Divorce, appeal and a new good will' precedent
By By Suzanne Monk / managing editor
Nov. 10, 2002
Did you know that divorce rulings handed down in Lauderdale County Chancery Court are sometimes appealed all the way to the Mississippi Supreme Court?
It happens. Not often, but it happens.
When it does, it almost always has to do with alimony, child support and how the chancery judge, or "chancellor," divided marital assets. So it is with the test case I'll be talking about in this column one that sets new precedent in determining the value of a business.
Here's the story of "John" and "Mary," as told in rulings handed down first by the Mississippi Court of Appeals and later by the Mississippi Supreme Court.
John and Mary were married for more than 20 years. John found out that Mary had cheated on him not once, but many times, and he sued for divorce. The case was initially heard by Chancellor Sarah Springer.
Springer awarded Mary one year of "rehabilitative" alimony.
John objected, asserting that the question of alimony took him by surprise because it had not been listed as a contested issue in a pre-trial statement. Because of this, he said, he was unprepared to respond to Mary's demand.
Regardless of what the approved pre-trial statement reviewed by both parties said, or did not say, Springer ruled its failure to mention alimony did not remove it from her consideration.
The Court of Appeals disagreed.
The Supreme Court disagreed.
Mary gets no alimony.
In general, John said Mary made no financial contribution to the accumulation of the couple's assets and, in any case, was not entitled to share 50-50 in them because her extramarital affairs had removed her from the home and had eroded its harmony and stability.
In general, Judge Springer disagreed, noting that the couple divided responsibilities. John built and developed his business and earned income for the family, while Mary took care of their home and their child.
Springer also noted that while John made most of the money, Mary had worked during almost all of the marriage. The COA said Springer followed the law correctly and "achieved an almost even division of property."
The Supreme Court, in an 8-1 decision, said Mary was not necessarily entitled to a 50-50 split.
Justice James W. Smith Jr. wrote the opinion for the high court. He said the chancellor noted that Mary was physically and emotionally absent from John and her child because of her numerous adulterous relationships and that she was extravagant.
Good will' and the
value of a business
A court-appointed consultant evaluated John's business to determine what it was worth. If you've ever had your house appraised, you know that several different methods of determining its value are possible. Same thing with a business.
The consultant placed the fair market value of John's business at about $150,000, the price at which it would change hands between a willing buyer and a willing seller.
This figure represented the cash, accounts receivable, inventory and equipment and a business intangible called "good will" the idea that the esteem in which John was held by the community affected the present and future value of his business.
The Supreme Court disagreed, noting that while "good will" may be appropriate in helping to determine alimony and child support, it should not be considered when dividing marital assets.
In this, the high court set precedent for Mississippi divorce law, and instructed Judge Springer to hold a new hearing into the matter.
John's certified public accountant was not allowed to testify at his original divorce trial before Judge Springer. The accountant had a different opinion of the value of both John's business and the building that housed it.
The COA upheld Springer on this issue, largely because John failed to cite any case law in support of his position.
The Supreme Court reversed both Springer and the COA, noting that the exclusion of this testimony was contrary to the intent of Mississippi's rules of evidence.
Springer must allow John's accountant to testify in the new hearing.
She must also re-visit her ruling that Mary is entitled to half-interest in an inheritance John received and applied to a new house the couple was building.
Nothing, at least not in this column.
You didn't find any names here except the judge's, or specific references to when things happened, because it was not my intent to embarrass anybody or expose their unhappiness to the public view.
The point of this exercise was to take a look at what kind of issues are considered on appeal in divorces, and how complicated those issues can be.
Certainly, in this case, the Mississippi Court of Appeals and the Mississippi Supreme Court found very little common ground and the justices involved have the luxury of considering abstract questions of law all day, every day, at their leisure.
It's a luxury trial court judges seldom enjoy.