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In Re Marriage of Jones

OPINION FILED FEBRUARY 16, 1982.

IN RE MARRIAGE OF WILLIAM C. JONES, PETITIONER AND COUNTERRESPONDENT-APPELLEE, AND CORINNE JONES, RESPONDENT AND COUNTERPETITIONER-APPELLANT.


APPEAL from the Circuit Court of Cook County; the Hon. ALLEN F. ROSIN, Judge, presiding.

PRESIDING JUSTICE CAMPBELL DELIVERED THE OPINION OF THE COURT:

Following trial on the matter, the circuit court of Cook County entered a judgment for dissolution of marriage of the wife, Corinne Jones, and the husband, William C. Jones. On appeal, the wife contends that the trial court erred: (1) in its classification and division of property between the parties; (2) in its allocation of property between the parties; (3) in its failure to award maintenance to the wife; (4) in its order requiring the immediate sale of the marital residence; and (5) in its order that attorney fees of both parties be paid from the proceeds of sale of the marital residence.

The record discloses that the parties were married in May 1955, and that the parties had four children, one of whom is a minor and one of whom is deceased. In 1957, the husband commenced working for his father, Horry Jones, at Jones Metabolism Co. Jones Metabolism Co. was the exclusive sales agent for Medical Instruments Co., which manufactured basal metabolism equipment. Both of these companies were owned by the father and business was conducted on Honore Street in Chicago, Illinois. In 1960, the husband developed a device which measured pulmonary functions and was sold under the trade name "pulmonor." An account was established under the name "Jones Medical Instrument Co." for the income and expenses generated by the "pulmonor." Expenses for the construction of the pulmonor which were initially billed to one of the father's companies were repaid to the father's companies through funds from the parties' joint account. From 1960 until the death of Horry Jones in 1969, the parties listed the income and expenses generated by the "pulmonor" on Schedule C of their personal income tax returns.

In 1969, following the death of Horry Jones, the two companies of the father were merged into one entity, Jones Medical Instrument Co., Inc. Subsequent to the merger, the parties no longer listed income and expenses from the "pulmonor" on their personal income tax returns. From the record, it appears that after the merger of the two companies of Horry Jones, the operations of the business involving the "pulmonor" which was started in 1960 were absorbed or consolidated with the two merged companies. The record also discloses that the use of basal metabolism equipment which was sold by the father had become obsolete at the time of the merger and that following the father's death, there was little business generated through sales of this equipment.

On December 31, 1968, the father negotiated an agreement whereby Jones Metabolism Co. and Medical Instruments Co. would purchase 50% of the stock in each of the two companies which were owned by the husband's sister for a total purchase price of $86,500. It appears that at the time this agreement was executed, the sister did not own stock of either company and that the purchase agreement would have prospective application upon the death of Horry Jones. On the first corporate income tax return for Jones Medical Instrument Co., Inc., which was filed after the death of the father, the book value of the merged entities was listed at $193,571. Testimony established that the only assets of the father's companies at the time of his death were the Honore Street property which was later sold for $35,000 and inventory which was valued at between $5,000 and $25,000.

From the record, it appears that in 1968, a parcel of property on which to conduct the business was purchased in Oak Brook, Illinois. According to the uncontradicted testimony of the wife, funds for the purchase and construction of the Oak Brook facilities were derived from the sale of the Honore Street property ($35,000), loans from the children's bank accounts ($37,000) and from the parties' joint savings account ($81,000). At the time the operations were moved to Oak Brook, much of the inventory which remained from the father's businesses was abandoned.

During the course of the trial, testimony concerning the value of Jones Medical Instrument Co., Inc., disclosed that the corporate books for the period ending June 30, 1980, showed that the book value of the company was $384,041. The Oak Brook property was valued by the corporation at $476,656. Also reflected on the corporate balance sheet were loans to the husband in the amount of $72,249. The corporation also was indebted to the parties' three children in the sum of $37,000 and was indebted to the husband's sister in the amount of $56,605. The amount owed to the husband's sister was the outstanding balance due from the purchase of the stock which she inherited from the father. Three appraisers testified that in 1980 the value of the Oak Brook property which included land and improvements was $625,000, $590,000 and $500,000. The appraiser who valued the property at $500,000 in 1980 testified that in 1978, he had valued the property at $470,000 and that, since 1978, property values in Oak Brook have increased at the rate of 10 to 20 percent. According to testimony from accountants, if the corporate assets, such as the real estate, were valued at less than fair market value on the corporate books, then the book value of the corporation would have to be increased to arrive at a sum which would reflect the increased actual value of the corporation.

The husband maintained two Visa and one American Express charge accounts which were used by the parties. Numerous items, such as camera equipment, meals, clothing and other personal items were purchased on the Visa accounts and travel expenses, both business and pleasure, were charged to the American Express account. The bills incurred on these charge accounts were paid by Jones Medical Instrument Co., Inc. During 1979, the parties charged approximately $18,000 on the two Visa accounts and, in 1980, approximately $22,000 in purchases were charged to the two accounts. According to the wife, the company also paid for automobile and housing expenses from September 1977 through 1978. The husband testified that the foregoing expenses were charged to his "262 Account" at the company and that the funds received by the husband from the "262 Account" were advanced to the husband. During the course of the marriage, the parties have travelled throughout the United States. They also have travelled to the Soviet Union, Europe, Mexico and Canada. The husband travelled to Latin America in search of lost treasure. From the record, it appears as if the corporation paid for the expenses incurred on these trips.

Prior to the parties' marriage in 1955, Horry Jones established a stock trust for the husband. In 1971, the trust was valued at $141,474 and as of July 31, 1980, the portfolio was worth $201,463. It appears from the record that all but a small portion of the income generated by this trust was added to the trust corpus and reinvested in other income-producing securities. During the course of the marriage, the parties reported the income earned by the stock trust on their joint tax returns.

The parties owned a home in Oak Brook, Du Page County, Illinois, which is where they both have resided during the pendency of this action. The home was purchased for $310,000 in 1975 from the husband's attorney. The parties paid for the home with $100,000 in cash with the balance being financed through a $156,000 loan from the seller and a $60,000 mortgage. At the time of these proceedings, the note given to the seller has been in default since 1978 and a notice of default was served upon the husband in July 1980, although no action to foreclose has been taken. Two appraisals of the marital home established the value of the home at $344,000 and $375,000. At the time of the proceedings, the outstanding balance on the encumbrances was approximately $114,000.

On January 19, 1981, the court entered judgment for dissolution of marriage of the parties, made its findings and provided for the division of the property of the parties. The court found that the husband inherited all of the stock of Jones Medical Instrument Co., Inc., from his father and that at the time of his father's death, the corporation was worth $193,571 which was the separate property of the husband. The court determined that the adjusted book value of the corporation as of June 30, 1981, was $415,055 and that the increase in the value of the corporation subsequent to the death of Horry Jones was marital property. The court found that the husband's pension and profit sharing plan was worth approximately $103,000 and that the husband's interest in this plan was marital property. The court deemed the stock trust established by Horry Jones for the husband to be non-marital property. The court found the marital home of the parties to be marital property and that the home was worth not less than $344,000. The court found the home to be a financial burden on the parties and economically unfeasible for either party to retain the home, and therefore, ordered that the parties immediately sell the home. The court also ordered that the attorney fees incurred by the parties during the dissolution proceedings be paid from the sale proceeds. Following payment of the attorney fees and other costs incurred in the sale of the home and satisfaction of the encumbrances, the parties were to divide the net proceeds received from the sale of the home. The court ordered the husband to pay to the wife, in lieu of maintenance, the sum of $200,000, payable at the rate of $20,000 per year in equal monthly installments of $1,666. The court found that the wife did not have any present skills for employment, but that she would be able to support herself in the future. The following is a breakdown of the court's allocation of marital and non-marital property from the major assets of the parties:

MARITAL NON-MARITAL

Jones Medical Instrument $221,484 $193,571 Co., Inc. Pension and Profit Sharing Plan 103,000 Stock Trust 201,463 Marital Home (Market Value 230,000 less encumbrances) __________ __________ TOTAL $554,484 $405,034

This court raises sua sponte the failure of the parties hereto to comply with the venue provisions of section 104 of the Illinois Marriage and Dissolution of ...


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