Appeal from the Circuit Court of Cook County; the Hon. Willard
J. Lassers, Judge, presiding.
JUSTICE PERLIN DELIVERED THE OPINION OF THE COURT:
Respondent Herbert G. Melnick (Herbert) appeals the property apportionment and attorney fees portions of a judgment entered on December 2, 1982, in the circuit court of Cook County dissolving his marriage to petitioner Carol Melnick (Carol). On appeal, Herbert contends that the trial court's valuation of Herbert's limited partnership investments and of his stock in Modern Management, Inc., was against the manifest weight of the evidence and that the trial court abused its discretion in ordering Herbert to contribute $85,000 toward Carol's attorney fees and costs.
Herbert and Carol were married in Cook County on August 11, 1956. Three children were born of this marriage: Elizabeth, born July 6, 1957; Michael, born February 2, 1959; and Marianne, born June 12, 1961. All are adults. On June 23, 1980, Carol filed a petition for dissolution of marriage, alleging mental cruelty.
The trial testimony addressed principally the value of 22 *fn1 limited partnership investments owned by Herbert and the value of Herbert's 20,088 *fn2 shares of stock in Modern Management, Inc., a closed corporation engaged in the business of labor relations consulting.
(1) LIMITED PARTNERSHIP INVESTMENTS
Shayle Fox, corporate attorney for Modern Management and Herbert's personal attorney, testified to the value of the 22 limited partnership investments. In seeking a method to evaluate these investments, Fox hired Duff and Phelps, Inc., professional appraisers, who evaluated one of the investments, Raintree, by utilizing a formula under which a 70% to 85% discount factor was applied to the "estimated value" of the investment in order to assess its present dollar value. In order to avoid the substantial expense of individual appraisals, Fox adapted this formula in valuing the remaining investments. Fox concluded that the overall value for all 22 investments was $840,000, and by applying a 75% discount, he arrived at $210,000.
Robert Rome, a certified public accountant, testifying on behalf of Carol, disagreed with the 75% discount applied by Fox because he considered most of the "shelters" to be "economically viable investments."
Bruce H. Brenner, a professional real estate appraiser and Carol's brother, testified that to value investments of the kind here involved, "each one has to be looked on individually."
In its evaluation of 14 of the limited partnership investments, the trial court adopted the values fixed by Fox. The trial court said it would not value any of the particular interests at a figure lower than that suggested by Fox, and the court concluded that the total fair market value of these investments was $318,675. Subsequent evidence with regard to the Carbondale property, however, resulted in increasing the trial court's evaluation of the investments to $495,598. The trial court awarded 18 limited partnership interests to Herbert (valued at $423,348) and four to Carol (valued at $72,250).
(2) MODERN MANAGEMENT, INC., STOCK
Herbert testified that he is chairman of the board of directors of Modern Management, Inc., a closely held corporation specializing in labor relations consulting. He owns approximately 32% of its outstanding shares.
Robert Urgo, an investment manager hired by Carol to determine the fair market value of Herbert's interest in Modern Management, testified that he examined the company's financial statements for the years 1976-1981, the Federal corporate income tax returns for 1976-1980, the company's promotional and marketing literature, the deposition of Victor Elting (Herbert's expert witness for valuing Herbert's interest), Elting's summaries of the company's value prepared in 1980 and 1981 and published financial information relating to companies similar to Modern Management.
By applying what he deemed an appropriate price/earnings ratio formula, i.e., 8:6, Urgo computed the fair market value of Modern Management to be $108.38 per share. However, when he considered the percentage of the company owned by Herbert, his position in the company, the change in share holdings that occurred over the last five to six years and a buy-sell agreement existing between the company and the key stockholders, he concluded that the fair market value of Herbert's interest was $92.12 per share.
Called subsequently to testify as a rebuttal witness, Urgo stated that he had examined exhibits detailing reductions in the salaries of Modern Management's officers. In light of this new information, he concluded that the fair market value of Herbert's stock interest was $77.76 per share.
Victor Elting, an investment banker, testified that he appraised the stock of Modern Management in 1980 and again in 1981. On July 31, 1981, Elting calculated a per share value of $13.23. Elting stated that at the time of trial, however, the market value of Herbert's stock was $3.83 per share.
James L. Bannon, a partner between 1972 and 1980, stated in an evidence deposition that in 1979, the "shareholders" of the company had valued the stock at $100 per share, although he would not have paid that price. In 1980, Bannon sold his 3,000 shares of stock to Modern Management for $50,000 ($16.67 per share). *fn3
Raymond F. Mickus, a former partner of Modern Management, testified that he owns 16% of the company's stock. At an officers' meeting in 1978, the value of its stock was set at $66.67 per share. In 1979 the officers agreed upon a value of $100 per share. In 1981, after "Mr. Melnick started having some marital difficulties the stock ...