Appeal from the Circuit Court of Cook County; the Hon. John J.
Crown, Judge, presiding.
JUSTICE MCGILLICUDDY DELIVERED THE OPINION OF THE COURT:
The petitioner, Evelyn Weiss (Evelyn), appeals from those portions of the judgment for dissolution of marriage pertaining to her award of maintenance and her allocation of the marital property. Evelyn maintains that the trial court failed to properly value certain of the parties' marital property and that the maintenance awarded to her by the trial court is inadequate.
Evelyn and the respondent, Frederick Weiss (Frederick), were married on April 3, 1941. Three children were born to the parties as a result of the marriage, all of whom are now adults. On August 3, 1973, Evelyn filed a petition for dissolution of her marriage to Frederick. The proceedings, including a trial, resulted in the dismissal of one count of Evelyn's petition for failure to prove jurisdiction. On August 13, 1980, this court reversed the decision of the trial court and remanded the cause for further proceedings. In re Marriage of Weiss (1980), 87 Ill. App.3d 643, 409 N.E.2d 329.
In 1981, a bench trial was held before Judge John J. Crown at which the following facts were established. In 1981 Frederick was 72 years old, a physician, and employed by Weiss Medical Complex, Ltd. (Weiss, Ltd.). Weiss, Ltd., was a corporation in which Frederick owned 100% of the preferred stock and between 70% and 80% of the voting stock. Frederick testified that when he received the stock in 1969 in return for his medical practice it was valued at $425,000. Approximately 50 persons, including other physicians and a support staff, were employed by Weiss, Ltd. Frederick testified that in 1981 he worked only 18 to 20 hours a week, having cut back on his working hours following open-heart surgery in 1978. Frederick's salary from Weiss, Ltd., in 1979 was $52,000, approximately $20,000 less than his salary in 1978.
Jerry Weiss, a certified public accountant, testified for Frederick that he had been the accountant for Weiss, Ltd., for 10 years. He testified that he did not believe there was any market for Frederick's stock other than under a stock redemption agreement with the corporation, although if the corporation declined the purchase Frederick would have 30 days in which to sell the stock to a third party. At the time of trial, the total accounts receivable for Weiss, Ltd., were approximately $490,000. Jerry Weiss believed there was a 50% reserve for uncollectibles against the total figure. The accounts receivable were declining, and most of the doctors had taken a voluntary reduction in salary. The corporation had also stopped reimbursing the doctors for automobile expenses. Weiss, Ltd., paid $15,000 to $18,000 a month in rent plus real estate taxes to Lincoln Medical Park Development Center. At the time of trial, the rent was two to three months in arrears. While testifying, Jerry Weiss referred to the Weiss, Ltd., balance sheet of October 31, 1980. *fn1 The trial court found that the value of Frederick's stock in Weiss, Ltd., was zero.
Lincoln Medical Park Development Center (Lincoln) was a real estate partnership which owned the land and buildings used by Weiss, Ltd. Frederick, personally and through a revocable trust, owned a 20.07% interest in Lincoln. James R. Johnston, a qualified real estate appraiser appointed by the court, testified that the fair market value of the land and buildings was $715,000. The Lincoln property was encumbered by an $800,000 note and first mortgage, on which Frederick was personally liable, held by New York Life Insurance Company. The Harvey Medical Development Company, a partnership composed of a series of trusts for the benefit of the Weiss family and another family, held a $450,000 purchase money second mortgage on the property. Neither Frederick nor Evelyn were beneficiaries of the trusts. After examining Lincoln's 1979 tax return, the trial court found that after offsetting partnership debts against the value of the property, Frederick's interest in Lincoln was worth minus $104,000.
Frederick also owned 17 tax shelter partnership investments: nine motion picture partnerships; four coal, gas and oil partnerships; one cable television partnership; and three real estate partnerships. Jerry Weiss testified that the motion picture partnerships were very speculative and that he would value them at zero. He stated that the real estate partnerships had some value but he was uncertain of the amount. The cable television partnership was relatively new and had some value, although, again, Jerry Weiss testified that he did not know the amount.
Harold Fee, a certified public accountant, testified for Evelyn as to the valuation of the 17 tax shelter partnerships. He referred to two exhibits which he had prepared and which were received into evidence showing (1) Frederick's 1979 tax return and cash flow analysis and (2) a list of Frederick's assets including estimated value as of December 31, 1980, and cash flow for 1979 and 1980. He also testified from the Schedules K-1 of Federal income tax return form 1065 Partner's share of income, credits, deductions, etc. for the 17 tax shelter partnerships. He arrived at a value of $307,644.42 for the 17 tax shelter partnerships. He computed the value by averaging the gross cash flow of each partnership over 1979-80 and multiplying the result by three. Jerry Weiss stated that if done on a net, rather than a gross, basis, this method was "as good as any." The court noted that the evidence in the record regarding the value of the partnerships was "very sketchy." In its findings of fact the court valued the tax shelter partnerships at minus $332,969, based on their capital accounts as of December 31, 1980, as shown on the Schedules K-1. The court stated: "From time to time, Frederick will be required to either recognize non-cash income as taxable gain (i.e. pay taxes) or purchase additional tax shelter to offset the non-cash income (buy shelter)."
Jerry Weiss testified that Frederick's 1981 gross income would be $169,000, including his $52,000 salary from Weiss, Ltd. He testified that Frederick's capital partnership commitments for 1981 were $36,000. Harold Fee testified that, based on the 1979 tax return and cash flow analysis he had prepared, and taking into account interest from a revocable trust and United States Treasury bonds, and income from investments and medical consultations as well as his salary, the total received by Frederick in 1979 was approximately $224,000. This figure did not take into account cash outflows, expenses, withholding taxes, FICA, partnership capital commitments or "dry income" produced by the tax shelters. Frederick's 1979 Federal income tax return indicated an adjusted gross income of $55,239, a taxable income of $34,968, and total Federal income tax of $15,870.
Evelyn testified that she was 63 years of age and was employed two days a week in a showroom at the Apparel Center, where she earned $40 per day gross income. She owned $41,183 in stocks and bonds derived mainly from the investment of an inheritance that she had received from her father. Of this, she owed her sister approximately $11,000. Evelyn owned approximately 25% of the assets of the Sibley Lumber Company, which were tied up in litigation at the time of trial. She estimated the assets to be worth approximately $215,000, less court and legal fees. The parties stipulated that the Sibley Lumber Company assets were non-marital property. In the early days of her marriage, Evelyn worked for Frederick without pay, helping him to establish his practice, often from 9:30 a.m. until 10 p.m. From 1944 through 1966, although she continued to assist Frederick on occasion, she devoted her time to raising the parties' three children, running the large marital home, entertaining and attending civic functions. She always employed help in the home, most frequently on a live-in basis. In 1967, Evelyn returned to work in Frederick's offices for a salary. The parties stipulated that while living together, their expenses exceeded $100,000 per year. Evelyn submitted a copy of her expenses at the time of trial. It appears that Evelyn was receiving $2,331.97 per month in temporary support.
The court-appointed real estate appraiser testified that he had appraised the marital home in Flossmoor and that he estimated its value to be $342,000 as of June 1, 1981. There was no mortgage on the home. The court ordered the home to be sold, with the first $250,000 to go to Evelyn and the remainder to be awarded to Frederick.
Further testimony established and the court found that Frederick had in his name cash and securities totaling $326,860, a condominium valued at $60,000 with a mortgage of $40,000, a vested pension plan worth $148,312 and an interest in Pro-Quip Leasing Venture, which leases equipment to Weiss, Ltd., worth $28,940.
Pursuant to section 503(c) of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1981, ch. 40, par. 503(c)), the trial court found that Frederick's contribution to the marital property had been as a physician, a business entrepreneur and an investor. Evelyn's contribution to the marital property had been as a homemaker. The court found that because of his age, his health, the decline of his medical practice and his potential liability to creditors and to the Internal Revenue Service, Frederick was unlikely to have any future opportunities to acquire capital assets or income. On the other hand, the court found Evelyn's opportunities to acquire future capital assets or income to be substantial due to the use of funds she expected to receive from her interest in the Sibley Lumber Company.
The court found that neither party had sufficient property to provide for his needs and that Evelyn was without sufficient income. Frederick was ordered to pay Evelyn $1500 per month as permanent maintenance effective March 1, 1981. At such time as Evelyn received the Sibley assets, maintenance was to be ...