APPELLATE COURT OF ILLINOIS, FOURTH DISTRICT
Cross-Appellee, and ANNET HLAVNA STONE,
Respondent-Appellee and Cross-Appellant
507 N.E.2d 900, 155 Ill. App. 3d 62, 107 Ill. Dec. 747 1987.IL.571
Appeal from the Circuit Court of Jersey County; the Hon. Claude J. Davis, Judge, presiding.
JUSTICE McCULLOUGH delivered the opinion of the court. SPITZ, P.J., concurs. JUSTICE GREEN, Concurring in part and Dissenting in part.
DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE MCCULLOUGH
On December 21, 1981, Paul L. Stone filed a petition for dissolution of marriage in the circuit court of Jersey County, Illinois. On December 28, 1981, the court granted the petition, specifically reserving issues of child custody, child support, and marital property rights. On April 30, 1984, husband initiated proceedings for determination of the remaining issues. On May 30, 1984, husband and wife, Annet Hlavna Stone, reached an agreement concerning the issues of child custody and visitation. The case proceeded to trial on the remaining issues of child support and division of property. On November 14, 1985, the court entered judgment. Following the court's denial of his motion to reconsider, husband appeals and wife cross-appeals the order of the circuit court.
The parties raise four issues for consideration on appeal: (1) valuation of the marital residence; (2) valuation and distribution of husband's interest in the law partnership; (3) division of personal property; and (4) child support. We are not persuaded by the arguments of the parties and consequently affirm the circuit court order.
Testimony indicated that the parties married on October 14, 1967, during husband's first year in law school. Wife testified that husband brought no property into the marriage, while she initially contributed a car, furniture, and general household goods. At the time of marriage, wife was employed by a certified public accounting firm in Champaign, Illinois, earning approximately $7,200 per year. Wife testified that her salary was used to pay marital bills as well as the majority of husband's educational expenses. Husband did not incur any debts to finance his legal education. During the first three years of marriage, husband held two summer jobs, earning approximately $3,500.
There were three children born to the marriage, none of whom have yet attained adult status. Wife continued to work throughout the marriage except for short periods of time when the children were born. Throughout the marriage, all of the money earned by wife was put into a family account which was allocated by husband.
Both parties presented expert testimony regarding the value of the marital residence at the date of dissolution. At the time of the hearing, husband and three children were living in the residence. Wife was living in St. Louis. Husband presented Mr. Robert Livergood, a licensed real estate broker from Sullivan, Illinois, who testified that he had been appraising property for over 21 years. Livergood stated that he was personally familiar with the subject property and had examined all comparable sales for the relevant time frame. The closest comparable sale Livergood found was the sale of property located on the same street as the marital residence approximately one-quarter of a mile away. This particular piece of property had been sold in 1980 to the Sullivan First National Bank Trust Department. Livergood noted that the property had sold for less than the assessed value.
Livergood further testified to his personal knowledge of real estate market trends in the Sullivan area during the years 1980 through 1985. Based upon this knowledge, in conjunction with his comparable sales analysis, Livergood opined that the fair market value of the marital residence on December 28, 1981, was $74,500. Livergood admitted to his lack of formal education, knowledge of the condition of the property in 1981, and cost of construction.
Mr. Charles McCoy, a real estate appraiser, testified on behalf of wife. McCoy stated that there were three commonly accepted methods utilized for the valuation of property of which the comparable sales approach in conjunction with the cost approach provided the most accurate valuation. McCoy stated that he had found four comparable sales, each of which he adjusted for comparative purposes. McCoy then utilized the cost approach to ascertain what it would cost to build the same property as of the date of appraisal.
McCoy valued the marital property at $82,000. The date of valuation used by McCoy was May 23, 1985. It was his belief that the 1985 valuation date would be similar to a 1981 valuation date. On cross-examination, McCoy admitted that he had never been involved in a real estate transaction in Sullivan and further, that his opinion as to the 1981 value with respect to his 1985 appraisal was "pure conjecture" based upon the market trends.
In the judgment order, the court found the value of the property on December 28, 1981, to be "one-half of the total value of both appraisals" or $78,250. The court awarded the marital residence to the husband, ordering him to pay wife one-half of the equity in the residence which was found to be $14,142. Payments were to be made in monthly installments of $200 beginning on January 1, 1986, until the entire amount was paid with no interest to accrue thereupon.
The husband's father, Paul Stone (father), a practicing attorney in Sullivan, Illinois, testified regarding the husband's participation in the law practice of Stone & Stone. The father stated that his son joined the practice in 1976, but at that time was also employed by the Moultrie County public defender's office. He further testified that his son subsequently left the public defender's office and began working with the State's Attorney's office.
In December of 1979, the husband left the State's Attorney's office and entered into an oral partnership agreement with Stone. The father testified that the oral partnership agreement provided that his son would draw a monthly salary of $3,000. Stone was to earn $4,000 a month. Any profit in excess of the salaries was to be divided equally. He stated that his son paid him nothing at the time he entered into the partnership. All of the furniture and furnishings in the law office were owned solely by Stone. The partnership, however, did purchase approximately $3,500 worth of personalty from the date of formation until the date of dissolution of marriage. The partnership continued until it was terminated in December of 1984, when husband returned to the State's Attorney's office.
On the date the partnership was formed, the law practice had accounts receivable in the amount of $116,508. On the date of the dissolution of partnership, the accounts receivable totaled $55,990.20. The accounts receivable at the date of dissolution of marriage amounted to $65,495. The father testified that the profitability of the partnership declined due to changes in probate law and the general decline of the real estate market.
Testimony indicated that during the existence of the partnership, the husband drew money in excess of his proportionate share to meet his increased family needs. The father testified that his son had overdrawn from the partnership in an amount of $32,419.80. The father, who characterized the overdraw as a loan, further testified that there had not been any repayment of this money. He claimed that as of December 31, 1981, his son had an obligation to the partnership equal to the alleged overdraw, but at the same time had no interest in the partnership, notwithstanding the representations that were made to the IRS on the partnership tax returns.
On cross-examination, the father admitted that the tax returns of Stone & Stone identified the husband as a partner in the firm since 1973. He claimed, however, that the tax returns were not an accurate reflection of the business and were filed indicating the existence of a partnership solely for tax purposes.
Both parties employed experts to value the law practice. Joel D. Elam, a certified public accountant, testified on behalf of husband. Elam identified a deficit in the husband's capital account in the amount of $14,000 based upon the purported "oral partnership agreement." Elam concluded that, had the partnership been liquidated in December 1981, the husband "would have been entitled to nothing or would have owed Paul Stone."
With respect to the goodwill of the partnership, Elam testified that if he used only the income figures of the partnership for 1980 and 1981, he would value the goodwill at $2,291. However, he stated that if he used the income figures until the date of the hearing, there was no value of goodwill given the declining profits.
On cross-examination, Elam testified that the partners had never kept "capital accounts" and that the construction of capital accounts contained in the report he presented was based solely on information supplied by the husband without regard to the partnership tax returns.
Stanley R. Smith, a business broker, testified on behalf of wife. Smith testified that in making his valuation, he considered the tax returns filed by the husband and his father, the partnership tax returns, the accounts receivable as of December 31, 1981, and his personal review of the physical assets of the partnership.
Smith testified that the fair market value of Stone & Stone as of December 31, 1981, was as follows: (1) cash, $3,327; (2) furniture (book value), $13,048; (3) receivables, $41,460 (based upon receivables cards provided by the practice); and (4) goodwill equal to $28,428 (based upon profit after expenses and consistent with the Dew, Inc., Business Journal for Evaluation of Professional Practices). According to ...