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06/22/95 MARRIAGE HELEN J. TALTY AND WILLIAM F.

June 22, 1995

IN RE MARRIAGE OF HELEN J. TALTY, APPELLEE, AND WILLIAM F. TALTY, APPELLANT.


The Honorable Justice Miller delivered the opinion of the court: Justice Harrison, dissenting: Justice McMORROW joins in this dissent.

The opinion of the court was delivered by: Miller

JUSTICE MILLER delivered the opinion of the court:

The petitioner, Helen J. Talty, brought the present action in the circuit court of Grundy County seeking the dissolution of her marriage to the respondent, William F. Talty. The circuit court entered a decree dissolving the marriage and disposing of the parties' property. The court awarded Helen a lump sum of $750,000 and the condominium where she was living. The court assigned the couple's remaining assets to William. No award of maintenance was made. In a post-decree order, Helen was awarded $15,000 in prospective attorney fees for the defense of the present appeal. The appellate court affirmed the judgment. (252 Ill. App. 3d 80.) We allowed William's petition for leave to appeal (145 Ill. 2d R. 315(a)), and we now reverse the judgments of the courts below and remand the matter to the circuit court for further proceedings.

The parties were married in 1961 and had three children, all of whom were emancipated by the time the order of dissolution was entered. Helen Talty filed a petition for separate maintenance in April 1983. In February 1984, Helen amended the action to one for dissolution of the marriage. Before the separation, Helen worked in the home; after the separation, Helen was employed as a pharmacy technician at a drug store in Coal City. At the time of the dissolution, Helen was earning $4.50 an hour and was working about 38 hours per week.

William and his brother were co-owners of Talty Chevrolet, Cadillac, Buick, Inc., an automobile dealership located in Morris. William became a partner in the business in 1975, a year after his brother acquired it; William had other employment before that time. William has also farmed throughout his life, and, at the time of the dissolution, he was farming about 460 acres in partnership with his brother.

During the separation, William made monthly payments of maintenance to Helen. These payments were originally about $950 a month, and they were later increased to about $1,450 a month. In addition, William provided Helen with the use of a new automobile. In 1989, William was ordered to furnish Helen with $20,000 for the purchase of a condominium apartment.

After a lengthy period of inaction by the parties, the matter proceeded to trial in October 1992. The principal issue at trial centered on the valuation of the car dealership that William owned and operated in conjunction with his brother. Helen's expert witness, William Evenson, a lawyer and accountant, testified that the fair market value of the business was $1,375,000, making William'shalf interest worth $687,500. William's expert witness, Carl Woodward, an accountant, testified that the value of the business was approximately $800,000, and that William's share was therefore worth about $400,000. Woodward's figures were net of taxes that would be owed on a sale of the business; Woodward's pre-tax valuation of the dealership was $1,053,000. Both experts included goodwill in their calculations. The parties agree that William's interest in the car dealership, acquired by him in 1975, is marital property.

For a number of years preceding the 1992 dissolution order, William earned between $200,000 and $300,000 in annual salary and bonus from his position at the car dealership, where he was vice president and sales manager. At the time of trial, William had several bank accounts and certificates of deposit worth more than $700,000. Including the bank accounts, the farm land, and William's half interest in the car dealership, the total value of the marital estate was estimated to be about $2 million.

After the close of evidence, the court entered an order dissolving the marriage and dividing the marital assets. The court awarded Helen a lump sum of $750,000 in cash and the condominium apartment where she was then living, subject to the existing mortgage. The court assigned to William the couple's remaining marital assets. In view of the substantial cash award made to Helen, the court did not grant maintenance. Both parties filed notices of appeal from the circuit court judgment.

In a post-decree petition, Helen later requested an award of prospective attorney fees to defend against William's appeal. The judge who heard the case had retired in the interim, and Helen's request was heard by a different judge. Following a hearing, the second judge awarded Helen $15,000 in prospective attorney fees for the defense of the appeal.

The appellate court affirmed the circuit court judgment. (252 Ill. App. 3d 80.) Regarding the issues raised before this court, the appellate court rejected William's challenges to the trial court's treatment of the goodwill of the car dealership, the award to Helen of prospective attorney fees for the defense of the appeal, and the denial of a motion for automatic substitution of judge. The appellate court also upheld the trial judge's division of the marital estate, which both William and Helen challenged on appeal. Finally, the appellate court rejected William's objections to the opinion testimony of Helen's expert witness and to the trial court's valuation of certain farm equipment. We allowed William's petition for leave to appeal (145 Ill. 2d R. 315(a)).

William's principal contention in the present appeal involves the treatment of the goodwill in the business he operated with his brother. As we have stated, the valuations offered by the parties' expert witnesses included amounts representing the goodwill of the business. Relying on In re Marriage of Zells (1991), 143 Ill. 2d 251, William argues that the trial judge improperly considered goodwill in valuing the business. William believes that the trial judge's treatment of goodwill in this case resulted in an impermissible double counting of its value--first when it was considered as part of the value of the business, and again later in the division of the marital assets, when the judge assessed the circumstances of the parties, particularly William's superior earnings capacity. The effect of the asserted error would be to overstate the value of the property assigned to William. In response, Helen asserts that the appellate court correctly concluded that Zells is limited to professional practices and professional corporations and thus is inapplicable to the car dealership at issue here.

In In re Marriage of Zells (1991), 143 Ill. 2d 251, this court considered the appropriate treatment of thegoodwill of a professional practice in a division of property under the Illinois Marriage and Dissolution of Marriage Act. Zells noted the conflicting appellate court decisions on the question whether the goodwill of a professional corporation should be considered a marital asset. The court agreed with the cases that have held that goodwill is already reflected in a number of the circumstances that must be considered by a judge in making an equitable division of property under the Act. Zells concluded:

"Adequate attention to the relevant factors in the Dissolution Act results in an appropriate consideration of professional goodwill as an aspect of income potential. The goodwill value is then reflected in the maintenance and support awards. Any additional consideration of goodwill value is duplicative and improper." Zells, 143 Ill. 2d at 256.

We believe that the same concerns noted in Zells are present here. The Illinois Marriage and Dissolution of Act embodies a partnership theory of marriage. This court has previously described the general purpose of the scheme of property division set forth ...


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