Case Title: ROBERT MYLES HALL V. NANCY KAY HALL

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2005-12-30T00:00:00Z

Document:
ROBERT MYLES HALL V. NANCY KAY HALL2005 WY 166125 P.3d 284Case Number: 05-72Decided: 12/30/2005
OCTOBER 
TERM, A.D. 2005

 
 
ROBERT 
MYLES HALL,

 
 
Appellant

(Plaintiff),

 
 
v.

 
 
NANCY 
KAY HALL,

 
 
Appellee

(Defendant).

 
 
Appeal 
from the DistrictCourtofTetonCounty

 
 

Representing 
Appellant:

Joseph 
F. Moore, Jr., and Glenn M. Ford of Moore, Myers & Garland, LLC, Jackson, Wyoming.  
Argument by Mr. Moore. 

 
 

Representing 
Appellee:

Katherine 
L. Mead of Mead & Mead, Jackson, Wyoming

 
 
Before 
HILL, C.J., and GOLDEN, KITE, VOIGT, BURKE, JJ.

 
 

GOLDEN, 
Justice.

[¶1]      This appeal 
arises out of the divorce of Robert Hall (Husband) and Nancy Hall (Wife).  Husband hereby appeals the property 
division portion of the Judgment and Decree of Divorce.  Husband alleges that the district court 
erred in the valuation and disposition of stock in his family corporation and 
also in not considering the tax consequences of his court ordered equalizing 
payments.  Finding no reversible 
error, we affirm.

 
 
ISSUES

 
 
[¶2]      Husband presents 
three issues for this Court's review:

 
 
A.  The Court committed reversible error by 
failing to tax affect the future payments of Robert Hall to Nancy Hall in order 
to achieve an equitable division of the marital estate.

 
 
B.  The Court committed reversible error 
when valuing the Class A Preferred Stock of Como Oil Company at par value of 
$100.00 per share rather than at the market value of $50.00 per share as 
evidenced by the testimony at trial.

 
 
C.  The Court committed reversible error 
when determining that seventy-five percent (75%) of the common stock of Como Oil 
Company should be included in the marital estate.

 
 
FACTS

 
 
[¶3]      Husband and Wife 
were married in 1982.  The instant 
divorce action was filed in 2002.  
The divorce was finalized in 2004.  
Wife is a high school graduate.  
She received job training through the United States Forest Service.  At the time of divorce wife was the 
District Ranger for the Black Rock and Jackson Ranger District.  Husband is a college graduate.  He has worked for Como Oil Company (Como 
Oil) since he graduated from college.  

 
 
[¶4]      Como Oil has been 
primarily owned and operated by members of Husband's family since Husband's 
father founded the company in 1946.  
Husband owned 25% of the common stock of Como Oil at the time of 
marriage.  During the course of the 
marriage, Como Oil issued a stock dividend and redeemed most of its common 
stock.  The result of these 
transactions left Husband as the sole holder of common stock, which increased 
his percentage of equity ownership from 25% to 100%.  At the time of divorce Husband was the 
sole director and president of Como Oil.  
As such, he controlled all aspects of Como Oil, including his 
compensation and company benefits.  
Prior to the divorce, Husband also acquired 2,928 shares of Como Oil's 
Class A Preferred Stock.  The par 
value for such stock is $100 per share.  
Husband purchased his shares of preferred stock for $50 a share.  

 
 
DISCUSSION

 
 
Standard 
of Review

 
 
[¶5]      The ultimate 
division of the marital estate is within the sound discretion of the trial court 
and will not be overturned absent clear grounds revealing an abuse of that 
discretion.  Paul v. Paul, 616 P.2d 707, 713 
(Wyo. 
1980).  An abuse of discretion 
occurs when the property disposition shocks the conscience of this Court and 
appears to be so unfair and inequitable that reasonable people cannot abide 
it.  Id. 
at 714.  "The result reached by the 
trial court will not be disturbed except on clear grounds in extreme cases.  We refuse to readjudicate property 
divisions when they are just and equitable."  Barney v. Barney, 705 P.2d 342, 344 
(Wyo. 1985) 
(internal citations omitted). 

 
 
[¶6]      The marital 
estate cannot be divided, however, until the distributable assets are 
valued.  Many times this requires 
comprehensive findings of fact and law, in this case by the court after a bench 
trial.  In reviewing these findings, 
we invoke our standard of review for bench trials.  This Court reviews a trial court's 
conclusions of law de novo.  The 
factual findings of a trial court, however, are not entitled to the limited 
review afforded to jury findings.  
Rather, we review the trial court's findings of fact to determine if they 
are clearly erroneous.  Barton v. Barton, 996 P.2d 1, 3 (Wyo. 
2000); Kennedy v. Kennedy, 761 P.2d 995, 997-98 (Wyo. 1988).

 
 
[¶7]      A finding is 
clearly erroneous when, although there is evidence to support it, we are left 
with the definite and firm conviction that, on the entire evidence, a mistake 
has been committed.  We are mindful 
of the fact that our review does not entail re-weighing disputed evidence and we 
cannot substitute our judgment for that of the trial court. Kennedy, at 998.  We begin our review therefore with a 
presumption that the trial court's findings of fact are correct.  In reviewing the findings of fact, 

 
 
[t]here 
are settled appellate concepts which we follow, all for the most part favorable 
to the party prevailing in the trial court.  An appealing party has a heavy burden to 
overcome.  We must assume that the 
evidence in favor of the successful party is true, leave out of consideration 
entirely the evidence of the unsuccessful party that conflicts with it and give 
the evidence of the successful party every favorable inference which may 
reasonably and fairly be drawn from it.  
In this case, there were special findings of fact which must be construed 
liberally and favorably to the judgment.  
We presume that they are right and where the findings of the trial court 
are not inconsistent with the evidence, clearly erroneous, or contrary to the 
great weight of the evidence, they will not be disturbed on appeal.  Moreover, the trial judge was present 
and observed at first hand the demeanor and expressions of the witnesses.  We must not forget that when we examine 
the cold words of the transcript of testimony, we do not have the benefit of how 
the trial judge sees and hears the witness--the pitch of the voice, facial 
changes, the movement in the witness--all of which may tell a separate story, to 
be given credence.  The conclusion 
of what preponderates is with the trier of fact.  Credibility of witnesses is for the trial 
court.  Appellate courts cannot try 
a case de novo.  

 
 

Madrid 
v. Norton, 596 P.2d 1108, 1117 (Wyo. 1979) (citations omitted).  

 
 
Distribution 
of Como Oil 

 
 
[¶8]      The most 
significant asset of the parties is Husband's ownership interest in Como 
Oil.  On appeal, Husband contends 
that all of his ownership interest in Como Oil is his sole, separate property 
and therefore should not have been made subject to distribution.  This particular argument receives no 
support under Wyoming law.  In Wyoming, upon divorce, property is divided 
pursuant to Wyo. Stat. Ann. § 20-2-114 (LexisNexis 2005):

 
 
In 
granting a divorce, the court shall make such disposition of the property of the 
parties as appears just and equitable, having regard for the respective merits 
of the parties and the condition in which they will be left by the divorce, the 
party through whom the property was acquired and the burdens imposed upon the 
property for the benefit of either party and children.  

 
 
As this 
Court has consistently pointed out, under the statute all property of the 
parties is subject to distribution.  
Mann v. Mann, 979 P.2d 497, 
499 (Wyo. 
1999) ("a married person's separately owned property is subject to 
distribution"); Paul, 616 P.2d  at 713 
("A property division may reach the separate property of either spouse.").  Consequently, Husband's protestation 
that his equity ownership interest in Como Oil is his and his alone is 
irrelevant to the authority of the trial court to include the value of that 
interest in its ultimate determination of a fair and equitable property 
distribution.1  The trial court made no mistake in 
identifying Husband's equity interest in Como Oil as property subject to 
division.  

 
 
Valuation 
of Class A Stock

 
 
[¶9]      The basic facts 
are not in dispute.  Husband bought 
his shares of Class A Preferred stock for $50.00 per share.  The preferred stock has a par value of 
$100.00 per share.  The preferred 
shares are given priority in liquidation.  
The trial court accepted the par value of the preferred stock as its 
appropriate value.

 
 
[¶10]   Husband declares that the trial 
court erred in valuing his shares of preferred stock at their par value because 
the par value was irrelevant to determining the then current market value of his 
preferred shares.  Implicit in this 
argument is a contention that, as a matter of law, a trial court has no 
discretion to value preferred stock at anything other than its market 
value.  Husband offers no legal 
authority, however, supporting this theory.  In fact, Wyoming law eschews such a restrictive 
approach to valuation of marital assets.  
This Court has made clear that "with respect to the valuation of marital 
assets, trial courts must exercise discretion and adjudicate marital property 
dispositions on a case-by-case basis using the best possible valuation method 
appropriate for that particular case."  
Wallop v. Wallop, 2004 WY 46, 
¶ 5, 88 P.3d 1022, 1024 (Wyo. 2004) (citing  Neuman v. Neuman, 842 P.2d 575, 582 
(Wyo. 
1992)).

 
 
[¶11]   The question, then, is whether 
valuing the preferred shares at par value was an appropriate exercise of 
discretion by the trial court under the circumstances.  Husband contends that the par value is 
inapplicable to the issue of valuation because the par value is an arbitrary 
dollar value assigned to each stock share, having no relationship to its market 
value.  While this may be true for 
common stock, it is not true for preferred stock.  For preferred stock, the stock's book 
value, liquidating value and dividend payments are based on its par value.  For instance, in valuing the common 
ownership interest in Como Oil, the value of the preferred stock was listed as a 
liability and adjusted out of the total value of Como Oil.  Husband's expert valued the preferred 
stock at its par value in making this adjustment in his valuation of Como 
Oil.  The liquidation value of the 
stock is its par value, $100 per share, which Como Oil would have to pay before 
it could pay anything to the common stock shareholders. Also, the dividend rate 
for the instant preferred stock is set at 6% per share.  The par value of this preferred stock is 
therefore not an arbitrary number completely disassociated from its true 
value.  We find no reason in law to 
exclude the par value from the determination of the value of such stock for 
marital property distribution purposes.

 
 
[¶12]   The duty of the trial court was to 
ensure that its valuation represented the real, actual value of Husband's shares 
of preferred stock.  The findings of 
the trial court reveal that it considered both the price Husband paid for the 
preferred stock and the par value.   The trial court determined that the 
evidence of fair market value as presented by Husband did not appropriately 
measure its real, actual value.  The 
trial court instead chose the par value as the more fair and reasonable value of 
the preferred stock.  Based upon our 
review of the record, we do not find the district court's conclusions to be 
clearly erroneous.  Under the 
particular circumstances of this case, including Husband's sole control of Como 
Oil, this Court finds no abuse of discretion in the trial court's 
determination.  

 
 
Tax 
Effect

 
 
[¶13]   As part of its distributive scheme, 
the trial court ordered Husband to pay Wife approximately $560,000 in order to 
effectuate an equal division of the divisible marital assets.  The trial court ordered the sum to be 
paid over five years at an interest rate of 10% per annum.  Husband argues that the evidence 
establishes that he cannot make the required payments without liquidating 
assets.  In such case, he inevitably 
would face tax consequences, effectively reducing the value of the assets.  Husband argues that the trial court 
therefore erred in not determining the tax effect that will be produced in light 
of the equalizing payments.  

 
 
[¶14]   The trial court considered the 
argument presented by Husband but found:

 
 
That the 
testimony and evidence regarding possible tax consequences were speculative and 
the Court declines to adjust values based on tax considerations because neither 
party established that sales and transfers would necessarily occur and the Court 
cannot establish fair value on the basis of possible tax consequences at unknown 
future dates under unknown circumstances and tax laws.  Furthermore, in disregarding possible 
tax consequences the Court has considered [Husband's] sole control of Como Oil, 
past financial benefits provided to [Husband] which do not coincide with 
testimony regarding the corporation's present dire financial status, and the 
provisions for equalizing payments to be made by [Husband] to [Wife] over a 
reasonable period of time, rather than on an immediate basis as addressed in Dice v. Dice, 742 P.2d 205, 208 (Wyo. 
1987).

 
 
By these 
findings the trial court clearly rejected Husband's assertions that he 
necessarily would have to liquidate assets in order to meet the equalizing 
payment schedule established by the trial court.  The trial court specifically found such 
assertions lacked credibility in light of the totality of the 
circumstances.  

 
 
[¶15]   It is axiomatic that this Court 
gives considerable deference to a trial court's factual findings since the trial 
court is in the best position to assess the witnesses' credibility and weigh 
their testimony.  Hoffman v. Hoffman, 2004 WY 68, ¶ 9, 91 P.3d 922, 925 (Wyo. 2004).  This 
Court will not reweigh the evidence.  
It is not clear error for the trial court to elect not to believe 
Husband's protests that he would be required to liquidate assets to make the 
equalizing payments as ordered.  The 
trial court expressly determined that no persuasive evidence was presented that 
Husband is presently compelled to sell any of the assets in order to pay Wife's 
share of the equitable distribution.  
Respecting the trial court's credibility determination, and otherwise 
viewing the evidence in the light most favorable to Wife, we find this holding 
is not clearly erroneous.

 
 
[¶16]   Under the facts, the trial court 
was correct in not considering the potential tax consequences of Husband's 
future equalizing payments.  The 
facts make this case clearly distinguishable from a case in which the trial 
court has ordered the liquidation of a specific asset, giving rise to immediate, 
known tax consequences.  See Blanchard v. Blanchard, 770 P.2d 227, 229 (Wyo. 1989); Dice v. Dice, 742 P.2d 205, 208 
(Wyo. 
1987).  In the instant case, Husband 
effectively was asking the trial court to consider tax implications of a 
theoretical future liquidation of assets.  
It would be the basest form of speculation to attempt to determine tax 
consequences of a voluntary liquidation of assets at an unknown future 
time.  

 
 
[¶17]   The voluntary and theoretical 
nature of the impact of potential future tax consequences is exemplified by 
Husband's failure to identify the assets he allegedly will be forced to 
liquidate with specificity.  Husband 
merely identified various assets he might liquidate in whole or in part 
including: residential property; Como Oil Company; and retirement and deferred 
compensation accounts.  He left it 
to the trial court to divine both the taxable income generated by whichever 
option, or combination of options, he might choose in the future, as well as the 
future tax rate applicable to his personal choice of asset liquidation.  

 
 
[¶18]   Potential tax liability should be 
considered only upon proof that a specific taxable event will occur in 
connection with the division of marital property within a time frame that such 
tax liability can be reasonably calculated.  Any other approach would frustrate the 
trial court's basic function of assuring a fair and equitable distribution of 
the parties' property interests.  
The trial court was correct in finding that it could not "establish fair 
value on the basis of possible tax consequences at unknown future dates under 
unknown circumstances and tax laws." 

 

CONCLUSION

 
 
[¶19]   All property of the parties in a 
divorce proceeding is subject to distribution.  The trial court, therefore, did not err 
by including Husband's equity interest in Como Oil in the marital estate.  The district court's finding that the 
fair value of Husband's preferred stock in Como Oil for distribution purposes is 
its par value is not clearly erroneous under the facts and circumstances of this 
case.  Finally, the refusal of the 
trial court to consider potential tax consequences of the future equalizing 
payments of Husband to Wife was clearly justified given the speculative nature 
of any potential tax liability.

 
 
[¶20]   Based upon our examination of the 
record, we conclude that the judgment was not against the clear weight of the 
evidence or unfair and inequitable considering all of the circumstances of this 
case.  
Affirmed.

 
 
FOOTNOTES

 
 

1The 
significance of a party's separate ownership of property is that it is one 
factor to be considered by the trial court in determining its distributive 
scheme.  Husband has not presented 
any specific, detailed argument challenging the fairness and equitableness of 
the trial court's ultimate distributive scheme.