Case Name: Joseph B. ANSON, Appellant/Cross-Appellee, v. Susan Marie ANSON, Appellee/Cross-Appellant
Court: Florida District Court of Appeal
Jurisdiction: Florida
Decision Date: 2000-10-06
Citations: 772 So. 2d 52
Docket Number: No. 5D99-204
Parties: Joseph B. ANSON, Appellant/Cross-Appellee, v. Susan Marie ANSON, Appellee/Cross-Appellant.
Judges: THOMPSON, C.J., COBB, SAWAYA and PLEUS, JJ., concur.
Reporter: Southern Reporter, Second Series
Volume: 772
Pages: 52–63

Head Matter:
Joseph B. ANSON, Appellant/Cross-Appellee, v. Susan Marie ANSON, Appellee/Cross-Appellant.
No. 5D99-204.
District Court of Appeal of Florida, Fifth District.
Oct. 6, 2000.
Robert W. Thielhelm, Jr., John W. Foster, Sr.,and Eric S. Golden, of Baker & Hostetler, LLP, Orlando, for Appel-lanVCross-Appellee, Joseph B. Anson.
Martin L. Haines, III, of Martin L. Haines, III, Chartered, of North Palm Beach, for Appellee/Cross-Appellant.

Opinion:
PER CURIAM.
Joseph B. Anson (husband), appeals his final judgment of dissolution of marriage and Susan M. Anson (wife) cross-appeals.
The parties were married in 1989 and had a six year old child when the petition for dissolution was filed in 1996. The husband had assets of considerable value when he entered the marriage and the wife had little. The primary focus on appeal is the trial court's treatment of the husband's pre-marital assets. Specifically, the husband contends that no portion of the capital stock owned by him that was issued by Anson-Stoner, Inc. (Anson-Stoner), should be regarded as a marital asset. Additionally he contends that two investment accounts known as the "Consults Accounts," largely funded with dividends from Anson-Stoner and established for the benefit of his sons from a prior marriage, should not be regarded as marital property.
The wife, who was awarded an interest in the Consults Accounts, requests clarification of the party entitled to appreciation in that account between the time of final judgment and the disposition of this appeal. Both parties raise additional issues which we affirm without discussion.
I. Anson-Stoner Capital Stock
The husband and Michael Stoner formed Anson-Stoner, Inc. in 1970. The husband received 60% of the capital stock and Stoner received the remaining 40%. Both founders actively worked for the corporation. A third-person acquired 5% of the stock in 1992 after which Stoner owned 37.5% of the outstanding stock and the husband's interest was reduced to 57.5%. Stoner's stock was redeemed by the corporation with corporate funds on December 31, 1994, pursuant to a buy/sell agreement entered into in the early 1980's between the corporation and Stoner.
Influenced by the decision in Rutland v. Rutland, 652 So.2d 404 (Fla. 5th DCA 1995), the wife urged and the trial court found that although the redemption was funded by the corporation, the redemption was deemed a "purchase" by the husband during the marriage with marital funds and was a marital asset because the redemption increased the husband's propor tionate interest in the outstanding stock of Anson-Stoner.
A. Rutland v. Rutland
In Rutland, the husband and his brother were equal stockholders of a corporation that engaged in the retail sales of clothing. The business was a family business of long standing and the husband's stock had been acquired prior to the marriage. The corporation redeemed the brother's stock during the marriage and the husband became the sole shareholder. We learn the additional fact from today's dissent that the corporation obtained a loan in order to provide funds to redeem the brother's stock. Rutland reasoned that because the redemption took place during the existence of the marriage and because the brother's stock was redeemed with funds of a corporation that realizes profits from the husband's active management and work, the corporate entity should be ignored and the redemption treated as though the purchase was made directly by the husband. Rutland also reasoned that the redemption was no different from a transaction in which the husband would purchase a 50% interest in a competing corporation even if he paid for it out of his wholly owned corporation. The court ruled that the husband owned 50% of the stock as non-marital property and the remaining 50% as marital.
We recede from the decision in Rutland for the following reasons:
1.The opinion failed to recognize that the brother in Rutland owned a 50% interest in the corporation and relinquished it in exchange for funds flowing from the corporation to himself. The surviving shareholder, the husband, was not affected by the redemption unless a discount or a premium was paid to the brother. Assuming that book value was paid to the brother, the value of the husband's stock was the same before and after the redemption. Fifty percent ownership of a corporation is theoretically the same as 100% of that same corporation after the other 50% shareholder has had his interest redeemed. If the redemption had been accomplished by the liquidation of 50% of the corporate assets, the husband's remaining interest of 100% would have the same value as before the redemption. This result would not be changed by the corporation having obtained a loan to finance the redemption rather than liquidating corporate assets. In fact, the corporation would be better off since its operating assets would not have been impaired by a liquidation of one-half of them.
2. The example used in Rutland to wit: "We find no difference in this acquisition than had Mr. Rutland, during the marriage, purchased fifty per cent in a competing corporation even if he paid for it out of his wholly owned corporation," is confusing. If Mr. Rutland had used, replaced, or diminished in value, a non-marital asset to acquire another asset, the acquired asset would also be a non-marital asset.
3. A stockholder's interest in a corporation is limited to the legal rights flowing from the ownership of capital stock. Those rights do not include a pro-rata interest in corporate assets. The corporation, as a legally recognized entity, holds title to its assets.
4. The earnings of a corporation do not become a marital asset upon marriage. Assets acquired through corporate earnings are corporate assets until payments are made for services or as dividends.
5. If a shareholder-spouse devotes work efforts to a corporation during marriage, the corporation's income is not immediately converted into marital income. If the corporation retains assets acquired from earnings of a corporation rather than distributing them as dividends to shareholders, the value of the outstanding capital stock should appre-' ciate in value. Section 61.075(5)(a)2, Florida Statutes, provides that the appreciation of a non-marital asset during marriage is to be classified as a marital asset if the appreciation resulted from marital efforts. In the absence of extra-ordinary circumstances, the statutory scheme for determining whether non-marital corporate stock is available for equitable distribution is based upon a comparison of values at the time of marriage and at the time of dissolution without enlisting the extreme measure of ignoring the corporate entity.
B. Valuation Approach
The correct approach in determining whether any portion of the husband's stock issued by Anson-Stoner is marital is to determine the value at the time of marriage and again at the time of dissolution. This approach conforms to the statutory concept of appreciation of non-marital assets as described in section 61.075(5)(a)2, Florida Statutes. A comparison of the two values would reveal whether the stock appreciated. If appreciation took place, an analysis of the reasons for appreciation must be undertaken to determine whether to classify all or a portion of the appreciation as marital. Simply because a shareholder-spouse devotes work efforts to a corporation during marriage should not transform the entire appreciation of the stock into a marital asset. Analysis is required to determine whether appreciation occurred because of corporate attributes, such as, goodwill, underlying investments, customer supplier and employee bases, operating assets, and inventory. Allocation of the appreciation should be no more difficult in marital law than is the allocation of fault in a negligence action in tort law.
In the instant case, the record reveals that a remand for that analysis is unnecessary. The stock value declined during marriage with the decline partially attributable to dividends enjoyed by the parties during marriage and to the loss of a valued customer. Therefore, no portion of the Anson-Stoner stock should be regarded as a martial asset.
II. The Consults Account
Both of the parties adopted the use of an analysis of the retained earnings bookkeeping account of Anson-Stoner in order to determine whether dividends to fund two investment accounts called the "Consults Accounts" were marital or non-marital. We do not approve or endorse such an approach; but, since both parties used it and convinced the trial court to use it in fashioning a distribution, we will not disturb it.
We also are inclined to affirm the conclusion that the account is a marital asset because both marital and non-marital funds were used to establish the account.
III. Conclusion
We reverse the finding of the trial court that any portion of the Anson-Stoner stock constitutes a marital asset as a result of the redemption of the stock of a third-party shareholder. Because that stock was an important element when the trial court fashioned the plan of equitable distribution, we must vacate the plan and remand for further consideration. A plan must be adopted that preserves the An-son-Stoner stock as a non-marital asset.
THOMPSON, C.J., COBB, SAWAYA and PLEUS, JJ., concur.
PETERSON, J., concurs and concurs specially with opinion.
GRIFFIN, J., concurring in result specially with opinion.
HARRIS, J., concurring in part, dissenting in part with opinion.