Opinion ID: 1138826
Heading Depth: 3
Heading Rank: 3

Heading: ISSUE: Whether the Chancellor Erred By Awarding Lump-Sum and Periodic Alimony?

Text: Through her counter-complaint, Nancy requested both lump-sum and periodic alimony. More specifically, she requested an award of an undivided one-half interest in and to all properties of every kind and description accumulated during the time of marriage. During the hearings, Mike contended that, because he was granted a divorce on the grounds of adultery, Nancy should receive only that which she legally owns and nothing more. Mike seems to conveniently forget that he too committed acts of adultery and wears no white hat. The chancellor's fact-finding is illustrative: [Mike] also engaged in adulterous affairs in the mid-70's with at least two women and there is evidence that he proposed that one of his employees become his mistress in 1982. There is also evidence that in 1987 and in 1988 since the separation he has had social contact with Eleanor Wright and a woman named Linda, though no adultry [sic] has been proven with these two. Vol. II, at 198. As related by Nancy: The problem started in 1979 when Nancy learned about Mike's adultery. Mike was out of the country on a political trip to Brazil in 1979. A female in the community who was then involved in a divorce called Nancy and admitted to her an adulterous relationship with Mike back in 1973-74. Mike was involved as a witness in her divorce. He was subpoenaed but did not testify. Mike then confessed to Nancy that he had had an on-going affair with their neighbor and Nancy's best friend over a number of months. Mike and this friend engaged in marital misconduct at her residence, his and Nancy's residence and at motels. Mike admitted to another affair with a former employee of R & R. He also testified that he falsely admitted to a third affair as a control measure to see if Nancy disclosed his admissions to other persons in the community. They filed a joint complaint for divorce on April 1, 1979. While they were separated, Nancy engaged in marital misconduct. Mike found Nancy in a motel room in Jackson with another man (John Doe) on July 10, 1979. Both Nancy and the other party testified that the relationship started during the separation. Appellee's Brief at 3-4 (citations omitted). All this aside, the chancellor rejected Mike's contention  that when the divorce is awarded due to the adultry [sic] of the wife that she is not entitled to any alimony under Mississippi case law: Once this was the law in this state, but this Court finds these positions to have been substantially modified by recent cases. In Rainey v. Rainey, 205 So.2d 514, alimony was awarded to the offending wife and the Court said: The award of alimony under the circumstances was a matter within the sound discretion of the chancellor. In Wood v. Wood, 495 So.2d 503, the Court upheld the award of alimony to the offending wife and said: The chancery court being sensitive to the equities of the cases before it has the authority to direct payment of alimony even though wrongful conduct on the part of the wife was found sufficient to grant the divorce to the husband. In Clark v. Clark , 446 [293] So.2d [at] 450, the Court said: It is the responsibility of an equity court to do what is fair and just when a marriage of many years is dissolved. In Reeves v. Reeves, 410 So.2d 1300, the Court held that where the wife had materially assisted in the husband's accumulating a great deal of property she was entitled to some share upon dissolution of the marriage. In Watts v. Watts, 466 So.2d 889 [(Miss. 1985)] the Court said: The sole issue in this case is whether the chancellor was acting beyond his authority in requiring appellant to grant a deed to the appellee of an undivided half interest in 20 acres  The court feels compelled to address the asserted doctrine that the chancery court can not divest a spouse of title to property forcing the spouse to deed it to the other spouse by judicial decree. McRainey [McCraney] v. McRainey [McCraney], 208 Miss. 105, 43 So.2d 872 (1950). While that is the general rule it is not an absolute rule. Our decision here will not create new law, nor overrule any old law, but it will elucidate exceptions to the rule.  The second exception is when the property has been jointly accumulated by the parties and the chancellor makes an equitable division of it. The Court then went on to say: When grounds for divorce do lie and there is jointly accumulated property from the marriage, the procurement of which the wife contributed to, the chancellor may effect an equitable division.  A chancellor is not limited to awarding the wife alimony and a share of personalty to a spouse after two decades of marriage. The Court reaffirmed this authority in Maxie [Maxcy] v. Estate of Maxie [Maxcy], 485 So.2d 1077 ([Miss.]1986) and again addressed it in Dillon v. Dillon, 498 So.2d [328] 330 (1986) and said: In Mississippi the chancellor is not obligated or required by law to equally divide the property of the parties to a divorce because Mississippi is not a community property state  However, the chancellor does retain the power and authority to affect an equitable division of jointly accumulated personal property acquired during the marriage. See also Schilling v. Schilling, 452 So.2d 834, and Pickens v. Pickens, 490 So.2d 872 [(Miss. 1986)]. In further dealing with this subject the Court in Regan v. Regan, 507 So.2d 54 ([Miss.]1987) said: Incident to a divorce the chancery court certainly has the power to look behind the formal state of title to property and decree an equitable division of jointly accumulated property, the division to be made by reference to the economic (though not necessarily monetarily economic) contribution made by each to the acquisition and maintenance of the property. In light of these authorities it is clear that the authority exists for this Court to make an equitable division of the assets. This Court is of the opinion that the facts here support such equitable division of the assets of this marriage. The parties are in disagreement as to who provided the initial funds for acquiring the original McDonald store, but the Court does not think that matters, for in 1973 Mrs. Retzer became the owner of a one-half interest in Retzer and Retzer which was the owner of the franchise. It makes no difference whether she got the stock by gift from her husband as he testified, or by investment of her own funds, for from that point on she was the owner of one-half the corporation. It was that corporation that provided the funds for later acquisition of other assets. It was also that corporation that made it possible for Mr. Retzer to develop Retco and his management company. The court recognizes the earnings of the corporation were distributed to the owners in the form of salary and bonuses rather than dividends and that this was a substantial tax advantage to them. The Court also recognizes that Retco and the management company were developed as tax saving devices and means for withdrawing corporate profits without the payment of corporate income tax. There is no doubt that had Mrs. Retzer's half interest in the corporation been owned by a totally unrelated party rather than a family member, this type arrangement for distribution of funds would not have been permitted. There is also no doubt that Mrs. Retzer received substantial benefit from the funds that were distributed to Mr. Retzer by way of salary, bonus, and payments to one of his other businesses, for these were the sources of funds that provided her expensive clothes, car, house, trips, and so on. This Court also recognizes that Mrs. Retzer might have contributed slightly to the accumulation of assets through her labor such as suggestions for decorations, but is of the opinion that her contribution through labor is very insignificant when compared to Mr. Retzer's, while her contribution through capital is significant when compared to his. This Court also is of the opinion that Mrs. Retzer has already received a significant distribution of the earnings of her capital in that this has supported some of her extravagant spending. With these facts, though, the Court concludes that she is entitled to some equitable divisions of the assets accumulated during the marriage, though she is clearly not entitled to half for her contributions have not been equal to his. In order for the Court to determine what is an equitable division it must be aware of what assets have been accumulated. Vol. II, at 203-07 (emphasis added). Thus, to help the chancellor determine an accurate assessment of the Retzers' financial status, another hearing was held  after which the following opinion was rendered: In the earlier opinion the court determined that Mrs. Retzer is entitled to some equitable division of the assets of the parties and cited therein the authorities which supported this determination. The court at that time also determined that Mrs. Retzer was not entitled to one-half the assets in that this state is not a community property state and cited therein the authorities for that determination. The court also there cited cases holding that the fact that Mrs. Retzer was at fault in causing the divorce would not bar her from all support, but that line of cases also indicates fault may be an item for the court to consider. The court has made an effort to determine as best it can the net worth of the parties and after analysis of all the data presented by the parties the court has concluded that these parties together are worth approximately $4,100,000.00. That of this Mr. Retzer holds about $3,000,000.00. The principal asset owned by Mrs. Retzer is her stock in Retzer and Retzer and since she already owns this there has already been some substantial division of the assets accumulated by the parties during the marriage. The court is, however, of the opinion that in light of the accumulations other than Retzer and Retzer that have occurred, that Mrs. Retzer should be entitled to some additional portion of the other assets owned by Mr. Retzer. The court has already determined that he owns about 27% of the net worth of the parties and is of the opinion that an equitable division of the assets here would require a transfer to her of approximately an additional 8%. The court concludes that to accomplish this rather than have him transfer specific assets, it is appropriate that he transfer two specific items as hereinafter mentioned and that he make a cash payment to her as hereinafter provided in the sum of $275,000.00. The court is of the opinion that in light of the financial obligations that are involved with their various assets and with the fact that his management is essential to the success of a substantial portion of the assets, it is not appropriate that the assets themselves be transferred, but that he be directed to transfer cash in lieu of assets to her. In order to avoid undue financial strain on him, the court determines that this $275,000.00 should be paid to her in the following manner: $100,000.00 to be paid November 1, 1988; $75,000.00 to be paid May 1, 1989; and $100,000.00 to be paid May 1, 1990. He is further to pay to her interest at the rate of 8% per annum compounded annually on all sums due after November 1, 1988, with said interest to be computed from November 1, 1988. The court is further of the opinion that this payment alone will not assure an equitable division of the assets of the parties in light of the fact that the principal asset which Mrs. Retzer now has and which she will have after these payments will continue to be her stock in Retzer and Retzer. Since Mr. Retzer owns approximately 51% of the stock in the corporation, he is in the position to control the corporation and to have all its earnings paid out in salaries to himself or in the position to inequitably erode her asset. The court determines that it must in some manner address this if it is to achieve a fair and reasonable equitable division of the assets. This Court recognizes that Retzer and Retzer is not a party to this lawsuit and that it has no authority over the corporation. The court on the other hand recognizes that it has determined that Mrs. Retzer's interest in the corporation is worth approximately $1,100,000.00, and that she must have some reasonable return on this sum if an equitable division is to be achieved. In light of his being in a position to control the operation of the corporation this court concludes that it must take some action to see that Mr. Retzer handles this matter fairly. This is a unique factual situation insofar as this court can determine from the case law in this state and this court following the mandates of existing case law that it achieve an equitable division of the assets determines that this court of equity must frame some appropriate remedy for this situation. The court concludes that the way to do so is to require him to pay periodic alimony to her if Retzer and Retzer does not provide her with revenue. In seeking to frame this solution the court has attempted to leave him with options available to him to minimize his tax liabilities. The court, therefore, concludes that a fair return on her asset would be 8% and if he uses this asset he should have to pay her such return on it. The court thus finds that he should be required to pay her $88,000.00 per year alimony, less any sums she receives from Retzer and Retzer in the form of compensation, dividends, bonuses, or other benefits. This alimony should be paid to her monthly at the rate of $7,333.33, which will be due on the first day of each month beginning October 1, 1988. Thus, if she receives $2,000.00 per month from the corporation he would have to pay only $5,333.33 per month alimony. If the corporation makes any payments to her in substantial sums, they may serve to reduce his alimony obligations for the ensuing months in an amount equivalent to the amount paid by the corporation. For example, if on January 1, the corporation pays her a $25,000.000 bonus, then for the next three months no alimony would be due and for the next month only $3,000.01 would be due. Thus, she is assured of income for her support. If she receives it from her asset then he would not have to pay her alimony. If her asset does not produce the income, then he would be required to provide it for her in the form of alimony. This requirement to pay this sum to her shall terminate if she sells her interest in Retzer and Retzer, for then she would have the proceeds of the sale of this substantial asset with which she would be able to fully support herself, and when she has those sums the court determines further alimony would not be required. This alimony requirement should also terminate if she remarries, for at that point this court concludes it would be inappropriate for alimony to be paid or for the court to mandate payment which might be used to support a new husband. If remarriage occurs, she will have to proceed as any other minority stockholder to protect her position in the corporation. Vol. II, at 230-33. This decision satisfied neither Mike nor Nancy. Both appealed, but Nancy subsequently decided to withdraw her petition and seek an affirmance of the chancellor's award. Mike seeks a reversal of the award and again contends that he should not be required to pay any alimony to an adulteress. See Appellant's Brief at 1 (citing cases). Mike also contends that, in regard to the award of periodic alimony, the chancellor has disregarded the corporate structure, `pierced the corporate veil,' and made [him] personally responsible for the corporation. Mike concludes that [t]his may have the appearance of expediency but it is contrary to the most recent statement of this Court. Appellant's Brief at 35-36 (citing Gray v. Edgewater Landing, Inc., 541 So.2d 1044 (Miss. 1989)). [3] Nancy rebuts by pointing out that the chancellor did not direct R & R to do anything. Instead, because of the facts peculiar to the case, [the chancellor] held that Mike should pay part of his income to Nancy as a return on her part of the property he controlled and used to make money personally. Nancy finally adds that the best way to understand the weakness of Mike's position is to assume that the [chancellor] denied any monthly payments ... and left Mike in charge of R & R. Mike would have control indefinitely of Nancy's income producing assets and keep all profits realized on Nancy's property without paying Nancy anything.

The chancellor's reasoning upon which the alimony award was based is persuasive and fair. More important, the reasoning reflects an accurate assessment and application of relevant, still-valid law. See also Holleman v. Holleman 527 So.2d 90, 94 (Miss. 1988) (holding that chancellors are accorded broad discretion due to their peculiar opportunity to sense the equities of the situation before them); Cheatham v. Cheatham, 537 So.2d 435, 438 (Miss. 1988) (delineating factors which a chancellor may consider in deciding whether to grant an award). Before this Court may reverse the chancellor's alimony decree, Mike must have presented sufficient evidence evincing manifest error. Skinner, 509 So.2d at 869; Wood v. Wood, 495 So.2d 503, 507 (Miss. 1986); Tutor v. Tutor, 494 So.2d 362, 364 (Miss. 1986); Harrell v. Harrell, 231 So.2d 793 (Miss. 1970). Restated, Mike had the burden to show: (1) that the alimony award was unwarranted; or (2) that the award should be modified due to unreasonableness. Wood, 495 So.2d at 506 (We have a long line of cases ... recognizing that, where the parties have been married for a number of years, where the wife is in need of financial support, the chancery court, being sensitive to the equities of the case before it, has authority to direct payment of alimony even though wrongful conduct on the part of the wife was found sufficient to grant the divorce to the husband.) (citing numerous cases); Rainer v. Rainer, 393 So.2d 475, 478 (Miss. 1981) (The chancellor's determination must be reasonable and commensurate with the wife's accustomed standard of living  taking into account the wife's own resources and the husband's ability to pay.).
Applying the law to the facts of this case, Mike has clearly failed to meet his burden. Repetitious ramblings about Nancy's adulterous lifestyle are virtually the only evidence presented by Mike to support his contention that alimony is unwarranted; the persuasiveness of these ramblings dims in light of Mike's own adulterous and flirtatious lifestyle. Mike has also failed to show that the award is unreasonable and should be modified. As discussed in a preceding subsection, a Balance Sheet indicates that Mike alone is worth over $4 million (probably a conservative figure)  which is over 300% more than Nancy's worth. The chancellor's award of 8% of Mike's worth leaves Mike with over 200% more than Nancy's worth. In other words, before the divorce Nancy owned 27% (approximately $1.1 million) of the Retzers' net worth (approximately $5.1 million according to the Balance Sheet). The chancellor awarded Nancy an additional 8% (approximately $685,000). This leaves Mike with 65% (approximately $3.3 million). See White v. White, 557 So.2d 480, 485 (Miss. 1989) (citing two cases: (1) one in which this Court affirmed lump-sum alimony which represented roughly 33% of her husband's worth, and (2) another in which this Court affirmed a chancellor's decision making an equal division). Notably, Mike's dissatisfaction with the award is contradictory to his admission during the divorce hearing that Nancy should receive 50% of that which was accumulated during the marriage: QUESTION:  You've never considered R & R to be jointly owned by you and Nancy Retzer, have you.  MIKE:  Yes sir. Sir, I gave her half of R & R.  QUESTION:  You intended to give it to her.  MIKE:  I did.  QUESTION:  Well, if you gave it to her, wasn't it hers?  MIKE:  It was hers after I gave it to her, that's correct.  QUESTION:  Then regardless of what happened after you gave it to her, wasn't half of what R & R made hers?  MIKE:  That is correct.  Vol. VI, at 618 (As noted previously, R & R comprises the Retzers' seven McDonald's restaurants and is responsible for virtually all the wealth they accumulated during the marriage.).
Finally, Mike's last-resort contention  that the chancellor's periodic alimony award pierced the corporate veil and, as a consequence, he disregarded the corporate structure  is unpersuasive and seems misplaced. That is, the facts of the case sub judice do not seem to fit within the realm of the doctrine's construct. The doctrine of piercing the corporate veil is a judicially-created mechanism used to protect creditors by imposing personal liability on shareholders. See Hodge and Berry, The Model Business Corporation Act: Does the Mississippi Version Lime the Bushes?, 46 MISS.L.J. 371, 376 (1975). More specifically, this doctrine generally applies to two broad categories of cases: (1) Those in which a third party seeks to hold shareholders individually liable for corporate debts; and (2) Those in which a shareholder utilizes a corporation to perform indirectly acts which the shareholder could not legally perform as an individual. Comment, Piercing the Corporate Veil in Louisiana Absent Fraud or Deceit, 48 LA. L.REV. 1229, 1230 (1988). The facts of this case simply do not fit within either of these two broad categories. And as contended by Nancy, the chancellor's decree does not affect the corporation in any way. The decree simply establishes an amount of periodic alimony which Mike must pay Nancy  based upon the Retzers' past earnings  and it permits Mike to offset the alimony payments by the amount which Nancy receives from the corporation in the form of salary, dividends, and so forth. The chancellor's decision accounts for the fact that Mike, as R & R's majority shareholder, could manipulate the corporation's by-laws, policies, or decisions in such a way that would ultimately deplete Nancy's income (which derives almost solely from R & R in salary form). The chancellor's decree seems fair to both parties. The decree protects Nancy against a majority shareholder who may decide to control the corporation in such a manner that it works a hardship on Nancy's financial status, and it protects Mike against the possibility that he'll have to pay Nancy above and beyond that which the chancellor deemed necessary. Assuming, arguendo, that the facts are sufficiently analogous and do fall within either of the two categories of cases involving the doctrine, then the question which must be answered is: Was the chancellor justified in piercing R & R's veil? This Court answers the question in the affirmative. The chancellor fashioned the periodic alimony award to fit the unique circumstances of the case; he deserves commendation for daring to be innovative. The design of the award is equitable and justifiable. Cf. Comment, Corporations and Commercial Law, 49 MISS.L.J. 319, 323-24 (1978) (As a means to rectify a wrong, piercing the corporate veil is justified.); see also Highway Development Co. v. Mississippi State Highway Comm'n, 343 So.2d 477, 480 (Miss. 1977) (holding that a court is justified in piercing the corporate veil where, to do otherwise, would subvert the ends of justice); Caroline Transformer Co. v. Anderson, 341 So.2d 1327 (Miss. 1977) (same).
In sum, no manifest error is evidenced. This Court  like the chancellor  is not convinced by Mike's adamant stance that an adulteress deserves nothing while an adulterer deserves all. The chancellor's innovative decision-making is affirmed. If it ultimately works an undue hardship on Mike, then he of course has the option to seek a modification. Moreover, if Mike decides to sell his interest in R & R, then issues not now before this Court may arise and warrant reconsideration and modification of the decree.