Owens v. Owens

JEFFERSON, J.

This is an appeal by the plaintiff, Mabel Pearl Owens, from that portion of the judgment, in an action for divorce, finding that the stock in O. C. O. Tool Company, Inc., was wholly the separate property of the husband and not community property.

[857]

Plaintiff and defendant were married in 1947 and lived together for approximately thirteen and a quarter years before this action for divorce was filed in 1961. This was the second marriage for both parties. Prior to marriage, defendant was the owner-manager of a business known as O. C. 0. Tool Company. On the day before the marriage, defendant transferred his individual ownership in the 0. C. 0. Tool Company to the then newly formed 0. C. 0. Tool Company, Inc. In return, defendant received 94 per cent of the stock in the corporation, which had a book valuation of approximately $42,000. During the entire life of the marriage defendant was president of the corporation, devoting his full time to its management and operation.

As compensation for his services defendant received an average salary of $14,461 per year, with $18,000 being paid in each of the last eight years of the marriage. During this time defendant also received one dividend of $5,000 which he commingled with community funds and spent for community purposes. In addition, defendant was given an entertainment allowance and the use of a company automobile.

During the marriage the O. C. O. Tool Company, Inc. purchased certain real property for investment and to provide income. It also purchased equipment and replacements for the operation of the business with the proceeds of loans entered into with the Bank of America. These loans were obtained in the name of the corporation. However, defendant personally guaranteed them. At the time of the hearing, in April of 1962, the corporation had an estimated value of $174,000 (exclusive of any increment for the good will of the corporation), and with the defendant still owning 94 per cent of the stock.

On appeal plaintiff contends that the portion of Finding 3, hereinafter quoted, is unsupported by the evidence:

“The defendant, VEEN OWENS, is the owner, as his separate, personal property, of the stock of O. C. 0. TOOL COMPANY, which stands in his name. All of the said stock was held by him before the marriage of the parties, the increase in the value of the stock is ascribed to a reasonable return upon the separate property of the defendant, invested by him before the marriage, and to the faithful, loyal, and effective service of other employees of the corporation and to the inflation which has occurred during the period of the marriage of the parties. The community has received adequate and fair compensation, through the payment of salary