Appeal from order of Superior Court, Oct. T., 1966, No. 322, affirming order of Court of Quarter Sessions of Schuylkill County, Sept. T., 1965, No. 432, in case of Commonwealth ex rel. Nancy Gitman v. Alfred Gitman.
David N. Bressler, with him Harry Shapiro, for appellant.
Donald D. Dolbin, for appellee.
Bell, C. J., Musmanno, Jones, Cohen, Eagen, O'Brien and Roberts, JJ. Opinion by Mr. Justice Musmanno. Mr. Justice Cohen, Mr. Justice Eagen and Mr. Justice Roberts concur in the result. Dissenting Opinion by Mr. Chief Justice Bell. Dissenting Opinion by Mr. Justice Jones. Mr. Justice O'Brien joins in this dissenting opinion.
As the result of an action instituted in the Court of Quarter Sessions of Schuylkill County, Alfred Gitman was ordered to pay, for the support of his wife, Nancy Gitman, and their three children, $12,000 a year. Mrs. Gitman appealed to the Superior Court, claiming inadequacy in the order. The Superior Court affirmed, and, upon petition for allocatur, we allowed an appeal to this Court.
Mrs. Gitman contends that the court below, in arriving at the amount of the support order, committed a manifest abuse of discretion in that it disregarded certain evidence which, if considered, would have dictated a much higher order. A reading of the record demonstrates quite convincingly that the court below failed to comprehend the extent of the husband's earnings. The income tax returns introduced into evidence showed that Mr. Gitman's net income, after taxes, amounted respectively, for the years, 1962, 1963, and 1964, to $32,489.29, $32,474.62, and $33,866.34. Much of this income derived from the Ashland Shirt Corporation, a closed family corporation of which Alfred Gitman was secretary-treasurer and one of its directors, in addition to being owner of 50% of its stock. The other half was owned by his twin brother. Another, and smaller portion of Gitman's income was derived from the Salem Mountain Corporation, also a closed family corporation with a total of 100 outstanding shares, of which Gitman owned 5, his twin brother 5, their brother Leo 5, and the Ashland Shirt Corporation 40, the remaining 45 being owned by their deceased father's estate, of which Gitman possessed a 3/10ths interest. Then, there was a third family corporation, the Fleetwood Shirt Corporation, of which Gitman was president and one of four directors, as well as owner of 10 of its 128 outstanding shares.
The court below failed to consider that some of Gitman's personal living expenses were absorbed by these corporations and that, to that extent, his income was augmented. The case of Commonwealth ex rel. Gutzeit v. Gutzeit, 200 Pa. Superior Ct. 401, should have offered the lower court some guidance in determining the realities of Gitman's income, in arriving at the amount the law compelled him to pay in discharging the obligation of supporting his wife and children. In that case the defaulting husband was an officer in a
corporation which provided him with a Cadillac automobile and a cabin cruiser, he traveled and entertained extensively, all of which luxuries he enjoyed at company expense. He lived with his 31-year-old son whose income emanated entirely from the defendant's company, paying no board or room rent. He enjoyed, at company expense, trips to Nevada, Florida and Europe. The corporation paid premiums on a $25,000 life insurance policy for the defendant. After enumerating these perquisites to the defendant's income, the Superior Court said: "What then is the defendant's earning capacity? . . . The only fair inference which can be drawn from the evidence is that the charges made to the corporation by the defendant, even though they may be legal deductions for corporate income tax purposes, constitute substantial perquisites to the defendant. All these must be considered in determining the defendant's earning capacity. It is evident that his salary, his corporate earnings, his life insurance, his direct perquisites from the corporation and his indirect perquisites obtained by living with his son in luxurious circumstances financed through his corporation would justify a finding that his earning capacity is at least $30,000 a year."
Another case shedding illumination to guide a court in determining income for the purpose of ordering support money is Commonwealth v. Miller, 202 Pa. Superior Ct. 573, where the Court said: "It is evident, however, that the defendant received commissions and other business income of over $47,000 in 1962 and a larger sum in other years; that he resides in a house valued at over $55,000 from which he conducts his business; that there is charged to business . . . an El Dorado Convertible Cadillac and a Chrysler automobile (both now with high mileage) and that club dues, florist's bills, luncheon bills, and similar expenditures were deducted as business expenses prior to arriving
at the net profit. Like the exemptions he claimed for his four sons, these items may have been proper deductions under the income tax law, but consideration must be given in a support case to those deductible expenditures which improve the defendant's standard of living and have the effect of perquisites."
It devolved upon the court below, therefore, in accordance with these decisions, to make a thorough study of all of Gitman's living expenses charged off to his corporation. This it failed to do. The court erred also in failing to make a study of the true worth and value of Gitman's interests in the three family corporations. According to his own calculation, Gitman's net worth amounted to at least $263,162.35, this based on the book value of his stock in the three family corporations. The market value is much higher than the book value. It was made clear in Gutzeit v. Gutzeit, supra, that, in determining a husband-father's financial obligation to his wife and children, the court must make a thorough appraisal of the defendant's stock interest and, in making that appraisal, consideration must be given to the corporation's good will and retained earnings. All this the court below neglected to do in the instant case.
The record showed also that, aside from Gitman's interests in the closed corporations, he owned at least an additional $100,000 of assets comprised of stock in three other corporations, an investment club, government bonds, Israel bonds and savings accounts. All this apparently escaped the lower court's attention or consideration.
Gitman lives in a luxurious $75,000-$80,000 residence previously occupied by the entire family. Although this property was held by him and his wife as tenants by the entireties, his interest was an asset to be considered in determining the monetary extent of his holdings.
In Commonwealth ex rel. DiVirgilio v. DiVirgilio, 182 Pa. Superior Ct. 475, it was held that the husband's interest in property held by the entireties was subject to execution for support payments due the wife, the Court stating: "Pertinent and applicable here is the following statement of Chief Justice Stern in Crane v. Crane, 373 Pa. 1, 95 A.2d 199: 'The husband certainly has an interest in all property owned as tenants by the entireties, and there is no reason why that interest should not be applied to the support of the wife whom he has deserted . . . Accordingly, after an order shall have been made by the court for plaintiff's maintenance it may be implemented by proceedings which will enable her to enforce it by liquidation of the shares of stock and the accumulated dividends thereon owned by them as tenants by the entireties so as to enable her to obtain satisfaction out of her husband's ...