Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

DEBRA ULLOM v. ROLAND GARTH ULLOM (01/31/89)

argued: January 31, 1989.

DEBRA ULLOM, APPELLANT,
v.
ROLAND GARTH ULLOM, APPELLEE. DEBRA ULLOM, APPELLEE, V. ROLAND GARTH ULLOM, APPELLANT



Appeals from Order of the Court of Common Pleas, Civil Division, of Cumberland County, No. 3476 Civil 1984.

COUNSEL

Lori K. Serratelli, Harrisburg, for appellant in No. 464 and appellee in No. 494.

Paul R. Wagner, Harrisburg, for appellee in No. 464 and appellant in No. 494.

Wieand, Popovich and Hester, JJ.

Author: Wieand

[ 384 Pa. Super. Page 516]

The principal issue in these cross-appeals from an order of equitable distribution is whether "good will," found by the hearing court to be an asset of a closely held corporation, can be excluded from marital property by the court in equitably distributing shares of stock in that corporation.

Debra Ullom and R. Garth Ullom were married on November 26, 1977. From 1972 until the present, and throughout the marriage, husband was employed at Cumberland Valley BMW, Inc., a closely held corporation of which husband's father is president and the majority shareholder. The corporation is a car dealership, engaged in the business of selling BMW and Subaru automobiles. Husband is currently vice president of the corporation, earning approximately $60,000.00 per year in that capacity and also from his earnings as a professional race car driver. Husband is the holder of fifty (50) of the 410 outstanding shares of the corporation's stock. Wife is a graduate of Cornell University, and during the marriage was employed full-time at Cumberland Valley BMW, Inc., earning a salary of $20,000.00 per year. During the marriage, the parties acquired a one-fourth interest in a travel agency business, First World Management of Pennsylvania, which they began

[ 384 Pa. Super. Page 517]

    with three other couples and where wife currently is employed, earning approximately $9,000.00 per year. No children were born of the marriage. The parties were divorced in a bifurcated proceeding on February 19, 1988. The matter of equitable distribution of the parties' marital assets was referred to a master, who held a full hearing and filed his recommendations on November 10, 1987.

At the hearing before the master, wife presented the report and testimony of William Boles, CPA, which placed a value of $147,150.00 upon the husband's shares of Cumberland Valley BMW, Inc. This sum he arrived at by applying a capitalized earning method and an industry average operator's margin method. He testified that he capitalized the corporation's excess earnings at ten (10%) percent to estimate a good will value of $1,295,130.00 and placed an overall value of the corporation's stock at $1,609,428.00. He then discounted the stock by 12.5% because of its lack of marketability and further discounted husband's minority shares by 12.5%, arriving at the conclusion that husband's shares had a market value totaling $147,150.00. Husband's expert witness, Michael Menear, a CPA and accountant for the corporation, valued the entire corporation at its book value of $355,583.00. He testified that the stock should be valued under the stock purchase agreement at the price at which husband had purchased the shares plus a seven (7%) percent incremental increase per annum. He also valued the stock using an industry average return on tangible assets of 15.7%, a capitalization rate of 15% and a discount factor for husband's minority interest of 50%. By averaging these two methods, husband's expert witness arrived at the value of husband's stock as $21,000.00. This valuation did not include good will as an asset in evaluating the corporation or in valuing the stock. The master accepted the value placed on the stock by wife's expert and determined that the stock should be distributed between the parties at a value of $147,150.00. Husband filed exceptions to the master's recommendations, and the hearing court

[ 384 Pa. Super. Page 518]

    altered the distribution suggested by the master. It entered the equitable distribution order from which both husband and wife have appealed.

The hearing court valued the marital estate at $102,462.00 and made the following distribution of property in kind to the parties:

To wife:

First World Management of Pennsylvania stock ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.