# Petition — Stricof v. Stricof

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition
- **Published:** January 1, 1980
- **Citation:** 449 U.S. 1011

## Text

fg Supreme Court Ug
8 0 ss 3 3 g FILED
i; SEP2 1980
NO. i
DAK, JR., CLERK
IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

e

NORMAN J. STRICOF,
Petitioner,
v.
LORRAINE C. STRICOF,
Respondent. »

e

PETITION FOR A WRIT
OF CERTIORARI TO THE
MICHIGAN COURT OF APPEALS

@

Attorneys for Petitioner

BRUCE T. LEITMAN

1263 W. Square Lake Koad
Bloomfield Hills, Michigan 48013
Phone: 1-(313) 338-4501

GARY GOODFRIEND

17117 W. Nine Mile Rd., Suite 536
Southfield, Michigan 48075
Phone: 1-(313) 559-9797

Interstate Brief & Record Co., Wurlitzer Bldg., 1509 Broadway, Detroit, Mi 48226
962-8745 962-8746

QUESTIONS PRESENTED

I.

WHETHER THE CHARACTERIZATION OF
PROPERTY DIVISION PAYMENTS AS “ALIMONY” IN
A MICHIGAN DIVORCE DECREE PROPERLY
QUALIFIES THOSE PAYMENTS AS ALIMONY
(WHICH IS DEDUCTIBLE FROM THE INCOME OF
THE HUSBAND AND INCLUDIBLE IN THE INCOME
OF THE WIFE) WITHIN THE MEANING OF 26 U.S.C.
§ 71(a) AND (c)?

II.

WHETHER A PROVISION IN THE PROPERTY
DIVISION OF A MICHIGAN DIVORCE COURT
DECREE STATING THAT THE RECIPIENT OF AN
INTEREST IN APPRECIATED PROPERTY INCURS A
FEDERAL INCOME TAX LIABILITY UPON THE
TRANSFER OF PROPERTY CONFLICTS WITH THIS
COURT’S INTERPRETATION OF 26 U.S.C. § 1001(a),
AS SET FORTH IN UNITED STATES V. DAVIS, 370 US
65 (1962)?

Il.

WHETHER THE ADVERSE TAX CONSEQUENCES
ADHERING TO THE ASSETS AWARDED TO
PETITIONER WERE SO “SPECULATIVE AND
IMAGINARY’ SO AS TO BE IGNORED BY THE
COURT WHEN IT DETERMINED THE APPROPRIATE
WORTH OF PETITIONER’S SHARE OF THE MARITAL
ESTATE?

iii

TABLE OF CONTENTS
Page
Te a eee és eee i
GaN, BWside las wislk.b 6 0.0 sic dees 0o00s.s 1
ee es win ee pee oes oe 2
tans tklea ie sg ious ccaness 2
a iiss whee cctv eecersctee 4
Reasons for Granting the Writ ................55. 9
INDEX TO AUTHORITIES
Cases

Bardwell v CIR, 318 F2d 786 (10th Cir 1963) ..... 16

CIR v Lester, 366 US299, 81 S Ct 1343, 66 L Ed 2d
ee pied joclee stcesceeensee 16
Crouser v Commissioner, 73 TC No. 89 (1980) .. 16

Estate of Bird v Commissiner, 534 F2d 1214 (6th
ET CitCe she iGo eb bevhs s'ds0cev eae ss 16

Gammill v Commissioner, 73 TC No 75 (1980)
een AWM MR hhe 066 0 e-vabid's 0:0 W050 00,00 14,16,17
Gerlach v Commissioner, 55 TC 156 (1970) ...... 14

Hornback v United States, 298 F Supp 977 (WD
EE eG Seda ly'e S55 anes dees teense 17
Jackson v Commissioner, 54 TC 125 (1970) ...... 14

Kraunz v Kraunz, 293 NY 152, 56 NE2d 90 (1944) 11

ag

‘ PREVIOUS PAGE WAS BLANK |

iv

Page
Lambros v Commissioner, 459 F2d 69 (6th Cir
SME PRs Hla ORES BH db ERE TRO EEG anaes 13
Matthews v United States, 425 F2d 738 (Ct Cl
BN 6 a5n's. kc Re ES ba Wein hh Oke se 18
McCombs v Commissioner, 397 F2d 4 (10th Cir
1 PDA RRC MiRy st eet raEInTE Fane war RA ete SY 13
Merchant's Loan & Trust Co v Smietanka, 255 US
509, 41 S Ct 386, 65 L Ed 751 (1921) .......... 9
Mills v CIR, 442 F2d 1149 (10th Cir 1971) ....... 14
Norfolk & Western R Co v Liepelt, —US—, 62 L
ee ee Oe, DO EID. eb eas ec hs osc ce 21
Pierce v Commissioner, 66 TC 840 (1967) ....... 13,14
Piel v CIR, 340 F2d 887 (2d Cir 1965) ........... 14
Porter v Commissioner, 388 F2d 670 (6th Cir
BOE SSF oi Ea ee LAE os See ees Ae aes 14
Pulliam v Commissioner, 329 F2d 97 (10th Cir
RE Eh Cr aE i a ev eae 4 eae ea es bee is es 18
Rice v Sioux City Memorial Park Cemetery, 349
US 70, 99 L Ed 897, 75 S Ct 614 (1955) ........ 12
Siragusa v Commissioner, 39 TCM 1196 (1980) .. 16
Taylor v Campbell, 335 F2d 841 (5th Cir 1964) ... 14
United States v Davis, 370 US 62 (1962) ..... 1,8,17,18
Wallace v United States, 439 F2d 757 (8th Cir
BOON ike se a'e-t once ce an A ad ae ee a we 18
Wetzel v Wetzel, 35 Wis 2d 103, 150 NW2d 482
CUE 5 cha ch ae naccay on panne te a cueeae se cl 20

7?

Page
Statutes

oR OO Be Pe ere y es err rey pe 1,2,3,10
11,12,15

ME 4 ois kbs Vn Coeecer uah'ne PAeks 1,3,13,15
PEED © Se bn dcdivilievciscave 3,4,10,12,13
Be Re EE kg es Sine b eo cen bin ceceneee 3 20
Re ee EINE Ch vnc b CRG eke tended beeeens 20
Ge TO” eer rere reer rere s 18
PE 8 Can aU ph eke bc beso bb Kaaba s aa 18
SEED. Pe ok sitar dece cet kcst aeynw nba t> 18
Ce | PA ee reer et eer eee ye 1,5,17
SP Re EE O's Sena then cob peewantce nes 2

S Rep No 1631, 77th Cong, 2d Sess 83 (1942) ... 13,16

Rules & Secondary Authority

EE crue Nw veh CM beh ene ie nenes 9,12
po EE ere rs ae re er 13
pi eS By |! | er 15

Anno — Consideration of Tax Impact, 51 ALR3d
MEROOUE Ve icaw ethos Gea eee vacaresiees 20

-*

IN THE

Supreme Court of the United States

OCTOBER TERM, 1980

¢

NORMAN Jj. STRICOF,
Petitioner,
v.
LORRAINE C. STRICOF,
Respondent.

,

PETITION FOR A WRIT
OF CERTIORARI TO THE
MICHIGAN COURT OF APPEALS

*

OPINIONS BELOW

The March 12, 1976 Judgment of Divorce of the
Oakland County Circuit Court (Michigan) is reproduced
in the Appendix at 7a, infra. The March 12, 1976
Findings of the state trial judge are reproduced in the
Appendix at 18a, infra. The January 25, 1978 Opinion of
the Michigan Court of Appeals is unpublished. It is,
however, reproduced in the Appendix at 34a, infra. The
August 9, 1979 Post-Remand Findings and Conclusions
of the Trial Judge is unpublished, but is reproduced in
the Appendix at 42a, infra. The March 7, 1979 Opinion
of the Michigan Court of Appeals is unpublished, and
is reproduced in the Appendix at 5la, infra.

2

The April 4, 1980 Order of the Michigan Supreme Court
denying Petitioner Discretionary Leave to Appeal is
published at 408 Mich 886 (1980). For convenience, it is
reproduced in the Appendix at 57a, infra. The Order of
Mr. Justice Stewart, extending Petitioner’s time in
which to file this Petition for Certiorari to September 1,
1980, is reproduced at 59a of the Appendix, infra.

JURISDICTION

The order of the Michigan Supreme Court denying
discretionary leave to appeal was entered on April 4,
1980 (57a). The Honorable Potter Stewart, sitting as
circuit justice, entered an order on June 25, 1980,
extending Petitioner’s time for filing his Petition for
Certiorari an additional sixty (60) days (59a). The
petition for a writ of certiorari has been filed within the
allotted one hundred fifty (150) days. This Court’s
jurisdiction is invoked under 28 U.S.C. § 1257(3).

STATUTES INVOLVED

The three (3) statutes of the Internal Revenue Code
here involved are:

a 26 U.S.C. § 71(a)(1) — If a wife is divorced or
legally separated from her husband under a
decree of divorce or of separate maintenance, the
wife’s gross income includes periodic payments
(wiiether or not made at regular intervals)
received after such decree in discharge of (or
attributable to property transferred, in trust or
otherwise, in discharge of) a legal obligation

3

which, because of the marital or family
relationship, is imposed on or incurred by the
husband under the decree or under a written
instrument incident to such divorce or
separation. (Emphasis added.)

26 U.S.C. § 71(c)(1) and (2) — ‘(1) General rule.
For purposes of subsection (a), installment
payments discharging a part of an obligation the
principal sum of which is, either in terms of
money or property, specified in the decree,
instrument, or agreement shall not be treated as
periodic payments,” and ‘(2) Where period for
payment is more than 10 years. If, by the term of
the decree, instrument, or agreement, the
principal sum referred to in paragraph (1) is to
be paid or may be paid over a period ending
more than 10 years from the date of such decree,
instrument, or agreement, then (notwithstanding
paragraph (1)) the installment payments shall be
treated as periodic payments for purposes of
subsection (a), but (in the case of any one
taxable year of the wife) only to the extent of 10
percent of the principal sum. For purposes of the
preceding sentence, the part of any principal
sum which is allocable to a period after the
taxable year of the wife in which it is received
shall be treated as an installment payment for
the taxable year in which it is received.”

26 U.S.C. § 215(a) — In the case of a husband
described in section 71, there shall be allowed as
a deduction amounts includible under section 71
in the gross income of his wife, payment of
which is made within the husband’s taxable
year. No deduction shall be allowed under the

4

preceding sentence with respect to any payment
if, by reason of section 71(d) or 682, the amount
thereof is not includible in the husband’s gross
income.

3. 26 U.S.C. § 1001 — The gain from the sale or
other disposition of property shall be the excess of
the amount realized therefrom over the adjusted
basis provided in section 1011 for determining
gain, and the loss shall be the excess of the
adjusted basis provided in such section for

determining loss over the amount realized.
(Emphasis added.)

STATEMENT OF THE CASE

NORMAN J. STRICOF, the Petitioner herein,
instituted divorce proceedings in the Oakland County
(Michigan) Circuit Court against his (then) wife,
LORRAINE C. STRICOF, the Respondent herein. The
case was governed by Michigan’s so-called “no fault’’
divorce statute.' Trial focused upon the proper
evaluation of the marital estate, what constituted a
reasonable division of the parties’ assets, and whether
the Respondent would receive alimony.?

On March 12, 1976, the trial court entered judgment
granting an absolute divorce between the parties (7a).
Petitioner was ordered to pay Respondent alimony in
the amount of Three Thousand ($3,000) Dollars per

' Mich. Comp. Laws § 552.6; Mich. Stat. Ann. § 25.86.

2 Under Michigan divorce law, there is to be a “.. . just and
reasonable .. .’’ property settlement. Mich. Comp. Laws § 552.19;
Mich Stat. Ann. § 25.99

-%

>.

5

month (14a-15a). Respondent was further awarded
assets having a value in excess of one-half of One
Million Dollars. These transferred properties included,
inter alia, a marital residence, marketable stocks, bonds,
partnership interests, and proceeds from other
partnership and corporate investments (8a-11a).

Sub-paragraphs B, C, and G of Article III of the
Judgment of Divorce, entitled ‘“PROPERTY
SETTLEMENT,” stated, inter alia, as follows:

“B. IT IS FURTHER ORDERED AND
ADJUDGED that defendant wife shall receive as
her sole and separate property 50% of the
amounts paid to plaintiff husband from or on
account of plaintiff husband’s 27-1/2% interest in
Frenchtown Convalescent Center, Inc., a
Michigan corporation, and its related entity, FCC
Properties, a Michigan co-partnership.

“The intent of the foregoing language is to
award defendant wife fifty percent (50%) of the
amount received or benefited to plaintiff
husband from payments of principal, capital,
income or otherwise, including any amount
received by plaintiff husband upon a sale or
other diminution of his interest therein, with a
maximum limit of $135,000.00 to be paid to
defendant wife under this provision.

* + *

6

“The amounts so received by defendant wife
shall be alimony taxable to her and deductible
by plaintiff husband.

* * *

“C. IT IS FURTHER ORDERED AND
ADJUDGED that defendant wife shall receive as
her sole and separate property 50% of the
amounts paid to plaintiff husband, from or on
account of plaintiff husband’s 20% interest in
Van Buren Convalescent Center, Inc., and in Van
Buren properties (a co-partnership).

“The intent of the foregoing language is to
award defendant wife 50% of the amount
received or benefited to the plaintiff husband by
way of principal, capital, income or otherwise,
including any amounts received by plaintiff
husband upon a sale or other diminution of his
interest therein with a maximum of $170,000.00
to be paid to defendant wife under this
provision.

* * *

“The amounts so received by wife shall be
alimony and taxable to her and deductible by
plaintiff husband and shall not terminate as a
result of death or remarriage.”

“G. IT IS FURTHER ORDERED AND
ADJUDGED that each party hereto shall be
responsible for his and her own tax liability
incurred by reason of this property settlement on
the property received.” (11a)

When Judgment was entered, the trial judge stated:

‘It is the intention of the Court that both parties
who receive any of the property the Court has

>

|

7

indicated shall be responsible for any taxes due
and owing as a result of their ownership.”
March 12, 1976 transcript, pg. 8.

Petitioner appealed by right to the Michigan Court of
Appeals alleging, inter alia, that pursuant to the Internal
Revenue Code, these provisions were legally
insufficient to make the Respondent-transferee
responsible for tax liabilities on property which she
received, irrespective of the contrary intention
expressed in the state court judgment.

On January 25, 1978, the appellate court remanded
the case to the trial court to answer ten (10) specific
questions, including:

“Can the trial court properly term the property
settlement alimony?” (38a)

Pursuant to this remand, on August 2, 1978 the trial
court heard oral argument. In an August 9, 1978
opinion, the trial judge reaffirmed the original
Judgment of Divorce in its entirety (42a). The trial judge
termed the federal income tax liabilities “speculative,
imaginary tax consequences.” (44a)

On Appeal after remand, on March 7, 1979, the
Michigan Court of Appeals affirmed all aspects of the
Judgment of Divorce, except for a provision involving
payment of attorney fees (51a). Speaking to the trial
court’s treatment of tax incidences, the Michigan Court
of Appeals said:

“Finally, the trial court stated that the general
principle which had guided the trial court’s
division was that each party should be
responsible for his or her own tax liabilities on
property awarded in the settlement.

8

“‘We can find no fault with the above
findings. . .”” (52a)

Specifically addressing Petitioner’s allegations that the
trial court misread this Court’s decision in United States
v Davis, 370 US 65 (1962), the Michigan appellate
tribunal answered that the trial court “is not required to
consider speculative, imaginary tax consequences of
transfers which may never occur.” (52a)

On March 4, 1980, the Michigan Supreme Court
denied Petitioner’s application for discretionary review,
again with one exception. That Court remanded the
case to the trial judge for reconsideration of “the matter
in light of the plaintiff's clear tax liability that arises out
of the undisputed fact that the nursing home properties
had negative bases of $70,000 and $127,000 at the time
of trial.’’ (58a) This issue is not now before this Court.

At trial and at every level of appeal the Petitioner has
vigorously advanced his arguments regarding (1)
whether, pursuant to the applicable portions of the
Internal Revenue Code, Petitioner could deduct as
alimony the property division payments to his former
spouse, (2) which party bears the federal income tax
liability under United States v Davis, 370 US 65 (1962),
and (3) whether the adverse tax consequences adhering
to the assets awarded Petitioner were so “speculative
and imaginary” so as to be ignored by the Court when
it determined the appropriate worth of Petitioner's
share of the marital estate.

REASONS FOR GRANTING THE WRIT

I
A.

Supreme Court Rule 17.1(a) provides, in pertinent
part:

“1. A review on writ of certiorari is not a matter
of right, but of sound judicial discretion, and
will be granted only where there are special and
important reasons therefor. The following, while
neither controlling nor fully measuring the
court’s discretion, indicate the character of
reasons which will be considered:

“(a) Where a state court has decided a federal
question of substance not theretofore determined
by this court, or has decided it in a way
probably not in accord with applicable decisions
of this court.”

Petitioner respectfully submits that here the Michigan
Courts, apparently like the courts of many other
jurisdictions, erroneously decided several questions
involving interpretations of provisions of the Internal
Revenue Code.

Petitioner’s research has found no decision from this
Court which fully addresses the supremacy of the
Internal Revenue Code as it impacts upon specific
Provisions found within state divorce decrees. &
Merchant's Loan & T. Co. v Smietanka, 255 US 509, 41
S.Ct. 386, 65 L.Ed. 751 (1921). As shown, infra, at 13-15,
the federal courts of appeals as well as the Tax Court
have consistently held that it is not the state trial
judge’s ruling that certain tax results will obtain that

10

determine whether the property awarded in that provision
is alimony. These courts have uniformly held that an
award is only “alimony” (and therefore taxable as income
to the wife and deductible to the husband) if it fully
satisfies the Congressional elements of 26 U.S.C. §§ 71 and
215.

However, in spite of this plethora of existing lower
federal court precedent, state trial judges, like the one in
this case, continue to believe that the expressed intention
of the state trial judge underlying a specific award
determines whether that award qualifies as alimony.
Petitioner believes that it is time for this Court to speak
forcefully on this question and to instruct state judges that,
for income tax purposes, the denominations used in state
divorce judgments, and the intention of the state trial
judge, do not determine whether an award properly
qualifies as alimony. In view of the ever increasing
number of divorces in Michigan and in this country?, a
definitive holding from this Court would be extremely
beneficial.

The position in which this state court judgment placed
Petitioner should not escape this Court. Norman J. Stricof
is caught between two existing forces: One, the state
divorce judgment, tells Petitioner that he may deduct
certain payments and property divisions as “alimony”
because that was the express intention of the Michigan
courts; the other, §§ 71 and 215 of the Internal Revenue
Code, plainly mandates that Petitioner cannot deduct
these payments as alimony because an award

* One source notes, for example, that in 1970 the national
divorce rate was 3.5 per 10.6 marriages per 1000 persons, while in
1978 that number rose remarkably to 5.1 divorces per 10.3 marriages
per 1000 persons. See, U.S. Bureau of the Census, Statistical Abstract
of the United States: 1979, pg. 60 (100th ed) Washington, D.C. (1979).

11

only qualifies as alimony if it satisfies the requirements of
26 U.S.C. § 71. Petitioner’s argument that the language of
the Internal Revenue Code was controlling as to whether
an award qualifies as alimony was ignored by the
Michigan courts. The dilemma onfronting a taxpayer like
Petitioner is substantial.4

Moreover, the myriad lower federal court precedent
treating this question manifestly illustrates that the state
divorce courts do not recognize the opinion of the federal
circuit courts of appeals and the Tax Court as controlling. A
decision of this Court squarely holding that the provisions
of a state divorce judgment, and the concomitant intention
of the state trial judge, are not supreme in treating matters
of federal income tax would substantially reduce the flow
of federal cases continually re-litigating this point.

Lastly, it is to be realized that Michigan’s divorce laws
are equitable in nature. Formulating property divisions
and alimony awards by misapplication of governing
federal tax law is hardly supportive of the concept of
equity. See, Kraunz v Kraurz, 293 NY 152, 56 NE2d 90,
91-92 (1944). Erroneous state property divisions, such as
this one, which totally misperceive and misapply the
governing federal tax statutes result, in fact, in a grossly
disparate and inequitable property division.

The legal questions which this Petition presents are
substantial. Not only Mr. Stricof but all others who go

* Income tax return preparers in Michigan are immersed in a

similiar predicament. The Tax Reform Act of 1976 imposed
significant penalties upon preparers not only for any wilful
understatement of tax liability, but also for negligence. 26 U.S.C.
§ 6694. There are also criminal sanctions for aiding and abetting a
taxpayer in a misstating any material matter on a tax return. 2%
U.S.C. § 7206(2). Accordingly, this matter is of serious interest to the
accounting profession, the legal profession and the State of
Michigan commercial income tax return industry.

12

through divorce proceedings would benefit from a
decision of this Court which provides clear guidance on
the impact of the Internal Revenue Code on state divorce
judgments. This case presents “special and important
reasons” for review and plainly satisfies Rule 17.1(a). See,
Rice v Sioux City Memorial Park Cemetary, Inc, 349 US 70, 99
L Ed 897, 75 S Ct 614 (1955).

After awarding Respondent $3,000 per month as
alimony, which was obviously framed with 26 U.S.C.
§§ 71 and 215 in mind, the trial court then divided various
maz.tal assets between the parties under Article III of the
Judgment of Divorce entitled “PROPERTY
SETTLEMENT.” Sub-paragraph C of that settlement
awarded the wife certain interests in various partnership
and corporate investments owned by the husband, and
concluded that:

“The amount so received by the wife shall be
alimony taxable to her and deductible by the
plaintiff-husband and shall not terminate as a
result of death or remarriage.”

Further, sub-paragraph G of that Article stated:

“G. IT IS FURTHER ORDERED AND ADJUDGED
that each party hereto shall be responsible for his
and her own tax liability incurred by reason of this
property settlement on the property received.”
(14a)

In order for the alimony to be included in the taxable
income of the Respondent-wife, and deductible by the
Petitioner-husband, payments must be “... periodic

13

payments. . . because of the marital or family relationship
.. +.” See, Treas. Reg. § 1.71-1(b)(4), and S. Rep. No. 1631,
77th Cong., 2nd sess. 83 (1942), 1942-2 C. B. 504, 568, which
interpreted the predecessor of present § 71 of the Internal
Revenue Code of 1954— § 22(k) of the 1939 Internal
Revenue Code. The trial court limited itself to the question
of whether these payments met the time prescriptions of 26
U.S.C. § 71(c)(2). That is not the principal issue. The
question is, for Internal Revenue Code purposes, do these
payments represent a property division instead of an
alimony award.

The federal judiciary has uniformly held that even if
payments satisfy the periodic payments test, sometimes
referred to as the ten (10) year rule, they will not be treated
as alimony for purposes of 26 U.S.C. §§ 71 and 215 if they
are, in substance, a disguised property settlement.

For example, addressing the ten (10) year rule, the Court
of Appeals for the Sixth Circuit has observed that 26 U.S.C.
§ 71(a) “... merely mandates that definite amounts
payable over more than ten years be deemed periodic and
does not eliminate the requirement that the payment be in
the nature of support rather than a division of property. ”’
Lambros v Commissioner, 459 F2d 69, 71 (6th Cir 1972). See,
also, Pierce v Commissioner, 66 T.C. 840 (1976), Acq. 1978-1
C.B.2.; and McCombs v Commissioner, 397 F2d 4 (10th Cir
1968).

In Pierce, supra, as in this case, the divorce decree had
denominated the payments at issue as “alimony.” In
disregarding that state court label, the Tax Court noted
that:

“Our determination as to whether a particular
payment qualifies as section 71 a‘umony for

14

Federal tax purposes rests on the factual
circumstances of each case, and we are not at all
bound by the New Jersey court’s characterization of
the payment in questionas ‘alimony.’ ”’ 66 T.C. 840,
846.

See, also, Gammill v Commissioner, 73 T.C. No. 75 (1980);
Gerlach v Commissioner, 55 T.C. 156, 167 (1970); Porter v
Commissioner, 388 F2d 670 (6th Cir 1968); Taylor v Campbell,
335 F2d 841, 845 (5th Cir 1964); Mills v C.I.R, 442 F2d 1149,
1151 (10th Cir 1971); Wright v C.1.R., 543 F2d 593, 598 (7th
Cir 1976); Piel v C.I.R., 340 F2d 887 (2d Cir 1965). The
Gammill decision declared:

“Payments which are part of property settlement
are capital in nature and, therefore, not subject to
the provisions of § 71.” (citations omitted) CCH
Tax Court Regular Decisions, at pg. 2835.

As stated by the Gerlach court, the proper test to apply in
determining if payments represent alimony or a division
of property is to view ”. . . all the surrounding facts and
circumstances.” 55T.C. 156, 167. See, also, Gammill, supra;
Jackson v Commissioner, 54 T.C. 125, 130 (1970).

It is manifest that the payments under Article III of the
instant ‘PROPERTY SETTLEMENT” represent a property
division rather than an obligation arising out of “the
marital or family relationship,” i.e., alimony. First,
these payments were placed within the
“PROPERTY SETTLEMENT” portion of the Judgment.

* The trial judge was consistent. From the bench, he was explicit
in treating the bifurcation of these interests as part of the property
settlement in spite of his repeated declarations that these monies
were to be tax deductible to Petitioner. See, March 12, 1976
transcript, pp. 4, 6, 7, 8 and 10.

15

Second, in language that was obviously phrased with 26
U.S.C. § 71(a) in mind, the Judgment of Divorce elsewhere
specifically provides for alimony in the amount of $3,000
per month. Third, and most importantly, is the nature of
the payments themselves. Article III payments are not a
set amount for a defined period of time. Rather, they
constitute, up toa maximum dollar amount, one-half of the
proceeds the husband would receive from certain
partnership interests and corporate investments.
Applying the ‘facts and circumstances” test to this case, it
is beyond argument that the monies required to be paid by
the Petitioner under the “PROPERTY SETTLEMENT”
provisions of the Judgment of Divorce are not alimony
payments within the meaning of 26 U.S.C. § 71(a).

But assuming, arguendo, that the payments arose out of
the marital or family relationship, this provision still does
not qualify as deductible alimony because it does not meet
the statute’s “periodic payment” test.

“Alimony” must meet certain statutory criteria, one of
which is that it takes the form of payments for ‘more than
10 years.’’ 26U.S.C. § 71(c). Inthe alternative, an award for
less than ten (10) years qualifies as deductible alimony only
if ““(a) Such payments are subject to any one or more of the
contingencies of death of either spouse, remarriage of the
wife, or change in the economic status of either spouse,
and (b) Such payments are in the nature of alimony or an
allowance for support.” Treas. Reg. § 1.71-1(d)(3)(i)a)
and (b). None of these contingencies was included
within these provisions. Therefore, the only way in
which these payments can properly be considered as
alimony for federal income purposes is if they can be
deemed to be periodic payments for more than ten (10)
years.

16

But in this case, as the trial court so clearly stated:

“the period which the payments must be made is
indefinite; it is neither more than, nor less than, ten
years. Thus, the payments fit the statutory
definition and should be treated for tax purposes as
alimony.’” (Emphasis Supplied) (Tr August 11,
1978).

This portion of the Judgment of Divorce plaintly does
not provide for Respondent-wife to receive periodic
payments for more than ten (10) years. It is manifest,
therefore, that her federal income tax liabilities from
receipt of over one-half million dollars will not result in the
federal income tax consequences envisioned by the state
court.

These issues — (1) alimony versus property settlement,
and (2) periodic payment — are two of the most frequently
litigated questions in tax law. See, for recent example,
Gammill, supra; Crouser v Commissioner, 73 T.C. No. 89
(March 18, 1980); and Siragusa v Commissioner, 39 T.C.M.
1196 (March 10, 1980). Their consistent re-occurrence and
the plain congressional intention that there be uniformity
of tax treatment for situations arising in the several states,
C.I.R. v Lester, 366 US 299, 81S Ct 1343, 6 L Ed 2d 306 (1961);
Bardwell v C.1.R., 318 F2d 786, 789 (1963); S. Rep. No. 1631,
77th Cong, 2d sess. 83 (1942); H. R. Rep. No. 2333, 77th
Cong, 2d sess. 72 (1942), suggests that this is a most
appropriate case in which to grant certiorari.

II

In formulating the instant property division the trial
court made the following statement which was accepted,
sub silencio, on appeal.

“It is the intention of the Court that both parties
who receive any of the property the Court has

17

indicated shall be responsible for any taxes due
and owing as a result of their ownership.” (22a)

It is thus obvious that the Michigan Courts proceeded
upon the erroneous assumption that the federal income
tax liabilities fell upon the recipient of the transferred
property (Respondent), rather than on the transferor
spouse (Petitioner).

But the very clear construction of 26 U.S.C. § 1001(a)
set forth in this Court’s decision in United States v
Davis, 370 US 65 (1962), teaches that a divorce related
transfer, like the transfer of the Petitioner’s interest in
the $75,000 marital home to Respondent in this case, is
a“. . . sale or other disposition of property... .” As is
common in so many divorce cases, the transfer of
Petitioner’s interest in the marital home is a taxable
event. Since the transferor is viewed as the seller, he or
she incurs a federal income tax liability for any gain
while the recipient incurs no federal tax liability upon
the transfer. It is thus plain that the intention
underlying the state trial judge’s ruling, supra, directly
contradicts the federal tax law as enunciated by this
Court in Davis.

The position herein asserted by the Petitioner has
been consistently advanced by the Internal Revenue
Service, in Davis itself, and in every subsequently
published tax decision.

The scope of the Davis tax is also well established
throughout the federal judiciary. See, for example,
Stephens v Commissioner, 38 T.C. 345 (1962); Hornback v
United States, 298 F. Supp. 977 (W.D. Mo. 1969); Deyoe
v Commissioner, 66 T.C. 904 (1976); Gammill v
Commissioner, 73 T.C. No. 75 (1980); Matthews v United

18

States, 425 F2d 738 (Ct. Cl. 1970); Pulliam vy
Commissioner, 329 F2d 97 (10th Cir 1964); Estate of Bird v
Commissioner, 534 F2d 1214 (6th Cir 1976), and Wallace v
United States, 439 F2d 757 (8th Cir 1971). No federal
opinion subsequent to Davis has interpreted the divorce
Property division tax, pursuant to § 1001(a), as being
one properly imposed upon the transferee of property.

It is therefore obvious here, as it was in the first issue
of this Petition for Certiorari, that, irrespective of the
federal precedent to the contrary, many States still
disregard or misconstrue the rulings of the lower federal
courts on matters involving the Davis Tax.

State rulings such as this one place the party to a
divorce in a “Catch 22” situation. For state divorce
court purposes, the income tax liability is considered
the responsibility of the recipient of the transferred
property. But how does the transferor report it to the
Internal Revenue Service? If the transferor willfully
ignores the teachings of Davis and progeny, then he or
she risks exposure to tax evasion (26 U.S.C. § 7201), or
at the very least, has contravened the “false statement”
section of the Internal Revenue Code (26 U.S.C.
§ 7206(1)). The unfortunate taxpayer could also be liable
for the fifty percent (50%) civil fraud penalty (26 U.S.C.
§ 6653(b)). See, also the five percent (5%) negligence
penalty (26 U.S.C. § 6653(a)).°

® See n. 4, supra.

19
Ill

The state trual judge eschewed the validity of the tax
consequences in this case because he believed they
were “‘speculative’’ and “imaginary,’’ (44a). In
evaluating the worth of each asset, the trial judge
refused to deduct any tax from the gross value of the
asset; he declined to recognize these taxes as valid
liabilities. As with the other tax issues presented in this
Petition, the trial judge simply ignored the
ramifications and supremacy of the Internal Revenue
Code.

On March 7, 1979, the Michigan Court of Appeals
affirmed the trial judge’s refusal to consider
“speculative, imaginary tax consequences’ (52a).
Neither the trial court nor the appellate tribunal applied
the facts of this case to their terse legal conclusions that
these tax incidences were ‘‘speculative’’ and
“imaginary.”

The Michigan Supreme Court denied leave to appeal
on this issue on April 4, 1980.

Throughout the Michigan judicial system, Respondent
has successfully asserted the fiction that the various tax
liabilities already incurred by the Stricof estate were
illusory and should be discarded. Such a position is
erroneous in the extreme.

In approaching the proper manner by which to
evaluate the Stricof marital estate, the state trial judge
was presented with two alternatives in which to treat
the attendant tax liabilities. Initially, he had the option
of ignoring tax ramifications in their entirety because,
as here in part, he believed them to be “speculative”
and “imaginary.” Or, the trial judge could have

20

attempted, consistent with the evidence, to determine
that dollar value which fairly reflects the tax incidences
brought about by the division of the marital estate.
Since, ‘disregarding the effect of taxes may (as here)
result in an unrealistic and unjust result,” Wetzel v
Wetzel, 35 Wis 2d 103, 150 NW2d 482 (1967), it is
extermely difficult to comprehend any rule of law which
encourages state trial judges to ignore so critical an
element. See, generally, Anno — Consideration of Tax
Impact, 51 ALR 3d 461 (1973), and cases cited therein.

At trial, expert testimony illustrated that Petitioner
possessed assets which had substantial tax incidences.
For example, Mr. Stricof possessed a 15% interest in
Shelco Investment Company, an installment sale basis
land contract receivable. (106a-109a) The record
undisputably shows that as principal payments are
collected on the contract, Petitioner incurs $7,603.00 in
income taxes. See, 26 USC § 453(a)(1) and (b)(1)(A). In
addition, a $3,392.00 tax liability would be incurred by
Petitioner on the collection of the proceeds of
Greenfield North, another installment basis land
contract. (125a).

The existence of these taxes is not speculative. There
can be no doubt that either Mr. Stricof, or his estate in
the event of his death, will have to discharge these
encumbrances. That much is unarguable. What is not
Pristine is when these taxes must be paid and,
therefore, precisely how much they will be. But, as was
done in this case’, a careful lawyer can lay the

” Petitioner recognizes that the trial judge discarded this
testimony on the grounds that the witness who offered it — Orville
Lefko — was lacking in credibility. (43a-44a) However, implicit in
the Michigan Supreme Court's April 4, 1980 order of remand “in
light

(cont'd on following page)

21

necessary evidentiary foundation upon which to have
expert witnesses determine the dollar amount of income
tax as of the approximate date of the entry of the
divorce decree. Since tax liabilities can be determined
to a reasonable degree of certainty, their inclusion in a
state trial judge’s calculations is vastly superior to
disregarding them in their entirety.

Only last term in a state court personal injury action
brought under the Federal Employer's Liability Act, this
Court was confronted with a similar argument. There it
was urged that a lay jury was incapable of ascribing an
appropriate dollar amount to a decedent’s future
estimated after tax earnings. Forcefully rejecting that
contention in clear language that could have been
written with Respondent’s “too speculative’ objection
to determining these tax consequences in mind, the
Court, in Norfolk & Western R. Co. v Liepelt, — US —,
62 LEd 2d 689, 694; 100 S Ct — (1980), said:

“Admittedly there are many variables that may
affect the amount of wage earner’s futute income
tax liability. The law may change, his family
may increase or decrease in size, his spouse’s
earnings may affect his tax bracket, and extra
income or unforeseen deductions may become
available. But future employment itself, future
health, future personal expenditures, future
interest rates, and future inflation are also

(cont’d from preceding page)

of the plaintiff's clear tax liability that arises out of the undisputed
fact that the nursing home properties had negative bases of $70,000
and $127,000 at the time of trial’ (Emphasis Supplied) (58a) is the
resurrection of Mr. Lefko as a witness by Michigan's highest court.
This is so because only Mr. Lefko offered evidence of the nursing
home properties negative bases — evidence which the Michigan
Supreme Court had no trouble determining to be “clear” and
“undisputed.”

22

matters of estimate and prediction. Any one of
these issues might provide the basis for
protracted expert testimony and debate. But the
practical wisdom of the trial bar and the trial
bench has developed effective methods of
presenting the essential elements of an expert
calculation in a form that is understandable by
juries that are increasingly familiar with the
complexities of modern life. We therefore reject
the notion that the introduction of evidence
describing a decedent’s estimated after-tax
earnings is too speculative or complex for a

Lad

jury.

If the tax consequences are not too speculative for a
jury, the circuit judges of Michigan should not be held
to a lesser standard.

It is respectfully submitted that this Petition for
Certiorari should be granted in its entirety.

Respectfully submitted,

BRUCE T. LEITMAN (P16541)
1263 West Square Lake Road
Bloomfield Hille, Michigan 48013
(313) 338-4501

GARY M. GOODFRIEND (P22867)
17117 W. Nine Mile Road

Suite 536

Southfield, Michigan 48075

(313) 559-9797 __

Attorneys for Petitioner

DATED: August 28, 1980.

APPENDIX TABLE OF CONTENTS

Page
Docket Entries of the Circuit Court of Michigan ... 1a
Docket Entries of the Michigan Court of Appeals .. 5a
Docket Entries of the Michigan Supreme Court ... 6a
March 12, 1976 Judgment of Divorce ............. 7a
March 12, 1976 Statement of Trial Judge .......... 7a
January 25, 1978 Opinion of the Michigan Court of
ET REE Ce are eer ane et senate 34a
August 9, 1978 Circuit Court Post-Remand Findings
En ee ri G ae ay aia aac ee 42a
March 7, 1979 Opinion of the Michigan Court of
FN. x Ca Vn des Sil tes hos Rh Des 5la

April 4, 1980 Order of the Michigan Supreme Court 57a

June 25, 1980 Order of Mr. Justice Stewart Extending
Time to File Petition for Writ of Certiorari ...... 59a

Excerpts from Testimony of Orville B. Lefko

ne NI 0 a Oe en T 60a
ane on A te see 133a
a a ree 149a

SIE OEP CLE TE TEC RI LE 15la

la

DOCKET ENTRIES
(Oakland County Circuit Court)

1973

Jul. 30. Complaint for divorce filed.

Jul. 30. Summons issued.

Aug. 16. Proof of service on summons filed 8-3-73.
Aug. 16. Answer to complaint for divorce filed.

Aug. 21. Reply to answer to complaint for divorce filed
Sep. 19. Notice of Issue No. — NJ.

Nov. 14. Injunctive order filed.

Nov. 14. Consent injunction re: alienation.

1974

Jan. 30. Stip. and order for first adjournment filed.

Feb. 25. Interrogatories Series I filed.

Mar. 13. Answers to interrogatories filed.

Mar. 19. Answers to interrogatories filed.

Mar. 26. Order of adjournment filed. & stip.

Apr. 2. Supplemental interrogatories to Pitf. filed.

Apr. 10. Motion for hearing on objections to
supplemental interrogatories filed.

Apr. 15. Notice of Hearing file.

Apr. 15. Answer to pltf’s. motion in the nature of motion
to compel answers to interrogatories and
adjournment of trial date filed.

Apr. 17. Reply to answer to pltf’s. motion for hearing on
objections to supplemental interrogatories filed.

Apr. 24. Stip./order for second adjournment filed.

Aug. 15. Adjourned over term subpoena continued.

Sep. 11. Motion to withdraw as atty. for pltf. filed.

Sep. 26. Stip./order for third adjournment filed.

Oct. 2. Order withdrawing as counsel for Pltf. filed.

Oct. 4. Affid of mailing filed.

2a

Oct. 10. Appearance filed.

Oct. 2. Withdrawal of Pltf’s atty allowed.

Oct. 23. Stip./order for fourth adjournment filed.

Oct. 29. Notice of taking deposition filed (Lorraine C.
Stricof). ‘

Oct. 29. Proof of service of notice of taking deposition
filed.

Nov. 27. Deposition of Lorraine C. Stricof filed. Letters
Sent.

Nov. 27. Interrogatories to Def filed.

Nov. 27. Proof of service filed.

Dec. 9. Interrogatory to pltf filed.
1975
Jan. 24. Def’s. answer to interrogatory filed.
Jan. 29. Notice of taking deposition filed. Abraham
Burnstein. |
Jan. 29. Affidavit filed.
Jan. 29. Proof of service on notice of taking deposition

filed. Jeptha W. Schureman.

Feb. 5. Pltf. answer to interrogatory filed.

Feb. 5. Proof of service filed 2-3-75,

Mar. 10. Stip. & Order for fifth adj. filed.

Mar. 24. Non jury trial begins 1/2 day trial time.

Mar. 25. Non jury trial continues — 1/2 day trial time.

Mar. 27. Non jury trial contines — one day.

Mar. 28. Non jury trial continues — 1/2 day trial time. adj.
to 6-9-75,

Jun. 12. Non jury trial continues — 1 day trial time.

Jun. 13. Non jury trial continues — one day trial time.

Jun. 19. Non jury trial continues — ¥2 day trial time.

Proposed findings of fact and conclusions of law due 5
pm Jul 11 replies Jul 25.

Jun. 16.
Jun. 17.
Oct. 10.

filed.

Oct. 10.

Non jury trial continues — one day trial time.
Non jury trial continues — one day trial time.
Pet for order for D to execute 1974 tax returns

Proof of service filed. 10-8-75.

a

3a
1976

Mar. 5. Motion for more specific findings of fact filed.

Mar. 12. Judgment of divorce filed. (10).

Mar. 12. Statement on specific findings of fact — 1/2 day
trial time.

Mar. 30. Notice of filing of claim of appeal filed.

Mar. 30. Motion for fixing of bond and for stay of
proceedings filed.

Mar. 30. Claim of appeal filed. Letters sent. CS.

Apr. 9. Substitution of attorneys filed. Notice filed.
Bruce T. Leitman.

Apr. 13. Motion for the setting of an appeal bond and
stay of proceedings-filed.

Apr. 13. Proof of Service-filed.

Apr. 13. Notice of Hearing-filed.

Apr. 14. Order for temporary alimony and interim
counsel fees-filed.

Apr. 29. Stip for restraining order. Order filed.

May 14. Order fixing bond and staying proceedings
filed.

May 18. Bond on appeal filed.

Jul. 21. Order from the Court of Appeals filed.

Aug. 31. Transcript of trial vol. 1 filed.

Aug. 31. Transcript of trial vol. 2 filed.

Sep. 2 Notice to counsel & Affidavit of n.ailing.

Oct.1. Stenographer’s certificate & Notice of F iling filed.

Oct. 14. Transcript of March 27, 1976.

1977

Feb. 15. Letter from Court of Appeals filed, granted.
Feb. 18. Appearance filed, Zemke.

Apr. 19. Letter of transmittal from Court of Appeals filed.
Apr. 19. File sent to Court of Appeals, Lansing run CH.

4a

1978

Feb. 8. Appearance-fiied.

Mar. 22. AOS 032278 AIO Hampton, hearing 4-25-78.

Mar. 22. Apr. date assigned for appearance for
780425 H.

Apr. 11. PIitf’s post remand Request for Finds of Fact
filed.

Apr. 27. Notice of Hearing filed.

Jun. 1. Proof of Service filed 6-1-78.

Jun.1. PSconsolidated post remand Request for Finding
Facts filed.

Jun. 14. Proof of Service filed.

Jun. 28. Proof of Service & Affdvt of mailing filed.

Jun. 28. Appearance filed.

Jun. 29. Plf’s Reply to dfdt’s post remand Regt for
Findings filed.

Jun. 29. Proof of Service filed.

Aug. 11. Post-remand Findings and Conclusions filed.

Sep. 7. Motion to Compel Signature /Med.

Sep. 7. Notice of Hearing filed.

Sep. 7. Proof of Service filed.

Sep. 14. Transcript of proceedings had on 8-1-78,

Sep. 25. Steno notice of filing of transcript filed.

Oct. 4 Motion heard under advisement.

Oct. 6. Letter of transmittal from Ct of Appeals filed.

Oct. & File sent to Court of Appeals filed, Lansing run
CO.

1979

Apr. 4. Order from Court of Appeals filed.

Apr. 4. File returned from Court of Appeals, letters sent
mem.

Jul. 31. Letter of transmittal from Supreme Court filed.

Jul. 31. File sent to Supreme Court Lansing, run KSL.

5a

1980

Apr. 8. Order from Supreme Court filed.

Apr. 8. File returned from Supreme Court, letters sent
mem.

Jul. 16. Plf’s Motn to Disqualify Richard D. Kuhn, etc.,
Affid filed.

Jul. 17. Post judgment proceeding.

July 17. Motion to Disqualify Judge denied-accting held.

Jul. 24. Order Deny pltf’s Mot to Disqualify R D Kuhn

filed.
DOCKET ENTRIES
(Court of Appeals of the
State of Michigan)
1976

Mar. 31. CV-Claim of Appeal.
Mar. 12. Order appealed from: Oakland County Circuit,
Judge: Kuhn, Richard D, LCT 73100923 DO.

1978

Jan. 25. Opinion filed; PC-RET Jur Panel: Result:
Remnd. DEH,NJK, John E. McDonald; Find Fact Juris
retnd.

Oct. 13. Record filed, file; 1TR; Oakland.

Oct. 13. Record filed, file; TR; Oakland.

Oct. 14. Supplemental Brief, appt, by: PTY 01 PL-AT
P/S:101078, Atty: Leitman, Bruce T of: Bloomfield.

Nov. 6. Supplemental Brief, appe, by: PTY 02 DF-AE
P/S:110678, Atty: Schureman, Jepth of: Detroit. both
briefs sent to panel.

6a

1979

Mar. 7. Opinion filed, PC panel: DEH NJK JC Result:
PAR on remand; JC Dissent.

Mar. 30. Remmittitur & record retrn, files-2; TR-5; Depo
returned to Oakland County.

Jun. 13. Appl for Leave to Sup Ct.

Jul.09. Transferred to Sup Crt. COA file sent to Sup Crt.

1980
Apr. 4. S/CT Ord Gr & Remand to CT/AGY.

DOCKET ENTRIES
(Supreme Court of the State of Michigan)

1979

Jun. 12. Delayed application for leave filed.

Jul. 10. Court of Appeals record filed.

Aug. 1. Circuit Court record filed.

Oct. 1. Answer in Opposition to application filed.

Oct. 1. Defendant's delayed application for cross-appeal
filed.

Oct. 9. Answer and brief to cross-appeal filed.

Oct. 10. Appellant’s response to defendant’s
counter-question three filed.

Oct. 15. Defendant’s reply brief filed.

1980

Apr. 4. In lieu of granting leave of appeal, Remanded to
trial court with instructions.

Apr. 4. Court of Appeals and Circuit Court records
returned.

7a

JUDGMENT OF DIVORCE

(State of Michigan
In the Circuit Court — County of Oakland)

(Filed Mar. 12, 1976)

(Norman J. Stricof, Plaintiff, vs Lorraine C. Stricof,
Defendant. Leonard E. Bellinson (P10665) Attorney for
Plaintiff, Jeptha W. Schureman (P20109) Attorney for
Defendant. Judge Richard D. Kuhn (P16285). Civil Action
No. 73-100923)

At a session of said court held in the Courthouse Tower
in the City of Pontiac, Oakland County, and State of
Michigan, on March 12, 1976.

PRESENT: HONORABLE RICHARD D. KUHN, Circuit
Judge.

This cause having been brought on to be heard upon the
Complaint for Divorce filed herein by plaintiff, and the
answer of defendant, the court having heretofore taken
plaintiff's and defendant's proofs in open court, from all of
which it satisfactorily appears to this court that there has
been a breakdown of the marriage relationship of the
parties to the extent that the objects of matrimony have
been destroyed and that there remains no reasonable
likelihood that the marriage can be preserved.

On motion of Leonard E. Bellinson, attorney for
plaintiff,

|
DIVORCE

IT IS HEREBY ORDERED AND ADJUDGED, that the
marriage of the parties hereto be and the same is

8a

hereby dissolved and a divorce from the bonds of
matrimony is adjudged effective as of the date hereof.

II
MINOR CHILDREN
There are no minor children of the marriage of parties.
: II
#@ PROPERTY SETTLEMENT

The Court finds as a fact, from all the evidence and
testimony presented herein that, notwithstanding the
ostensible title or ownershhip thereof being in one or the
other of the parties hereto, all of the items listed
hereinbelow for division are, in fact, the property of both
parties hereto, either jointly or in common, with the
exception of that property held in either a custodial or trust
account for the benefit of the children, and that this
division thereof serves only to partition the same, and is
not intended to constitute award of property of one party
or any interests therein, to the other, for any consideration.

A. IT IS ORDERED AND ADJUDGED that defendant
wife receive as her sole and separate property, the
following items:

1. The marital home at 28435 Brooks Lane,
Southfield, Michigan, (the note and mortgage on
which defendant wife assumes and agrees to pay
and from which defendant wife shall hold plaintiff
husband harmless), together with all furniture and
furnishings presently located therein (except those
items specifically awardcd to plaintiff husband
hereunder).

9a

2. 1971 Ford car, or any car replacing it, and any
lien on such vehicle is to be assumed and paid by
wife and from which she shall hold plaintiff
husband harmless.

3. U.S. Government Series “E’”’ bonds owned by
either party or jointly as of November 6, 1975.

4. Marketable securities and municipal bonds
owned by either party or jointly as of November 6,
1975 including those listed on the attached Exhibit
“A”, and including all dividends, stock or cash,
interest, rights or other benefits that may have been
paid or accrued on account of such securities or
bonds.

5. A right to receive the first $33,040 paid to
plaintiff husband upon the 15% interest standing
in the name of plaintiff husband in “Shelco
Investment Co.,” a Michigan co-partnership,
secured by a lien thereon.

6. Reserve Fund Account (Chemical Bank) in the
amount of $85,000.00, plus interest paid or accrued
from November 6, 1975. In the event the present
face amount is less than $85,000.00, the plaintiff
husband shall pay forthwith to the defendant wife
cash in the amount of that deficiency.

7. All interest standing in name of plaintiff
husband in “Texas International Drilling Co.,” a
partnership.

8. This 1/6 interest in name of plaintiff husband in
“Paint Creek Golf & Country Club,” a Michigan
co-partnership.

10a

9. Life insurance policies on the life of plaintiff
which are owned by defendant including the
following:

(a) North American Life, Policy 649 368 S.
(b) Dominion Life, Policy 196,334.
(c) Dominion Life, Policy 196,577.

B. IT IS FURTHER ORDERED AND ADJUDGED that
defendant wife shall receive as her sole and separate
property 50% of the amounts paid to plaintiff husband
from or on account of plaintiff husband's 27-1/2% interest
in Frenchtown Convalescent Center, Inc., a Michigan
corporation, and its related entity, FCC Properties, a
Michigan co-partnership.

The intent of the foregoing language is to award
defendant wife fifty percent (50%) of the amount received
or benefited to plaintiff husband from payments of
Principal, capital, income or otherwise, including any
amount received by plaintiff husband upon a sale or other
diminution of his interest therein, with a maximum limit
of $135,000.00 to be paid to defendant wife under this
provision.

The interest of plaintiff husband at date of judgment in
the aforesaid corporation and partnership is 27-1/2%.

The amounts so received by defendant wife shall be
alimony taxable to her and deductible by plaintiff
husband.

The payments to defendant wife shall be made to her by
plaintiff husband within 10 days after receipt by him of the
money or benefits. 50% of any such receipts by husband
from November 6, 1975 to date of this judgment shall be
paid to defendant wife within 30 days of this judgment.

lla

C. IT IS FURTHER ORDERED AND ADJUDGED that
defendant wife shall receive as her sole and separate
Property 50% of the amounts paid to plaintiff husband,
from or on account of plaintiff husband’s 20% interest in
Van Buren Convalescent Center, Inc., and in Van Buren
properties (a co-partnership).

The intent of the foregoing language is to award
defendant wife 50% of the amount received or benefited to
the plaintiff husband by way of principal, capital, income
or otherwise, including any amounts received by plaintiff
husband upon a sale or other diminution of his interest
therein with a maximum of $170,000.00 to be paid to
defendant wife under this provision.

The interest of plaintiff husband at date of judgment is
20%.

The amounts so received by wife shall be alimony,
taxable to her and deductible by plaintiff husband and
shall not terminate as a result of death or remarriage.

The payments to defendant wife shall be made to her by
plaintiff husband within 10 days after receipt by him of the
money or benefits. 50% of any such receipts by husband
from November 6, 1975 to date of this judgment shall be
paid to wife within 30 days of this judgment.

D. ITIS FURTHER ORDERED AND ADJUDGED that
plaintiff husband receive as his sole and separate property,
the following items:

1. Stricof and Polk partnerships and Stricof and
Polk, Professional Corporation shares standing in
the name of plaintiff.

12a

2. The projector, screen, camera, photographs,
slides and films, the blue couch from the office, the
living room chair, the Stricof and Polk filing
cabinet, including client wallets.

3. 1975 Oldsmobile or replacement car.

4. Stricof and Polk, P.C., retirement trust funds
attributable to plaintiff.

5. Alilife insurance policies on the life of plaintiff
husband excepting those owned by defendant wife
which have previously been awarded to her in this
judgment.

6. All interest of the parties in Greenfield North
co-partnership and land contract.

7. All interest of the parties in World Computer
Corp.

8. The 15% interest in Shelco Investment Co.,
co-partnership subject however, to the previously
awarded rights of defendant therein.

9. All bank accounts of the parties not solely titled
in name of defendant wife, except reserve fund
account (Chemical Bank) previously awarded to
wife and further excepting any accounts of a
custodial or trust nature in favor of any child of the
parties hereto as beneficiary.

10. All real estate held in partnership or
otherwise, not otherwise disposed of herein,
including interest in Big Rapids Building Co. and
in Regency Park Apartments.

11. The 27-1/2% interest in Frenchtown
Convalescent Center, Inc., and FCC Properties (a

13a

co-partnership) presently titled in plaintiff, and the
25% interest in Van Buren Convalescent Center,
Inc., and in Van Buren Properties (a
co-partnership) presently titled in plaintiff,
subject, however, to the previously described and
awarded interests of defendant wife in these
properties.

12. That*part of the 1974 Federal income tax
refund not expressly reserved in this judgment by a
subsequent provision for payment of attorney and
accountant fees of wife.

E. IT IS FURTHER ORDERED AND ADJUDGED that
the plaintiff husband shall pay to defendant wife's
attorney, Jeptha W. Schureman, an attorney fee in the
amount of Twenty Two Thousand ($22,000.00) Dollars and
to defendant wife’s C.P.A., David Desow, the amount of
Five Thousand ($5,000.00) Dollars. These funds are to be
secured by a lien on the income tax refund pursuant to a
1974 Federal income tax return which the plaintiff husband
has represented to the Court that he has filed jointly with
the defendant wife, and on which there is due a refund to
the parties in the amount of $33,971.19.

The plaintiff husband shall notify the defendant wife
and counsel of record immediately upon receipt of the
refund from this return.

F. IT IS FURTHER ORDERED AND ADJUDGED that
plaintiff husband shall be liable for all marital obligations
up to date of judgment including but not by way of
limitation, mortgage payments, taxes, insurance,
maintenance and utilities on marital residence; further,
defendant (sic) husband shall be responsible for all
deficiencies, penalties, interest or other obligations and

14a

amounts due from all tax returns filed by the parties
jointly, and shall indemnify and hold harmless the
defendant wife therefrom.

G. ITIS FURTHER ORDERED AND ADJUDGED that
each party hereto shall be responsible for his and her own
tax liability incurred by reason of this property settlement.

Each party shall execute all documents reasonably
necessary to effectuate the Property settlement provisions
set forth herein, including the plaintiff husband making
available to the defendant wife at reasonable time and
intervals the books and records pertaining to the
Frenchtown and Van Buren Nursing Home Enterprises.

IV
ALIMONY

A. Plaintiff husband shall pay to defendant wife,
through the office of the Friend of the Court, Oakland
County, alimony of $3,000.00 per month, commencing on
the date of entry hereof, and continuing until death or
remarriage of defendant wife or until further order of the
Court.

B. The award of alimony is based upon the income of
plaintiff husband being between Seventy-Five and One
Hundred Thousand Dollars per year. Either party may, as
Provided by law, petition the Court for modification of the
alimony, based upon a substantial change of
circumstances.

C. So long as plaintiff husband has any obiigation to
Pay alimony to defendant wife hereunder, he shall
maintain in effect insurance on his life (term or permanent,
at his option) as security for payment

15a

thereof in the event of his death, in the amount of
$200,000.00 with defendant wife as beneficiary thereof,
and shall present to defendant wife proof of his continuing
execution of this provision.

V
DOWER

IT IS FURTHER ORDERED AND ADJUDGED that the
plaintiff shall pay defendant herein One Dollar in lieu of
her dower in his lands and that he shall hereafter hold his
remaining lands free, clear and discharged from any such
dower right or claim of defendant.

VI
INSURANCE

IT IS FURTHER ORDERED AND ADJUDGED that
except as otherwise specifically provided hereinabove, all
rights of either party in and to the proceeds of any policy or
contract of life insurance, endowment, or annuity upon the
life of the other in which he or she was named or
designated as beneficiary, or to which he or she became
entitled by assignment or change of beneficiary during the
marriage or in anticipation thereof, whether such contract
or policy was heretofore or shall hereafter be written or
become effective, is hereby extinguished and at an end.

VII
CHILDREN’S PROPERTY

IT IS FURTHER ORDERED AND ADJUDGED that
neither of the parties shall be awarded any beneficial
interest in the property, real or personal, of the children of
the parties and shall hold such properties as shall

l6a

have been in the name of either of the parties as of the time
of trial of this cause for the use and benefit of such children.

. Vill
RETENTION OF JURISDICTION

IT IS FURTHER ORDERED AND ADJUDGED that the
Court retains jurisdiction to make such other and further
orders as it shall deem necessary, upon application of
either party, to give effect to the provisions herein.

Ix
IMPLEMENTATION OF JUDGMENT

IT IS FURTHER ORDERED AND ADJUDGED that each
of the parties hereto shall, at any time, and from time to
time hereafter, take any and all steps and execute,
acknowledge and deliver to the other party any and all
further instruments and assurances that the other party
may reasonably require for the purpose of giving full force
and effect to the provisions of this Judgment of Divorce,
and

Further, in the event of default by either of the parties
hereto in delivering to the other any documents or
instruments necessary to implement the provisions of this
judgment, a certified copy of this Judgment of Divorce
shall stand in its place and stead.

/s) RICHARD D. KUHN
Circuit Judge

1,100
38
1,000
12
100
198
178
100
200
240
120
100

Municipal Bonds

$10,000
10,000

17a

EXHIBIT A

Company

Allied Supermarkets, Inc.
Bio-Dynamics, Inc.

First S & L Shares
Johnson Controls
Security Pacific Corp.
N.Y. Times-Class A

1st Golden Bancorp
Travelers Corp

Putnam Growth Fund
Keystone S4 Fund
Sanites Service

Citizens Mtg. Inv. Trust
Source Capital Inc.
Source Capital Inc. Pfd.
Windsor Raceway — A & B

Coldwater S/D 4 1/8% due 5/1/91
Birmingham G/O 4% due 10/1/97
Total Value of Marketable Securities

18a

MOTION

(State of Michigan
In the Sixth Judicial Circuit Court,
County of Oakland)

(NORMAN J. STRICOF, Plaintiff vs LORRAINE C.
STRICOF, Defendant. File No. 73-100923

Proceedings had in the above-entitled matter before the
HONORABLE RICHARD D. KUHN, Judge of the Sixth
Judicial Circuit Court, County of Oakland, Michigan on
March 12th, 1976.

APPEARANCES: MR. LEONARD BELLINSON,
Attorney-at-Law, Appearing on behalf of the Plaintiff;
MR. JEPTHA SCHUREMAN, Attorney-at-Law,
Appearing on behalf of the Defendant. MR. EDWARD
SIMON, Attorney-of-Counsel.

Lynn E. Erickson, Official Court Reporter

(2) 6th Judicial Circuit Court
County of Oakland, Michigan
Friday, March 12th 1976,

+ + *

The Clerk: Case number 73-100923, Norman J. Stricof vs.
Lorainne C. Stricof.

The Court: Gentlemen, there has been a motion filed
for —

Mr. Bellinson: (Interposing) Additional findings of
fact.

The Court: Additional findings of fact. The Court
wants to make the following statement:

In this case the parties have been married nearly
twenty-seven years and have had three children, all

19a

now the age of maturity, and this Court feels this is a classic
case of the young chap who starts from scratch, the wife
working to assist the husband in the completion of his
education and thereby after helping in his office and in his
client relationship at the social level, aiding in the
development of his career.

While the husband has admittedly worked hard, is an
increasingly successful business and professional man.
The wife has raised their children (3) to adulthood and toa
measure of independence. While the husband’s success is
more easily noticeable, the wife can take pride in the
achievements of the children, as well as the husband
should take pride in the achievements of his children,

Approaching middle age the husband decides he was
bored and adopted a new life-style for himself and filed for
divorce. Her children gone, rejected by her husband and
without any particular skills to re-establish her life, the
husband having confirmed in open court that he has been
unfaithful to his wife, that he has bought gifts and taken
trips with another woman, clearly the wife has been totally
faithful to the Plaintiff throughout the marriage and since
the separation —

Mr. Bellinson: (Interposing): Your Honor —

The Court: (Continuing): Based on these findings of
fact —

Excuse me, Counsel, the Court will entertain your
motion when he is through.

Based on these specific findings of fact from this trial
which lasted many, many days, the Court believes, in
fairness to the wife of nearly twenty-seven years, that she
should receive something in the percentage of
sixty-five percent of their total assets to his thirty-(4)
five percent of the total assets. And, if the Counsel

20a

would like the Court to precisely come up with that figure,
the Court would do so, but this is a very difficult case as to
values and as to division of properties.

Several properties are in such a condition that the Court
has been informed by Counsel that there is no way this
Court can distribute to the wife this property, because
there are restrictions that do not permit it, i.e.: VanBuren
Nursing Home, Frenchtown Nursing Home, the Shelco
property and partnerships.

Therefore, the Court had to do the best it could, and
when recalculating the figures as of yesterday, March 11th,
1976, the Court honestly feels it is giving the husband
$280,000 in assets and the wife only $275,00 in assets. The
values the Court is placing on the properties are as follows:

Marital home: $50,000: Household contents, $2,500: 1971
Ford LTD, $1,000: U.S. E bonds, $600: Marketable
Securities, $46,000: Shelco partnership, $33,000:
Municipal bonds, $15,000: Certificate of deposit Reserve
Fund Chemical Bank, $124,000.

(5) That is what the Court thought originally it was
going to give the Defendant wife. The Court has been
informed, subsequently, even though both counsel in
their proposed judgment indicated that was the figure as
indicated by Exhibit A, that the figure has now been
dropped to $80,000 rather than $124,000.

Texas International Drilling, $1,100; Paint Creek Golf
Club, which is a one-sixth interest is a zero value as
testified to by the Plaintiff and a debt.

For trial to her Counsel (sic) a $1,000, you take these
figures and add $27,000 for attorney fees and CPA’s and the
Court comes up with the grand total figure that the wife
is receiving $257,000.

21a

Now, as to the husband’s assets, the Court has used the
figures as follows:

$2,500 for the apartment: $6,000 for the automobile: — or
I should say probably if they are plural, also the
Oldsmobile, ’75: a retirement fund, $14,600: Cash value on
life insurance, $5,000: $44,000 for Greenfield Northland
accounts receivable, which was less the mortgage payable:
World Computer unsecured, $15,000: The accounting
practice, the figure of $173,000, although the Court is of the
opinion it is worth more than that, (6) this Court would say
it was probably worth $200,000, and the Plaintiff husband
for payment to his Counsel $13,896.

Now, using these figures comes to $274,166, but the
Court is cognizant that there was a refund in the amount of
$33,000, and the Court gave all the balance of that money
after the $27,000 which the Court directed that the
defendant's attorney and CPA be paid, that goes to the
husband, and therefore, that would be assuming the figure
is $33,000, there would be an additional $6,000 which
would be $280,000.

The Court is cognizant that the nursing homes which are
both worth in this Court’s opinion in excess of — I am
speaking of total value — in excess of $2,000,000.
Frenchtown being worth approximately $2,300,000 and
VanBuren being worth approximately $2,250,000. The
Court understands that the interest of the Plaintiff in this
matter is twenty-seven and a half percent in Frenchtown
and twenty percent in VanBuren. —

Mr. Bellinson: (Interposing): It’s approximately
twenty-five percent.

Mr. Schureman: More?

The Court: I believe it is twenty percent.

Mr. Bellinson: He just acquired an (7) addition to
twenty-five.

22a

Mr. Schureman: More?

The Court: The Court understands from the testimony
that these cannot be given to the wife. The Court being
very concerned about the two assets which are not
included in the figure that I gave earlier in the amount of
$280,000 for the husband and $257,000 for the wife,
feels that she should get something from them since the
husband’s own testimony was that he put between 150,
$200,00 cash into these investments.

The Court has indicated that she should get certain
dollar figures of $170,000. She should get $170,000 from
VanBuren and $135,000 from Frenchtown; but the Court
made it very clear that she should only receive one half of
any amount paid to the husband from either of the
partnerships by return of principal of capital or income or
otherwise, such amount be contributal (sic) to the wife
and deductible by the husband.

And, in addition, that the husband pay to the wife one
half of any amounts to be received by him upon a sale or
alleviation (sic) of his interest therein. Obviously, it is
conceivable that the husband may not receive any moneys
from these two investments, which in (8) turn quite clearly
would mean the wife would receive nothing either.

It is the intention of the Court that both parties who
receive any of the property the Court has indicated shall be
responsible for any taxes due and Owing as the result of
their ownership. Anything further?

Mr. Bellinson: Yes, I have some questions, Your
Honor. You have suggested there was unfaithfulness, that
the husband was unfaithful before he left home or after he
left home?

The Court: The Court found there was unfaithful-
ness during the i arriage and the Court is not
making a determination when. this unfaithfulness

23a

started, but there was an unfaithfulness during the
marriage and while they were lawfully and legally married,
which caused the destruction of this marriage and family.

Mr. Bellinson: Is — ifI understand you right, you said
that the parties shall pay the taxes due on the property they
receive?

The Court: Right.

Mr. “ellinson: You didn’t delineate in my request for
specific findings what you thought these taxes (9) would
be; could you do that?

The Court: No, Icould not. Iam nota tax man, this man
has never done that and doesn’t feel it can.

Mr. Bellinson: Would you indicate whether it took into
consideration the taxes in this matter in determining the
values of the property?

The Court: The answer is no, I took into consideration
what this Court found to be the values of each piece of
property at the time of the judgment.

Mr. Bellinson: Without —

The Court: (Interposing): Any tax consequences,
right.

Mr. Bellinson: Allright. AmI correct, you said that you
felt the split should be based on the test of
sixty-five/thirty-five; is that correct?

The Court: That is correct, but yet, my figure indicates
that the husband received some 23,000 more than the wife.
My hands are tied because of the nature of the assets and
the way they are limited. -

Mr. Bellinson: Could you possibly, Your Honor, give
us your formulas? A great deal of testimony has been
presented for our purposes in future motions (10) and so
forth in this matter; can Your Honor give us the values
that you felt this test was as to the nursing homes; can
you tell us?

24a

The Court: Yes, I thought I gave values of the nursing
homes.

I did put a value on the record.

Mr. Bellinson: I think I missed it.

The Court: You missed it. I put a value on the record. I
puta value of two million, approximately two million three
hundred on Frenchtown and a total value of two million
two-hundred fifty, I believe on Van Buren.

Mr. Bellinson: Did you factor in the mortgage?

The Court: No, these are gross values, I understand
there are mortgages and it was my understanding there
was a mortgage on VanBuren of one million three-hundred
two dollars and a mortgage on Frenchtown of one million
six thousand one hundred seventy-eight.

Mr. Bellinson: You determined this from the expert
testimony?

The Court: No one discussed the mortgages except Mr.
Bellinson, who brought these figures in and handed me
the mortgage. I don’t believe there is any testimony as to
the mortgage.

(11) Mr. Bellinson: You are vague —

The Court: (Interposing): Based on the expert
textimony this Court relied strongly on Mr. Bernstein’s
testimony.

Mr. Bellinson: Even though he said he was not an
expert?

The Court: That's correct, he indicated he was a CPA,
attended many closings of nursing homes and attended
one within the last ten days prior to the time of his
testimony, and I really took his low value rather than high
— high value. The Court thought from this Court’s
experience in real estate and matters of this

25a

kind, which is extensive, that this Court feels these values
were justified.

Mr. Bellinson: One other point, lastly here, you
awarded him his insurance and Counsel raised the point
that though she was the beneficiary of these insurances,
the fact is these insurances were purchased by my client for
his father and his children, even though she is the
beneficiary: We didn’t initiate that at the hearing because
she was the beneficiary; you switched at the time of your
discussion.

The Court: I didn’t switch anything because (12) of the
beneficiary, if there is ownership in a policy I would not
switch because of beneficiaries. If someone would like to
address themselves to whether we are speaking of
ownership of policies.

Mr.Schureman: Your Honor, our intention was to ask
that Mrs. Stricof have the protection of life insurance
during the life of the husband without regard to ownership
that he maintains and is in force and effect.

The Court: Excuse me, Counsel, we have agreed to
that, and I agreed $200,000.

Mr. Bellinson: That’s in addition?

The Court: That isn’t what we wanted to talk about, we
wanted to talk about these policies. Now, we have agreed
to that whether it be term or regular life insurance and Mr.
Bellinson asked could it be term. The Court indicated yes,
it had no interest as long as they had $200,000 until his
payments and alimony is not any longer required to be
paid to his former wife.

Mr. Schureman: The fact is that Mrs. Stricof is the
owner of the policy, the ownership was transferred to her
and she has, herself, paid the premiums.

The Court: Based on ownership this Court ruled that
the ownership, whoever owned them would get

26a

(13) these policies. The Court did not change it because of
beneficiaries, that would not be a reason for changing
thern; but, if in fact she is the owner as was indicated to
this Court, the Court made that determination.

Mr. Bellinson: Is the Court —in my request for specific
findings, did the Court find that supplying the wife with
the liquid assets, of course, leaving the defendant with the
taxes to pay that from alimony and from returns on the
capital that the wife will be receiving from $50,552 and the
husband $35,000 from the — the way these assets are and
the alimony distribution is set right now?

The Court: The Court didn’t make that determination,
no, it did not make a determination as to value. The Court
indicated the way it may be valued.

Mr. Bellinson: In talking about income from his
practice and from the assets divided —

The Court: (Interposing): The Court found
obviously, that he made approximately $100,000 for five
years prior to the time of this divorce and the Court granted
alimony in the amount of $3,000 a month based on an
income of 75 to $100,000.

Mr. Bellinson: Did the Court disregard (14) the
testimony of his last year’s return of fifty odd thousand
dollars?

The Court: The Court was not aware of the last year’s
testimony, the Court realized that he indicated that the
income was going to be reduced greatly and I believe he
was ona draw, $3,000 a month, but the Court also took note
with regard to the testimony that when things were tight
for him that he took a draw in the amount of $30,000.

Mr. Bellinson: My brother counsel —

Mr. Stricof: My —

27a

The Court: (Interposing): I think he had better speak
through you.

Mr. Bellinson: To keep the Court straight, it’s
inconsistent with some of the items awarded today.

How about taxes not paid on these items and the values
will be reduced by the fact that he has to pay these taxes?

The Court: No, that was not brought to the Court's
attention at any time, and therefore, the Court obviously
could not take that into consideration because it is not on
the record, and no one brought it out. It is a fact the —

(15) Mr. Bellinson: (Interposing): Does the Court
feel that if this was disclosed that these facts were brought
to the attention of the Court, then the Court feels it would
change it’s opinion?

The Court: No, for the reason as I stated, we have two
major assets here which this Court feels at this time, that
the Plaintiff has a net value in excess of 5 to 600,000 in
Frenchtown and VanBuren at this very moment, and there
is no way this Court can touch it. The Court would not be
in any way inclined to change its judgment. The Court
feels this is an extremely fair settlement based on the facts
and as the Court indicated if it could be precise in dollar
amount give sixty-five to the wife and thirty-five percent
to the husband. The Court has failed to do that only
because its hands are tied.

Mr. Bellinson: Your Honor, since the Court has
stated on the record the taxes should be paid by these
— either of the party who received the assets, I am
suggesting to the Court that it does not enter the
property judgment because I don’t believe the property
judgment presented by the defendant is consistent with

28a

our statements and I ask at least a few days to review it
again and show you (16) how it does not.

The Court: Mr. Schureman.

Mr. Schureman: I am extremely opposed, I think as a
matter of law whatever taxes befall the parties is the
consequence of the division of property of this marital
estate. The Court has made the ruling that they will bear
these taxes, the Court has spoken in a paragraph any
benefit the Piaintiff might receive from either the
nursing home in the future clearly set forth they are to
be considered as taxable income and deductible by the
husband. Otherwise, your Honor it’s getting into a great
degree of difficulty. Whatever taxes there may be each of
the parties, by operation of law, is going to be
responsible for his or her own taxes on the basis of the
award of the property, Court awarded; that’s the way I
feel about it.

The Court: The Court feels this judgment basically
inadequately covers what the Court’s pronouncement is
and the Court wants to sign it this morning. The Court
feels there is no need to carry this on any further, but
the Court would hand this judgment back to Counsel
and that one statment that I have indicated that each
party would be responsible for their taxes may be
written in here so it is clear-cut, and the Court is not
going any further (17) than that.

The Court does feel it is bound.

Mr. Bellinson: Can we ask that he write that in
before judgment?

The Court: Yes, definitely. The Court is going to be
in recess.

29a

Mr. Bellinson: One other question. Did the Court
take into consideration the testimony that stated there
would be a tax of $48,000 on the valueless — two
valueless apartment buildings?

The Court: Well, the Court took into consideration all
the testimony, and the Court realizes that some taxes are
due and owing and the Court also realizes there has been
excessive write-offs but the Court can’t guess, surmise,
and the Court also understands some foreclosures are
pending, whether or not they will become actual or real,
this Court cannot guess. The Court has seen many things
in foreclosures and people come back payoffs and save
them. They do different things for different reasons.

Mr. Bellinson: We are talking about Big Rapids and
Regency Park, $48,000 and the testimony was that there
would be a $48,000 loss. I am wondering in (18) the
evaluations whether the Court accepts that loss or not?

The Court: The Court did not in the evaluations placed
on the record, but if the Court were to do that it still comes
nowhere near, nowhere near the value where it should be.

Going through, the Court would also indicate as an
alternative, Mr. Bellinson’s figure, and using Mr.
Bellinson’s figures exactly as a value for every asset except
the CPA practice, the figures would be as follows:

Wife; $243,000. Husband; $215,876. That is using Mr.
Bellinson’s and Mr. Lefko’s evaluation of each and every
piece of property and assets except — except the CPA,
which the Court increased it by 75,000, but if I used what
Mr. Lefko and Mr. Bellinson came in with it would be
121,000 for the husband, but you must add the $75,000
which this Court has added to the value of the practice,

30a

196,000. You must add that to the added fee paid and
charge the Defendant with it, which would come to
199,876, and you must add the tax return in the amount of
6,000 which would come to 205,876 for the husband, and
the wife would receive 243,000 after you
put the 28,000 on for her — for her attorney and CPA that I
(19) have indicated that the husband should Pay.

Mr. Bellinson: Your Honor, could we have a request
that the wife sign the 1975 tax that she has been supported
during that period, we have another —

Mr. Schureman: (Interposing): I don’t know what it
Says, as a matter of fact, I will wait until you are through, I
think we ought to see it, if it makes sense I will recommend
he (sic) sign it.

Mr. Bellinson: Can we keep that open?

The Court: You may keep that open.

Mr. Bellinson: One other question, I guess. Did the
Court take into consideration in the evaluation of the
accounting practice that all the appraisers indicated that
purchase of it was based on the receivables, on the
realization of these Mr. Stricof will have to pay taxes?

The Court: No, the Court did not consider receivables
as a practice, that is not true. The Court does know that as
to the accounting practices, I believe I went from a low of 60
to 90 to a high of 278,000 by the so-called witnesses.

Mr. Bellinson: The Court did notinclude receivables in
the evaluation?

The Court: It did not, because the Court (20) would not
know the receivables as a value.

Mr. Bellinson: Your Honor, its the Court ruling that if
there is this $48,000 tax lia bility on Big Rapids and other tax
liabilities that the wife share in half of these — these taxes
that sheltered the assets?

3la

The Court: No, the Court does not indicate the wife
should share in any of the taxes due and owing on any
property that she did not receive. Mr. Shureman.

Mr. Schureman: I have one inquiry, Your Honor. I
extended some concern about the treatment of the 1974
Federal Income Tax Return, and I would like
confirmation from Mr. Stricof he has received the check
from the Internal Revenue for $33,971 and 19 cents; have
you received that?

Mr. Stricof: Yes, I have.

The Court: Was that not payable to both of you?

Mr. Stricof: The check was deposited to the account of
Norman and Lorraine Stricof.

Mr. Schureman: And, that is —

Mr. Stricof: (Interposing): And the money is held
undisturbed in the amount of $27,000 income plus (21)
with the lien that had been stated by the Court.

Mr. Schureman: Did you endorse her name on that
check?

Mr. Stricof: Deposited to the payor/payee bank
account.

The Court: She did not endorse it?

Mr. Stricof: No, she did not have to.

The Court: You have, however, taken some of that
money already, the $33,971 and 19 cents; you withdrew
some of that?

Mr. Stricof: The excess over 27,000 has been
withdrawn.

Mr. Schureman: But, you have taken for yourself the
amount that you anticipate the Court would award when it
signed this judgment, but you haven’t distributed that
amount that was supposed to be distributed for the
payment of Mrs. Stricof’s legal expenses?

32a

Mr. Stricof: That is not true, the money was for her
maintenance and support co-mingled with the other.

Mr. Schureman: You are entitled to it? Would you
please identify the bank that this is deposited in?

(22) Mr. Stricof: The money was deposited to the
account that was put into the record during the trial,
named as Norman and Lorraine Stricof, joint account, I
believe it would be identified to that Michigan National
Bank account, I believe.

The Court: Is that checking or savings?

Mr. Sricof: Checking account.

The Court: Gentleman, the Court is going to be in
recess.

Mr. Bellinson: Your Honor, one other point, I don’t
think that Mr. Schureman’s professional services
distribution, he is an accountant and that is not in there.

The Court: Excuse me, what is the last statement.

Mr. Bellinson: In your judgment you indicated that the
division of property from the nursing home that in his
professional services supplied are excluded, that is part of
his professional fees, coming as the accountant and so
forth?

Mr. Schureman: That's unnecessary. We specified
what he is to participate in.

The Court: Obviously, the Court did not (23) entertain
the question of legitimate fees, but I think if there is going
to bea problem maybe the Court should review it whether
it is a legitimate fee or someone trying to get around the
Court. The Court did not have any intention of going into
the question of legitimate fee, that should not — anything
that should go to the defendant wife, no question about it.

The Court will be in recess.

33a

Mr. Bellinson: One other question, this is a very
difficult matter, and we would ask Your Honor from time
to time to preserve their interests in the nursing home
monies would have to be advanced, any money advanced
from this date would the Plaintiff get credit for against the
distribution?

The Court: That’s exactly why the Court made the rule
that it has, any money advanced by the Plaintiff or
any further cash appropriations of these assets the

Defendant does not share in it, it is strictly the Plaintiff.
Mr. Schureman: That’s why you put the ceiling on it?
The Court: The Court will be in recess.

(Whereupon the matter was concluded.)

+ + *

34a

OPINION

(State of Michigan Court of Appeals)
(Filed January 25, 1978)

Norman J. Stricof, Plaintiff-Appellant, v Lorraine C.
Stricof, Defendant-Appellee.

BEFORE: D. E. Holbrook, P.J. and N. J. Kaufman and J. E.
McDonald, JJ.

PER CURIAM

Plaintiff and defendant were married in December,
1948. The three children born of the Marriage are now all
adults. The couple separated in August, 1973, after the
plaintiff filed his complaint on July 30, 1973. A judgment of
absolute divorce was entered on March 12, 1976. Plaintiff
appeals as of right.

This appeal is fundamentally centered around the
permanent alimony and property settlement provisions of
the judgment and that portion of the judgment which
awards defendant $22,000 in attc rneys’ fees, and $5,000 in
accountant’s fees.

It should be noted at the outset that the record does not
show that plaintiff was unfaithful to defendant prior to the
separation, nor is there evidence showing that plaintiff's
unfaithfulness, at any time, was the cause of the divorce.1

' The testimony concerning plaintiff's extramarital affairs after
the filing of divorce was admitted on the theory of Kretzschmar v
Kretzschmar, 48 Mich App 279; 210 NW2d 352 (1973), the trial court
ruling the evidence admissible as to the determination of alimony
and the property settlement.

35a

This Court’s powers of review in divorce cases are ably
set forth in Schilleman v Schilleman, 61 Mich App 446, 449;
232 NW2d 737 (1975), lv den 395 Mich 769 (1975):

“A trial court has wide discretion in dividing the
property of the marital estate and awarding
alimony. Pinney v Pinney, 47 Mich App 290; 209
NW2d 467 (1973). While this Court hears appeals in
divorce cases de novo, we will not revise or modify
alimony awards and property settlements in
divorce cases unless convinced that we would have
reached a different result had we occupied the
position of the trial court.” (Citations omitted.)

This Court explained:

“We follow these rules because in a divorce
action, an award of property to each party depends
upon a number of equitable factors, including the
source of the property, each party’s contribution
toward acquisition of the property, length of the
marriage, needs of the parties, their earning
ability and the needs of the children
involved. Irish v Irish, 59 Mich App 635; 229
NW2d 874 (1975), Hostetler, supra. Since trial courts
are in a much better position to determine the
relative weight to be accorded each of these factors,
we give great weight to their analysis. ***.”” 61 Mich
App at 450.

36a

Of necessity, that standard requires this Court to be
sufficiently apprised of the underlying facts so as to be able
to carry out our duties in this area. Typically, there are
several questions in a divorce action on which some
decision must be made. Therefore, this Court must insist
that trial courts abide by GCR 1963, 517.1, which provides
for specific findings of fact.

In this case, the trial was conducted Over a period of nine
days and consumed 900 pages of transcript. We realize that
the trial court was faced witha very difficult task in order to
come to a just and equitable conclusion. Nevertheless, our
examination of the record leaves us with numerous
unanswerable questions, without resolution of which we
cannot perform our designated function.

As noted earlier, part of plaintiff’s appeal is centered on
the property settlement Provisions of the judgment. In
Socha v Socha, 5 Mich App 404, 409; 146 NW2d 839 (1966),
this Court held that “[t]he [reviewing] court also
reviews on the issue of whether the trial court erred in
the disposition of property.” However, because of the
paucity of factual findings, we find ourselves unable to
answer necessary questions such as:

(1) Did the trial court consider all of the tax
consequences toward the parties in reaching its
conclusion, particularly with regard to accounts receivable
and goodwill?

(2) What portion of Stricof & Polk, C.P.A., P.C.,
belonged to plaintiff?

37a

(3) What was the value of the corporation, excluding
accounts receivable?

(4) Can good will of a professional corporation be
considered an asset? See Nail v Nail, 486 SW2d 761 (Tex,
1972).

(5) Why did the trial court add $75,000 to the valuation
of good will? Did it go by the testimony of plaintiff or did it
go by its own experience and thereby take judicial notice?2

(6) Why is there no termination date on the interest in
the two nursing homes?

Plaintiff also contends that the trial court’s treatment of
the alimony issue represented a serious abuse of judicial
discretion. This Court has noted that:

“The right to alimony arises out of the husband’s
duty to support the wife under the marriage
contract. Johnson v. Johnson (1956), 346 Mich 419.
Although the court’s power to grant alimony is not
inherent but statutory, Ritzer v Ritzer (1928), 243
Mich 406, the statute rests discretion in the court.

“CL 1948, § 552.23, as amended by PA 1964, No
11 (Stat Ann 1965 Cum Supp § 25.103) provides:

“ “Upon every divorce from the bond of
matrimony for any cause except that of adultery

2 The latter alternative has been frowned upon by this Court. See
e.g., Lepofsky v Lincoln Park, 48 Mich App 347, 354 n. 3; 210 NW2d
517 (1973).

38a

committed by the wife, and also upon every
divorce from bed and board for any cause, if the
estate and effects awarded to the wife shall be
insufficient for the suitable support and
maintenance of herself and such children of the
marriage as shall be committed to her care and
custody, the court may further decree to her such
Part of the personal estate of the husband and such
alimony out of his estate real and personal, to be
paid to her in gross or otherwise as it shall deem
just and reasonable, having regard to the ability of
the husband and the character and situation of the
Parties, and all the other circumstances of the case.’

“Thus, there does not appear to be an absolute
duty to support the wife. In the most recent case,
Stathas v. Stathas (1965), 1 Mich App 410, the short
duration of the marriage and the youth of the
parties was held sufficient to sustain a decree
awarding no alimony. In Sickrey v. Sickrey (1950),
329 Mich 41, the Court sustained a decree awarding
the wife only $3,000, the husband being awarded
real estate valued at about $6,500, subject to a lien of
$3,000 in favor of the wife to secure the judgment,
and a 1939 Chevrolet.” Socha v Socha, supra, at
412-413.

It is evident that a full factual explication of such a
complicated area of divorce litigation is a prerequisite to
proper appellate adjudication. Here again, however, there
are insufficient facts to answer the following questions:

(7) Can the trial court properly term the property
settlement alimony? See judgment at 4.

39a

(8) Was the award of alimony based on MCLA 552.133
or also used as punishment to plaintiff (as indicated by the
trial court in its March 12, 1976 statement)? See Schaffer v
Schaffer, 37 Mich App 711; 195 NW2d 326 (1972) and Gove v
Gove, 71 Mich App 431; 248 NW2d 573 (1976).

Plaintiff also complains of that portion of the judgment
which provides defendant with attorneys’ and
accountant’s fees. In Socha v Socha, supra at 414, Judge
Holbrook succinctly pointed out:

“Plaintiff claims she should have been awarded
$300 as attorney fees. Attorney fees have also been
referred to as being in the discretion of the trial
court Maynard v. Maynard (1951), 329 Mich 247
(sustaining award of $175); Wood v. Wood (1939),
288 Mich 14 (counsel fees refused). Factors to be
considered are needs of the wife, the ability of the
husband to pay, and the difficulty of the case. 1
Michigan Practice, Moore and Moore (2d ed. 1965),
§ 1364.”

> “(1) In every action brought either for a divorce or for a
separation, the court * * * may require either party to pay alimony
for the suitable maintenance of the adverse party, to pay such sums
as shall be deemed proper and necessary to conserve any real or
personal property owned by the parties or either of them, and to
pay any sums necessary to enable the adverse party to carry on or
defend the action, during its pendency. It may award costs against
either party and award execution for the same, or it may direct such
costs to be paid out of any property sequestered, or in the power of
the court, or in the hands of a receiver.

(2) An award of alimony may be terminated by the court as of
the date the party receiving alimony remarries unless a contrary
agreement is specifically stated in the judgment of divorce.
Termination of an award under this subsection shall not affect
alimony payments which have accrued prior to that termination.”

40a

See also Gove v Gove, supra, Reed v Reed, 53 Mich App 625;
22 NW2d 199 (1974), Clemens v Clemens, 39 Mich App 626;
197 NW2d 844 (1972).

In this case, there is not sufficient factual development of
this issue to permit the answering of these pertinent
inquiries:

(9) Were the attorneys’ fees based on MCLA 552.13;
GCR 1963, 726.124

(10) Who is paying the fees? It is the plaintiff or are
both parties Paying it out of the joint rebate from the
Internal Revenue Service?

Thus, it is clear that, overall, further development of the
factual posture of this case is necessary, and this can be
done best by the trial court. We acknowledge
that Zawisa v Zawica, 61 Mich App 1, 5; 232 NW2d
275 (1975), notes that where there is a “* * * failure to

_

* “Attorney Fees and Expenses.

“(1) In an action for divorce, separate maintenance,
annulment, or affirmation of marriage, and in subsequent petitions
to modify the judgment, either party may request that the court
order the other spouse to Pay an attorney the sum specified as
necessary to enable that party to carry on or defend the suit.

“(2) The moving party shall allege facts showing that he or she
is unable to bear the expense of the action without this aid. The trial
judge may require the disclosure of what attorney fees have been
paid,

(3) The court may order, in the judgment or in a separate
order, that whatever sum it finds necessary and reasonable be paid
to the wife’s attorney, either by the husband or out of the assets of
the husband over which the court has jurisdiction.

(4) The final judgment in the case shall by its entry vacate all
interlocutory orders not yet complied with unless provision is
otherwise made in the final judgment.”

4la

make specific findings of fact as required by GCR 1963,
517.1, [a ] case must be reversed.” We do not agree. We
hold that a remand to the trial court to make the findings of
fact enumerated above is a sufficient remedy. The trial
court is also directed to reopen the case to take testimony
where it deems it necessary.

We further acknowledge that the judicial circuit in
which the trial court sits is very busy. Therefore, we will
not set a date by which time this matter must be heard. We
realize that some of the inquiries the trial court is directed
to pursue will necessitate briefs from both sides. We know
that the trial court is aware that a case of this type demands
expeditious handling.

The trial court is directed to transmit to this Court
transcripts of new testimony taken, and copies of any
additional exhibits as well as its required factual findings
under GCR 1963, 517.1.

We retain jurisdiction.

42a

POST-REMAND FINDINGS AND CONCLUSIONS

(State of Michigan
In the Circuit Court — County of Oakland)
(Filed August 9, 1978)

Norman J. Stricof, Plaintiff v Lorraine C. Stricof,
Defendant, Circuit Court No. 73-100923 DO, Court of
Appeals No. 28132.

Ata session of said Court held in the Courthouse in the
City of Pontiac, County of Oakland, State of Michigan, on
this 9th day of August A.D. 1978,

PRESENT: THE HONORABLE RICHARD D. KUHN,
CIRCUIT JUDGE

This case is before the Court on remand from the Court
of Appeals, Division One. That Court, in a per curiam
opinion of January 25, 1978, posed ten questions for this
Court to answer to facilitate appellate review of this
Court’s judgment. The Court has heard oral arguments,
has received and considered proposed findings and
responses, has reviewed its own notes, and jas read the
transcript of certain parts of the proceedings in this Court.
No new testimony has been taken. Being fully advised in
the premises, the Court makes the following
determinations.

I

“Did the trial Court consider all of the tax consequences
toward the parties in reaching its conclusion, particularly
with regard to accounts receivable and good will?’

43a

This Court did not consider all of the tax consequences to
the parties in reaching its division of property. To the
extent that expert testimony incorporated tax
consequences, this Court did consider that factor. In the
evaluation of Stricof & Polk, C.P.A, P.C., this Court did
not evaluate accounts receivable. Since receivables might
never be paid, they are mere expectancies that could not be
known as a value. This Court said as much on March 12,
1976. (Transcript of 3-12-76, p. 19-20) Good will was
considered as part of the value of the C.P.A. firm.

This Court expressly ordered in its judgment that ‘“each
party hereto shall be responsible for his and her own tax
liability incurred by reason of this property settlement on
the property each received.” (Judgment, III.G., p. 7.)
Therefore, this Court accounted for and distributed the tax
liabilities that were part of the marital estate.

As to the tax liabilities about which plaintiff’s expert
Lefkos testified, this Court has discounted those
purported tax liabilities for two reasons. First, those
purported tax liabilities were calculated based on transfers
of those properties in 1974, none of which were ordered
and none of which have yet occurred. Further, those tax
calculations were not supported by adequate foundation
as to rates, deductions, or other details necessary to the
calculations. (Transcript of March 27, 1975, p. 33-34, 36.)

Secondly, and more importantly, in this Court’s eyes,
witness Lefkos lacked credibility. His testimony that
plaintiff's likely future earnings would not exceed $40,000
per year, in the face of plaintiff's own testimony that he
had averaged $100,000 per year over the

44a

previous five years, was completely incredible and
patently contrived. In light of Lefkos’ obvious falsehood as
to plaintif“s income, this Court chose to disbelieve and
ignore Mr. Lefkos’ testimony on all points.

Therefore, there was no other testimony upon which
this Court could have considered these speculative,
imaginary tax consequences.

II

“What portion of Stricof & Polk, C. P.A., P.C., belonged
to plaintiff?”

Plaintiff owned 75% of the C.P.A. firm, as this Court
acknowledged on March 12, 1976. (Transcript p. 19.) In
evaluating plaintiff's interest, the Court was presented
with testimony evaluating plaintiff's interest in the firm in
a range extending from $99,241 up to $278,000. The Court
arrived at the figure of $173,000 by weighing the evidence
and assessing the credibility and reliability of the
witnesses and testimony this Court heard. The plaintiff
himself admitted to defendant's witness Desow that the
C.P.A. firm was worth $282,000. The Court did consider
good will, but did not consider receivables in evaluating
plaintiff's interest.

ITI

“What was the value of the corporation, excluding
accounts receivable?’’

The $173,000 value put on plaintiff’s 75% interest in
the firm took into consideration good will, but did not
consider accounts. receivable. See the transcript of
March 12, 1976, p. 19 and 20.

45a

IV

“Can good will of a professional corporation be
considered as an asset? See Nail v Nail, 486 SW2d 761 (Tex.
1972).”

Nail v Nail notwithstanding, this Court is of the opinion
that good will is an appropriate asset when evaluating
professional corporations. See In re Marriage of Lopez, 38
Cal App 3d 93, 113 Cal Rptr 58 (1974). There, the
community property law required an assumption that a
spouse has contributed to and acquired an interest in the
good will of a professional firm. Here, the Court has made
an express finding to that effect. (Tr. 3-12-76, p.2)
Therefore, as inLopez,“’. . . good will may thus be separate
Property, community property, or varying degrees of both
depending upon the particular circumstances.” 113 Cal
Rptr 58, 67. The good will of Stricof & Polk, C.P.A., P.C. is
an asset of the marriage.

See also Moss v Moss, 80 Mich App 693 (1978), in which
the Court of Appeals affirmed an award of alimony which
represented the wife’s contribution to the acquisition of
the husband’s medical degree.

V

“Why did the trial Court add $75,000 to the valuation of
good will? Did it go by the testimony of plaintiff or did it go
by its own experience and thereby take judicial notice?’’

As to how this Court derived the value of Stricof &
Polk, C.P.A., P.C., see this Court’s answer to question
2 (part II, supra). This Court did not take judicial notice
of anything, but rather weighed and balanced the

46a

testimony in light of its own knowledge and experience so
far as that knowledge and experience reflected on the
credibility and reliability of the evidence.

The Court did not add $75,000 to the valuation of good
will of Stricof & Polk, P.C. Nor did the Court arrive at its
valuation of $173,000 by virtue of its own experience and
thereby take judicial notice. What the Court did was
attempt to strike a balance between the plaintiff's appraisal
of $99,241, and the defendant’s appraisal of $282,000. In
doing so, the Court added approximately $75,000 to the
plaintiff's evaluation, inan attempt to be fair to both sides.

The question could as easily be asked, ‘Why did the
Court subtract $109,000 from the defendant’ s evaluation?”
This rather less argumentative form of the question would
result in the same answer, i.e., to achieve fairness to both
sides. As noted above from the record of hearing on March
12, 1976, the Court concluded, and still holds, that the
accounting practice is worth more than $173,000, probably
$200,000. (3/12/76 5-6)

VI

“Why is there no termination date on the interest in the
two nursing homes?”

There is no termination date on the nursing home
interest because none was intended. What was intended
was a maximum dollar termination point, and the division
of the nursing home interest is such that if the nursing
home yield no profits or other form of return, neither party
benefits from those interests.

Although not asked for by the Court of Appeals, this
Court will address its evaluation of the nursing home

47a

interests. As shown by the transcript of March 12, 1976
proceedings, this Court did fix a value to the nursing home
interests. (March 12, 1976 TR. p. 6, p.10.) In reaching those
values, this Court relied largely on the testimony of Mr.
Bernstein, who actually visited the properties and had just
recently participated in the closing of a nursing home
transaction. This Court found Mr. Bernstein’s testimony
reasonable, based on recent observation, and based on his
personal experience. The value placed on Mr. Stricof’s
interests in the nursing homes was not included in the total
valuation of the property division.

VII

“Can the trial Court properly term the property
settlement alimony? See judgment at 4.”

In response to this question the Court points out that the
term “alimony” under Judgment III.B. and III.C. was
inserted not by this Court, but during a recess of court by
the mutual agreement of the parties. This Court acquiesced
in the use of that terminology, but did not order it and did
not give its express approval of that specific language.

It is standard practice to try to frame divorce decrees and
property divisions in a manner that will afford the parties
some tax benefit. The Internal Revenue Code provisions
regarding alimony provide that periodic payments which
last over a period of ten years, or which are not installments
on a fixed sum in gross, shall be treated as alimony.

These payments are not tied to any sum in gross (except
that there are maximum dollar amounts specified)
and the period during which the payments must be
made is indefinite; i* is neither more than, nor

48a

less than, ten years. Thus, the payments fit the statutory
definition and should be treated for tax purposes as
alimony.

VIII

“Was the award of alimony based on MCLA 552.13 or also
used as punishment to plaintiff (as indicated by the trial
Court in its March 12, 1976 statement)? See Schaffer v
Schaffer, 37 Mich App 711; 195 NW2d 326 (1972) and Gove v
Gove, 71 Mich App 431, 248 NW2d 573 (1976).”’

Initially, this Court is at a loss to find any statement in
the March 12, 1976 transcript that would indicate that this
Court is punishing Mr. Stricof through the award of
alimony. The reference to Gove is equally mystifying since
that case primarily deals with attorney’s fees, not alimony.
The statutory reference to MCLA 552. 13; MSA 25.93 is also
confusing since that statute deals with temporary alimony
pending a final decree. The order of alimony here is part of
the final decree and is properly reviewed in light of MCLA
952.23; MSA 25.103, the permanent alimony statute.

Reviewing the award of alimony in light of the statute
and the circumstances of the Parties reveals the following.
Plaintiff had maintained his wife and household in a
comfortable fashion, giving her $1800 per month during
the marriage for basic household expenses and after the
separation giving her over $22,000. She also expended
other funds for her own maintenance. The award of $3,000
per month alimony is specifically tied to an income for
plaintiff of $75,000 to $100,000 per year. The decree
provides that he may petition for a modification if there isa
substantial change of circumstances. The plaintiff
established defendant's standard of living and maintained

49a

it throughout the separation. The defendant must now
treat the alimony as taxable income, and must meet
expenses brought about by the divorce. An award of
$3,000 per month is not unduly burdensome to a person
earning $75,000 to $100,000 per year, and is appropriate
to maintain defendant in a reasonable life style.

As to plaintiff's fault in causing the breakdown of this
marriage, this Court finds in reviewing its notes taken at
the time of the trial, that plaintiff admitted that the
defendant had been a loyal and faithful wife. He further
admitted, on June 12, 1975, that he had not been faithful to
his wife. Certainly these matter can be taken into account
as this Court exercises its discretion.

Ix

“Were the attorneys’ fees based on MCLA 552.13; GCR
1963, 726.1?”

Because of the :ature of many of the assets of this
marriage, defendant had restricted uccess to sufficient
funds to pay professionals for their assistance in this
matter. This was a complex and unusual nine day trial over
the division of the marital estate. Plaintiff paid substantial
sums to attorneys and accountants on his own behalf out of
marital assets. The payment of defendant’s fees was
reasonably necessary, in light of the substantial amount
(though not unreasonable or inflated) and defendant's
limited access to liquid assets during the proceedings, and
thus was within the statute.

X

Who is paying the fees? Is it the plaintiff or are both
parties paying it out of the joint rebate from the Internal
Revenue Service?”

50a

The Court specifically provided that the attorney fees to
defendant's counsel of $22,000 and the expert witness fee
to defendant’s Mr. Desow of $5,000, were to be paid from
the joint Federal Income Tax refund of the parties for 1974
totaling over $33,000, with the net thereafter to be retained
by plaintiff. The intent of the Court, especially in view of
plaintiff's paying of costs of litigation from the joint
account of the parties, was in substance to impose these
awards upon the marital estate of the parties. This is clear
from the transcript of hearing on March 12, 1976, wherein
the Court noted that it was awarding defendant total assets
of $275,000, and awarding the plaintiff total assets of
$280,000. The computation of this amount to the plaintiff
was arrived at by including in the total to him only the net
sum of $6,000 from the income tax refund after deducting
the award of attorney’s fees and costs. (3/12/76 4,6)

XI

This Court feels compelled to render some additional
comments on this case. As previously noted, plaintiff's
chief expert witness, Mr. Lefkos, was totally lacking in
credibility (part I, supra). This is also the case with the
plaintiff's own testimony. At one point he testified that the
most he could draw from his C.P.A. firm was $3,000 per
month. He later testified that during one month when
things were financially tight, he drew $30,000 from the
firm. He also testified that, after averaging $100,000 a year
over a five year period, he was sure he would never make
over $45,000 in any future year. Such glaring discrepancies
expose Norman Stricof, at the very least, as an unreliable
witness.

This Court remains unshaken in its conviction that the
property division and alimony award are extremely fair to
both parties. This was a most difficult case

5la

considering the nature and extent of the property
involved, the length of the marriage, and the intricate
maneuvering and manipulation by plaintiff. This Court is
satisfied that it has reached the right result.

ls) RICHARD D. KUHN
Circuit Judge

OPINION
(State of Michigan Court of Appeals)’
(Filed March 7, 1979)

Norman J. Stricof, Plaintiff-Appellant, v Lorraine E.
Stricof, Defendant-Appellee. Docket #28132.

Before D. E. Holbrook, P. J., N. J. Kaufman and Ee,
McDonald, JJ.

PER CURIAM.

This case is before us for evaluation of the trial court's
post-remand findings of fact, as ordered in Stricof v Strico f
(Docket #28132, unpublished per curiam opinion,
released 1/25/78). Appellant does not contest the granting
of the divorce itself. His challenges are to the property
settlement, alimony, and attorney fee provisions of the
March 12, 1976 judgment of divorce. No further testimony
has been presented, or requested, although our earlier
opinion suggested that such testimony might be helpful to
this court and the trial court.

52

The first question which we directed the trial court to
answer dealt with the court’s consideration of tax
consequences. In its opinion on remand, the court stated
that tax consequences had been considered, to the extent
incorporated by the expert testimony; however, plaintiff's
expert lacked credibility because he had testified
untruthfully. In addition, this witness had not specified
the foundational facts for his calculations, and had made
his calculations based on transfers of property which had
not yet occurred and had not been ordered. Finally, the
court stated that the general principle which had guided
the court’s division was that each party should be
responsible for his or her own tax liabilities on property
awarded in the settlement.

We can find no fault with the above findings. The trial
court has wide discretion in dividing the property of the
marital estate, and in deciding which witnesses are worthy
of belief. Irish v Irish, 59 Mich App 635, 636; 229 NW2d 874
(1975). The court must consider tax consequences in
general, but is not required to consider speculative,
imaginary tax consequences of transfers which may never
occur. See Wahl v Wahl, 39 Wis 2d 510; 159 NW2d 151
(1968). The situation here is analagous to that where an
employee’s interest in a pension fund is a mere
expectancy: such an interest is not distributable pursuant
to a divorce judgment. Miller v Miller, 83 Mich App 672;__
NW2d __ (1978). United States v Davis, 370 US 65; 8 L Ed 2d
335; 82 S Ct 1190 (1962), relied on by the plaintiff, is not on
point because in that case the transfers had already taken
place. In the case at bar, all our opinion asked was whether
the court had taken the tax consequences into consid-
eration, and we are now satisfied that this was done.

53a

The second through fifth questions concerned the
valuation of plaintiff's accounting firm, Stricof and Polk,
P.C. In its post-remand findings of fact the trial court
stated that (1) plaintiff's interest in the firm was 75 percent,
(2) this 75 percent interest was valued at $173,000,
including goodwill but excluding accounts receivable, and
(3) the $173,000 figure was arrived at by weighing the
evidence and credibility of witnesses, and attempting to
strike a fair and equitable balance between the valuations
of $99,241 and $282,000 given by plaintiff's and
defendant's witnesses respectively.

Again, we cannot find that we would have reached a
different conclusion had we been in the position of the trial
court. It was proper for the court to fix a value between the
extreme estimates. Greenough v Greenough, 354 Mich 508,
518; 93NW2d 391 (1958), Mitchell v Mitchell, 333 Mich 441,
445; 53 NW2d 325 (1952). As to the inclusion of goodwill,
we find no abuse of discretion since there was testimony
from both sides that this particular firm did have valuable
goodwill. SeeIn re Marriage of Lopez, 38 Cal App 93; 113 Cal
Rptr 58 (1974). The sixth and seventh questions dealt
with two nursing homes in which plaintiff held
partnership interests. The judgment of divorce had
awarded defendant wife 50 percent of the benefits received
by plaintiff on account of plaintiff's interests in these
nursing homes “by way of principal, capital, income or
otherwise.” The ceiling on the amount defendant could
receive was $135,000 for Frenchtown and $170,000 for Van
Buren. These sums were to be “alimony,” and were not to
terminate “as a result of death or remarriage.”’

On remand, this Court asked, first, whether the trial
court could term the property settlement ‘alimony.’

54a

The trial court responded that the word “alimony” was
added by mutual agreement of the parties. Plaintiff has not
disputed this statement in his brief. The law favors
compromises and settlements, and the court is ordinarily
powerless to disturb the terms of a stipulation entered into
by the parties as to the division of property. See Shahan v
Shahan, 74 Mich App 621; 254 NW2d 596 (1977), Dillard v
Dillard, 356 Mich 394; 96 NW2d 801 (1959). We find no
error.

Our previous opinion also asked why there was no
termination date on the nursing home interests. The trial
court responded that none was intended; what was
intended was a maximum dollar termination point.
Plaintiff has presented no authority indicating that this
was an abuse of discretion. Indeed, plaintiff's arguments
are essentially directed at the court’s valuation of the
nursing homes. ' We have examined the transcript and find
that we would not have reached a different result. The
testimony of Burnstein (defendant's expert), an accountant
who had had previous experience with at least 20 nursing
homes, and who had visited Frenchtown and Van Buren
and found them to be beautiful, well-run facilities, was
certainly no less believable than that of Lefko (plaintiff's
expert). Lefko had appraised two nursing homes in his
career — Frenchtown and Van Buren — and had not even
visited these properties in person.

Our eighth question concerned the trial court’s possible
use of alimony as punishment of plaintiff for having a
relationship with another woman nearly two years after
his separation from defendant. We do not

' We note that the trial court did not consider plaintiff's interest in
these nursing homes in its total evaluation of property.

55a

approve of the use of alimony as punishment for actions
occurring so long after the separation. Nevertheless, we
are convinced from our review of the trial court’s
statements taken in light of the testimony as a whole that
the alimony award was basically intended to maintain
defendant in the lifestyle to which she had contributed and
become accustomed to during the marriage. We thus find
no abuse of discretion. MCL 552.23; MSA 25.102; Abadi v
Abadi, 78 Mich App 73; 259 NW2d 244 (1977). If there is a
change in circumstances, plaintiff may of course petition
the court fora reduction in alimony. Esslinger v Esslinger, 9
Mich App 11; 155 NW2d 702 (1967).

Finally, our earlier opinion requested clarification
regarding attorney fees. The trial court’s response
indicated that defendant’s attorney fee of $22,000 and
expert witness fee of $5,000 were to be paid from the
parties’ joint 1974 federal income tax refund. The court saw
these sums as ‘reasonably necessary, in light of the
substantial amount (though not unreasonable or inflated)
and defendant's limited access to liquid assets during the
proceedings.”

We must reverse the above award. Attorney fees in
divorce actions are proper only if necessary to enable a
party to carry on or defend the litigation. MCL 552.13; MSA
25.93; GCR 1963, 726.1; Gove v Gove, 71 Mich App 431; 248
NW2d 573 (1976), Radway v Radway, 81 Mich App 32053
NW2d 202 (1978). This was not the case here. A person
awarded $275,000 in a divorce judgment does not need any
help to pay an attorney and an accountant.

Plaintiff and defendant are each entitled to one-half of
the joint 1974 federal income tax refund.

Affirmed in part; reversed in part. No costs.

56a

DISSENTING OPINION
(State of Michigan Court of Appeals)

Norman J. Stricof, Plaintiff-Appellant, v Lorraine C.
Stricof, Defendant, Appellee. Docket #28132.

Before D. E. Holbrook, P. J., N. J. Kaufman and ee
McDonald.
JJ. J. E. McDonald, J. (Dissenting)

I must respectfully dissent.

We are in total agreement with the opinion written in all
regards except concerning the denial of attorney fees.

The circuit judge pointed out in his response to the
questions asked by this Court on remand that he believed
that the attorney fees awarded for the defendant were
necessary and reasonable to enable the defendant to carry
on the litigation. The trial court also points out that the
defendant wife’s Separate estate was virtually
non-existent.

The trial court stated that during the pendency of this
suit, the plaintiff husband paid considerable moneys for
his cost of litigation from marital assets. This was done
without requesting or obtaining Court approval and with
no showing of necessity under MCL 552.13; MSA 25.93;
GCR 726.4. The husband was awarded over $280,000.00 by
the judgment. Both Gove and Radway involve situations
that occurred several years after a divorce had been granted
and the parties had received their separate amounts.
Attorney fees were awarded on motions to modify the
judgment.

We do not believe that the consideration of attorney fees
on a post-judgment motion involves as many

57a

factors as does the award of attorney fees as part of an
overall settlement between the two parties at the time of
the divorce when the monies under consideration are not
specifically those of one party or the other as definitely as
they are several years after the parties have gone their
separate ways with their own funds.

We recognize that the trial court in the instant case had to
deal with many aspects of a very complicated economic
situation. We are unable to say that he committed error in
exercising his judgment and we are unable to say that these
items should be considered separately.

Part of our reluctance to interfere with the disposition of
the trial court is our concern that in doing so we may create
a situation where the defendant wife not only is compelled
to pay her own cost of litigation but a portion of the cost of
litigation of the plaintiff husband.

We would affirm the action of the circuit judge.

ORDER

(State of Michigan Supreme Court)
(Filed April 4, 1980)

Norman J. Stricof, Plaintiff-Appellant, v Lorraine C.
Stricof, Defendant-Appellee.

At A Session Of The Supreme Court Of The State Of
Michigan, Held at the Supreme Court Room, in the City of
Lansing, on the 4th day of April in the year of our Lord one
thousand nine hundred and eighty.

58a

Present the Honorable Mary S. Coleman, Chief Justice,
Thomas Giles Kavanagh, G. Mennen Williams, Charles L.
Levin, John W. Fitzgerald, James L. Ryan, Blair Moody, Jr.,
Associate Justices.

On order of the

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385007_0377%3A1. Public record. Not legal advice.