Bowen v. Bowen,
473 A.2d 73 (N.J. 1984).


Procedure:Defendant husband appealed the opinion of the Superior Court, Appellate Division (New Jersey), which affirmed the trial court's judgment granting plaintiff wife an equitable one-half interest in stock owned in a closed corporation but allowing defendant to retain ownership interest for purposes of voting and other stockholder responsibilities.

Facts: Mr. Bowen (D) held 22% of the stock in a closely held corporation, where he worked full time. At the divorce hearing, the trial court held that it could not determine the value of the stock from the testimony. It awarded D all the indicia of ownership of the stock and awarded Mrs. Bowen (P) "an equitable one-half interest in the stock." The court made certain provisions so that P would be assured of dividends. The parties appeal.

Issue: May a court faced with difficulty in evaluation of the stock of a close corporation order one party to retain the stock and make the other party an equitable owner of half that stock?


Holding:Yes. Judgment reversed.
The Superior Court, Appellate Division, affirmed, and petition for certification was granted. The Supreme Court, O'Hern, J., held that: (1) despite the valuation difficulties, court was obliged to arrive at a valuation of the stock in order to avoid the sources of strife and friction which could arise from giving wife an interest in the stock; (2) stockholders' buy-sell agreement was not controlling; (3) opinion value not based on evidence in the record or proven acceptance in the field would be given little weight; and (4) court could employ independent expert to resolve specific disagreements between the parties' experts.


Analysis: In a divorce judgment, the trial court awarded plaintiff wife an equitable one-half interest in the stock of a closely held corporation but allowed defendant husband to retain voting rights and other stock ownership responsibilities, and the appellate court affirmed. On further review, the court reversed and remanded, holding that the trial court had to arrive at a value for closely held corporate stock to effect equitable distribution of the asset to one spouse because to do otherwise would continue the discord between the parties. The court noted that a comprehensive buy-sell agreement could provide presumptive evidence of such value but that the parties' agreement did not do so because it did not include good will. The court also held that opinions of value not based upon evidence in the record or of proven acceptance in the field should be given little weight and that the trial court must base its valuation on facts in the record. Finally, the court observed that trial courts should employ independent experts when necessary to resolve specific disagreements between the parties' experts.