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Ladden v. Ladden

Decided: February 18, 1960.


Gaulkin, Sullivan and Foley. The opinion of the court was delivered by Sullivan, J.A.D.


This is an appeal in a matrimonial action in which plaintiff, the wife of defendant Matthew L. Ladden, sued her husband and three business corporations which he owned. The first count of the complaint asked for separate maintenance from the husband, for the support of plaintiff and two children then living with her. The second count, against the corporate defendants, sought the recovery of salary earned by plaintiff as an employee but never paid to her. The third count charged defendant husband with taking the aforesaid salary due plaintiff and using the funds for his own purposes. In the fourth count it was alleged that defendant husband fraudulently induced plaintiff to turn over to him her twenty-five per cent stock interest in one of defendant corporations. The return of the stock was sought.

The trial was lengthy and bitterly contested. At the conclusion thereof the court awarded plaintiff separate maintenance for the support of herself and a daughter living with her, the other daughter having decided to live with her father after the commencement of the suit. On the second and third counts, involving the salary claim, the court found for plaintiff and entered a judgment of $25,000 in her favor against all defendants. As to the fourth count, for the corporate stock, the court dismissed plaintiff's claim. The judgment allowed a counsel fee of $4,000 to the attorneys for plaintiff for services rendered in connection with the matrimonial issue. Thereafter the court made additional allowances of $350 and $500 to plaintiff's attorneys for services rendered in the cause subsequent to the entry of judgment.

Plaintiff has not appealed from any part of the court's ruling. All of the defendants have appealed from that part of the judgment awarding plaintiff $25,000 on the second and third counts. Defendant husband also appeals from the allowance of the $4,000, $350 and $500 counsel fees.

The parties were married in 1931. The union seems to have been happy enough in the beginning and produced three children. The oldest, a son, is married and has his own home. He works for his father. The two daughters attend school.

Plaintiff as well as her husband was employed for the first few years of the marriage. During that period of time their income was pooled to pay living expenses. She gave up her employment prior to the birth of her first child in 1935, and thereafter her husband was the sole support of the family. About 1944 Mr. Ladden decided to go in business for himself, and organized Ladden Asbestos Corporation with borrowed money. Plaintiff came to work in the corporation office in 1946 and stayed until May 1955. In the beginning it was a "one-girl office" with plaintiff attending to numerous duties. As the business expanded an office staff was added and plaintiff's work became supervisory or executive in character. Her salary reflected the situation. In the beginning it was modest but was increased from time to time until her earnings reached $200 or more weekly. It was stipulated that over the period of time involved, 1946 to May 1955, plaintiff's earnings were approximately $75,000.

Plaintiff claims that none of the salary was ever paid to her, and that her husband appropriated all of it. Mr. Ladden denies this. The trial court made no finding thereon but it is unnecessary to resolve the precise issue because, no matter how the money came to Mr. Ladden, it is obvious that it was with plaintiff's knowledge and consent. From 1946 to 1952 her salary went into a joint bank account on which she could, and did, draw checks. If she had any objection to the receipt of her salary by her husband she could have taken or used the money as she saw fit. She

also could have terminated her employment if she did not approve of the situation. On the contrary she continued to work, acquiesced in Mr. Ladden's course of conduct and, together with her husband, signed yearly joint federal income tax returns acknowledging receipt of the salary.

The crux of this appeal is whether or not plaintiff can compel her husband to account to her for this money. This in turn depends on the nature of the arrangement between the parties. Was it a gift or a loan? Was her salary made available to her husband under some agreement that he was to use it for specified purposes only, or was it just turned over to him or taken by him without any agreement at all as to its use or disposition?

It is settled law in this State that when a wife turns her income over to her husband who spends it with her knowledge and without objection on her part, a gift will be presumed. Van Inwegen v. Van Inwegen , 4 N.J. 46 (1950). In Jones v. Davenport , 44 N.J. Eq. 33, 47 (Ch. 1888), the court commented on this type of situation as follows:

"A wife, by permitting her husband to take her income and make such use of it as he sees fit, induces him to live in a style much more expensive than he otherwise would. He spends more for her, and gives her more to spend than he would if she required him to pay her income over to her. And she gets just as much benefit, as a general rule, from his increased expenditures as he does. It would, in many cases, not only be extremely unjust, but ruinous, if the wife could, after years of silence, call upon her husband to return to her everything he had received ...

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