On appeal from the Superior Court, Appellate Division, whose opinion is reported at 167 N.J. Super. 256 (1979)
For reversal and remandment -- Chief Justice Wilentz and Justices Sullivan, Pashman, Clifford, Schreiber, Handler and Pollock. For affirmance -- none. The opinion of the Court was delivered by Pashman, J.
In a divorce proceeding, a court has the power "to effectuate an equitable distribution of the property * * * acquired * * * during the marriage." N.J.S.A. 2A:34-23. In this case we are once again called upon to examine when the marriage terminates so as to place after acquired property beyond the reach of this power.
The parties were married in 1944 and had two daughters, both of whom were emancipated at the time of trial. During the early 1960's, plaintiff William Brandenburg had founded and was the principal owner of Norris Manufacturing Company. Around the beginning of 1966, the company was liquidated to satisfy a quarter million dollar judgment against it. Plaintiff forfeited his stockholdings to pay the judgment. Defendant Barbara Brandenburg received $37,000 for her stock, and plaintiff placed other proceeds totalling $60,000 in trust for the two daughters. Soon afterwards, the husband moved from the marital home.
Shortly after the liquidation of Norris Manufacturing Company, several of its former employees formed JBL Corporation. This new enterprise did not receive any assets from the proceeds of the earlier liquidation. The new company retained plaintiff as a general manager. He received stock options as compensation but did not become a stockholder until 1969 or 1970. At the time of trial, plaintiff owned approximately 59% of the new corporation.
When the parties separated in 1966 plaintiff moved to an apartment in Hawthorne, New Jersey. Defendant continued to reside in the marital home in Montclair, New Jersey, with the two daughters. During this time, plaintiff gave defendant between $595 and $695 per month and paid all of the household expenses. In 1974 the Montclair home was sold and plaintiff purchased a condominium for defendant and the children in
Clifton, New Jersey, with the proceeds of the sale and a $15,000 loan. Plaintiff then increased his support payments to $700 per month. He continued to pay all household expenses until three or four months before trial, when payments were increased to $800 per month.
Although the parties separated in 1966, it was not until February 20, 1976, that plaintiff filed suit for divorce based on 18 months' separation. Defendant filed a counterclaim seeking divorce on grounds of separation and desertion. A judgment of divorce in favor of both parties on the ground of separation, see N.J.S.A. 2A:34-2(d), was granted on February 23, 1977.
The trial court awarded defendant $20,000 per year in alimony. Applying our ruling in Painter v. Painter, 65 N.J. 196 (1974), the court made equitable distribution of all assets acquired by the parties since their marriage in 1944 until the date on which plaintiff filed the complaint in 1976. Defendant was awarded property valued at one-third of the total worth of these assets. This distribution included plaintiff's stockholdings in JBL Corporation -- valued by the trial judge at $468,000 -- which he had not acquired until some three years after the parties separated. The court adjudicated the matter prior to this Court's decision in Smith v. Smith, 72 N.J. 350 (1977), in which we held that a written separation agreement would mark the end of the marriage for equitable distribution purposes.
Plaintiff appealed to the Appellate Division, contending that assets acquired after the 1966 separation -- specifically the JBL stock -- should not have been subject to distribution. He argued that under the reasoning in Smith, the oral agreement to separate in 1966 and the parties' continued adherence to that agreement constituted sufficient evidence of a marital breakdown in 1966. Plaintiff urged the Appellate Division to use this earlier date as the time of the marriage's termination instead of the "date of complaint" as required by Painter. This would have excluded from equitable distribution assets acquired after 1966, including the stock in the new corporation. He also challenged the equitable distribution award on the grounds that certain of the court's valuations and computations were erroneous.
The Appellate Division reversed and remanded the case for recomputation of the equitable distribution award. The majority held that since the parties' oral agreement to separate marked the end of their marriage, equitable distribution could not include the plaintiff's later acquired stock in JBL Corporation.*fn1 167 N.J. Super. 256 (App.Div.1979). Relying on our decision in Smith, the court concluded that if evidence that the marital enterprise is no longer viable is "clear and unequivocal, the inclusion of property thereafter should not depend upon the existence of a formal document designated as a separation agreement." 167 N.J. Super. at 262. Since the Brandenburgs had "separated under a mutual oral understanding and did not cohabit for a period of ten years," the majority concluded that "it would be 'clearly irrational' to include as distributable assets property acquired by the husband years after such a continuous and final breakdown of the normal marital relationship." 167 N.J. Super. at 262-263 (quoting Smith, 72 N.J. at 361). The court also found that defendant's support of her husband as a homemaker and wife was lacking after the separation. This was a "corroborating relevant factor" in the court's determination that plaintiff's JBL stock was not subject to distribution. 167 N.J. Super. at 264.
Judge Michels dissented on the issue of when the marriage had ended for purposes of equitable distribution. He stated that in the absence of a formal separation agreement, the date the complaint is filed should govern. The dissent would have affirmed the trial court's finding that the JBL stock was eligible for equitable distribution. Id. at 266-270 (Michels, J.A.D., dissenting in part).
Defendant appealed to this Court from the Appellate Division judgment. Under R. 2:2-1(a)(2), this appeal as of right is limited to "those issues as to which * * * there is a dissent in the Appellate Division." The only question before us, therefore, is whether the parties' separation in 1966 marked the
end of their marriage for purposes of equitable distribution. As to that issue we now ...