In 1971, the Legislature authorized the courts, in a divorce proceeding, "to effectuate an equitable distribution of the property . . . acquired . . . during the marriage." N.J.S.A. 2A:34-23.
This case involves further review of the continuing evolution of the issue of when an asset should be valued for purposes of equitable distribution. A separate but related issue is whether a litigant should be charged for investing marital funds, post complaint, in good faith, in a business (also a marital asset), that is determined to have no value at the time of trial.
When referring to the problems involved in awarding equitable distribution, the Supreme Court observed:
The judicial task may upon occasion be a difficult one but it will hardly be novel. Seeking just and equitable results is and has always been inherent in the judicial function; it has been a chief concern of the courts for many centuries. [ Painter v. Painter, 65 N.J. 196, 212, 320 A.2d 484 (1974)]
The two issues being addressed in this opinion have been alluded to but have never been directly decided in any reported decision in this State. As this court considered those issues, it applied the oft-stated principle that:
[T]he division of property upon divorce is responsive to the concept that marriage is a shared enterprise, a joint undertaking, that in many ways it is akin to a partnership. Only if it is clearly understood that far more than economic factors are involved, will the resulting distribution be equitable within the true intent and meaning of the statute. [ Rothman v. Rothman, 65 N.J. 219, 229, 320 A.2d 496 (1974)]
For the purpose of deciding the issues presently before the court, the relevant facts are not in dispute. The parties were married in 1966 and they separated in 1987. They have two children who are 23 and 18. The husband filed a complaint for divorce on January 13, 1988.
Plaintiff purchased a car dealership with another person in 1985. He owned two-thirds of the business from its inception until the summer of 1990 when, as the result of the settlement of litigation with his partner, he became the sole owner. He has always been actively involved in the management of the business.
In 1985, he loaned $200,000 of marital funds to the business. The balance of the capital used for acquisition and start-up purposes came from bank loans for which plaintiff became personally liable.
In February 1989, plaintiff loaned $100,000 of marital funds to the business and the additional sum of $250,000 was advanced in November 1989. The business paid interest on those amounts, as it had done on the plaintiff's initial loan of $200,000, and the interest payments were routinely deposited by
plaintiff (as were his salary checks) into various money market and liquid accounts that were used to support the family.
Pendente lite motions were argued on July 29, 1988. The order from that date was signed on November 3, 1988. Paragraph five provides:
Both plaintiff and defendant are hereby restrained and enjoined from alienating or encumbering in any manner any of the assets of the parties or either of them, except that plaintiff shall not be restrained and enjoined hereunder from conducting his business known as Coast Imported Cars in the ordinary course . . . .
Plaintiff's loans, totalling $350,000, were made after the entry of that order. In addition, some time in 1990, plaintiff used approximately $50,000 of marital funds to pay counsel fees in connection with the litigation with his partner. For present purposes, the loans and the payment of counsel fees are ...