Wallace v. Wallace ( 1998 )

IN THE COURT OF APPEALS OF TENNESSEE
AT NASHVILLE
FILED
October 14, 1998
CAROLYN VIRGINIA WALLACE, )
) Cecil W. Crowson
Plaintiff/Appellee, ) Appellate Court Clerk
) Appeal No.
) 01-A-01-9712-CC-00751
VS. )
) Davidson Circuit
) No. 96D-248
RANDEL EUGENE WALLACE, )
)
Defendant/Appellant. )
APPEALED FROM THE CIRCUIT COURT OF DAVIDSON COUNTY
AT NASHVILLE, TENNESSEE
THE HONORABLE MARIETTA M. SHIPLEY, JUDGE
LOUISE R. FONTECCHIO
BRUCE, WEATHERS, CORLEY,
DUGHMAN & LYLE
2075 First American Center
315 Deaderick Street
Nashville, Tennessee 37238-2075
Attorney for Plaintiff/Appellee
W. A. MOODY
MOODY, WHITFIELD & CASTELLARIN
95 White Bridge Road, Suite 509
Nashville, Tennessee 37205
Attorney for Defendant/Appellant
AFFIRMED AND REMANDED
BEN H. CANTRELL, JUDGE
CONCUR:
KOCH, J.
CAIN, J.
OPINION
This case involves the value of a CPA firm included in the marital assets.
The trial judge found the value to be $140,000. We affirm.
I.
Among other assets the parties had accumulated during their marriage
was an accounting firm that started as the wife’s bookkeeping business in the late
1970's. Husband, a CPA and a teacher at Nashville Tech, began to get involved and
do tax work for his wife’s clients. At first the parties worked out of their home, but by
the time of the divorce they worked out of an office building on White Bridge Road.
The husband was by then the primary source of the professional services rendered
to the clients.
In November of 1994 the husband purchased another accounting firm’s
client list and office assets for approximately $100,000. In December of 1995 he filed
a financial statement with the bank showing the value of his firm at $260,000. He
testified in the divorce hearing that the personal property in the business was worth
$64,900 and that the accounts receivable amounted to $40,000. The wife testified
that in 1995 the husband was considering selling the business and that he valued it
at between $310,000 and $350,000. The trial judge found that the firm was a marital
asset and valued it at $140,000.
II.
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We decided in Smith v. Smith, 709 S.W.2d 588 (Tenn. App. 1985) that
the good will of a small law firm was not part of the marital property. It cannot be sold
separately from the business, and it is extremely hard to evaluate.
The husband in this case insists that the same rule applies to his
business and that the trial judge’s finding of the value of the business for division as
martial property included a large portion of the firm’s good will. We agree that the rule
in Smith v. Smith applies here. But we cannot agree that the value found by the trial
judge included the firm’s good will. The record shows that the husband had an
ongoing business which he managed with the help of three or four other employees
while teaching full time at Nashville Tech. In 1995 he purchased another firm’s client
list and other tangible assets for approximately $100,000. The personal property and
accounts receivable amounted to approximately $105,000 at the time of the divorce.
There is evidence in the record that a firm such as this one would sell for
approximately the amount of its gross receipts for one year. In this case the firm was
averaging around $250,000 in gross receipts each year.
With proof showing tangible assets of $105,000 and a market value
including its good will of $250,000, the trial judge chose to value the firm at $140,000.
We think the finding is supported by the record and that it does not include good will.
The judgment of the trial court is affirmed and the cause is remanded
to the Circuit Court of Davidson County for any further proceedings necessary. Tax
the costs on appeal to the appellant.
____________________________
BEN H. CANTRELL, JUDGE
CONCUR:
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_____________________________
WILLIAM C. KOCH, JR., JUDGE
_____________________________
WILLIAM B. CAIN, JUDGE
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