Leona M. ASHTON, Appellant and Cross-Appellee.
J. R. ASHTON, Appellee and Cross-Appellant.
Rehearing Denied March 14, 1961.
[89 Ariz. 149] Evans, Kitchel & Jenckes, Phoenix, for appellant and cross-appellee.
Moore & Romley and Robert H. Green, Phoenix, for appellee and cross-appellant.
This appeal involves the interpretation and application o a property settlement agreement entered into by Leona M. Ashton, plaintiff below (hereinafter called 'Appellant') and J. R. Ashton, defendant below (hereinafter called 'Appellee').
The agreement (hereinafter called Property Settlement Agreement) made part of a judgment and divorce decree rendered September 18, 1954, reads in part:
'In computing the amount to be paid by First Party to Second Party as specified in sub-paragraph 2 of Paragraph 1 hereof, First Party and Second Party and their respective counsel appraised at $15,000.00 the interest and equity of First Party and Second Party in the following Corporations, viz: Aztec Homes, Inc., Butterfly Homes, Inc., Copperhead Homes, Inc., Devilhead[89 Ariz. 150] head Homes, Inc., Eagle Homes, Inc., Flatrock Homes, Inc., Goldenrod Homes, Inc., Hummingbird Homes, Inc., Ironside Homes, Inc. and Jasmine Homes. Inc. By the terms and provisions of this Property Settlement Agreement First Party becomes the absolute owner of the entire interest and equity of First Party and Second Party in said corporations, and Second Party acknowledges First Party's right at any time to sell said interest and equity in any manner and at such prices as he shall deem reasonable without any obligation whatsoever to Second Party; however First Party expressly agrees that as of January 1, 1957 a determination of the value as of that date of said interest and equity in said corporations shall be made by Robert A. Becker whose said determination in that respect shall be final, binding and conclusive on both First Party and Second Party. If said interest and equity as determined by Robert A. Becker shall exceed the sum of $15,000.00, First Party shall pay to Second Party fifty per cent (50%) of the difference between $15,000.00 and the amount of said determination, said payment to be made in equal monthly instalments without interest payable on the lst day of each month, commencing February 1, 1957 and ending September 1, 1964: provided, however, that if First Party shall have sold said interest and equity prior to January 1, 1957 he shall pay to Second Party fifty per cent (50%) of the difference between $15,000.00 and the proceeds of said sale. In the event of a sale of said interest and equity, fifty per cent (50%) of the net excess over $15,000.00, after payment of any capital gain tax thereon, shall be paid by First Party to Second Party in equal monthly instalments without interest payable on the lst day of each month, commencing on the first day of the month following said sale and ending September 1, 1964.'
Appellant contends that the trial court erred in entering its order and judgment requiring appellee to pay to appellant the sum of $4,943.45, and in failing to require appellee to pay appellant the sum of $24,370.
The court will first consider the agreement.
On January 17, 1955, the appellee with others, reduced to writing prior oral negotiations whereby he agreed to exchange his interest in equity of corporations mentioned in the Property Settlement Agreement (hereinafter referred to as 'A' to 'J' corporations) for shares of the common capital stock of Magma Copper Company. The performance of the agreement with Magma (hereinafter called Magma agreement) was subject to numerous conditions, including: authorization by the New York [89 Ariz. 151] Stock Exchange for the listing of 23,375 shares of Magma stock; order of the Securities and Exchange Commission declaring effective the registration of said 23,375 shares of Magma stock; approval of the agreement by Reconstruction Finance Corporation or the Secretary of the Treasury; obtaining of opinion from Magma's counsel with respect to title and obtaining
of opinion from Magma's counsel with respect to the authority of the parties to be bound by the provisions of the agreement. All of said conditions were to be met on or before March 28, 1955.
Under the terms of the Magma agreement the closing of the transaction was to take place on or before March 31, 1955. The conditions were net, and the transaction was completed on or about April 11, 1955. Appellee received 760 shares of the common capital stock of Magma Copper Company in exchange for all of his right, title and interest in and to the capital stock of the 'A' to 'J' corporations. On the last mentioned date stock of Magma was sold on the New York Stock Exchange at prices ranging from 86 3/4 to 87. Under the circumstances at that date, April 11, 1955, the 760 shares of Magma stock received by appellee were worth not less than $65,740.
October 25, 1955, appellee's attorney sent a letter to appellant's attorney explaining the transfer. The letter read in part:
"On October 26, 1954, the day the agreement to sell was entered into, the value of the Magma Copper stock ranged from a low of $45.75 to a high of $46.00 per share. Mr. Ashton is willing to use the $46.00 figure; accordingly the 760 shares at $46.00 per share had a value on October 26, 1954 of $34,960.00.
"Mr. Ashton's cost basis for the 'A' to 'J' stock was $3.51 per share, or a total of $2,667.60 for the 760 shares involved. Deducting this amount from the value of the stock on October 26, 1954 leaves a net amount of $32,292.40 to be taxed as a capital gain at 25%, which amounts to $8,073.10. When the amount of the tax in deducted from the $34,960.00 value above-mentioned there remains a net of $26,886.90 which exceeds the $15,000.00 figure mentioned in paragraph III (1), supra, by $11,886.90.
"Under the terms of the Property Settlement Agreement Mrs. Miller is entitled to receive one-half of the $11,886.90 which amounts to $5,943.45; under the terms of said Agreement that amount is payable in equal monthly installments commencing on November 1, 1954 and ending on September 1, 1964, a period of 119 months; accordingly the amount payable per month is just under $50.00. At Mrs. Miller's request Mr. Ashton some time ago paid her [89 Ariz. 152] $500.00 to apply on the amount due her in connection with this transaction, and at her request we are sending her a copy of this letter together with Mr. Ashton's check for $500.00 representing an additional payment on said obligation. Mrs. Miller had indicated a desire ...