Holm v. Holm
2017 ND 96
N.D.2017Background
- Dianna and Thomas Holm divorced after a 24-year marriage; major marital asset was a 10% interest in a closely-held corporation purchased under Thomas’s employment stock-option agreement.
- Thomas purchased $5,000/year for five years using marital funds to reach the 10% cap; ownership required continued employment and transfers were heavily restricted.
- The stock paid substantial annual dividends (≈ $38,693 in 2014; ≈ $28,686 in 2015). Thomas testified he regarded dividends as part of his compensation and would not have taken the job without the stock option.
- The district court found the dividends were compensation, valued the stock at its $25,000 purchase price (the amount paid by the parties), awarded the stock to Thomas, and divided the net marital estate nearly equally.
- Dianna moved for amended findings/new trial; the court denied those motions. She appealed arguing (1) dividends are marital property, (2) stock should have been valued under the agreement’s “Calculated Value” procedure, and (3) the stock should have been divided.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether stock dividends are part of Thomas’s compensation (not divisible) | Dividends are stock distributions / marital property and must be divided | Dividends were part of Thomas’s compensation tied to employment and stock option; not a dividable salary substitute | Court: Dividends treated as compensation; finding not clearly erroneous; dividends not split |
| Proper valuation method for the stock | Court should apply §6.7.3 “Stipulated/Calculated Value” method in the employment agreement | No stipulation or accountant valuation was presented; court may rely only on evidence in record | Court: Valued stock at $25,000 (purchase price); within evidence range and not clearly erroneous |
| Whether stock should be divided between spouses | Dianna sought stock (or share of dividends) for an equal property distribution | Thomas argued restrictions, company buy-back option, and work-tied value make division impractical and conflict-prone | Court: Refused to divide shares; awarded stock to Thomas; overall property split remained essentially equal and not inequitable |
| Whether district court’s findings were clearly erroneous given contract language | Plaintiff: Contract separates compensation and shareholder rights; dividends not listed as compensation—court misinterpreted contract | Defendant: Purpose and context show dividends functioned as employment compensation; precedent allows treating distributions as wages | Court: Majority upheld findings as not clearly erroneous; concurrence disagreed on legal interpretation but concurred in result |
Key Cases Cited
- Adams v. Adams, 863 N.W.2d 232 (N.D. 2015) (standard of review for marital property division)
- Wald v. Wald, 556 N.W.2d 291 (N.D. 1996) (dividends characterized as compensation may not be awarded as marital property)
- Dvorak v. Dvorak, 693 N.W.2d 646 (N.D. 2005) (valuations within the range of evidence are not clearly erroneous)
- Klitzke v. Klitzke, 308 N.W.2d 385 (N.D. 1981) (trial courts may structure payment forms in lieu of dividing stock)
- Fisher v. Fisher, 546 N.W.2d 354 (N.D. 1996) (minority shares in close corporations often have little market value)