IN RE: the MARRIAGE of Sarane and Harold FONSTEIN. (1975)

Sarane Fonstein obtained a judgment of dissolution of her marriage to Harold Fonstein, which judgment provided for spousal and child support and effected the distribution of substantial community property including Harold's interest in the partnership of Rose, Klein and Marias, a firm of attorneys.

The trial court valued the partnership interest at $49,977.00. Sarane has appealed, challenging that valuation. Harold cross-appealed contending that the partnership interest is contingent and non-vested and thus not properly included in the community assets. Subsequently Harold moved to dismiss Sarane's appeal on the grounds that her acceptance of the benefits of the judgment was a waiver of her right of appeal.

Acceptance of the benefits of a judgment constitute a waiver of the right to appeal where those benefits are ones to which the appealing party would not be entitled in the event of a reversal. Conversely where the benefits accepted are ones which would flow to the appealing party in any event, an appeal on an issue which is severable from the right to those benefits is not inconsistent with such acceptance. (San Bernardino v. Riverside, 135 Cal. 618, 67 P. 1047; Miller v. Miller, 227 Cal.App.2d 322, 38 Cal.Rptr. 571; Browning v. Browning, 208 Cal. 518, 282 P. 503; Gudelj v. Gudelj, 41 Cal.2d 202, 259 P.2d 656.)

The fact that Sarane accepted other items of community property as well as spousal and child support is no basis for dismissing her appeal concerning the issue of the value of the item of the community property.

The law firm of Rose, Klein and Marias operates pursuant to a written partnership agreement which provides a formula for distribution of income among the partners and for evaluating each partner's interest upon death or voluntary withdrawal from the firm. No fund is maintained for distribution in case of death or withdrawal, it being contemplated that payment would come from current partnership income.

The evidence established that Harold's partnership interest at the time of trial had a value of $110,417 and that should he withdraw from the firm the sum, according to the provisions of the partnership agreement, would be paid to him over a period of nine year without interest. The value of the partnership interest in the event of Harold's death would have been approximately twice that figure.

It seems clear that at the time of trial Harold had a vested interest in the partnership which was available should he decide to withdraw or in the event of his death and was contingent upon his performing additional services in the future. Thus the partnership interest was an item of community property with an ascertainable present value. (Bensing v. Bensing, 25 Cal.App.3d 889, 102 Cal.Rptr. 255; Waite v. Waite, 6 Cal.3d 461, 99 Cal.Rptr. 325, 492 P.2d 13; In re Marriage of Lopez, 38 Cal.App.3d 93, 113 Cal.Rptr. 58.)

Sarane does not quarrel with the fact that the partnership interest was valued on the basis of an assumed withdrawal by Harold. Nor does she argue with a downward adjustment attributable to the fact that payment would be spread out over a nine-year period. She does contend that the valuation failed to properly consider the effect on Harold's interest of the recent death of one the partners and that it was error for the court to reduce the value of Harold's interest on the basis of projected tax consequences.

The starting point for the trial court's evaluation of Harold's partnership interest was the finding that that interest was 8 percent of the partnership. There is agreement between the parties that the 8 percent figure was a correct one prior to the death of one of the partners. They further agree that the partnership agreement is ambiguous as to the effect that the death of a partner will have on the interest of the remaining partners. Extrinsic evidence was offered to establish that in fact Harold's interest remained at 8 percent. There is substantial evidence in the record to support the trial court's adoption of the 8 percent figure.

The crucial and significant issue tendered by this appeal is the impact of the projected tax consequence on the valuation. We need not lengthen this opinion by reciting the elements of the computation which were used in arriving at the trial court's final value of $49,977 for the partnership interest. Suffice to say there was substantial evidence in the record, by way of testimony of expert witnesses, which support the court's determination of the after-tax value.

The real question is simply whether it was proper, for the purpose of this litigation. to consider possible tax consequences at all. Sarane argues that these consequences were speculative and based on certain assumptions concerning Harold's future financial situation, which may or may not prove out. In this argument Sarane is in the position of wanting to have her cake and eat it too.

The very basis of the evaluation of Harold's present interest in the partnership was an assumption of his withdrawal from the firm. There is no indication that he intends to or will withdraw. The trial court was faced with the difficult task of placing a present value on an item, the value of which under present expectations, may vary widely in the future. In solving the problem the trial court had to answer the question ‘What would the partnership interest be worth if it were now converted to cash?’

If the parties had remained married and Harold had in fact withdrawn from the firm, there would, of course, have been tax consequences which would have impacted on the two of them. Sarane should not be placed in a better position because of the dissolution of the marriage.

The requirement that community assets be divided equally frequently places the court in a position of having to place an instant cash value on inchoate interests and this necessarily leads at times to arbitrary and imprecise valuation. (See In re Marriage of Lopez, supra.) The objective is to make as accurate a division of the property as human limitations will allow. Taxes are a fact of life that will be with us for some time to come, and we see nothing inequitable or improper in the trial court's projecting on the best evidence available, the extent to which taxes would reduce Harold's cash in hand had he made the assumed withdrawal from the partnership. Weinberg v. Weinberg, 67 Cal.2d 557, 63 Cal.Rptr. 13, 432 P.2d 709, relied on by Sarane is inapplicable to the situation here.

Harold is being asked to pay cash now for something he may never realize in fact.¹ Possibly his situation will change in a way that the tax consequences will not be as great as now predicted. History indicates, however, that taxes tend to rise rather than drop. On the other hand the fate of the law firm may prove to be such that Harold is paying more now than his interest may ultimately be worth. In our opinion the trial court properly considered all factors bearing on the problem and achieved a fair and equitable result.

The motion to dismiss the appeal is denied; the judgment is affirmed; both sides to bear their own costs.

FOOTNOTES

1.  The partnership agreement provides that its provisions be changed by majority vote of the partners.

COMPTON, Associate Justice.

FLEMING, Acting P. J., and BEACH, J., concur.