Opinion
June 18, 1974.
Editorial Note:
This case has been marked 'not for publication' by the court.
Gail F. Ouren, Monte Vista, for plaintiff-appellee.
Inman, Flynn & Coffee, P.C., Robert D. Inman, Denver, for defendant-appellant.
COYTE, Judge.
This appeal concerns an order for property division entered in connection with a decree of divorce entered on August 14, 1970.
The parties entered into a stipulated agreement which provided for division of the major portion of the marital estate. This appeal involves the trial court's resolution of certain disputed items in connection with an appliance store operated by the parties as a family business. The parties agreed that Mr. Skeff, the appellant, was to retain and operate the business. After a hearing, the trial court made findings of fact with respect to the valuation of the business and entered a judgment in favor of plaintiff, Nancy Skeff, in the sum of $37,529.55. Appellant asserts that the trial court erred in failing properly to account for the contingent liability on commercial paper sold with full recourse; in its valuation of accounts receivable; and in its determination that the business had a going concern value of $20,000.
I
One of the items in dispute is the amount of contingent liability arising in connection with a number of retail installment sales contracts which had been sold to various commercial lenders with a provision for full recourse against the business should the customer default on his payments. Appellant asserts that there existed a contingent liability with respect to this discounted commercial paper and that the valuation of the business should have been reduced accordingly. In its order denying the motion for a new trial, the court stated that from the evidence it had no way of determining any loss on contingent liabilities and directed that jurisdiction be retained to determine that loss at a time when the amount of contingent liabilities was finally resolved.
Appellant also objected to the court's valuation of the accounts receivable. He asserted that the testimony showed that these accounts were uncollectible and therefore valueless. In its denial of appellant's motion for new trial, the court stated that it was not satisfied that these accounts could not be collected, at least in part, and ordered that the accounts be made the subject of an accounting with final disposition to follow after reasonable efforts had been made to collect them. Appellant now contends that the trial court erred by failing to make a final disposition with respect to the accounts receivable and by retaining jurisdiction until the amount was finally determined.
The statute in effect at the time of these proceedings, C.R.S.1963, 46--1--5(2), required that an order dividing the property of the parties to a divorce proceeding be made either at the time the divorce decree is issued, or within such 'reasonable time thereafter as may be set by the court at the time of the issuance of said divorce decree.' C.R.S.1963, 46--1--5(4), authorized the court to retain jurisdiction for the purpose of hearing matters regarding division of property which it was unable to determine at earlier hearings for 'lack of knowledge or information.' Here, the trial court entered an order relative to division of property and retained jurisdiction for the purpose of an accounting with respect to uncollected accounts receivable and contingent liabilities. The court stated that it could not make a final disposition of these matters because there was insufficient evidence from which to determine their value. Under such circumstances, the trial court properly retained jurisdiction with respect to the contingent liabilities and the uncollected accounts receivable.
II
Appellant also asserts that the trial court erred by establishing a going concern value for the business of $20,000 and in increasing the net asset value of the business by that amount. Appellant asserts that the assignment of a going concern value was erroneous because the trial court did so Sua sponte and without taking evidence on the issue. In addition, appellant points out that the trial court departed from generally accepted accounting principles in its establishment of the going concern value.
Appellant's arguments on this issue are well taken. The trial court assigned a value to the intangible assets of the business without taking evidence or hearing expert opinion on either the proper method for determining such value or on the amount of such value with respect to the business. As a result, there is insufficient evidence in the record relative to the elements comprising the going concern value of the business. See Los Angeles Gas & Electric Corp. v. Railroad Commission, 289 U.S. 287, 53 S.Ct. 637, 77 L.Ed. 1180; Appleton Waterworks Co. v. Railroad Commission, 154 Wis. 121, 142 N.W. 476.
The judgment is affirmed with respect to the matters of contingent liability and uncollected accounts receivable, and reversed with respect to the matter of the going concern value of the business and the cause is remanded for such further proceedings as may be necessary to determine the proper method of establishing the going concern value, if any, of the business.
SILVERSTEIN, C.J., and ENOCH, J., concur.