## Facts

- Michael L. Retzer (husband) and Nancy B. Retzer (wife) were married and, during the marriage, built a successful McDonald’s franchise business.
- The Retzers formed a closely held corporation, Retzer & Retzer, Inc., to operate the franchise(s).
- The business venture required significant work and training, and it was financed through a combination of loans and family resources.
- Corporate ownership was split between the spouses, with Michael holding 51% of the stock and Nancy holding 49%.
- Michael later filed for divorce. The chancery court granted the divorce to Michael on the ground of Nancy’s adultery.
- In dividing the parties’ economic interests, the chancery court focused on how to provide Nancy a meaningful benefit from her minority stock position in a company controlled and operated by Michael.
- The chancery court valued Nancy’s interest in the corporation at about $1.1 million and selected 8% as a reasonable annual return on that ownership interest.
- The chancery court ordered Michael to pay Nancy $88,000 per year in equal monthly installments, but framed the award as “alimony” reduced by any distributions Nancy received from the corporation.
- The chancery court also awarded Nancy a $275,000 lump-sum cash amount and granted her custody of the children.
- Michael appealed, challenging the lump-sum award, the annual $88,000 obligation (including its characterization), and the custody award.

## Issues

1. Whether the chancery court erred by awarding Nancy a $275,000 lump-sum cash award in addition to other financial provisions.
2. Whether the chancery court erred in ordering Michael to pay Nancy $88,000 per year as periodic alimony, and whether the payment should instead be treated as a return on Nancy’s ownership interest in the closely held corporation.
3. Whether the chancery court erred in awarding custody of the children to Nancy despite the adultery finding.

## Decision

- The Mississippi Supreme Court reversed and rendered the $275,000 lump-sum cash award, eliminating it.
- The court affirmed the $88,000 annual payment amount, but held it was not alimony; it was a fair return on Nancy’s ownership of 1,600 shares in Retzer & Retzer, Inc.
- The court affirmed the award of custody to Nancy.

## Legal Principles

- A chancellor’s findings of fact in domestic cases receive substantial deference on appeal and will not be disturbed unless manifestly wrong or clearly erroneous.
- An equity court must reach a fair and just result when dissolving a long-term marriage, but monetary awards must be supported by the proof and must fit coherently within the overall financial arrangement ordered by the court.
- Appellate courts look to the substance of a payment obligation, not the label used by the trial court; payments described as “alimony” may be reclassified where they function as compensation for a property interest.
- In a closely held corporation where one spouse controls operations and the other spouse holds a minority interest, a court may structure relief to provide the minority owner spouse a reasonable return tied to ownership, rather than forcing the spouse to rely on the controlling shareholder’s dividend decisions.
- A lump-sum cash award may be set aside when it is not adequately supported by the record or when it improperly duplicates other benefits granted to the same spouse.
- Marital fault such as adultery does not automatically determine custody; custody turns on the children’s best interests, and the chancellor’s custody decision is reviewed with deference.

## Conclusion

In *Retzer v. Retzer*, the Mississippi Supreme Court removed the $275,000 lump-sum award, upheld the $88,000 yearly payment but treated it as a fair return on the wife’s close-corporation stock rather than alimony, and left custody with the wife because the chancellor’s best-interests determination was not clearly erroneous.


Retzer v. Retzer, 578 So. 2d 580 (1990)