Equitable Distribution in a High End Divorce

The Seattle Times has an interesting story on a retired Microsoft executive and how a judge divided the couples art collection, valued at $100 million plus.  The couple could not decide which paintings they wanted so the judge was to decide, but he also wanted input into the decision making process by the couple.  She was more interested in art from a collector and connoisseurship point of view, he wanted to cover walls and use the collection for collateral.

The Seattle Times reports on the division

In February, Judge Downing asked both parties to express, in writing, their wishes for how the art should be assigned.

Calhoun wrote seven pages, going through the pieces one by one. At times she described her emotional reaction to the art. The Monet, she said, was "incredibly soothing to look into."

Some scenes she related to her life. Of Theodore Robinson's "Day Dreams," she wrote: "A young woman with a pensive expression. The place of her fanciful moments seems to be an orchard and makes me think of my place of origin, Wenatchee." A Hermann Herzog painting, "Going Home with Flock of Sheep," summoned thoughts of generations past. Both sides of her family "have histories of raising sheep, going back to our Irish roots."

She critiqued, calling paintings "lovely" or "charming," or saying that a Charles Sprague Pearce piece "gains points with me for the portrayal of beauty that is not pale skinned and blond."

Larson's objectives were more businesslike.

He said he wanted his collection to be "well-balanced and diversified."

He said he needed artwork to secure a line of credit with JPMorgan Chase — and that the bank would count, as collateral, only those paintings worth $750,000 or more.

And he said: "I have lots of wall space to cover in the Norcliffe house, and so I do not want a collection consisting of very few expensive paintings."

Lots of wall space to cover. This guys can relate to. A guy rents an apartment and what does he do? He scans the walls and finds posters to fill up the space. It's just that Larson has more space to fill and more money for posters.

To measure this particular objective — the desire to cover maximum wall space — we dropped the 43 paintings into a spreadsheet and performed a quick calculation (value divided by dimension) to arrive at each painting's "appraised value per square inch."

For Larson to get his wish, he needed to get lots of square inches for minimal cost (while at the same time racking up enough big-ticket items to keep JPMorgan Chase happy).

At one end of the spectrum was William Medcalf's "Little League," a bargain at $17.34 per square inch. At the other was John Singer Sargent's "Dans les Oliviers à Capri," a masterpiece that, per square inch, clocked in at a whopping $26,666.67.

Who got what

So how did it turn out? Well, give the judge a hand. We'll spare you the details, but after adding it up, it looks like Larson's collateral demands were met.

Calhoun got the two pieces she wanted most (a Monet and a Sargent), as well as the piece she wanted least (the Cropsey). She got the piece that reminded her of Wenatchee.

Calhoun's 19 paintings averaged $3,082 of appraised value per square inch.

Larson's 24 paintings came in at $1,942 per square inch. That lower number is good. It means he can cover more wall space.

All together, Larson's paintings will cover 25,505 square inches, or about 177 square feet.

Now for one last computation: According to the Home Depot Paint Calculator, a half-gallon — or two quarts — would cover almost exactly the same amount of wall space.

So Larson got two quarts' worth. But in his case, each quart would cost about $25 million. That's what happens when you replace latex with oil and have it applied by Bierstadt and Renoir.

After the judge's order was issued, Larson and Calhoun, on their own, elected to do some trading. So some pieces awarded to Calhoun now belong to Larson, and vice versa. Great art endures, but ownership rarely does.

Source: The Seattle Times