Opinion
No. 3-997 / 03-0549
Filed February 27, 2004
Appeal from the Iowa District Court for Cass County, Gordon C. Abel, Judge.
Roger Martens appeals from the property division provisions in the decree dissolving his marriage to Judy Martens. AFFIRMED AS MODIFIED.
Michael Winter, Council Bluffs, for appellant.
Joanne Lorence of Otto Lorence Law Firm, P.C., Atlantic, for appellee.
Heard by Zimmer, P.J., and Miller and Hecht, JJ.
Roger Martens appeals from the dissolution decree entered by the district court dissolving his marriage to Judy Martens. He contends the court erred in admitting evidence of his potential future inheritance and considering this evidence in granting a judgment against him and in favor of Judy for $60,000. Judy seeks appellate attorney fees. We affirm with minor modification.
I. BACKGROUND FACTS AND PROCEEDINGS.
Judy filed a petition for dissolution of marriage on May 22, 2002 after some forty-two years of marriage to Roger. The case proceeded to trial in October 2002, and the court entered a dissolution decree on February 27, 2003, dividing the assets and debts of the parties. There are no minor children involved in this case and no alimony was awarded. Judy was sixty at the time of the dissolution hearing and was working as a cosmetologist and as an independent sales representative for Smith-Dale, Inc., marketing home furnishings and decorating items. Her 2001 income tax returns showed an income of approximately $14,000. The court found Judy to be in good health. Roger was sixty-three at the time of hearing and was self-employed as a farmer until he retired in 2000. He began receiving Social Security benefits in December 2001 and receives approximately $10,176 per year in benefits. He also hauls recyclable materials, from which he earns an additional $7,500 per year. The court found that Roger had suffered a stroke the year prior to the hearing and that his balance was affected and he has weakness on his right side and hand due to the stroke. Roger is also on oral medication for diabetes.
In 1997 Judy's mother died and she inherited 240 acres of farm land which was free from debt, approximately $40,000 in cash, and a house which she sold for $80,000. Judy contributed the proceeds from the sale and the cash either directly to Roger or to their family farming operation which Roger managed. Roger also assumed control of all of the rent from the 240 acres Judy inherited and spent that money as he saw fit. The court found Roger is either unwilling or unable to account for the cash Judy gave to him and the farm rental income.
Despite these contributions by Judy the parties fell into debt. In December of 2000 Roger applied to MetLife for a loan allegedly to consolidate debts of an existing mortgage and income tax liability, as well as get $23,250 in new borrowed funds, for a total loan of $275,000. MetLife required as collateral the parties' 80-acre parcel of land they had purchased in 1976 as well as the 240 acres Judy had inherited. Judy agreed and both parties signed the mortgage. Roger's remainder interest in real estate he had inherited in 1976 was not encumbered by the mortgage.
After paying their bank $259,345 of the loan proceeds, Roger received the remaining amount of $15,654 from the MetLife loan. The trial court again found Roger was either unable or unwilling to explain what he did with these loan proceeds or an additional $36,149 in accounts receivable he had listed on the loan application. Roger testified that he did not make the required mortgage payments and that the MetLife loan was in default with a total due of $287,900 at the time of trial. The court also found Roger had sold eight items of farm equipment in 2001 without Judy's knowledge or consent. He did not share any of the $38,354 in proceeds from the equipment sales with Judy, and although he testified the money was applied to loans for which the equipment was collateral he offered no documentation at trial to support the claim. Judy testified her mother gave her $30,500 in 1995 to purchase a motor home. Roger apparently sold the motor home in May 2002 for $11,000 without Judy's consent or approval and did not share any of the proceeds from the sale with her. Roger claims the bank had a lien on the motor home for $7,500.
In addition, Roger offered evidence at trial which showed an MBNA credit card in his name with a balance in October 2000 of $5,764, of which $2,433 was from ATM cash advances, and with a balance of $17,691 on the date of trial. There was also a Chase credit card in his name with a balance of $19,547, $14,000 of which was for cash advances. The court found that these debts were not discussed with Judy, the parties' lending institution, or MetLife, and if they had been marital debts Roger would have had great incentive to refinance them with the rest of their debt in 2000 but did not. From these facts the trial court determined these debts were not marital debts but were Roger's separate gambling debts which he had kept secret and not disclosed to Judy or their financial institutions.
Over Roger's objections, the court received and considered evidence regarding Roger's possible future inheritance. In its ruling the court stated that Roger's mother was ninety-one years old and had an estate valued at approximately $598,000. The court found that Roger would inherit one-half of his mother's total estate and that due to her mental infirmities her will cannot he changed. The court further stated that "Roger has the good fortune that he has not yet received his expected inheritance having an estimated value of $289,000 at the time of trial." Timely and proper objections were consistently made by Roger to all of the evidence Judy introduced at trial regarding his mother's available assets, her insurance coverage, or anything to do with her financial well-being. The court noted the standing objection but allowed the evidence finding it was material and only went to the weight of the evidence.
Ultimately the court concluded that Judy's testimony, as a whole, was credible and Roger's was not. The court determined Roger could not begin to account for his gambling losses and there had been an enormous erosion of marital property attributable directly to Roger's uncontrolled and unaccounted for gambling losses, which he attempted to conceal from Judy and their creditors. Thus, given the waste committed by Roger, the numerous sales of marital assets without Judy's knowledge or consent, and Roger's failure to account for the proceeds, the court concluded that an equal distribution of property was not equitable. Accordingly, in dividing property the court awarded Judy a judgment against Roger in the amount of $52,352. Due to the fact Roger had the full benefit of Judy's inheritance and his waste of marital assets, the court further increased Judy's property division judgment by an additional $60,000, for a total award of $112,352. The court ordered that the judgment should be paid within one year of the death of Roger's mother, bearing interest at the legal rate.
This and the following amounts are the correct, amended amounts entered by the court in a nunc pro tunc order after the court corrected a mathematical error in the original decree.
For purposes of this appeal Roger does not dispute the court's credibility findings or the $52,352 portion of the judgment awarded to Judy. Roger's sole contention on appeal is that the court erred in allowing and considering the evidence of Roger's potential future inheritance in granting the additional judgment against him of $60,000 in favor of Judy.
II. SCOPE AND STANDARD OF REVIEW.
In this equity case our review is de novo. Iowa R. App. P. 6.4. We examine the entire record and adjudicate rights anew on the issues properly presented. In re Marriage of Smith, 573 N.W.2d 924, 926 (Iowa 1998). We give weight to the fact-findings of the trial court, especially when considering the credibility of witnesses, but are not bound by them. Iowa R. App. P. 6.14(6)( g). This is because the trial court has a firsthand opportunity to hear the evidence and view the witnesses. In re Marriage of Will, 489 N.W.2d 394, 397 (Iowa 1992). Prior cases have little precedential value, except to provide a framework for analysis, because our decision must be based on the unique facts and circumstances before us. In re Marriage of Kleist, 538 N.W.2d 273, 276 (Iowa 1995).
III. MERITS.
Our analysis of the property division is governed by Iowa Code section 598.21(1) (2001). The ultimate question is whether the distribution of property is equitable under the specific facts of the particular case. In re Marriage of Richards, 439 N.W.2d 876, 880 (Iowa Ct. App. 1989). The partners to a marriage are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Miller, 552 N.W.2d 460, 463 (Iowa Ct. App. 1996). However, Iowa courts do not require an equal division or percentage distribution. Id. All economic aspects of the divorce decree must be viewed as an integrated whole when considering the equity of the distribution. In re Marriage of McFarland, 239 N.W.2d 175, 179 (Iowa 1976).
It is clear from the trial court's ruling that the court did in fact consider Roger's potential future inheritance in determining the property division. Roger argues there are no statutes or case law supporting the court's admission and consideration of this evidence. We agree that the evidence relating to Roger's potential future inheritance should not have been admitted or considered by the court. See In re Marriage of Muelhaupt, 439 N.W.2d 656, 661 (Iowa 1989) (reversing an award by the district court of a percentage of one spouse's expected future inheritance to the other); In re Marriage of Griffin, 356 N.W.2d 606, 608 (Iowa Ct. App. 1984) (rejecting wife's contention she should receive a larger award due to fact husband will be inheriting more money, because the court's concern is with dividing the assets the parties have now and the court does not make property divisions based on speculation of future inheritances). Therefore, in our de novo review we give this evidence no consideration. However, even ignoring all of the evidence relating to Roger's possible inheritance, for the reasons set forth below we conclude the trial court's additional award of $60,000 was equitable.
Iowa courts have recognized that some conduct of a spouse which results in the loss or disposal of property which would otherwise be subject to division at the time of divorce may be considered in making an equitable division of property. In re Marriage of Bell, 576 N.W.2d 618, 624 (Iowa Ct. App. 1998), abrogated on other grounds by In re Marriage of Wendell, 581 N.W.2d 197, 200-01 (Iowa Ct. App. 1998); In re Marriage of Burgess, 568 N.W.2d 827, 828 (Iowa Ct. App. 1997). "Moreover, we recognize that dissipation or waste of marital assets by a spouse prior to the dissolution of marriage may generally be considered in making a property division." Burgess, 568 N.W.2d at 828. A spouse's disposal of assets that would otherwise be subject to division in the dissolution may properly be considered in making an equitable distribution of the parties' property. In re Marriage of Goodwin, 606 N.W.2d 315, 321 (Iowa 2000).
We, like the district court, find that Judy's testimony is more credible than Roger's regarding the considerable assets expended by the couple on gambling. Although the record is clear that both parties gambled a great deal, it is also clear that Roger dissipated much more of the parties' property than Judy and did so in a secretive way. He disposed of several of the parties' assets without the knowledge or approval of Judy and without sharing those proceeds with her. There is no evidence in the record of any similarly secretive or deceptive conduct on Judy's part.
Furthermore, Roger had the full benefit of the approximately $120,000 in cash Judy inherited as well as the rental income from the 240 acres she inherited. Judy gave all of these funds either directly to Roger or to pay for the parties' joint debts and farming operation. In addition, Judy agreed to use the 240 acres she inherited as collateral on the consolidation loan Roger got through MetLife. However, she never saw any of the approximately $15,000 balance of the loan which was paid out to Roger, Roger is unwilling or unable to account for that money, and the loan is now in default and Judy is at risk of losing that property in a foreclosure. Judy also has no retirement fund and was relying on Roger's representations that they would both use their inheritances to subsidize their retirement.
Ultimately there appear to be many tens of thousands of dollars for which Roger is either unwilling or unable to account. Further, he concealed these expenditures and his large amount of debt from both Judy and his creditors. Accordingly, we agree with the trial court that based on the evidence in the record it appears a great majority, if not all, of those monies were wasted by Roger on gambling. We do not believe that Judy, especially after a marriage of such long duration, should have to bear the brunt of Roger's denial and deception. The court's additional award of $60,000 was equitable.
As noted above, the trial court ordered that Judy's $112,352 judgment against Roger be paid within one year of Roger's mother's death and bear interest at the legal rate for judgments. In making the judgment due at that time the court considered Roger's potential inheritance from his mother and the approximate time he might receive any such inheritance. We have held that the trial court should not have admitted or considered evidence of this possible inheritance. We therefore conclude that the date on which the judgment becomes due and payable should not be tied to the date of Roger's mother's death, and strike that part of the decree that delays the due date of the judgment. Judy shall be entitled to enforce the judgment at any time.
IV. APPELLATE ATTORNEY FEES.
Judy seeks an award of appellate attorney fees from Roger. An award of appellate attorney fees is not a matter of right but rests within our sound discretion. In re Marriage of Kurtt, 561 N.W.2d 385, 389 (Iowa Ct. App. 1997). We consider the needs of the party making the request, the ability of the other party to pay, and whether the party making the request was obligated to defend the trial court's decision on appeal. Id. After considering these relevant factors, we award Judy $3,000 in appellate attorney fees.
V. CONCLUSION.
Based on our de novo review, and for all of the reasons set forth above, we conclude that the challenged $60,000 property division judgment in Judy's favor was equitable. While we recognize this resulted in an unequal division of the parties' property, we reiterate that the goal of a property division is to assure just and equitable, rather than equal, allocations. Based on the particular facts and circumstances of the case at hand we conclude the additional award to Judy is distinctly just and equitable. We modify the trial court's decree by striking the part that delays the due date of Judy's judgment against Roger, and provide instead that Judy shall be entitled to enforce the judgment at any time. Judy is awarded $3,000 in appellate attorney fees from Roger.