Opinion
No. 2-161 / 01-1318.
Filed July 3, 2002.
Appeal from the Iowa District Court for Woodbury County, GARY E. WENELL, Judge.
Thomas Distefano, Jr. appeals and Patricia Lewis cross-appeals from a district court order on the receiver's final report in an action to dissolve the parties' corporation. AFFIRMED AS MODIFIED.
Alan E. Fredregill of Heidman, Redmond, Fredregill, Paterson, Plaza, Dykstra Prahl, L.L.P., Sioux City, for appellant.
Jeffrey L. Poulson and Michael W. Cameron of Corbett, Anderson, Corbett, Poulson, Flom Vellinga, Sioux City, for appellee.
Heard by MAHAN, P.J., and ZIMMER and EISENHAUER, JJ.
Thomas Distefano, Jr. appeals and Patricia Lewis cross-appeals from a district court order on the receiver's final report in an action to dissolve the parties' corporation. On appeal, Thomas contends the district court erred in concluding life insurance proceeds were assets of the corporation. On cross-appeal, Patricia also contends the district court erred in concluding life insurance policies were assets of the corporation. We affirm as modified.
Patricia also raised two additional issues that we do not address on appeal.
Background Facts and Proceedings. Thomas Distefano, Jr. was employed by Jim Lewis as an electrician. In 1974 Jim and Thomas formed Aquat-ic Engineering, a company engaged in swimming pool and spa sales and service. Initially, both Jim and Thomas participated in the management of Aquat-ic. Since 1983 Thomas handled the day-to-day operations of the company while Lewis Electric provided bookkeeping functions and payroll assistance for the business. In 1992 there was some discussion between Thomas and Jim regarding a buy-sell agreement providing for the survivor to buy out the stock from the deceased shareholder's estate; however, it was never completed. In 1993 $50,000 life insurance policies were purchased on the life of each partner. Although the corporation paid the premiums on the policies, the partners were the sole owners of said policies.
Aquat-ic Engineering was also formed by a third partner, who ceased participating during the early years.
The policies were cross-owned with Jim owning the policy upon Thomas's life, and vice versa. As such, each was the beneficiary of the policy on the other's life.
On September 15, 1996, Jim Lewis passed away, and shortly thereafter Thomas received the proceeds of the life insurance policy in the amount of $52,985.06. Upon his death, Jim's interest in the companies passed to his wife, Patricia Lewis. Initially, there was some discussion about Thomas buying out Patricia's interest in the business. However, the discussions were limited. The relationship between Patricia and Thomas became strained and deteriorated to the point that it was agreed the business must close and be sold at the end of 1999.
Patricia did not object to Thomas's receipt of the life insurance proceeds.
Besides Aquat-ic Engineering, both Thomas and Jim were also fifty-fifty owners in D L Rentals.
On February 3, 2000, a petition was filed requesting a receiver to be appointed to wind up and liquidate the business of both entities and for a decree dissolving the corporations. Thomas, Patricia, and the receiver raised several issues. On October 20, 2000, the court entered an order which ruled on various financial matters, including the life insurance policies. The court determined the insurance polices should be reclassified as corporate assets. The court required Thomas to reimburse the corporation for the proceeds he previously received. Thomas appeals, and Patricia cross-appeals.
It is clear from the record that neither Thomas, Patricia, nor the receiver requested the district court to rule on the ownership of the life insurance policies. It was then, and remains today, the position of both Thomas and Patricia that these policies were their own personal property.
Standard of Review. Our review in this equity case is de novo. Iowa R. App. P. 6.4. We examine the entire record and adjudicate rights anew on the issues properly presented. Fencl v. City of Harpers Ferry, 620 N.W.2d 808, 811 (Iowa 2000). 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).
Life Insurance Policies. On appeal both parties contend the district court erred in concluding the life insurance policies were the assets of the corporation. We agree. A careful review of the record indicates that neither party requested such a finding. In addition, both parties at oral arguments requested that this portion of the decision be vacated. It is clear that the findings and conclusions of the district court with regard to the ownership of the life insurance policies were entirely outside the issues presented to the court for determination. Further, our de novo review of the record leads us to the conclusion that the life insurance policies were personal property, not assets of the corporation. See Fleming v. Fleming, 194 Iowa 71, 123-24, 184 N.W.2d 296, 297 (1921); Jones v. Simmons, 209 N.W.2d 840, 842 (Mich.Ct.App. 1973). Accordingly, we affirm the decision of the district court but modify that portion which concludes the life insurance policies are an asset of the corporation. The insurance policies are the personal property of the parties.
Remaining Issues. Because we conclude the life insurance policies were personal assets, we need not address the remaining issues raised by Patricia in her cross-appeal.
AFFIRMED AS MODIFIED.