Summary
rejecting husband's claim that farm bought six months before the parties married was a premarital asset, where the couple cohabited for years before marrying
Summary of this case from In re Marriage of WheelerOpinion
No. 3-252 / 02-1613.
Filed January 14, 2004.
Appeal from the Iowa District Court for LinnCounty, Thomas L. Koehler, Judge.
Husband appeals the property division and attorney fee provisions of the decree dissolving the parties' marriage. AFFIRMED.
Angela Railsback of Nazette, Marner, Wendt, Knoll Usher, L.L.P., Cedar Rapids, for appellant.
Jeannine Roberts of Krug Beckelman, P.L.C., Cedar Rapids, for appellee.
Considered by Mahan, P.J., and Miller and Vaitheswaran, JJ.
Robert Squires appeals from the decree dissolving his marriage to Kathryn Squires. He challenges various aspects of the property division, and an award of attorney fees. We affirm.
Background Facts and Proceedings. Kathryn Olson and Robert Squires began dating in 1987. The couple began cohabitating in 1988, and resided together "on and off" for the next few years. In 1992 Kathryn and Robert jointly purchased a $28,500 mobile home. Due primarily to Robert, they were able to pay $10,500 toward the purchase price, and received a loan for the remaining $18,000. Kathryn and Robert located the new mobile home on the farm owned by Robert's parents. As Robert had lost all of his furniture and household goods in a fire, most of the household goods and furniture in the new home were Kathryn's.
The couple made a down payment of $1,000, and Robert was able to contribute an additional $9,500 from an $18,000 insurance settlement for losses he suffered when his own mobile home was destroyed by fire. Robert used some or all of his remaining settlement proceeds to make improvements to the new mobile home.
In addition to actively working his parents' farm, Robert was employed by Cargill Corporation. Kathryn worked for Rockwell Collins. Because Robert was fulfilling a child support obligation, Kathryn bore the majority of household expenses. This included the entire mortgage payment on the mobile home, even though Robert claimed the mortgage interest deduction on his tax returns. Kathryn also performed the majority of household tasks, and helped care for Robert's parents. Additionally, she assisted Robert with farming operations.
In October 1994, Robert began purchasing his family farm on contract. The purchase was subject to his mother's life estate in a house, garage and yard area. Although the parties to the contract agreed the value of the total farm was $121,683, the purchase price was set at $72,000. Robert was allowed a discount for past rentals paid, as well as credits for the value of his mother's life estate, estimated at 17.91 years, and Robert's obligation to pay taxes and insurance on the house, garage, and yard area during his mother's life.
Robert originally began to purchase the farm on contract in 1989, but forfeited the contract due to problems with his father's Title XIX benefits.
Robert and Kathryn married in May 1995, a little more than six months after the purchase agreement was signed. Although Kathryn did not make any direct financial contribution to the purchase of the farm, she did sign a $35,000 personal guarantee for Robert's farming equipment and operating expense loans. She also continued to assist Robert in a number ways with the farming operation, from transporting seed and crops to constructing fences to keeping the farm's records.
For over a year after the marriage Kathryn continued to make the entire mortgage payment on the parties' mobile home. By the time Robert began making half the mortgage payment in June 1996, Kathryn had paid about $14,000 towards the purchase of the $28,500 home. Even after Robert began contributing to the mortgage payments, Kathryn paid the greater amount of household expenses, and continued to perform the majority of household tasks.
Robert filed a petition for dissolution of the marriage in June 2001. Robert and Kathryn had no children, and earned nearly identical salaries, he at Cargill Corporation and she at Rockwell Collins. The issues before the district court at the July 31 and August 1, 2002 trial were accordingly limited to property division and attorney fees and costs.
In the district court's August 2002 dissolution decree, Robert received a net property award of approximately $130,000 to $140,000. This included the farm, farming operations, and the parties' mobile home. Kathryn received a net award of approximately $77,000. The majority of Kathryn's award consisted of various payments from Robert, including a $50,000 payment that represented a one-half share of the parties' net equity in the farm land, buildings and dwellings that Robert began purchasing in 1994. An account containing the proceeds of Kathryn's inheritance from a great aunt was not made part of the property division, but was set aside to Kathryn.
Robert appeals, arguing the court erred in not excluding his premarital assets, including the farm, farming operation, and life insurance, from the property division. He also argues the court erred in valuing the farming assets, in ordering him to pay one-half of Kathryn's Capital One credit card debt, in ordering him to reimburse Kathryn for certain expenses, and in awarding Kathryn certain items of personal property. Finally, he argues the court erred in awarding Kathryn attorney fees.
Scope of Review. Our scope of review is de novo. Iowa R. App. P. 6.4. Although not bound by the district court's factual findings, we give them weight, especially when assessing the credibility of witnesses. Iowa R. App. P. 6.14(6)( g).
Treatment of Premarital Assets. Robert first argues that his life insurance and his family farm, including the land, buildings and dwelling occupied by his mother, should not have been included in the property division because they were acquired prior to the marriage. While a gift or inheritance is not subject to division unless equity so requires, premarital assets are specifically subject to division between the parties. See Iowa Code § 598.21(1)(b), (2) (2001). Here, there is no substantial, credible evidence the farm constituted a gift or inheritance to Robert. The life insurances policies and the farm were subject to division by the district court, with any equity Robert had in them at the time of the parties' marriage being a factor to be considered by the court. See id. 598.21(1)(b).
Valuation of Farming Assets. Robert also argues the court set too high a value on various farming assets. In reviewing the values set by the court, we look to see whether they were within the permissible range of the evidence. In re Marriage of Driscoll, 563 N.W.2d 640, 643 (Iowa Ct. App. 1997). If the record supports the court's valuations, we will not set them aside. Id. Significant to this consideration, as well as the property division in general, are the district court's repeated findings that Robert was not credible in his testimony on a number of matters, including farm finances. We give weight to these credibility assessments. Iowa R. App. P. 6.14(6)( g).
Robert first argues the court erred in setting the overall value for the farm, buildings and dwellings at $213,610, and the parties' net equity in the farm "real estate" at $100,000. We reject both claims. As $213,610 was the total value for the land, farm buildings, house and mobile home contained within the county assessor's appraisal records provided by Kathryn, it is clearly within the permissible range of the evidence. We reach the same conclusion regarding the court's valuation of the parties' net equity in the farm land, buildings and dwelling that Robert is purchasing on contract. Reducing the overall farm value of $213,610 by various items, including the remaining debt under the purchase contract, the value of the parties' mobile home and the new shed, and allowing a credit for the remainder of the life estate held by Robert's mother, results in a figure of over $100,000.
Based on the structure of the district court's property division, we understand that "real estate," as used by the district court, refers to only the land, buildings and dwelling that Robert has been purchasing on contract since 1994.
Robert also contends the court erred when it set the value for his farm equipment at $36,000, which was approximately the amount reflected in a pre-trial appraisal. He relies on his personal financial statement to establish that the actual value of the equipment at the time of trial was only $24,150, and points to the fact that he was required to make over $4000 in repairs. We can perceive no error in the court's action. Although the court stated the total value of the farm equipment was $36,000, it valued the equipment, for the purpose of the property division, at only $19,545. Even if Robert's estimated value is reduced by the cost of repairs, it is still higher than the figure used by the court.
Finally, Robert argues the court erroneously valued cattle at $24,500. Pre-trial estimates set the value of the livestock between $18,000 and $20,000, and Kathryn admits $20,000 would be the more accurate value to place on the cattle. Robert, however, contends the court was bound to set a value as of the time of trial, and asserts $9600 is the accurate value of the actual livestock he possessed as of the trial date.
While assets are typically valued at the time of trial, the particular circumstances of a case may require that an asset be valued as of a different date. Driscoll, 563 N.W.2d at 642 ("Equitable distributions require flexibility and concrete rules of distribution may frustrate the court's goal of obtaining equitable results."). Here, the over $10,000 reduction in value appears to be the result of Robert selling some of the livestock after the appraisals, the profits from which went to Robert exclusively. In addition, the appraisals did not reflect the value of the calves born after they had been conducted. Under the circumstances, a livestock value of $20,000 is adequately supported by the evidence. Although this value is somewhat lower than that set by the court, we do not find the difference significant in light of the overall property division, discussed below.
Life Insurance Policies. Robert entered the marriage with two life insurance policies, and Kathryn entered the marriage with one life insurance policy. The district court divided equally that portion of each policy's value which had accrued during the marriage. Robert contends it was inequitable for Kathryn to receive any portion of the value of his life insurance policies, because the policies' appreciation during the marriage was merely fortuitous. See In re Marriage of Lattig, 318 N.W.2d 811, 815 (Iowa Ct. App. 1982) ("An equitable property division of the appreciated value of the property should be a function of the tangible contributions of each party and not the mere existence of the marital relationship."). However, unlike a stock whose value may rise and fall without regard to the action of either party, the value of Robert's life insurance policies continued to accrue because Robert continued to make the premium payments. Kathryn's financial contributions to the marriage enabled Robert to make those payments, and thus constituted tangible contributions to the increased policy value. We conclude it was equitable to equally divide the portions of each policy's value that accrued during the marriage.
Capital One Debt. At the time of trial Kathryn carried a $3,487.08 balance on her Capital One credit card. Robert was ordered to pay one-half of this amount. Robert contends this was inequitable as the Capital One balance represents a personal, post-separation debt of Kathryn, and is not subject to division. However, Kathryn presented evidence that, at the time of separation, $4900 of debt was owed on her credit cards. Pre-separation obligations are subject to division. See In re Marriage of Smith, 351 N.W.2d 541, 543 (Iowa Ct. App. 1984) (finding it appropriate to divide equally the remaining obligation on a pre-separation loan as such loans "are considered part of a joint effort benefiting both parties"). Robert is being required to pay less than one-half of the debt owed on Kathryn's credit cards at the time of separation. The district court's order was equitable.
Reimbursement Obligations. Robert was ordered to pay Kathryn one-half of the parties' 2000 tax refund, and to reimburse her for expenses associated with repairing and refilling an LP gas tank attached to the parties' mobile home. Robert argues neither item is subject to division because the parties agreed to the disposition, received and deposited the tax refund prior to their separation, and Kathryn incurred the gas-related expenses after the parties separated. His claims are without merit.
The credible evidence indicated that, just prior to their separation, the parties had agreed to divide what remained of tax refund after Robert paid the parties' car insurance, but that when Kathryn demanded her one-half share, Robert listed various additional deductions Kathryn had not agreed to. Moreover, although the LP gas tank expenses were incurred after the parties separated, the district court clearly believed that Kathryn incurred these expenses because of Robert's action in removing a temporary LP gas tank from the property. In addition, since Kathryn vacated the mobile home shortly after the repairs were made and the tank filled, Robert received the majority of the benefit from Kathryn's expenditures. The court's actions were equitable.
Personal Property. Robert also asserts it was inequitable for the district to award Kathryn ten items of personal property out of the martial home, as Kathryn already possessed much of the parties' personal property. However, prior to trial Robert stipulated that each party should be allowed to keep the personal property then in his or her possession. Moreover, most of the disputed items are gifts or clothing, and not of a high monetary value. We see no inequity in awarding them to Kathryn.
Kathryn was awarded three sun catchers that were gifts from her daughter, a battery charger that was a gift from her father, blue coveralls, pink snow boots, a cooler, a heating pad, a snow shovel, and a picture.
Equability of the Overall Property Division. As previously noted, Kathryn received a net award of approximately $77,000. Taking into consideration the $20,000 livestock value agreed to by Kathryn and supported by the evidence, Robert received a net award of approximately $130,000 to $140,000. In reviewing these awards, we must determine if they represent an equitable, albeit not equal division of the parties' assets and debts. See In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct. App. 1991). The division must assure that each party receives a just share of the property accumulated through their joint efforts. Id.
Although Robert contends his award fails to properly account for his obligation to pay the $62,985 remaining on the contract to purchase his family farm, the $100,000 value of the parties' net equity in the farm land, buildings, and dwelling being purchased by Robert was reached in part by deducting the amount of the outstanding loan.
Robert's complaints regarding the equitability of the overall property division center around the farm and farming operation. His primary complaint is that, because the farm and farming operations are premarital assets, the marriage was of short duration, and Kathryn did not contribute to the farming operation, it was inequitable to award her the equivalent of one-half of the parties' net equity in those items.
One of the factors to be considered in making an equitable division is the property that each party brought to the marriage. See Iowa Code § 598.21(1)(b). One of the purpose of this section is "to prevent a spouse from receiving an interest in property for which he or she made no contribution to acquiring." In re Marriage of Miller, 452 N.W.2d 622, 624 (Iowa Ct. App. 1989). Because the focus is on the contributions of each spouse, we do consider one spouse's premarital contributions to the other spouse's premarital assets. Id.
While Robert denied Kathryn was actively involved in the farming operations, the district court clearly did not believe this testimony. The court found that Kathryn had rendered significant non-financial assistance to the operation both before and after the marriage, and we concur in this assessment. Moreover, Robert did not enter into the current purchase contract until after he and Kathryn began cohabitating. Although Kathryn did not make direct financial contributions to the purchase of the farm or the farming operations, her contributions to the couple's household, both before and after the marriage, enabled Robert to meet farm-related expenses. Kathryn also signed a $35,000 personal guarantee on farm-related loans after the marriage. Under these circumstances, it was equitable for Kathryn to receive an award representing a share of the farm and farming operations.
Although Robert focuses on a number of individual items, the key question before this court is whether the overall property division was equitable. Russell, 473 N.W.2d at 246. In this case, Robert received a net property award some $53,000 to $63,000 more than that received by Kathryn. Although this was not a marriage of long duration, we conclude the award was equitable in light of the contributions made by Kathryn, both before and after the parties' marriage.
Attorney Fees. The district court awarded Kathryn $1000 in attorney fees. Such an award is within the discretion of the district court, and will be set aside only upon a demonstrated abuse of that discretion. In re Marriage of Grady-Woods, 577 N.W.2d 851, 854 (Iowa Ct. App. 1998). The award should be fair and reasonable in light of the parties' financial positions. Id. Here, the court was presented with evidence that Kathryn incurred attorney fees due to Robert's lack of cooperation on certain issues, and there is no evidence the fee amount is burdensome to Robert. We find no abuse in the fee award.
In addition, each party requests an award of appellate attorney fees. Such awards are discretionary and determined by assessing the needs of the requesting party, the opposing party's ability to pay, and whether the requesting party was forced to defend the appeal. In re Marriage of Gaer, 476 N.W.2d 324, 330 (Iowa 1991). We decline to award appellate fees in this matter. Costs of the appeal are assessed to Robert.