Opinion
No. 3-905 / 03-0753
Filed March 10, 2004
Appeal from the Iowa District Court for Jasper County, Dale B. Hagen, Judge.
Benjamin Withers appeals from the property division and child support provisions of the decree dissolving his marriage to Nancy Withers. AFFIRMED AS MODIFIED.
Bradley McCall of Brierly Charnetski, L.L.P., Grinnell, for appellant.
Jeanne Johnson, Des Moines, and Robert Laden of Laden Pearson, P.C., Des Moines, for appellee.
Considered by Huitink, P.J., and Zimmer and Miller, J.J.
Benjamin Withers appeals from the decree dissolving his marriage to Nancy Withers. He contends the trial court erred in (1) valuing the property of the parties and in making an unfair and inequitable division of property, (2) failing to require Nancy to pay him interest on the deferred portion of a property equalization judgment, and (3) calculating his child support obligation. We affirm as modified.
I. BACKGROUND FACTS AND PROCEEDINGS.
Nancy and Benjamin were married in 1976 and separated in April of 2002 after twenty-six years of marriage. Nancy filed a petition for dissolution of marriage on May 2, 2002. A hearing was held on the disputed issues on February 28, 2003. There were three children from this marriage, two of whom were minors at the time of the dissolution and are affected by this action. The two were fifteen and thirteen years of age. The parties stipulated that they would have joint legal custody of the children with Nancy having physical care. They did not agree on the appropriate amount of child support owed by Benjamin.
Nancy was forty-three years of age at the time of dissolution hearing and lives in the marital home on the parties' acreage. She has a high school education and has worked full-time throughout most of the marriage. In 1992 Nancy began working for Representative Services as a non-lawyer representative for people seeking Social Security Disability benefits. The business receives a fee of twenty-five percent of any past due benefits it recovers from the Social Security Administration for its clients. In 1999 Nancy assumed sole ownership of Representative Services. She continued to operate the business at the time of trial, employing one full-time employee and sub-contracting out some business to one other individual.
The trial court found that in 2002 Nancy had income from her business of $55,000, but that she averaged about $43,000 annually for the previous five years. Nancy testified that the most she had ever earned in a year was $63,000 when she had a contract with Broadlawns Hospital but she no longer had that contract. She also testified that the business has no value beyond the physical assets because "she is the business" and it would not survive without her.
Benjamin was forty-five years old at the time of hearing and lived with his mother. He began working at Maytag shortly after the parties were married and has worked there ever since. The trial court found that Benjamin's rate of pay is $18.63 per hour, he works forty hours per week, he has consistently received overtime income which at times has been as much as $5,000 per year, he receives an annual bonus, and his income for 2001 was $43,685. His income for 2002 was only $33,111 because after the parties separated Benjamin did not work for seven months due to depression. Benjamin estimated that his income for 2003 would be approximately $35,700 based on a forty-hour work week at the hourly rate of pay set forth above, but this was without taking into account any of his overtime pay or his yearly bonus which in 2002 was $1,700 after taxes. He is also vested in his retirement account at Maytag and the parties stipulated that his pension should be divided equally between the parties with a qualified domestic relations order.
The trial court awarded Nancy the following property: (1) the marital home and acreage valued at $196,500 as well as the mortgage indebtedness in the amount of $77,835, for a net value of $118,665; (2) her 2001 Nissan Altima valued at $12,870, with an indebtedness of $15,416, for a negative value of minus $2,546; (3) her SEPP account valued at $6,960; (4) her Pekin life insurance with a value of $6,977, less the gifted value of $4,150, for a net value of $2,827; (5) half of Benjamin's Maytag retirement account, payable through a qualified domestic relations order; (6) various personal property as agreed to by the parties; and (7) all right, title and interest in Representative Services. However, the court found that Representative Services had no assignable value. In addition, Nancy was assigned the indebtedness to Dr. Rover in the amount of $525. Thus, the total value of property awarded by the court to Nancy was $125,381.
We note the trial court valued the SEPP account at $6,977. However, the undisputed evidence in the record shows that the value is in fact $6,960 and this is the value we will use here.
The trial court stated the total value of property awarded to Nancy was $118,421. However, this figure clearly appears to be in error. Based on the values expressly found by the court in its order the correct amount is $125,381.
The trial court awarded Benjamin the following property: (1) a 1999 Chevrolet pickup truck valued at $20,600, with an indebtedness of $8,600, for a net value of $12,000; (2) two 1957 Chevrolet pickup trucks with a combined value of $5,000; (3) the Maytag stock he previously cashed in for a value of $3,854; (4) his life insurance with a value of $796; (5) one-half of his Maytag retirement account; and (6) all of the various items of personal property agreed to by the parties. The total value of the property awarded by the trial court to Benjamin was $21,650.
To equalize the property division the court ordered that Nancy pay Benjamin $48,385, $15,000 of which was to be paid within ninety days of the filing of the decree. The balance was to be payable upon the earlier of the following: when the parties' youngest child attains age eighteen or graduates from high school, whichever last occurs; when Nancy remarries; or when the home is refinanced or sold. Benjamin was also ordered to pay child support for the parties' two minor children in the amount of $797 per month.
This $48,385 was based on the trial court's statement that Nancy was receiving a property award of $118,421. However, because the trial court in fact awarded her property it had valued at $125,381, it should have ordered a payment of $51,865, i.e., $125,381-$21,650=$103,731÷2=$51,865, to "equalize" the property division.
Benjamin appeals from the property valuation and child support provisions of the court's dissolution decree. Specifically, he contends the valuations made by the district court with regard to Representative Services, Nancy's Pekin life insurance policy, and his 1999 Chevrolet pickup truck were not within the permissible range of evidence. He further argues the court erred in failing to require Nancy to pay him interest on the deferred portion of the property equalization payment. Finally, Benjamin asserts the court erred in calculating his child support obligation.
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 the witnesses, but are not bound by them. Iowa R. App. 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).
III. MERITS.
A. Property Valuation and Interest on Judgment.
Iowa is an equitable distribution state, which means the partners in a marriage that is to be dissolved are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Robison, 542 N.W.2d 4, 5 (Iowa Ct.App. 1995). Iowa courts do not require an equal division or percentage distribution. In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct.App. 1991). The determining factor is what is fair and equitable in each particular circumstance. Id. When distributing property we take into consideration the criteria codified in Iowa Code section 598.21(1) (2001). In re Marriage of Estlund, 344 N.W.2d 276, 280 (Iowa Ct.App. 1983).
Benjamin first argues the trial court erred in assigning Nancy's business, Representative Services, no value. He contends that his $20,000 valuation of the business is what is supported by the evidence in the record. Nancy testified that the business' physical assets are worth approximately $5,000, the business checking account had a current balance of around $5,000, and there is an escrow account into which she puts a portion of the fees she receives, to use in the event of a fee dispute, with a balance of approximately $3,000. However, she also testified she does not think the business has any value beyond the physical assets or any value as a going concern.
We conclude Representative Services should be assigned a value of $13,000, the total of the two accounts and the physical assets of the business as set forth above. The only evidence in the record as to what the business may be worth, if anything, beyond the value of these assets is Benjamin's bare assertion that the business is worth $20,000. However, the evidence strongly supports what both parties generally agree to be the value of the physical assets and the accounts. Accordingly, we find the trial court should have assigned the business a value of $13,000 and included that amount in Nancy's property award.
Benjamin next argues that Nancy's Pekin life insurance policy should have been assigned its full value of $6,977 because there is no evidence in the record it had a value of $4,150 when it was gifted to her by her parents and the court therefore should not have set aside that amount of the value of the policy to Nancy as gifted property. We disagree. Nancy testified that the policy was bought for her by her parents when she was born and she took it over when she was old enough, prior to marrying Benjamin. She further testified that when she got the policy it was "paid up" and had a value of $4,150. The trial court adopted the $4,150 as having been gifted to Nancy in making its property division and thus must have found Nancy's testimony on this issue to be credible. We are particularly deferential regarding issues of credibility, given the district court's opportunity to directly observe witness demeanor. In re Marriage of Forbes, 570 N.W.2d 757, 759 (Iowa 1997). We conclude the trial court's determination that $4,150 should be set aside to Nancy as gifted property is sufficiently supported by the evidence in the record and will not be disturbed.
Finally, Benjamin asserts the trial court erred in valuing his 1999 Chevrolet pickup truck at the $20,600 "retail value" given in the Kelly Blue Book instead of the $15,110 "private party value" given in the same publication. However, an examination of the record shows that the court similarly valued Nancy's automobile at its higher "retail value" of $12,870. Thus, although the "private party value" may have been the more appropriate value for these vehicles, because the court apparently valued both parties' vehicles in the same manner we cannot find its valuation of Benjamin's truck to be inequitable.
We conclude the trial court should have assigned Representative Services a value of $13,000 instead of no value. The court's valuation of Nancy's Pekin life insurance policy and Benjamin's 1999 pickup truck are evidentially supported and equitable and we will not disturb them on appeal. Accordingly, the total value of the property awarded to Nancy as modified is $138,381 and the proper amount Nancy must pay to Benjamin to equalize the property division as modified is $58,365.
The terms under which Nancy is to pay Benjamin this equalization judgment as ordered by the trial court shall remain the same (i.e. Nancy is to pay $15,000 within ninety days from the filing of the decree and the remainder shall be payable upon the earlier of the following events: (1) their youngest child attaining the age of eighteen or graduating from high school, whichever last occurs; (2) Nancy remarrying; or (3) the home being sold or refinanced). However, we agree with Benjamin that forcing him to wait up to five years without any interest accruing before he will receive his share of the property destroys the equity of the division. We therefore modify the decree to order Nancy to pay Benjamin four percent interest per year on any portion of the equalization payment which is not paid within ninety days of the filing of the decree.
B. Child Support.
In his last claim on appeal Benjamin contends the trial court erred in calculating his child support obligation. Specifically, he contends the court should not have included his overtime income in determining his child support obligation. For purposes of applying the child support guidelines, income need not be guaranteed. Seymour v. Hunter, 603 N.W.2d 625, 626 (Iowa 1999). It is appropriate to exclude overtime income only if it is uncertain or speculative. In re Marriage of Geil, 509 N.W.2d 738, 742 (Iowa 1993). History over recent years is the best test of whether certain payments are expected or speculative. See Seymour, 603 N.W.2d at 626 (holding that "per capita" payments to a Native American tribal member were properly considered income in computing a child support obligation). The same test is applied to overtime pay. In re Marriage of Brown, 487 N.W.2d 331, 333 (Iowa 1992).
It appears Benjamin is correct that the trial court did adopt Nancy's proposed child support calculation from the "Child Support Guidelines Worksheet" she prepared for the court. Nancy's worksheet used gross income figures of approximately $43,000 for both Benjamin and herself. Benjamin testified that his income in 2001, the last full year where he worked throughout the entirety of the year, was $43,685. He predicted he would earn $35,700 in 2003. The evidence also shows that Benjamin has consistently received overtime income, $5,000 in some years and more in others, as well as a yearly bonus which was $1,700 after taxes in 2002.
Nancy did earn $55,000 in 2002; however her average annual income for the previous five years was approximately $43,000. Furthermore, she testified that she had been working extra in 2002 to make up for the time she was not receiving child support in order to support herself and the parties' two children. She stated that it was very difficult to work extra hours and keep up with her day-to-day child care responsibilities.
The evidence shows that Benjamin's income from his overtime and annual bonus is not merely speculative. He has received both consistently and thus the court was correct in considering such income in determining Benjamin's child support obligation. In addition, although Nancy earned more in 2002, her average income over the previous five years was only $43,000. Furthermore, she was able to earn more in 2002 only by working more than in past years, which apparently caused additional strain and hardship on her due to the child care responsibilities she has and Benjamin does not have. We presume Benjamin would not want the care of his children to suffer due to the fact Nancy had to work extended hours to meet her and the children's financial needs. Accordingly, we conclude the court did not err in calculating Benjamin's child support obligation. Finding each party to have gross income of approximately $43,000 is supported by the evidence and is fair and equitable. We affirm the trial court's determination on this issue.
IV. CONCLUSION AND DISPOSITION.
Based on our de novo review of the entire record, and for all of the reasons set forth above, we conclude the trial court should have attributed a value of $13,000 to Representative Services and included that amount in Nancy's property award. There is sufficient evidentiary support for the court's valuations of the Pekin life insurance policy and the 1999 Chevrolet pickup truck and we do not modify them on appeal. Taking into account this additional amount assigned to Nancy's business, as well as a mathematical error on the part of the trial court, we modify the property division set forth in the decree. The total value of the property awarded to Nancy is $138,381 and the total value of property awarded to Benjamin is $21,650. To equalize the property division Nancy shall pay Benjamin $58,365. We further find that requiring Benjamin to wait up to five years without any interest accruing before he receives his full share of the property award would be inequitable. Accordingly, we modify the trial court's judgment to require Nancy to pay four percent interest per year on any portion of the equalization judgment she chooses to defer under the provisions of the decree which allow for such deferral. Finally, we conclude the trial court did not err in determining Benjamin's child support obligation because the annual gross income figures used by the court in making its determination were fair, equitable, and supported by the evidence in the record. Each party shall pay one-half of the costs of this appeal.