Opinion
No. 0-616 / 99-1862.
Filed November 20, 2000.
Appeal from the Iowa District Court for Polk County, DARRELL J. GOODHUE, Judge.
Brian Heck appeals various economic provisions of the parties' dissolution decree. AFFIRMED AS MODIFIED AND REMANDED.
James R. Cook, Des Moines, for appellant.
Ben T. Doran of Quinn, Doran Anderson, Boone, for appellee.
Considered by SACKETT, C.J., and HUITINK and MAHAN, JJ.
I. Background Facts and Proceedings .
Brian and Deborah Heck were married in July 1992. They have two children: Payton, age six, and Taylor, age four. Deborah filed a petition for dissolution of marriage on October 6, 1998.
The disputed issues at trial concerned valuation and division of Brian's interest in Hecks' Dozer, a closely held family corporation. The parties also disagreed on the value of a boat and the amount of child support Brian should pay.
The court made the following findings of fact concerning the value of the Hecks' assets and Brian's income:
The parties have assets as of this date with values as set out:
Homestead in Ogden $35,000.00
1994 Ford Mustang subject to debt -0-
1980 Toyota car $100.00
Hecks' Dozer, Inc., 255 shares of stock $115,500.00
Boat $6,500.00
Household goods at residence $3,000.00
Household goods in Deb's possession $500.00
The value of the homestead is based on the original cost plus the home improvement loan and a general inflationary adjustment. The value used is substantially equivalent to the assessed value. The shares in Hecks' Dozer are valued per Brian's testimony. There is no basis for adding the equipment value onto the retained earnings in arriving at a value for Hecks' Dozer. The equipment was purchased in part with retained earnings. It is legitimate to replace the depreciated value of the equipment, as reflected on the balance sheet, with the Schedule I estimated value. If that method were to be used it would result in a value substantially equivalent to the value Brian had used.
* * *
5. Brian is employed by Hecks' Dozer. He owns 25.5% of the stock and his mother and father own the rest. His mother is also the corporate secretary and in her testimony she repeatedly referred to him as being self-employed. He may not technically be self-employed, but he obviously has a great deal of autonomy in his employment. His basic salary is $1,850 per month, he gets a bonus, which the Court will estimate to be an average of $3,600 per year, and he gets a $400 per year director's fee. He has a company provided vehicle and all car expense is paid by Hecks' Dozer, which the Court believes can be conservatively valued at $400 per month. The Court does not consider it appropriate to include the per diem he is paid when out of town or anything for the health costs or uniform allowance. The uniform allowance is insignificant, the per diem is irregular and doesn't much more than cover additional expenses incurred. The health benefits are the same as employer provided medical costs, which are generally not included as income. Nevertheless, Brian is a 25.5% owner of Hecks' Dozer and it appears from Exhibit 2 that retained earnings were $25,860 in 1998 and $19,474 in 1997. Figuring an average of $21,000, Brian's share is about $5,300 per year. This is a conservative figure since Exhibit 14 indicates that the depreciated value of Hecks' Dozer's equipment is approximately $190,000, whereas its actual value is $423,790. Because of excess depreciation Dozer's actual income is understated for tax purposes. There has been approximately $230,000 in income which has been offset by tax-allowed depreciation, as opposed to real depreciation. The Court finds Brian's monthly income to be $3,000 per month before taxes. His employment is undoubtedly secure, although his income could fluctuate. To a large extent he and his family control his income.
As a result of these findings, the court concluded:
Brian shall pay to Deb the sum of $35,000 as property settlement. Of that amount $10,000 shall be due no later than October 1, 1999, and the remainder shall be due $5,000 on January 1, 2000; $5,000 January 1, 2001; $5,000 January 1, 2002; $5,000 January 1, 2003 and $5,000 January 1, 2004. Said sums shall not draw interest if paid when due, but shall draw interest at 10% per annum if delinquent. The settlement is based on the increase in value of the house during the relationship, the boat and Brian's stock in Hecks' Dozer. Because the stock was in part the result of family gifting and there are restrictions on sale because of Brian's minority interest, this is not a situation where there should be a 50/50 division. Nevertheless, the stock accumulation should, in part, be attributed to his work efforts during the relationship. . . . It would be inequitable to decree that Deb should come out of the marriage with little or no property, given the length of the relationship and the assets that have been accumulated.
The court further concluded:
Brian shall pay to Deb the sum of $740 per month as child support with the first payment to be due as of October 1, 1999. Support shall continue until a child graduates from high school or becomes nineteen years of age, whichever is later. The Court reserves jurisdiction to determine post-graduate support. Brian shall be entitled to the dependency exemption for Taylor as long as the support is current. Deb shall be entitled to Payton's dependency exemption. When support is due for only one child it shall be Creduced to $485 per month. Deb shall be obligated to maintain medical insurance on the children and each party shall pay one-half of the uncovered medical expense.
On appeal Brian contends his equity in Hecks' Dozer should not be included as property subject to division by the court. He also argues the district court overstated the value of his boat. In addition, Brian contends the district court improperly included Hecks' Dozer's retained earnings and the value of his use of a corporate vehicle in computing his income for child support purposes.
Deborah has not cross-appealed.
II. Scope of Review.
Our scope of review in this equity action is de novo. Iowa R. App. P. 4. We give weight to the trial court's findings of fact, especially in matters of credibility, but are not bound by them. Iowa R. App. P. 14(f)(7). The appeal in an equity case is not a trial de novo, but is limited to de novo review of identified and preserved error. Hyler v. Garner, 548 N.W.2d 864, 870 (Iowa 1996).
III. Property Division .
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 Russell, 473 N.W.2d 244, 246 (Iowa App. 1991). Iowa courts do not require an equal division or percentage distribution. Id. The determining factor is what is fair and equitable in each circumstance. Id. The distribution of the property should be made in consideration of the criteria codified in Iowa Code section 598.21(1) (1997). In re Marriage of Estlund, 344 N.W.2d 276, 280 (Iowa App. 1983).
Brian's boat is a 1997 Tracker purchased for $8000 in 1997. He testified the book value of the boat was $3600. Deborah cites the purchase price as evidence of the boat's value. Because the court's $6500 valuation falls well within the range of the evidence, we are not inclined to disturb the court's determination on appeal. In re Marriage of Versluis, 521 N.W.2d 760, 761 (Iowa App. 1994).
The remaining issue concerns division of Brian's equity in Hecks' Dozer. It is undisputed that Brian's 25.5% equity interest in Hecks' Dozer was a gift from his parents. Ordinarily, gifts or inheritance received by a party during the marriage are not subject to division unless failure to do so would be inequitable to the other party. Iowa Code § 598.21(2); In re Marriage of Hardy, 539 N.W.2d 729, 731 (Iowa App. 1995). Factors considered in making this determination include:
(1) contributions of the parties toward the property, its care, preservation, or improvement; (2) the existence of any independent close relationship between the donor or testator and the spouse of the one to whom the property was given or devised; (3) separate contributions by the parties to their economic welfare to whatever extent those contributions preserve the property for either of them; (4) any special needs of either party; (5) any other matter which would render it plainly unfair to a spouse or child to have the property set aside for the exclusive enjoyment of the donee or devisee.
In re Marriage of Liebich, 547 N.W.2d 844, 850 (Iowa App. 1996).
We, like the district court, conclude that failure to include Brian's share of Hecks' Dozer in the property division would be unjust. The district court correctly noted that most of Hecks' Dozer's profits were retained and reinvested in business assets. As a result, any return on Brian's shares was unavailable to meet his family's subsistence needs. By working and contributing her earnings to meet these needs, Deborah has contributed to the increased value of Brian's equity in Hecks' Dozer. The equity of its division is further enhanced by the proportion of the parties' net worth attributable to Brian's interest in Hecks' Dozer and their relatively modest incomes.
We decline to consider Deborah's challenge to the district court's valuation of Brian's share in Hecks' Dozer because she has not cross-appealed on this issue. See In re Marriage of Novak, 220 N.W.2d 592, 598 (Iowa 1974).
We affirm on this issue.
IV. Child Support .
A noncustodial parent's child support obligation is determined by application of the child support guidelines adopted by our supreme court. Iowa Code § 598.21(4). In applying these guidelines the court must determine each parent's net monthly income from the most reliable evidence presented. In re Marriage of Hart, 547 N.W.2d 612, 615 (Iowa App. 1996). Income which is speculative and uncertain is not considered in determining child support. In re Marriage of Heinemann, 309 N.W.2d 151, 152 (Iowa App. 1981). Additionally, net income does not include employment benefits such as personal use of a corporate vehicle. In re Marriage of Huisman, 532 N.W.2d 157, 159 (Iowa App. 1995). Such benefits are more appropriately considered as reasons to depart from the guideline results. Id.
As noted earlier, the district court's calculations of Brian's income included his $1850 monthly salary, $400 annual director's fee, average annual bonus of $3600, a $5300 average annual share of corporate retained earnings and $400 per month for use of a corporate vehicle. The record supports inclusion of all but the retained corporate earnings and corporate vehicle use.
We have expressly rejected inclusion of corporate vehicles in the determination of monthly income. See id. Brian's role as a 25.5% minority shareholder, in the absence of other evidence, does not permit him to determine whether corporate earnings are retained or distributed. It would not be equitable to attribute these earnings to Brian under these circumstances. By including these items the district court overstated Brian's monthly income and awarded an excessive amount of child support to Deborah.
Although Hecks' Dozer retained earnings and Brian's corporate vehicle should not be considered as income, they may provide justification for deviation from the amount of child support provided by the guidelines. The record, however, does not support an upward deviation in this case particularly in view of our decision to affirm the division of Brian's equity in Hecks' Dozer. Moreover, application of the guidelines using Brian's monthly salary, director's fee, and average annual bonus will result in a presumptively reasonable child support award. We accordingly remand on this issue and direct the district court to recompute Brian's child support based on his net monthly salary, annual bonus, and director's fee. The parties shall complete and file child support guideline worksheets as required by the child support guidelines. We do not retain jurisdiction.
V. Attorney's Fees .
An award of attorney fees is not a matter of right, but rests within the court's discretion and the parties' financial positions. In re Marriage of Kern, 408 N.W.2d 387, 390 (Iowa App. 1987). We are to 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. In re Marriage of Castle, 312 N.W.2d 147, 150 (Iowa App. 1981).
Brian and Deborah shall each pay his or her own attorneys fees. Costs of appeal shall be divided equally.
AFFIRMED AS MODIFIED AND REMANDED.