Opinion
No. 4-542 / 04-0178
Filed December 22, 2004
Appeal from the Iowa District Court for Delaware County, Alan L. Pearson, Judge.
Francis Childs appeals the property division in the parties' dissolution decree. AFFIRMED.
Robert Sudmeier and Norman Wangberg of Fuerste, Carew, Coyle, Juergens Sudmeier, P.C., Dubuque, for appellant.
Chad Leitch and Kerrie Liedtke of O'Connor Thomas, P.C., Dubuque, for appellee.
Heard by Huitink, P.J., and Mahan, Miller, Vaitheswaran, and Eisenhauer, JJ.
I. Background Facts Proceedings
After living together for four years, Francis and Lois Childs were married on June 27, 1977. At the time Francis was farming 248 acres of land he purchased from his parents in 1971. Lois left her employment as a bookkeeper shortly after the marriage to Francis to devote full time to homemaking, childcare, and to assist Francis on the farm. In May 1978 the parties incorporated their farming operations as Shac, Inc. In exchange for property with a net value of $42,272.59, Shac, Inc. issued 204 shares (fifty-one percent) of common stock to Francis and 194 shares (forty-nine percent) to Lois. The value and basis of the property transferred to Shac, Inc. as well as the liabilities assumed by Shac, Inc. were itemized in its May 12, 1978 balance sheet. That balance sheet provides:
SHAC, INC.
May 12, 1978
Balance Sheet
UNAUDITEDFAIR
ASSETS TAX MARKET
BASIS VALUE
Cash $ 28,100.00 $ 28,100.00 Land, 248 acres 48,000.00 87,876.00 Buildings 44,941.53 44,941.53 Machinery 63,821.01 63,821.01 Livestock 1,495.00 1,495.00
Receivable from incorporators $ 3,000.00 3,000.00 $ 189,357.54 $229,233.54
LIABILITIES EQUITY
Notes Payable — Del Que FS $ 18,460.95 $18.460.95 Notes Payable — Delhi Savings Bank 166,500.00 166,500.00
Notes Payable — A.J. Schmidt 2,000.00 2,000.00
Equity 2,396.59 42,272.59 $ 189,357.54 $229,233.54
In the 1990s Francis won national and state corn production contests and he was paid to speak about his corn production techniques around the country. His income from these speaking engagements was deposited in a corporate bank account. Also, the parties had a snowmobile dealership on their farm for a number of years and received income from that. They were no longer operating the snowmobile dealership.
Beginning in 2003, Francis did not deposit all of his income from speaking engagements in the corporation account. He sold corn and kept the proceeds. Francis also withdrew funds from the corporate account. He spent some of the money buying gifts for his girlfriend. He could not account for all of the money, about $139,300, he either kept from the corporation or withdrew from the corporation.
Lois filed a petition for dissolution of marriage. The district court issued a dissolution decree on January 7, 2004. The court awarded Francis property with a net value of $389,476 and Lois property with a net value of $359,249. As part of this division, Lois received the homestead and one-half of the farmland. Francis received the rest of the farmland. Also included in the property awarded to Francis was the $139,300 which he kept from the corporation. The court awarded Francis slightly more property in order to recognize that he brought more property to the marriage.
Based on the recommendation of the parties' accountant, Douglas Funke, the court ordered a divisive reorganization of Shac, Inc. This would mean that Shac, Inc. would be divided into two separate corporations, one for Francis's portion of the farm and one for Lois's portion of the farm. Funke testified that under current tax laws a divisive reorganization could be accomplished without any present tax consequences to the parties.
A divisive reorganization is governed by Internal Revenue Code § 368 (1999).
Francis filed a post-trial motion pursuant to Iowa Rule of Civil Procedure 1.904(2). This motion was denied by the district court. Francis now appeals.
II. Standard of Review
Our scope of review in this equitable action is de novo. Iowa R. App. P. 6.4. In equity cases, especially when considering the credibility of witnesses, the court gives weight to the fact findings of the district court, but is not bound by them. Iowa R. App. P. 6.14(6)( g).
III. Proposed Decision
The district court ruled generally on the division of property in this case in chambers, then asked Lois's attorney to draft a proposed decree. Francis's attorney was given a chance to look over the decree before it was signed by the judge. On appeal, Francis objects to this procedure, claiming he should also have been given an opportunity to submit a proposed decree to the court.
Our appellate courts have criticized a district court's ex parte request of counsel to submit a proposed decision. See Williamson v. Wellman Fansteel, 595 N.W.2d 803, 807 (Iowa 1999); In re Marriage of Siglin, 555 N.W.2d 846, 848 (Iowa Ct.App. 1996); see also Rubes v. Mega Life Health Ins. Co., 642 N.W.2d 263, 266 (Iowa 2002) ("[T]he customary deference accorded trial courts cannot fairly be applied when the decision on review reflects the findings of the prevailing litigant rather than the court. . . ."). The better practice is to request a proposed decision from both parties, and to give the parties an opportunity to comment on the proposed decision of the other. Williamson, 595 N.W.2d at 807; Production Credit Ass'n v. Shirley, 485 N.W.2d 469, 475 (Iowa 1992).
We determine, however, that even when a proposed decree is adopted verbatim, it does not necessarily mean the decision was not a product of independent judicial judgment. Quality Refrigerated Servs., Inc. v. City of Spencer, 586 N.W.2d 202, 205 (Iowa 1998). Although the better practice would have been to allow both parties to submit proposed decrees, we note that Francis was allowed to comment on Lois's proposed decree in this case and his attorney signed the decree. We give the dissolution decree in this case the same deference we give to other dissolution decrees.
IV. Appellate Waiver Doctrine
Francis raises several arguments on appeal concerning the district court's division of property, including the divisive reorganization of the parties' corporation, Shac, Inc. During oral argument and in their appellate briefs, the parties agree the divisive reorganization ordered by the district court has already taken place. The general rule under the appellate waiver doctrine is that where a party, knowing the facts, voluntarily accepts the benefits or a substantial part thereof, accruing to him under a judgment, order, or decree, such acceptance operates as a waiver or release of errors, and estops him from afterward maintaining an appeal or writ of error to review the judgment, order, or decree or deny the authority which granted it. . . .
Kettells v. Assurance Co., 644 N.W.2d 299, 300 (Iowa 2002) (quoting 4 C.J.S. Appeal Error § 193, at 267-68 (1993)). A waiver must be voluntary, intentional, and with knowledge of the circumstances. CHR Equip. Fin., Inc. v. C K Transp., Inc., 448 N.W.2d 692, 694 (Iowa 1989). "Payment of a judgment under compulsion does not amont to waiver of the right to appeal." Hegtvedt v. Prybil, 223 N.W.2d 186, 188 (Iowa 1974).
The supreme court has relaxed the appellate waiver doctrine in recent years. Mendenhall v. Judy, 671 N.W.2d 452, 459 (Iowa 2003). The acceptance of proceeds on one issue in a case does not waive the right to appeal on other issues. Kettells, 644 N.W.2d at 311 (citing Wederath v. Brant, 319 N.W.2d 306, 310-11 (Iowa 1982)). Also, "[w]hen an amount accepted under a judgment or decree is part of a sum admittedly due and does not cover the amount claimed, its acceptance does not alone constitute acquiescence in the provision of the judgment or decree under which the amount is awarded." In re Marriage of Abild, 243 N.W.2d 541, 543 (Iowa 1976). Thus, in a dissolution decree, where a party accepts part of an award of cash, alimony or support while claiming entitlement to a larger award on appeal, the appellate waiver doctrine does not apply. Id.
We determine Francis has waived his right to challenge the divisive reorganization on appeal. Francis voluntarily accepted the benefits of a divisive reorganization before an appellate decision on the matter was entered and this operated as a waiver of the issue. See Kettells, 644 N.W.2d at 300. We also determine that by entering into the divisive reorganization, Francis accepted a certain portion of the parties' farmland as part of his new corporation. Therefore, we will not address any issues concerning which portion of the farmland Francis received.
Application of the appellate waiver doctrine on these issues not does mean Francis has waived his right to appeal other issues. See id. at 311. Although Francis accepted certain property through the divisive reorganization, where he is claiming an entitlement to a larger amount of the property the issues have not been waived by the operation of the appellate waiver doctrine. See Abild, 243 N.W.2d at 543. We proceed to address those issues which have not been waived.
V. Property Division
Francis contends the property division was not equitable to him. 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 Dean, 642 N.W.2d 321, 325 (Iowa Ct.App. 2002). Iowa courts do not require an equal division or percentage distribution. In re Marriage of Bonnette, 584 N.W.2d 713, 714 (Iowa Ct.App. 1998). The determining factor is what is fair and equitable in each circumstance. In re Marriage of Campbell, 623 N.W.2d 585, 586 (Iowa Ct.App. 2001).
A.
We first consider Francis's claim that he should have been given more credit for assets he brought to the marriage. Francis purchased the farm from his parents in 1971 for $99,200. At the time of the marriage he still owed his parents about $90,000 for the farm, plus he had other farm debt. Property that a party brings into the marriage is a factor to consider in making an equitable division. In re Marriage of Wenell, 581 N.W.2d 197, 199 (Iowa Ct.App. 1998). In some circumstances, this factor may justify a full credit, but it is not required. In re Marriage of Miller, 552 N.W.2d 460, 465 (Iowa Ct.App. 1996). We conclude Francis received sufficient credit for his pre-marital interest in the farm.
B.
Francis also contends the district court should not have credited him with $139,300 for funds which he withheld from the corporation. The court found Francis failed to deposit $15,000 from the sale of corn and $54,300 in speaking fees into the corporate account. In addition, Francis withdrew $70,000 from the corporate account. Francis admits that he withheld corporate funds, but states this amount should be reduced by about $30,000.
At the time of the dissolution hearing, Francis could only account for about $15,000 of the amount which he dissipated. He testified he did not know where the rest of the money went, except that he spent some of it on gifts for his girlfriend. We conclude the district court properly credited Francis with $139,300. See In re Marriage of Burgess, 568 N.W.2d 827, 828 (Iowa Ct.App. 1997) ("We have previously determined that some conduct of a spouse which results in a loss or disposal of property otherwise subject to division at the time of divorce may be considered in making an equitable division of property."); see also In re Marriage of Johnson, 350 N.W.2d 199, 202 (Iowa 1984); In re Marriage of Williams, 421 N.W.2d 160, 164 (Iowa Ct. App. 1988).
C.
Francis claims that he should have been awarded the farm, and Lois should have been awarded $75,000 plus other assets. He asserts that Lois does not need to farm to support herself because she has skills as a bookkeeper. He states that his grandparents and parents previously owned the farm, and he asks that the farm not be divided.
The parties' farm was valued at $694,120, and had debt of $172,642, giving a net value of $521,478. The total net value of all the other assets, including the farm machinery, was $227,247. This amount plus a cash property settlement of $75,000 would not be sufficient to give Lois an equitable share of the parties' assets.
We note that part of the reason to divide the farm and award each party about 119 acres of farmland was so that they could each continue to farm. The parties' accountant, Funke, testified these two new farms should be financially viable. Lois was fifty-one years old and had not worked outside the home as a bookkeeper since the parties' marriage in 1977. She testified that during the marriage she gained sufficient skills to operate a farm. The parties worked together for twenty-six years to operate the farm, and we determine the district court properly awarded Lois one-half of the farmland.
We determine the property division in the parties' dissolution decree was equitable, and we affirm.
VI. Attorney Fees
Lois seeks attorney fees for this appeal. An award of appellate attorney fees is not a matter of right, but rests within the court's 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 district court's decision on appeal. In re Marriage of Maher, 596 N.W.2d 561, 568 (Iowa 1999). Both parties were awarded substantial assets in the dissolution decree, and we determine each party should pay his or her own appellate attorney fees.
We affirm the decision of the district court.