Opinion
No. 1-967 / 01-0681.
Filed July 19, 2002.
Appeal from the Iowa District Court for Black Hawk County, TODD A. GEER, Judge.
Ronnie Riley appeals and Janice Schrage cross-appeals from the district court's decree distributing property on the termination of a joint venture. AFFIRMED AS MODIFIED ON APPEAL AND CROSS-APPEAL AND REMANDED.
Richard K. Betterton, Cedar Falls, for appellant.
Kevin Engels of Correll, Sheerer, Benson, Engels, Galles Demro, Cedar Falls, for appellee.
Considered by HUITINK, P.J., and ZIMMER and VAITHESWARAN, JJ.
Ronnie Riley appeals and Janice Schrage cross-appeals from the district court's decree distributing property on the termination of a joint venture. We affirm as modified on appeal and cross-appeal.
I. Background Facts and Proceedings .
This case arises out of the parties' termination of their twenty-year personal and financial relationship. Although they cohabited for at least ten years and are the parents of one child, Riley and Schrage stipulated that theirs is not a marriage relationship. They also stipulated that any property acquired over the course of their relationship should be divided according to equitable principles governing the termination of a joint enterprise or joint venture.
To that end, the court appointed a special master to ascertain the nature and extent of the parties' jointly acquired property and make recommendations for an appropriate division. The special master concluded the parties had jointly invested in six properties. Four of the properties consisted of farmland totaling 673 acres, one was a real estate contract for the sale of 180 acres of farmland, and the other property was the parties' personal residence. Of these properties, only the personal residence was titled jointly, the other five were titled in Schrage's name. The master further found that Riley initially purchased all of the farmland, but was subsequently reimbursed by Schrage without interest. Riley managed the farms without receiving compensation. Both of the parties contributed toward the purchase of their residence, which was held as a tenancy in common. The remainder of the parties' individual assets were maintained separately in their individual names. Based on these findings, the master recommended that the farm real estate and real estate contract be divided equally between the parties as if it had been held jointly and the personal residence be divided in proportion to the respective contributions each made to its purchase. The special master also recommended that the remaining assets and liabilities be individually retained because the evidence indicated that the parties did not consider those assets and liabilities as joint venture property.
The district court adopted the master's findings of fact, but concluded that the master had failed to give "appropriate recognition to the net worth differential between the parties at the time their relationship began," or to take into account Schrage's significant gambling losses. As a result, the court increased Schrage's distributive share by $200,000 to reflect her greater net worth at the commencement of the joint enterprise, adjusted for her gambling losses.
Riley later filed a motion to reopen the record and admit new evidence, alleging that Schrage had concealed relevant financial documents. Following a hearing on this motion, the court considered additional evidence and entered an amended decree reducing Schrage's distributive share by $50,000 to reflect additional gambling losses disclosed by the newly considered evidence.
A second motion to reopen the record and admit new evidence filed by Riley was denied.
On appeal, Riley argues the court erred in modifying the special master's report absent a finding that the master's conclusions were clearly erroneous. Riley also challenges the court's finding that Schrage is entitled to a greater portion of the jointly acquired property due to her greater net worth at the beginning of their relationship. Lastly, Riley contends the district court erred in denying his postdecree motion to admit new evidence.
On cross-appeal, Schrage argues that the district court erred in adopting the erroneous conclusions of the special master. She contends the farm property and real estate contract should not have been divided equally between the parties, citing her eventual repayment of the full purchase price of all farmland purchased. She also argues that even if the farm-related properties were appropriately divided, it was error to divide the parties' personal residence using a different analysis than applied to the rest of the jointly purchased property. Finally, Schrage argues that the district court erred in discounting her share of the joint venture based on alleged gambling losses.
II. Standard of Review .
Our review of the district court's decision is de novo. Iowa R. App. P. 6.4; Rowen v. Lemars Mut. Ins. Co., 347 N.W.2d 630, 634 (Iowa 1984). The master's findings of fact should be adopted by the district court unless they are found to be clearly erroneous. Id. A finding of fact is clearly erroneous if the reviewing court on the entire record has a definite and firm conviction that a mistake has been committed. Nelson v. Barnick, 245 Iowa 982, 989, 63 N.W.2d 911, 915 (1954). Because this court's duty of de novo review puts it in the shoes of the district court in reviewing the master's report, we independently consider that report and make our own determination under the clear error standard. Rowen, 347 N.W.2d at 634.
III. Dissolution of the Joint Venture .
The trial court's undisputed determination that the parties' relationship was a joint enterprise rather than a marriage defines the relevant consideration for division of the property at issue. The law governing division of joint venture property is that which applies to partnerships. Jensen v. Schreck, 275 N.W.2d 374, 378 (Iowa 1979). Although not mutually exclusive, the factors considered in making a property division in a dissolution of marriage are not generally applicable because the court's jurisdiction in that context is not implicated in disputes between unmarried cohabitants. See, e.g., Metten v. Benge, 366 N.W.2d 577, 579 (Iowa 1985); Slocum v. Hammond, 346 N.W.2d 485, 490-91 (Iowa 1984).
Upon our review of the record, we conclude the district court erroneously considered the parties' net worth at the inception of the joint venture in determining their distributive shares on termination. There is simply no evidence indicating that the parties' initial capital contributions to the joint venture were in proportion to their respective net worths at the time the joint venture commenced. In fact, the record supports a contrary finding. We, like the special master, find that, with the exception of the parties' joint contributions to the acquisition of real property, the remainder of the parties' individual assets were "clearly segregated in their individual names." We also agree with the special master's findings that although the parties advanced "a lot of money between each other's accounts, [they] always ke[pt] track of who owed whom any money." In the absence of any evidence that either party was indebted to the other, there is no justification for adjustment of their respective shares based on Schrage's greater net worth.
For the same reason, it is unnecessary to reduce Schrage's distributive share to account for gambling losses. In doing so, the court relied on evidence of unaccounted for social security checks, certificates of deposits, and cash withdrawals to support its conclusion that Schrage depleted at least $60,000 of joint venture assets. As mentioned above, with the exception of the funds invested in real estate, the parties' segregated their assets and held title to them individually. Again, there is no evidence indicating that any of the funds allegedly lost were ever contributed to or withdrawn from the joint venture. See Jensen, 275 N.W.2d at 382 (withdrawals of funds from joint venture reduce the joint venturer's distributive share).
Lastly, we also find Schrage's challenge to the method of dividing their equity in their personal residence is without merit. See Williams v. Monzingo, 235 Iowa 434, 442, 16 N.W.2d 619, 622-23 (1944) (proof of unequal contribution to tenancy in common overcomes presumption that tenants in common take equal shares and raises presumption they intended to share in proportion to amounts contributed). The district court is affirmed on this issue. Given the parties' limited records and conflicting accounts regarding their individual contributions to the joint venture, we conclude the special master's findings were not clearly erroneous and his recommended distribution accomplished an equitable distribution of the assets of the parties' joint venture. Because the special master's findings were not clearly erroneous, we adopt them as our own and hold that the district court's contrary conclusion necessitates modification of its decree.
This matter is accordingly remanded to the district court for entry of a decree distributing the parties' joint venture assets in accordance with the findings and recommendation of the special master.
We need not address the remaining issues raised on appeal because the foregoing is dispositive. The judgment of the district court is affirmed as modified and remanded as herein provided.
AFFIRMED AS MODIFIED ON APPEAL AND CROSS-APPEAL AND REMANDED.