Summary
declining to consider debts to parents where substantial evidence supported that finding
Summary of this case from Thomas v. Thomas (In re Marriage of Thomas)Opinion
No. 3-556 / 02-1473
Filed October 15, 2003
Appeal from the Iowa District Court for Iowa County, William L. Thomas, Judge.
Dell Lyle appeals from the property division provisions of the parties' dissolution decree. AFFIRMED AS MODIFIED.
Janice Becker of McMurray Becker, Coralville, and Stephen Greenleaf of Lynch, Greenleaf Michael, L.L.P., Iowa City, for appellant.
Robert Leinen of Elwood, Elwood Leinen, North English, for appellee.
Considered by Huitink, P.J., and Vaitheswaran and Eisenhauer, JJ.
Dell Lyle, an eastern Iowa farmer, divorced his wife, Sheryl. On appeal, he takes issue with the district court's property distribution, contending it is skewed in favor of Sheryl, does not account for farm debt owed to his father, and unnecessarily results in the division of a family farm. Sheryl responds that the distribution appears skewed in part because the court did not discount her retirement account to present value. We affirm as modified.
I. Background Facts and Proceedings
Dell and Sheryl married in 1981 and had three children. Shortly after their marriage, the couple moved into a home on a 160 acre farm owned by Dell's parents, Francis and Theola. They eventually entered into a written contract with Dell's parents to purchase the home and 1.01 acres of surrounding land. At the time of the dissolution trial more than twenty years later, Sheryl was living in the home with all three children, two of whom were still minors. The home was valued at $80,000 and carried debt of $34,177.
The parties agree the debt is not $60,000 as found by the district court.
Throughout most of the marriage, Dell farmed the 160 acres with his father pursuant to an undocumented partnership agreement. The farming operation was financed through the "F D Lyle" Account. Francis and Theola contributed the majority of funds. Dell provided most of the labor, given Sheryl's outside employment as a secretary. Operational decisions were made primarily by Francis and Dell, although Sheryl sought greater involvement after 1998.
In 1998, Dell and Sheryl ended the informal farm operating arrangement they had with Dell's parents. They assumed responsibility for 100% of the cash operating needs, taking out loans to cover cash rent payments and crop inputs. Around the same time, hog prices declined, leaving Dell's livestock operation in disarray.
On the advice of his banker, Dell found off-the-farm employment. At the time of trial, his salary was $34,368 annually. Sheryl continued her employment as a secretary, earning $33,342 annually. At the time of trial, her retirement account had a value of $83,306.
Prior to trial, the parties stipulated that Sheryl would have physical care of the two minor children. They also reached an agreement concerning child support, visitation, and division of certain debts. Dell relinquished his right to Sheryl's retirement account.
The primary issue for trial was how to equitably divide the parties' remaining assets and liabilities. The district court awarded Sheryl the parties' home and required her to assume the indebtedness. The court also awarded her the retirement account "free and clear of any claim by Dell." Dell received all the farm equipment and machinery and any interest he had in hogs. He was held responsible "for any and all farm operation debt currently owing and previously incurred, whether jointly or individually incurred and whether owed to an individual or financial institution or relative. . . ." Dell appealed.
II. Property Distribution
Dell contends the district court's division of the couple's assets and liabilities is "grossly inequitable." See In re Marriage of Dean, 642 N.W.2d 321, 323 (Iowa Ct.App. 2002) (noting division need not be equal, but must be equitable under particular circumstances of each case). Our review of this issue is de novo. Iowa R.App.P. 6.4.
The parties married young and brought no significant assets to the marriage. After twenty years, they had accumulated approximately $46,000 of equity in their home, some heavily encumbered farm machinery and equipment, several cars and animals, two life insurance policies with a cash value of $7700, securities totaling less than $7,000, and the retirement account valued at $83,306. They also had accumulated significant debt, including an undisputed $86,114.27 farm operating loan with a local bank and disputed debts to Dell's parents of $30,300 for cash rent and $74,531.02 for farm operating expenses.
In assessing the parties' relative net worths, we agree with the district court that the debts to Dell's parents should not be considered. Although certain balance sheets make reference to these debts and there is evidence they were viewed as ten-year loans, a banker characterized Dell's obligation to Francis as a "pay as you can" scheme. Furthermore, the district court made an adverse credibility finding concerning these debts, stating, "I simply do not believe that there is now or ever was or ever will be any risk that Dell will ever have to repay any `debt' to his parents." We give weight to this finding. See In re Marriage of Vrban, 359 N.W.2d 420, 423 (Iowa 1984) (noting that on appeal "[w]e are denied the impression created by the demeanor of each and every witness as the testimony is presented.")
We also agree with the district court that Sheryl's retirement account should be valued at $83,306 rather than its present value, as Sheryl now contends. Sheryl did not contest valuation of the retirement account in the district court and her financial affidavit and statement of issues reflected an account value of $83,306. See In re Marriage of Heneman, 396 N.W.2d 797, 801 (Iowa Ct.App. 1986) (stating "[q]uestions not presented to and not passed on by the trial court cannot be raised or reviewed on appeal.")
Relying on figures contained in a law review article, Sheryl contends the $83,306 figure should have been discounted by $51,650, resulting in a present value of $31,656.
After setting aside parental debts and including the stipulated value of the retirement account, we find Sheryl received net assets of close to $130,000 and Dell ended up with net liabilities of approximately $9,000. We believe this differential is inequitable. This was a long marriage. The parties' ages, education, and earning capacities were similar. See Iowa Code § 598.21(1) (setting forth factors to be considered in dividing property). Dell assumed all the farm debt which, at the time of trial, significantly outweighed the value of farm assets. He continues to disclaim an interest in Sheryl's retirement account. See In re Marriage of Benson, 545 N.W.2d 252, 255 (Iowa 1996) (stating "pensions are characterized as marital assets, subject to division in dissolution actions just as any other property.") Under these circumstances, we believe the property distribution should be modified.
Dell determined Sheryl received $128,597.46 in net assets and he received $12,029.10 in net liabilities, without consideration of the debt to his parents. However, Dell failed to account for his agribusiness account containing $3,229.46 or three dogs valued at $300 each that were awarded to Sheryl.
Dell was forty-five years old at the time of trial and Sheryl was forty-three.
Dell obtained a degree in agricultural business from a community college and Sheryl took computer and medical terminology courses at the University of Iowa.
III. Disposition
Dell shall be awarded the parties' homestead when his child support obligation ends. Sheryl shall have the right to continue living in the home until Dell's child support obligation ends. See Iowa Code § 598.21(1)(g) (finding desirable award of marital home to party receiving physical care of couple's children). Sheryl shall be responsible for payment of the real estate contract and any note secured by a mortgage until the date the property is transferred to Dell. At that point, Dell shall assume these debts.
Costs of the appeal are divided equally between the parties.