PUBLISHED OPINION
Case No.: 96-0591
Complete Title
of Case:
In re the Marriage of:
FREDRIC P. SPINDLER,
Joint-Petitioner-Respondent-
Cross
Appellant,
v.
BONITA B. SPINDLER,
Joint-Petitioner-Appellant-
Cross
Respondent.
Submitted on Briefs: September 11, 1996
Oral Argument:
COURT COURT OF APPEALS OF WISCONSIN
Opinion Released: December 4, 1996
Opinion Filed: December
4, 1996
Source of APPEAL Appeal from a judgment
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Ozaukee
(If
"Special", JUDGE: JOSEPH D. MC CORMACK
so indicate)
JUDGES: Anderson, P.J., Brown and Snyder, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn behalf of joint-petitioner-appellant-cross
respondent, the cause was submitted on the briefs of Ann T. Bowe of
Milwaukee.
Respondent
ATTORNEYSOn behalf of joint-petitioner-respondent-cross
appellant, the cause was submitted on the briefs of Donald A. Levy of
Cedarburg.
COURT OF
APPEALS DECISION DATED AND
RELEASED DECEMBER
4, 1996 |
NOTICE |
A party may file with the Supreme Court a petition to review an
adverse decision by the Court of Appeals.
See § 808.10 and Rule
809.62, Stats. |
This opinion is subject to further editing. If published, the official version will appear in the bound
volume of the Official Reports. |
No. 96-0591
STATE OF WISCONSIN IN
COURT OF APPEALS
In re
the Marriage of:
FREDRIC
P. SPINDLER,
Joint-Petitioner-Respondent-
Cross Appellant,
v.
BONITA
B. SPINDLER,
Joint-Petitioner-Appellant-
Cross Respondent.
APPEAL
and CROSS-APPEAL from a judgment of the circuit court for Ozaukee County: JOSEPH D. MC CORMACK, Judge. Affirmed in part; reversed in part and
cause remanded.
Before
Anderson, P.J., Brown and Snyder, JJ.
ANDERSON,
P.J. Bonita B. Spindler appeals and Fredric P.
Spindler cross-appeals from a judgment of divorce in which the trial court set
Bonita’s maintenance at $1020 per month for an indefinite period of time and it
deemed property inherited by Fredric as marital property and divided it
accordingly. Bonita contends that the
trial court misused its discretion in ordering maintenance based on a 60/40
split of the joint income. In the
alternative, Bonita argues that the $1020 is a mathematical error and the
correct amount of maintenance should be $1120.
Because the evidence supports the trial court’s exercise of discretion
and because the trial court sought a rough 60/40 split and $1020 achieved that
goal, we affirm this portion of the judgment.
Fredric
cross-appeals the inclusion of the Crandon cottage in the marital property
division. The trial court determined
that based on Bonita’s contributions throughout the marriage, the character of
the cottage changed from inherited to marital property. We conclude that Bonita’s contributions, in
the form of labor, were of de minimis value and were insufficient to change the
character of the cottage. Accordingly,
we reverse and remand this portion of the judgment.
Bonita's Appeal
Bonita
contends that the trial court erred in its maintenance award by ordering a
60/40 split of the joint income rather than a 50/50 split. Maintenance determinations are within the
sole discretion of the trial court and we will not reverse the trial court’s
decision unless there is evidence of an erroneous exercise of that
discretion. Grace v. Grace,
195 Wis.2d 153, 157, 536 N.W.2d 109, 110 (Ct. App. 1995). We conclude that the evidence supports the
trial court’s maintenance determination.
On
October 22, 1993, Bonita and Fredric filed a joint petition for divorce. They had been married for twenty-seven and
one-half years as of the date of divorce.
Fredric is an electrical engineer with a company in Milwaukee and makes
approximately $60,000 per year. Bonita
is an interior designer with her own interior decorating business and makes
approximately $12,000 per year. The
family court commissioner, after hearings on November 16, 1993, and February
24, 1994, ordered Fredric to pay Bonita temporary maintenance in the amount of
$1812 per month through May 1994.
Fredric continued to pay this amount until the final judgment of divorce
was rendered on January 19, 1996.
On
January 24, 1995, a trial to the court was held. The issues before the court were the division of gifted or
inherited property, maintenance, Bonita’s earning capacity and personal
property issues. In a decision and
order dated June 30, 1995, the trial court found that Bonita’s 1961 Corvette
and Fredric’s cottage lost their separate character and were included in the
50/50 property division of the marital estate.
In regard to Bonita’s earning capacity, the trial court relied on the
testimony of Dr. Leslie Goldsmith, an expert in the field of vocational
rehabilitation. Based on Goldsmith’s
testimony, the trial court determined that Bonita’s “greater vocational
prospects lie in the area of furniture sales/interior decorating ¼ [but] she has not
pursued these positions with the degree of effort that would allow the court to
simply accept her present income as the starting point for a division of income
¼.” Accordingly, the court imputed $20,000 to
Bonita as her annual income, or $1666 per month. The trial court further opined that Bonita has the capacity to
substantially increase her income beyond $20,000 per year and based its 60/40
division of the parties’ joint income on this finding. Based on Fredric’s monthly income of $5300
and Bonita’s imputed monthly income of $1666, the trial court ordered that
Bonita be paid indefinite maintenance in the amount of $1020. The trial court’s findings were embodied in
the final judgment of divorce dated January 19, 1996, which Bonita appeals.
Our
examination of the record satisfies us that the trial court’s determination on
this question is not a misuse of discretion.
The 60/40 split was based on the trial court’s conclusion that Bonita is
capable of obtaining a full-time position which could increase her income
beyond the $20,000 per year as imputed by the trial court. The trial court’s rationale displays a
reasonable exercise of discretion.
Therefore, we affirm this portion of the judgment.
As
an alternative argument, Bonita contends that the trial court’s maintenance
calculation of $1020 was incorrect and that $1120 is the correct figure. Maintenance decisions are left to the sole
discretion of the trial court. Grace,
195 Wis.2d at 157, 536 N.W.2d at 110.
At the rehearing on this issue, Bonita argued that there was a
“mathematical misfiguring” and that $1120 would equalize the gross
incomes. Fredric, on the other hand,
pointed out that on a net after-tax basis, the court’s order as uncorrected
would result in a 58/42 split, or as corrected would result in a 56/44
split. “[I]n order to result in a 60/40
split of net after tax income in [Fredric’s] favor, it requires a payment of
$855 a month.” The trial court
explained its decision as follows:
[T]he problem ¼ with using the tax calc, ¼ is the assumptions that have to be plugged into it are
so variable from case to case that you can’t really hit it exactly. But my point in the decision was to achieve
a rough 60/40 split. That’s the only
thing you can get in a case like this.
You’re not going to get a precise one because their tax situation could
change from year to year, and you’d have to re-figure it every year and re-run
the tax calc on it so I am exactly looking for a rough 60/40 split. And I will say that the original amount of
1,020 that I came up with was an arithmetic error. But in analyzing what’s been submitted since then by both
counsel, it seems to me that that number, although based upon a mistake,
achieves the closest thing to a rough 60/40 split. And because of that, I’ll direct that that number stand and that
there be no modification. It's not
going down to 855, it’s not going to go up to 1120.
Based on the trial court’s reasoning, we find no need to
correct the error in calculation.
Fredric's
Cross-Appeal
On
cross-appeal, Fredric contends that the trial court erred in its conclusion
that the cottage changed character from inherited property to marital property
and was subject to the property division.
This issue is one of statutory construction of the property division
statute, § 767.255, Stats., and
its application to the controlling facts of this case which are essentially
uncontested. Generally, property
division rests within the sound discretion of the trial court. Brandt v. Brandt, 145 Wis.2d
394, 406, 427 N.W.2d 126, 130 (Ct. App. 1988).
However, the application of a statute to a set of facts is a question of
law which we review de novo. Trattles
v. Trattles, 126 Wis.2d 219, 223, 376 N.W.2d 379, 381 (Ct. App. 1985).
In
1982, Fredric was gifted a cottage and parcel of land situated on Lake Lucerne
in Crandon, Forest County. Fredric’s
grandfather built the cottage in 1922 and bequeathed it to Fredric’s
grandmother in 1930 when he passed away.
She in turn left it to her five daughters, one of whom was Fredric’s
mother. In 1982, Fredric’s two aunts
held the remaining interests and gifted the cottage to him by deed. The title remains in Fredric’s name.
Fredric
testified that they have done no major improvements to the exterior of the
cottage because the Forest County and Town of Lincoln zoning commission
prohibits exterior improvements greater than $1000 to any cottage closer than
seventy-five feet to a lake, which applies to Fredric’s cottage. Even so, the roof was replaced in
approximately 1992. According to
Fredric’s testimony, interior improvements included: Fredric and friends tiling the kitchen and dining area; painting
the interior; installing a shower; installing a pump that draws lake water to a
ten-gallon electric water heater; hooking the kitchen sink to the water heater
and replacing a third of the porch flooring.
The improvements were paid for with commingled funds. He stated that Bonita reupholstered some
furniture, painted the middle bedroom and helped replace some screens. Fredric also testified that other than four
pieces of living room furniture and certain accoutrements, the remaining
furniture was inherited with the cottage.
Bonita
corroborated Fredric’s testimony regarding her contribution to the value of the
cottage. According to Bonita’s
testimony, she assisted with the general upkeep, such as raking and burning
leaves, helping to creosote the bridge, cleaning the kitchen area, washing the
draperies, dusting the floors and occasionally pulling out the pier. Bonita also testified that she helped put in
the vinyl flooring in the kitchen and dining room, put in custom-made
draperies, purchased lawn furniture and painted.
The
estimated value of the land in 1982, according to the tax bill, was $18,000 and
the improvements were valued at $16,500.
An assessment in 1993 reflected these same figures. In 1994 the property was reassessed,
increasing the value of the land to $29,000 while the value of the improvements
remained at $16,500, with a total estimated fair market value of $51,000. The parties stipulated that the reasonable
fair market value of the property in 1995 was $66,750.
At
trial, Shirley Van Cleve, a licensed real estate appraiser in the Crandon area,
attributed the appreciation of the real estate from 1982 to 1995 to the lot and
not to any improvements. Van Cleave
testified that she conducted an appraisal of the cottage and parcel and she
estimated the total fair market value to be $68,000. Van Cleve further testified that the vacant lot, if there were no
cottage on it, would sell for between $50,000 and $55,000 with no
improvements. According to Van Cleve’s
observation, the value of the cottage “had reached [a] minus condition all the
way through the building,” despite work done inside.
Based
on this evidence, the trial court concluded that the cottage property had
changed character from inherited to marital property. The trial court held:
The next item
of property that is in dispute is a cottage located in the Crandon area. Joint Petitioner Fredric inherited this
property and insists that it has retained such a separate character that it
should not be included in the marital estate.
The Court disagrees. There
appears to be a literal mountain of evidence that indicates that not only did
the Joint Petitioner Bonita provide labor and other efforts to maintain and
improve this property, but it is also clear that marital funds were expended in
its maintenance. Clearly, this property
lost its separate character and must be included in the marital estate.
We
disagree. The trial court erred when it
concluded that Bonita had proven that through her labors and the use of marital
funds the cottage had lost its gifted character and must be included in the
marital estate. Whether gifted or
inherited property is to remain exempt from a division of the marital estate
depends upon a confluence of the original status of the property, the identity
of the property and the character of the property. Each component must be separately evaluated and the evaluations
brought together to ascertain whether the property has in fact become marital
property. A substantial change in any
of the factors could be enough to transmute gifted property into marital
property. However, we caution that
where, as in this case, the parties agree that one or more factors have not
changed, the trial court must carefully evaluate the evidence on whether there
has been a change to the remaining factor(s) that justifies stripping the
gifted property of its exempt status.
In
this appeal, the focal point is whether the character of the property had
sufficiently changed to transmute the cottage into marital property. As we demonstrate, it is not enough that the
parties continue the marital relationship and carry out the usual obligations
in relationship to the property or that some marital funds are expended on
routine maintenance. The changes to the
property as a consequence of the marital relationship must substantially
increase its value. Despite the trial
court’s conclusion that Bonita made efforts to “improve the property,” we can
find no evidence to establish that her efforts substantially increased the
cottage’s value. Simply because a
spouse does routine maintenance is not enough of a reason to conclude that the
character has been changed. Likewise,
simply because marital funds are used for routine maintenance is not enough to
conclude that the character has been changed.
There must be more.
Section
767.255(2), Stats., provides:
(a) Except as provided in par. (b), any property
shown to have been acquired by either party prior to or during the course of
the marriage in any of the following ways shall remain the property of that
party and is not subject to a property division under this section:
1.
As a gift from a person other than the other party.
2.
By reason of the death of another, including ¼.
3.
With funds acquired in a manner provided in subd. 1. or 2.
(b) Paragraph (a) does not apply if the court
finds that refusal to divide the property will create a hardship on the other
party or on the children of the marriage.
If the court makes such a finding, the court may divest the party of the
property in a fair and equitable manner.
The
burden of proof on the question of whether an asset is exempt as gifted
property rests upon the party asserting the claim to show to a reasonable
certainty by the greater weight of the credible evidence that the property was
gifted. Brandt, 145
Wis.2d at 407-08, 427 N.W.2d at 131.
Here, Bonita does not challenge the original gifted status of the
cottage and Fredric has made a prima facie case that the cottage is
exempt. See id. at
408-09, 427 N.W.2d at 131.
Next,
we consider whether the trial court correctly concluded that the character and
identity of the cottage have not been preserved. See Popp v. Popp, 146 Wis.2d 778, 787, 432 N.W.2d
600, 602 (Ct. App. 1988). This burden
lies with Bonita to present countervailing evidence that the character and
identity have not been preserved and the cottage has lost its exempt
status. See Brandt, 145
Wis.2d at 409, 427 N.W.2d at 131.
Whether a party has met the burden of proof is a question of law which
we examine without deference to the trial court's conclusions. Id.
Identity
addresses whether a gifted asset has been preserved in some present
identifiable form so that it can be meaningfully valued and assigned. See Friebel v. Friebel, 181
Wis.2d 285, 298, 510 N.W.2d 767, 773 (Ct. App. 1993). It is not seriously disputed that the cottage possesses the same
physical form it had when it was gifted to Fredric and can be easily valued.
We
now turn to the question of whether Bonita fulfilled her burden of proof to
show that the character of the cottage had changed to marital property. Character addresses the manner in which the
parties have chosen to title or treat gifted assets. Id. at 298, 510 N.W.2d at 772. Changing the property's title, for example,
can transmute it to divisible property.
Id. Transmutation
will occur when a party transfers his or her gifted property into joint tenancy
or uses the property to purchase property for the mutual enjoyment and use of
the marriage or uses marital property to improve and enhance the gifted
property. See id. at 298,
510 N.W.2d at 772-73.
According
to the testimony of both Fredric and Bonita, Bonita’s labor and efforts focused
on maintenance and upkeep of the property, such as general cleaning and
maintenance of the yard. Testimony also
revealed that the appreciation in the property’s value from 1982 to 1995 was
due to the increase in the value of the land alone and not the
improvements. Bonita’s work around the
property constituted maintenance and ordinary repairs, but provided no more
than de minimis value to the enhanced value of the real estate and cottage.
We
have previously stated that merely maintaining the marital relationship and
performing customary obligations of one spouse to the other do not constitute a
contribution of the nonowning spouse requiring the appreciation in value of
separately owned property to be treated as part of the marital estate. Haldemann v. Haldemann, 145
Wis.2d 296, 302, 426 N.W.2d 107, 109 (Ct. App. 1988). Rather, the trial court should determine whether the nonowning
spouse’s efforts and modifications constituted improvements to the real
estate. Id. at 305, 426
N.W.2d at 110. An improvement is “[a]
permanent addition to or betterment of real property that enhances its capital
value and that involves the expenditure of labor or money and is designed to
make the property more useful or valuable as distinguished from ordinary
repairs.” Id. at 305, 426
N.W.2d at 111 (quoted source omitted).
Clearly, Bonita’s efforts do not constitute improvements and therefore
did not alter the character of the property.
Moreover,
the mere use of marital funds for maintenance and upkeep is insufficient to
alter the character of the property. See
id., 145 Wis.2d at 302, 426 N.W.2d at 109. The key test is whether, despite the use of
commingled funds, the inherited portion of the asset can still be identified
and valued. See Brandt,
145 Wis.2d at 412, 427 N.W.2d at 132.
Here, the marital funds expended in the maintenance and upkeep of the
cottage are easily ascertained.
Accordingly, Fredric’s gifted portion can be valued by subtracting the
few expenditures made to the property from its total value. The expenditure amount from marital funds
would be subject to division, while the remaining portion would be awarded to
Fredric.
While
we conclude that Bonita’s efforts were insufficient to transmute the cottage to
marital property, Bonita is not necessarily barred from sharing in its
increased value. “If the trial court
finds that a refusal to divide such non-marital property, or its appreciated
value, would create a hardship on the other spouse ¼ it may in its
discretion divest the donee spouse of such property in a fair and equitable
manner.” Plachta v. Plachta,
118 Wis.2d 329, 334, 348 N.W.2d 193, 195 (Ct. App. 1984). Here, the trial court determined the cottage
was subject to division; therefore, it did not consider whether the refusal to
divide the cottage would create a hardship on Bonita. On remand, the court may still award some of this to Bonita if it
concludes that a lack of division will cause her to suffer hardship under §
767.255, Stats.[1]
In addition, the court may determine
that this decision affects its prior presumption of equal division and adjust
the original division based on equitable considerations embodied in § 767.255.
In
sum, Fredric has made a prima facie case that the cottage was gifted property
and is exempt. And there is no dispute
that the identity of the cottage had not been changed. However, Bonita failed to show that, to a
reasonable certainty by the greater weight of the credible evidence, the
cottage lost its exempt status because its character had not been
preserved. See Brandt,
145 Wis.2d at 407, 427 N.W.2d at 131.
We reverse the trial court’s finding to the contrary and we remand for
further proceedings consistent with this decision.
No
costs to either party.
By
the Court.—Judgment affirmed in
part; reversed in part and cause remanded.
[1] We note
“hardship” cannot be based on the belief that the inclusion of the exempt
gifted property in the property division is necessary to achieve fairness and
equity. A finding of “hardship”
requires the trial court to conclude that the inclusion of the exempt asset is
necessary to eliminate or alleviate a financial difficulty or privation which
would otherwise exist if the property division were limited to the marital
property. Popp v. Popp, 146
Wis.2d 778, 792, 432 N.W.2d 600, 605 (Ct. App. 1988). The “hardship” determination must be made in light of the facts
and history of the case and the relative financial circumstances of the parties
before and after the divorce. This
consideration should not be limited to essential needs only. Id. at 792-93, 432 N.W.2d at
605.