Lang v. Lang

• Decision Date: 12 April 1991
• Docket Number: No. 89-1859,89-1859
• Citation: 161 Wis.2d 210,467 N.W.2d 772
• Parties: In re the Marriage of Mildred LANG, Petitioner-Appellant, v. Clifford W. LANG, Respondent.
• Court: Wisconsin Supreme Court

Page 772

467 N.W.2d 772

161 Wis.2d 210

In re the Marriage of Mildred LANG, Petitioner-Appellant, v. Clifford W. LANG, Respondent.

No. 89-1859.

Supreme Court of Wisconsin.

Argued Jan. 4, 1991.

Decided April 12, 1991.

Terry W. Rose, argued, Rose & Rose, on brief (in Court of Appeals), Kenosha, for petitioner-appellant.

Mary Ann Boehnlein of Jastroch & LaBarge, Waukesha, argued, Schwartz, Weber, Tofte & Nielsen, S.C., Racine, on brief (in Court of Appeals), for respondent.

CECI, Justice.

This case is before the court on certification from the court of appeals, pursuant to sec. (Rule) 809.61, Stats. Mildred Lang (petitioner) commenced an action against Clifford Lang (respondent) which sought, inter alia, an absolute divorce and division of the property of the parties.

The petitioner appeals from a judgment of the circuit court for Kenosha county, David M. Bastian, Circuit Judge. The circuit court granted the petitioner's request for an absolute divorce, ruled that certain property was not subject to division under sec. 767.255, Stats., ¹ and divided equally the rest of the parties' property.

There are three issues raised by this appeal. The first issue is whether the proceeds of a life insurance policy constitute an inheritance or gift within the meaning of sec. 767.255, Stats., and therefore are not subject to division in the beneficiary's divorce proceedings. The second issue is whether a right of survivorship in a joint tenancy is an inheritance within the meaning of sec. 767.255, and therefore not subject to division in a divorce proceeding. The third issue is whether property owned by one of the parties prior to the marriage is subject to division under sec. 767.255.

We hold that neither insurance proceeds nor a right of survivorship in a joint tenancy constitute an inheritance within the meaning of sec. 767.255, Stats. Accordingly, we conclude that the circuit court properly ruled that both were subject to division. We further hold that property one of the parties owned prior to the marriage is also subject to division under sec. 767.255.

We leave for another day the question of whether life insurance proceeds constitute gifts within the meaning of sec. 767.255 because the petitioner did not raise this issue in the circuit court. Wirth v. Ehly, 93 Wis.2d 433, 443-44, 287 N.W.2d 140 (1980). However, we do note that any party who seeks to establish that life insurance proceeds constitute a gift within the meaning of sec. 767.255 must deal with the difficult question of interspousal gifts if the beneficiary is the decedent's spouse. See generally L. Golden, Equitable Distribution The facts of this case relevant to this appeal are not in dispute. The petitioner and the respondent were married on March 6, 1969. It was the second marriage for both parties. The petitioner's first husband died on January 27, 1966. At the time of his death, the petitioner and her former husband owned as joint tenants with rights of survivorship a residence at 1008 Burlington Road, Kenosha, Wisconsin. After his death, the probate court terminated the petitioner's former husband's interest in said residence. At the time the petitioner commenced this action, said residence was held in her name alone and was being used by the parties as a rental property.

of Property, sec. 5.27 (1983 & Supp.1990). ²

The petitioner was the beneficiary of a life insurance policy on her former husband's life for approximately $20,000. At the time of her marriage to the respondent, the petitioner retained approximately $17,000 to $18,000 of the insurance proceeds in her name alone in two separate bank accounts. At the time the petitioner commenced this action, $5,196 of those insurance proceeds remained in an account at Kenosha Savings and Loan Association in her name alone. The respondent does not dispute the petitioner's contention that those funds were never commingled. ³

In addition to the residence and the insurance proceeds, the petitioner owned prior to her marriage to the respondent two life insurance policies with cash values. One policy was issued by Prudential and the other was issued by State Farm. The petitioner owned both of the policies at the time she commenced this action.

The petitioner argued in the circuit court that the right of survivorship in the residence at 1008 Burlington Road and the life insurance proceeds were inheritance and, therefore, were not subject to division. The petitioner also argued in the circuit court that the life insurance policies she currently holds are not subject to division because she owned them prior to her marriage to the respondent.

The circuit court rejected the petitioner's arguments and ruled that all three assets were subject to division. The circuit court reasoned that the residence at 1008 Burlington Road was not inherited because the petitioner's former husband did not own the residence in his name only, and, therefore, the petitioner simply acquired the property in full as the sole living joint tenant. In rejecting the petitioner's claim that the life insurance proceeds were inheritance, the circuit court reasoned that a life insurance policy is nothing more than a contract between the decedent and a third party to pay the beneficiary monies upon the decedent's death. The circuit court's decision does not indicate its reasoning for rejecting the petitioner's claim that the Prudential and State Farm policies are subject to division.

The circuit court entered judgment on September 25, 1989. The petitioner appealed from the judgment of the circuit court, and the court of appeals certified the appeal to this court.

Whether an asset is subject to division under sec. 767.255, Stats., is a question of law. In re Marriage of Weiss v. Weiss, 122 Wis.2d 688, 692, 365 N.W.2d 608 (Ct.App.1985). Statutory construction and the interpretation of a term used in a statute is also a question of law. Ortin v. Schuett, 157 Wis.2d 415, 418-19, 459 N.W.2d 596 (Ct.App.1990). Accordingly, we will independently and without deference review the circuit court's determination that the assets in question were subject to division. Ball v. District No. 4, Area Board, 117 Wis.2d 529, 537, 345 N.W.2d 389 (1984).

INSURANCE PROCEEDS

The petitioner contends that the life insurance proceeds constitute inheritance within the meaning of sec. 767.255, Stats., and therefore are not subject to division, for three reasons. First, the life insurance proceeds were taxed under sec. 72.12(7), Stats., which is commonly referred to as an "inheritance tax." Second, inheritance is commonly understood to include life insurance proceeds. Third, ordinary people view life insurance proceeds as being like inheritance; therefore, life insurance, like inheritance, should not be subject to division. We disagree.

While sec. 72.12, Stats., does impose a tax on what is commonly thought of as inheritances, labeling it "an inheritance tax" is misleading. Section 72.12 imposes a tax on the right to receive property. In Matter of Estate of Laev, 115 Wis.2d 168, 174, 340 N.W.2d 223 (Ct.App.1983). The taxing event is the transfer of certain classifications of property. Id. These classifications include transfers that occur after death, such as transfers by will and intestate succession, and transfers between living persons that occur before death, such as transfers in contemplation of death (transfers for less than adequate or full consideration that occur within two years prior to death). Sections 72.12(1), (2), and (4). ⁴ Given the court of appeals' holding in Herlitzke v. Herlitzke, 102 Wis.2d 490, 492-93, 307 N.W.2d 307 (Ct.App.1981), that inheritance within the meaning of sec. 767.255 does not include transfers of property between living persons, sec. 72.12 taxes a broader range of transactions than inheritance within the meaning of sec. 767.255.

Furthermore, the term "inheritance" does not even appear in sec. 72.12. Instead, ch. 72 is titled "Inheritance, Estate and Gift Tax." While words that appear in the title of a chapter of the statutes may be indicative of legislative intent, the fact that the term "inheritance" appears in the title of ch. 72 does not mean the legislature intended inheritance to mean the same thing in secs. 72.12 and 767.255. The same term may have different meanings when it is used in different statutes. Rupp v. Swineford, 40 Wis. 28, 30-31 (1876).

Moreover, the history of sec. 767.255 proves that the legislature intended inheritance to have a different meaning in sec. 767.255 than transactions subject to taxes under sec. 72.12. As originally enacted in 1977, sec. 767.255 was numbered 247.255 and provided in relevant part that:

Any property inherited by either party prior to or during the course of the marriage shall remain the property of such party and may not be subjected to a property division under this section except upon a finding that refusal to divide such property will create a hardship on the other party or on the children of the marriage.... The court shall presume that all other property except inherited property is to be divided equally between the parties....

Section 247.255, Stats. (1977) (Emphasis added). Chapter 196, sec. 29, Wis. Laws of 1979, effective August 1, 1980, amended sec. 767.255 so that the section now provides in relevant part that:

Any property shown to have been acquired by either party prior to or during the course of the marriage as a gift, bequest, devise or inheritance or to have been paid for by either party with funds so acquired shall remain the property of such party and may not be subjected to a property division under this section except upon a finding that refusal to divide such property will create a hardship on the other party or on the children of the marriage.... The court shall presume that all other property is to be divided equally between the parties....

Section 767.255, Stats. (Emphasis added).

The fact that the legislature amended sec. 767.255...