Marriage of Francis, In re

• Decision Date: 14 June 1989
• Docket Number: No. 88-1188,88-1188
• Citation: 442 N.W.2d 59
• Parties: In re the MARRIAGE OF Thomas August FRANCIS and Diana Mora Francis, Upon the Petition of Thomas August Francis, Appellant, and Diana Mora Francis, Appellee.
• Court: Iowa Supreme Court

Page 59

442 N.W.2d 59

58 USLW 2018

In re the MARRIAGE OF Thomas August FRANCIS and Diana Mora Francis,

Upon the Petition of

Thomas August Francis, Appellant,

and

Diana Mora Francis, Appellee.

No. 88-1188.

Supreme Court of Iowa.

June 14, 1989.

Rehearing Denied July 13, 1989.

Bruce L. Walker of Phelan, Tucker, Boyle & Mullen, Iowa City, for appellant.

C. Peter Hayek of Hayek, Hayek & Holland, Iowa City, for appellee.

Considered en banc.

NEUMAN, Justice.

This appeal involves the thorny economic issues surrounding what has come to be called the "advanced degree/divorce decree" ¹ dissolution of marriage action.

On the day he was admitted to medical school, appellant Thomas Francis proposed marriage to appellee Diana Mora Francis. Like countless couples before them, they pledged to one another their support and commitment to a shared future. Six years and two children later, however, their marriage is at an end. And while Tom stands at the threshold of his career as a physician specializing in family practice, Diana ponders her future from the vantage point of one who has helped support the family through medical school and two years of residency on the modest income generated by her in-home day care business.

The fighting issue, as framed by the trial court and reiterated by the parties on appeal, is this: What compensation, if any, should Diana receive for her contribution to Thomas' increased earning capacity due to his education received during the marriage? For over a decade this court has recognized that a spouse's contribution to that increased earning potential is a factor properly considered in the award of alimony and an equitable division of the parties' assets. See In re Marriage of Horstmann, 263 N.W.2d 885, 891 (Iowa 1978). Yet precisely because each dissolution action must be decided on its unique facts and circumstances, no predictable method of valuing that contribution or distributing the fruits of that increased potential has been settled upon.

Here the trial court awarded Diana a $100,000 lump sum property award payable with interest in ten annual installments, along with a three-year rehabilitative alimony award totaling $54,000. On appeal from these judgments, Thomas concedes that Diana is entitled to something but challenges the size and nature of the awards on three principal grounds: first, that the court based its $100,000 on the erroneous legal conclusion that a medical education constitutes an asset for the purpose of equitable distribution; second, that the trial court based its award on calculations that were speculative, incomplete, and misleading; and, third, that the record does not support Diana's need for rehabilitative alimony. Additionally, Thomas challenges his obligation to pay $1000 towards Diana's attorney fees and resists the payment of similar fees on appeal.

Our review of this equitable action is, of course, de novo. In re Marriage of Janssen, 348 N.W.2d 251, 252 (Iowa 1984). We are persuaded that the trial court neither misapplied legal doctrine nor erroneously misconstrued the evidence so as to compensate Diana far beyond her contribution to the marriage, as Thomas suggests. We conclude, however, that for marriages of short duration which are devoted almost entirely to the educational advancement of one spouse and yield the accumulation of few tangible assets, alimony--rehabilitative, reimbursement, or a combination of the two--rather than an award of property, furnishes a fairer and more logical means of achieving the equity sought under Horstmann and its progeny. Accordingly, with some modification, we affirm the trial court.

I. Several well settled rules guide our decision. Principal among them is the rule that an advanced degree or professional license in and of itself is not an asset for property division purposes. Janssen, 348 N.W.2d at 253; Horstmann, 263 N.W.2d at 891; In re Marriage of Berger, 431 N.W.2d 387, 388-89 (Iowa App.1988); In re Marriage of Stewart, 356 N.W.2d 611, 612 (Iowa App.1984).

Nevertheless, the future earning capacity flowing from an advanced degree or professional license is a factor to be considered in the division of property and the award of alimony. Janssen, 348 N.W.2d at 253; Horstmann, 263 N.W.2d at 891; Berger, 431 N.W.2d at 388-89; Stewart, 356 N.W.2d at 612-13; In re Marriage of Estlund, 344 N.W.2d 276, 280 (Iowa App.1983). Insofar as the advanced professional degree creates an expectancy of higher future earnings, the degree may and should be taken into account in calculating that future earning capacity. Janssen, 348 N.W.2d at 253-54; Horstmann, 263 N.W.2d at 891; Berger, 431 N.W.2d at 388-89; Stewart, 356 N.W.2d at 612-13.

Prior Iowa cases have interchangeably used property awards and alimony as means of compensating a nonprofessional spouse for the contribution made to the other spouse's advanced degree or professional license. Janssen, 348 N.W.2d at 254 (substantial periodic alimony rather than lump sum property award equitably adjusts parties' finances); Horstmann, 263 N.W.2d at 891 (husband's potential for increased earning capacity made possible "with the aid of his wife's efforts" pertinent to both equitable distribution of assets and whether alimony should be awarded); Stewart, 356 N.W.2d at 612-13 (enhanced earning capacity factored in issue of alimony but properly rejected when supporting spouse made comparable career advancement during marriage); Estlund, 344 N.W.2d at 280 (wife's contributions, as homemaker and breadwinner, to husband's law degree properly considered upon issue of equitable division of property). These decisions are in harmony with statutes that direct the trial courts to consider such contributions in the awarding of property and spousal support. See Iowa Code §§ 598.21(1)(e), (3)(h) and (j) (1987).

It must be remembered, however, that the purposes of property division and alimony are not the same. Property division is based on each partner's right to "a just and equitable share of the property accumulated as the result of their joint efforts." In re Marriage of Hitchcock, 309 N.W.2d 432, 437 (Iowa 1981). Alimony, on the other hand, is a stipend to a spouse in lieu of the other spouse's legal obligation for support. In re Marriage of Wegner, 434 N.W.2d 397, 398 (Iowa 1988).

Recently, such court-ordered stipends have taken on new forms to accomodate the broad range of functions that alimony may serve. See H. Clark, The Law of Domestic Relations in the United States 641-44 (2d ed. 1988). The Utah Court of Appeals nicely summarized the need for such flexibility this way:

In [long-term marriages], life patterns have largely been set, the earning potential of both parties can be predicted with some reliability, and the contributions and sacrafices of the one spouse in enabling the other to attain a degree have been compensated by many years of the comfortable lifestyle which the degree permitted. Traditional alimony analysis works nicely to assure equity in such cases.

In another kind of recurring case, ... where divorce occurs shortly after the degree is obtained, traditional alimony analysis would often work hardship because, while both spouses have modest incomes at the time of divorce, the one is on the threshold of a significant increase in earnings. Moreover, the spouse who sacrificed so the other could attain a degree is precluded from enjoying the anticipated dividends the degree will ordinarily provide. Nonetheless, such a spouse is typically not remote in time from his or her previous education and is otherwise better able to adjust and to acquire comparable skills, given the opportunity and the funding. In such cases, alimony analysis must become more creative to achieve fairness, and an award of "rehabilitative" or "reimbursement" alimony, not terminable upon remarriage, may be appropriate.

Petersen v. Petersen, 737 P.2d 237, 242 n. 4 (Utah App.1987) (citing Haugan v. Haugan, 117 Wis.2d 200, 343 N.W.2d 796 (1984); Mahoney v. Mahoney, 91 N.J. 488, 453 A.2d 527 (1982)).

With these principles in mind, we consider the contentions of the parties.

II. Thomas begins by asserting that the trial court erroneously characterized his medical education and license as marital assets properly subject to equitable division. We find no merit in the contention. The trial court specifically found that the "degree ... obtained by Thomas [is] not property." It then went on to correctly cite Horstmann, Janssen, and Estlund for the proposition that it is the potential for increased future earning capacity made possible by Thomas' degree, with Diana's assistance, "that constitutes the asset for distribution by the Court." ²

We are persuaded, however, by Thomas' assertion that alimony, not a property award, is the proper vehicle by which to achieve equity upon the dissolution of this marriage.

As previously stated in this opinion, alimony has traditionally taken the place of support that would have been provided had the marriage continued. A calculation of future earning capacity, in a case like the present one, essentially represents a value placed on the income to be derived from the advanced degree achieved during the marriage. The amount that would have been the student spouse's contribution to the future support of the parties is logically tied, if not wholly determined by, future earning capacity. Thus the court's duty to look at the future earning capacity of the spouses tracks more closely with a concern for loss of anticipated support, reimbursable through alimony, than through division of as-yet-unrealized tangible assets.

The alimony of which we speak is designed to give the "supporting" spouse a stake in the "student" spouse's future earning capacity, in exchange for recognizable contributions to the source of that income--the student's advanced education. As such, it is to be clearly distinguished from "rehabilitative" or "permanent" alimony.

Rehabilitative alimony was...