Marriage of Gore, In re, 55A04-8711-CV-366

• Docket Nº: No. 55A04-8711-CV-366
• Citation: 527 N.E.2d 191
• Case Date: August 22, 1988
• Court: Court of Appeals of Indiana

Page 191

527 N.E.2d 191 In re the MARRIAGE OF Mark A. GORE, Appellant,
and
Debra L. Gore, Appellee. No. 55A04-8711-CV-366. Court of Appeals of Indiana,
Fourth District. Aug. 22, 1988.

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Thomas G. Stayton, Joseph H. Yeager, Jr., Baker & Daniels, Indianapolis, for appellant.

Jeffrey A. Berg, Speedway, Stephen A. Oliver, Borin & Oliver, Martinsville, for appellee.

MILLER, Judge.

Mark A. Gore has taken this interlocutory appeal to challenge the imposition of a receivership over his corporation, M.A. Gore of Indiana, Inc. that operates the Mark's Pub tavern, and his personal assets pending the dissolution of his marriage to Debra L. Gore. Mark asks this court to reverse the receivership order and to assess the costs of the receivership against Debra. We reverse the appointment of a receivership over M.A. Gore of Indiana, Inc. and affirm the receivership over Mark's personal assets and remand to the trial court.

ISSUES

Mark's appeal raises the following issues: ¹

I. Whether notice to Mark was deficient concerning the receivership over his personal assets.

II. Whether the evidence warrants the imposition of a receivership.

III. Whether the court has authority to appoint a receiver as a temporary order in a dissolution proceeding.

IV. Whether Mark should be required to pay the expenses of a receivership unlawfully imposed.

FACTS

Debra L. Gore sought to dissolve her three year, childless marriage to Mark A. Gore by dissolution proceedings in Marion County November 14, 1986. On that day she procured an order prohibiting Mark from disposing of property. The case was venued to the Morgan Circuit Court and then transferred to the Morgan Superior Court. Six hearings have been held; 690 pages of transcript have been accumulated. ² Mark has been held in contempt three times for violating the order restraining him from disposing of potential marital assets. The focus upon Mark's contemptuous behavior has prevented the case from proceeding toward final hearing on the merits.

Finding Mark in contempt the third time, the court imposed a receivership over Mark's corporation and his personal assets to protect the marital estate pending the final hearing. Mark petitioned this court to stay the order pending this appeal. After oral argument, an order was entered staying in part the appointment of a receiver. We allowed the receivership over Mark's personal assets to remain in force.

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But, we stayed the receivership over M.A. Gore of Indiana, Inc. subject to the following conditions: 1) Mark's Pub would continue to operate in a normal fashion in the ordinary course of business; 2) neither Mark nor M.A. Gore of Indiana, Inc., would sell, transfer or encumber any asset of M.A. Gore of Indiana, Inc. except in the ordinary course of business; and Mark would deposit with the Clerk of the Morgan County Superior Court the sum of $3,000 which Debra could withdraw at a rate of $150 per week in satisfaction of Mark's spousal maintenance obligation.

Mark and Debra were married August 21, 1983. In contemplation of marriage, Mark and Debra entered into an antenuptial agreement August 4, 1983 setting out the division of their property in case of divorce. The agreement purported to keep Mark's and Debra's estates separate--including property accumulated during marriage. Specific mention is made of Mark's 49% interest in his father's business, J.W.G. Enterprises, Inc. Mark's interest in this business and any additional interest acquired by gift, inheritance, or purchase was to remain Mark's sole property.

The largest potential marital asset was Mark's tavern and package liquor business, J.W.G. Enterprises, Inc. which was doing business as the Sakitumi Lounge. Mark obtained sole ownership of the business from his father in 1986. Mark has maintained that his business interests are separate property and not subject to court order by virtue of the antenuptial agreement. Mark sold the Sakitumi the same day Debra filed for divorce, November 14, 1986 before receiving notice of the restraining order. The purchase price of the Sakitumi was $275,000; the terms were $100,000 down plus monthly payments of $2,771.39 for seven (7) years.

The cumulative evidence of all six hearings is required to put together the full story of the sale of the Sakitumi and Mark's other enterprises during the year following the commencement of the dissolution proceedings. Mark used part of the $100,000 down payment from the Sakitumi to repay a loan from his mother of some $30,000 to $35,000. Mark then started a new business, M.A. Gore of Indiana, Inc. which does business as Mark's Pub. ³ He borrowed $56,000 secured by a second mortgage on the marital residence and borrowed an additional $30,000 from his mother. He traded his old truck in on a new one. He delivered to the sheriff certain household goods for delivery to Debra pursuant to court order. The court found at its October 30, 1987 hearing that the goods Mark supplied were not complete and many of the items were inferior substitutes for those in the order.

The first hearing Mark attended was a contempt hearing held June 9, 1987. Mark had failed to appear at an earlier hearing because his mother was ill. The court exonerated Mark for the sale of the Sakitumi because the sale was completed before Mark received notice of the restraining order. Mark was held in contempt for the repayment of the loan to his mother out of the proceeds of the sale. The court found that Mark had "used a facade of a corporate entity, J.W.G., to mask the true nature of this business, i.e. a sole proprietorship owned and operated by Mark A. Gore" in order to strip assets and deplete funds from the marital estate. As part of its order, the court admonished Mark that should he fail to comply with the provisions of the order, the court, upon petition, would immediately appoint a receiver to manage the affairs of Mark's corporate interests until the divorce proceedings were completed.

Mark was again held in contempt August 4, 1987. He had paid no spousal support as ordered, disbursed the monthly contract payments from the sale of the Sakitumi in violation of court order, and negotiated the parties 1985 joint income tax refund without Debra's endorsement or knowledge. The court found that it would be necessary to appoint a receiver to manage the assets

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of Mark's corporate interests in order to preserve the potential marital estate. The court gave the parties a week to agree upon a fiduciary.

August 10, 1987, Mark petitioned the court for relief from its order. He requested that he be allowed a week to file a verified accounting the court had ordered months earlier. He also requested the receivership be stayed until or unless he be found in further contempt. His petition twice refers to a receivership over his personal assets but makes no mention of one over his corporate interests. On August 11, 1987, the court granted Mark relief by staying its order instanter.

Mark was again found in contempt at an October 30, 1987 hearing and given a suspended thirty (30) day sentence. The court found it had no alternative but to lift the stay, and order that a receiver be appointed to preserve the marital estate. Again the court gave Mark and Debra a week to agree upon a fiduciary before it would order one on its own. Sixteen days later and absent any agreement by Mark and Debra as to the selection of a corporate fiduciary, Debra advised the court by motion that it would be necessary for the court to select a receiver and recommended the certified public accounting firm of Plasterer and Mann, P.C. The court appointed Plasterer and Mann, P.C. after the posting of bond as receivers over Mark's personal assets and M.A. Gore of Indiana, Inc. November 16, 1987.

DECISION

I. Receivership over Mark's Personal Assets--Sufficiency of Notice

Mark asserts that the appointment of a receiver over his personal assets is error because notice was never properly served upon him. The problem arises out of the blur between Mark's corporate and personal interests. The record is replete with notice to Mark that if he continued to disobey court orders a receivership would be imposed over his corporate assets. But, nowhere in the record does Mark receive notice of an impending receivership over his personal assets.

The adequacy of notice is defined by statute. IND.CODE 34-1-12-9 reads: "[r]eceivers shall not be appointed, either in term or vacation, in any case, until the adverse party shall have appeared or shall have had reasonable notice of the application for such appointment, except upon sufficient cause shown by affidavit." The statute is satisfied either by an "appearance" or by "reasonable notice." In all previous cases interpreting this statute, receiverships have been sought at the commencement of lawsuits and the "reasonable notice" requirement has been analyzed. No case, as yet, has held an "appearance" alone to be adequate.

Mark contends that notice must be given in the form of a pleading. He relies upon the following language from Indianapolis Dairymen's Co-op v. Bottema (1948), 266 Ind. 237, 79 N.E.2d 399, 403 for this proposition:

"... [T]here must be some application filed on behalf of the parties seeking the appointment of the receiver, and invoking the powers of the court to be exercised in that behalf. He must map out by some form of pleading, stating a cause for the appointment of receiver, that the opposite parties may know on what grounds the right to receiver is claimed and that they may know what they have to meet and defend against to prevent the appointment and the pleadings in this behalf will be bound and limit the inquiry."

Indianapolis Dairymen's is distinguishable from the present case because it interprets the reasonable notice requirement for a receivership sought at the commencement of an action. However, the importance of procedural protection is not forgotten or diminished under the "appearance"...