Marriage of Muelhaupt, In re

• Decision Date: 19 April 1989
• Docket Number: No. 87-1336,87-1336
• Citation: 439 N.W.2d 656
• Parties: In re the MARRIAGE OF Frances Ellen MUELHAUPT and Joseph Daniel Muelhaupt Upon the Petition of Frances Ellen Muelhaupt, Appellee, And Concerning Joseph Daniel Muelhaupt, Appellant.
• Court: Iowa Supreme Court

Page 656

439 N.W.2d 656

In re the MARRIAGE OF Frances Ellen MUELHAUPT and Joseph Daniel Muelhaupt Upon the Petition of Frances Ellen Muelhaupt, Appellee And Concerning Joseph Daniel Muelhaupt, Appellant.

No. 87-1336.

Supreme Court of Iowa.

April 19, 1989.

Rehearing Denied May 12, 1989.

Randall G. Horstmann of Nyemaster, Goode, McLaughlin, Emery & O'Brien, P.C., Des Moines, for appellant.

Verne Lawyer and Richard H. Doyle IV of Law Offices of Verne Lawyer, Des Moines, and Harlan M. Hockett, Des Moines, for appellee.

Considered by HARRIS, P.J., and LARSON, CARTER, NEUMAN, and SNELL, JJ.

HARRIS, Justice.

This is an appeal and cross-appeal from the economic provisions of a dissolution of marriage decree. Substantial property rights are involved. Our de novo review leads us to modify and affirm on both appeals.

Frances Muelhaupt (Frances) and Joseph Muelhaupt (Joe) were married in 1966. They had three children: Elizabeth; Daniel; and Heidi. By a prior marriage Frances had a son, Aaron, whom Joe adopted. Frances, forty-four years old at the time of trial, never finished high school and had not worked outside the home for more than twenty years. Joe, forty-eight years old at the time of trial, has a college degree in business. He is vice president of Des Moines Cold Storage Co., Inc. (DMCS), a closely held corporation. His annual salary is $92,500 per year, but in 1985 his total income was $196,931. Frances has had a falling out with the children except for Aaron. The children live with Joe when not in school.

The case was extremely bitter and hard-fought. After a bench trial the court awarded joint legal custody of Heidi, the only minor child, to the parties and granted physical care to Joe. Heidi has since turned eighteen. Frances was ordered to pay child support of $100 per month until Heidi became eighteen, plus $100 per month per child for post-high school education while the children are actually in school. Joe was ordered to pay $2500 per month in alimony until Frances dies, remarries, cohabitates, or the year 2007.

I. Criteria for dividing property between parties to a marriage dissolution are set out in Iowa Code section 598.21(1) (1987). It provides:

(a) the length of the marriage;

(b) the property brought to the marriage by each party;

(c) the contribution of each party to the marriage, giving appropriate economic value to each party's contribution in homemaking and child care services;

(d) the age and physical and emotional health of the parties;

(e) the contribution by one party to the education, training or increased earning power of the other;

(f) the earning capacity of each party, including educational background, training, employment skills, work experience, length of absence from the job market, custodial responsibilities for children and the time and expense necessary to acquire sufficient education or training to enable the party to become self-supporting at a standard of living reasonably comparable to that enjoyed during the marriage;

(g) the desirability of awarding the family home or the right to live in the family home for reasonable period to the party having custody of the children, or if the parties have joint legal custody, to the party having physical care of the children;

(h) the amount and duration of an order granting support payments to either party pursuant to subsection 3 [criteria for support payments] and whether the property division should be in lieu of such payments;

(i) other economic circumstances of each party, including pension benefits, vested or unvested, and future interests;

(j) the tax consequences to each party (k) any written agreement made by the parties concerning property distribution;

(l ) the provisions of an antenuptial agreement;

(m) other factors the court may determine to be relevant in an individual case.

There is no dichotomy between the statute and former or existing case law; most of the statutory guidelines could be gleaned from our cases. See, e.g., Marriage of Thomas, 319 N.W.2d 209, 210 (Iowa 1982).

Especially significant here is Iowa Code section 598.21(2). It requires that property given to or inherited by either party ordinarily is to be considered the property of that party. This subsection does not demand that property acquired by gift or inheritance must always be set aside to the donee and omitted altogether from consideration in the division of property. To avoid injustice property inherited by or given to one party may be divided. Thomas, 319 N.W.2d at 211. Factors weighed in considering when property should be divided under this exception include:

(1) contributions of the parties toward the property, its care, preservation or improvements;

(2) the existence of any independent close relationship between the donor or testator and the spouse of the one to whom the property was given or devised;

(3) separate contributions by the parties to their economic welfare to whatever extent those contributions preserve the property for either of them;

(4) any special needs of either party;

(5) any other matter which would render it plainly unfair to a spouse or child to have the property set aside for the exclusive enjoyment of the donee or devisee.

Thomas, 319 N.W.2d at 211. See also In re Marriage of Vrban, 359 N.W.2d 420, 427 (Iowa 1984).

The first statutory factor (length of marriage) is likely to be involved in any dissolution case. It also is important in considering section598.21(2). See In re Marriage of Winegard, 278 N.W.2d 505, 512 (Iowa 1979). The importance of the passage of time was well stated this way:

[A]s time goes on, the benefits of such property are enjoyed by the married couple; it is both natural and proper for the expectations of the other spouse to rise accordingly. A sudden substantial rise in the couple's standard of living made possible by a gift or inheritance to the husband or the wife will naturally and reasonably lead the other spouse to anticipate that that standard of living will be maintained, particularly if it is sustained over a lengthy period of time.... With time such changes become even more deeply ingrained, and eventually it becomes impossible to return to a world long since renounced and forgotten....

On the other hand, it cannot be said that the partner who has benefited from the other's inheritance or other property necessarily has a claim to half of all that property or to any other mathematically certain portion of it, even after a great many years.... [I]f the total assets are so great as to enable each partner to continue to live the same lifestyle with something less than half of the total, then the division should be made so as to provide for that end without depriving the original recipient of any more than is necessary to achieve it.

In re Marriage of Wallace, 315 N.W.2d 827, 831 (Iowa App.1981).

II. Because our review is de novo there would be little point in detailing all of the trial court's determinations of divisions and awards. For an overview it is enough to say that Frances was given the right of first refusal of the house if she paid Joe $35,000 and the mortgage of about $30,000. The same right applied to the furnishings if she paid $7500. Joe was awarded the house and furnishings he bought after the separation. Frances was awarded her jewelry and furs. Frances was awarded either fifty percent of Joe's stock in Pothoff Foods Co., Inc., (PFI) or $150,000. She was also awarded $350,000 for her equitable share in the DMCS stock. The court awarded Joe thirty percent of Frances' expected inheritance from her father. Joe was ordered to pay Frances' outstanding debts. As a further part of the property division Joe must pay Frances $50,000 to compensate for property he spent while dissolution proceedings were pending. Joe was ordered to pay $20,000 for Frances' attorneys' fees, plus her expert and witness fees and court costs.

III. DMCS was founded and developed by the Muelhaupt family. It is a highly successful enterprise. Joe was given 850 shares of DMCS common stock before his marriage and more during the early years of the marriage. He presently owns 2700 shares of common stock and 91,278 shares (also a gift from his family) of preferred stock. In addition he enjoys a life interest (remainder to his children) in a number of shares owned by a trust formed by his mother. All DMCS stock is in Joe's name alone. Although Frances claims otherwise we find that all the DMCS stock was his family's gift to Joe, not to both Joe and Frances.

We think, as did the trial court, that it would be inequitable not to consider the stocks in determining the property division and spousal support. The marriage lasted more than twenty years. The parties shared a comfortable life style, lived in a comfortable home, and achieved together a certain social status based in large part on Joe's income. Joe has received substantial compensation from DMCS in the form of salary and bonuses. There is no reason to anticipate his income will decrease in the future. Rather than developing an earning capacity during the twenty important years Frances never worked outside the home. Where we disagree with the trial court is in leaving out altogether the source of the stock. It should be divided. But, because it was a gift to Joe from his family, it should not be, as the trial court would have it, equally divided.

It is difficult to value the DMCS stock. The parties' experts offered disparate estimates of the stock's worth. Difficulties arise because (1) it is minority stock in a closely held family corporation and (2) the stock has no ready market. It is nonetheless valuable. Comparing the estimates we, like the trial court, think Joe's DMCS common stock "fair value" is $678,105. But this "fair value" does not take into account the two factors, previously mentioned, which must be weighed in arriving at the stock's market value. Frances' expert conceded that the market value might be as low...