Noble v. Noble
| Decision Date | 21 September 2005 |
| Docket Number | No. 2004AP2933.,2004AP2933. |
| Citation | 706 N.W.2d 166,2005 WI App 227 |
| Parties | In re the Marriage of Danny B. NOBLE, Petitioner-Respondent, v. Deborah P. NOBLE, Respondent-Appellant.<SMALL><SUP>†</SUP></SMALL> |
| Court | Wisconsin Supreme Court |
Before BROWN, NETTESHEIM and ANDERSON, JJ.
This appeal concerns the trial court's division of property in this divorce action between Deborah P. and Danny B. Noble. Danny and his brother, Dale Noble, are equal partners in a farming business organized as a partnership. During the 1990s, Dale and his wife acquired and titled in their own names three properties the partnership uses for farming. Deborah maintains that the trial court erred in excluding the value of the properties from the marital estate because Danny committed marital waste with regard to these properties. She points out that Danny admitted that Dale and his wife acquired the properties and titled them in their own names for the express purpose of keeping the properties out of the marital estate in the event she and Danny divorced. Deborah claims that the use of partnership funds to purchase the properties improperly dissipated the value of the marital estate. She also challenges the trial court's valuation of real estate included in the marital estate.
¶ 2 We hold that the trial court properly excluded from the marital estate the value of the three properties at issue. In short, the law does not require a party to a prospective divorce to take advantage of an opportunity to acquire property that would increase the value of the marital estate, and the use of partnership funds to finance the purchase of the properties did not improperly dissipate the value of the marital estate. We further hold that the trial court did not err in adopting Danny's expert's valuation of the real estate. The court simply made a credibility determination with which we cannot quarrel. We affirm the judgment of the trial court.
¶ 3 Deborah and Danny were married in November 1982. Danny originally filed a petition for divorce in February 1993, but the petition was dismissed later that year. Danny filed the petition for divorce in this appeal on November 6, 2002. The trial was held in March 2004. Although the trial court considered numerous issues at trial, only the two questions concerning the property division are up for our review. We limit our recitation of the facts accordingly.
¶ 4 We first relate the facts that pertain to Deborah's claim that Danny committed marital waste. The partnership, Noble Grain Farms, was organized on January 1, 1976. The partnership originally included Willard Noble, the Noble brothers' father, but he retired in 1991. Dale and Danny are now equal partners in the partnership.
¶ 5 The partnership consists of equipment, inventory, stock and good will and derives its income primarily from the sale of grain. The partnership itself does not own any land. Willard and his wife, Danny and Deborah, and Dale and his wife own several of the properties in one-third shares; Danny and Dale own one property in equal shares; and Dale and his wife own three properties in their names alone. The partnership rents the remaining land it farms.
¶ 6 Prior to the purchase of the three properties owned by Dale and his wife, if Danny and Dale wished to acquire property for the partnership to farm, Danny and Dale would withdraw partnership funds and purchase the property. According to Danny, the properties would then be titled in Willard's, Danny's and Dale's names.
¶ 7 Between 1994 and 1999, Dale and his wife purchased the three properties in question for partnership use and titled them in their names only. These properties are known as the Spriggs, Raboine and Hegemann properties.1
¶ 8 Danny testified that when he and Dale deviated from their established practice of having properties purchased for partnership purposes titled in both their names, he had it "in the back of [his] mind" "to keep [the properties] out of [Deborah's] name in the event of divorce." According to Danny, "[T]hings were not going well in my marriage."
¶ 9 However, Danny also explained that one of the properties, the Spriggs property, was made available for purchase only to Spriggs family members. Dale and his wife were able to acquire the property because his wife is related to the Spriggs family. He further stated that he was also concerned about Deborah's erratic behavior and was worried that she would interfere with the acquisition of the properties. He noted that the partnership had already been renting two of the properties (the Raboine and Hegemann properties), which were also adjacent to properties the partnership farmed. As Danny testified, "The farm partnership needs land to create income."
¶ 10 Partnership assets were used to finance the purchases of the three properties. A ledger balance was then opened on the partnership books reflecting the amount Dale and his wife owed the partnership. Rather than have the partnership pay Dale and his wife rent for the use of the property, an amount equivalent to the value of the rent was forgiven on the obligation Dale and his wife owed to the partnership each year. Apparently, this financing arrangement had not been used by the partnership before.
¶ 11 In its oral decision, the trial court rejected Deborah's notion that these facts demonstrated that Danny had engaged in some kind of misconduct warranting the inclusion in the marital estate of the value of the three properties. The court noted that one of the properties "was not available to the general public, and it was only by virtue of that family relationship that Dale and [his wife] were able to purchase the property at $1,400 an acre." The court observed that Deborah was not being cooperative in purchasing additional property and that "Dale did not want to risk losing the property and given the fact that they were renting acreage adjacent to the property, he purchased it in his own name." The court further noted that while Dale and his wife borrowed money from the partnership in order to pay for the property, they repayed the partnership "by way of rental income":
The land is farmed by the partnership, a fair rental value was calculated based upon what the partnership was paying for other similar rented property, and that was the amount that was credited for the debt every year. Every year the ledger shows that the amount of the loan is decreased by the fair rental value. I found nothing wrong, nothing sinister about that practice; in fact ... the testimony was undisputed that the partnership would not have made it if they would have had to actually pay out money for that rent.
In summing up its conclusion, the court commented that the decision to title the property in the names of Dale and his wife was "nothing other than a sound business decision." The trial court accounted for the outstanding obligation Dale and his wife owed as of the date of divorce, which the court called an account receivable, in its property division.
¶ 12 We next turn to the facts that pertain to Deborah's claim that the trial court erroneously relied on Danny's expert's valuation of certain real estate. Danny's expert, Robert Dirksmeyer, used what he called the "use value" approach to valuing the real estate. Dirksmeyer defined "use value" as
the value of specific property for a specific use. This value concept is based on the productivity of an economic good. Use value refers to the value that the real estate contributes to the enterprise of which it is part, without regard to highest or best use or the monetary amount that might be realized upon its sale.
He acknowledged that the "highest and best use" could be to develop the real estate or turn it into small hobby farms, but because Danny and Dale planned to continue to farm the land, he conducted his appraisal based on its use as "agricultural land." Using this method, Dirksmeyer valued the land at an average of $3000 per acre, for a total value of $4,359,090. He testified that assuming the partnership was going to continue to farm the land, this value is what the parties could have obtained in an arms-length transaction with a prudent farmer.
¶ 13 Deborah's valuation expert, Arthur Liddicoat, valued the land using a "market value" approach. Liddicoat defined "market value" as
the most probable price which the property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller each acting prudently, knowledgably and assuming the price is not affected by undue stimulus.
Using this valuation method, Liddicoat valued the land at an average of $5000 per acre, for a total value of $10,534,000. He testified that he reached this value viewing the land "in its configuration as farmland," but that he was "looking at agricultural land that city people are picking up as hobby farms."
¶ 14 After considering the testimony, the trial court issued an oral decision in which it rejected Liddicoat's valuation method as "flawed" and adopted Dirksmeyer's valuation of the properties because it "was far more credible." The court rejected Liddicoat's testimony that the land at issue was not farmland anymore, stating "The land has been used solely for farmland, solely for farming for at least the last 36 years, and there was absolutely no evidence in the record to indicate that it would be used for anything but farming for the foreseeable future." The court noted the inconsistencies in Liddicoat's testimony, recounting that Liddicoat had also testified that the land would continue to be used for agricultural purposes. The court further expressed...
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