U.S. v. Marx

• Citation: 844 F.2d 1303
• Decision Date: 12 April 1988
• Docket Number: No. 87-1715,87-1715
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Dennis P. MARX a/k/a Dennis Martin, Big "D," Dennis Burtell, Defendant. Appeal of Mary Ann MARX.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 1303

844 F.2d 1303

UNITED STATES of America, Plaintiff-Appellee, v. Dennis P. MARX a/k/a Dennis Martin, Big "D," Dennis Burtell Defendant Appeal of Mary Ann MARX.

No. 87-1715.

United States Court of Appeals Seventh Circuit.

Argued Dec. 7, 1987.

Decided April 6, 1988.

As Amended April 12, 1988.

William H. Theis, Chicago, Ill., for defendant.

Melvin K. Washington, Asst. U.S. Atty., Patricia A. Gorence, U.S. Atty., Milwaukee, Wis., for plaintiff-appellee.

Before CUMMINGS, CUDAHY and MANION, Circuit Judges.

CUMMINGS, Circuit Judge.

Petitioner Mary Ann Marx seeks to recover her asserted interest in property forfeited by her husband Dennis Marx to the federal government. Dennis pled guilty to various counts of an indictment arising out of a drug conspiracy, including a count of engaging in a continuing criminal enterprise in violation of 21 U.S.C. Sec. 848, was sentenced to a prison term of twenty-five years and, under 21 U.S.C. Sec. 853(a), forfeited certain property, including sixty-seven shares of Accurate Brass and Aluminum Foundry, Inc. ("Accurate"), to the United States. In addition to providing for the criminal forfeiture of certain property, Section 853 also provides that any person, other than the defendant, asserting a legal interest in the property that has been ordered forfeited may petition the court for a hearing to adjudicate the validity of her alleged interest in the property. 21 U.S.C. Sec. 853(n)(2). Pursuant to this Section, Mary Ann petitioned the court and asserted her interests in the Accurate shares under three separate legal theories: (1) marital property, (2) a constructive trust, and (3) a resulting trust. Following a two-day hearing, the district court found that Mary Ann did not participate in or have knowledge of her husband's illegal activities, but it nevertheless concluded that she had not established her interests by a preponderance of the evidence, see 21 U.S.C. Sec. 853(n)(6)(A), and denied the petition. We reverse and remand.

I

The forfeited property in dispute is sixty-seven shares of stock in Accurate that represent 100 per cent ownership of the corporation and at the time of the forfeiture were titled in the name of Dennis Marx. Accurate was incorporated in 1964 and initially issued fifty shares, twenty-five titled in the name of Dennis Marx and twenty-five in the name of Mary Ann's father, Steven Andracek. Although the Marx shares were titled in Dennis' name alone both Dennis and Mary Ann testified ¹ that they regarded the business as belonging to both of them. As Dennis stated, "she had half of the headaches and half the problems, so I assumed if there was any benefit, she had half the benefit." Asked why, if they believed the shares belonged to both of them, the shares were titled in only Dennis' name, Mary Ann and Dennis each testified that it was a convention of the times, that in 1963 lawyers drew up legal documents in the man's name.

Each of the original fifty shares cost $100. The $2,500 consideration for the shares titled in Dennis' name was paid out of the proceeds of the sale of pieces of heavy equipment owned by M & M Excavating. M & M Excavating was a small business run between 1959 and 1963 by the Marxes and a war "buddy" of Dennis. During that period Mary Ann worked both as a bookkeeper for M & M and as a registered nurse. She worked for M & M without compensation and poured part of her nursing earnings into the struggling M & M. These earnings from Mary Ann's nursing contributed to the purchase price of the M & M equipment later sold to acquire the twenty-five shares in Accurate.

In 1967, Accurate issued ten additional shares, again titled to Dennis alone. The consideration for these ten shares came from the proceeds of the sale of a home that was titled jointly in both Dennis' and Mary Ann's names. Mortgage payments on the home had been made in part with Mary Ann's outside earnings.

In 1967 or 1968, Mary Ann's father gave his wife, Mary Andracek, his twenty-five shares of Accurate stock. In 1970, Mary Andracek entered into a written agreement with Dennis to sell him the twenty-five shares at the original price of $100 per share. Under the terms of the agreement, title to the twenty-five shares transferred to Dennis immediately but was subject to return if he failed to make payments of $200 per month on the $2,500 purchase price. Dennis ultimately paid only $500, the price of only five of the shares, again selling equipment of M & M Excavating to finance the purchase.

Although Dennis still owed her $2,000 for the twenty remaining shares, Mrs. Andracek told him that he need not pay the remainder because she was giving the twenty shares to Mary Ann. She testified that she told Dennis to hold the shares for Mary Ann, and that he stated that although the stock remained in his name, he understood the shares were a gift to Mary Ann from her mother.

The preceding narrative accounts for only sixty of the sixty-seven outstanding shares of Accurate. The record does not reflect and neither the parties nor the district court mention how and with what assets Dennis acquired the last seven shares.

II

Mary Ann contends that she has a presumptive one-half interest in all property acquired during her marriage to Dennis, regardless of whether she or her husband holds title. As a result of this presumption she claims a legal interest superior to that of the government in thirty-three and one-half of the sixty-seven shares forfeited. Under the applicable Wisconsin law, the district court correctly rejected this claim.

Wisconsin's new Marital Property Act, Wis.Stat. ch. 766 (1986), expresses "the intent of the [Wisconsin] legislature that marital property is a form of community property," Wis.Stat. Sec. 766.001(2), and states that all property is presumed to be marital property in which each spouse has a present undivided one-half interest. Wis.Stat. Sec. 766.31(2) and (3). Mary Ann, however, cannot rely on this statute to support her contentions. The federal criminal forfeiture statute requires the court to determine Mary Ann's interest "at the time of the commission of the acts which gave rise to the forfeiture of the property." 21 U.S.C. Sec. 853(n)(6)(A). All of Dennis Marx's drug activities occurred before the effective date of the new Marital Property Act, January 1, 1986. Therefore Mary Ann's interest must be determined under the prior statute, Wis.Stats. Sec. 767.255, ² and the cases interpreting that section.

Relying on Section 766.25, the district court dismissed Mary Ann's argument that she has a presumptive one-half interest in marital property during the marriage. At a pre-trial hearing the district court held that, unlike the new Section 766.31 that grants a present property interest during the marriage, Section 767.255 provided a property interest only upon a judgment of annulment, divorce or legal separation as to property titled in the husband's name. Under Section 767.255, a wife has no property rights until a court creates those rights in a divorce proceeding. Because Mary Ann and Dennis were married at the time of the acts giving rise to the forfeiture, and are still, Mary Ann has no interest in the shares titled to Dennis.

Mary Ann urges a different interpretation of Section 767.255. She argues that Wisconsin adheres to a partnership theory of marriage that grants the non-titled spouse more than an inchoate right in marital property that comes into existence only upon divorce. The cases she cites in support of her interpretation do recognize marriage as a partnership and marital property as partnership property, but they do so in the context of the division of property in a divorce proceeding. Krueger v. Wisconsin Department of Revenue, 124 Wis.2d 453, 369 N.W.2d 691 (1985) (transfers of property at divorce are not taxable on the ground that the spouses were equitable co-owners of the property); Lacey v. Lacey, 45 Wis.2d 378, 173 N.W.2d 142 (1970) (the division of property upon divorce rests upon the concept of marriage as a shared enterprise or joint undertaking--a partnership); see also Savings and Profit Sharing Fund of Sears Employees v. Gago, 717 F.2d 1038, 1044 (7th Cir.1983) (recognizing that the effect of Section 767.255 is that upon divorce all non-exempted property is presumptively subject to equal distribution). She does not cite, and we have not found, any cases affecting a division of marital property outside the context of a divorce proceeding.

In the absence of supporting case law outside the context of divorce, Mary Ann urges us to consider the fact that with her husband in prison for at least the next fifteen years ³ she needs her share of marital property at least as much as a woman who is undergoing a divorce and asks us to look to general partnership law. Although her argument is compelling, it does not state the law of Wisconsin at the time of Dennis' illegal acts. If Mary Ann's interpretation of the prior law is correct, then the new Act is merely a codification of the preexisting law with no substantive effect. However, this is not the case. The new Act sharply differentiates between marriages occurring before and after the determination date of the new Act and property acquired before and after the determination date, emphasizing the significance of the change in the law. Wis.Stats. Sec. 766.31(6), (8) and (9). The express intent and language of the new Act undermine the interpretation Mary Ann urges. We affirm the decision of the district court rejecting her assertion of an interest in thirty-three and one-half shares on the basis of a marital property theory.

III

Mary Ann also claims that her mother, Mary Andracek, gave Dennis twenty shares of Accurate stock to hold for Mary Ann. The district court mislabeled this a resulting trust argument. ⁴ Mary Ann labels it a constructive trust. ⁵ We hold that if the testimony of Mary Andracek and Dennis is credited, the gift by Mary Andracek to her daughter...