Wehrkamp v. Wehrkamp

• Decision Date: 23 March 1984
• Docket Number: No. 14325,14325
• Citation: 357 N.W.2d 264
• Parties: Audrey R. WEHRKAMP, Plaintiff and Appellant, v. Scott R. WEHRKAMP, Defendant and Appellee. . Considered on Briefs
• Court: South Dakota Supreme Court

Page 264

357 N.W.2d 264

Audrey R. WEHRKAMP, Plaintiff and Appellant, v. Scott R. WEHRKAMP, Defendant and Appellee.

No. 14325.

Supreme Court of South Dakota.

Considered on Briefs March 23, 1984.

Decided Oct. 3, 1984.

Keith R. Smit of Morman, Smit, Shepard, Hughes & Wolsky, Sturgis, for plaintiff and appellant.

Clair R. Gerry of Stuart & Gerry, Sioux Falls, for defendant and appellee.

HENDERSON, Justice.

A divorce was granted to both of these parties by the Second Judicial Circuit Court on June 21, 1983. Appellant, Audrey R. Wehrkamp, appeals the property award provided in the judgment of divorce. We affirm.

At the time of their marriage on August 2, 1975, appellee Scott R. Wehrkamp held a Bachelor of Science degree from South Dakota State University, Brookings and appellant had completed one year of college. During the first years of the marriage, appellee attended dental school at Loyola University in Chicago, Illinois, where he received a D.D.S. degree. Appellant, during this same period, completed five years of college and obtained a dental hygiene certification.

While in Chicago attending school, both parties received educational loans, grants, and gifts from relatives. Both parties also maintained part-time employment during these years.

Under the decision of the trial court, it was found that both parties had saleable skills as licensed professionals. Both parties were in good health and both had a trade or skill sufficient to maintain their accustomed station in life without financial contribution from the other party. The personal property and real estate acquired during marriage were divided equitably between the parties, each receiving roughly one-half. Appellant did not ask for alimony and it was not awarded.

The trial court further found that the future earnings of the parties, being too speculative, were not to be considered part of the property award. Also, the court did not consider appellee's education and professional license a marital asset for property division purposes. Considering the respective educational benefits, degree, certification and the contributions of both parties in obtaining these, the trial court held that neither party had established they were individually entitled to a contribution award.

Appellant contests the trial court's failure to take into consideration appellee's increased earning capacity resulting from his D.D.S. degree. Appellant claims this is the most valuable asset acquired by the parties during the term of their marriage and that it is an asset subject to appraisal. She contends it was an abuse of discretion not to consider this in dividing the marital property. See Palmer v. Palmer, 316 N.W.2d 631 (S.D.1982).

We are faced with this question: Is an individual's future earning capacity resulting from an advanced degree "property" in divorce cases? There is a growing body of case law on this subject throughout the various jurisdictions. See generally, Annot., 4 A.L.R.4th 1294 (1981). The majority view is that an advanced degree or professional license is not "property" as that term is used in divorce settlement cases. An early leading case in this area was In re Marriage of Graham, 194 Colo. 429, 432, 574 P.2d 75, 77 (1978), wherein it was stated:

An educational degree ... is simply not encompassed even by the broad views of the concept of "property." It does not have an exchange value or any objective transferable value on an open market. It is personal to the holder. It terminates on death of the holder and is not inheritable. It cannot be assigned, sold, transferred, conveyed, or pledged. An advanced degree is a cumulative product of many years of previous education, combined with diligence and hard work. It may not be acquired by the mere expenditure of money. It is simply an intellectual achievement that may potentially assist in the future acquisition of property ... it has none of the attributes of property in the usual sense of that term.

In re Marriage of Goldstein, 97 Ill.App.3d 1023, 53 Ill.Dec. 397, 423 N.E.2d 1201 (1981); Grosskopf v. Grosskopf, 677 P.2d 814 (Wyo.1984).

It was an abuse of discretion for a trial court to value husband's law degree as a marital estate asset, according to a Wisconsin Appeals Court in DeWitt v. DeWitt, 98 Wis.2d 44, 58, 296 N.W.2d 761, 768 (1980) (footnotes omitted).

Whether a professional education is and will be of future value to its recipient is a matter resting on factors which are at best difficult to anticipate or measure. A person qualified by education for a given profession may choose not to practice it, may fail at it, or may practice in a speciality, location or manner which generates less than the average income enjoyed by fellow professionals. The potential worth of the education may never be realized for these or many other reasons. An award based upon the prediction of the degree holder's success at the chosen field may bear no relationship to the reality he or she faces after the divorce. Unlike an award of alimony, which can be adjusted after divorce to reflect unanticipated changes in the parties' circumstances, a property division may not. The potential for inequity to the failed professional or one who changes careers is at once apparent; his or her spouse will have been awarded a share of something which never existed in any real sense.

In New Jersey, it has been held that a person's earning capacity should not be recognized as a separate, particular item of property, even where its development has been aided and enhanced by the other spouse. Stern v. Stern, 66 N.J. 340, 331 A.2d 257 (1975). Further, "[o]bviously, if the enhanced earning capacity itself is not distributable property, then neither is the license or degree, which is merely the memorialization of the attainment of the skill, qualification and educational background which is the prerequisite of the enhanced earning capacity and on which it is predicated." Mahoney v. Mahoney, 182 N.J. 598, 605, 442 A.2d 1062, 1066 (1982), rev'd on other grounds, 91 N.J. 488, 453 A.2d 527 (1982). It has none of the attributes of distributable property. Goldstein, 53 Ill.Dec. 397, 423 N.E.2d 1201.

As we did in Saint-Pierre v. Saint-Pierre, 357 N.W.2d 250 (S.D.1984), decided this day, we align ourselves with the majority rule in now holding that a professional degree or license and/or the potential earning capacity stemming therefrom is not distributable property. We therefore find that the trial court did not abuse its discretion in failing to consider appellee's enhanced earning capacity a marital asset subject to property division upon divorce. The factors and variables involved in such a consideration are simply too speculative and could only act to turn the possibility of inequity on the one hand into a probability of such on the other.

We note that not all courts have rejected the concept that potential earning capacity made possible by an advanced degree may be considered an asset for distribution by the court. See In re Marriage of Horstmann, 263 N.W.2d 885 (Iowa 1978); Inman v. Inman, 578 S.W.2d 266 (Ky.App.1979). However, it was the particular circumstances of each case which motivated these decisions. In Horstmann, wife did not complete her formal education and provided the major source of support through employment with a bank while husband attended law school. The court found husband's law degree was conferred upon him with the aid of his wife's efforts, and thus, she should share in the potential for increase in earning capacity made possible by the degree.

Despite strong reservations to the contrary, similar circumstances prompted the holding in Inman, 578 S.W.2d at 268, that under "certain instances ... treating a professional license as marital property is the only way in which a court can achieve an equitable result." The court cited the most common instance as being a situation where one spouse supports the other through school, only to have the marriage dissolve immediately upon graduation. In a subsequent decision involving the same parties, see Inman v. Inman, 648 S.W.2d 847 (Ky.1982), the Kentucky Supreme Court expressed that it could not accept a proposition that an educational degree is, upon...