Weiss v. Weiss

• Decision Date: 21 January 1985
• Docket Number: No. 84-123,84-123
• Citation: 365 N.W.2d 608,122 Wis.2d 688
• Parties: In re the Marriage of Daniel WEISS, Respondent, v. Carol E. WEISS, Appellant.
• Court: Wisconsin Court of Appeals

Page 608

365 N.W.2d 608

122 Wis.2d 688

In re the Marriage of Daniel WEISS, Respondent, v. Carol E. WEISS, Appellant.

No. 84-123.

Court of Appeals of Wisconsin.

Submitted on Briefs Oct. 17, 1984.

Opinion Released Jan. 21, 1985.

Opinion Filed Jan. 21, 1985.

Review Denied.

Harry W. Theuerkauf, Milwaukee, for appellant.

Levy & Levy, S.C., Cedarburg, for respondent; Dorothy H. Dey, Madison, of counsel.

Before WEDEMEYER, P.J., and MOSER and NETTESHEIM, JJ.

NETTESHEIM, Judge.

This is an appeal from the terms of a judgment of divorce awarded to the respondent (Daniel) against the appellant (Carol). The issues are: (1) whether the marital estate was properly reduced by $5000, which was a gift from Daniel's parents and was used to purchase the parties' homestead; (2) whether money due Daniel upon withdrawal from his former law firm was a marital asset; (3) whether the physical assets of Daniel's new law firm were properly valued; (4) whether the marital estate was properly reduced by $7000, which represented Daniel's maintenance, insurance and living expenses and two adult children's college expenses incurred by Daniel during the pendency of the action, and (5) whether the trial court erred by failing to value Daniel's interest in two real estate limited partnerships and instead awarding Carol an interest in future distributions. We affirm the trial court's method of dividing Daniel's interests in the limited partnerships. We reverse the trial court's holdings as to the remaining issues, and we remand for a new property division and a consideration of its impact upon the maintenance award.

The parties were married on April 11, 1963. At the time of trial, they had three children: Michael Daniel, an adult attending Brown University, Providence, Rhode Island; David Jeffrey, an adult attending the University of Wisconsin, Madison, Wisconsin; and Stephanie, a minor in high school.

Daniel is forty-nine years old and a practicing attorney in the Milwaukee area. Shortly before he filed for divorce, he sold his twenty percent interest in his former law firm and began practicing law as a sole practitioner. The trial court determined he was capable of earning $60,000 a year.

Carol is forty-nine years old and is a college graduate. After the marriage, she briefly worked as a teacher. She has not worked outside the home for twenty years. During the marriage she kept the home, raised the children and in general assisted Daniel in the furtherance of his career. Daniel filed a petition for divorce on April 12, 1983. On December 20, the trial court issued its findings of fact, conclusions of law and judgment of divorce. Carol appeals.

Gifted Property

We first consider whether the trial court properly granted Daniel's post-judgment motion to reduce the marital estate by $5000 on the basis that said amount was a gift and not subject to property division under sec. 767.255, Stats. ¹

Shortly after the marriage, Daniel's parents gave him $5000. The money was used to assist in the purchase of the parties' residence, which was jointly titled in both Daniel's and Carol's names. The trial court excluded this amount from the marital estate.

Generally, a property division upon divorce is within the sound discretion of the trial court. Jasper v. Jasper, 107 Wis.2d 59, 63, 318 N.W.2d 792, 794 (1982). However, the application of a statute to a particular set of facts is a question of law. Maxey v. Redevelopment Authority of Racine, 120 Wis.2d 13, 18, 353 N.W.2d 812, 815 (Ct.App.1984). Therefore, whether the property at issue in this case is marital property subject to division under sec. 767.255, Stats., presents a question of law. As such, we owe no deference to the trial court's determination. First National Leasing Corp. v. City of Madison, 81 Wis.2d 205, 208, 260 N.W.2d 251, 253 (1977).

In this case, the trial court did not have the benefit of Bonnell v. Bonnell, 117 Wis.2d 241, 248, 344 N.W.2d 123, 127 (1984), where the Wisconsin Supreme Court held that:

The transfer of separately owned property into joint tenancy changes the character [emphasis added] of the ownership interest in the entire [emphasis in original] property into marital property which is subject to division.

The property becomes marital property because each of the joint tenants has an equal interest in the entire property during the tenancy, regardless of unequal contributions at the time the joint tenancy is created. Id. at 247, 344 N.W.2d at 126-27. See sec. 700.17(2)(a), Stats. The property no longer retains its character as separate property but rather becomes part of the marital estate subject to division under sec. 767.255, Stats. Although Bonnell involved a conversion of separate, inherited property into joint tenancy, its logic also applies to a conversion of gifted property into joint tenancy.

Daniel argues that this case can be distinguished from Bonnell because in Bonnell there was a clear intent on the part of the donor spouse to make a gift of her separate inherited property by way of a joint tenancy to the donee spouse. Daniel argues that no such intent exists in this case.

While the Bonnell decision does speak of the wife's intention to make a gift of the inherited property to her husband, the gift resulted from the conversion of her separate property to joint tenancy. Bonnell recognized the general principal " 'that a spouse may by agreement, either express or implied, or by gift, transmute an item of separate property into marital property.' " Bonnell at 245, 344 N.W.2d at 126, quoting Daniels v. Daniels, 557 S.W.2d 702, 704 (Mo.App.1977). Here also, Daniel has manifested his intent to make a gift by the conversion of his separate property into a joint tenancy with Carol. Just as Bonnell observed that "[i]t is clear that Mrs. Bonnell intended to create a joint tenancy in the subject properties," id., so also is it clear in this case that Daniel harbored a similar intent.

Daniel also argues that the trial court's reduction of the marital estate by the $5000 gift should be affirmed on the basis of this court's holding in Anstutz v. Anstutz, 112 Wis.2d 10, 331 N.W.2d 844 (Ct.App.1983). Daniel correctly concludes that the tracing feature of Anstutz applies to gifted property as well as inherited property. However, the court of appeals in Anstutz simply noted that the property division statute envisions a return of inherited property to the heir prior to the division unless the inherited funds are so commingled with the parties' other assets that it is not possible to determine the present value of the inheritance or whether the inheritance has been preserved. Id. at 12, 331 N.W.2d at 845-46. See also sec. 767.255, Stats.

Anstutz, however, is pre-Bonnell and, unfortunately, does not state how the residence which was purchased in part with the inherited property was titled. Furthermore, Bonnell does not discuss Anstutz.

Plachta v. Plachta, 118 Wis.2d 329, 334, 348 N.W.2d 193, 196 (Ct.App.1984), holds that the statute exempts gifted property from the marital estate if it retains its identity and character. The mere fact that the identity of the property can be traced under Anstutz does not entitle the property to exempt status if its character has been converted under Bonnell. This is the factor overlooked by Daniel in his argument. The $5000 gift to Daniel, in fact, is no longer gifted property because its character has been changed by virtue of the conversion into a joint tenancy in real estate. The tracing feature of Anstutz does not apply because there is no longer any separate, gifted property to trace. As a result, the identity/tracing concepts of Anstutz do not apply in this case.

Therefore, the creation by Daniel and Carol of the joint tenancy in the homestead converted the character of the $5000 gift from separate property to marital property and subjected the entire joint asset to division. Thus, the trial court erred when it excluded the $5000 from the marital estate. We reverse the trial court's property division determination and remand for a new property division which shall eliminate this exclusion.

Proceeds of the Law Firm Buy-out

Next we consider whether the marital estate should have included payments due Daniel upon his withdrawal from his former law firm. Again, we are presented with a question of law to which we owe no deference to the trial court. See First National Leasing Corp., 81 Wis.2d at 208, 260 N.W.2d at 253.

For many years prior to the divorce, Daniel was a twenty percent shareholder in a law firm operating as a service corporation. On March 30, 1983, Daniel sold his stock in the firm to become a sole practitioner. As part of the consideration for the sale of his interest, Daniel was to receive:

1. Twenty-four monthly payments representing his share of the fair market value of accounts receivable and fixed assets;

2. A discounted share of secured accounts receivable, and

3. Periodic payments representing contingent fee contracts in effect at the time of sale.

Carol argues that the trial court improperly classified these payments as income to consider in determining maintenance rather than as a marital asset subject to division. We agree.

Daniel and his fellow stockholders in the law firm agreed upon a method of purchasing stock owned by a stockholder who terminated his relationship with the firm. The stock buy-out agreement provided formulas, based on a stockholder's fractional ownership of the firm's stock, to determine the purchase price of the stock. Evidence submitted at trial indicated that Daniel's share of the fixed assets of the firm and the regular accounts receivable was valued at approximately $29,260 at the time he left the firm. Daniel was to receive this amount on an installment basis of $1,219.18 per month over a twenty-four month period beginning May 1, 1983. At the time of the divorce, several payments were still due. The value of the secured accounts receivable was established to be...