No. 4-231 / 03-0835Court of Appeals of Iowa.
April 28, 2004.
Appeal from the Iowa District Court for Jones County, Patrick R. Grady, Judge.
William A. Milder appeals, challenging the financial provisions of the March 28, 2003 decree dissolving his twenty-six year marriage to Susan K. Milder. AFFIRMED AS MODIFIED.
Patricia Kamath of Kamath Law Office, Iowa City, for appellant.
Mona Knoll of Nazette, Marner, Wendt, Knoll Usher, Cedar Rapids, for appellee.
Considered by Sackett, C.J., and Vaitheswaran and Eisenhauer, JJ.
SACKETT, C.J.
William A. Milder appeals, challenging the financial provisions of the March 28, 2003 decree dissolving his twenty-six year marriage to Susan K. Milder. He contends the district court should have given him credit for the value of property he brought into the marriage and that the district court established an unreasonably high value on farmland awarded to him. We affirm as modified.
Our review of the economic provisions of a divorce decree is de novo. Iowa R. App. P. 6.4. We examine the entire record and adjudicate anew the issues properly presented on appeal. In re Marriage of Steenhoek, 305 N.W.2d 448, 452 (Iowa 1981). We give weight to the findings of the trial court, especially when considering the credibility of witnesses, but are not bound by them. Iowa R. App. P. 6.14(6)(g); In re Marriage of Grady-Woods, 577 N.W.2d 851, 852 (Iowa Ct.App. 1998).
Before making an equitable distribution of assets in a dissolution, the court must determine all assets held in the name of either or both parties as well as the debts owed by either or both. See In re Marriage of Driscoll, 563 N.W.2d 640, 641-42
(Iowa Ct.App. 1997); In re Marriage of Brainard, 523 N.W.2d 611, 616 (Iowa Ct.App. 1994). The assets should be given their value as of the date of trial. Locke v. Locke, 246 N.W.2d 246, 252 (Iowa 1976); In re Marriage of McLaughlin, 526 N.W.2d 342, 344 (Iowa Ct.App. 1994). The assets and liabilities should then be equitably, not necessarily equally, divided after considering the criteria delineated in Iowa Code section 598.21(1) (2003) see Driscoll, 563 N.W.2d at 642. In general, the division of property is based upon each marriage partner’s right to a just and equitable share of the property accumulated as a result of their joint efforts. In re Marriage of Hitchcock, 309 N.W.2d 432, 437 (Iowa 1981).
This was a second marriage for both parties. William had a son by his first marriage. The son remained in the physical care of William’s first wife. William paid child support for his son. Susan’s two minor children lived with William and Susan, and for the most part, William and Susan provided their support. The three children are all adults, and no children were born to this marriage.
The parties both were employed during the marriage and commingled their assets. At the time of the dissolution William was farming and working full time for Cedar River Paper Company in Cedar Rapids. Susan was working as a claims representative for the Social Security Administration. She reported a salary of $5,035[1] a month or about $60,000 a year. In 2002 William reported a salary of $44,912 and had a loss on his farming operations of $15,056.[2]
Both William and Susan had property and debts at the time they were married. William was finishing a house that was subsequently sold, and he had a second home which was occupied by his first wife and son and sold when his son reached majority. Susan had a house on 3.04 acres which the parties lived in during the marriage and which was allocated to her in the distribution of assets here. In allocating the property the district court valued the house and acres at $200,000. Before dividing the property the district court set aside to Susan $50,000 because she brought the house and surrounding acres to the marriage. The court further set aside to Susan an account of $88,431 that she inherited and $2,000 in personal property that she purchased with life insurance received at the time of her father’s death. The district court then valued and allocated the other assets and liabilities. According to the district court’s values from this allocation, Susan received $338,889.48 in equities, and William received $487,861.07. The district court then required William to pay Susan $74,485.79 within a year of the decree to equalize the division. In addition the district court, while not valuing the parties’ respective pensions, determined Susan’s benefits would be greater and ordered that William receive $450 a month for life from Susan’s pension when she retires.
William’s first challenge is that it was not equitable for the district court to give Susan credit for property she brought into the marriage and ignore assets he had at that time.
Property which a party brings into the marriage is a factor to consider in making an equitable division. Iowa Code §598.21(1)(b). Such property is not set aside in the same manner as gifted and inherited property. Instead, the fact property was brought to the marriage is one of many factors in making an overall division. Its impact on the ultimate distribution will vary according to the facts of each case. Furthermore, in considering accumulations to premarital assets, we do not limit our focus to the parties’ direct contributions to the increase. We also consider the contributions of each party to the overall marriage, as well as all other factors. See In re Marriage of Miller, 552 N.W.2d 460, 465 (Iowa Ct.App. 1996) (citing Iowa Code § 598.21(1)). The length of the marriage is an important factor in determining whether to and to what extent property brought into a marriage should be divided. See Iowa Code §598.21(1)(a). The longer the marriage, the more inclined we are to divide such property. See In re Marriage of Lattig, 318 N.W.2d 811, 815-16 (Iowa Ct.App. 1982).
Of the property brought into the marriage by the parties to the marriage the only substantial asset retained was Susan’s home and acreage valued at the time of trial between $179,000 and $210,000. It had been valued at $80,000 at the time of Susan’s dissolution, several months before she married William. At the time of the marriage it was mortgaged for $35,000, and Susan owed her former husband $18,250, which was a lien on the home. The mortgage was paid from joint funds. The former husband’s lien was satisfied by him to discharge his child support obligation, and apparently he paid no additional support for his two children that Susan and William supported out of their joint earnings.
The principal assets William had at the time of the marriage included a house he was building that was near completion. The house was sold for $75,000 shortly after the marriage. It had been mortgaged for $33,000, and after paying the cost of sale and a mortgage to his mother, William netted about $30,000 or about $3,250 more than the equity in Susan’s property at the time. The $30,000 from the sale of William’s house was commingled with the parties’ other money. Another principal asset of William’s at the time of marriage was a second home, where William’s former wife and son were living. It was sold after William’s son reached his majority in 1986 for $53,500[3] and was not encumbered. William also contends he had certain tools and equipment at the time of the marriage. The tools were sold at two public auctions and the proceeds divided. William contends that all the tools were sold and the district court incorrectly determined he had $7,700 in tools.
The circumstances of this case do not justify setting $50,000 aside to Susan because she brought the acreage into the marriage. In arriving at this conclusion, we consider among other things the following: (1) this was a twenty-six year marriage; (2) both parties worked hard and commingled most assets; (3) William brought assets into the marriage of similar and perhaps greater worth than Susan’s;[4] (4) the appreciation to Susan’s house and acreage which occurred during the marriage was due in part to the efforts of the parties in maintaining the premises, putting up a barn, and remodeling the house; and (5) Susan leaves the marriage with more assets due to a substantial inheritance being set aside to her, and she has greater earnings.
We recognize that a major factor contributing to the increase in value of the acreage was inflation. In looking at the equities of dividing property brought to a marriage we look to whether appreciation was due to the efforts of the parties or the result of inflation or other factors beyond the parties’ control. See In re Marriage of Hass, 538 N.W.2d 889, 893 (Iowa Ct.App. 1995); Lattig, 318 N.W.2d at 815. While there are cases where the increase of value in property brought into the marriage would not be divisible, the factors here weigh against such a result. First we recognized earlier that upkeep and improvements contributed to the increase in value. Additionally there was a joint decision to sell William’s home and to utilize Susan’s. Had the decision been reversed, it is reasonable to assume inflation would have operated to increase the value of William’s home. The equities William brought to the marriage were of greater or similar value at the time to Susan’s. Susan’s property was refinanced under a favorable loan because William utilized his VA benefits to do so. Looking at all of these factors, we determine it was not equitable to set aside to Susan the $50,000 representing property brought to the marriage, and we modify the decree to omit it.
William’s next challenge is to the value placed by the district court on 190.17 acres that he bought from his mother in 1993 for $121,200. The land is an irregularly shaped tract in sections 33 and 34, township 84 north, range 2 west, along the Wapsipinicon River. According to appraiser Glen Hankemeier, land such as this was historically used for livestock grazing. The property, located on a gravel county road, is improved with a thirty-year-old two or three bedroom ranch-style house with a basement and an attached two-car garage, a barn, three grain bins and a Quonset building.
Evidence of valuation at trial came from Hankemeier, who testified for Susan, and Bob Crane, who testified for William.
Hankemeier advertised that he specializes in farm real estate, has been a realtor since 1978, a licensed real estate broker since 1981, and is a state-certified general real property appraiser. He is a high school graduate and has attended college. He grew up on a farm near the Linn-Jones county line, owns land in Jones County, and is a director of the Linn County Farm Bureau. He testified he does about twenty appraisals a year. He sells real estate for the same agency as Peter, the husband of Susan’s lawyer. This was the first appraisal Hankemeier had done for Susan’s lawyer, but he is sent a lot of appraisal business and other business from an attorney in her office. Hankemeier valued the land at $364,375 in July of 2001, and at the time of trial in mid-February of 2003 he testified the farm would have increased in value sixteen percent. He then increased his value to $447,900 although a sixteen percent increase in value would result in a value of only $422,675.
Crane is a real estate broker, real estate property appraiser, and property manager. He is a Certified General Appraiser, which is a national designation. He also is an accredited rural appraiser from the American Society of Farm Managers and Rural Appraisers and holds a Senior Master Appraiser designation. He works in real estate and does 110 to 115 appraisals a year. Eighty-five percent of his appraisals involved agricultural land His work is basically limited to the state of Iowa and he works primarily in the counties of Johnson, Iowa, Benton, Linn, Jones, Cedar, Muscatine, Louisa, Washington, Delaware, and Buchanan. Crane initially valued the farm at $336,375 and determined by the time of trial its value was up ten percent, so he increased his appraisal to $369,375.
Both appraisers submitted detailed appraisals which were entered as exhibits. The testimony shows the farm to be of a medium to low grade with a corn suitability rating for the entire farm of fifty-seven. Both appraisers recognized there was an increase in the value of Iowa farmland between the time of their initial appraisals and trial.
Each appraiser appraised the property by utilizing various methods. Hankemeier looked at three comparable sales and on a sales comparison method concluded at the time of his initial appraisal the value on the sales comparison approach was $361,323. His income approach estimate was $364,320, and his cost approach was $359,387.
Crane looked at four comparables and came up with a value of $336,375 for the sales comparison approach, $347,000 for an income approach, and $331,194 for a cost approach. He gave the greatest weight to the comparable sales approach.
The district court basically accepted the appraisal of Susan’s expert and rejected the appraisal of William’s expert. In determining a valuation for the farm the district court said,
Susan’s valuation of the farmstead that William is purchasing from his mother’s estate is clearly the most accurate and may be somewhat low based on the fact that William is farming his own land rather than renting it. The Court finds that value is $447,000.
William challenges the district court’s decision to adopt the value of Susan’s appraisal. He contends Susan’s attorney’s husband is a member of the same real estate firm as Hankemeier, that the district court adopted Hankemeier’s appraisal of his farm but valued Susan’s acreage $10,000 less than Hankemeier appraised it. He further contends that despite discovery requests he was not made aware that Hankemeier would testify to a sixteen percent increase in land value from the time of his initial appraisal. He also argues that the district court accepted Hankemeier’s value even though it was reached by increasing the value not by sixteen percent but by nineteen percent. William also contends the district court used improper conclusions in rejecting his appraiser’s assessment, including the conclusion that he appraised it lower because William was farming and was not an investor.
Susan argues that William agreed to Hankemeier’s appraisal. William contends he did not, and if he did, it happened without his knowing the relationship between Susan’s attorney’s husband and Hankemeier. We reject William’s argument that we should modify the district court’s appraisal because of this relationship. Hankemeier was cross-examined about the relationship with Peter and with Susan’s attorney’s firm. Hankemeier testified he doubted there was anything he would testify to that was based on his relationship with Peter. He further testified he and Peter work out of different offices.
The existence of the relationship between Hankemeier and Peter and Susan’s attorney’s firm goes to the weight of the testimony, and the district court was in the best position to assess that. We do, however, reject Susan’s argument that William had agreed to accept Hankemeier’s appraisal and it was therefore binding on him. William was not aware Hankemeier was in a firm with Susan’s attorney’s husband at the time an agreement was made that Hankemeier would appraise the farm. It was only when he learned this that he sought another appraisal. More importantly, there was no stipulation before the appraisal that Hankemeier’s valuation would be binding on the district court. We disagree with William’s contention that Hankemeier valued the acreage at $210,000. He appraised it at less than $200,000, but on cross-examination said that if sold, perhaps the seller could get more.
Both appraisers have adequate credentials, although we note that Crane has more experience in appraising and more impressive certifications in the area of appraisals than does Hankemeier. Generally where the district court establishes a value within the permissible range of evidence it will not be disturbed on appeal In re Marriage of Decker, 666 N.W.2d 175, 180 (Iowa Ct.App. 2003); In re Marriage of Vieth, 591 N.W.2d 639, 640
(Iowa Ct.App. 1999). The district court’s valuation is supported by Hankemeier’s appraisal with one exception. Hankemeier increased his original valuation by a greater percentage than was supported by his testimony or the testimony of Crane as to the percentage of increase in land values between the time of his appraisal and the date of trial. This resulted in the valuation he reached being about $25,000 too high. We therefore decrease the valuation of the farm by $25,000. We have considered William’s other arguments, but with these modifications we consider the property division to be equitable.
Susan contends that even if we find the district court’s decree not equitable, the district court should be affirmed because it was not fair for the court to award William a part of Susan’s pension when he received farmland that he could rent out in his retirement. We reject this argument. The assets of the parties are essentially being divided equally though, due to her inheritance, Susan is receiving substantially more assets than is William. It is the value of the assets at the time of the dissolution that is the issue, not how the parties invest them after the dissolution is over.[5]
The decree is affirmed in all respects, except we modify to (1) exclude setting aside $50,000 to Susan, and (2) decrease the value of the farm which William receives by $25,000. The result is that the payment William is required to make to Susan is reduced to $36,985.79, which reduction is one half of the $50,000 that the district court set aside as premarital property to Susan, and one half of the $25,000 decrease in valuation of farmland set aside to William.
We award no appellate attorney fees, as neither party has been totally successful on appeal. The costs of appeal are taxed one half to each party.
AFFIRMED AS MODIFIED.