In re the Marriage of Agan ( 2018 )

IN THE COURT OF APPEALS OF IOWA
No. 17-0678
Filed November 7, 2018
IN RE THE MARRIAGE OF STEPHEN D. AGAN
AND JULIANNE M. AGAN
Upon the Petition of
STEPHEN D. AGAN,
Petitioner-Appellant/Cross-Appellee,
And Concerning
JULIANNE M. AGAN,
Respondent-Appellee/Cross-Appellant.
________________________________________________________________
Appeal from the Iowa District Court for Madison County, Richard B. Clogg,
Judge.
Stephen Agan appeals and Julianne Agan cross-appeals from various
provisions of the decree dissolving their marriage. AFFIRMED AS MODIFIED.
Ryan D. Babich and Phillip F. Van Liew of Babich Goldman, PC, Des
Moines, for appellant.
Elisabeth S. Reynoldson of Reynoldson & Van Werden, LLP, Osceola, and
Jane E. Rosien of Flander Rosien, PC, Winterset, for appellee.
Heard by Danilson, C.J., Doyle, J., and Scott, S.J.*
*Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2018).
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DANILSON, Chief Judge.
Stephen (Steve) Agan appeals and Julianne (Juli) Agan cross-appeals from
various provisions of the decree dissolving their marriage. Steve argues the
dissolution court inequitably valued and divided the marital property. Juli argues
the court erred in valuing the pastureland. Neither party challenges the distribution
of property, rather both raise various issues to support their contention that the
equalization award was inequitable. Steve also requests appellate attorney fees.
Upon our de novo review of the decree, we modify the dissolution decree
to account for various gifted monies and conclude the equalization payment to Juli
from Steve shall be in the amount of $80,000. We do not award appellate attorney
fees.
I. Background Facts & Proceedings.
Steve and Juli began living together in February 2009, and were married on
February 27, 2010. On March 3, 2015, Steve filed a petition for dissolution of
marriage. In June 2015, Juli moved out of the home where the parties had resided
together. The trial was held on November 16-17, 2016, and the decree was filed
on February 27, 2017.
Steve works as a heavy equipment operator with Elder Corporation. Juli
works at Wells Fargo. Steve receives unemployment compensation during his
company’s annual layoff. In addition to his job, Steve raises cattle and serves as
manager of his family’s trust, the Raymond John Agan Trust. As compensation
for his work as manager, Steve is permitted to live in the home owned by the Trust
and to use the adjoining farm buildings and graze the 100 acres of adjoining
3
pasture land. He is not required to pay any rent for the house, buildings, or pasture
land.
Steve’s grandfather gave him five cows in 2000 and fifteen cows in 2001.
Steve purchased a bull before he and Juli were married. At the time of the parties’
2010 marriage, Steve owned twenty-five cows, one bull, and ten to thirteen calves.
One cow and two bulls were purchased during the marriage. Juli took time off
work to assist the veterinarian in working the herd. She was involved in the calving
season, contacting the veterinarian when needed, pulling calves, and bottle
feeding. Both Juli and Steve were involved in the bookkeeping necessitated by
the cattle operation.
During their marriage, Steve and Juli combined their bank accounts. They
both deposited their paychecks into a joint account at Farmer and Merchants State
Bank, which was used both as their personal account and as the farm account to
fund the cattle operation. Juli also deposited the child support she received for her
two children from a prior marriage into this account. The parties also had joint
checking and savings accounts at Union State Bank.
In March 2012, Steve and Juli purchased 36.74 acres of pasture in Madison
County. The funds for the purchase of the real estate ($89,058) came from Steve’s
mother, Mildred Jo Agan (“Jo”). The instrument of conveyance executed when the
real estate was purchased vested title in Steve and Juli as “Joint Tenants with Full
Rights of Survivorship and Not as Tenants in Common.”
During the marriage, Steve and Juli paid for and made substantial
improvements to the pasture land, reconstructing the pond on the land, installing
a fence around the pond, installing an additional stretch of fence, installing tile and
4
waterers, building a small corral, and building a crossing. All of these
improvements were paid for out of the parties’ joint bank account at Farmers and
Merchants State Bank. Until late 2014 when the parties separated, their bank
accounts, real estate taxes, insurance premiums, and all other expenses related
to the real estate were paid out of the parties’ joint Farmers bank account.
Since June 2015, Steve has retained sole and exclusive possession of the
real estate without regard to Juli’s ownership interest. He received and retained
all benefit, enjoyment and income generated from the real estate. Juli received no
compensation or consideration in any form or amount.
By 2015, the cattle herd had grown to sixty-five cows. Steve sells his calves
each year. After filing for divorce, Steve sold nine cows, one bull, and thirty-nine
calves. He did not deposit the proceeds from these sales into any bank account,
he retained over $38,000 cash.
On the date of trial—November 16, 2016—Steve was forty-five and Juli was
forty-six years old, and both parties were in good health. They have no children
together; Steve has no children and Juli has two children from a prior marriage.
Steve’s gross year-to-date income was $42,423, and he anticipated making
another $1000 from Elder Corporation and about $6000 in unemployment
compensation for the year. In addition, he benefits from the free rent and free use
of buildings and pasture for supervising the properties owned by the trust. Juli’s
annual income was about $52,000.
At trial, Steve claimed the livestock were offspring from his premarital gifted
livestock, with the exception of one cow and two bulls. He sought to have all but
the one cow and two bulls set aside as gifted property. He also asserted that the
5
$89,058 his mother provided to purchase the thirty-six acres of farmland as pasture
was a gift to him alone. Further, Steve contended in August 2012, his mother
gifted to him alone $15,150 to purchase a hay rake and hay mower; on July 9,
2013, $16,660 to purchase a hay processer; and in July and August 2013, $11,000
to purchase a Kawasaki all-terrain vehicle (ATV) side-by-side. Steve’s father also
gifted him a boat in 2012 and a 1998 Dodge Dakota in 2013. Steve testified as to
his estimate of the value of farm machinery, vehicles, and other property. He also
testified the value of the pasture land was $2900 per acre.
Juli testified she had performed computer research of various sites she and
Steve had used to purchase the various pieces of farm machinery, and she
presented estimates from those websites as to the current value of the farm
machinery and other items.1 She also testified she had researched the sales of
comparable properties to the pasture land purchased in 2012. She opined the
value was $3800 per acre or $139,600.
Following trial, the district court made findings as to the value of contested
property. The court found, “A fair and reasonable current fair market value of Steve
and Juli’s pasture land is $3200.00 to $3600.00 per acre for a total value of
$125,000.00.” The court also concluded the parties’ assets included these items
and determined their fair market values.2
(a) Kuhn GMD 3550 Mower Conditioner (Serial #B0070) was
purchased in approximately December 2011. Virtually the same
piece of equipment, Kuhn GMD Mower Conditioner (Serial #B0098),
1
Juli had sought and was granted leave to have the property appraised. However, the
report by the appraiser was ruled untimely and was excluded from trial.
2
We are unable to explain the different values set forth in the district court’s findings of
facts as compared to its conclusions of law, but we rely upon the values set forth in the
district court’s conclusions of law.
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is for sale in Albia, Iowa for $12,900.00. The fair and reasonable
value of the parties’ mower conditioner is $8500.00.[3]
(b) Kuhn SR110 Hay Rake (Serial #E3929) was purchased in
approximately December 2011. A similar but slightly older piece of
equipment (Serial #E3571) is for sale in Waukon, Iowa for $4995.00.
The rake for sale in Waukon is Serial #3571, produced approximately
400 units before production of E3929. The parties’ hay rake has a
kicker wheel, the one listed for sale does not, which increases value.
The fair and reasonable value of the parties’ hay rake is $3750.00.[4]
(c) Kewanee 1010 18’ Disk was purchased in approximately
June 2012. A similar piece of equipment is for sale in Ellsworth,
Wisconsin for $4495.00. The fair and reasonable value of the
parties’ disk is $2200.00.
(d) Demco 500 gallon sprayer was purchased in
approximately June 2012. S&H Farm Supply in Lockwood, Iowa,
recently sold a similar sprayer for $500.00. The fair and reasonable
value of the parties’ sprayer is $500.00.[5]
(e) 2011 Kawasaki Mule 610 4x4 XC was purchased in
approximately January 2011. A similar Mule, but without a roof and
without a bumper/cattle guard, is listed for sale in Peninsula, Ohio,
for $5998. A Kelley Blue Book valuation of a 2011 Kawasaki Mule
610 4x4 XC, also without a roof and bumper/cattle guard, is valued
at $5245. The fair and reasonable value of the parties’ Mule is
$4250.00.[6]
(f) 2015 John Deere X534 Lawn Tractor (Serial
#xxxFM101067) was purchased in March 2016. The parties’ 2012
John Deere X534 Lawn Tractor, both purchased and paid for in full
during the marriage, was traded in against the purchase of the 2015
Lawn Tractor. A trade allowance was given of $4200.00 for the 2012
Lawn Tractor. The parties’ 2015 Lawn Tractor has only 40 hours of
use, a 54” deck and a rack/cattle guard on the front. A 2015 John
Deere X534 with only a 40” deck, 60 hours of use and no rack/cattle
guard is for sale in Dubuque, Iowa for $6100. A 2015 X534 with a
54” deck and 86 hours of use, but no rack/cattle guard on the front,
is for sale in Sleepy Eye, Minnesota for $6250.00. A fair and
reasonable value of the parties’ 2015 Lawn Tractor is $5300.00.[7]
(g) 1975 John Deere 4430 Tractor with Cab was purchased in
January 2012. A slightly newer 1977 John Deere 4430 Tractor with
Cab is for sale in Jordan, Minnesota for $12,900.00. A fair and
3
Steve opined the Kuhn mower conditioner had a value of $5500; Juli valued it at $12,000.
4
Steve valued the hay rake at $2500; Julie valued it at $5000.
5
Steve valued the disk and sprayer at $1500; Juli valued the disk at $4410 and the sprayer
at $500.
6
Steve claimed the 2011 Kawasaki should not be considered marital property, which will
be discussed further below.
7
Steve valued the John Deere mower at $4500; Juli valued it at $6400 and claimed it was
a gift to her.
7
reasonable value of the parties’ 1975 John Deere 4430 is
$9000.00.[8]
(h) 2013 12’ Big Dog Feed Lot Box Scraper (Serial
#H2120912800) was purchased in March 2013. The parties’ scraper
is in remarkably good or excellent condition. Two other 2013 12’ Big
Dog Feed Lot Box Scrapers are for sale in Iowa. One in Chariton;
and, one in Manchester. Both are listed for sale for $4700.00. A fair
and reasonable value of the parties’ Big Dog Scraper is $3600.00.[9]
(i) 2013 727TK Grasshopper Mower with Powerfold Duramax
61” Deck (Serial #6314103) was purchased in March 2013. A 2001
720K/61 Grasshopper Mower owned by Steve prior to the marriage
was traded in against the purchase of the 2013 Mower. A trade
allowance was given of $2630.00 for this 2001 Grasshopper Mower.
The parties’ 2013 Grasshopper has approximately 140 hours of use.
A 2013 Grasshopper 727T, without the Kohler cooled engine and
with 244 hours of use is for sale in Sleepy Eye, Minnesota for
$9650.00. A fair and reasonable value of the parties’ 2013
Grasshopper 72TTK is $7500.00.[10]
(j) 2013 Highline CFR650 Bale Processor (Serial
#CFR6505413) was purchased in July 2013. The same model but
slightly older unit (Serial #CFR650402) is for sale in Osceola, Iowa
for $17,500.00. The same model sold in Moorhead, Minnesota in
April 2016 for $15,100.00. A fair and reasonable value of the parties’
bale processor is $10,000.00.[11]
(k) 2012 Kawasaki Teryx KRF750NCS was purchased in
August 2013. It has a roof, 1723 miles and 360 hours of use. A 2013
Kawasaki Teryx without a roof is for sale in Pound, Wisconsin for
$6900.00. A fair and reasonable value of the parties’ Teryx is
$3800.00.[12]
(l) 2015 Suzuki King Quad 750 AXI was purchased in October
28, 2015. It has 15 miles and 3.4 hours of use, upgraded tires,
upgraded wheels, a front rack and a back rack. A Kelley Blue Book
valuation of a 2015 Suzuki King Quad, without any upward
adjustment for the upgrades and accessories, is $7260.00. A fair
and reasonable value of the parties’ King Quad is $5200.00.[13]
(m) 2015 Wilson Ranch Hand 24’ Aluminum Trailer (Serial
#PSGN-5724T) was purchased in April 2015. A 2011 model of this
8
Steve valued the John Deere tractor at $5000; Juli valued it at $11,600.
9
Steve valued the scraper at $2500; Juli valued it at $4700.
10
Steve testified the Grasshopper mower had replaced a mower he owned prior to
marriage and claimed a value of $5000; Juli valued it at $10,100.
11
Steve claimed the bale processor was a gift from his mother, valued at $8000; Juli
valued it at $15,100.
12
Steve claimed the 2012 Teryx was a gift from his mother and not running; Juli testified
she was able to find a listing for a 2011 model, which sold for $4700, and a 2013 model,
which was listed for $6900.
13
Steve valued the King Quad at $3000; Juli valued it at $8260.
8
trailer with only one center gate is for sale in Harrisburg, South
Dakota for $14,500.00. The parties’ trailer has two center gates and
is in very good condition. The 2011 model decreased in value
$666.00 per year. A fair and reasonable value of the parties’ Wilson
Trailer is $14,800.00.[14]
(n) 2014 Ranchworx Aerator (Serial #56890314130RHA) was
purchased in April 2014. This is a unique aerator. Comparable
listings or sales are difficult to find. According to the manufacturer a
comparable 2016 model would cost $22,700.00. A two-year-old
model would decrease in value. A fair and reasonable value of the
parties’ aerator is $8000.00.[15]
(o) 259DS Caterpillar Multi Terrain Loader (Serial
#FTL08580) was purchased in May 20, 2016. Two 259D Caterpillar
Multi Terrain Loaders, one with 159 hours of use and one with 133
hours of use, are for sale on CatUsed.com for $56,500.00. Ziegler,
Inc., the CAT dealership where the parties’ loader was purchased,
values it between $55,000.00 and $60,000.00. A fair and reasonable
value of the parties’ loader is $53,000.00.[16]
(p) Feeders, hay rings, waterers, portable fencing and
miscellaneous hand tools and power tools were also purchased
throughout the marriage. Steve and Juli, and now Steve individually,
insure feeders for $5000.00, portable fencing for $8000.00 and
miscellaneous hand tools and power tools for $13,450.00. The
parties’ income tax return depreciation schedules for the period of
the marriage show the purchase of waterers totaling $1774.00; and,
feeders totaling $680.00. Additionally, during 2015 Steve purchased
a feeder for $2521.62 which was omitted from his 2015 depreciation
schedule. Discounting these amount for items purchased prior to the
marriage and for depreciation in value, a fair and reasonable fair
market value of these items is $1000.00 for feeders, hay rings and
waterers; $2000.00 for portable fencing; and, $1000.00 for
miscellaneous hand and power tools.
In the February 27, 2017 dissolution decree, the district court characterized
Steve’s claims that the pastureland and farm machinery were gifts to him as an
effort to “effectively deprive Juli of any interest or equitable consideration from
those assets.” The court did find there was credible evidence that monies were
gifted to provide for the purchase of the pastureland. However, the court also
14
Steve valued the Wilson trailer at $12,500; Juli valued it at $17,186.
15
Steve valued the aerator at $4000, claiming it was damaged; Juli valued it at $16,800.
16
Steve valued the loader at $50,000; Juli valued it at $56,500.
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determined, “Even so, it is not clear those monies were gifted only to Steve and,
even if they were, the gift has been sufficiently commingled to render it property
subject to division in these proceedings.”
The court also rejected Steve’s claim that items were either in disrepair or
damaged, decreasing their value. The court found no credible evidence supported
reducing the fair market value of the 1975 John Deere 4430 Tractor, the 2012
Kawasaki Teryx, the 2015 Suzuki King Quad, or the 2014 Ranchworx Aerator.
The court also rejected Steve’s claim that the monies used to purchase the
2012 Kawasaki Teryx, Kuhn SR110 Hay Rake, Kuhn GMD 3550 Mower
Conditioner, and 2013 Highline CFR650 Bale Processor were from his mother and
given exclusively to him. The court found:
Steve and Juli’s joint bank account records show cash deposits at or
about the time of these items being purchased. Unlike the records
admitted regarding the real estate purchase funded by Jo, there are
no accompanying records of these cash deposits coming from
Steve’s mother. Steve testified that he did not like to have a lot of
money in the bank and intentionally keeps large amounts of cash on
hand at home. Juli corroborated this. It cannot be verified that the
cash deposits made at or about the time these items were purchased
were monies provided by Jo Agan, and not just cash Steve had on
hand and deposited. Again, no gift tax returns were filed verifying
the amounts of the gifts and/or the gift donee(s).
Regardless, the monies were deposited into the joint checking
account maintained by Steve and Juli at Farmers and Merchants
State Bank. Steve and Juli together researched, shopped for and
went to purchase these items. The insurance premiums for these
items were paid out of the parties’ joint account for so long as it
existed. The cost of repair, service and maintenance for these items
was paid out of the parties’ joint account for so long as it existed.
The items were used in the parties’ joint cattle operation and were
claimed as assets on the depreciation schedule filed with their joint
income tax returns.
As for the cattle, the court determined that even if Steve’s original cows
were gifted to him,
10
[f]rom the moment the parties were married the cattle operation was
funded through the parties’ joint checking account, the same account
into which Juli deposited all of her paychecks and all of her child
support payments. Promptly after their marriage, Steve and Juli set
into motion a very intentional plan to grow the cattle herd. The real
estate was acquired and substantially improved with joint monies as
described above to allow for the growth of the cattle herd. Bulls were
purchased. Calves were held back, fed, cared for and bred. Juli was
an active participant in these decisions and in the care of the herd.
Feed, hay, feeders and waterers were purchased with monies from
the parties’ joint bank account. Veterinarian bills were paid from the
parties’ joint bank account. Machinery and equipment used in the
cattle operation was purchased, serviced, maintained and insured
with monies from the parties’ joint bank account. It is unlikely that
many, if not all, of Steve’s original 25 head of cows are even still part
of the herd. Under these circumstances, it would be inequitable to
set aside 25 head of cows as Steve’s separate property.
With respect to Steve’s claim that the 2011 Kawasaki Mule should not be
considered marital property because it had been given to his mother and was kept
at his mother’s residence, the court found:
Steve and Juli purchased and paid for the 2011 Mule during the
marriage. Steve continued to list the 2011 Mule on his bank financial
statements after August 2013. The 2011 Mule remained a listed
asset on Steve and Juli’s income tax return depreciation schedules
for all years since 2011, including on Steve’s individual return for tax
year 2015. The 2011 Mule remained a listed item on Steve and Juli’s
insurance coverage, including on the individual policy Steve acquired
in January 2016. While it is undisputed that Steve’s mother has been
allowed to use the Mule and it has remained at her residence, its
actual ownership has not been transferred. It remains an asset of
the parties for purposes of these proceedings.
The district court did set aside some items to Steve as gifted property, i.e.,
a 1997 Buick LeSabre, a 1980 Chevrolet pickup, and a boat. The court divided
the marital property and debts, awarded Juli fifty percent of Steve’s pension fund
accrued during the parties’ marriage, assigned vehicles to each party, awarded
Steve the cows, the pastureland, and the farm machinery, and ordered Steve to
11
pay Juli an equalization payment in the amount of $149,439.50. The court restored
Juli’s surname and she is now known as Julianne Ireland.
Steve appeals and Juli cross-appeals.
II. Scope and Standard of Review.
Dissolutions of marriage are tried in equity and appellate review is de novo.
In re Marriage of McDermott, 827 N.W.2d 671, 676 (Iowa 2013). “[W]e examine
the entire record and adjudicate anew the issue of the property distribution.” Id.
“We give weight to the findings of the district court, particularly concerning the
credibility of witnesses; however, those findings are not binding upon us.” Id.
Generally, we will disturb the trial court’s ruling only when there has been a failure
to do equity. Id.
III. Discussion.
A. Divisible property.
“Iowa is an equitable distribution state.” In re Marriage of Sullins, 715
N.W.2d 242, 247 (Iowa 2006). “This ‘means that courts divide the property of the
parties at the time of divorce, except any property excluded from the divisible
estate as separate property, in an equitable manner in light of the particular
circumstances of the parties.’” Id. (citation omitted). Steve contends much of the
property deemed divisible by the district court should have been excluded as
premarital or gifted property.
The dissolution court must identify and value all the assets subject to
division. McDermott, 827 N.W.2d at 676. “To identify divisible property, the district
court looks for all marital assets that exist at the time of the divorce, with the
exception of gifts and inheritances to one spouse.” Id. Yet, premarital and gifted
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property may be included in the divisible estate. See Iowa Code §§ 598.21(5)(b),
.21(6) (2015). The factors relevant to a court in making an equitable division
include:
(a) The length of the marriage.
(b) The property brought to the marriage by each party.
(c) The contribution of each party to the marriage, giving
appropriate economic value to each party’s contribution in
homemaking and child care services.
(d) The age and physical and emotional health of the parties.
(e) The contribution by one party to the education, training, or
increased earning power of the other.
(f) The earning capacity of each party, including educational
background, training, employment skills, work experience, length of
absence from the job market, custodial responsibilities for children,
and the time and expense necessary to acquire sufficient education
or training to enable the party to become self-supporting at a
standard of living reasonably comparable to that enjoyed during the
marriage.
....
(i) Other economic circumstances of each party, including
pension benefits, vested or unvested. Future interests may be
considered, but expectancies or interests arising from inherited or
gifted property created under a will or other instrument under which
the trustee, trustor, trust protector, or owner has the power to remove
the party in question as a beneficiary, shall not be considered.
(j) The tax consequences to each party.
....
(m) Other factors the court may determine to be relevant in an
individual case.
Id. § 598.21(5) (emphasis added).
We also consider section 598.21(6), which provides:
Property inherited by either party or gifts received by either
party prior to or during the course of the marriage is the property of
that party and is not subject to a property division under this section
except upon a finding that refusal to divide the property is inequitable
to the other party or to the children of the marriage.
13
(Emphasis added.) Thus, our supreme court has recognized the code considers
property brought into the marriage by one party is but one factor to consider.
McDermott, 827 N.W.2d at 671. The following factors are also to be considered:
(1) contributions of the parties toward the property, its care,
preservation or improvement[ ];
(2) the existence of any independent close relationship
between the donor or testator and the spouse of the one to whom
the property was given or devised;
(3) separate contributions by the parties to their economic
welfare to whatever extent those contributions preserve the property
for either of them;
(4) any special needs of either party;
(5) any other matter[,] which would render it plainly unfair to a
spouse or child to have the property set aside for the exclusive
enjoyment of the donee or devisee.
Id. at 679 (alterations in original) (citation omitted). It is the court’s obligation to
achieve an equitable division of assets after considering all the pertinent factors.
See id.; see also In re Marriage of Muelhaupt, 439 N.W.2d 656, 659 (Iowa 1989).
(1) Gifted monies.
Steve complains the thirty-six acres of pastureland and farm equipment
were gifts from his mother to him alone and the district court should not have
included them as marital assets. He stresses the marriage was of short duration.
Upon our de novo review, we find no reason to modify the trial court’s
determination of the marital estate.
We begin our analysis by noting the district court—on several occasions—
stated there was not “credible” evidence supporting Steve’s claims. Here, the court
found, “The only asset for which credible evidence was presented of monies being
gifted to provide for the purchase of it is the real estate owned by Steve and Juli.”
The court continued, however, “Even so, it is not clear those monies were gifted
14
only to Steve . . . .” This district relied upon Jo Agan’s testimony on cross-
examination:
Q. And you have been asked to look at documentation
regarding money you gave Steve for the rake and the mower and the
hay processer. Is there any documentation of the money you say
you gave him for the aerator? A. I have a check—I mean, it went
through the bank.
Q. And the reason I ask is we’ve seen some other documents
in this case that he borrowed money from—for that. But is it your
you testimony you gave— A. I gave some—I gave part of it—partial,
whatever.
Q. And now how Steve handled the monies that you provided
him, what accounts he put it in, and what he did with it from there
was up to him. Would that be true? A. Yes.
Q. Do you have a strained relationship with Juli? A. No.
Q. Did you have any animosity toward her at the time that you
provided money to Steve— A. No —
Q. —during their marriage? A. —no.
Q. And would you have any concern if he would have put the
money that you gave her into their joint accounts? A. No. I trusted
him to do with it—
Q. What he wanted — A. . . . what the purpose was for,
whatever it was for.
Q. And to do it whatever he saw fit? A. Yes.
Q. Would you have strictly forbidden him from Juli having any
benefit off of any of the monies you provided him? A. No.
Q. And would that sentiment hold true both at the time that
you gave the monies and today? A. Yes.
Further, with respect to all other items Steve claimed were purchased from
money gifted only to him, the court found “no credible evidence exists for the court
to conclude they were purchased with gifted monies. Steve’s testimony to that fact
is not credible.” The court noted there were no gift tax returns filed and many of
the items Steve claims to be his alone are insured by the parties’ policies and listed
on the parties’ tax returns.
However, the district court made no credibility findings with respect to the
testimony of Jo Agan or Juli. We find Jo Agan’s testimony consistent with Steve’s
15
of testimony that although Steve could use the money for whatever he saw fit—
including benefiting Juli—the gifts of monies were to Steve. In fact, most of the
monies gifted to Steve were for a specific purpose—to purchase pasture land or
buy specific pieces of farm equipment. When Jo Agan was asked whether the
more than $89,000 gifted for the purchase of the pastureland was a gift to Steve
and Juli, she responded, “It was for Steve’s cows.” She was then asked, “Just
Steve?” and she responded, “Yes.”
When Juli testified, she acknowledged or did not dispute, Steve’s mother
provided gifts of money for the hay mower, hay rake, hay processor, new mule,
and $80,000 towards the pasture land (though she disputed an additional $9058
used for the land purchase).
Because the district court is in a unique position to hear the evidence and
observe the witnesses’ demeanor, we generally defer to the district court’s
determinations of credibility. In re Marriage of Brown, 487 N.W.2d 331, 332 (Iowa
1992). We decline to defer in this instance, however, in light of the supporting
testimony of Jo Agan, as well as Juli’s, that Jo Agan did in fact make monetary
gifts.
We must next consider whether the gifts of monies were to Steve alone or
to both Steve and Juli. To determine if a gift was made to one or both parties, we
consider (1) the intent of the donor and (2) the circumstances surrounding the gift.
In re Marriage of Wertz, 492 N.W.2d 711, 714 (Iowa Ct. App. 1992).
Here, we acknowledge no gift tax returns were apparently filed. We also
acknowledge Juli had a good relationship with Jo Agan and Jo Agan would have
had no complaints if some or all of the monies were used for Juli’s benefit.
16
Nonetheless, the gifts of monies were intended to help finance the purchase of the
pastureland and various pieces of farm equipment for the cattle and farm
operations and were used for that purpose. Jo Agan’s testimony clearly reflects
her intent was to gift the monies to Steve alone, for these specific purposes. The
fact that gifted monies provided to Steve were commingled into a joint account
does not serve to transform the gifted property to marital property. See id. at 713-
14.
Our analysis does not yet end because property purchased with the gifted
monies may be divided if it is inequitable to refuse to divide it. See Iowa Code
§ 598.21(6). In determining if it would be inequitable not to divide the gifted
monies, we consider the following factors:
“(1) contributions of the parties toward the property, its care,
preservation or improvement[ ];
(2) the existence of any independent close relationship
between the donor or testator and the spouse of the one to whom
the property was given or devised;
(3) separate contributions by the parties to their economic
welfare to whatever extent those contributions preserve the property
for either of them;
(4) any special needs of either party;
(5) any other matter which would render it plainly unfair to a
spouse or child to have the property set aside for the exclusive
enjoyment of the donee or devisee.”
In re Marriage of Goodwin, 606 N.W.2d 315, 319 (Iowa 2000) (quoting In re
Marriage of Thomas, 319 N.W.2d 209, 211 (Iowa 1982)). In Thomas, the court
also stated,
Other matters, such as the length of the marriage or the length
of time the property was held after it was devised or given, though
not independent factors, may indirectly bear on the question for their
effect on the listed factors. Still other matters might tend to negative
or mitigate against the appropriateness of dividing the property under
a claim that it falls within the exception.
17
319 N.W.2d at 211. In Goodwin, the court added, “[W]here the parties have
enjoyed, over a lengthy period of time, a substantial rise in their standard of living
as the result of gifts or inheritances, then any division of property should enable
the parties to continue that lifestyle, even if that goal requires the division of gifted
property.” 606 N.W.2d at 319 (citing Muelhaupt, 439 N.W.2d at 659).
Considering all pertinent factors, in In re Marriage of Geil, a farm inherited
by the wife was divided equally because the farm had served as the family
homestead and provided the family’s livelihood for many years. 509 N.W.2d 738,
741 (Iowa 1993). The court found the farm and its substantial debt were
“inextricably bound” and both parties should be responsible for the debt. Id.
Here, the parties had a short-term marriage of about seven years. We
agree with Steve the equity in the land should not be divided equally simply
because the deed to the land reflected both of their names. See In re Marriage of
Liebich, 547 N.W.2d 844, 851 (Iowa Ct. App. 1996) (observing the act of placing
gifts received by one spouse into joint ownership is not a conclusive factor in
deciding whether the property should be divided as a marital asset). Juli was
actively involved in the cattle operation for the first two years. After the pastureland
was purchased, extensive improvements were made to the land. These
improvements were financed from a joint account to which both parties contributed.
Five years after the purchase and the improvements were completed the pasture
land had increased in value from about $89,000 to $125,000. We also note Juli
had a good relationship with Jo Agan and Jo Agan was not opposed to Juli
receiving a benefit from her gifts. Accordingly, we conclude that although the
18
pastureland was purchased from gifted monies from Jo Agan to Steve, Juli should
be awarded one-fourth of its value ($125,000 ÷ 4 = $31,250). The failure to
recognize her contributions to the cattle operations upon the pastureland, her
financial contributions to the improvements to the land, and her contributions to the
family by providing her a portion of the pastureland would be inequitable.
However, the hay processor, hay mower, hay rake, and Kawasaki ATV shall be
aside to Steve as gifted property. In addition, one-half of the value of the
roller/aerator ($8000 ÷ 2 = $4000) shall be set aside as gifted property as one-half
of the monies expended to purchase it. This equipment provided no direct benefit
to the parties’ lifestyle.
Steve was also gifted a boat and a 1998 Dodge Dakota from his father
during the marriage. Juli makes no claim for the boat, and it should be awarded
to Steve as gifted property. Contrary to the district court, we also conclude the
1998 Dodge Dakota should be set aside as gifted property.
(2) Premarital property.
Prior to marriage Steve owned a 1980 Chevy pickup, Grasshopper
lawnmower, Mahenda tractor, and a 1560 International tractor. The lawnmower
has since been traded but the other assets remain. Steve also owned a cow herd,
which at the time of marriage consisted of thirty-five cows, two bulls, and thirteen
calves. The cow herd began with a gift of twenty cows from his grandfather in
2000 and 2001.
We discussed the award of premarital property in In re Marriage of Hansen,
886 N.W.2d 868, 872-73 (Iowa Ct. App. 2016), noting, “We have stated that the
claim of a party to the premarital property owned by the other spouse in a short-
19
term marriage is ‘minimal at best.’” (Citing In re Marriage of Dean, 642 N.W.2d
321, 326 (Iowa Ct. App. 2002) (one year); In re Marriage of Peiffer, No. 12–1746,
2013 WL 5498153, at *3 (Iowa Ct. App. Oct. 2, 2013) (seven years)). We also
observed in Hansen, “[I]t is often equitable to simply award the property to the party
that brought it into the marriage.” 886 N.W.2d at 873 (citing In re Marriage of
Steenhoek, 305 N.W.2d 448, 453-54 (Iowa 1981) (ordering property returned to
husband in five-year marriage); In re Marriage of Wallace, 315 N.W.2d 827, 830-
31 (Iowa Ct. App. 1981) (noting length of marriage can be a major factor in
determining each parties' rights)).
Because the parties’ marriage was short-term, less than seven years, Juli’s
claims to any of these assets are minimal at best. The farm equipment was used
in Steve’s cattle and farm operations. Steve’s claim to the cow herd is also
bolstered by the fact that the herd originated by gifts from his grandfather. We
conclude the farm equipment should be awarded to Steve in its entirety as his
premarital property. We note Steve reported on a personal financial statement for
the Union State Bank, dated the same month the parties were married, that his
cattle herd had a total value of $33,650. The cattle operation has since expanded.
Appreciation in the value of assets during the marriage is a marital asset. See In
re Marriage of White, 537 N.W.2d 744, 746 (Iowa 1995) (concluding appreciation
in the value of assets during the marriage is a marital property). Juli should be
awarded one-half of the increase in value of the cattle herd at the time of the
dissolution trial. Absent some clear recordkeeping of the herd, we reject Steve’s
claim that he should be awarded the entire herd because all the cattle originated
from his grandfather’s gift. Even if we accepted Steve’s argument, appreciation in
20
the cattle operation is generally considered marital property—particularly when the
record reflects Juli did assist in the cattle operations to some degree.
B. Valuation.
Steve next contends the court should not have considered Juli’s testimony
concerning the value of the acreage and farm equipment. He notes Juli’s appraiser
did not timely submit valuations. He argues the court erred in allowing Juli to testify
as to the value of the property.
“We review evidentiary rulings for an abuse of discretion. A district court
abuses its discretion when it bases its decisions on grounds or reasons clearly
untenable or to an extent that is clearly unreasonable.” Stender v. Blessum, 897
N.W.2d 491, 501 (Iowa 2017) (citations omitted).
“In ascertaining the value of property, its owner is a competent witness to
testify to its market value.” In re Marriage of Hansen, 733 N.W.2d 683, 703 (Iowa
2006). Here, when the court excluded evidence from Juli’s appraiser, Juli testified
she researched comparable properties on the internet. She also testified she was
involved in the acquisition of the machinery and equipment and used many of the
same websites they had relied upon when they were purchasing the items.
Moreover, Steve acknowledged he used the same website, tractorhouse.com, to
help him determine his values. We find no abuse of discretion by the trial court in
allowing Juli to testify on the value of the property.
In relation to Juli’s use of websites, Steve argues the court erred in
admitting, over his objection, about forty pages of notes containing information
from the websites as well as Juli’s handwritten notes. Steve adds that the district
21
court then relied heavily upon those forty pages of notes to arrive at the values for
the farm equipment.
Initially, Juli’s counsel asked permission for Juli to use the forty pages of
notes to aid her testimony. Steve’s counsel objected and argued that he could not
“look those over and then properly cross-examine over [forty] pages of notes that
I am just receiving.” The objection was overruled and Juli was permitted to use
her notes. Later, Juli’s counsel asked that her forty pages of notes, Exhibit TT, be
admitted into evidence. Steve’s counsel responded, “Just same objection, Your
Honor, I made previously, I didn’t see it until today.”
Steve now argues Juli failed to comply with the trial scheduling order in
failing to provide a copy of the notes in advance of trial and also failed to
supplement her answer to Interrogatory 10 setting forth all assets over $500 in
value that she claimed an interest. However, we conclude Steve failed to preserve
error on these arguments. See Iowa R. Evid. 5.103(a)(1)(B) (providing that to
preserve error on an evidentiary claim, a party must timely object and “state the
specific ground” for the objection). Steve did object to some exhibits on the
grounds he now raises, but no objection was made to Exhibit TT—Juli’s forty pages
of notes on those same grounds. With respect to Exhibit TT, the objection did not
refer to either the trial scheduling order or Interrogatory 10 and thus failed to alert
the district court of the basis now urged.17 See State v. Howard, 509 N.W.2d 764,
769 (Iowa 1993).
17
We acknowledge the district court could have delayed the cross-examination of Juli until
Steve’s counsel had sufficient time to review the notes, but we observe there was a lunch
hour allowing some time to review the notes during the trial, and notwithstanding the short
time, counsel thoroughly cross-examined Juli on her values. We also acknowledge
22
Even if we consider counsel’s objection sufficient to raise the issues he now
raises, we conclude there was no abuse of discretion in overruling Steve’s
objection. Juli’s answer to interrogatory 25 stated, in part, that she was claiming
fifty percent of the various pieces of machinery and equipment that had been
purchased. Steve did not file a motion to compel a more definitive answer to
interrogatory 10 in light of Juli’s answer to interrogatory 25, even though he filed a
motion to compel related to other issues. The complaint now is that the district
court gave too much weight to the exhibit. However, the court’s reliance on the
exhibit likely can be explained by the failure of either party to complete an appraisal
of the equipment. Moreover, counsel sought no delay in the trial to review the
documentation, and the documentation was cumulative to Juli’s testimony. See
Vasconez v. Mills, 651 N.W.2d 48, 57 (Iowa 2002) (concluding there was no
prejudice in erroneously admitting hearsay when it is merely cumulative to other
evidence in the record).
Steve also complains the trial court’s equipment valuations are all too high.
However, the court found Steve’s claims that some of the property was damaged
or in need of repair was not credible and we defer to these credibility findings. On
cross-appeal, Juli asserts the court’s valuation of the pastureland was too low. We
reject both parties’ complaints. We will generally defer to the district court’s
determinations of property value so long as they are within the range of evidence
presented at trial. Hansen, 733 N.W.2d at 703. Upon our de novo review and as
Steve’s counsel had earlier objected to some evidence on the bases of the trial scheduling
order and Juli’s answer to interrogatory 10.
23
already discussed in this decision, we conclude the valuation of the pastureland
and various pieces of farm machinery fell within the range of the parties’ evidence.
C. Equalization payment.
Steve asserts the district court failed to specify how it derived the value of
the equalization payment and argues the amount ordered ($149,139.50) is
unreasonable. However, as pointed out by Juli, Steve completely omits any
mention of the cattle herd.
Though the court does not specifically state the value of the herd, we note
the district court awarded the entire cattle herd to Steve. Steve testified he had
forty-five cows,18 twenty-five of which should be considered premarital. The court
determined it would be inequitable to set off any of the “first” twenty-five head of
cows to Steve, noting the parties’ “intentional plan to grow the cattle herd” and
cattle operation, Juli’s active participation in the operation, and the use of the joint
bank account to purchase, service, and maintain the operation. Steve agreed the
two bulls he now owns should be considered marital property. He also testified he
had one calf. Steve testified the value of each cow was $1082, the value of the
calf was $300, and each bull had a value of $1500. Thus, Steve’s own testimony
is that the cattle herd had a value of $51,990.19
Juli claims the cattle should be part of the marital property and the district
court reached the same conclusion. However, it does not appear the cattle were
included in the court’s calculations in determining the equalization payment. Thus,
18
Steve stated one cow had died the night before trial.
19
(45 x $1082)+(2 x $1500)+$300=$48,690+$3000+$300=$51,990. Steve also sold cattle
during the parties’ separation and kept the $38,000 in proceeds but the $38,000 in
proceeds were considered in the court’s equalization payment
24
Juli claims the equalization payment should be increased to $152,413.50 to
account for the cattle.20
Steve asserts the decree found the total value of assets subject to division
is $368,663 and the total value of liabilities subject to division is $146,248. But
Steve omits any value for cattle still on hand from his calculation of the net
proceeds awarded to him. Including the cattle herd value of $51,900, our review
of the decree awards Steve $396,988 in assets and $109,872 in liabilities for a net
of $287,116. The decree awarded to Juli $23,576 in assets and $36,376 in
liabilities for a net of ($12,800).
With respect to the cattle herd, as we indicated earlier, Steve should be
afforded a credit of $33,650 (for the value of the herd as premarital property and
further supported by the original gift of twenty cows from his grandfather). The
difference between the value of the cow herd at the time of trial, less this credit,
should be divided equally between the parties as appreciation arising during the
marriage ($51,900 – $33,650 = $18,250; $9125 to each party).
In sum, and upon our de novo review of the decree, we do not modify the
distribution of property except the equalization award. Both parties agree Juli was
awarded total assets of $23,576 and assigned liabilities in the sum of $36,376 for
a net value of -$12,800. Both parties also agree that Steve was assigned liabilities
in the amount of $109,872. There is also no dispute with respect to the “separate
property” identified in the decree awarded to Steve as his premarital property. The
20
Juli claims when the cattle are added to the other assets awarded to Steve, he received
net assets of $292,027.00 and she received net assets of -$12,800.
25
parties part ways, however, on the total value of the assets awarded to Steve and
the equalization payment to Juli.
We have concluded Juli should be awarded one-fourth of the value of the
pastureland ($31,250) and one-half of the increase in value of the cow herd
($9125). Steve should be awarded certain farm equipment because the equipment
was purchased by gifted monies—hay mower, hay rake, hay processor, Kawasaki
ATV, and one-half of the value of the roller/aerator ($4000). Steve should also be
awarded the 1998 Dodge Dakota as separate gifted property.
The decree also awarded Steve the remaining farm equipment,21 which
need not be repeated here; along with other equipment (identified as feeders,
waterers, fencing, and tools) totaling $4500; one-half of the value of the
roller/aerator ($4000); his bank accounts; withdrawals taken by Steve in the sum
of $10,000; and livestock sale proceeds of $38,477. The total sum of these assets
is $195,439.
If we total the sum of $195,439 with Steve’s share of the pastureland,
$93,750 and his share of the appreciation in the cattle herd of $9125, the total
assets received by Steve is $298,314. His share of the liabilities is $109,872 and
the value of his net assets is $188,442. The net value of assets awarded to Juli in
the decree is -$12,800 plus $31,250 for the pastureland and $9125 for the
appreciation of the cattle herd for a total of $27,575. The difference between
$188,442 and $27,575 is $160,867. Juli should be awarded an equalization
payment of one-half of $160,867—or approximately $80,000. We feel this sum is
21
These items are listed in the decree as seventeen separate items of marital property of
which we have excluded the items we identified as gifted property.
26
generous in light of the parties’ contributions and the fact this was a short-term
marriage where it is often unnecessary to order an equalization payment. See
Hansen, 886 N.W.2d at 873 (concluding “to achieve equity, the division need not
be equal in most short-term marriages”). We modify the decree accordingly.
IV. Appellate Attorney Fees.
“Appellate attorney fees are not a matter of right, but rather rest in this
court’s discretion.” In re Marriage of Okland, 699 N.W.2d 260, 270 (Iowa
2005). “In determining whether to award appellate attorney fees, we consider the
needs of the party seeking the award, the ability of the other party to pay, and the
relative merits of the appeal.” McDermott, 827 N.W.2d at 687 (internal quotation
marks and citations omitted). Having considered these factors, we decline to
award Steve attorney fees.
V. Conclusion.
We modify the dissolution decree to account for various gifted monies and
conclude the equalization payment to Juli from Steve shall be in the amount of
$80,000.
AFFIRMED AS MODIFIED.