IN THE COURT OF APPEALS OF IOWA
No. 15-1300
Filed August 17, 2016
IN RE THE MARRIAGE OF WILLIAM JOHN WRIGHT
AND KRYSTLE MARIE WRIGHT
Upon the Petition of
WILLIAM JOHN WRIGHT,
Petitioner-Appellee/Cross-Appellant,
And Concerning
KRYSTLE MARIE WRIGHT,
Respondent-Appellant/Cross-Appellee.
________________________________________________________________
Appeal from the Iowa District Court for Greene County, Steven J. Oeth,
Judge.
The wife appeals and the husband cross-appeals the provisions of their
dissolution decree. AFFIRMED AS MODIFIED AND REMANDED.
Dorothy L. Dakin and Judd N. Kruse of Kruse & Dakin, L.L.P., Boone, for
appellant.
Vicki R. Copeland of Wilcox, Gerken, Schwarzkopf, Copeland & Williams,
P.C., Jefferson, for appellee.
Considered by Vogel, P.J., Potterfield, J., and Mahan, S.J.*
Senior judge assigned by order pursuant to Iowa Code section 602.9206 (2015)
2
POTTERFIELD, Judge.
Krystle Wright appeals and William Wright cross-appeals the dissolution
decree entered by the district court. Krystle maintains the district court
incorrectly (1) valued the livestock and farmland in question, (2) calculated
William’s income for purposes of ordering child support, and (3) denied her
request for trial attorney fees. She asks that we award her appellate attorney
fees. In his cross-appeal, William disputes the district court’s ruling regarding the
farmland in question. William maintains the district court (1) incorrectly valued
the parties’ interest in the farmland because they did not own the land in
question, but rather had an interest in a real estate contract to purchase the land;
(2) incorrectly calculated the amount of debt still owed under the real estate
contract; and (3) failed to consider that at least part of the value was a gift made
to him alone.
I. Background Facts and Proceedings
Krystle and William married in summer 2006, and they had one child
during their marriage.1 The parties had been married almost nine years at the
time of the trial, which took place over two days, on April 9 and June 9, 2015.
At the time of trial, Krystle was thirty-one years old and William was thirty-
three years old. Both were in good health. Krystle was considered a salaried
employee and earned $44,345.00 a year. William was a self-employed grain
farmer, and he also raised sheep for meat consumption and show.
1
The parties stipulated to all issues involving physical and legal custody of their child
before the dissolution proceeding commenced.
3
Although the parties were able to reach a stipulated agreement on many
issues before trial, they asked the district court to determine the value and
division of marital assets, including the livestock and farmland, and to determine
William’s annual income for purposes of calculating the child support award.
Additionally, Krystle asked the court to order William to pay part of her attorney
fees.
The parties testified in-depth about the farm operation including the
number of livestock and the purposes for which the livestock were raised. Their
estimates of the livestock’s value varied significantly, with Krystle claiming the
livestock were worth more than $400,000 while William maintained they were
worth less than $50,000. William testified that he had sold most of his best show
sheep and was left with sheep that would be sold primarily for consumption.
Krystle testified only ten sheep a year generally were sold for consumption, and
she placed a very high value on each of the sheep.
The parties each hired experts to testify about the value of the farmland
and the farm machinery. The district court found that the experts were generally
well-prepared and credible but noted the disparity of the values in their reports.
The district court filed its findings of fact, conclusions of law, and decree of
dissolution on July 1, 2015. The court valued the livestock at $110,125. It found
the farmland to be worth $263,973 with $75,000 debt still owed by the parties.
The court found the parties’ annual income to be almost equal and did not order
either party to pay child support. Krystle’s request that William pay her attorney
fees was denied.
Krystle appeals, and William cross-appeals.
4
II. Standard of Review
We review dissolution cases de novo. “‘Although we decide the issues
raised on appeal anew, we give weight to the trial court’s factual findings,
especially with respect to the credibility of the witnesses.’” In re Marriage of
Sullins, 715 N.W.2d 242, 247 (Iowa 2006) (citation omitted). “Ordinarily, a trial
court’s valuation will not be disturbed when it is within the range of permissible
evidence.” In re Marriage of Hansen, 733 N.W.2d 683, 703 (Iowa 2007).
III. Discussion
A. Value of Assets: Livestock
Krystle maintains the district court incorrectly calculated the value the
livestock. On the first day of trial, Krystle maintained the livestock had a value of
$427,350, while William claimed they were worth $54,675. In the two months
between the first and second trial date, William sold several sheep, and each
party proposed different values at the second day of trial. Krystle asserted the
remaining livestock were worth $361,323.29 and William asserted they were
worth $45,813. The court ultimately valued the livestock at $110,125. Here,
Krystle offers another new value; she maintains the district court should have
found the value of the livestock to be $172,800.2
The district court noted the inconsistencies in the testimony of both parties
regarding the livestock. William testified that most of the animals would be sold
2
Krystle supports her current valuation of the livestock with the following:
Number Livestock Price Total Value
132 Ewes $450 $59,400
139 Lambs $600 $83,400
2 (half owner) Rams $5000 $10,000
2 Rams $10,000 $20,000
$172,800
5
for consumption, so he valued them at $1.97 per pound. Krystle, on the other
hand, used the sales of the most valuable show sheep as average and applied it
to the entire stock of animals. Additionally, because the number of lambs to be
born varies, and it is unclear how many of those will make good show sheep in
the future, the court had many variables to consider when trying to determine the
correct value of the livestock. Ultimately, the court averaged the 2012 and 2013
values that William had provided to his lending institution in order to obtain
financing for his farm operation. The court provided the following reasoning:
As the court understands [William]’s testimony, [he] is saying
that he had certain livestock when he came into the marriage. That
livestock, except for the breeding stock, has been sold either for
consumption or for show. The proceeds are used to pay expenses
and for some profit, but essentially the operation continues year
after year. The court notes that in [William]’s financing statements,
provided to the bank, [William] lists the value of his livestock as
follows:
2009 -- $66,700
2010 -- $85,500
2011 -- $77,600
2012 -- $86,000
2013 -- $134,250
It is interesting to note that before the dissolution
proceedings started the livestock apparently had significantly more
value than [William] now claims. The court, after considering the
testimony and exhibits and including the cross-examination of
[William], concludes the livestock has a value of $110,125. The
court reaches this conclusion by averaging the 2012 value and
2013 value as listed on the financing statement. This is the value
provided to the bank before the dissolution proceedings started. It
is less than Krystle’s valuation but more than [William]’s. It reflects
that [William] has sold assets recently as reflected in Krystle’s
exhibits. . . . It is fair to assume that [William] has an inventory that
will be able to match sales comparable to those years and still keep
his breeding stock so as to keep his operation functioning.
Determining the value of the livestock is not an exact science. See In re
Marriage of McDermott, 827 N.W.2d 671, 689 (Iowa 2013) (Appel, J., dissenting)
6
(“In the end, establishing an appropriate property division in this case is a matter
of art rather than science.”); see also In re Marriage of Conley, 284 N.W.2d 220,
223 (Iowa 1979) (noting “equality does not need to be achieved with
‘mathematical exactness’” (citation omitted)); cf. In re Marriage of Dennis, 467
N.W.2d 806, 808 (Iowa Ct. App. 1991) (“Because of the difficulty of the task of
valuation [of closely held corporations], the law provides much leeway to the trial
court, even permitting the trial court to devise its own scheme for valuation.”).
The district court considered all of the relevant testimony and exhibits and
determined a value that is “well within the range of evidence.” In re Marriage of
Wiedemann, 402 N.W.2d 744, 748 (Iowa 1987). After our own review of the
record, we do not believe the district court’s valuation should be disturbed on
appeal. See id. (“While we do not necessarily adopt the trial court's methods, we
believe the findings were well within the range of the evidence and should not be
disturbed on appeal.”).
B. Value of Assets: Farmland
The district court calculated the value of the farmland in question by
multiplying the size of the farm and the number of tillable acres3—according to
William and William’s father’s testimony—and the value per acre—as determined
by Krystle’s real estate appraiser. The court found the value of the farm to be
$263,973. Both parties challenge the district court’s determination.
3
All thee appraisers, the one hired by Krystle, the one hired by William, and the one
hired by William’s parents in 2010, agreed the taxable acreage was 42.44 acres, not
forty-five. William and William’s father testified that of that, only thirty-one or thirty-two
acres was tillable.
7
Krystle maintains the district court’s reliance on William’s interested
testimony regarding the amount of tillable acreage was in error. She argues the
testimony of her appraiser, which matched that of a previous appraisal, was more
reliable. William and his father before him had farmed that particular piece of
land for more than forty years; previous generations of their families farmed it
before them. The district court found William and his father to be more
knowledgeable about the number of acres that could be farmed, and because
nothing in the records leads us to question this credibility finding, we decline to
upset the district court’s ruling on the number of tillable acres.
William maintains the district court should not have used the value of the
farmland itself when determining the value of the parties’ asset but rather should
have found and used the value of their equity in the real estate contract. He
maintains the proper amount to be considered was the amount that had been
actually paid under the real estate contract, which he asserts is $43,748.47.4
We see no issue with the court considering the market value of the land,
minus the outstanding debt, even though the purchase contract was still
outstanding. William argues this is improper because there is a chance he could
default on the contract and thus never realize the difference in value the court
awarded him. But courts typically consider the value of the marital home at the
time of dissolution, even though it is owned subject to a mortgage. See e.g. In re
Marriage of Romanelli, 570 N.W.2d 761, 763 (Iowa 1997) (noting that at the time
the marital home was awarded to the wife, it was encumbered by a mortgage
4
We note that in his affidavit of financial status, filed a few days before the start of trial,
William claimed the parties had paid $60,000 toward the real estate contract.
8
and a home improvement loan); In re Marriage of Fidone, 462 N.W.2d 710, 711
(Iowa Ct. App. 1990) (awarding each party one of the parties’ homes along with
the mortgage for that property); In re Marriage of Lovetinsky, 418 N.W.2d 88, 89
(Iowa Ct. App. 1987) (stating the wife could keep the marital home if she could
remove the husband from the note and the mortgage encumbering the property).
In this case, we believe it is even less likely that such a result will occur, as
William’s parents held the contract and had not enforced it even though the
parties failed to make the payments as scheduled from 2010 to 2013.5
William’s real argument is that the difference between the sale price and
the appraisal price was a gift made only to him, and thus was not marital property
to be divided by the court. See Iowa Code § 598.21(5) (“The court shall divide all
property, except inherited property or gifts received or expected by one party,
. . .”). The district court specifically rejected that claim, stating, “The difference
between the fair market value and sales price was a gift to both [William] and
Krystle as both were named as buyers on the contract.” During direct-
examination, William’s father was asked who he intended to gift the land to, and
he answered he had intended to give it to both Krystle and William. Moreover,
no gift taxes were paid. Finally, even if it was a gift, there was no credible
evidence the gift was intended to be given solely to William. See In re Marriage
of Miller, 552 N.W.2d 460, 463 (Iowa Ct. App. 1996) (“The livestock, crops,
machinery, rent reduction, use of certain equipment, and wages ‘given’ by [the
husband’s] family members do not truly represent gifts, or gifts to him alone. No
5
Pursuant to the contract, the parties were supposed to make one $10,000 payment
each year on December 1st. The parties made the payment in 2009 but only partial
payments, at best, the next four years.
9
gift taxes were paid in any of the years in which the alleged gifts were made.
Moreover, no true ‘intent of the gift donor’ can be ascertained from the evidence
presented. If these items constituted ‘gifts,’ there is no evidence they were to be
gifts solely to [the husband], and not given to both spouses or to the corporation.
As such, we find no error in including the full value of the corporation among the
marital assets.” (citation omitted)).
Lastly, William maintains the district court improperly determined the
outstanding obligation on the contract was $75,000 rather than $91,251.53.
Although William’s mother testified the parties had only made $43,748.47 in
payments on the $135,000 sale contract, there was no indication that William
would ever be expected to pay the $16,251.53 difference. As mentioned above,
William represented to the court that he and Krystle had paid $60,000 toward the
contract before trial commenced. Additionally, he testified that his parents had
accepted the reduced payments each year in place of the $10,000 payments that
were due. When asked on direct examination, William testified his parents had
been accepting the proceeds of a certain amount of grain sales each year and
had “just forgiven the rest.”
For the reasons stated above, we believe the district court’s valuation of
the farmland, and the use of that valuation, is equitable.
C. William’s Annual Income
The district court calculated William’s income by figuring the average over
five years, namely 2010 to 2014. In doing so, it allowed him to use all of the
standard depreciation he claimed on his taxes and one-half of his section 179
10
expenses.6 The court concluded William’s annual income was $44,720.
Because Krystle’s annual income was almost the same amount, $44,345, and
the parties had agreed to share equally the physical care of their child, the court
did not order either party to pay child support.
Krystle argues the district court’s calculation is improper because it should
have averaged William’s income for only the three years preceding the trial.
William does not dispute the formula or method used by the district court, but he
concedes that an error in the amount of section 179 expenses for one of the
years skewed his income, which is actually $50,514.
Here, where William’s income has fluctuated substantially, it was
necessary for the district court to average his income “over a reasonable period
when determining the current monthly income.” See In re Marriage of
Knickerbocker, 601 N.W.2d 48, 52 (Iowa 1999). While Krystle maintains that
three years was a more reasonable time period because William’s business
selling show lambs “took off” after the 2011 grand championship win at the Tulsa
State Fair, we do not believe the district court was wrong to consider a five-year
period. We have used a five-year period when determining the monthly income
of a farmer in another dissolution proceeding. See, e.g., In re Marriage of
Looney, No. 12-0299, 2013 WL 1452934, at *4 (Iowa Ct. App. Apr. 10, 2013)
(“Notably, the five years used by the district court included one year with negative
6
26 U.S.C. § 179 (2015) allows a taxpayer “to treat the cost of any section 179 property
as an expense,” and “[a]ny cost so treated shall be allowed as a deduction for the
taxable year in which the section 179 property is placed in service.” Here, the district
court only allowed William to utilize half of his section 179 expense when calculating his
income for child support purposes “in the interest of justice” and in the best interests of
the minor child.
11
farm income, even after adjusting the figures for straight line depreciation. In our
view, the five-year average was a realistic and properly documented snapshot of
[respondent]’s income.”); In re Marriage of Hoag, 380 N.W.2d 8, 10 (Iowa Ct.
App. 1985). Moreover, William testified that his income in 2012 and 2014 was
irregularly high due to the receipt of crop insurance proceeds those two years.
Although we have no concerns with the method used by the district court,
because the section 179 expense for one year was transcribed incorrectly, we
remand to the district court to reconsider whether child support should be
ordered “based on the present financial circumstances of the parties and the
child support guidelines.” See In re Marriage of Hoffman, 867 N.W.2d 26, 37
(Iowa 2015).
D. Attorney Fees
Krystle maintains the district court abused its discretion by denying her
request for attorney fees. “‘Whether attorney fees should be awarded depends
on the respective abilities of the parties to pay. In addition, the fees must be fair
and reasonable.’” In re Marriage of Witten, 672 N.W.2d 768, 784 (Iowa 2003)
(citation omitted). We review the district court’s decision regarding a request
for attorney fees for an abuse of discretion. See In re Marriage of Romanelli, 570
N.W.2d 761, 765 (Iowa 1997).
As the district court noted, both parties incurred substantial fees—
including the cost of hiring multiple experts to value marital assets—and both
earn similar annual salaries. We cannot say the district court abused its
discretion in ordering each party to be responsible for their respective fees.
12
E. Appellate Attorney Fees
Krystle asks for an award of appellate attorney fees. Appellate attorney
fees are not a matter of right but may be awarded at this court's discretion. In re
Marriage of McDermott, 827 N.W.2d 671, 687 (Iowa 2013). Having considered
the needs of the party seeking the award, the ability of the other party to pay, and
the relative merits of the appeal, see id., we decline to award Krystle appellate
attorney fees.
IV. Conclusion
Because the district court’s valuation of the livestock and the farmland
were well within the range of evidence, we decline to disturb either valuation on
appeal. We do not believe the district court abused its discretion when it denied
Krystle’s request for attorney fees, and we decline to award her appellate
attorney fees. However, because a transcription error led William’s salary to be
incorrectly figured, we remand for the district court to reconsider whether child
support should be awarded. Costs of the appeal are to be assessed equally to
each party.
AFFIRMED AS MODIFIED AND REMANDED.