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In Re Marriage of Wilder

OPINION FILED OCTOBER 28, 1983.

IN RE MARRIAGE OF GAYLE L. WILDER, PETITIONER-APPELLANT, AND HOWARD L. WILDER, RESPONDENT-APPELLEE.


Appeal from the Circuit Court of Cook County; the Hon. John J. Reynolds, Judge, presiding.

JUSTICE SULLIVAN DELIVERED THE OPINION OF THE COURT:

JUSTICE SULLIVAN delivered the opinion of the court:

This appeal is from a supplemental judgment entered in an action for dissolution of marriage. Petitioner raises numerous issues concerning (1) the trial court's classification and valuation of marital and non-marital property; (2) the award of rehabilitative rather than permanent maintenance and the sufficiency thereof; (3) the sufficiency of child support and the trial court's failure to require respondent to provide security therefor; (4) the denial of her petition for attorney fees; and (5) the denial of recovery on alleged arrearages in temporary maintenance and child support.

On November 5, 1981, a judgment was entered granting dissolution of the parties' marriage but reserving the issues of child support, maintenance, property disposition, and attorney fees. Respondent did not contest petitioner's request for dissolution, and no questions pertaining thereto are raised in this appeal. Subsequently, hearings were held on the remaining issues, and the evidence introduced established that the parties were married in 1968 and had three children: Kelly, a 20-year-old college student (petitioner's child from a former marriage, legally adopted by respondent); Leslie, 13; and Amy, 11. By agreement, petitioner was granted custody of the minor children. Petitioner, a 41-year-old housewife, had training and worked as an electronmicroscope technician prior to the marriage but had not been employed outside the home during the marriage. Respondent, 58 years of age, was an opthalmologist specializing in retinal surgery and was employed by Drs. Wilder and Vygantas, Ltd., a professional corporation formed in 1970 in which he held 50% of the stock. The parties also presented testimony and evidence with regard to their property, both marital and non-marital, and the valuation thereof, their current and future financial needs, and the needs of the children. That evidence is voluminous and, in most cases, conflicting; therefore, we shall set forth only such portions thereof as are relevant to the particular issues raised as they are discussed.

On June 17, 1982, the trial court entered its written order resolving the disputed issues. The following disposition of property was made:

PETITIONER

Non-marital property:

Inheritance from her father's estate $125,000 Personalty 4,140 ________ $129,140 Marital property:

Marital home $328,000 Household furnishings 45,860 Two automobiles 6,325 ________ $380,185

RESPONDENT

Non-marital property:

Stock in Drs. Wilder & Vygantas, Ltd. $157,553 Personalty no finding __________ $157,553 plus items of unknown value

Marital property:

Highland Park residence $35,000 Palm Springs condominium 70,000 plus unknown rental value Car collection $144,000 Art collection 25,000 Money Market fund 5,000 Profit sharing and pension plans 158,675 Personalty no finding __________ $437,675 plus items of unknown value

In addition, several investments of unknown value, described as tax shelters, were divided in kind; and respondent was ordered to pay petitioner $20,000, assume sole liability for $118,000 in debts, most of which were incurred by him after the parties separated, and release a debt of $3,000 owed to him by petitioner. Petitioner was awarded rehabilitative maintenance in the amount of $2,400 per month for five years, and the court ordered respondent to pay $500 per month per child for the support of the minor children, all of their reasonable medical and college expenses, and 60% of Kelly's college expenses during her final year. Petitioner's request for attorney fees was denied, as was her petition for recovery of arrearages allegedly due under an order for temporary maintenance and child support, and this appeal followed.

OPINION

Petitioner first contends that the trial court erred in finding that respondent's interest in Drs. Wilder and Vygantas, Ltd. (the stock) was non-marital property. In the alternative, she maintains that the stock was transmuted into marital property because its increase in value resulted entirely from contributions made during the marriage. She asserts that this erroneous characterization of the stock requires redetermination of all of the property and support issues, and the judgment therefore must be reversed and remanded.

Before reaching the merits of petitioner's contention, we note that the trial court, after finding that the stock was respondent's non-marital property, went on to say that "[t]his finding of the Court, if it were contrary and found to be marital, would have little or no effect on the total property disbursements as it is the Court's intention to make an equitable distribution of property to the parties." It appears that even if the trial court had found the stock to be marital, as petitioner asserts, its distribution of property would have been unaffected, since it had considered the value of all property, whether marital or non-marital, in dividing the marital property, as it is required to do under section 503(d) of the Illinois Marriage and Dissolution of Marriage Act (the Act). Ill. Rev. Stat. 1981, ch. 40, par. 503(d); see In re Marriage of Thornton (1980), 89 Ill. App.3d 1078, 412 N.E.2d 1336.

In light of the court's statement, we question whether reversal on this issue would be required even if we were to find that the trial court erred in categorizing the stock as non-marital property. The cases cited by petitioner for this proposition are distinguishable. In In re Marriage of Peshek (1980), 89 Ill. App.3d 959, 412 N.E.2d 698, the judgment of the trial court was reversed and the cause remanded for redetermination of the property issues where the court failed to value or apportion a significant marital asset. Similarly, in In re Marriage of Olsher (1979), 78 Ill. App.3d 627, 397 N.E.2d 488, while the trial court had correctly found that certain stock was marital property and had apportioned it to one of the spouses, it had failed to make any finding as to the value thereof. We reversed and remanded for redetermination of the property issues, noting that "without evidence of the respective values of the various items of the marital property it was impossible for the court to divide the marital property in `just proportions' as required by the statute." 78 Ill. App.3d 627, 636, 397 N.E.2d 488, 495.

• 1 Here, unlike either Peshek or Olsher, the trial court did classify and value the property in question, and affirmatively stated that it considered that value in apportioning the marital property. Furthermore, it made a specific alternative finding that even if the property were marital, the division it made would be unaffected, or at least that any effect would be de minimus. This situation appears to be unique; the parties have not cited, nor has our own research discovered, any case in which such an alternative finding has been made, nor are we aware of any case wherein a trial court's error in classifying property as non-marital has been found harmless based on its statement that the determination would be the same even if the property in question were found to be marital. Nevertheless, we may be guided in this instance by the general rule that not every error committed by the trial court in a civil case leads to reversal (Svenson v. Miller Builders, Inc. (1979), 74 Ill. App.3d 75, 392 N.E.2d 628); rather, there must be some showing that the appellant has been prejudiced by that error (County of Cook v. Patka (1980), 85 Ill. App.3d 5, 405 N.E.2d 1376), and reversal is required only where it appears that the outcome might have been different had the error not occurred (Canales v. Dominick's Finer Foods, Inc. (1981), 92 Ill. App.3d 773, 416 N.E.2d 303). Therefore, in the light of the alternative finding of the court, it is our view that the error, if any, in classifying the stock as non-marital property was harmless, and reversal on that issue would not be required. Of course, this question is entirely separate from the issue of whether the division was equitable, as we are concerned at this point only with the label placed on the property.

• 2 Moreover, we are not persuaded that the trial court's classification of the property as non-marital is erroneous. Respondent had been practicing as a specialist in the field of retinal surgery since 1958, and his practice and reputation were well established when the parties married in 1968. Two years later, respondent changed the form of his business from a sole proprietorship to a professional corporation, thereafter transferring 50% of the stock to Dr. Vygantas. The instrument of conveyance of assets executed at that time recites that respondent received 10 shares of stock, par value $100 per share, and a $5,000 note in exchange for his office furniture and equipment, items which the undisputed testimony establishes were acquired prior to the marriage. Section 503(a)(2) of the Act defines non-marital property, in part, as "property acquired in exchange for property acquired before the marriage." (Ill. Rev. Stat. 1981, ch. 40, par. 503(a)(2).) The trial court found, based on the evidence before it, that respondent had met his burden of proving that the stock was acquired exclusively in exchange for non-marital property. See In re Marriage of Smith (1981), 86 Ill.2d 518, 427 N.E.2d 1239.

Nevertheless, petitioner maintains that this burden was not met, pointing to respondent's admission that he transferred his patient files to the corporation. It is her position that these files represent a proprietary interest in the patients, that the transfer was part of the consideration for the stock, and that some of the patient files presumably were acquired between 1968 and 1970 (there was no evidence on this issue) while the parties were married, and were therefore marital property. The flaw in petitioner's argument is her assumption, entirely contradicted by the record, that the patient files were part of the consideration for the stock. The instrument of conveyance recites as the sole consideration the transfer of furniture and equipment. Respondent's statement that an undisclosed number of patient files were transferred to the corporation does not contradict that document; he did not state that the transfer was in consideration for the stock, nor is there any evidence that the files were of any value or that they were acquired after the marriage. In the light of this evidence, we do not believe that the trial court's finding that the stock was acquired in exchange for property acquired before the marriage was against the manifest weight of the evidence.

• 3 Petitioner's alternative argument that the stock in question was transmuted into marital property is also without merit. She theorizes that the stock appreciated in value from $1,000 (the par value of 10 shares) to at least $157,553 (the current market value admitted by respondent), and maintains that this "substantial increase in value" could not be due to inflationary factors; therefore, she posits, the increase must have resulted entirely from the contribution of both parties during the marriage, transmuting it into marital property. (See In re Marriage of Lee (1981), 87 Ill.2d 64, 430 N.E.2d 1030.) We agree that where a party can show that a substantial contribution of marital property significantly increased the value of non-marital property, a rebuttable presumption arises that the property was transmuted into marital property (In re Marriage of Olson (1983), 96 Ill.2d 432, 451 N.E.2d 825.) We do not agree that, as petitioner asserts, the presumption arises automatically; she had the burden of proving that a significant contribution occurred. (See In re Marriage of Olson.) That burden has not been met in this case. Petitioner relies solely on the difference between the par value of the stock acquired and its admitted current market value in arguing that transmutation occurred. However, the par value recited on a stock certificate is not the proper measure of its value; rather, stock is usually valued at its market value. (In re Marriage of Olsher (1979), 78 Ill. App.3d 627, 397 N.E.2d 488.) Here, there is no evidence of the market value of the stock at the time of its acquisition, possibly because petitioner did not attempt to raise before the trial court the question of whether the property had been transmuted. In the absence of such proof, we are unable to determine whether the increase, if any, was not attributable to inflationary factors. Since petitioner failed to provide evidence of a substantial contribution of marital property, no presumption of transmutation arose, and there was therefore nothing for respondent to rebut.

• 4 Petitioner next contends that, even if the trial court was correct in ruling that the stock was non-marital property, it erred in failing to consider good will as a factor in determining the value of that stock. As a result, she maintains, the stock was undervalued by at least $139,000, and all of the property issues must be redetermined in the light thereof.

Testimony established that the stock in question is subject to a buy-sell agreement which provides in relevant part that upon respondent's death, incapacity, or the termination of his employment, the corporation has the right and is obligated to purchase his shares. The purchase price provided by the agreement is the greater of the proceeds of any policy insuring his life or the value of the shares, to be determined by the value of the accounts receivable plus the fair market value of furniture, equipment, and leasehold improvements owned by the corporation. It is undisputed that, under this formulation, the value of the stock is $157,553. ...


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