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In Re Marriage of Hilkovitch

OPINION FILED MAY 24, 1984.

IN RE MARRIAGE OF LORRAINE HILKOVITCH, PETITIONER-APPELLEE, AND DENNIS HILKOVITCH, RESPONDENT-APPELLANT.


Appeal from the Circuit Court of Cook County; the Hon. Allen F. Rosin, Judge, presiding.

PRESIDING JUSTICE LINN DELIVERED THE OPINION OF THE COURT:

On October 10, 1979, Lorraine Hilkovitch filed a petition for dissolution of her 12-year marriage to Dennis Hilkovitch. Following a contested trial in the circuit court of Cook County on the issues of property distribution, maintenance, and child support for the couple's two minor children, a judgment of dissolution of marriage was entered on January 14, 1982, the issues of attorney fees being reserved for future determination.

On February 5, 1982, Lorraine filed a petition for a rule to show cause, claiming that Dennis was in arrears in his unallocated maintenance and child support payments. After a hearing, Dennis was found to be in wilful contempt of court for failing to pay $12,396 in support due through April 30, 1982, and he was sentenced to 20 days in the Cook County House of Corrections. The commitment order also provided that Dennis could regain his freedom by paying one-third of the arrearage. Finally, on March 11, 1982, Lorraine filed an emergency petition for the appointment of "a receiver and/or sequestrator" to manage and sell Dennis' businesses, the proceeds of the sale to be used to pay the arrearages and for other purposes designated by the court. His responsive petition for change of venue was denied, and on September 9, 1982, an order was entered appointing a receiver-sequestrator.

Dennis Hilkovitch has filed three appeals. By our order, the appeals have been consolidated.

In the first appeal (No. 82-809), Dennis attacks the provisions of the January 14, 1982, dissolution of marriage judgment determining unallocated maintenance and child support, future support allowances, and property valuation and distribution. Specifically, Dennis argues that the trial court abused its discretion when it divided the marital property and determined the award of maintenance and child support because the statutory standards designed to guide decisions on both issues were ignored. Alternatively, Dennis appeals from the order of April 1, 1982, denying him a new trial.

In the second appeal (No. 82-1460), Dennis attacks the post-judgment order of June 17, 1982, finding him in contempt of court for failing to pay an arrearage of $12,396 in unallocated maintenance and child support and sentencing him to 20 days' confinement as a sanction for the contempt. Dennis argues that his failure to pay was not a wilful violation of an order of the court and therefore not contumacious because the award itself was not based upon his actual income as established through his testimony and exhibits.

Finally, in the third appeal (No. 82-2200), Dennis attacks the September 9, 1982, order appointing a receiver-sequestrator of certain properties previously awarded to him, maintaining that the trial court erred in denying his motion for a change of venue and thereby rendered void all orders entered subsequent to its denial. Alternatively, if the denial of his motion was not error, Dennis claims that the trial court committed reversible error by (1) failing to conduct a hearing before appointing the receiver-sequestrator, or by (2) entering the order appointing the receiver-sequestrator when it had no jurisdiction to do so.

We affirm the decision of the trial court on all issues.

FACTS

Dennis and Lorraine Hilkovitch were married on November 18, 1967. During their marriage, Dennis was employed in the retail food and beverage industry, while Lorraine worked at Allstate Insurance Company until the birth of their first child in 1970. Since that time, Lorraine has been a full-time housewife, taking care of the couple's two children, Jason and Nicole, and managing the family's home. In 1979, however, Lorraine enrolled in a marketing program at a local junior college to prepare for re-entry into the work force, and she recently joined a neighbor in cleaning houses five or six days a month.

During the course of the marriage, the couple acquired interests in both real estate and business ventures. In 1969, they purchased a 50% interest in Plush Pup, Inc., a hot dog stand that Dennis managed. In 1972, they purchased a 33 1/3% interest in a second hot dog stand, Plush Pup II, which was operated by another of the shareholding partners. Dennis and Lorraine bought a home in Park Ridge in 1974 and a vacant lot in Riverwoods in 1977. Finally, in 1978, they acquired a bar, named it "Nasty Habits," and incorporated it as JNH, Inc. Purchase of these properties was made through savings, bank loans, loans from Dennis' mother, Charlotte Hilkovitch, or a combination of these. Prior to trial, the parties stipulated that the net worth of the Park Ridge home was $100,000, the Riverwoods lot $55,000 to $60,000, and the three businesses together $155,000 to $160,000.

Testimony by the parties at trial established that Dennis earned $445 per week at the hot dog stand and $200 plus tips of $60 to $350 weekly from the bar. The couple's income tax returns reflect a yearly gross income of approximately $35,000 and a yearly net income of approximately $24,500. During the course of the marriage, Dennis gave Lorraine $430 weekly for household expenses, $230 by check drawn on Plush Pup, Inc., and $200 in cash. In addition, he would pay the couple's accumulated charge account bills, over $2,000 yearly in real estate taxes on both parcels of real estate, approximately $900 yearly for gifts, $2,500 yearly on vacations, and $40 weekly to go out to dinner, as well as giving Lorraine an additional $300 monthly when she ran short of money.

From 1975 to 1980, Dennis paid $110.50 per month on a home improvement loan. From 1978 to 1981, he spent $487.21 monthly to pay off a loan used to help in purchasing the bar, and in 1977 he began repaying a $25,000 loan from his mother at more than $1,000 monthly. From time to time he made other payments to his mother to reduce the balance of other loans she had made to him. During all this time, even when the couple traveled to Hawaii, Jamaica, Mexico, Europe, or the Bahamas, according to Lorraine their lifestyle did not change although Dennis was repaying significant sums each month for the various loans.

Dennis moved out of the marital home in May 1979 but continued paying the real estate taxes on both pieces of property as well as giving Lorraine approximately $2,000 monthly for household expenses. At the same time he was maintaining a separate household in an apartment. When the children visited with him, he took them to restaurants for their meals, at a cost of more than $30 daily. In the fall of 1980, he began giving Lorraine only $380 weekly, and he occasionally reduced that amount to $300 or less. At the same time, however, he agreed to make the payments on the couple's outstanding charge account balances.

At trial, Lorraine introduced two affidavits detailing her average monthly expenses and a statement showing the various debts accumulated by the couple with the monthly payments due on each. The first expense affidavit had been prepared immediately after the couple separated in 1979, while the second was prepared two years later at the time of the hearing. Lorraine testified that after she and Dennis separated, she was not able to maintain the same lifestyle the couple had enjoyed while together, and the 1979 affidavit, which stated her necessary monthly expenses to be $2,376.15, reflected this drop in her standard of living and her corresponding inability to pay for automobile maintenance, dental work for the children, religious schooling, and some necessary household repairs. The 1981 affidavit, on the other hand, which stated her monthly expenses to be $3,488.24, took into account an increase in the cost of living, the assumption by Lorraine of several financial obligations previously paid by Dennis, and certain necessary projected expenses to be incurred in the near future.

During the course of the trial, Dennis sold his one-third interest in Plush Pup II to the remaining two partners for $4,984, a sale he claimed was forced. Lorraine protested that the sale was either a sham or a dissipation of marital assets because Dennis had stipulated at trial that the value of his stock was $50,000, and he previously had signed a written shareholders' agreement that apparently guaranteed him a minimum of $50,000 if he sold his interest to the other two partners.

When Dennis was called by Lorraine's attorney as an adverse witness (Ill. Rev. Stat. 1981, ch. 110, par. 2-1102), his testimony established that since his separation from Lorraine he had spent between $50,000 and $79,000 yearly. The 1979 post-separation bank statements reflecting his personal checking account showed additional monthly deposits of cash from Plush Pup and Nasty Habits ranging between $334 and $1489. Dennis also testified that he purchased cashier's checks with funds from either his personal account or one of the business accounts and used them to pay other personal bills.

At the conclusion of all the testimony and argument by counsel, the trial court entered a judgment of dissolution that contained, inter alia, the following findings and rulings:

1. That the parties' stipulation and testimony established that the marital home and the vacant land together had the same net equity value as Dennis' equity interests in the three corporations, Plush Pup, Inc., Plush Pup II, and Nasty Habits.

2. That the alleged sale of Dennis' interest in Plush Pup II was a sham and that he still retained his one-third interest in the stock of that corporation.

3. That records in evidence and testimony relative to Dennis' spending habits established that his income was a minimum of $85,000 per year.

4. That Lorraine was awarded $3,000 monthly for unallocated maintenance and child support for three years and $1,912.50 monthly thereafter as child support.

5. That Lorraine was awarded custody of the children, the marital home including all the furniture and fixtures, her automobile, and the Riverwoods property, which she was directed to sell in order to have sufficient funds to invest and to reimburse Dennis' mother the balance of the loan she had given the couple to help buy the property.

6. That both parties were ordered to execute all documents necessary to effectuate the above rulings, and if Dennis failed to convey to Lorraine his interest in the Riverwoods property within 90 days, the court had the power to execute the documents and complete the transfer.

By January 31, 1982, only 17 days after the entry of the judgment of dissolution, Dennis was $5,845 in arrears in his support payments, an amount that included support due under the prejudgment temporary orders. By April 27, 1982, the first hearing date on Lorraine's petition for a rule to show cause, the arrearage had grown to $12,396.

Dennis based his defense to the charge of contempt on the fact that during this period he claimed a gross income of $6,859.97, out of which he had paid Lorraine over $3,500, or nearly 50%, "clearly demonstrat[ing] that Dennis made the maximum possible contribution to the support and maintenance of Lorraine and the minor children." To support his position, Dennis called his accountant, Peter Poulos, as a witness. The accountant testified that all of the documentary evidence of income and expenses from both Plush Pup and Nasty Habits supported Dennis' testimony concerning his income, and no cash discrepancies existed between the deposits of daily receipts and the cash journals for both businesses. On cross-examination, however, Poulos admitted that he took the figures representing the daily cash receipts from Dennis' entries, not from the cash register tapes themselves.

Following Dennis' direct examination, counsel for Lorraine again began to question Dennis about his income and monthly expenses, and again, the money Dennis admitted to spending during the first four months of 1982 exceeded his admitted income by nearly $11,000. Dennis attempted to reduce his income figure by recalling that the money for the $7,400 fee he had paid to his attorneys came from loans from his mother and a friend and therefore was not to be included as income; however, he had testified earlier that he had not borrowed any money in 1982. Dennis also stated that nearly all expenses for his vacation in Florida, including food and lodging, had been paid for by his relatives, and an expense of $1,460 for a Christmas party had been paid for by Nasty Habits. Further, Dennis' admitted expenditures did not include any amounts for incidental expenses such as personal items, entertainment, laundry, food, or anything connected with gifts for the children on their visitation periods with him. Even with the subtraction of the challenged items from Dennis' expenditures, the total of the amount he spent still exceeded his claimed income by approximately $2,000.

On June 8, 1982, at the conclusion of the hearing, the trial court found Dennis to be in wilful contempt of court for failure to pay $12,396 in past due unallocated maintenance and child support. On June 17, the trial court entered its findings, among them that Dennis had the same employment, business interests, personal expenses, living arrangements, and lifestyle as he had had during the dissolution proceedings, that none of his current bills was overdue, that he had contradicted his own testimony on the question of incurred debt in 1982, and that his testimony on the question of incurred debt in 1982, and that his testimony as to his net spendable income was not believable or creditable. Consequently, the court held that because Dennis had not met his burden of proving a clear inability to pay the ordered amount of family support, he was found to be guilty of wilful contempt of court and accordingly was sentenced to serve 20 days in the Cook County House of Corrections; he could regain his freedom upon payment of one-third of the arrearage. Enforcement of the contempt citation and jail sentence was stayed by order of the appellate court pending appeal.

Meanwhile, on March 11, 1982, Lorraine filed an "Emergency Motion for the Appointment of a Receiver and/or Sequestrator" to take immediate custody, control and possession of all Dennis' businesses and business assets on the ground that Dennis had failed to comply with the court's order concerning family support and now claimed that physical problems prevented him from operating his businesses and thereby supporting Lorraine and the children. Both petitions, one for the contempt citation and the other for the appointment of the receiver-sequestrator, were continued from time to time and finally set for a hearing on April 1, 1982, before the same judge who had presided over the dissolution proceeding. On that date, both petitions were continued again and reset for hearing on April 26, 1982, at which time the trial judge decided to proceed with the hearing on the contempt petition only, deferring the sequestration issue to a later time. After hearing the evidence on April 26, 1982, the trial court, on June 8, announced its findings and on June 17 entered the contempt order discussed earlier.

Nearly two weeks later, on July 1, 1982, the date previously set for the hearing on Lorraine's request for appointment of a receiver/sequestrator, Dennis filed a petition for a change of venue for the sequestration hearing; the petition was denied on July 16, 1982, and the denial confirmed as to the issue of the receiver/sequestrator on August 4, 1982. Although Dennis filed several detailed objections to the appointment, on September 9, 1982, the court entered an order appointing Richard Hoffman the receiver of JNH Enterprises, Inc., with authority to operate the business until he could arrange a reasonable sale. Further, Hoffman was appointed sequestrator of Dennis' stock in Plush Pup, Inc., and Plush Pup II, both appointments to take effect without the necessity of Hoffman's posting bond. Dennis filed his appeal on the same day.

OPINION

I

In his first appeal, that from various provisions of the dissolution of marriage judgment Dennis claims that the trial court abused its discretion (1) in its distribution of marital property and (2) in its award of unallocated maintenance and child support. Specifically, Dennis argues that first, the marital property division was unfair because his share of the marital estate was overstated by two amounts, the one-third interest in Plush Pup II and the value of the furniture in his apartment, and second, both his income and the needs of Lorraine and the children were significantly less than the figures determined by the trial court.

Division of property and awards of maintenance and child support are formulated according to the statutory provisions contained in sections 503, 504, and 505 of the Illinois Marriage and Dissolution of Marriage Act:

"Disposition of property.

(b) All property acquired by either spouse after the marriage and before a judgment of dissolution of marriage * * * is presumed to be marital property, regardless of whether title is held individually ...


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