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In Re Marriage of Smith



Appeal from the Circuit Court of Winnebago County; the Hon. Paul Logli, Judge, presiding.


Respondent, Carroll Eugene Smith, 55, appeals from an order of the circuit court of Winnebago County which dissolved his marriage to petitioner-appellee Donna Jean Smith, 54, apportioned their marital property and obligated respondent to pay $3,500 to petitioner's attorney. Respondent contends the trial court abused its discretion in concluding that he dissipated at least $50,000 in marital assets, in apportioning the parties' marital property, and in ordering him to pay one-half of petitioner's attorney fees. Since we conclude the trial court committed no reversible error, we affirm.

Petitioner and respondent were married on May 27, 1949. The parties' three children all have attained the age of majority, but one child continues to live with petitioner. Neither party began the marriage with any assets. Petitioner worked full-time outside the home for one year and then became a homemaker for the duration of their marriage. Respondent worked as a tool and die maker until 1973, when he quit that work to manage the parties' real estate assets on a full-time basis. Starting in 1958, the parties began acquiring and renovating real estate. Respondent performed almost all of the construction, renovation, management and handling of their properties. Petitioner testified she answered phone calls and collected rents from the tenants on occasion.

Petitioner filed her petition for dissolution of marriage on November 19, 1982. At trial, the court after reviewing the evidence found that respondent had dissipated between $50,000 and $80,000 in marital assets. Based in part upon this finding, the trial judge stated that he was awarding petitioner approximately $290,000 or 63% of the marital property and was awarding respondent approximately $160,000 or 37% of the parties' property. The parties stipulated that the court's apportioning of the marital property would provide petitioner with rental income of $2,750 monthly and respondent with $1,400 monthly. The court also ordered respondent to pay one-half or $3,500 of petitioner's attorney fees and barred both parties from receiving maintenance. Respondent filed a timely notice of appeal from the trial court's order entered on September 23, 1983.

The first argument advanced by respondent is that the trial court erred in concluding that he dissipated assets of the marital estate. The trial court expressly apportioned a larger percentage of the marital estate to petitioner because it concluded respondent "improperly spent" funds and "hadn't accounted for all funds sufficiently to the Court." Petitioner responds that the trial court's finding that respondent dissipated marital assets is supported by the record.

Section 503(c)(1) of the Illinois Marriage and Dissolution of Marriage Act (IMDMA) (now codified as section 503(d)(1)) directs the court to consider in dividing marital property "the contribution or dissipation of each party in the acquisition, preservation, or depreciation or appreciation in value, of the marital and non-marital property, including the contribution of a spouse as a homemaker or to the family unit * * *." (Ill. Rev. Stat. 1981, ch. 40, par. 503(c)(1).) Dissipation of marital assets by one spouse is not an acceptable practice. (In re Marriage of Hellwig (1981), 100 Ill. App.3d 452, 426 N.E.2d 1087.) Dissipation has been defined as "the use of marital property for the sole benefit of one of the spouses for a purpose unrelated to the marriage at a time that the marriage is undergoing an irreconcilable breakdown." (Ill. Ann. Stat., ch 40, par. 503(d)(1), Supp. to Hist. & Prac. Notes, at 57 (Smith-Hurd Supp. 1984-85), citing In re Marriage of Sevon (1983), 117 Ill. App.3d 313, 453 N.E.2d 866; In re Marriage of Cook (1983), 117 Ill. App.3d 844, 453 N.E.2d 1357; In re Marriage of Schriner (1980), 88 Ill. App.3d 380, 410 N.E.2d 572.) A finding of dissipation is possible even though the act occurred prior to the commencement of the dissolution proceedings (see In re Marriage of Hellwig (1981), 100 Ill. App.3d 452, 426 N.E.2d 1087), and the dissipating party need not derive personal benefit from the dissipation of the asset to be held accountable. (In re Marriage of Siegel (1984), 123 Ill. App.3d 710, 463 N.E.2d 773.) The trial court's finding regarding the allocation of marital property including making allowances for dissipation will not be reversed absent an abuse of discretion. In re Marriage of Hilkovitch (1984), 124 Ill. App.3d 401, 464 N.E.2d 795; In re Marriage of Greenberg (1981), 102 Ill. App.3d 938, 429 N.E.2d 1334.

Essentially, respondent attacks the trial court's finding as unsupported by the evidence. In discussing the specific assets which were at least partially dissipated, respondent asserts that Illinois courts> consistently have required positive proof that marital property was dissipated. Implicit is respondent's contention that petitioner was obligated to establish how the funds were spent. Our research has disclosed no Illinois decision which has specifically assigned to either party the burden of proving for what purposes the funds were spent. We suspect the paucity of discussion on this issue is caused perhaps by the fact that in almost every case involving an alleged dissipation, the party charged with the dissipation instinctively comes forth with at least some evidence concerning the expenditure of the funds. This case is unique in that respondent in most cases has offered no evidence on how he spent funds received from the liquidated assets.

While Illinois courts> have not precisely addressed this question, several decisions provide guidance. In In re Marriage of Lord (1984), 125 Ill. App.3d 1, 465 N.E.2d 151, this court affirmed the trial court's finding that the husband had dissipated marital assets by cashing in life insurance policies with a value of $13,900 and by withdrawing $16,000 from the parties' joint savings account. This court noted that the husband's explanation of how the funds were spent requires the trial court to make a determination as to his credibility, and concluded that the trial court's disbelief of the husband's explanation did not constitute error. (125 Ill. App.3d 1, 6, 465 N.E.2d 151, 154.) Similarly, in In re Marriage of Smith (1983), 114 Ill. App.3d 47, 448 N.E.2d 545, the trial court found that the husband had dissipated $15,000 in marital assets by withdrawing that amount from his credit union account and using it for non-marital purposes. In contrast to the absence of testimony from respondent here, the husband in Smith testified he used the money to finance a trip to Las Vegas, and "for the payment of taxes and attorney fees, and for the purchase of various household appliances and furniture for the apartment in which he lived after he ceased living with the family." (114 Ill. App.3d 47, 50, 448 N.E.2d 545, 548.) Finding, as this court did in Lord, that the spouse's explanation is a question of credibility, the appellate court concluded that the trial court's finding that the entire $15,000 was dissipated was adequately supported by the evidence. Compare In re Marriage of Sevon (1983), 117 Ill. App.3d 313, 453 N.E.2d 866 (appellate court affirmed trial court's finding that wife had not secreted assets, where the record contained a complete list of the wife's expenditures for herself and the marital residence and where appellate court found that the record contained no other evidence indicating wife had spent the money for purposes unrelated to the marriage).

The appellate court in In re Marriage of Greenberg (1981), 102 Ill. App.3d 938, 944, 429 N.E.2d 1334, 1339, likewise affirmed the trial court's finding that the husband had dissipated marital assets because of the inadequacy of the husband's proof, stating that the husband had cashed in securities "without completely accounting for proceeds of sale." (Cf. In re Marriage of Block (1982), 110 Ill. App.3d 864, 441 N.E.2d 1283 (remandment required where husband vaguely testified that he used funds from second mortgage to finance parties' affluent lifestyle and where husband did not show the specific disposition of the funds).) Even in the two cases cited by respondent, In re Marriage of Hellwig (1981), 100 Ill. App.3d 452, 426 N.E.2d 1087, and Klingberg v. Klingberg (1979), 68 Ill. App.3d 513, 386 N.E.2d 517, the court did not impose the burden of tracing the dissipated assets on the spouse alleging dissipation. In Hellwig, the dissipating spouse offered the explanation regarding the reasons for the transfers of funds and realty, and in Klingberg, the dissipating spouse admitted he withdrew marital funds to pay child support to a wife of a former marriage and the only issue for the reviewing court to resolve was whether the dispersal was for a marital purpose.

The common element in these decisions is that the party charged with dissipating assets offered some explanation as to the disposition of the funds. If the expenditures were not documented adequately, the courts> affirmed the findings of dissipation with the exception of In re Marriage of Block (1982), 110 Ill. App.3d 864, 441 N.E.2d 1283, where this court had already determined that another issue necessitated remandment and thus, remanded the dissipation issue because of the inadequacy of the proof. Courts> in other jurisdictions also have required the party charged with dissipation to come forward with specific evidence concerning the disposition of the funds. In Barriger v. Barriger (Ky. 1974), 514 S.W.2d 114, for example, the Court of Appeals of Kentucky affirmed the trial court's finding that the husband had dissipated $25,000 in marital assets. The evidence showed the husband had spent some of the funds on a trip to Las Vegas, had lost some of the money gambling, and "[h]e was unable to account for the remainder of the funds except to say that he paid a lawyer $1,100 and spent the remainder on `entertainment'." (514 S.W.2d 114, 115.) The Barriger court noted that although the husband was an accountant, "he was unable to reconstruct the financial records to the satisfaction of the trial court." (514 S.W.2d 114, 115.) The court in Bland v. Bland (Mo. App. 1983), 652 S.W.2d 690, likewise found inadequate the husband's proof offered in defense of a charge of dissipation. There, the husband contended he used the $10,800 withdrawn from joint savings accounts to pay marital expenses. In affirming the trial court's finding of dissipation, the Missouri Court of Appeals noted that the trial court was free to believe or disbelieve the husband's explanation, and after reviewing the husband's proffered evidence, the reviewing court stated:

"In light of the vague and indefinite testimony of the husband in this regard, unsupported by any form of receipts or recorded account, we cannot say the rejection by the trial court of this explanation was unjustified." (652 S.W.2d 690, 692.)

See also Cooksey v. Cooksey (1984), 280 S.C. 347, ___, 312 S.E.2d 581, 585 (recognizing that courts> of other jurisdictions have ruled that a spouse who removes marital property in contemplation of divorce is required to either account for it or have some part of its value charged against that spouse's share of marital property); E.E.C. v. E.J.C. (Del. 1983), 457 A.2d 688 (husband's explanation that his salary was spent during the parties' separation to pay expenses for two households was inadequate to avoid finding of dissipation).

• 1 From these Illinois and foreign jurisdiction cases, we can extract the general principle that the person charged with the dissipation is under an obligation to establish by clear and specific evidence how the funds were spent. General and vague statements that the funds were spent on marital expenses or to pay bills are inadequate to avoid a finding of dissipation. In the case at bar, petitioner established and respondent admitted that certain marital assets were liquidated by respondent. The trial court specifically found that respondent dissipated assets of the marital estate with a value between $50,000 and $80,000. We proceed ...

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