Appeal from the Circuit Court of McLean County; the Hon. James
A. Knecht, Judge, presiding.
JUSTICE MILLS DELIVERED THE OPINION OF THE COURT:
A question of marital property.
This 11-year marriage was dissolved on April 15, 1981. John Weaver appeals from an order entered June 27, 1984, relating to the property distribution.
In sum, we reverse and remand.
The key issue on appeal relates to the assets of Abest, Inc. (Abest), a corporation wholly owned by John's parents. Abest was incorporated on April 4, 1969, approximately 19 months before the parties married. John's parents, Charles and Mary Weaver, were the sole stockholders of Abest.
John was the president of Abest, and Charles and Mary placed no restrictions or limitations on his use of the corporation. In April 1971, Charles and Mary created a trust which provided that all of the income of Abest would be paid to John. Charles testified that the purpose of the trust was to assure that all of the income from Abest went to John and none to Charles and Mary. The trust terminated by its own terms on April 1, 1981. Charles testified that no dividends were ever declared for Abest.
Charles Weaver testified that Abest was formed so that the businesses, Weaver's Rent-All and Weaver's Ready Mix, could be operated as a corporation. Weaver's Rent-All was a partnership owned by Charles and Mary Weaver. Weaver's Ready Mix was a sole proprietorship owned by John.
John testified that in the latter part of 1968 several judgment creditors had claims against Weaver's Ready Mix and that he stopped operating the business at that time. Linda testified that John told her in 1972 that all of his property had to be in the corporate name because he had liens against it.
William Baltz, a former employee of Abest, testified that John told him in 1971 that several lawsuits had been filed against him during his operation of Weaver's Ready Mix and "instead of going bankrupt, he just started Abest, Inc., and just put everything, like, in his father's name, to keep the people from collecting on the liens." Baltz also testified that John told him he intended to "put everything back into his name" after seven years because the "liens would be up."
John testified that in addition to being president of Abest, he was the sole proprietor of A-Abest. A-Abest provided consulting services primarily for Abest. As president of Abest, John would hire himself as the sole proprietor of A-Abest to perform consulting work. He would fix the salary which Abest would pay for the consulting. John testified that since the dissolution of marriage, Abest has paid him consulting fees of $6,000. He admitted that he stated in an evidence deposition that the consulting fees were between $25,000 and $30,000; however, he stated that that figure was not correct.
During the marriage, the parties resided in a house near Bloomington. The house and land were in the name of Abest. Mortgage payments and taxes on the property were paid by Abest. The parties paid no rent except in 1972 and 1973 while they were being audited by the Internal Revenue Service. During those two years they declared $50 a month as income for the rental value of the premises.
In addition to owning the house and land, Abest also paid the electric bills, the fuel bills, the insurance on personal property, and the insurance on livestock owned by the parties. During the marriage, Linda's family car, a 1977 Chevrolet Caprice, was obtained in a trade for an airplane owned by Abest. When the car was fully depreciated on the corporate books, its title was transferred to Linda. Gasoline and maintenance for the family vehicles were paid by Abest. Abest also owned the washing machine in the parties' residence and the lawnmower.
In 1973, Linda began working for Abest and became its secretary-treasurer. Her duties included answering the phone, handling the payrolls, delivering parts and keeping the books. She "reconstructed" the company books in preparation for an IRS audit in 1972 and 1973. She testified that after Abest was audited, she realized "that we had to keep the company and the separate, because of all the liens and everything."
When Linda first began working for Abest, she did not draw a salary because the company was not making enough money. When money was available, she would write herself payroll checks according to the family needs. She set her own salary with John's approval. During 1983, John and Linda lived in DeRidder, Louisiana, while on a construction job. During this time, Linda was paid $1,500 per month as a salary ...