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06/28/89 In Re Marriage of Vernon Thacker

June 28, 1989

IN RE MARRIAGE OF VERNON THACKER, PLAINTIFF-APPELLANT, AND


APPELLATE COURT OF ILLINOIS, FIFTH DISTRICT

JOANN THACKER, Defendant-Appellee

541 N.E.2d 784, 185 Ill. App. 3d 465, 133 Ill. Dec. 573 1989.IL.1017

Appeal from the Circuit Court of St. Clair County; the Hon. Milton S. Wharton, Judge, presiding.

APPELLATE Judges:

JUSTICE RARICK delivered the opinion of the court. GOLDENHERSH, J., concurs. JUSTICE CHAPMAN, Concurring in part and Dissenting in part.

DECISION OF THE COURT DELIVERED BY THE HONORABLE JUDGE RARICK

Plaintiff, Vernon Thacker, appeals the distribution of certain property awarded by the circuit court of St. Clair County in his action for dissolution of marriage to defendant, JoAnn Thacker. We reverse and remand.

Vernon and JoAnn were married in June of 1982 and separated three years later. No children were born of the marriage, although Vernon has two children by prior marriages, one of whom lived with the parties during their marriage. Both Vernon and JoAnn work full time. Prior to the parties' separation, JoAnn also served as a part-time secretary without compensation, averaging 10 hours a week, for Thacker Painting, Inc.

Vernon argues on appeal the trial court erred in classifying certain assets as marital property. Specifically, Vernon contends the parties' residence, stock in Thacker Painting, Inc., and a bedroom set and coffee and end tables are all non-marital property which rightfully belong to him. We turn first to the stock in Thacker Painting, Inc.

In 1979, prior to the parties' marriage, Vernon started his own painting company, Thacker Painting, which he operated as a sole proprietorship. In 1984, after their marriage, Vernon incorporated the business. At the time of incorporation, Vernon's accountant recommended that 20 shares of stock in the business be issued to JoAnn so that in the event of Vernon's death Thacker Painting, Inc., could remain in operation. Thacker Painting, Inc.'s 1984 tax return indicates that 20 shares were transferred to JoAnn. JoAnn, however, never received any of the stock certificates. Vernon testified he never intended to give her 20 shares of the stock nor intended for her to have any right to control the operation of the business. JoAnn contributed no income to and did not become liable for any debts of Thacker Painting, Inc. JoAnn testified, however, she purchased the very first ladder for the predecessor Thacker Painting. She also continued to work part time for the business without pay after incorporation until the parties' separation.

The trial court, in distributing the parties' assets, classified Thacker Painting, Inc., as marital property. Vernon contends the stock is non-marital property. He argues he merely exchanged one nonmarital asset (Thacker Painting) acquired prior to the parties' marriage for another non-marital asset acquired shortly after the marriage. JoAnn, however, asserts Thacker Painting was a marital asset owned by both parties prior to incorporation; consequently, Thacker Painting, Inc., as its successor, is also marital property. We cannot accept JoAnn's argument. Clearly, Thacker Painting, Inc., is non-marital property.

Section 503 of the Illinois Marriage and Dissolution of Marriage Act (Ill. Rev. Stat. 1985, ch. 40, par. 503) sets forth the guidelines to be consulted in determining whether property is marital. Subsections (a)(6) and (a)(2) clearly state property acquired before the marriage and property acquired in exchange for property acquired before the marriage is nonmarital. Vernon started Thacker Painting three years before the parties' marriage. As such, it was property acquired before the marriage belonging solely to Vernon. It is true that JoAnn aided the fledgling business by purchasing its first ladder and contributing secretarial work, but she never exerted any control over the operation of the business, never claimed any income from the business on her individual tax returns prior to the parties' marriage and never claimed to be a joint owner or partner prior to incorporation. JoAnn's contributions do not entitle her to any premarital property rights in Thacker Painting under the Illinois Marriage and Dissolution of Marriage Act. (See In re Marriage of Hughes (1987), 160 Ill. App. 3d 680, 685, 513 N.E.2d 1203, 1206; In re Marriage of Crouch (1980), 88 Ill. App. 3d 426, 430-31, 410 N.E.2d 580, 583.) And, her contributions after the marriage, standing alone, were not substantial enough to convert the business into a marital asset. See In re Marriage of Frazier (1984), 125 Ill. App. 3d 473, 478, 466 N.E.2d 290, 294, appeal after remand (1988), 164 Ill. App. 3d 207, 517 N.E.2d 775; In re Marriage of Pancner (1982), 111 Ill. App. 3d 546, 549, 444 N.E.2d 653, 655.

Our Discussion, however, cannot end here, for in 1984, after the parties' marriage, Vernon incorporated his business. If Vernon had issued all stock to himself, clearly this exchange of assets would fall under subsection (a)(2). Vernon, however, declared on the 1984 tax and incorporation forms that JoAnn was a stockholder. Under subsection (b) of the Act, all property acquired by either spouse after the marriage, including non-marital property transferred into some form of co-ownership between the spouses, is presumed to be marital property, regardless of title. (See Ill. Rev. Stat. 1985, ch. 40, par. 503(b).) Vernon, however, has rebutted this presumption. First, the designation of ownership on tax returns in and of itself is too ambiguous to establish that a spouse intended to convey a gift to the marriage. (See Pancner, 111 Ill. App. 3d at 549, 444 N.E.2d at 655.) Second, JoAnn was to receive 20 shares of stock on the advice of the parties' accountant to keep the business in operation should Vernon die. JoAnn never received the 20 shares of stock. More importantly, Vernon never intended to give her any stock. Vernon also never intended for JoAnn to exercise any control over the business, and she never attempted to do so. Under such circumstances, Thacker Painting, Inc., is not marital property. (See In re Marriage of Legge (1982), 111 Ill. App. 3d 198, 205, 443 N.E.2d 1089, 1094.) Vernon simply exchanged one non-marital asset for another, regardless of title. The trial court erred in classifying it otherwise. Consequently, we must remand this cause for a reclassification and redistribution of the parties' assets.

We must also remand this cause for further proceedings because of the trial court's erroneous handling ...


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