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03/01/96 MARRIAGE MICHELLE R. ARMSTRONG HALE

March 1, 1996

IN RE THE MARRIAGE OF: MICHELLE R. ARMSTRONG HALE, PETITIONER-APPELLEE, CROSS-APPELLANT, AND DONALD J. ARMSTRONG, RESPONDENT-APPELLANT, CROSS-APPELLEE.


Appeal from the Circuit Court of the 13th Judicial Circuit, La Salle County, Illinois. No. 87-D-595. Honorable Cynthia M. Raccuglia, Judge Presiding.

Released for Publication April 2, 1996.

Honorable Peg Breslin, Presiding Justice, Honorable Michael P. Mccuskey, Justice, Honorable Kent Slater, Justice. Presiding Justice Breslin delivered the opinion of the court: McCUSKEY and Slater, JJ., concur.

The opinion of the court was delivered by: Breslin

PRESIDING JUSTICE BRESLIN delivered the opinion of the court:

The primary issue raised by this appeal is whether a trial court may assign present values to marital property when the court redistributes the property after vacating a dissolution judgment. We hold that trial courts have discretion in such instances to distribute marital property according to present values. Therefore, we affirm the trial court's decision on this issue; we also affirm as to the other issues raised on appeal.

The trial court dissolved the six-year marriage between the petitioner, Michelle Hale, and the respondent, Donald Armstrong, by judgment entered in January 1989. The judgment ordered the parties' property distributed according to the terms of a property settlement agreement; accordingly, the trial court placed no values on the property.

In August 1990, Michelle filed a motion to vacate the dissolution judgment pursuant to section 2-1401 of the Code of Civil Procedure (735 ILCS 5/2-1401 (West 1992)). Her petition alleged that Donald concealed his interest in a parcel of real estate, as well as his receipt of a real estate commission earned during the marriage. After several delays, the trial court heard Michelle's 2-1401 petition in September 1992 and found that Donald did conceal assets. The court thus vacated the property division portion of the dissolution judgment, but left the dissolution intact, primarily because Michelle had since remarried. Donald appealed the court's decision and we affirmed. See In re Marriage of Armstrong (1993), 255 Ill. App. 3d 844, 625 N.E.2d 1108, 192 Ill. Dec. 953.

The trial court then reopened the matter for hearings on the property division issue. The court made two pre-trial rulings relevant to this appeal. First, the court decided that it would consider evidence of present property values when redistributing the parties' property. Second, the court ruled that rents and option payments Donald acquired following the original dissolution would be treated as marital property. Donald received these payments by leasing, and selling an option to purchase, a parcel of real estate (the Prospect Street property) he acquired as a result of the dissolution judgment. Although Donald used some of the rents before the vacation order was entered, the trial court ordered the amounts received after the order was entered to be placed in an escrow account for subsequent division.

At trial, the parties stipulated to their financial circumstances. Donald, who was in his 50s, reported that he was not employed and that he received social security payments in the amount of $13,300 per year. Donald also testified that he was entitled to a monthly retirement pension of about $1,000 upon reaching age 65. Michelle, who was in her 30s, reported a yearly net income of $15,181 as an employee of the city of Kent, Washington. The court found no evidence that Michelle's earnings were likely to increase in the future.

The trial court determined that an equal division of the marital assets was appropriate. The court awarded Donald two parcels of real estate according to their present values and credited the rents Donald had already used to his share of the marital property. Michelle was awarded the rents and option payments which were preserved in escrow after the vacation order was entered. The court also ordered the Prospect Street property sold, with its proceeds split between the parties.

Finally, the court ordered Donald to pay $12,000 of the approximately $34,800 in attorney fees Michelle incurred as a result of the section 2-1401 and property division proceedings. In ordering Donald to pay that amount, the court found that neither party was in a better position to pay the fees, but that Donald's fraud necessitated the proceedings to set aside the original property division. The court refused, however, to require Donald to pay the fees Michelle incurred during the property division proceedings.

Donald raises three issues on appeal: first, whether the trial court erred by valuing the real estate according to present values; second, whether the court erred by treating the rents and option payments as marital property; and third, whether an equal division of the marital assets was equitable.

We turn first to the question of the proper date of valuation for the parties' real estate. The reason this question is important is that Donald apparently believes that the real estate appreciated from the time of the original dissolution to the date of the property division trial. (There is no evidence in the record to support this, but it is logical that the properties have indeed appreciated to some extent.) If the trial court was constrained to value the property as of the date of the original dissolution, then Donald, as recipient of the property upon redistribution, would take the appreciation as his own non-marital property.

We have found no cases which discuss what the proper date for valuing marital property should be when a trial court vacates the property division portion of a dissolution judgment pursuant to section 2-1401 and subsequently retries the property division issue. Nor does the relevant statute, section 503 of the Illinois Marriage and Dissolution of Marriage Act (Act) (750 ILCS 5/503 (West 1992)), supply a rule to follow in this situation. *fn1 Therefore, ...


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