Appeal from Circuit Court of Macon County No. 98D620 Honorable Thomas E. Little, Judge Presiding.
The opinion of the court was delivered by: Justice Myerscough
In October 1998, petitioner, Constance Carter, filed a petition for dissolution of her 26-year marriage with respondent, David Carter. At a hearing in August 1999, the trial court found that David's mental cruelty constituted grounds for dissolving the marriage and took the case under advisement. In November 1999, the trial court entered a final judgment dissolving the marriage, allocating marital assets and debts, granting custody of a minor child to Constance, and ordering David to pay $75 per week in child support. The trial court also ordered the parties to obtain a mortgage loan on the marital residence to pay off marital debts and to sell the marital residence when the parties' remaining minor child turns 18 years old or graduates from high school, whichever occurs last. Constance appeals, arguing that the trial court (1) abused its discretion in burdening her with David's gambling debts in its division of marital property, (2) abused its discretion in finding that David did not dissipate marital assets, (3) erred in finding that the marriage underwent an irreconcilable breakdown in July 1999, (4) and was without authority to consolidate David's gambling debts into a new mortgage secured by the marital residence. We reverse and remand.
David and Constance married in 1973. They had one minor child, aged 17 years, at the time of the August 1999 hearing. Constance worked at a bank, earning $400 gross income per week. David worked as a counselor, earning $322 gross income per week. In addition, David officiated high school and youth sporting events, earning an additional $500 per month.
During the marriage, the parties lived in a home that they purchased together. The marital residence had a market value between $50,000 and $55,000 according to Constance's estimate. David estimated the value of the home to be $65,000. Constance paid off the mortgage by July 1998. Each party owned an automobile subject to a car loan. Their checking or savings accounts amounted to no more than a few hundred dollars each. Each party had an individual retirement account (IRA) amounting to about $5,000. Constance had a 401(k) retirement plan worth almost $47,000. David's retirement plan was worth about $11,600. Each party had monthly expenses, excluding debt repayment, of $900 to $1,000 each.
The parties had previously separated in April 1992, when Constance received a telephone bill for over $3,700 in toll charges that David incurred on their home telephone by calling several "900" numbers to play games and receive gambling-related sports information. David told Constance that he would pay off the bill. However, David established a credit card account with Ameritech (later MBNA America) in April 1992 to borrow $500 toward paying off the telephone bill. David did not make any additional charges to that account. Nonetheless, the July 1999 outstanding balance was $1,100.
In April 1992, Constance filed a petition for dissolution of marriage. In December 1992, David admitted incurring debts related to his gambling. He agreed to stop gambling and amassing debts so that he could move back in with Constance. Constance then had her April 1992 dissolution petition dismissed.
After David returned to the marital residence in December 1992, the parties lived mostly separate lives. They ate separate meals. David often stayed out late at night, and Constance took care of the children. For the most part, David slept on the couch, but he occasionally slept with Constance. They maintained individual checking, savings, and credit card accounts. David agreed to pay the power bill and to continue to pay Constance $110 per week, an amount that he had been ordered to pay her for child support in the 1992 dissolution proceedings. David did not discuss his credit situation with Constance because "she more or less lived her life and [he] was living [his] life."
This arrangement continued until July 1998 when David stopped contributing to household expenses. Constance suspected that David was in financial difficulty when she received telephone calls from his creditors. In October 1998, Constance obtained David's credit report and was shocked to discover that he had accumulated over $45,000 in debts. She did not recognize much of that debt as relating to household expenses, so she assumed that David was gambling again. She decided to separate from David because he had hidden these debts from her. On October 27, 1998, Constance filed the instant petition for dissolution based on the grounds of mental cruelty. David moved out of the marital residence on November 1, 1998.
David's credit card and other unsecured debts increased by approximately $25,000 from his December 1992 total balance of approximately $13,500 to his July 1999 total balance of nearly $38,500. In December 1992, David owed $7,500 on his Chase Visa credit card. By December 1992, he had a $6,000 balance in cash advances on a line of credit from Providian National Bank obtained in October 1991. According to David, Constance knew about these two accounts in December 1992.
David claimed that he incurred debts after 1992 for "household expenses" and "repairs." He referred to an exhibit that listed his accounts and a brief explanation of the nature of the charges. However, David's exhibit accounted for only $7,652 in household expenses out of the $25,000 increased debt incurred from December 1992 to July 1999: he paid $1,823 in income taxes in 1995 and 1996; $829 for three car insurance payments; $300 for car repairs; $1,900 for an air conditioner and furnace in the marital residence; $1,100 at Sears for a microwave and Christmas presents; $900 to Illinois Power and his weekly contributions to household expenses; and $800 at Menard's for a storm door for the marital residence. He also claimed that he spent an unspecified amount for gas, officiating expenses, and miscellaneous items. He listed from memory the expenses that he paid, but he said that he could not account for every dime that he owed because he could not remember everything since 1992. David attached credit card statements that established only the balances that he owed as of July 1999, but he did not produce any itemization, receipts, or other statements to support his claim that he borrowed and then spent money for household expenses.
David's credit card balances increased in part because he made only minimum payments on his accounts. In July 1999, his total minimum monthly credit cards payments were at least $1,000. He realized that he did not pay anything on the actual debts because his minimum payments were often insufficient to meet credit fees and periodic finance charges. In July 1999, for example, David incurred multiple $30 monthly fees for making late payments, having checks returned, and exceeding his credit limits. David also incurred periodic finance charges at effective annual rates exceeding 20%, which he characterized as being "exorbitant." The only way that he tried to reduce his debt burden was to transfer the balances to other credit card accounts. For instance, he created an American Express account in November 1995 to transfer balances of $3,000 from his Chase Visa account and $2,000 from his Bank One First USA MasterCard account.
All of David's credit card balances included credit fees, although he itemized in his exhibit only $1,000 in fees for 2 of his 10 accounts. David did not indicate how much of his balances resulted from accumulated interest. David never sought to reduce his borrowing costs by obtaining a home equity loan even though David owned the marital residence in joint tenancy with Constance.
At the August 1999 hearing, Constance argued that David's debts resulted from his past and continuing gambling activities. David maintained that his debts resulted from cash advances to pay household expenses, credit fees, and "exorbitant" interest rates. The trial court found that all of David's debts were marital and that none of the amounts represented dissipation. It also found no evidence that David's debt was attributable to a gambling problem. By docket entry, the trial court ...