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In re Marriage of James

Court of Appeals of Illinois, Second District

May 31, 2018

In re MARRIAGE OF PATRICIA A. JAMES, Petitioner-Appellee, and WILLIAM E. WYNKOOP, Respondent-Appellant.

          Appeal from the Circuit Court of Winnebago County. No. 14-D-86 Honorable Steven L. Nordquist, Judge, Presiding.

          JUSTICE SPENCE delivered the judgment of the court, with opinion. Justices McLaren and Hutchinson concurred in the judgment and opinion.

          OPINION

          SPENCE JUSTICE.

         ¶ 1 Respondent, William E. Wynkoop, appeals from the judgment dissolving his marriage to petitioner, Patricia A. James. He contends that the trial court erred in classifying as marital property the real estate on which his nonmarital business is located. Because the trial court's ruling that respondent failed to show that he acquired the property by a method listed in section 503(a) of the Illinois Marriage and Dissolution of Marriage Act (the Act) (750 ILCS 5/503(a) (West 2016)) was not against the manifest weight of the evidence, we affirm.

         ¶ 2 I. BACKGROUND

         ¶ 3 The parties were married in September 1990. Petitioner filed a petition for dissolution of marriage on February 4, 2014, and an amended petition for dissolution on February 14, 2014. A trial was held over the course of two days, on October 17, 2016, and December 5, 2016.

         ¶ 4 At trial, respondent testified as follows. In March 1984, before his marriage to petitioner, he purchased a fully operating auto body shop located on 35th Street in Rockford (35th Street property) for $205, 000. The sale included the land, building, tools, and equipment. He made a down payment of $40, 000 and obtained a mortgage in his individual name for the $165, 000 balance. He titled the land in his individual name. That same year, he incorporated Auto Rehabilitation Center, Inc. (ARC), and, although the business has since moved to a new location on Colosseum Drive in Rockford (the Colosseum property), he has continued to operate ARC as the sole owner and shareholder.

         ¶ 5 During their marriage, the parties each received regular paychecks from their jobs, which they deposited into a joint checking account. Respondent maintained separate bank accounts for ARC, including a savings and a checking account. These accounts were always separate from the parties' marital accounts. Petitioner never contributed any money to ARC.

         ¶ 6 Sometime in 1997 or 1998, respondent decided that he wanted to build from "the ground up" his own body shop that would be tailored to ARC's business. ARC saved "about close to $300, 000" in its separate savings account, and respondent purchased the Colosseum property with funds from that account. Respondent testified that he secured a bank loan from Northwest Bank to purchase the Colosseum property and that the loan was in place when the closing took place, on May 27, 1999. He titled it in his individual name, rather than in the name of his business, for tax purposes. The Colosseum property was never sold, conveyed, or transferred to any other person or entity. At the time of the trial, the Colosseum property remained titled in respondent's name.

         ¶ 7 Sometime in late 1999, respondent created a business proposal to develop the Colosseum property, and he presented it to Bill Redig, who was then a commercial loan officer at Northwest Bank. The bank issued two loan-commitment letters on November 4, 1999, both of which were admitted into evidence. The first loan-commitment letter was for $1.6 million to finance the construction of a new auto body shop on the Colosseum property. It identified respondent individually as the borrower and listed as collateral the first mortgage on the Colosseum property and the assignment of an insurance policy on respondent's life. The second loan-commitment letter was for $500, 000 to finance equipment and furnishings for the new body shop. It listed ARC as the borrower and required as collateral a blanket security agreement on ARC's assets and respondent's unlimited personal guaranty. Respondent described these Northwest Bank loans as covering "the purchase of the building, the property building, and the tool and equipment loan." Petitioner did not participate in negotiating either loan, nor did the bank ask her to provide collateral or her signature.

         ¶ 8 Respondent sold the 35th Street property for $325, 000 in June 2000, when construction of the new body shop at the Colosseum property "was about half way finished." At the time of the sale, the 35th Street property was still encumbered by a mortgage, and respondent received only a negligible amount from the sale.

         ¶ 9 After the new body shop at the Colosseum property was completed, the construction loan that had encumbered it became a mortgage, which also was in respondent's individual name. Based on advice he received from Alfred Johnson, his "on and off" financial advisor, respondent decided to charge ARC rent in the amount of $25, 000 per month. Petitioner was involved in these transactions, in that she typically deposited the rent checks into the parties' joint account and then paid the mortgage on the Colosseum property from that account. This arrangement began in 2000 and continued until the parties separated, after which ARC began paying rent directly to respondent. At the time of trial, just under $500, 000 remained due on the mortgage, and ARC had paid off the $500, 000 equipment loan.

         ¶ 10 On cross-examination, respondent testified that he purchased the Colosseum property in cash for $270, 000, using funds in ARC's savings account, and that approximately $30, 000 remained in the account. Respondent agreed that during the course of the dissolution proceedings he did not disclose any documentation related to the source of the cash that he used to purchase the Colosseum property. He stated that he did not have any such documentation, nor did he have copies of his 1998 or 1999 personal or corporate income-tax returns.

         ¶ 11 Johnson testified as follows. He had been respondent's and ARC's "on and off" accountant and tax advisor since 1985. When respondent was considering purchasing the 35th Street property, Johnson advised him that "it would be preferential to own the real estate individually and own the business as a corporation." He also gave respondent this advice when respondent contacted him regarding the Colosseum property, although Johnson was not "doing the books" for ARC at that time. Beyond ...


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