PUBLISHED OPINION
Case No.: 95-0007
Complete Title
of Case:
In the Matter of the Estate
of Gloria L. Bille, Deceased:
JOHN K. BILLE,
Appellant,
v.
CHRISTINE ZURAFF,
Personal Representative
of the Estate,
Respondent.
Submitted on Briefs: August 31, 1995
COURT COURT
OF APPEALS OF WISCONSIN
Opinion Released: December 27, 1995
Opinion Filed: December 27, 1995
Source of APPEAL Appeal
from an order
Full Name JUDGE COURT: Circuit
Lower Court. COUNTY: Fond du Lac
(If "Special", JUDGE: STEVEN W. WEINKE
so indicate)
JUDGES: Anderson,
P.J., Brown and Snyder, JJ.
Concurred:
Dissented:
Appellant
ATTORNEYSOn
behalf of the appellant, the cause was submitted on the briefs of Gordon S.
Johnson, Jr. of Gonyo & Johnson of Berlin.
Respondent
ATTORNEYSOn
behalf of the respondent, the cause was submitted on the brief of John S.
Schlom of Waupun.
COURT OF APPEALS DECISION DATED AND RELEASED December 27, 1995 |
NOTICE |
A party may file with the
Supreme Court a petition to review an adverse decision by the Court of
Appeals. See § 808.10 and
Rule 809.62, Stats. |
This opinion is subject to
further editing. If published, the
official version will appear in the bound volume of the Official Reports. |
No. 95-0007
STATE
OF WISCONSIN IN COURT OF
APPEALS
In the Matter of the
Estate
of Gloria L. Bille,
Deceased:
JOHN K. BILLE,
Appellant,
v.
CHRISTINE ZURAFF,
Personal
Representative
of the Estate,
Respondent.
APPEAL from an order of
the circuit court for Fond du Lac County:
STEVEN W. WEINKE, Judge. Affirmed.
Before Anderson, P.J.,
Brown and Snyder, JJ.
SNYDER, J. John
K. Bille appeals from the denial of his petition to reclassify the residence of
his deceased spouse, Gloria L. Bille, as marital property under the provisions
of ch. 766, Stats., Wisconsin's
Uniform Marital Property Act (UMPA). In
the alternative, John requests reimbursement for contributions made to the
residence.
The probate court
granted John's reimbursement request in part and denied it in part. John appeals from the denial of his petition
to reclassify the residence as marital property and the partial denial of his
reimbursement request.[1] Because application of the relevant UMPA
provisions support the probate court denials, we affirm.
BACKGROUND
The facts are
undisputed. Gloria married John on
December 21, 1984, and died on February 7, 1993. Gloria and John were domiciled in Wisconsin throughout their
marriage and never entered into a prenuptial, postnuptial or marital property
agreement. Gloria and John's UMPA
determination date is January 1, 1986.[2]
In 1982, two years prior
to her marriage to John, Gloria borrowed $23,000 from her grandparents (the
Blake loan) and purchased a residence in Fond du Lac, Wisconsin. Gloria and John lived there during the
marriage and paid the mortgage payments, real estate taxes and property
insurance premiums from marital income and assets. The fair market value of the home in 1993 was $64,619. During the marriage, the parties used
Gloria's residence to secure certain financial transactions.
On September 11, 1986,
Gloria and John borrowed $40,000 using the residence as collateral. The $20,231.25 balance of the Blake loan was
satisfied from the loan proceeds on September 17, 1986. The remaining funds were used for marital
purposes, including loan expenses.
On December 12, 1987, a
second marital loan of $8688.82 was obtained with the residence as security,
and the proceeds were used for marital purposes. On April 22, 1988, a final mortgage loan of $48,000 was obtained
to pay off the prior two loan balances of $47,397.88, with the remaining amount
being applied to taxes and loan expenses.
Gloria and John obtained
a joint credit life insurance policy to cover any balance owing on the 1988
mortgage note if either of them died.
The policy premium was paid out of marital property, and at Gloria's
death the policy satisfied the 1988 loan balance of $46,457.02. Gloria's will then disposed of the Fond du
Lac residence as nonmarital property, leaving John a life estate in the
property unless he remarried. John
remarried on May 27, 1994.
RESIDENCE RECLASSIFICATION
John's initial request
is that Gloria's residence be reclassified as marital property. If the residence were marital property,
Gloria could dispose of only one-half interest upon her death. See Lloyd v. Lloyd, 170 Wis.2d
240, 252, 487 N.W.2d 647, 651 (Ct. App. 1992).
John would then be entitled to the other one-half interest as marital
property. See §§ 766.31(3),
861.01, Stats. If the residence remains nonmarital
property, Gloria's will controls and John receives only the conditional life
interest in the residence that terminated upon his remarriage. See Lloyd, 170 Wis.2d
at 252, 487 N.W.2d at 651.
This issue requires
application of the marital property law to undisputed facts, which presents a
question of law that we review de novo.
See id.
Classification of the residence determines whether Gloria could freely
dispose of the residence as nonmarital property. See id.
We are not bound by the trial court's legal conclusions or by legal
conclusions the trial court has denominated factual findings. Id.
Ordinarily, a UMPA
classification discussion begins with the presumption that the residence is
marital property. See §
766.31(1), (2), Stats. However, John's argument is based on a
reclassification claim—this necessarily concedes that Gloria's residence is
nonmarital property. See Kobylski
v. Hellstern, 178 Wis.2d 158, 172, 503 N.W.2d 369, 374 (Ct. App. 1993).[3]
John proposes two bases
upon which to reclassify Gloria's residence.
As one theory, John contends that Gloria's nonmarital residence is
classifiable as marital property because marital property was “mixed” with the
residence property. Alternatively, he
argues that the satisfaction of the original mortgage through the marital loan
should be recognized under the UMPA as an “acquisition” of nonmarital property
through the reduction of indebtedness.
Because we conclude that the marital property classification issue is
disposed of under a mixed property analysis, we address that issue first.
Mixed Property Analysis
Classification of
nonmarital property as marital property through mixing is governed by §
766.63(1), Stats. That section provides:
Except
as provided otherwise in ss. 766.61 and 766.62, mixing marital property with
property other than marital property reclassifies the other property to marital
property unless the component of the mixed property which is not marital
property can be traced.
The
burden to establish the requisite mixing of marital with nonmarital property is
on the claimant.[4] Kobylski, 178 Wis.2d at 173,
503 N.W.2d at 374. The nonmarital asset
is reclassified as marital property “unless the component of the mixed
property which is not marital property can be traced.” Section 766.63(1) (emphasis added); see
Kobylski, 178 Wis.2d at 173, 503 N.W.2d at 374. The estate does not contest that John has
met his burden to show the mixing of marital property with the nonmarital
residence. The issue is whether the nonmarital
residence can be traced.
The burden of
establishing tracing is on the estate as the party seeking to avoid
reclassification of the residence as marital property. See id. at 173, 503
N.W.2d at 374. The record here,
however, reveals the following concession by John concerning the estate's §
766.63(1), Stats., tracing
burden:
MR. SCHOLM [estate counsel]: ...
There is no question about the tracing here.
The stipulations that are filed show there is tracing. Mr. Hobbs admits there is tracing in his
Petition.
MR. HOBBS [John's counsel]: That is correct, I do admit that ... the
tracing is possible here. But the
only effect that that has is to prevent a reclassification of that house to
marital property. [Emphasis added.]
John argues on appeal
that his tracing concession is “incorrect as a matter of law” because while he
has met his burden of establishing that marital property was mixed with
nonmarital property, the estate has failed to meet its tracing burden. John argues that the estate has failed to
provide evidence of the amount of mortgage payments that he paid.[5]
John has a basic
misunderstanding of the § 766.63(1), Stats.,
tracing requirement. There is no
requirement that marital property be traced, and John does not cite to any
authority for that proposition. If a
nonmarital asset is mixed with marital property, tracing the nonmarital
property to its nonmarital source preserves the traced component's nonmarital
property character. Lloyd,
170 Wis.2d at 257, 487 N.W.2d at 653.
There is no requirement that the estate trace the mixing of marital
assets with the nonmarital residence.
John's concession that Gloria's residence could be traced as nonmarital
property was supported by the evidence.
It was unaffected by any failure of the estate to trace the mixed
marital assets.
We conclude that John's
tracing concession was not incorrect as a matter of law. The probate court was correct in holding
that:
John
Bille's claim that the residence has been transformed into marital property
cannot be sustained as ... § 766.63(1) precludes reclassification of nonmarital
property to marital property when tracing can be performed.
Life Insurance Exception
Although we conclude
that the tracing of the nonmarital property properly denies John's contention
that the residence should be reclassified, we note that there are two
exceptions to the application of § 766.63(1), Stats.[6] The exception we address, § 766.61, Stats., relates to the classification
of life insurance policies and proceeds under the UMPA.
While John does not
specifically cite to this exception or argue that it supports his
reclassification claim, the marital indebtedness secured by the residence was
satisfied from the proceeds of a policy on Gloria's life. In the interest of a thorough analysis, we
will address the validity of the insurance exception to John's claim.
The policy on Gloria's
life related directly to the 1988 loan and was specifically intended to satisfy
the 1988 marital indebtedness to Fox Valley Savings and Loan Association, the
loan creditor. Section 766.61(4), Stats., specifies:
This
section does not affect a creditor's interest in the ownership interest or
proceeds of a policy assigned to the creditor as security or payable to the
creditor.
All
of the proceeds were paid to Fox Valley.[7] John was not entitled to any policy
proceeds, only to the relief the proceeds provided from the marital debt.
We conclude that because
all of the insurance policy proceeds on Gloria's life were payable to a
creditor in satisfaction of the marital debt, the § 766.63, Stats., exception is irrelevant to
John's reclassification claim.
Acquisition Analysis
As an alternative to
reclassification based upon § 766.63(1), Stats.,
John contends that the marital estate acquired Gloria's residence through the
1986 marital loan, which was used in part to pay off the mortgage (the Blake
loan). He bases this argument on §
766.01, Stats., which reads:
(1)
“Acquiring” property includes reducing indebtedness on encumbered property and
obtaining a lien on or security interest in property.
Acquisition
of an asset involves either the payment of money, the exchange of another asset
or the incurrence of an obligation. Lloyd,
170 Wis.2d at 257, 487 N.W.2d at 653.
John claims that the use of marital assets to reduce or eliminate the
residence indebtedness is an “acquisition” cognizable under the UMPA because of
the above definition.
In furtherance of this
acquisition claim, John theorizes that § 766.01(1), Stats., requires a changing of his and Gloria's determination
date from January 1, 1986, to an “acquisition date” (or dates) which then
controls the residence classification.
In his brief, he wrote:
Herein,
that acquisition date would be the date the premarital mortgage was paid
off. It could also be an alternatively
later date for the payoff of the succeeding mortgages. Therefore, the determination date could be
as early as September 11, 1986, with respect to the $20,231.25 mortgage, or as
late as Gloria's date of death with respect to the $46,457.02 mortgage.
We disagree that §
766.01(1), Stats., usurps a valid
§ 766.63(1), Stats., nonmarital
component retention analysis or operates in the manner suggested by John. The marital property John wants to use to
“acquire” (reduce the indebtedness on) the residence is the same marital
property (payment of money) that he asserts was “mixed” with the residence
property in the § 766.63(1) analysis.
Because mixing marital
property of any type (mortgage payments, improvements, etc.) with traceable
nonmarital property fails to change the traced component's nonmarital property
character, see Lloyd, 170 Wis.2d at 257, 487 N.W.2d at
653, John is foreclosed by § 766.63(1), Stats.,
from his theory of his acquisition of Gloria's residence. We next proceed to John's reimbursement
claim.
REIMBURSEMENT CLAIM
The second issue John
raises concerns the partial denial of his reimbursement request. John contends that the trial court erred in
not giving him credit for all physical improvements made to Gloria's residence.
These claims require the
application of the statutory provisions of § 766.63(2), Stats., and an examination of the Kobylski
enhanced property value determination.[8] The application of a statute to a particular
set of facts is a question of law, and the court of appeals decides the issue
independent of the probate court's determination. See Artis-Wergin v. Artis-Wergin, 151 Wis.2d
445, 452, 444 N.W.2d 750, 753 (Ct. App. 1989).
Before analyzing the validity of John's reimbursement claim, we begin
with the trial court's determination that John's recovery of the marital
portion of the Blake loan payment was now time barred.
UMPA Statutory Remedy
While John did not
assert a § 766.70, Stats., claim,[9]
the estate contends that John had a remedy under § 766.70(5) to recover his
marital interest in the $20,231.25 Blake loan payment and failed to present the
claim timely. Section 766.70(5) states
in relevant part:
When
marital property is used to satisfy an obligation ... the nonobligated spouse
may request the court to order that he or she receive as individual property
marital property equal in value to the marital property used to satisfy the
obligations ... subject to equitable considerations. No person may bring an action under this subsection later than
one year after the obligation is satisfied. [Emphasis added.]
The probate court
perceived John's claim as a valid § 766.70(5), Stats., request. This
was based upon the satisfaction of Gloria's Blake loan obligation with marital
property (the 1986 loan obligation).
However, the court granted the estate's motion to preclude a Blake loan
value reimbursement claim as untimely.
Because the Blake loan balance was satisfied in September 1986, John had
until September 1987 to invoke his § 766.70(5) remedy. He made no request concerning individual
credit for the satisfaction of the Blake loan until after Gloria's death in
1993.
We conclude that the
probate court's application of the § 766.70(5), Stats., one-year time limitation to John's marital
reimbursement claim for the Blake loan was proper.
We now address John's
contentions that in the absence of reclassification of the residence, he is
entitled to additional reimbursements for improvements made to Gloria's
residence from marital property.[10] John does not specifically identify his
reimbursement claim as being based upon a § 766.63(2), Stats., attribution claim or upon a Kobylski
enhanced value analysis. We address
John's reimbursement claim as including both.
Mixed Industry Attribution and
Enhanced Value Claims
John submitted a total
reimbursement claim of $14,962.75, itemized as follows:
Date Improvements Cost
11/18/86 New 2-1/2 car garage
and
patio $
2,685.00
9/23/88 Replace eave trough 279.75
1988 Replace
overhang (soffits) 820.00
8/88 Replace
furnace 1,596.00
8/87 Install
central air
conditioning 1,200.00
6/89 Replace
windows
6,400.00
1988 Paint
interior and exterior 525.00
9/92 Remodel
bathroom 500.00
4/10/90 Replace tile and
linoleum in
kitchen
and hallway 957.00
$14,962.75
The probate court found
that the marital estate was entitled to reimbursement for the garage and the
central air conditioning in the total amount of $2615.90 and ordered that John
be awarded $1307.95 as his marital share.[11] Neither John nor the estate contests those
findings. John appeals, however, from
the probate court's denial of the balance of his reimbursement claim in the
amount of $11,077.75.[12]
(1) Mixed
Industry Attribution Claim
We look to § 766.63(2), Stats., to resolve this claim. Section 766.63(2) provides:
Application by one spouse of substantial
labor, effort, inventiveness, physical or intellectual skill, creativity or
managerial activity to either spouse's property other than marital property
creates marital property attributable to that application if both of the
following apply:
(a) Reasonable compensation is not received for the application.
(b) Substantial appreciation of the
property results from the application.
Section 766.63(2), Stats., contemplates the creation of a
marital property interest attributable to a spouse's contribution of
uncompensated industry to the other spouse's nonmarital property. Kobylski, 178 Wis.2d at 182,
503 N.W.2d at 378. In an “industry
mixing” claim, the burden of proof is with the claimant, in this case John, to
establish his or her contributions. Id.
at 184, 503 N.W.2d at 378‑79.
In order to meet his
burden, John must show that: (1) his
industry created a marital property component in Gloria's nonmarital residence
by applying substantial labor or skill to the residence, (2) he received no
reasonable compensation for his industry, and (3) the efforts produced a
substantial appreciation of the residence.
The only evidence John
submits to support his reimbursement claim is the stipulation as to the value
of the improvements made to the residence.
He presents no evidence that he applied his own labor, efforts,
inventiveness, physical or intellectual skill, creativity or management
activity to the residence. Because John
fails to meet the threshold burden of the application of the requisite industry
on his part, his § 766.63(2), Stats.,
claim must fail.
(2) Enhanced Value Claim
We also examine John's
claim by applying the enhanced value rule of reimbursement created by our
holding in Kobylski, 178 Wis.2d at 180, 503 N.W.2d at 377. There we held:
Where marital funds are used to improve
the separate property of one of the spouses, a claim for reimbursement exists
in favor of the marital estate measured by the property's enhanced value
attributable to the improvements, not the amount of marital funds actually
expended. Thus, expenditures that
relate merely to the maintenance of the property or which do not enhance the property's
value are not to be considered. The
party seeking such reimbursement has the burden of demonstrating that the
improvement funds expended have enhanced the value of the spouse's separate
property and the amount of enhancement.
Id.
(footnote omitted).
Because John is seeking
reimbursement, he has the burden of demonstrating any increase in property
value due to his monetary contributions.
See id. at 181, 503 N.W.2d at 377. The only evidence presented concerning the
enhancement of the value of the residence during the marriage was provided in
the parties' stipulation. The
stipulation was that the assessed value of the residence increased from $52,000
in 1986 to $54,500 in 1993, and that the fair market value (determined by using
the taxing authority ratio) increased from $50,000 in 1986 to $64,619 in 1993.
Because John presents no
additional evidence or records in support of his claim that the enhanced value
of Gloria's residence was due to the remaining expenditures, he has failed to
meet his burden. We are satisfied that
John is not entitled to any further reimbursements from the estate under either
a § 766.63, Stats., mixed
industry or a Kobylski enhanced value analysis.
We conclude that the
trial court properly denied the reclassification of Gloria's residence as
marital property, as well as John's alternate claim for additional
reimbursement.
By the Court.—Order
affirmed.
[2] The determination date is the date on which the last of the following three events occurs: (1) marriage (12/21/84); (2) both spouses are domiciled in Wisconsin (12/21/84); or (3) January 1, 1986. See § 766.01(5), Stats.
[3] John's concession is consistent with a UMPA analysis. Because Gloria's residence is Gloria's predetermination-date property and was acquired prior to her marriage to John, both the basic presumption that the residence was marital property and the secondary presumption that the residence was deferred marital property are rebutted. Unless the residence is reclassified, it remains nonmarital property. See Lloyd v. Lloyd, 170 Wis.2d 240, 260-61, 487 N.W.2d 647, 655 (Ct. App. 1992).
[4] The term “property other than marital property,” used in § 766.63(1), Stats., is analogous to the term “nonmarital property.” See Lloyd, 170 Wis.2d at 259, 487 N.W.2d at 654.
[5] John argues that because “the reduction of indebtedness through marital funds establishes acquisition and/or mixing [under § 766.01(1), Stats.], likewise the payment of interest on such indebtedness does also.” Therefore, he contends that his mortgage payments on the property establish a mixing that has not been traced.
[6] One of the exceptions, § 766.62, Stats., refers to the classification of deferred employment benefits and is not relevant here.
[7] In his stipulation of fact, John concedes that the total insurance check in the amount of $46,671.02 was paid to the creditor of the marital note, Fox Valley.
[8] In Kobylski v. Hellstern, 178 Wis.2d 158, 180, 503 N.W.2d 369, 377 (Ct. App. 1993), this court held that spousal reimbursement for marital funds contributed to the improvement of nonmarital property should be based on any enhancement to the property's value which occurred as a direct result of those contributions.
[9] A request of the court “to order that he ... receive ... marital property equal in value to the marital property used to satisfy the obligations of [Gloria]” would be contrary to John's claim that Gloria's residence be classified as marital property. See § 766.70(5), Stats.
[10] John suggests in his second statement of issues that the marital estate should be reimbursed for “all of the mortgage payments.” That issue was not presented to or addressed by the trial court. As a general rule, we will not decide a matter not presented to the trial court. In re Cherokee Park Plat, 113 Wis.2d 112, 125‑26, 334 N.W.2d 580, 587 (Ct. App. 1983). In addition, John's brief does not address mortgage payments. We will not consider an argument that is inadequately briefed. See State v. Pettit, 171 Wis.2d 627, 647, 492 N.W.2d 633, 642 (Ct. App. 1992).