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 MARCH 17, 2005 |
::: Special Alert :::
Court of
Appeals Recommends
Derr v. Derr for Publication
Today, the District IV Court of Appeals issued their opinion in Derr v. Derr, No. 03-2181 (Wis. Ct. App. Mar. 17, 2005) (recommended for publication) reversing in part and affirming in part the judgment of Judge David Flanagan (Dane County Cir. Ct.), concerning property division and child support.
The court of appeals held that the circuit court correctly categorized an apartment building as the husband’s non-divisible property, but that the court should have deemed the mortgage debt a divisible debt. The appellate court also held that the circuit court properly determined that the husband wasted $45,000. Finally, the appellate court concluded that the trial court correctly determined the husband’s income for purposes of child support.
Regarding the apartment building, the appellate court undertakes a lengthy analysis of the issues of “character”, “identity”, “donative intent”, “tracing” and “commutation”. The court notes:
“...several of Michael’s and Martha’s property division arguments employing “identity” and “character” terminology are either misdirected or confusing. We do not fault the parties. A reading of our twenty or so cases addressing WI. Stat. § 767.255(2)(a) and disputes involving divisible/non-divisible categorization leads to the conclusion that two phrases—“loss of identity” and “loss of character”—are the source of considerable confusion, largely because it is too easy to misunderstand what we mean when we use these non-descriptive phrases.”
The court proceeds to clarify these terms. In this case, the court concludes that the apartment building is not divisible property and the fact that it was used as collateral for a loan did not evince donative intent.
The appellate court reversed, however, the trial court’s finding that the loan was not divisible. The appellate court held that since the monies received by the loan were used for marital purposes, the debt was divisible.
The appellate court affirmed the trial court’s finding regarding the husband’s income for child support purposes, holding that where the trial court had to approximate husband’s income because he had refused to provide “coherent and reliable financial information”, he cannot complain about the court’s approximation.
The troubling part of the decision is the dissipation issue. The appellate court upheld the trial court’s finding that losing $45,000 by day trading in stocks was waste and the loss should be charged to husband in the property division. While the trial court’s decision seemed to be based on husband’s failure to provide credible information, the concept that a losing investment is a dissipation creates possibilities for similar arguments about investments which do not fare well without any wrongdoing by the investor.
This case will be analyzed more fully in Gregg Herman’s column in the Wisconsin Law Journal.
Full Opinion (PDF)
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