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In Re the Marriage of Sue Lynn Klingaman and Kenneth Irvin Klingaman

February 13, 2013


Appeal from the Iowa District Court for Madison County, Randy Hefner, Judge.

The opinion of the court was delivered by: Danilson, J.

A husband appeals the property division in the parties' dissolution decree. AFFIRMED.

Considered by Potterfield, P.J., and Danilson and Tabor, JJ.

Kenneth and Sue Klingaman were married on July 17, 1998. Sue filed a petition for dissolution of marriage on December 28, 2010. The dissolution hearing was held in September 2011. Kenneth appeals the property division in the dissolution decree, claiming the property division was inequitable and the court should have set aside to him gifted and inherited property. We affirm the decision of the district court.

I. Background Facts & Proceedings

At the time of the dissolution hearing Sue was fifty years old. She began employment at Bridgestone/Firestone in 1995, and earns about $32,881 per year working in supplies. Sue has helped Kenneth in his farming operation by physical labor, by assistance in obtaining financing, and by helping to pay down debt on the farm. Sue has two children from a previous marriage. She brought little property to the marriage other than a 1995 Ford F-150 pickup.

At the time of the trial Kenneth was forty-eight years old. He has been employed at Bridgestone/Firestone since 1995, where earns about $34,380 per year as a mechanic. Kenneth also conducts a farming operation which did not show a profit during the parties' marriage. In addition, he is a co-owner of Discount Diggers, a trenching business, and NMT, LLC, a company that purchases farm real estate. At the time of the marriage Kenneth had more property than Sue, but also more debt.

Kenneth's parents owned farmland in Madison County. Kenneth's father died on August 15, 1991, and a substantial portion of his estate was conveyed into a trust. The trust set up a life estate for Kenneth's mother, with the remainder to go to Kenneth and his sister, Mary, at her death. Kenneth purchased 360 acres of farmland from his mother for $207,000 in November 1991 through a real estate contract. Kenneth's mother conveyed her interest in the real estate contract to the trust. Kenneth's mother died on March 5, 1997. Her will bequeathed her estate to Kenneth and Mary equally. Also, at her death the assets from Kenneth's father's trust were to be distributed to Kenneth and Mary.

On September 8, 1998, which was after Kenneth and Sue were married, Kenneth and Mary entered into a family settlement agreement. Under the agreement Kenneth received the farmland which is at issue in this case. In addition, he was required to pay Mary $126,723.51. Kenneth and Sue obtained a loan of $218,000, which was used to pay Mary and other debt on the farm. The district court determined that at the time of the marriage Kenneth had assets of $455,720, less debt of $218,000, giving him net assets of $237,720. The district court found that of the property received by Kenneth, fifty-two percent represented inherited or gifted property, and forty-eight percent was funded by the loan.

During the marriage the parties placed their wages in a joint checking account. Each month $500 from the checking account was transferred to a savings account. They also kept a farm account, and during the marriage transfers were made between the three accounts. As noted above, the farm was never profitable, and the district court found, "[a] substantial portion of debt service for the farming operation was paid from the parties' wages earned at Firestone." Sue's income, as well as that of Kenneth, was used to subsidize the farming operation and to pay down the parties' debt for the purchase of Mary's interest in the property obtained in the family settlement agreement.

The district court issued a dissolution decree for the parties on October 17, 2011. The district court determined the property acquired in the 1998 family settlement agreement was funded in part by a loan for which both Kenneth and Sue were liable. Regarding this property the court found:

The Court thus concludes that 50% of the current value of the real estate should be set aside to Kenneth as inherited property. The remaining 50% is marital property and will be divided accordingly based upon its current value. This percentage of division is justified both by the details of the 1998 family settlement agreement and the values of the various items of property distributed or exchanged, and the broader recognition that Kenneth was purchasing his sister's interest in one-half of the real estate which he now owns.

Thus, the court set aside to Kenneth one-half of the value of the property received in the family settlement agreement, and this one-half was considered non-marital property. The court determined the other one-half of the value of the property received from the family settlement agreement was marital property. The court also determined the remaining debt from the loan entered into at the time of the family settlement agreement, about $262,000, was a marital debt.

The district court awarded Kenneth the farmland, farm equipment, and his interest in the two other companies in the division of marital assets. Sue was awarded her 401(k), vehicle, and personal property. In order to equally divide the parties' marital assets the court ordered Kenneth to pay Sue $448,107. No spousal support was awarded and each party was made responsible ...

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