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In Re the Marriage of Melinda B. Engelbrecht and Mark H.

March 13, 2013


Appeal from the Iowa District Court for Buchanan County, George L. Stigler, Judge.

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

Mark Engelbrecht appeals from the property distribution and alimony provisions of the decree dissolving his marriage to Melinda Engelbrecht. AFFIRMED AS MODIFIED.

Heard by Vogel, P.J., and Potterfield and Doyle, JJ.

Mark Engelbrecht appeals from the property distribution and alimony provisions of the decree dissolving his marriage to Melinda Engelbrecht. We strike the equalization payment, but otherwise affirm the property distribution and support provisions of the decree.

I. Background Facts and Proceedings.

We set out the following facts as found by the trial court, which are fully supported by our review of the record:

Melinda Berniece Engelbrecht and Mark Howard Engelbrecht were married March 5, 1977. This is a first marriage for both. They separated in February 2008. The marriage produced six children: . . . . The children whose welfare may be affected by this controversy are [a son] (in terms of a post-secondary education subsidy) and [a daughter], who is a minor. The marriage has irretrievably broken down and there is no reasonable likelihood it can be preserved. They have been married 33 years.

Melinda was born [in 1958] and grew up Melinda Bernice Frieden on a 152.6-acre farm near West Union (hereinafter the "Frieden Farm"). She graduated high school in 1976, and has no formal education beyond that. She was 19 at the time of the marriage. She is presently 52 years of age and operates a quilting business. Her health is good.

Mark Howard Engelbrecht was born [in 1952] and is 58 years of age. He has a Bachelor of Science degree from the University of Maryland in animal and dairy science. His health is good. His lifetime goal was always to be a farmer. Since 1979, he has been employed by Farm Credit Services.

In 1976, shortly before the marriage, Mark purchased a farm in State College, Pennsylvania, (hereinafter the "Rose Farm"). The purchase left Mark heavily in debt. Other than the Rose Farm, neither party brought anything of significant value to the marriage. After the marriage, the parties lived in West Union. Shortly thereafter, the parties moved to Mark's hometown, Linthicum Heights, Maryland, because they had an opportunity to purchase, from his parents, the house in which Mark grew up.

The parties sold this home, and in 1978 moved to a farm in State College, Pennsylvania down the road from the Rose Farm (hereinafter the "Persia Farm"). The Persia Farm was in two side-by-side parcels, Mark and Melinda purchased one parcel, and Mark's parents purchased the other as an investment (hereinafter the "State College Farm"). Mark's parents never lived on their parcel or farmed it. Their first child was born shortly before the move to the Persia Farm.

The parties moved from the Persia Farm in 1979 to Cedar Rapids and purchased a home. In 1980 they purchased a dairy farm near Elgin, Iowa (hereinafter the "Goose Ranch"), on contract. They sold the Rose Farm, the Persia Farm, and their Cedar Rapids home in order to buy the Goose Ranch.

During this period, [their second child] was born. Melinda stayed home with the children and was responsible for the cooking, cleaning, laundry, shopping, and child care. She also helped with the milking and the other farm chores, and managed the family finances and bookkeeping.

Given the farm economy of the 1980s, despite their combined efforts, Mark and Melinda failed. In 1981 they sold a portion of the Goose Ranch that included the homestead, and returned to Maryland. The remainder of the Goose Ranch was sold on contract. The buyer defaulted on the contract, and as a consequence, Mark and Melinda were forced to default in turn. At this point, Mark and Melinda lost any material wealth they had accumulated.

Upon returning to Maryland, the parties purchased a home in Chestertown, in July 1982, with a $20,000 down payment given them by Mark's parents, paid as $10,000 to Mark and $10,000 to Melinda. Mark and Melinda held title to the property jointly. They had a $30,000 mortgage. The parties updated and improved the house.

In 1984, the parties bought another home in Chestertown. They used the proceeds from the sale of the first Chestertown home to purchase the second. They held title to the second home also in joint tenancy. In addition to homemaking, child care, and house remodeling projects, Melinda babysat in order to earn extra money for the family. In 1985, Melinda went to work at a local discount store to increase the family income. Joshua was in private school, and additional funds were needed.

Since the inception of the marriage, the parties have deposited all funds in a joint bank account. Mark's salary, any farm rent or any other income, inheritances, or gifts, Melinda's earnings from baby-sitting, and Melinda's wages, were placed in one account and used for general family purposes.

In February 1985, Mark's father died, and Mark's mother came into possession of their joint holdings. Mark's mother also had property from her family of origin. She began a course of giving gifts to her children, their spouses, and her grandchildren.

For example, in 1985, she gave Mark stock valued at $3,304.52, and $5,000 in cash, and gave Melinda cash of $5,000 and a truck valued at $3,049.85. Over the years, she gave both parties stock. Some was in Melinda's name, some was in both parties' names, and some was in Mark's name.

In 1985, at Mark's urging, his mother purchased a 133-acre farm in Maryland, from sellers named Fernwalt (hereinafter the "Fernwalt Farm"). The Fernwalt Farm had not been in the Engelbrecht family, and the Engelbrecht family had no other connection with the sellers. Mark chose the farm, negotiated all of the terms of the agreement, and made all of the financial arrangements. His intention was to again become a farmer. On February 10, 1986, Mark's mother gifted the 133-acre farm solely to Mark.

The purchase of the Fernwalt Farm included an option to buy an additional 23 acres. In order to exercise that option, in 1986, Mark's mother gave Melinda $10,000 in cash, and gave Mark $200 in cash and her State College Farm, then valued at $92,741.41. His mother instructed the parties to sell the State College Farm and give a portion of the proceeds ($40,000) to Mark's sister, Mary, and Mary's husband, to keep things fair with respect to gifting. The parties equally divided the $40,000, and Mark gave $10,000 to Mary and $10,000 to her husband. Melinda also gave $10,000 to Mary and $10,000 to Mary's husband. The gift to Mark shown as $92,741.41 on the gift tax return was $52,741.41. The remaining proceeds were used to exercise the option to buy the additional 23 acres of the Fernwalt Farm. Title to the Fernwalt Farm was in Mark's name alone, because Mark insisted Melinda not be included on the deed. The closing of the purchase of the additional 23 acres occurred December 22,1987.

The parties decided to build a new home on the Fernwalt Farm. In January 1987, the parties sold their second Chestertown home and used most of the proceeds to build the house. In 1987, Margaret gave $10,000 to Melinda. Those funds also were used to build the house. Margaret's gift tax return for 1987 shows a gift to Mark of $210,179.90. That figure represents payments on the Fernwalt Farm, $300,000, minus the mortgage of $89,820.10. In 1988, Mark received a small ($11,494.88) inheritance from his aunt. The money was used to complete the house.

The parties had a mortgage on the Fernwalt Farm of approximately $150,000. They moved into the new house before it was finished, and completed the work themselves. Together, they did flooring, trim work, painting, tiling, and other finish work. Mark continued to work at Farm Credit, and Melinda continued with her household responsibilities. They rented the land to a local farmer. The parties continued to deposit their funds in a joint account which they used for all expenses, including the mortgage.

Around the same time, Melinda left her job at the discount store, and began baking to earn extra money. She sold baked goods at the local farmers market. She produced bread, pies, rolls, sticky buns, loaf cakes, cheesecakes, and more. Melinda and the children raised chickens and sold the eggs at the farmers market as well. Three children, [ . . . ], were born during the parties' time in Maryland. By this time, the parties had five children.

For a variety of reasons, the parties decided to return to Iowa. Melinda's father had had a stroke and was placed in a nursing home, and Melinda's mother needed to sell the farm. Rather than sell the Frieden Farm to a stranger, Melinda's mother made a gift arrangement with Melinda to give Melinda the farm with the understanding that Melinda would give her mother gifts in exchange. The intention of Melinda's parents was to give the family farm to Melinda. In 1989, Melinda's parents prepared a deed to Melinda, but when Mark found out the deed was in Melinda's name alone, he insisted his name be added. The value of the Frieden Farm was $160,000. Melinda's mother had already received the cash rent of $10,300 for the year, and kept it. Melinda and Mark transferred stock to Melinda's mother valued at $9,000. The parties agreed to give Melinda's mother $40,700. The total gift to Melinda and Mark was $100,000.

Around the same time, the parties sold approximately 91 acres of the Fernwalt Farm in Maryland for $275,310 in a section 1031 IRS exchange of property. The parcel was exchanged for a farm in Fayette County, Iowa, purchased from a seller named Lahey (hereinafter the "Lahey Farm"). Title to the Lahey Farm was held in Mark's name alone. In 1991, they sold the remaining approximately 65 acres and the house on the Fernwalt Farm for $400,000 in a 1031 exchange. The parcel was exchanged for two farms in Buchanan County, Iowa, the current homestead (hereinafter the "Haines Farm") and a 75.5-acre farm (hereinafter the "Allen Farm"). Mark and Melinda hold titles to the Haines Farm and the Allen Farm jointly.

The parties built a new house on the Haines Farm. They moved into the home before it was finished, and again, Mark and Melinda did tile work, laid the hardwood floors, installed trim, did other finish work, and landscaped the property. Their younger child, J.M., was born in 1998 in Iowa.

In 2004, the parties purchased a 78.5-acre farm in Buchanan County, Iowa (hereinafter the "Glass Farm"), financing the entire purchase. Mark and Melinda hold title to the Glass Farm jointly. In 2006, they purchased 100.7 acres from a seller named Hunt, again employing a 1031 exchange, of 40 acres of the Lahey Farm, and assuming debt for the balance of the purchase price. The parties had a comprehensive mortgage of $850,000 securing all of the Buchanan County real estate. Both parties were obligated on the note and mortgage, but Melinda's name is not on the Hunt Farm deed.

The parties own six farms: (1) the Frieden Farm, (2) the Glass Farm, (3) the Lahey Farm, (4) the Haines Farm, (5) the Allen Farm, and (6) the Hunt Farm.

A. The Frieden Farm

The Frieden Farm consists of 152.6 acres of land located in Fayette County immediately outside the city of West Union. It is Melinda's family's farm.

In the late 1980s, Melinda's father suffered a stroke which left him incapacitated and unable to farm. Melinda's mother determine to make a $100,000 gift of the farm to Melinda and had her lawyer draft a warranty deed conveying title to the farm solely to Melinda. Mark and Melinda were at this point again living in Iowa. Mark felt betrayed because he thought the Friedens had made representations to him that one day the Frieden Farm would be his. He testified this was one of the reasons he agreed to come back to Iowa to live. At Mark's strong insistence, the warranty deed was revised to include Mark on the deed. Exhibit 13-1, the warranty deed, which contains both Melinda and Mark's names as grantees, reflects the addition of Mark's name out-of-typed-alignment with Melinda's name. This clearly establishes the truthfulness of the view that Melinda's parents did not initially desire to make Mark a co-donee of their farm, but did so only at his demand.

The warranty deed is dated December 1, 1989. Exhibit 13-2, dated May 13, 1990, establishes the 1990 value of the Frieden Farm as $160,000, the $100,000 gift plus $9000 in stock from both Melinda and Mark, the retention of the $10,300 farm rent for 1990 by Melinda's mother plus a $40,700 balance due to Melinda's mother. The balance was paid in full on December 21, 1999, by Melinda and Mark out of family earnings.

Melinda's appraiser states the present value of the Frieden Farm to be $709,400. Mark's expert places the farm's value at $696,700. The difference is essentially de minimus.

The court finds the value of the Frieden Farm to be $709,400.

Mark asserts an interest in the farm, inclusive of its appreciated value, through the inclusion of his name as a codonee. He claims an interest in the Frieden Farm at the same time he denies Melinda any ...

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