Despite “Thorny” Issues, Wife’s Non-Marital Claims Upheld
The wife filed a Motion for Declaratory Judgment. Judge Robert E. Douglas indicated that he had spent a lot of time going over what it considered to be one of the “most thorny issues in the family law arena”. He found that the wife’s non-marital property was transmuted into the marital estate subject to reimbursement and that she was entitled to the sum of $114,359.70 from the marital estate. Judge Douglas granted the wife’s Motion for Declaratory Judgment.
The husband was represented by Stephen R. Botti and Jessica L. Sendek of Botti Marinaccio, Ltd. The wife was represented by Walter R. Jackowiec III of Walter R. Jackowiec III, P.C., and Michael A. Biederstadt of Biederstadt Law, P.C.
The parties were married on June 24, 2006. At the time of the parties’ marriage, the husband was fifty-three years old and the wife was fifty-six. The wife claimed her non-marital estate was valued at $931,410.88. The value of the husband’s non-marital estate was $71,653.75. The husband was self-employed as an accountant and the wife was employed as a school teacher.
During the parties’ marriage, the husband solely managed the parties’ finances during which time the parties maintained separate personal banking accounts. The husband would notify the wife of the monthly amount which the wife was required to contribute and they would each contribute those amounts to pay their monthly bills. To date, the wife maintained the same personal banking accounts she held prior to the parties’ marriage. Prior to filing a Petition for Dissolution of Marriage, thewife alleged that the husband had sole access to and managed the wife’s non-marital investment account. At the time of the filing of the Petition, it was then that the wife discovered that only $33,378.90 remained in her non-marital investment accounts.
The wife’s non-marital funds were used to purchase all of the assets acquired during the course of the parties’ marriage. The wife asserted that anytime funds were withdrawn from her non-marital funds, the husband would inform her that the assets purchased with said funds were either the wife’s property or that she would be repaid for the entirety of her non-marital investment. The husband disputed this allegation.
Following the filing of the Petition for Dissolution, the husband claimed that all assets purchased during the parties’ marriage were marital and that the wife’s non-marital funds utilized to purchase said assets had transmuted to marital property and that he was entitled to an equal distribution of same.
In March of 2012, the wife purchased $38,000 of collectible coins from Joseph Hazdra and Carol Christopherson, who were clients of the husband. These purchases were accomplished in the following manner: The wife initiated the transfer of $38,000 from her non-marital brokerage account, to the parties’ joint checking account. Said transfer was finalized on March 29, 2012. On March 28, 2012, payment of $19,000 to Joseph Hazdra cleared the parties’ joint checking account. On April 2, 2012, payment of $19,000 to Carol Christopherson cleared the parties’ joint checking account. On October 26, 2017 a court appointed appraisal conducted by Fox Valley Coins valued the collection to be worth a total of $29,957.15.
In order to prove that property was non-marital under Section 503(a), the standard of proof was clear and convincing. The court heard testimony over four days from the parties with regard to certain transactions which occurred during the marriage. The court focused on them one at a time and identified them as was easiest for the court.
The wife proved that $38,000 was withdrawn from her non-marital brokerage account and wire transferred to the jointchecking account from her non-marital Fidelity account. The husband testified on the stand that that was the wife’s money.
That check immediately was turned around and the husband wrote two checks: $19,000 went to Joseph Hazdra on March 28th, and on April 2nd, a second check was cut to Carol Christopherson for $19,000.
The court read the cases provided by the husband, in particular ,In Re Marriage of Hegge, 25 Ill. App. 3d 138 and In Re Marriage of Vondra, 406 Illinois Decision 62, 2016 IL. App. (1 st) 150793. The court also read the cases provided by the wife, In Re Marriage of Scanlon vs. Scanlon, 6 Ill. 2d 224; In Re Marriage of Guerra, 153 11l. App. 3d 550, and 385 111. App. 3d 640. and In Re Marriage of Heroy, 385 111. App. 3d. The court also relied on two Second District cases, the first was In Re Marriage of Wojcik 362 111. App. 3d 144, and In Re Marriage of Steel, 11 Ill. (20) 080974.
Both cases reference Heroy. In the Steel case, which was somewhat more difficult to
read because of the interests which were being transferred, the court found that where property
was transferred into a marital account for a short period of time, it was only a conduit. That property did not become transmuted into the marital estate. In Re Wojcik, which was quoted and relied on in the Steel case was much easier to understand, in that it dealt with a husband and a wife who were divorced. The husband had used non-marital funds to purchase a motorcycle. The wife had used non-marital funds to purchase an automobile. The husband had taken his non-marital funds, placed them in a joint account. That money had then been transferred into several different accounts before ultimately being spent on the motorcycle.
The husband could not identify exactly how the money had moved from account to account, and there was a tracing issue. The court ruled that that motorcycle was marital property. With regard to the wife's car, which was bought with non-marital funds, the non-marital funds were placed into a marital account; and within a matter of days the car was bought with funds from the marital account. The court ruled that that was non-marital property, in that that property never lost its identity and a marital account was merely a conduit for that property.
In this case in the first transaction, the Hazdra transaction, the money was in the parties' marital account and the check cleared the same day the deposit was completed. In the case of the Carol Christopherson, the monies were there from March 28th through April 2nd, approximately five days.
The court found that there was a sufficiently small period of time to fall within the decision in Wojcik and Steel; and, therefore, the court granted the Declaratory Judgment on the Hazdra coins. The second transaction was coins purchased during the marriage. With regard to the first Colorado gold purchase, which occurred in 2015, the court heard by clear and convincing evidence that $30,000 was withdrawn from the wife's non-marital brokerage account, $8,400 was put aside for taxes, and the remaining $21,600 deposited into the wife’s personal checking account. That was on May 12th of 2015. On May 13th, one day later, a check was written from the wife’s personal checking account in the amount of $ 22,595 to Colorado Gold. The court found that the $21,600 did not loose its non-marital character and did not become marital property. However, there was $995 which was not deposited into that account, which would not be considered non-marital money. $21,600 went in. $22,595 came out. So $21,600 was considered to be the wife's non-marital money.
As we have heard, the coins which were purchased for $22,595 are now worth, according
to the appraisal, a value of $21,054. The non-marital estate shares with the marital estate the loss on those coins in proportion. The court had not gone through the math to figure out the percentage that $995 was of the total purchase, but whatever the loss was, would be split up accordingly between the parties. So the wife would not be entitled to the complete amount. It would be something less than the complete amount that was left. The $21,054 in coins were awarded to the wife.
The next series of transactions involved real property that was purchased in Jackson Harbor, Wisconsin. The vacant farm land was purchased by the parties in September 2012 with funds from the parties’ joint Wheaton Bank Account. It was established that the wife transferred $55,000.00 from her non-marital brokerage account on August 30, 2012, $72,000.00 from another non-marital brokerage account on August 27, 2023 and $8,000.00 from her personal checking account into the parties’ joint checking account. At the time of purchase, the land was titled in the name of an LLC for liability purposes. The parties had an equal interest in the LLC and were each named as 50% members. The parties intended to build a residence on the land and paid all expenses for the property with funds from their joint checking account. After the parties discovered that they could not build on the land, the property was sold by the parties almost three years after it was purchased, on July 3, 2015. The net proceeds on the sale of the property were paid via check issued to the wife and the wife deposited the funds into the parties’ joint checking account. On August 14, 2015, 43 days after the funds were deposited into the joint account, $111,522.00 of coins were purchased with funds from the joint checking account.
The cases which the court cited, non-marital money had lay in a marital account for several
months before being used; and it, therefore, was transmuted and became marital money. It could not be argued that it was a conduit. The court did not give an outside date for what the conduit theory could be used on. But using what the court said, that several months was too long, the court looked here at the fact that this money was in the joint account for only 43 days, which was less than what the court would consider to be a couple of months, not several months.
The court found credible, more credible, the testimony of the wife with regard to the purchase of the coins and their discussions over whether they were a marital or non-marital asset. The wife testified that when the coins were purchased they were laid out in the marital home to be counted and the husband came in and selected 40 of the coins from that coin lot, and paid the wife $720 with a check from his personal checking account for 40 silver eagles. The court awarded the $111,522 in gold and silver coins purchased as the non-marital property of the wife and granted the wife’s Motion for a Declaratory Judgment.
The husband has filed a Notice of Appeal.