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IN THE COURT OF APPEALS OF IOWA

No. 2-210 / 01-1213

Filed October 30, 2002

IN RE THE MARRIAGE OF RICK ROHACH AND CONNIE ROHACH

Upon the Petition of

RICK ROHACH,

Petitioner-Appellee,

And Concerning

CONNIE ROHACH,

Respondent-Appellant.

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Appeal from the Iowa District Court for Marshall County, David R. Danilson, Judge.

Connie Rohach appeals from the property distribution provisions of the parties’ dissolution decree. AFFIRMED AS MODIFIED.

Barry S. Kaplan and Melissa A. Nine of Fairall, Fairall, Kaplan, Hoglan, Condon & Frese, Marshalltown, for appellant.

Curtis A. Ward of Brooks, Ward & Robertson, Marshalltown, for appellee.

Considered by Sackett, C.J., and Zimmer and Vaitheswaran, JJ.


ZIMMER, J.

Connie Rohach appeals challenging the property distribution provisions of the parties’ dissolution decree. She claims she should have been awarded a larger percentage of the marital assets. She also finds fault with the district court’s treatment of farm debt incurred by her former spouse, Rick Rohach. Finally, she asserts the court should have included a potential mortgage penalty expense in calculating the net value of the marital home. We affirm as modified.

I. Background Facts and Proceedings.

The parties were married in 1986 and have two minor children. At the time of trial, Rick was forty-one and residing in a home purchased by his mother. Connie was thirty-six and living in the parties’ former family home with the children. The parties are in good health. Both are high school graduates.

At the time of trial, Connie had three jobs. She worked about thirty hours per week as an associate court attendant in Marshall County and was employed part-time with State Farm Insurance in Toledo, working approximately ten hours per week. In addition, she was working as a waitress at a local restaurant on a temporary basis. She earns approximately $1400 per month or $16,800 annually.

Rick’s income is less straightforward. In 1983, he purchased a commercial property for $83,000. ConAgra leases the property from Rick and also owns commercial property adjacent to the property it leases. ConAgra uses the properties to sell seed corn, fertilizer, and chemicals. ConAgra pays Rick a salary to manage its business, called Crop-mate. Rick receives a ten percent bonus when Crop-mate is profitable.

Rick has income from other sources as well. From time to time, he receives cash bonuses and other perks from chemical companies such as incentive checks or vacations. In the year 2000 Rick received a $17,000 incentive payment from one supplier. Rick cash rents two parcels of farmland and hires others to do the farm work. He rents the farmland in part because he is able to purchase his farm inputs at a significant discount.

The trial court’s task of determining Rick’s income for the purpose of setting his child support obligation was more difficult than it should have been because of Rick’s failure to accurately report his income in previous years. For example, Rick failed to include a $17,000 payment from a chemical supplier and $24,236 in crop income on his original tax return for the year 2000. With some adjustments to the information originally supplied by Rick, the court concluded he earned $40,131 in 2000, $77,389 in 1999, $37,206 in 1998, $27,965 in 1997, $24,413 in 1996, and $51,064 in 1995.

Rick filed a petition to dissolve the parties’ marriage in March 2000. The parties resolved the issues of custody and visitation prior to trial. They also reached agreement regarding the division of most of their assets and debts. Connie did not request an award of alimony. The fighting issues at trial were child support, asset valuation, adjusting payments, and attorney’s fees.

The district court entered its decree on July 13, 2001. The court awarded Connie $887 per month for child support and required Rick to pay $1000 of her attorney’s fees. Pursuant to the parties’ agreement, Connie was awarded the family home and Rick was awarded the fertilizer plant.

Without consideration of debt, the court first assigned assets of $432,236 to Rick and $108,483 to Connie. The court then allocated $171,330 in debts to Rick and $36,227 in debts to Connie resulting in a net award of $260,905 to Rick and $72,255 to Connie. The court then divided Rick’s ConAgra stock equally and awarded Connie a $25,000 cash settlement. The final division resulted in Connie receiving a net allocation of $144,150 and Rick receiving $189,011. Connie appeals claiming the property division was inequitable.

II. Scope of Review.

In this equity case our review is de novo. Iowa R. App. P. 6.4. We examine the entire record and adjudicate rights anew on the issues properly presented. In re Marriage of Smith, 573 N.W.2d 924, 926 (Iowa 1998). We give weight to the fact-findings of the trial court, especially when considering the credibility of the witnesses, but are not bound by them. Iowa R. App. 6.14(6)(g); In re Marriage of Vieth, 591 N.W.2d 639, 640 (Iowa Ct. App. 1999). This is because the trial court has a firsthand opportunity to hear the evidence and view the witnesses. In re Marriage of Will, 489 N.W.2d 394, 397 (Iowa 1992).

III. Discussion.

Connie raises several issues regarding the property distribution. She contends the overall property division was inequitable, the assignment of a $44,000 farm operating debt to Rick was in error, and that the court erred in failing to assign her the mortgage penalty on the marital home. Connie also suggests the court’s valuation of Rick’s business is too low. After careful consideration of the record, we affirm with modification.

The partners to a marriage are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa Ct. App. 1991). After assigning valuations, a determination must be made as to the equitable allocation of the assets and debts. Vieth, 591 N.W.2d at 640. Assets and debts should be equitably, but not necessarily equally, divided under the circumstances after considering the criteria delineated in Iowa Code section 598.21(1) (2001). See In re Marriage of Driscoll, 563 N.W.2d 640, 642 (Iowa Ct. App. 1997).

A. Mortgage Penalty Issue.

We first address Connie’s claim that the trial court overstated the net equity in the home she was awarded by failing to take into account a potential FHA mortgage penalty in calculating the net value of the home. The house is valued at $62,090. The mortgage balance is $28,775.41. Rick purchased the family home in 1982 using a thirty-three year FHA loan at one percent interest. The loan terms retroactively apply interest of up to 9.9 percent if the home is sold to a third party prior to the completion of the loan schedule. Currently, this results in a potential $10,000 liability if Connie sells the house.

The trial court chose not to add the potential interest penalty to Connie’s debt total. We find no reason to disagree with this conclusion. Connie testified that remaining in the family home with the children was in their best interests. She expressed no interest in selling the home before the mortgage was paid. The record suggests it is unlikely that the penalty will ever be incurred. We conclude the court properly excluded the potential penalty in calculating the net value of the parties’ home.

B. Farm Debt.

Connie contends the trial court’s assignment of $44,000 in farm debt to Rick was flawed because the court failed to take into account the value of his farm lease or income that would be generated as a result of his farming operation. Under the circumstance of this case, we agree.

The record reveals that Rick rents two parcels of farmland totaling 221 acres. In 2000, he received roughly $30,000 in proceeds from the sale of corn and beans grown on his rental land. As a result of his relationship with Crop-mate, Rick receives his farm chemicals at a thirty-five percent discount.

Clearly, Rick planned to farm the land in 2001. At some point in time, he obtained a $44,000 operating loan to pay his cash farm rent and other expenses associated with the 2001 crop year. Trial commenced on May 9, 2001. At trial, Rick testified that he paid the $24,000 rent due on the farmland on the date of trial. Rick provided little specific information regarding the remaining loan proceeds; however, the record suggests the bulk of the loan proceeds have or will be used for crop inputs and other farming expenses. The 2001 crop had not been planted at the time of trial.

Allocating the $44,000 debt to Rick without attributing any value to his leasehold or considering the income he expects to earn from his investment is inequitable. Connie is claiming no interest in Rick’s 2001 crop, or in any potential insurance or government payments. She claims no interest in the value of his farm lease. We conclude the farm debt incurred by Rick for the 2001 crop year should have been excluded from the debt allocated to Rick under the circumstances of this case. We modify the decree accordingly.

C. Property Division.

Connie asserts the property division was inequitable. We begin consideration of this issue by indicating that we find no reason to disagree with the trial court’s overall valuation of the parties’ assets. Pursuant to the district court’s decree, Rick received approximately fifty-seven percent of the parties’ net assets and Connie forty-three percent. As the district court stated, our courts recognize that it is not necessary to equally divide the assets when a farming operation or small business is part of the assets. See In re Marriage of Wiedemann, 402 N.W.2d 744, 747 (Iowa 1987); In re Marriage of Callenius, 309 N.W.2d 510, 515 (Iowa 1981); In re Marriage of Blume, 473 N.W.2d 626, (Iowa Ct. App. 1991). This is particularly applicable when an asset is the vocation of one of the parties. Callenius, 309 N.W.2d at 515. We must also take into account the risk inherent in any particular asset. See Wiedemann, 402 N.W.2d at 474; Callenius, 309 N.W.2d at 515.

In the instant case, the Crop-mate fertilizer plant constitutes the largest part of Rick’s assets. The enterprise faces much competition and is an inherently risky asset. In addition, Rick acquired the business and the parties’ home several years before the marriage. In view of this, we believe the district court’s decision to allocate a greater percentage of the net property to Rick was reasonable.

If the farm debt for the 2001 crop year is removed from the court’s calculation, Rick’s net worth increases by $44,000. In order to maintain the percentage distribution ordered by the trial court in its decree, which we find equitable, we modify the dissolution decree to order Rick to pay Connie $43,029 instead of $25,000 as specified in the decree. In all other respects, we affirm the district court’s decree.

AFFIRMED AS MODIFIED.