In Re Marriage of Eddy

569 N.E.2d 174, 210 Ill. App. 3d 450, 155 Ill. Dec. 174, 1991 Ill. App. LEXIS 337
CourtAppellate Court of Illinois
DecidedMarch 5, 1991
Docket1-88-3615
StatusPublished
Cited by21 cases

This text of 569 N.E.2d 174 (In Re Marriage of Eddy) is published on Counsel Stack Legal Research, covering Appellate Court of Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
In Re Marriage of Eddy, 569 N.E.2d 174, 210 Ill. App. 3d 450, 155 Ill. Dec. 174, 1991 Ill. App. LEXIS 337 (Ill. Ct. App. 1991).

Opinion

JUSTICE DiVITO

delivered the opinion of the court:

Petitioner Judith C. Eddy (Judith) appeals from portions of the circuit court’s judgment granting the dissolution of her marriage to respondent J. Michael Eddy (Michael). Judith contends that the circuit court erred in (1) classifying certain business assets acquired by Michael during the marriage as his nonmarital property; (2) failing to reimburse the marital estate for Michael’s uncompensated personal services, which allegedly substantially increased the value of a non-marital business; (3) failing to award Judith sufficient assets or maintenance; (4) assigning to the parties the responsibility for payment of their own litigation expenses without a hearing; and (5) imposing sanctions against Judith’s counsel for preparing an erroneous summary of business records.

Judith and Michael were married on June 28, 1958, and were the parents of two children, Sarah and Thomas. The dissolution of their marriage occurred on October 5, 1988. At the time of dissolution, Thomas was a high school student scheduled to graduate in June 1990 and was dependent on his parents; Sarah was emancipated and married.

At the time of dissolution, Judith was 52 and Michael was 53 years of age. Both had college degrees. Judith was a housewife during the marriage and was not employed. She had income from investments, gifts, and trusts. Michael had been employed from 1958 to 1972 by General American Transport Corporation and its successor, GATX Corporation. Since 1972, Michael was employed by the Eddy Corporation. In the year before dissolution, he earned a salary of $250,000.

Michael possessed a number of business assets which were acquired during the marriage and which ultimately were configured into two entities: (1) Eddy Properties, Ltd., a partnership which owned real estate primarily located in Florida and North Dakota and (2) Eddy Corporation, which owned and operated 25 McDonald’s restaurants. He owned each entity equally with his brother, Ray Eddy, Jr. (Ray).

During his lifetime, Michael’s father had given certain North Dakota ranch and farm property as gifts to Michael and Ray. They ran this business under a partnership called Eddy Brothers. After the death of Michael’s father in 1967, the remainder of his father’s ranch and farm business in North Dakota and certain Chicago business interests were devised to Michael, Ray, and their father’s widow. The partnership, which had changed its name to Eddy Farms, eventually purchased the widow’s interests in the property. There was evidence that in 1967 the estate had a gross value of $1.9 million. Eddy Properties, Ltd., eventually evolved from Eddy Farms.

In 1969, Michael and Ray formed Eddy Foods, a partnership which purchased three McDonald’s restaurants in Florida. The money to purchase the restaurants came from loans made to the brothers and from a mortgage and loan secured by the property owned by Michael and Ray. Pursuant to the Eddy Foods partnership agreement, each brother’s capital contribution to the partnership was $2,500. Eddy Corporation eventually evolved from Eddy Foods.

During the marriage, Judith’s grandmother, Constance Blumenthal, died and left two trusts each worth about $1.9 million, in the names of Judith’s parents, James L. Cook, Jr., who was 85 years of age at the time of dissolution, and Helen M. Cook, who was 83 years of age at that time. The trust funds were invested in a diversified portfolio of stocks, bonds, and money-market instruments. Judith was an eligible beneficiary of these trusts, subject to the discretionary power of the trustee and her father. Additionally, Judith received gifts-in-kind of stock from her parents, which the parties stipulated were nonmarital property. These separate stocks were valued at $45,241 at the time of dissolution.

The circuit court concluded that there was an oral agreement between the parties that what was Judith’s was hers and what was Michael’s was his. The court found that, although Michael’s business interests had been acquired during the marriage, since no family income or marital money was used to acquire those business interests or was used for business loans and since no marital property was ever pledged as security on any loans relating to those business transactions, the presumption that Eddy Corporation and Eddy Properties, Ltd., were marital property was rebutted by clear and convincing evidence. The court therefore concluded that no reimbursement to the marital estate from Michael’s estate was required.

The circuit court further found that Judith had a “Vz interest” in the Blumenthal trust funds; it classified this interest as nonmarital property; and it valued her interest at $1.9 million. The circuit court found that Judith never asked for more money from the Blumenthal trust, but that, in its opinion, “she would not have been denied had she asked and she could do so at this time.”

Based upon its findings, the court apportioned the property in the following manner:

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The circuit court ordered that Michael pay $3,000 per month in child support; that neither party was responsible for maintenance payments; that the parties pay their own attorney fees; and that, because of a faulty summary of business records, Judith’s attorneys pay a sanction of $1,000 to Michael.

I

Judith initially maintains that the circuit court erred in classifying Michael’s business interests as nonmarital property. She specifically contends that Michael failed to prove by clear and convincing evidence that he acquired his stock in Eddy Corporation in exchange for nonmarital property.

Prior to assigning or dividing property upon dissolution of marriage under section 503 of the Illinois Marriage and Dissolution of Marriage Act (the Dissolution Act), the court must classify it as either marital or nonmarital. (Ill. Rev. Stat. 1987, ch. 40, par. 503.) Normally, property acquired by either spouse after the marriage, but prior to judgment of dissolution, is presumed marital property regardless of how title is held. (Ill. Rev. Stat. 1987, ch. 40, par. 503(b); In re Marriage of Rogers (1981), 85 Ill. 2d 217, 422 N.E.2d 635.) Property obtained by gift, legacy, or descent, or in exchange for property acquired by gift, legacy, or descent, however, is excepted from marital property and is classified as nonmarital property. (Ill. Rev. Stat. 1987, ch. 40, pars. 503(a)(1), (a)(2).) Thus, the property given to Michael by gift and the property distributed to him upon the death of his father fell within the exception and were properly classified as nonmarital.

As to newly acquired property, clear and convincing evidence is required to show that it has been acquired in exchange for nonmarital property in order to classify it as nonmarital property (In re Marriage of Rogers, 85 Ill. 2d 217); any doubts must be resolved in favor of finding that the property is marital. (In re Marriage of Brooks (1985), 138 Ill. App. 3d 252, 486 N.E.2d 267

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Cite This Page — Counsel Stack

Bluebook (online)
569 N.E.2d 174, 210 Ill. App. 3d 450, 155 Ill. Dec. 174, 1991 Ill. App. LEXIS 337, Counsel Stack Legal Research, https://law.counselstack.com/opinion/in-re-marriage-of-eddy-illappct-1991.