FT - Zabel v. Zabel (4/22/1997)

[Riser Adkisson LLP]

In re the Marriage of Ron Zabel and Leslie M. Zabel v. Vivian V. Zabel
565 N.W.2d 240 (Wis.App. 04/22/1997)

COURT OF APPEALS OF WISCONSIN

No. 96-3092

1997.WI.15085, 565 N.W.2d 240, 210 Wis. 2d 337

April 22, 1997

IN RE THE MARRIAGE OF: RON ZABEL, JOINT-PETITIONER-RESPONDENT, LESLIE M. ZABEL,
JOINT-PETITIONER-THIRD PARTY PLAINTIFF-RESPONDENT,

v.

VIVIAN V. ZABEL, THIRD PARTY DEFENDANT-APPELLANT.

APPEAL from order of the circuit court for Vilas County: JAMES B. MOHR, Judge.

For the third-party-defendant-appellant the cause was submitted on the briefs of and orally
argued by Stephen D. Willett of Willett & Klein S.c. of Phillips.

For the joint-petitioner-third-party plaintiff-respondent the cause was submitted on the brief of
and orally argued by Steven M. Lucareli of Eagle River.

Before Cane, P.j., LaRocque and Myse, JJ.

The opinion of the court was delivered by: LA Rocque

LA ROCQUE, J. Vivian V. Zabel appeals a family court order denying her motion to dismiss a third-
party complaint joining her as a defendant in her son's divorce action. Vivian asserts that ch.
767, STATS., relating to "actions affecting the family" does not permit third-party actions.
Because the circuit court has the authority to join third parties for certain equitable claims
where joinder is necessary to a just and complete adjudication of the cause, we affirm.

Ron and Leslie Zabel filed a joint petition for divorce in Vilas County, Wisconsin. Thereafter,
Leslie filed a third-party complaint naming Vivian, Ron's mother, as third-party defendant.
Leslie alleged that certain real property located in Vilas County and titled in Vivian's name was
marital property and therefore subject to division as part of the divorce. Leslie alleged that
Ron used marital assets to purchase the property, to pay for the materials to build and maintain
a home on the property, and to pay the taxes on the property. Leslie alleged that the property
was titled in Vivian's name to avoid division in the event of a divorce between Ron and Leslie.

Leslie sought (1) to enjoin Vivian from disposing of the proceeds of a pending sale of the
property, (2) to rescind the deed as a "sham transaction," and (3) a "fair and equitable" share
of the property's value. In the event the trial court were to find the property not to be a
marital asset, Leslie also sought compensation for her contribution in the form of labor to build
the house. *fn1 If the home in question is ultimately found to be a marital asset, it would
undisputedly constitute the principal asset of the marriage. Vivian moved for dismissal. The
trial court denied her motion, and we granted Vivian's petition for leave to appeal. *fn2

This case involves the interpretation of various sections of ch. 767, STATS., actions affecting
the family. The interpretation of statutes is a question of law we review without deference to
the trial court. State ex rel. Newspapers, Inc. v. Showers, 135 Wis. 2d 77, 85, 398 N.W.2d 154,
158 (1987). Jurisdiction in divorce cases is purely statutory, and the authority of a court in
such a case is confined to those express and incidental powers conferred by statute. Haeuser v.
Haeuser , 200 Wis. 2d 750, 758, 548 N.W.2d 535, 539 (Ct. App. 1996).

Vivian first claims that dismissal is required because the only proper remedy for the transfer of
marital assets to a third party is an unequal property division under §§ 767.275 and 767.255,
STATS., or an independent action. We first note that squandering of the assets of the marriage or
intentional or neglectful destruction of marital property may be considered by a court in its
decision to divide marital property pursuant to § 767.255. Anstutz v. Anstutz , 112 Wis. 2d 10,
12-13, 331 N.W.2d 844, 846 (Ct. App. 1983). *fn3 In Anstutz this court held that such conduct is
relevant to the parties' contributions to the marriage under § 767.255(3). Id. We conclude that
is not the only remedy, however.

Wisconsin courts have consistently recognized that a court in a divorce proceeding has additional
powers to hear equitable claims against third persons that affect the rights of the parties to
the divorce. In Caldwell v. Caldwell , 5 Wis. 2d 146, 92 N.W.2d 356 (1958), the wife sought to
join her stepson claiming that her husband transferred to his son certain valuable securities in
an attempt to evade the property division. Our supreme court held:

Where the husband has made a substantial gift or transfer, without consideration, of a
substantial portion of his property to a third person in order to avoid payment of alimony or
support money which might be ordered against him in a pending or expected divorce suit, the
transfer is voidable as a fraud on the wife. Obviously the same rule applies where the purpose of
the transfer is to escape or minimize the division of property in favor of the wife in case of
divorce. Where such a transfer has been made, the court has power in the divorce action to make
the transferee a party and to cancel the transfer, at least to the extent to protect the rights
of the wife and minor child. Damon v. Damon, 28 Wis. 510, 515; Way v. Way, 67 Wis. 662, 666, 31
N.W. 15; Hanson v. McCarthy, 152 Wis. 131, 133, 139 N.W. 720.

Id. at 158, 92 N.W.2d at 362 (citations omitted). The court also cited the Uniform Fraudulent
Transfer Act, and found that the wife was a "creditor" within the meaning of the Act and that
therefore the court could properly set aside the transfer pursuant to the remedies described in
the Act. Id. at 158-59, 92 N.W.2d at 362-63.

Vivian argues that the current no-fault divorce code, effective July 1979, renders Caldwell and
its progeny are inapplicable. We disagree. Our supreme court cited Caldwell with approval as
recently as 1988. Poindexter v. Poindexter , 142 Wis. 2d 517, 538 n. 3, 419 N.W.2d 223, 231 n. 3
(1988), stated:

Our decision today does not preclude the circuit court from considering on remand whether Dr.
Poindexter intended to defraud his former spouse by such transfers. A circuit court has the power
to make the transferee a party to cancel the fraudulent transfer to the extent necessary to
protect the rights of the former spouse. See Caldwell v. Caldwell, 5 Wis. 2d 146, 92 N.W.2d 356
(1958); sec. 242.07, Stats.

This court is bound by the decisions of the Wisconsin Supreme Court. State v. Clark , 179 Wis. 2d
484, 493, 507 N.W.2d 172, 175 (Ct. App. 1993).

Third-party joinder in divorce actions in certain circumstances is consistent with § 767.01(1),
STATS., which describes the circuit court's subject matter jurisdiction:

The circuit courts have jurisdiction of all actions affecting the family and have authority to do
all acts and things necessary and proper in such actions and to carry their orders and judgments
into execution as prescribed in this chapter. All actions affecting the family shall be commenced
and conducted and the orders and judgments enforced according to these statutes in respect to
actions in circuit court, as far as applicable, except as provided in this chapter.

From earliest times, Wisconsin has allowed third-party joinder to impose an equitable remedy. See
Damon v. Damon , 28 Wis. 510 (1871). Damon noted that in an equitable action to set aside a
fraudulent transfer of marital property the claim is ancillary to, or incidental of, an action
for divorce and not a separate suit. Id. at 514. In that case the wife alleged that her husband
defrauded her of certain assets and sought to join a third party for the purpose of recovering
them. The court held:

It is urged that the power of the court in these cases is limited; that it cannot exercise full
equity powers, but only such as are conferred by the statute; and, inasmuch as the statute does
not expressly provide that third parties may be made defendants in divorce suits, that therefore
no person can be made a defendant in those actions other than a party to the marriage contract.
We do not so understand the statute. We think that when the court is empowered to award alimony
to the wife out of the husband's estate ... and to divide and distribute the whole estate between
the parties -- that the power to bring before it as a party defendant in the same action any
person who is attempting fraudulently to keep the estate over which the court has such absolute
control, away from the jurisdiction of the court and out of the reach of its judgment, must
necessarily follow.

Id. at 515-16 (emphasis added). The statutory language examined in Damon is similar to § 767.01
(1), STATS., in that both provide that procedural rules governing other civil actions are to
govern divorce cases except where explicitly excepted. *fn4

We conclude that joinder of Vivian as a defendant would be proper under § 803.03(1)(a), STATS.,
joinder of persons needed for just and complete adjudication, because in Vivian's absence a
complete adjudication of the parties' marital property rights cannot be accomplished. *fn5 See
Wm. David Taylor III, Third-Party Practice in Divorce Cases, 26 Fam. L.Q. 5 (1992). A majority of
states permit joinder of third persons when "the family court cannot fulfill its duty to
distribute marital property equitably if prevented from determining the extent of that property
by the absence of third parties claiming an interest in it." Id. at 6. Joinder was usually
accomplished through the state's civil procedure rules governing joinder. Id. The article claims
that twenty-five states, including Wisconsin, allow third-party joinder. Id. at 6 n.8; see also
Frank D. Wagner, Annotation, Propriety of Consideration of, and Disposition as to, Third Persons'
Property Claims in Divorce, 63 A.L.R.3d 373 (1975 & Supp. 1996).

In this case, Vivian raised the issue whether it was necessary to join her as a third-party
defendant to the circuit court. The trial court considered the issue and ruled she was a
necessary party because of the limited marital estate were the home not included. The parties
agree that the home, valued in excess of $100,000, constitutes almost all of the property at
issue in the divorce. Because the trial court made no express finding that the disputed asset is
marital property, the parties remain free to litigate that question.

Finally, Vivian argues that use of a family court action would deprive her of her right to a jury
trial. We disagree. The right to a jury trial under article I, § 5 of the Wisconsin
Constitution "does not extend to 'equity cases, in which the party has never been held entitled
to a jury trial as a matter of right.'" Spensley Feeds v. Livingston Feed & Lumber, 128 Wis. 2d
279, 288, 381 N.W.2d 601, 605 (Ct. App. 1985) (quoting Stilwell v. Kellogg , 14 Wis. 499, [
*461], 503, (1861)). There is no right to a jury trial in a divorce action. Section 767.12(1),
STATS.

Leslie requests (1) an order enjoining Vivian from disposing of the proceeds of any sale of the
disputed property, (2) an order setting aside the deed and declaring the deed "illegal as a sham
transaction," (3) a "fair and equitable share of the value" of the property. In the alternative,
she seeks a "fair payment in equity" for her labor toward the home's construction. The first two
requests involve injunctive and declaratory relief, which are equitable in nature. See Barbian v.
Lindner Bros. Trucking Co. , 106 Wis. 2d 291, 301, 316 N.W.2d 371, 377 (1982); Morris v. Ellis ,
221 Wis. 307, 315, 266 N.W. 921, 924 (1936). Rescission is merely one form of restitution, an
equitable claim. State v. Dugan , 193 Wis. 2d 610, 621, 534 N.W.2d 897, 901 (Ct. App. 1995)
(restitution is an equitable concept). Leslie's request for a fair share of the value of the
property presumably seeks to impose a construction trust on the property, also a matter of
equity.

Wisconsin courts continue to recognize the difference between legal and equitable remedies in
determining whether there is a constitutional right to a jury trial. Spensley Feeds , 128 Wis. 2d
at 288, 381 N.W.2d at 605. When equitable relief is requested, there is no constitutional right
to a jury trial. *fn6 Id. We conclude that the claims contained and relief requested in the third-
party complaint are equitable in nature. We therefore conclude that Vivian has no right to a jury
trial in the instant action.

Vivian asserts that Gardner v. Gardner , 175 Wis. 2d 420, 499 N.W.2d 266 (Ct. App. 1993), and
Stuart v. Stuart , 140 Wis. 2d 455, 410 N.W.2d 632 (Ct. App. 1987), require that the third-party
complaint be dismissed. We disagree. Neither case involved third-party joinder, and we do not
consider those cases relevant to the instant controversy.

Finally, we note that Leslie's alternative claim for relief against Vivian, in the event the
property at issue is not marital property, is not subject to adjudication as part of the divorce
action.

By the Court. --Order affirmed.

Opinion Footnotes

*fn1 Although we affirm the order allowing third-party joinder, Leslie cannot maintain a third-
party action against Vivian for compensation if the trial court finds the property is not part of
the marital estate.

*fn2 A party may petition the court of appeals for leave to appeal a judgment or order not
appealable as a matter of right pursuant to § 808.03(2), STATS. We will grant such a petition if
the appeal will:

(a) Materially advance the termination of the litigation or clarify further proceedings in the
litigation;

(b) Protect the petitioner from substantial or irreparable injury; or

(c) Clarify an issue of general importance in the administration of Justice.

*fn3 Section 767.275, STATS., provides that any marital asset with a fair market value of $500 or
more that is "transferred for inadequate consideration, wasted, given away or otherwise
unaccounted for" within one year of the commencement of the divorce proceeding is rebuttably
presumed to be part of the marital estate and must be considered in the property division under §
767.255. We do not read § 767.275 to prevent a court from including in its property division
assets transferred or otherwise disposed of more than one year from the commencement of the
divorce proceeding. The one-year period described in § 767.275 merely imposes a rebuttable
presumption, shifting the burden of proof to the spouse attempting to exclude the asset as
marital property. If the transfer occurred beyond the one-year period, we assume the burden
remains on the spouse attempting to include the asset.

*fn4 Chapter 111, § 15 of the 1871 Wisconsin statutes stated in full as follows:

Actions to annul or affirm a marriage, or for a divorce, and all other matters coming within the
purview of this chapter, not otherwise specially prescribed, shall be conducted in the same
manner as other actions in courts; and the court shall have power to award issue, to adJudge
costs, and to enforce its judgments, as in other cases.

*fn5 Section 803.03(1), STATS., states as follows:

PERSONS TO BE JOINED IF FEASIBLE. A person who is subject to service of process shall be joined
as a party in the action if:

(a) In the person's absence complete relief cannot be accorded among those already parties; or

(b) The person claims an interest relating to the subject of the action and is so situated that
the Disposition of the action in the person's absence may:

1. As a practical matter impair or impede the person's ability to protect that interest; or

2. Leave any of the persons already parties subject to a substantial risk of incurring double,
multiple or otherwise inconsistent obligations by reason of his or her claimed interest.

*fn6 Other jurisdictions have determined that a debtor is not entitled to a jury trial in an
action filed by a creditor alleging fraudulent transfer and seeking rescission of the transfer.
See Keville v. McKeever , 42 Mass. App. Ct. 140, 675 N.E.2d 417, 424 (Mass. App. Ct. 1997); Allen
v. Meinig , 109 Ore. App. 341, 819 P.2d 744, 745 (Or. App. Ct. 1991); Hudson v. Maher , 55 Mich.
App. 90, 222 N.W.2d 47, 49 (Mich. Ct. App. 1974); Lane v. Lane. , 211 S.C. 536, 34 S.E.2d 754,
756 (S.C. 1945).