source: Caselaw Access Project

author: ZINTER, Justice,

license: Public Domain

text:
    2007 SD 90
    Gary MAUCH, License No. 13-001-000141941T-ST-001, Petitioner and Appellant v. SOUTH DAKOTA DEPARTMENT OF REVENUE AND REGULATION, Respondent and Appellee.
    No. 23966.
    Supreme Court of South Dakota.
    Argued Aug. 29, 2006.
    Reassigned Feb. 20, 2007.
    Decided Aug. 22, 2007.

      Jeffrey L. Bratkiewiez, William G. Taylor, Cheri S. Raymond of Woods, Fuller, Shultz & Smith, P.C., Sioux Falls, SD, for petitioner and appellant.
    Jack C. Magee, Donald W. Hageman, South Dakota Department of Revenue and Regulation, Pierre, SD, for respondent and appellee.
   ZINTER, Justice,

(on reassignment).

[¶ 1.] Gary Mauch appeals a Department of Revenue and Regulation decision assessing sales tax on engineering services he provided. Mauch also appeals the Department’s assessment of use tax for accounting and legal services that were provided to Mauch by out-of-state accountants and attorneys. We reverse the assessment of sales tax on the engineering services, affirm the assessment of use tax, and remand.

I.

[¶ 2.] Mauch obtained a one-year technical degree in drafting and design technology in 1972. Thereafter, he started working as a draftsman for Beehive Machinery Inc., in Salt Lake City, Utah. Beehive manufactured specialized machinery used in the meat processing industry to separate meat from bone. During his employment with Beehive, Mauch held the positions of Chief Draftsman, Acting Engineering Director, and Chief Products Engineer. Mauch’s duties included design and modification of standard and custom food processing machinery. He also trained the new Engineering Director.

[¶ 3.] Mauch met Eldon Roth during Mauch’s employment with Beehive. Roth is the founder and majority owner of Beef Products Inc. (BPI), a company that uses custom designed meat processing machinery to eliminate bacteria and pathogens from meat and sells meat to other food processing companies. In 1986, Mauch accepted an engineering position with BPI in its Nevada City, California facility. After six months, Mauch left BPI’s Nevada City facility and began working as an independent contractor. He continued to provide services for BPI and was also hired by Multi-Fill to design and improve its equipment.

[¶ 4.] In 1994, Roth contacted Mauch in an effort to obtain his engineering services more exclusively in connection with BPI’s facilities. BPI’s headquarters are in Dakota Dunes, South Dakota. However, all of its processing facilities are located outside South Dakota. Roth wanted Mauch to help design new machinery for use in BPI’s out-of-state facilities. Mauch accepted the offer. He and his family bought a home in Burbank, South Dakota, where he lives and works.

[¶ 5.] In the course of this employment, Mauch attended meetings with Roth in which the two “brainstormed” for ideas to improve and design BPI equipment. The meetings were either held at Mauch’s home or at BPI headquarters in Dakota Dunes. Mauch drafted most of BPI’s dimensional drawings with the assistance of BPI’s drafters. The designs were then reviewed at BPI headquarters to ensure that they met BPI’s quality standards. If BPI approved the designs, it sent them to out-of-state machine shops for construction. After construction, the machines were sent to BPI plants for installation. Mauch occasionally visited the out-of-state plants to ensure proper installation.

[¶ 6.] In 2003, the Department audited Mauch’s engineering business. The audit resulted in an assessment of tax, interest, and penalties in the amount of $70,641.32. The assessment was imposed for sales tax on the engineering services Mauch provided to BPI and use tax on legal and accounting services that were provided to Mauch’s business by out-of-state firms.

[¶ 7.] Mauch disputed the Department’s assessment and requested a hearing under SDCL 10-59-9. Following the hearing, an independent hearing examiner proposed findings of facts and conclusions of law reversing the sales tax assessment and upholding the use tax assessment. The Department rejected the hearing examiner’s findings of fact and conclusions of law and imposed its original assessment. Mauch appealed to circuit court. The circuit court affirmed the Department’s assessment, and Mauch appeals raising the following issues:

1. Whether the engineering services Mauch provided BPI were exempt from sales tax under SDCL 10-45-12.2.
2. Whether the engineering services Mauch provided BPI were exempt from sales tax under SDCL 10-45-12.3 (repealed SL 2003, ch. 61, section 3).
3. Whether the accounting and legal services provided to Mauch were exempt from use tax under SDCL 10-46-2.1.
4. Whether Mauch was entitled to an abatement of interest and penalties under SDCL 10-59-6 or SDCL 10-59-28.

[¶ 8.] “Questions of law, such as the question whether a statute imposes a tax under a given factual situation, are reviewed de novo.” In the Matter of Choice Hotels International, Inc. v. SD Dept. of Rev. and Reg., 2006 SD 25, ¶ 9, 711 N.W.2d 926, 928. Further, “[statutes allowing tax exemptions are exactingly and narrowly construed in favor of the taxing entity.” Watertown Coop. Elevator Ass’n v. S.D. Dept. of Rev., 2001 SD 56, ¶ 10, 627 N.W.2d 167, 171.

II.

Engineering Services Exemption Under SDCL 10-15-12.2

[¶ 9.] Four statutes govern sales taxation on engineering services. SDCL 10-45^4 imposes a broad sales tax on services in general:

There is hereby imposed a tax at the same rate as that imposed upon sales of tangible personal property in this state upon the gross receipts of any person from the engaging or continuing in the practice of any business in which a service is rendered. Any service as defined by § 10-45-4.1 shall be taxable, unless the service is specifically exempt from the provisions of this chapter.

SDCL 10-45-4.1 defines “service” as “all activities engaged in for other persons for a fee, retainer, commission, or other monetary charge, which activities involve predominantly the performance of a service as distinguished from selling property.” “Engineering services” are specifically captured by SDCL 10-45-5.2. However, SDCL 10-45-12.2 provides an exemption if the “engineering services” are classified in Group No. 871 of the Standard Industrial Classification Manual, 1987 (SIC Manual) and they are for projects located entirely out-of-state:

There are specifically exempted from the provisions of this chapter and from the computation of the amount of tax imposed by §§ 10-45-4 and 10-45-5, the gross receipts from engineering, architectural, and surveying services ([Gjroup [N]o. 871, Standard Industrial Classification Manual, 1987, as prepared by the Statistical Policy Division of the Office of Management and Budget, Office of the President) rendered for a project entirely outside this state.

Id. Therefore, in order for Mauch to be entitled to the exemption provided by SDCL 10-45-12.2, he had the burden of showing that his services were classified as “engineering services” under SIC Group No. 871 and that such services were rendered for projects outside of South Dakota.

[¶ 10.] Industry Group No. 871 of the SIC Manual is titled “Engineering, Architectural and Surveying Services.” Industry No. 871 describes “Engineering Services” as “[ejstablishments primarily engaged in providing professional engineering services.” (Emphasis added.)

[¶ 11.] The hearing examiner acknowledged that Mauch was not licensed as a “professional” engineer in South Dakota and did not have an engineering degree. However, the hearing examiner concluded that Mauch provided professional engineering services because of his knowledge and experience. On the other hand, the circuit court agreed with the Department’s position that in order to be entitled to the tax exemption, Mauch was required to be licensed as a “professional” engineer by the South Dakota Board of Technical Professions under SDCL ch. 36-18A, the chapter regulating the practice of architecture and engineering.

[¶ 12.] At the outset it must be noted that the statutes capturing and exempting these services do not refer to “professional” engineering services: those statutes only refer to “engineering services.” There is also no statutory reference in the tax statutes requiring licen-sure. With respect to SIC Manual Group No. 871, it is equally important to note that it is only intended to classify types of economic activity rather than the status of the individuals providing the economic activity in that industry. Additionally, although the SIC Manual contains “professional engineering services” language, there is no definition of a “professional engineer” in the SIC Manual. Finally, one specific example for this industry included services provided by “machine tool designers,” the service that Mauch appears to have provided. Nevertheless, the Department concluded that SDCL ch 36-18A, the chapter regulating the practice of architecture and engineering, should be incorporated into the tax code to determine the taxability of engineering services. We conclude that the incorporation of this regulatory engineering practice chapter into the unrelated sales tax statutes was incorrect for three independent reasons.

[¶ 13.] First, the incorporation of these unrelated statutes is at odds with the statutory rule governing when definitions in one part of the code may be used in others. SDCL 2-14-4 provides: “Whenever the meaning of a word or phrase is defined in any statute such definition is applicable to the same word or phrase wherever it occurs except where a contrary intention plainly appears.” Here, the words and phrases are not the same and a contrary intention plainly appears. SDCL 36-18A-1(24) defines a “professional engineer” as a person who is licensed and legally authorized to practice engineering in the state. However, neither the tax statutes imposing the tax on services (SDCL 10-45-4 and 10-45-5.2) nor the engineering exemption (SDCL 10-45-12.2) use the words “professional” or “engineer.” Rather, the words used in the tax statutes only refer to “engineering services.” See SDCL 10-45-5.2; SDCL 10-45-12.2. Therefore, because the phrase in the tax statutes is not the same as the phrase used in the regulatory statutes, the general rule of incorporation under SDCL 2-14-4 is inapplicable.

[¶ 14.] Moreover, even if the general rule were applicable, the regulatory definition may not be incorporated into the tax exemption because the exception in SDCL 2-14-4 applies. This exception prohibits incorporation “where a contrary intention plainly appears.” Id. In this case, SDCL 36-18A-1 provides that definitions in SDCL ch. 36-18A only apply to “[t]erms used in this chapter [SDCL ch. 36-18A].” (Emphasis added.) Therefore, the regulatory definition of a professional engineer is expressly confined to SDCL ch. 36-18A, and it does not apply to other, unrelated chapters like SDCL ch. 10-45.

[¶ 15.] Second, by incorporating the regulatory definition of a professional engineer into the tax code, the Department failed to follow this Court’s precedent. In two recent cases this Court concluded that analogous statutory definitions, unrelated to sales taxation, may not be incorporated into the tax code to define and determine a sales tax exemption. In Cooperative Agronomy Services v. S.D. Dept. of Rev., 2003 SD 104, ¶ 18, 668 N.W.2d 718, 723, we held that the definition of “farm products” found in SDCL 57A-9-102(34) (Article 9 of the UCC) could not be used to define the term, and therefore determine entitlement to a tax exemption for, “farm products” in SDCL 10-45-12.1. We explained:

[W]e do not believe that the Legislature intended that the UCC definition of “farm products” would also determine which “farm product warehousing and storage services” are exempt from sales taxation under SDCL ch 10-45. After all, SDCL ch 57A-9 regulates the procedure and rights of debtors and creditors engaged in secured transactions, a purpose wholly unrelated to sales taxation.

Id. ¶ 20.

[¶ 16.] Similarly, in Wharf Resources (USA) Inc. v. Farrier, 1996 SD 110, 552 N.W.2d 610, this Court was required to determine whether equipment and other things affixed to a mine were exempt from taxation because of a general, unrelated real property definition of a “mine” in SDCL 43-1-5. We again rejected the incorporation of unrelated statutes to define and determine taxability, explaining:

SDCL 43-1-5 is a statute of general application, intended to aid in determining which of those items commonly associated with a mine would be deemed appurtenant to the land. There is no corresponding definition of “mine” contained in the South Dakota taxation statutes found under SDCL 10-4-2 and 10-6-35.

Wharf Resources, 1996 SD 110, ¶ 42, 552 N.W.2d at 618.

[¶ 17.] The Department’s interpretation also fails to follow our precedent requiring that taxability be determined based on the nature of the services provided rather than the character or status of the individual providing a service. This Court has been quite clear that in deciding analogous exemption disputes, “we use the predominant activity test in deciding if services [are] subject to sales tax.” Watertown Co-op. Elevator Ass’n v. S.D. Dept. of Rev., 2001 SD 56, ¶ 12, 627 N.W.2d 167, 172 (emphasis added) (citing Nash Finch Co. v. S.D. Dept. of Revenue, 312 N.W.2d 470, 472 (S.D.1981)). Accord, EG & G, Inc. v. Director of Revenue, 94 N.M. 143, 607 P.2d 1161, 1164 (N.M.Ct.App.1979) (“predominant ingredient” test). “We have also emphasized that 'determinations of taxability should focus on the transaction.’ ” Id. (citing Sioux Falls Newspapers, Inc. v. Secretary of Revenue, 423 N.W.2d 806, 809 (S.D.1988) (emphasis added)). Therefore, “[i]t is the similarity in the transactions and not the character of the participants upon which we must focus” in determining eligibility for service exemptions. Sioux Falls Newspapers, Inc., 423 N.W.2d at 808 (emphasis in original). This focus on the transaction rather than the character of the service provider is understandable because this is a tax on services, and therefore, the tax statutes specifically refer to the nature of the “services” being provided rather than the status of the individual providing those services. See SDCL 10-45-4; SDCL 10-45-5.2; SDCL 10-45-12.2.

[¶ 18.] Third, the Department’s interpretation is contrary to legislative intent. It is hard to imagine that the Legislature had sales taxation on its mind in 1996, when it revised the regulatory statutes governing the practice of engineering. It is also hard to imagine that, in revising the regulatory statutes, the Legislature could have intended that the regulatory definition of a “professional engineer” applied to the tax code because those words are not in the tax code: they are only found in the SIC Manual. And, the Legislature could not have intended that licensure be required because the SIC Manual is only a listing of establishments by type of economic activity, the SIC Manual was not designed for non-statistical purpose, such as a state’s sales taxation.

The SIC system is designed for statistical purposes. Although the classification is also used for various administrative purposes, the requirements of government agencies that use it for nonstatistical purposes play no role in development and revision of the SIC.

SIC Manual, Appendix B: “Principles and Procedures for the Review of the SIC,” § A, p. 699.

[¶ 19.] We finally note that the Legislature could not have intended that the licen-sure requirements of SDCL ch 36-18A would determine the taxability of Mauch’s engineering services. To do so, the Legislature would have had to intend that SDCL 36-18A-l(24) apply retroactively. The regulatory statutes became effective July 1, 1999; however, the engineering services at issue were provided between January 1998 and December 2000. Therefore, a substantial portion of the engineering services had already been provided by the time SDCL 36-18A-l(24) was enacted, and the Legislature prohibits such retroactive application of its statutes “unless such intention plainly appears.” SDCL 2-14-21.

[¶ 20.] For all of the foregoing reasons, the Department erred in incorporating the regulatory definition of a professional engineer in SDCL 36-18A-l(24) into SDCL 10-45-12.2, an unrelated sales tax statute that does not define engineering services. When tax exemption statutes like SDCL 10-45-12.2 do not define their terms, this Court has consistently looked to plain meaning definitions rather than unrelated statutes. See Cooperative Agronomy, 2003 SD 104, ¶ 21, 668 N.W.2d at 724 (using Black’s Law Dictionary to define “farm products” for purposes of determining a tax exemption under SDCL 10-45-12.1); Graceland College Center for Prof. Dev. and Lifelong Learning, Inc. v. S.D. Dept. of Rev., 2002 SD 145, ¶¶ 7, 8, 654 N.W.2d 779, 783 (using American Heritage Dictionary to define “vocational school” for purposes of determining a tax exemption under SIC Manual Group No. 824 and SDCL 10-45-12.1).

[¶ 21.] Black’s Law Dictionary defines “professional” as: “A person who belongs to a learned profession or whose occupation requires a high level of training and proficiency.” (8th ed. 2004). The American Heritage College Dictionary defines “engineer” as, “[o]ne who is trained or professionally engaged in a branch of engineering.” 456 (3rd ed. 1997). The record in this case reflects that Mauch met these definitions.

[¶ 22.] The Department’s brief concedes that he has had professional training and extensive experience: “Mauch received a one-year technical degree in drafting and design technology!,] and has many years of experience in the industry.” Appellee’s Brief, p. 6. More specifically, he received formal instruction and has had more than thirty years of experience in providing professional engineering services, including the last fifteen years as an independent contractor providing design and engineering services. He was the acting engineering director of a similar company and has been designing this type of machinery since 1974. Unquestionably, through his education and extensive experience, Mauch received adequate training and proficiency to qualify him to design and engineer the specialized machines at issue and to qualify him as a professional. Therefore, we conclude that Mauch was providing professional engineering services.

[¶ 23.] Because Mauch provided professional engineering services as classified in SIC Manual Group No. 871, we must next determine whether the services were provided for projects “entirely outside this state.” See SDCL 10-45-12.2. The evidence reflects that the services were only for projects and machines in plants that were located entirely outside South Dakota. The Department concedes this issue in its brief:

[T]he machines and component parts are manufactured by vendors outside of South Dakota and are assembled at various meat packing facilities located around the country. None of the machines are placed at plants in South Dakota.

Appellee’s Brief, pp. 4-5. Thus, there is no dispute that Mauch satisfied the second test for exemption under SDCL 10-45-12.2.

[¶ 24.] We therefore conclude that Mauch’s services fell within the description of engineering services found in the SIC Manual Group No. 871 and SDCL 10-45-12.2, and the Department and circuit court incorrectly overruled the hearing examiner’s decision allowing the sales tax exemption. Because Mauch was entitled to the exemption for engineering services under SDCL 10-45-12.2, we need not address Mauch’s entitlement to the sales tax exemption under 10-45-12.3.

III.

Assessment of Use Tax for Accounting and Legal Services

[¶ 25.] Mauch next argues that he should not have been assessed use tax on accounting and legal services he obtained from out-of-state firms under SDCL 10-46-2.1, which provides in part:

For the privilege of using services in South Dakota, except those types of services exempted by § 10-46-17.3, there is imposed on the person using the service an excise tax equal to four percent of the value of the services at the time they are rendered.

However, this Court has previously concluded that when similar out-of-state services are used to conduct in-state business, the Department may properly impose use tax. Thermoset Plastics, Inc. v. S.D. Dept. of Rev., 473 N.W.2d 136, 139 (S.D.1991). In this case, the hearing examiner, the Department, and the circuit court found that Mauch failed to establish that any of the accounting and legal services were provided for something unrelated to his South Dakota business. On the contrary, the record reflects that he used those services in his engineering service business. Therefore, the use tax was correctly imposed.

IV.

Abatement of Interest and Penalties

[¶ 26.] Mauch finally argues that he is entitled to an abatement of interest and penalties. Because we have concluded that he is entitled to the sales exemption under SDCL 10-45-12.2, we remand for reconsideration of this issue.

[¶27.] Affirmed in part, reversed in part, and remanded.

[¶ 28.] GILBERTSON, Chief Justice, and SABERS, KONENKAMP, and MEIERHENRY, Justices, concur.

      . Multi-Fill sells food packaging equipment. The Department did not assess any tax for Mauch’s services provided to Multi-Fill.

      . The Standard Industrial Classification (SIC) is a system for classifying establishments by type of economic activity. Its purposes are: (1) to facilitate the collection, tabulation, presentation, and analysis of data relating to establishments, and (2) to promote uniformity and comparability in the presentation of statistical data describing the economy. The SIC is used by agencies of the United States Government that collect or publish data by industry. It is also widely used by state agencies, trade association, private businesses, and other organizations.
      SIC Manual, Appendix B: “Principles and Procedures for the Review of the SIC,” § A, p. 699.

      . We also note that the phrase “professional engineer” only appears in the SIC Manual, a reference to which SDCL 2-14-4 does not purport to apply.

      . The premise of the Department's argument is incorrect. The Department concedes that Mauch "may fall within the definition of engineer and he may provide engineering services. However, it is undisputed that he is not licensed in South Dakota pursuant to SDCL 36-18A.” (Appellee's Br. 10). From this, the Department argues that because Mauch is not a professional engineer, he "is prohibited from providing professional engineering services within this state.”
      Although many engineering services provided in this state must be provided by a licensed professional engineer, virtually identical engineering services are simultaneously exempted from the licensure requirement based upon the user or the size of the project. See SDCL 36-18A-9 (allowing many engineering services to be provided by unlicensed engineers). For example, the preparation of plans for two to four family dwellings and ranch buildings does not require licensure. Id. Similarly, plans for building or remodeling hospitals, hotels, restaurants, libraries, offices, and retirement homes do not require licensure if the projects are four thousand square feet or less. Id. Therefore, the Department is incorrect in arguing that one must be a professional engineer to render any engineering services in the State. It also makes little sense that the taxa-bility of virtually identical engineering services would be determined by the nature of the user of the services or the size of the project when those additional qualifications do not appear in the tax statutes or the SIC Manual.

      . See supra note 3.

      . Although there was some dispute concerning where Mauch’s services were used, the Department agreed at oral argument that this question is irrelevant to the exemption under SDCL 10-45-12.2:
      Q. (the Court): Where the services were used, that's only relevant under 12.3; that are not even relevant under 12.2, is it?
      A. (Department): That’s correct ...


author: SABERS, Justice. KONENKAMP, Justice MEIERHENRY, Justice ZINTER, Justice

text:
    2007 SD 91
    Barbara R. HALBERSMA, Plaintiff and Appellee, v. Lawrence M. HALBERSMA, Defendant and Appellant.
    No. 24290.
    Supreme Court of South Dakota.
    Considered on Briefs April 23, 2007.
    Decided Aug. 22, 2007.

      Debra M. Voigt of Piersol & Voigt, LLP, Sioux Falls, South Dakota, Attorneys for plaintiff and appellee.
    Aaron J. Emerson, Myers & Billon, LLP, Sioux Falls, South Dakota, Attorneys for defendant and appellant.
   SABERS, Justice.

[¶ 1.] Lawrence M. Halbersma (Lawrence) appeals from the property division determination in his divorce from Barbara R. Halbersma (Barbara). The circuit court found that approximately $1.6 million dollars of assets were Barbara’s separate property and excluded it from the marital property. We reverse.

FACTS

[¶ 2.] Lawrence and Barbara were married on October 15, 1955. The young couple started their farming operation with donations from their families. Lawrence’s brother gave them five cows and Barbara’s parents gave them some chickens. Barbara’s father purchased land near White, SD where the couple could operate their dairy operation. They eventually purchased the land from her father. Over time, they increased their land to 600 acres and a net worth of almost one million dollars.

[¶ 3.] Lawrence operated a dairy business and devoted all of his time to this operation. Due to his long hours, Barbara was left to take care of the home and raise their children. She also claims to have helped in the farming/dairy operation, but Lawrence disputes this claim. In addition, the couple agreed Barbara would be the one in charge of the family finances. She handled the bills and, when they had money to invest, made their investment decisions.

[¶ 4.] In 1986, Barbara’s parents left her a substantial inheritance. They left her the family homestead near Brandon and other cash assets. In addition to handling the family finances, she also handled this inherited property. However, instead of commingling the inherited property, she kept the property separate. The land near Brandon was being rented and Barbara used the income from the land, along with other inherited funds she invested, to pay the taxes and upkeep on the land. However, for purposes of federal income tax reporting, Barbara and Lawrence filed a joint return. This return included income from the inherited properties and investments. Barbara claims she paid her portion of the federal income tax from her inherited money.

[¶ 5.] From 1986 to 2003, Barbara managed the Brandon property, while Lawrence continued to work on the farm. With the children grown and out of the home, Barbara had more time to devote to the management of the property. With Lawrence working long hours on the farm, he was unable to contribute to the maintenance of the Brandon property. He helped a few times, but Barbara usually hired people to complete the work.

[¶ 6.] In 2003, the couple sold their 600 acres in White, SD by a contract for deed and moved to the Brandon home. The next year, Barbara created a revocable trust from inherited funds, which named her children as the beneficiaries. She also created a will that left all of the marital property to Lawrence, while leaving the inherited property to her children.

[¶ 7.] In December of 2005, Barbara sued Lawrence for divorce alleging extreme mental cruelty. Lawrence consented to the divorce being granted on those grounds. The children were adults, there was no request for alimony and no debt to divide, so the sole issue was the property division. In particular, Barbara argued the entire inheritance should not be included in the marital estate. Lawrence argued the inherited property should be included as marital property. After the trial, the circuit court found the inherited property should be kept separate. It divided the marital estate, awarding Lawrence approximately $465,073 and Barbara approximately $450,072. Barbara also received all of the inherited property, which brought her total to $2,249,851.

[¶ 8.] Lawrence appeals and raises the following issues:

1. Whether the circuit court’s property division was an abuse of discretion.
2. Alternatively, whether the appreciation in value of the inherited properties should have been included as a marital asset.
3. Alternatively, whether Lawrence should have received a disproportionate share of the marital assets.
4. Whether the circuit court erroneously applied the law in its property division pursuant to SDCL 25-4^44.

STANDARD OF REVIEW

[¶ 9.] In a divorce action, a circuit court’s determination regarding division of property is reviewed using an abuse of discretion standard. Novak v. Novak, 2006 SD 34, ¶ 3, 713 N.W.2d 551, 552 (citing Godfrey v. Godfrey, 2005 SD 101, ¶ 11, 705 N.W.2d 77, 80). The property division will not be reversed unless the circuit court’s “discretion is exercised ‘to an end or purpose not justified by, and clearly against, reason and evidence.’ ” Id. We do not decide the question anew, but rather whether “a judicial mind, in view of the law and the circumstances of the particular case, could have reasonably reached such a conclusion.” Id. Findings of fact are reviewed for clear error. Id.

[¶ 10.] 1. Whether the property division decision, which excluded Barbara’s inherited property, was an abuse of discretion.

[¶11.] SDCL 25-4-4 gives the circuit court discretion to equitably divide the marital estate regardless of ownership. The statute provides:

When a divorce is granted, the courts may make an equitable division of the property belonging to either or both, whether the title to such property is in the name of the husband or the wife. In making such division of the property, the court shall have regard for equity and the circumstances of the parties.

SDCL 25-4-44. The circuit court is not bound by any mathematical equation when making an equitable division of property, but there are several factors it is to consider when dividing marital property. Garnos v. Garnos, 376 N.W.2d 571, 572-73 (S.D.1985). They are:

(1) the duration of the marriage;
(2) the value of the property owned by the parties;
(3) the ages of the parties:
(4) the health of the parties;
(5) the competency of the parties to earn a living;
(6) the contribution of each party to the accumulation of the property; and
(7) the income-producing capacity of the parties’ assets.

Novak, 2006 SD 34, ¶ 4, 713 N.W.2d at 552 (citing Billion v. Billion, 1996 SD 101, ¶ 21, 553 N.W.2d 226, 232).

[¶ 12.] We have noted that these factors apply and must be examined before deciding whether inherited property should be included in the marital estate. Id.; Billion, 1996 SD 101, ¶ 21, 553 N.W.2d at 232. Therefore, “inherited property ‘is not ipso facto excluded from consideration in the overall division of property.’ ” Novak, 2006 SD 34, ¶ 5, 713 N.W.2d at 553 (citing Billion, 1996 SD 101, ¶ 20, 553 N.W.2d at 232). Instead, “[o]nly where one spouse has made no or de min-imis contributions to the acquisition or maintenance of an item of property and has no need for support, should a court set it aside as ‘non-marital’ property.” Id.

[¶ 13.] Lawrence claims the circuit court abused its discretion when it found Barbara’s inherited property was separate property. He claims the inherited property should be included in the marital property because his work on the dairy farm was a substantial and significant contribution to the inherited property. He argues that Barbara would not have been able to keep the property separate but for his contribution through hard work on the farm. Additionally, he claims she always handled the finances for the family and should not be able to take advantage of her position of controlling the family finances.

[¶ 14.] The circuit court did examine the factors relating to the property division inquiry. It noted that the parties were married for over fifty years. It found that Lawrence was 71 and Barbara was 69 years old and both were in good physical health for their ages, but they were at retirement age and neither one could earn more than minimum wage. The circuit court found that both parties had contributed to the accumulation of marital assets.

[¶ 15.] The circuit court also found that Barbara’s mother intended to pass the land and money to Barbara alone. Furthermore, it found that Barbara had kept the inherited property and money separate from the marital estate. Finally, the circuit court found Lawrence had no control over the property and did not participate in any decisions as to the inherited property. Consequently, the circuit court found Lawrence’s contribution to the inherited assets to be de minimis. The circuit court also noted that Lawrence had no need for support. Accordingly, the inherited property was excluded from the marital estate.

[¶ 16.] However, the circuit court erred when it determined Lawrence’s contribution to the inherited assets was de minimis. Lawrence only performed some direct maintenance on the inherited property once they moved to Brandon after retirement. Nonetheless, it is his indirect contribution that is valuable and was overlooked.

[¶ 17.] Barbara inherited the property in 1986. This was thirty-one years into an over fifty-year marriage. See Novak, 2006 SD 34, ¶10, 713 N.W.2d at 554 (noting that the property was inherited ten years into a sixteen-year marriage weighed in favor of including inherited property in the marital estate). For the next twenty years, Lawrence continued to work long hours on the farm. While Barbara continued to control the family’s finances, the children were grown, allowing her to spend more time away from home. Lawrence placed all of the income from his work on the farm into the marital estate. This allowed Barbara to keep the inherited property separate, as the farm was producing enough income to cover their expenses. His contribution, while not direct in the form of interviewing tenants, painting fences, or mowing the lawn, is no less significant and substantial. His indirect contribution was significant and substantial and the circuit court erred in determining that his contribution was de mini-mus. This is a finding of fact that is clearly erroneous.

[¶ 18.] This Court has indicated that indirect contributions help maintain the separate property in Garnos v. Garnos. 376 N.W.2d at 573. In Garnos, we reversed the circuit court’s determination that inherited real property was to be excluded from the marital estate. In reversing, we noted that the wife had contributed all of her earnings to family expenses and the contributions of a wife and mother were important considerations in determining property awards during divorce proceedings. Id.

[¶ 19.] Similarly, Lawrence contributed all of the farming income to the family and farm expenses. The circuit court indicated it understood the amount of work and sacrifice a milking/farming operation took. It noted:

I know how hard that work is, and it is a 7 day a week, 52 week a year operation. There is very little time, and you’re constantly trying to find a good friend, neighbor, relative or somebody to cover the times when you can’t be there. So I know how hard the work is.

While the circuit court considered this contribution in allocating marital property, it did not consider this indirect contribution to maintenance of the inherited property. As in Garnos, it is error not to consider this contribution. The law, much like a marriage, is not a one way street. If we recognize the significant and substantial contribution of a housewife and homemaker in the contribution of marital assets, then we should recognize the significant and substantial contribution this dairy farmer made to the inherited property in this case.

[¶ 20.] Furthermore, the court placed too much emphasis on Lawrence’s lack of control over the property and lack of decisions. Barbara was in control and made the decisions for all of the marital property finances. He testified that he did not think anything of her keeping the money separate because she handled all of the finances.

[¶21.] As the circuit court noted, this is a highly unusual case. It is hard to imagine a similar case will be before us in the future. This was a fifty-year marriage, one that Lawrence testified he expected to continue. She received the inheritance thirty years into the marriage. For over twenty years of the marriage, that inheritance was maintained separately, at least in part, because of Lawrence’s indirect contribution by working hard to make the dairy business and therefore, their lives, self-sufficient and comfortable. He testified that he thought the money would be used for their retirement, for both of their benefit, even though she kept it separate, “[a]fter all they were married, right?” He trusted Barbara with their finances. Therefore, the fact that Lawrence lacked control over or did not make decisions about the inherited property does not indicate a separate status. If we affirmed the property division under these circumstances, we would send a message to spouses not to trust the other’s financial decisions and investments for fear of being artfully excluded from assets.

[¶ 22.] A review of the record indicates the circuit court’s finding of fact was clearly erroneous and it abused its discretion when it excluded all of the inherited property from the marital estate. Lawrence made valuable indirect contributions to the inherited property. It would be unjust and inequitable to award Barbara over $2 million dollars, while Lawrence received only $600,000.

[¶ 23.] Barbara has made a motion for appellate attorney’s fees. SDCL 15-17-38 allows for an award of attorney’s fees, if “the interest of justice” so allows. However, since Lawrence is the prevailing party, we award her no attorney’s fees. See Toft v. Toft, 2006 SD 91, ¶ 26, 723 N.W.2d 546, 554-55 (awarding attorney’s fees to the prevailing party, but no attorney’s fees to the party that failed to prevail on appeal).

[¶24.] Due to our decision, we do not address the additional issues. Reversed and remanded to determine an equitable division of property that includes Barbara’s inherited property.

[¶ 25.] GILBERTSON, Chief Justice, concurs.

[¶ 26.] KONENKAMP, Justice, concurs with a writing.

[¶ 27.] ZINTER and MEIERHENRY, Justices, dissent.

KONENKAMP, Justice

(concurring).

[¶ 28.] I concur with the Court’s opinion. I write only to emphasize that this writing should not be read to suggest that Barbara’s inheritance must be divided in half. On remand, Lawrence should receive an “equitable” share in Barbara’s inherited property.

MEIERHENRY, Justice

(dissenting).

[¶ 29.] Applying our deferential standard of review, we should affirm the circuit court’s decision to exclude Barbara’s inherited property from the marital estate. There is no abuse of discretion under the factors and standard recently reiterated in Novak v. Novak, 2006 SD 34, ¶¶ 3-4, 713 N.W.2d 551, 552. We have consistently said, “[w]e find an abuse of discretion when discretion is exercised to an end or purpose not justified by, and clearly against, reason and evidence.” Id ¶ 3 (additional citations omitted). Under this standard, we do not ask whether we would have made the same decision, but “whether a judicial mind, in view of the law and the circumstances of the particular case, could have reasonably reached such a conclusion.” Id. (additional citation omitted). Additionally, we review the circuit court’s findings of fact under the clearly erroneous standard. Id.

[¶ 30.] In Billion v. Billion, we clearly directed circuit courts in this state to consider certain factors when deciding whether inherited property should be subject to division in the marital estate. 1996 SD 101, ¶ 18, 553 N.W.2d 226, 231. In Novak, we said, “[o]nly where one spouse has made no or de minimis contributions to the acquisition or maintenance of an item of property and has no need for support, should a court set [it] aside as ‘non-marital’ property.” 2006 SD 34, ¶ 5, 713 N.W.2d at 552-53 (citation omitted). The circuit court, following our directive, considered all the factors in light of the evidence and concluded that the inherited property should not be part of the marital estate. The court found that Lawrence’s contribution to the inherited assets was de minim-is, and that his need for support could be met without dividing the inherited assets. The circuit court’s findings were not clearly erroneous and its decision was reasonable and justified.

[¶ 31.] The majority opinion attempts to substitute its own opinion to conclude that Lawrence’s contribution to the inherited assets was not de minimis because of Lawrence’s indirect contribution to the inherited assets. However, it was the indirect nature of Lawrence’s contributions that led the circuit court to conclude that Lawrence’s contribution was de minimis. This conclusion was based on a number of factors unique to the facts of this case.

[¶ 32.] First, the Brandon property had clearly been given to Barbara alone. The circuit court noted:

[The inherited assets were] not given to her and her husband, even though at the time this distribution was made, they presumably had been married for an extended period of time even by then. So one would think that if there had been any intention on the part of her parents to benefit Mr. Halbersma from the inherited property, they would have given it to him in his name jointly or in some manner express their intent that that would be the case.

[¶ 33.] Second, Barbara kept the inherited assets completely separate from the marital estate. The circuit court commented that the inherited property

was never used to support the family generally in terms of acquisition of property by them, the land that they purchased over the years, the livestock, the things that they did, the inheritance was never a factor in that. It was always totally separated and segregated and it was not used to pay the monthly expenses. It didn’t pay the heat, the lights, the gas, anything else.

[¶ 34.] Finally, Lawrence admitted that over the years he told Barbara that he wanted nothing to do with the Brandon property and that it was her responsibility alone. The circuit court acknowledged Lawrence’s lack of involvement and interest at the close of trial.

Mr. Halbersma doesn’t dispute when the inheritance was received that he in essence said, I remember his words precisely, he said I was too busy farming to worry about her property down at Brandon and it was hers and I didn’t want anything to do with it and that’s what happened over many, many years.

All the decisions, control and contribution in maintaining the inherited property were made by Barbara without any involvement by Lawrence. All of the accounts and payments associated with the property were kept separate. Some of the inherited assets had been placed in a living trust with Barbara’s children as beneficiaries. Additionally, the circuit court found that the liquid assets awarded to Lawrence were adequate to support him “in the style to which the parties were accustomed during the marriage.” Thus, Lawrence did not show that his need for support was not met without dividing the inherited assets.

[¶ 35.] We have stated, “a ‘trial court has broad discretion in determining whether property is marital in nature and subject to division.’” Billion, 1996 SD 101, ¶ 20, 553 N.W.2d at 232 (quoting Heckenlaible v. Heckenlaible, 1996 SD 32, ¶ 8, 545 N.W.2d 481, 483). Based on this deferential standard and under the specific facts of this case, the circuit court’s exclusion of the inherited property from the marital estate was clearly reasonable and justified by the evidence. I would affirm the circuit court’s exclusion of the marital property.

ZINTER, Justice

(dissenting).

[¶ 36.] I join Justice Meierhenry’s dissent regarding the Court’s disregard of the abuse of discretion standard of review. The Court’s analysis is perplexing because it concedes that the circuit court did consider the relevant factors, see supra ¶¶ 14-15, the circuit court’s written opinion reflects that it also balanced all of those factors in arriving at its decision, yet this Court holds it abused its discretion. I also write to highlight that the Court has substituted its judgment for that of the circuit court on a disputed issue of fact, and point out that the Court only considers one relevant factor (contribution to the inherited property) while conceding that there are “several factors ... to consider when dividing marital property.” See supra ¶ 11 (citing Novak v. Novak, 2006 SD 34, ¶ 4, 713 N.W.2d 551, 552 and Billion v. Billion, 1996 SD 101, ¶ 18, 553 N.W.2d 226, 231) (emphasis added).

[¶ 37.] Notwithstanding our multifactor approach to deciding this issue, the majority reverses on one isolated factor: this Court’s perceived failure of the circuit court to correctly find the extent of Lawrence’s contribution to the inherited assets, a finding involving a highly disputed question of fact at trial. See supra ¶ 22. This is contrary to our long-standing approach in these cases. See Billion, 1996 SD 101 at ¶ 21, 553 N.W.2d at 232.

[¶ 38.] It is also contrary to the use of the multifactor approach itself. In other contexts, we have repeatedly emphasized that no one factor should be determinative. Great West Casualty Co. v. Bergeson, 1996 SD 73, ¶ 6, 550 N.W.2d 418, 420 (stating that when determining whether an employment relationship exists “[n]o single factor can be determinative; each case must be decided on its own facts.”). Similarly, in our family law cases, we frequently find no abuse of discretion if the circuit court considered all relevant factors. See Christians v. Christians, 2001 SD 142, ¶ 19, 637 N.W.2d 377, 381 (affirming alimony award when findings supported by the record “show[ed] a consideration of all factors”); Arneson v. Arneson, 2003 SD 125, ¶ 26, 670 N.W.2d 904, 914 (concluding circuit court did not abuse its discretion when “the court properly considered the relevant factors in making its custody determination”). In fact, under the multifactor approach, all factors need not be considered as long as “the decision [is] balanced and methodical.” Zepeda v. Zepeda, 2001 SD 101, ¶ 13, 632 N.W.2d 48, 53 (affirming circuit court’s child custody order). There is nothing balanced and methodical, however, about today’s opinion deciding a case on only one factor to the exclusion of all others, especially where that factor involves a disputed issue of fact.

[¶ 39.] If these are the new standards of appellate review, the bench and bar should be advised that we have abandoned the multifactor approach to deciding when inherited property should be excluded from the marital estate and that findings of fact will be reviewed de novo based upon how we perceive a circuit court should have decided a disputed issue of fact at trial. The Court should also acknowledge that under its analysis it has effectively overruled Novak and Billion.

      . Some of the land was used for crops to sell for profit, but most of the land was used to grow feed for the dairy animals.

      . During this time, the family operation switched from milk cattle to beef cattle. Their son left the farm and continuation of the milking operation was not feasible without his help.

      . These figures do not include the proceeds from the sale of the White farmhouse ($80,-300), the remaining Contract for Deed payments on sale of the White farmland ($200,-000) or the proceeds of the time share property in Branson, Missouri ($10,900). If these figures were included, Lawrence’s approximate share of the marital estate would be $610,708 and Barbara’s would be $595,707, a difference of $15,001.

      . Moreover, Lawrence contributed $50,000 in money he inherited from his family into the marital property and did not set it aside as his own inheritance.

      . Contrary to Justice Zinter’s dissent, this decision is made by considering more than just one factor. While it is most important that Lawrence made indirect contributions to the inherited property, other factors are considered. For instance, the first factor, length of the marriage was considered. Novak, 2006 SD 34, ¶ 4, 713 N.W.2d at 552 (citing Billion, 1996 SD 101, ¶ 18, 553 N.W.2d at 231). This is a marriage of long duration, over fifty years. Furthermore, the inherited property was received after thirty years of marriage; therefore, it was inherited with twenty years of marriage remaining. Additionally, the age and health of the parties and their competency to earn a living is considered. Id. Lawrence and Barbara are 71 and 69, respectively. Lawrence and Barbara are at retirement age and cannot earn more than minimum wage. The proper factors were considered in this decision.


author: LARSON, Justice.

text:
    IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. Gregory J. HUMPHREY, Respondent.
    No. 06-2061.
    Supreme Court of Iowa.
    Aug. 24, 2007.

      Charles L. Harrington and David J. Grace, Des Moines, for complainant.
    Mark McCormick, Des Moines, for respondent.
   LARSON, Justice.

The Iowa Supreme Court Attorney Disciplinary Board filed a complaint with our Grievance Commission charging Gregory J. Humphrey with several violations of our Code of Professional Responsibility for Lawyers. All of the alleged violations arose out of Humphrey’s representation of six probate estates. The commission found that the respondent “made certain errors in conducting his probate practice, [but] the same were not the result of any dishonest acts but were more in the nature of inexperience.” The commission recommended a “private reprimand” with restrictions on any future probate practice by the respondent. The board filed an application with our court for permission to appeal this decision, as provided by Iowa Court Rule 35.11(2). We granted the application and now consider the case de novo on the record made before the commission. See Iowa Ct. R. 35.10(1). We disagree with the sanction proposed by the commission and order that the respondent’s license to practice law be suspended for a period of not less than six months.

I. Standard of Review.

We review attorney disciplinary proceedings under well-established principles. Our review is de novo. See Iowa Ct. R. 35.10(1); Iowa Supreme Ct. Attorney Disciplinary Bd. v. Lesyshen, 712 N.W.2d 101, 104 (Iowa 2006). In making that determination,

“ ‘[w]e give respectful consideration to the Grievance Commission’s findings and recommendations, but are not bound by them.’
The Board must prove attorney misconduct by a convincing preponderance of the evidence. This burden is less than proof beyond a reasonable doubt, but more than the preponderance standard required in the usual civil case. Once misconduct is proven, we ‘may impose a lesser or greater sanction than the discipline recommended by the grievance commission.’ ”

Iowa Supreme Ct. Attorney Disciplinary Bd. v. Gottschalk, 729 N.W.2d 812, 815 (Iowa 2007) (quoting Iowa Supreme Ct. Attorney Disciplinary Bd. v. Conrad, 723 N.W.2d 791, 791-92 (Iowa 2006)).

II. Facts.

According to the record made before the commission, Humphrey has practiced law since 1977 and, at the time of the hearing, was practicing as a partner in a Fort Madison firm. The matters giving rise to the board’s complaint were the Eileen B. Glover estate, the William R. Lacke, Jr. estate, the Jesse B. White estate, the Carl O. Dupy estate, the Robert N. Percival estate, and the Teresa J. Sommers estate. These estates were identified as being among those in the Eighth Judicial District that had been open for more than three years. See Iowa Code § 633.473 (2003) (“Final settlement shall be made within three years, after the second publication of the notice to creditors, unless otherwise ordered by the court after notice to all interested parties.”). Chief Judge James Blomgren assigned District Judge Cynthia Danielson to investigate those estates.

A.The Glover estate. This estate was opened on May 1, 2000. During the pen-dency of the estate, the respondent received five delinquency notices from the clerk of court. A final report, filed on December 23, 2003, stated that all necessary tax returns had been filed. However, no proof of that fact was on file in the estate. The respondent therefore “resubmitted” the returns in January 2004 to obtain the tax clearances. The respondent characterized his efforts with regard to the tax returns in this estate, and the other five estates, as “resubmitting” the returns. However, we believe, in view of the fact that none of the six estates had tax clearances on file and the respondent was unable to produce copies of returns in any of the estates, that in fact at the time of the judge’s inquiry, the returns had not been initially filed as represented.

B. The Lacke estate. This estate was opened on March 9, 2000. The clerk of court sent two delinquency notices to the respondent. The respondent, in January of 2004, stated to the judge that tax returns were filed in 2002, but no clearances had been received. He “resubmitted” the returns in 2004, and the estate was closed on January 28, 2005, more than four years after it was opened.

C. The White estate. The respondent opened this estate on December 27, 2000. On or about August 1, 2001, he obtained an order for, and received, his full attorney’s fee, which he improperly deposited into his business account rather than into a trust account. He received three delinquency notices. After the respondent received one of the notices, he filed a “final report” stating that all tax clearances were on file, but this was not so. He “resubmitted” these returns in 2004, and the estate was closed on August 5, 2004.

D. The Dupy estate. The respondent opened this estate on August 6, 2001. During the pendency of this estate he received two delinquency notices. He filed a final report on October 10, 2003, stating that all inheritance and income taxes were cleared. The tax clearances were, in fact, not on file, and the respondent “resubmitted” the returns in July 2004. The estate was closed on November 4, 2004.

E. The Percival estate. The respondent opened this estate on June 12, 1998. On September 24, 1998, he received a check for half of his fee, although no inheritance tax return had been prepared. See Iowa Ct. R. 7.2(4) (half of attorney fees may be received on preparation of inheritance tax return and federal tax return if required). The respondent received four delinquency notices. Again, when copies of tax returns could not be located, the respondent “resubmitted” them. The estate was closed on November 2, 2004, over six years after it was opened.

F. The Sommers estate. The respondent opened the Sommers estate on March 13, 2000. In September 2000, he received his full fee and deposited it into his business account rather than his trust account. After receiving a delinquency notice, the respondent filed a final report stating inheritance and federal income tax returns had been filed. The tax clearances had in fact not been filed, and the respondent “resubmitted” the returns in July 2004. During the pendency of the estate, he received three delinquency notices. The estate was closed on July 30, 2004.

III. Violations.

All six estates languished from a lack of attention until Judge Danielson became involved. In all six estates, the respondent represented that tax clearances had been obtained when, in fact, they had not. The respondent’s failure to obtain tax clearances violated DR 6-101(A)(3) (a lawyer shall not neglect a legal matter). These misstatements of fact violated DR 1-102(A)(4) (a lawyer shall not engage in conduct amounting to misrepresentation), DR 1-102(A)(5) (a lawyer shall not engage in conduct that is prejudicial to the administration of justice), and DR 1-102(A)(6) (a lawyer shall not engage in conduct adversely affecting the lawyer’s fitness to practice law). All of the estates remained open for over three years, despite the lack of any serious complications in any of them, and without any order from the court approving such an extension of time as provided by Iowa Code section 633.473.

In the White, Percival, and Sommers estates, the respondent’s fees were deposited into his business account before they were earned, rather than into a trust account. This conduct violated DR 9-102(A) (“All funds of clients paid to a lawyer or law firm, including advances for costs and expenses, except retainer fees paid on a regular and continuing basis, shall be deposited in one or more identifiable interest-bearing trust accounts.... ”). Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Reedy, 586 N.W.2d 701, 702-03 (Iowa 1998); Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Apland, 577 N.W.2d 50, 55 (Iowa 1998).

IV. Sanctions.

Serious neglect lies at the heart of this respondent’s problems. When neglect is the primary rule violation, the sanction imposed generally ranges from a public reprimand to a six-month suspension, Iowa Supreme Ct. Attorney Disciplinary Bd. v. Earley, 729 N.W.2d 437, 443 (Iowa 2007) (citing Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Grotewold, 642 N.W.2d 288, 294 (Iowa 2002)). We consider

“the nature of the violations, the need for deterrence, protection of the public, maintenance of the reputation of the Bar as a whole, and the violator’s fitness to continue to practice law,” as well as any aggravating and mitigating circumstances.

Gottschalk, 729 N.W.2d at 821 (quoting Grotewold, 642 N.W.2d at 294). With respect to the latter consideration, we note that the respondent has not previously been sanctioned by this court.

This case resembles Earley in that it “indicates a pattern of neglect that clearly affected his clients’ interests and perception of the legal profession.” 729 N.W.2d at 443. In addition to neglect, this case also shows a pattern of misstatements in all six estates regarding the filing of the required tax returns.

As we said in Earley, “[t]here is no standard sanction for a particular type of misconduct, and though prior cases can be instructive, we ultimately determine an appropriate sanction based on the particular circumstances of each case.” Id. In the interest of maintaining some consistency, we look to similar cases, although their usefulness is limited because of variations in their facts. In Earley, the respondent neglected several cases and failed to deposit funds in his trust account. He further compounded matters by failing to respond to the board’s inquiries and failing to return a client’s file. We suspended Earley’s license for a minimum of four months. Id. at 444. In Iowa Supreme Court Attorney Disciplinary Board v. Neary, 731 N.W.2d 386 (Iowa 2007), the respondent neglected thirteen estates, received fees prior to court approval, and failed to cooperate in clearing up the neglected matters. We suspended his license for a minimum of twelve months. In Gottschalk, 729 N.W.2d 812, the respondent neglected an estate and misrepresented the status of the estate in his final report. He neglected a bankruptcy matter, a dissolution case, and a domestic-relations case. He also misinformed the court about the status of the estate and misinformed his client about his client’s dissolution case. Based on these violations, together with his failure to return a chent’s file, we ordered his license to be suspended for a minimum of one year. Gottschalk, 729 N.W.2d at 821-22. In Iowa Supreme Court Attorney Disciplinary Board v. Walker, 712 N.W.2d 683 (Iowa 2006), the respondent neglected three estates, represented to the court that he had complied with all tax requirements, which he had not, and misrepresented to a client regarding the filing of a deed. He also failed to respond on two occasions to the board’s complaint. We found his conduct caused harm to his clients in terms of cost and delay. We suspended his license for a minimum of six months. Walker, 712 N.W.2d at 686.

V. Disposition.

Based on the respondent’s neglect of the six estates, his misrepresentations to the court as to the status of the estates, and our prior cases, we believe the respondent’s license to practice law should be suspended for a minimum of six months. Accordingly, his license is suspended indefinitely with no possibility of reinstatement for at least six months. This suspension shall apply to all facets of the practice of law. Iowa Ct. R. 35.12(3). The respondent shall provide all notifications required by Iowa Court Rule 35.21. Upon any application for reinstatement, the respondent shall have the burden to show he has not practiced law during the period of suspension and that he meets the requirements of Iowa Court Rule 35.13. Costs are taxed to the respondent pursuant to Iowa Court Rule 35.25(1).

In addition, as a condition to any reinstatement, the respondent shall satisfy this court that he has associated with an experienced probate lawyer, approved by the chief judge of his district, prior to representation of any probate estates.

LICENSE SUSPENDED.

      . The Iowa Rules of Professional Conduct became effective July 1, 2005, replacing the Iowa Code of Professional Responsibility for Lawyers. However, the conduct involved in this case occurred prior to the effective date of the new rules.

      . Under Iowa Court Rule 35.9, the Grievance Commission "shall dismiss the complaint, issue a private admonition, or recommend to the supreme court that the attorney be reprimanded or the attorney's license to practice law be suspended or revoked." This rule does not provide for a "private reprimand.”


author: CADY, Justice.

text:
    IOWA SUPREME COURT ATTORNEY DISCIPLINARY BOARD, Complainant, v. John W. CARTY, Respondent.
    No. 07-0385.
    Supreme Court of Iowa.
    Aug. 31, 2007.
    Charles L. Harrington and Wendell J. Harms, Des Moines, for complainant.
    Brent B. Green and Bradley C. Ober-meier of Duncan, Green, Brown & Langeness, Des Moines, for respondent.
   CADY, Justice.

The Iowa Supreme Court Attorney Disciplinary Board (Board) charged John W. Carty with numerous violations of the Iowa Code of Professional Responsibility for Lawyers. The Grievance Commission of the Supreme Court of Iowa (Commission) found Carty violated the Iowa Code of Professional Responsibility for Lawyers. It recommended Carty be suspended from the practice of law for a period not less than four months. Upon our review, we find Carty violated the Iowa Code of Professional Responsibility for Lawyers, and we suspend his license to practice law for a period of sixty days.

I. Background Facts and Proceedings.

John W. Carty has practiced law in Win-field, Iowa, since 1952. During his long career, he was disciplined on one occasion for professional misconduct. This oc-eurred in 1994 when he was publicly reprimanded for becoming personally involved in a business interest of a client.

At the time of the facts and circumstances that gave rise to this proceeding, Carty was in the process of limiting his clientele in contemplation of retirement. His long-time secretary, or legal assistant, also left her employment during this time, and Carty employed a new secretary.

In April 2001, Carty was designated as the attorney for the estate of Ralph G. Beech, who died testate on March 18, 2001. Carty had prepared a will for Beech and performed other legal services for him shortly before his death.

The district court eventually ordered that Carty be paid fees for his ordinary services in the estate in the amount of $19,086.74. This fee was based on the gross value of the estate, as disclosed by the report and inventory prepared and filed with the court by Carty.

Carty subsequently completed the essential legal work in the case without incident and was preparing to close the estate. He arranged for the coexecutors to come to his law office to sign the tax returns, final report, and other documents so the closing order could be entered upon receipt of the tax clearances.

One of the coexecutors failed to appear at the appointment scheduled by Carty. The other coexecutor appeared and signed the documents. The coexecutor also issued a check to Carty for his legal fees in the full amount previously allowed by the district court. Carty intended to place the check into his trust account, but his new secretary deposited it in his office account.

The coexecutor who failed to appear at Carty’s office to sign the documents died before he was able to execute all of the necessary closing documents. Carty then discovered the deceased coexecutor had submitted documents to him that overvalued Beech’s estate by nearly $90,000. Consequently, Carty filed an amended inventory with the court to reflect the reduced value of the estate, together with amended tax returns and other documents, but never sought to reduce the amount of the fees for his ordinary services based on the reduced amount of the gross value of the estate. Instead, Carty eventually sought an allowance for extraordinary services based on the additional work he was required to perform to correct the mistake caused by the deceased coexecutor.

Carty requested extraordinary fees of $28,871.69 based on 182 hours of legal work. However, a portion of his application for fees detailed legal services that were duplicative of some of the services performed as a part of his ordinary fees. The inclusion of these services was likely due to miscommunication between Carty and his secretary during a time when Carty was working from his home after recuperating from heart surgery.

The district court approved the application for extraordinary fees requested by Carty. Carty was then paid the extraordinary fees requested in his application, and the estate was closed. Carty never sought to return the excessive ordinary fees ($1665), and he did not seek to return any portion of the duplicative extraordinary fees after they were discovered.

II. Board Complaint.

The Board charged Carty with a variety of disciplinary violations, and the parties subsequently stipulated to conduct to support a finding by the Commission that Carty violated the Iowa Code of Professional Responsibility. Specifically, the Commission found that Carty: (1) collected an illegal fee in violation of DR 2-106(A) when he received his full ordinary fee prior to the time the final report was filed and the costs were paid, and (2) charged or collected an illegal or clearly excessive fee in violation of DR 2-106(A) by failing to amend the ordinary-fee claim and submitting a claim for extraordinary fees that included duplicative services. See DR 2-106(A) (“A lawyer shall not enter into an agreement for, charge, or collect an illegal or clearly excessive fee.”). The Commission also found Cartas conduct violated DR 1-102(A)(1) (lawyer shall not “[v]iolate a disciplinary rule”) and DR 1-102(A)(6) (lawyer shall not “[e]ngage in any other conduct that adversely reflects on the fitness to practice law”).

III. Scope of Review.

We review attorney disciplinary matters de novo. Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Bernard, 653 N.W.2d 373, 375 (Iowa 2002). We give the findings of the Commission weight, but are not bound by them. Id.

IV. Violation.

A lawyer may not charge or collect an illegal or clearly excessive fee. DR 2-106(A). Carty violated this rule in three ways.

First, Carty violated DR 2-106(A) when he accepted a full probate fee prior to the time he filed the final report and paid the costs, contrary to the Iowa Rules of Probate Procedure. See Iowa Ct. R. 7.2(4) (“One half of the fees for ordinary services may be paid when the federal estate tax return, if required, and Iowa inheritance tax return, if required, are prepared.... The remainder of the fees may be paid when the final report is filed and the costs have been paid.”). The collection of the full fee was illegal.

Second, Carty violated DR 2-106(A) when he failed to amend his ordinary fee claim once the gross value of the estate was reduced to reflect the correct amount. An attorney may not be compensated for ordinary services in a probate proceeding in an amount greater than the fee schedule under Iowa Code section 633.197 (2001). This fee schedule caps the maximum fee at two percent of the amount of the gross estate over $5000, as disclosed in the probate inventory, plus $220. The collection of a probate fee in excess of the amount permitted by statute is illegal.

Finally, Carty violated DR 2-106(A) when he charged and collected duplicative fees for extraordinary services. Carty submitted a claim for extraordinary services that included ordinary services for which he had previously been compensated. He charged and collected an Illegal fee.

Although the violations resulted in part from miscommunication between Carty and his secretary, this circumstance does not excuse Carty from his violations. See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Beckman, 674 N.W.2d 129, 137-38 (Iowa 2004) (alleging an error was made due to a change in secretaries). Carty violated DR 2-106(A). By violating this disciplinary rule, he also violated DR 1-102(A)(1). Similarly, Carty also violated DR 1-102(A)(6). See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Johnston, 732 N.W.2d 448, 454 (Iowa 2007).

V.Discipline.

Carty is not the first Iowa lawyer to collect illegal or excessive fees in a probate proceeding. In prior cases, the resulting discipline has ranged from a reprimand to a suspension of various degrees. See Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Fleming, 602 N.W.2d 340, 340 (Iowa 1999) (suspension not less than six months); Iowa Supreme Ct. Bd. of Prof'l Ethics & Conduct v. Evans, 537 N.W.2d 783, 786 (Iowa 1995) (suspension not less than thirty days); Comm’n on Prof'l Ethics & Conduct v. Winkel, 415 N.W.2d 601, 602 (Iowa 1987) (reprimand). The ease that best approximates the conduct that occurred in this case is Evans. In that case, an experienced probate attorney collected fees that were both premature and excessive. 537 N.W.2d at 784-85. The attorney was suspended from the practice of law for thirty days. Id. at 786. However, we find aggravating circumstances in this case that were not present in Evans. Carty never took any action to correct the obvious excessive fees for ordinary and extraordinary services once the mistakes were discovered. This conduct reflects adversely on Carty and warrants additional discipline.

We conclude Carty should be suspended from the practice of law for sixty days. Prior to his reinstatement under Iowa Court Rule 35.12(2), Carty shall make restitution in the amount of $6165 to the trust established under the Beech will for distribution to the beneficiaries of the trust. We conclude Carty received ordinary fees of $1665 in excess of the maximum fee permitted under section 633.197, and that $4500 of his fees for extraordinary services was ordinary services or should have been included as ordinary services. Carty shall also be responsible for any fees, expenses, and costs incurred in making the restitution.

VI. Conclusion.

We suspend Cart/s license to practice law in Iowa for a period of sixty days. The suspension imposed applies to all facets of the practice of law as provided by Iowa Court Rule 35.12(3) and requires notification of clients as provided in Iowa Court Rule 35.21. Carty shall make restitution as provided in this opinion, and no automatic reinstatement, as provided under Iowa Court Rule 35.12(2), shall be ordered until all restitution has been made. The costs of this proceeding are taxed against Carty pursuant to Iowa Court Rule 35.25(1).

LICENSE SUSPENDED.


text:
    Martha J. STARK, Rebecca J. Lodge, and Terry J. Stark, Appellees, v. Alita L. STARK, Appellant.
    No. 06-0035.
    Supreme Court of Iowa.
    Sept. 14, 2007.

      Jeffrey L. Powell of Tindal and Kitchen, PLC, Washington, for appellant.
    Ann M. Klostermann McCrea of Elder-kin & Pirnie, P.L.C., Cedar Rapids, for appellees.
   LARSON, Justice.

Alita Stark appeals the district court’s order permanently enjoining her from disinterring her deceased spouse’s remains for purposes of reburial. On appeal, we reverse the ruling of the district court and remand for dismissal.

I. Facts and Prior Proceedings.

Joseph Stark died on February 15, 2005, survived by his wife, Alita Stark. Joe had previously been married to Audrey Stark, and they had three children together, the appellees in this lawsuit (referred to collectively as the Stark children). Joe was buried in Hillcrest Cemetery near plots owned by Audrey, his first wife, and the Stark children. In April 2005, Alita decided to move Joe’s remains to Evergreen Cemetery, where Joe’s parents were buried. Alita submitted an application to the Iowa Department of Public Health, Bureau of Vital Records (DPH), for a permit to disinter Joe’s remains, and DPH issued the permit.

The Stark children filed a petition in equity requesting temporary and permanent injunctions enjoining Alita from disinterring Joe’s remains. The district court granted an ex parte order for temporary injunction and, after a hearing, permanently enjoined Alita from disinterring Joe’s remains. Alita appeals.

II. Standard of Review.

Matters involving disinterment of human remains are equitable in nature, and as such, our review is de novo. In re Sybers, 583 N.W.2d 890, 891 (Iowa 1998); Life Investors Ins. Co. of Am. v. Heline, 285 N.W.2d 31, 35-36 (Iowa 1979).

III. Discussion.

Iowa Code section 144.34 (2005) governs the disinterment of human remains.

Disinterment of a dead body or fetus shall be allowed for the purpose of autopsy or reburial only, and then only if accomplished by a funeral director. A permit for such disinterment and, thereafter, reinterment shall be issued by the state registrar according to rules adopted pursuant to chapter 17A or when ordered by the district court of the county in which such body is buried. The state registrar, without a court order, shall not issue a permit without the consent of the surviving spouse or in case of such spouse’s absence, death, or incapacity, the next of kin. Disinterment for the purpose of reburial may be allowed by court order only upon a showing of substantial benefit to the public. Disinterment for the purpose of autopsy or reburial by court order shall be allowed only when reasonable cause is shown that someone is criminally or civilly responsible for such death, after hearing, upon reasonable notice prescribed by the court to the surviving spouse or in the spouse’s absence, death, or incapacity, the next of kin. Due consideration shall be given to the public health, the dead, and the feelings of relatives.

Iowa Code § 144.34.

Pursuant to section 144.34, there are two methods by which a person may disinter human remains: (1) by state-issued permit or (2) by court order. Under the first method, the party must file an application to disinter with the state registrar, DPH. Permits for disinterment must be issued in accordance with Iowa Administrative Code Rule 641-101.7, which provides that permits are valid for thirty days after the date of issuance, and copies of the permit must be provided to certain individuals. The only statutory requirements for a state-issued permit are that the surviving spouse or, in the absence of a surviving spouse, the next of kin, consent to the disinterment, and the purpose of the disinterment be for autopsy or reburial. Id. Neither section 144.34 nor rule 641-101.7 provides any further specific requirements for issuance of a permit for disinterment.

Under the second method to obtain approval for disinterment, a person may petition the district court for an order allowing disinterment. A court can order disinterment only for purposes of autopsy or reburial and “only upon a showing of substantial benefit to the public.” Id. Further, disinterment is only allowed by court order when “reasonable cause is shown that someone is criminally or civilly responsible for such death, after hearing, upon reasonable notice prescribed by the court to the surviving spouse or in the spouse’s absence, death, or incapacity, the next of kin.” Id. Finally, the court must give “[d]ue consideration ... to the public health, the dead, and the feelings of relatives.” Id.

In enjoining the disinterment of Joe’s remains, the district court concluded that Alita had not met her burden to show a substantial benefit to the public. We do not agree with this interpretation of section 144.34.

Section 144.34 allows anyone to apply to DPH for a permit to disinter. However, the state registrar will only grant such applications with the consent of the surviving spouse or, in the absence of a surviving spouse, the next of kin. When the surviving spouse consents to disinterment, the statute and the administrative rules require nothing further to issue the permit. Thus, the plain language of the statute allows a surviving spouse to disinter a deceased spouse’s remains for reburial regardless of the spouse’s motives for reburial or the objections of other family members or friends.

The Stark children argue, and the district court agreed, that the statute does not give the surviving spouse an exclusive affirmative right to disinter, but rather gives the surviving spouse a veto power when someone else requests disinterment. We do not agree. It is clear that, when the legislature wanted to limit the ability to disinter, it knew how to do so. The legislature clearly delineated the purposes for which disinterment could be granted (only for reburial or autopsy) and the requirements that must be met for a court-ordered disinterment over the objection of the surviving spouse. See Iowa Code § 144.34. The legislature’s lack of specific requirements for a surviving spouse to apply for, and receive, a state-issued permit is evidence, in itself, that the legislature did not intend for a surviving spouse to have to show anything other than that the disinterment is for the purpose of reburial or autopsy. See Marcus v. Young, 538 N.W.2d 285, 289 (Iowa 1995) (“This expresses the well-established rules of statutory construction that legislative intent is expressed by omission as well as by inclusion, and the express mention of one thing implies the exclusion of others not so mentioned.” (Citations omitted.)).

The district court did not have authority to override a state permit validly issued with the consent of the surviving spouse. As noted, section 144.34 provides two distinct methods by which disinterment may be allowed — a state-issued permit and court order. Neither section 144.34 nor rule 641-101.7 provides the court with the authority to review, in an injunction action, state-issued permits when those permits are validly issued with the consent of the surviving spouse. Any remedy in such a case must be through judicial review proceedings. Accordingly, we conclude that the district court erred in enjoining a surviving spouse from disinterring and rein-terring her deceased spouse’s remains pursuant to a state-issued permit. We reverse and remand for dismissal of the petition.

REVERSED AND REMANDED.