Marriage of Peterson ( 1989 )

NO. 8 9 - 1 7 6
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
IN RE THE MARRIAGE OF
LEAH D. PETERSON,
Petitioner and Respondent,
and
NORMAN W. PETERSON,
Respondent and Appellant.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Henry Loble, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
J. Cort Harrington, Jr., Helena, Montana
For Respondent:
David N. Hull, Helena, Montana
Submitted on Briefs: Aug. 3, 1 9 8 9
Justice John Conway Harrison delivered the Opinion of the
Court.
This is an appeal from the First Judicial District
Court, Lewis and Clark County. In this marriage dissolution
action, the appellant seeks reversal of the trial court's
amended judgment and reinstatement of the original judgment
which granted respondent a lesser share in the marital
estate. We affirm the trial court's amended judgment.
The issues on appeal are:
1. Did the District Court abuse its discretion by
including premarital assets in the marital estate?
2. Did the District Court award more than 100 percent
of the marital estate?
Leah Peterson and Norm Peterson met in early 1986.
Sometime during the spring of 1986 the parties opened a joint
checking account when they became engaged. Norm moved in
with Leah in the home she owned. Leah maintained a separate
account from which she made payments for this house and paid
household bills.
From the time the parties began commingling funds in
the joint checking account, both parties deposited their
paychecks in the joint account. Norm's monthly income was
approximately $2,500 and Leah earned about $1,800 per month.
After the parties separated Leah withdrew the $1,735
remaining in the joint account, using the monies to pay joint
debts nearly equal to the amount she withdrew.
Prior to their marriage the parties decided to build a
home on Cloverview Drive in Helena. Norm made a $500 down
payment on the lot. To finance the new home, Leah agreed to
sell her home in Helena and Norm agreed to sell a house he
owned in Browning, Montana. Leah sold her home, receiving
$13,400 in equity from the sale and deposited $12,600 in the
couple's joint account. Of this amount, Norm and Leah used
$8,000 as a down payment on the Cloverview home. Norm's
house in Browning never was sold.
Also prior to marriage, the couple jointly borrowed
$4,000 in order to buy their wedding rings, using a boat and
boat trailer owned by Norm as collateral. At this time Norm
transferred ownership of the trailer from himself to himself
and Leah. He also gifted one-half of the boat to Leah.
Norm received $7,000 from his insurance company for
coverage of a wrecked Datsun 280ZX, which money was deposited
in the couple's joint account prior to marriage. This money
was used for various expenses including a $2,000 pre-marriage
trip taken by Norm. Some of the insurance money was also
used to make payments on cars the couple purchased after they
were married, including a 1984 Buick Skylark which Leah
received and on which she also makes payments.
In April 1986, also before the marriage the parties
traded a 1980 Honda owned by Leah, having a value of $1,500
for a 1986 Toyota 4 Runner. With the trade the balance owing
on the Toyota was $15,000. Norm received the Toyota and
continues to make payments on it. Prior to the trade, Leah
paid $1,800 to rebuild the motor of the Honda.
On October 3, 1986, Norm and Leah were married in Las
Vegas, Nevada.
The troubled marriage was short-lived and the couple
separated in January, 1987. Leah filed a petition for
Declaration of Invalidity on March 11, 1987, alleging that
she had been induced into the marriage by Norm's fraudulent
promises that the parties would share equally in financial
contributions to the marriage, he would control his drinking
and seek counseling for his temper, and he would sell his
house in Browning. In response Norm affirmatively alleged
that he too was fraudulently induced to marry because he did
not know of the number, nature and extent of Leah's financial
obligations prior to the marriage and that Leah failed to
tell him one of her daughters from a former marriage would be
living with them. Norm also asked for an annulment, stating
that had Leah disclosed the above-listed information to him
he would not have married her. In a later pleading Norm
requested that the trial court grant an annulment or, in the
alternative, a dissolution.
After the parties separated, the Cloverview home sold
with the parties receiving a net of $2,236, all of which was
kept by Leah. Norm also paid Leah an additional $3,000 in
recognition of the fact that down payment for the Cloverview
home came from the proceeds of the sale of her home. Since
Norm's Browning property never sold, Leah's contribution to
the Cloverview home was disproportionate.
The boat and trailer, half of which was now owned by
Leah, was sold after the parties separated. Of the $6,000
price received, $5,400 remained after a sales commission was
deducted. Norm used $4,300 of the proceeds to pay off the
loan remaining on the rings and other joint debts.
The annulment/dissolution was originally heard on
December 7, 1987. From this trial the District Court judge
found it impossible to make a decision because of the manner
in which evidence was presented. By stipulation, the case
then went before a special master, pursuant to Rule 53,
M.R.Civ.P.
The special master apportioned the assets and debts of
the parties and held that a dissolution rather than an
annulment was proper. The special master found Leah's
assets, prior to commingling consisting of her home, the 1980
Honda with new motor, a diamond which went into Norm's
wedding ring, and personal property, to have a value of
$18,450. N o r m ' s assets p r i o r t o c o m m i n g l i n g , i n c l u d i n g money
f r o m i n s u r a n c e , boat a n d t r a i l e r , a n d v a r i o u s b u s i n e s s a n d
real p r o p e r t y i n t e r e s t s , w e r e v a l u e d a t $177,950.
T h e m a r i t a l e s t a t e v a l u e w a s placed a t $ 1 4 , 1 9 1 .
I n c l u d e d i n the m a r t i a l estate were:
1. t h e b o a t a n d t r a i l e r $5,400.00
2. r i n g s ( h i s & hers) 4,520.00
3 . proceeds f r o m t h e c o u p l e ' s
C l o v e r v i e w home 2,236.00
4. cash f r o m j o i n t c h e c k i n g a c c o u n t 1,735.00
5. e q u i t y i n t h e Toyota 300.00
6. e q u i t y i n t h e Buick 0.00
TOTAL : $14,191.00
The estate was t h e n divided as f o l l o w s :
T o Norm Value
1. T o y o t a 300.00
2. Rings i n possession 2,100.00
3. 4 i n t e r e s t i n boat & t r a i l e r
- 2,700.00
( l e s s t j o i n t d e b t s p a i d f r o m proceeds
of s a l e of b o a t & t r a i l e r ) (2,150.00)
TOTAL : $2,950.00
To Leah Value
1. Buick 0.00
2. Cash from j o i n t account 1,735.00
(less j o i n t debts paid) (1,730.00)
3. Rings i n possession 2,420.00
4. 4 i n t e r e s t i n boat & t r a i l e r (less
4 j o i n t d e b t s p a i d f r o m proceeds) (2,150.00)
TOTAL : $5,211.00
I n a d d i t i o n t o t h e d i s t r i b u t i o n of t h e m a r i t a l a s s e t s ,
the special master decided Norm still owed Leah $550,
one-half of the amount r e m a i n i n g f r o m sale o f t h e boat a n d
t r a i l e r a f t e r p a y m e n t of joint debts ($5,400-$4,300 = 1100
- 4 = $550) . Also, Norm was t o p a y Leah a n o t h e r $7,664 t o
compensate her for selling her home to enable the couple to
make a down payment on the Cloverview home. The figure was
arrived at by taking:
the amount Leah received for her home $13,400
less the amount Leah received on sale
of the Cloverview home (2,236)
less additional money Norm gave Leah (3,000)
less the down payment Norm paid on
the Cloverview lot (500)
equals the amount needed to replace the
home equity Leah "lost" in the marriage = $7,664
The District Court judge adopted most of the report of
the special master, with the exception of the finding
regarding Norm's payments to Leah of $7,664 for lost equity.
In an opinion dated December 7, 1988, the District Court held
that such a payment would have the effect of awarding more
than 100 percent of the marital estate.
On February 1, 1989, the District Court reassessed its
earlier decision and granted Leah's motion for new trial or
to alter or amend the December 7 judgment. The effect of the
February 1 decision was that the District Court fully adopted
the special master's report, ordering Norm to make an
additional $7,664 cash payment to Leah. A February 27, 1989
judgment of the District Court ordered Norm to pay Leah
$7,664 and $550 for a total judgment of $8,214.
The District Court was persuaded by Leah's argument
that the court failed to consider that the cash award was in
lieu of her interest in Norm's premarital property. Citing
the special master's Finding of Fact No. 12, the District
Court pointed out that the special master recognized the need
to consider premarital assets if there was to be an equitable
distribution:
In order to value each party's
individual property, therefore, it is
necessary to consider as nearly as
possible the property owned by each prior
to commingling of funds. Similarly,
joint assets and obligations were
acquired after the engagement but before
the actual marriage. Therefore,
consideration of assets - - marriage
of the
c a n i m T t e d - - to only assets and
obligatirns actually acquired after the
- -of marriage. Rather, consideration
date
must be given - - -
-- to all the parties' mutual
financial transactions. (Emphasis
supplied by the District Court.)
This, according to the District Court, explains how the
special master could distribute more money than was found to
be in the marital estate. The marital estate included all
assets involved in the parties' joint financial transactions
from the time commingling began, not merely from the date of
marriage.
Did the District Court abuse its discretion by
including premarital assets in the marital estate?
The standard of review for property distribution has
been clarified recently in In re Marriage of Hall (Mont.
1987), 740 P.2d 684, 686, 44 St.Rep. 1321, 1323, where we
stated:
We have concluded that in a property
distribution review in marriage
dissolution, this Court will reverse a
district court only on a showing that the
district court has acted arbitrarily or
has committed a clear abuse of
discretion, resulting in either instance
in substantial injustice.
Including the premarital assets in the marital estate
is not an abuse of discretion, nor does it result in
substantial injustice. There is evidence to support
inclusion of the premarital assets in order that an equitable
distribution be made. Leah sold her only substantial
premarital asset, her home, so that the parties could build
the Cloverview home. Norm's contribution was to have been
his Browning house, but the house never sold. While Leah was
given $2,236 in cash proceeds from the sale of the Cloverview
home and an additional $3,000 payment from Norm, she has lost
the equity she had in her home. Norm, on the other hand,
still owns his Browning house.
During their short relationship, Leah did contribute to
the maintenance of Norm's Browning property. Money from the
joint checking account, to which she contributed, was used to
pay taxes and purchase a stove for the Browning property.
However brief the interest, these payments evidence Leah's
interest in the premarital asset.
Inclusion of premarital assets in the marital estate in
the case at bar correlates with our previous holding in In re
the Marriage of J.J.C. (Mont. 1987), 739 P.2d 465, 44 St.Rep.
1068, where we held it was proper to award a cash payment to
the wife rather than force the division of property in which
the wife had only a brief interest. In J.J.C, as in the
instant case, the marriage lasted only a few months and the
wife's financial contributions to property were minimal.
While finding that the wife made no contribution to the
acquisition or preservation of the husband's estate, this
Court held a $15,000 payment to the wife was nonetheless
proper to compensate her for her interest obtained in the
husband's property through their marriage.
It should be noted that a decision requiring payment by
one party to the other in a dissolution proceeding also finds
support in statutory law. Section 40-4-202(1), MCA, states
that a court may "finally equitably apportion between the
parties the property and assets belonging to either or both,
however and whenever acquired and whether the title thereto
is in the name of the husband or wife or both."
The statute goes on to list factors which the court
must consider in making the property distribution. The
record clearly shows that the special master considered these
factors in making his findings and that the District Court
adopted the master's report in toto in its February, 1989
decision.
We hold the District Court properly included premarital
assets in the marital estate.
11.
Did the District Court award more than 100 percent of
the marital estate?
Norm argues that by ordering him to pay an additional
$7,664 to Leah the District Court is distributing more assets
than the marital estate contains. In support of this
argument he cites In re the Marriage of Lippert (Mont. 19811,
627 P.2d 1206, 38 St.Rep. 625, which expressly prohibited a
district court from awarding more than 100 percent of the
marital estate.
Lippert is a correct statement of the law. A court
cannot distribute what is not there. The District Court,
however, explained its reasoning in ordering the additional
payment. In the above-cited portion of the February 1
decision, quoting special master's Finding of Fact No. 12,
the District Court agreed that the marital estate included
assets acquired prior to the date of marriage. Noting that
the special master's report was confusing in regard to what
was in the marital estate, the District Court recognized that
the special master intended to include premarital assets. By
including premarital assets, the marital estate is adequate
to provide the additional payment from Norm to Leah in
compensation for the loss she suffered by selling her home in
order to contribute to the couple's Cloverview home.
The couple's premarital assets were properly included
in the marital estate and we find that the District Court did
not distribute more than 100 percent of the marital estate.
Affirmed.
We concur: