In Re Marriage of Pospisil , 299 Mont. 527 ( 2000 )

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No. 99-093
IN THE SUPREME COURT OF THE STATE OF MONTANA
2000 MT 132299 Mont. 5271 P. 3d 364IN RE MARRIAGE OF POSPISIL,
GEORGE K. POSPISIL,
Petitioner and Respondent
and
JOYCE M. POSPISIL,
Respondent and Appellant
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Fergus,
The Honorable David Cybulski, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gary S. Deschenes, Randy L. Tarum, Deschenes Law Office, Great Falls, Montana
For Respondent:
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Carl DeBelly, Lewistown, Montana
Submitted on Briefs: August 5, 1999
Decided: May 23, 2000
Filed:
__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
¶1 Joyce M. Pospisil (Joyce) appeals two orders issued by the Tenth Judicial District
Court, Fergus County. Joyce first contends that a Scheduling Order, issued January 12,
1999, which set a hearing date for January 25, 1999, violated her due process rights.
Second, she contends that the court's January 26, 1999 Order Implementing Property
Division did not achieve an equitable division of marital assets in accordance with the
Findings of Fact and Conclusions of Law, and the Final Decree and Judgment, entered by
the same court on June 11, 1996, and June 20, 1996, respectively.
¶2 We affirm in part, reverse in part, and remand for further proceedings consistent with
this opinion.
¶3 Joyce raises the following issues on appeal:
1. Did the District Court deny Joyce Pospisil due process by scheduling a hearing
date on fourteen-days notice?
2. Did the District Court err by failing to make an equitable division of the marital
estate?
Factual and Procedural Background
¶4 The parties were married on October 11, 1979, and separated in March of 1994. At the
time of their marriage, Joyce was 45 years old, and George Pospisil (George) was 46 years
old. They both have children from prior marriages, but none from their marriage to each
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other. While married, Joyce and George operated, and for a while lived on, a ranch and
farm located in Fergus County, Montana.
¶5The separation was not amicable. After more than two years of contentious litigation a
final dissolution decree was entered by the District Court on June 20, 1996. Although
Joyce entered the marriage with little property of her own, she was awarded $305,855 as
her net share of the marital estate. Notwithstanding the fact that George did not directly
appeal this judgment, Joyce's days of wrangling with her former spouse were far from
over.
¶6 The primary source of contention between the parties--then and now--is property,
namely the 1,400 acre farm and ranching operation near Moore, Montana. Prior to his
marriage to Joyce, George was gifted 160 acres from his parents, and an undivided fifteen-
percent interest in 1281 acres. In 1982, his parents entered a contract for deed with
George, selling him the remaining eighty-five percent interest for $221,638. During their
marriage, however, George and Joyce did not make any payments on the contract for
deed. George's parents and then his mother (his father died in 1984), not once demanded
payment or gave any notice of default while George and Joyce were married. Further,
George and Joyce treated the property as their own by paying taxes, paying related
insurance premiums, using it as security on numerous occasions, and placing the entire
property on the market for sale several times.
¶7 The cloudy legal status of the contract for deed would prove to be stormy. In the midst
of the dissolution proceedings, George's mother, Ruby Pospisil (Ruby), filed a quiet title
complaint against George and Joyce on March 14, 1995. This action sought to invalidate
the contract for deed, and thereby remove a majority of the marital property from the
dissolution. At this same time, George had, in fact, assumed power of attorney over his
mother's affairs as of January 11, 1994. Ruby, who was age 94 at the time, resided in a
Lewistown nursing home.
¶8 Ultimately, the quiet title action would be joined with the dissolution proceedings, by
an order issued May 15, 1995. In an order dated June 12, 1995, the court noted that "the
belated quiet title action by his mother is highly suspect." In its Findings of Fact and
Conclusions of Law, the court stated that "Ruby's belated quiet title action was and is a
conspiratorial sham between son and mother to deplete the marital estate to the wife's
detriment after a marriage of 17 years." The court dismissed the quiet title action in its
June 20, 1996 decree. On August 12, 1996, Ruby appealed the dismissal of her quiet title
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action, which prevented Joyce from conducting a sale of the marital property as ordered
by the District Court. This Court affirmed the District Court's dismissal of the quiet title
action in May of 1997.
¶9 Within months, counsel for Ruby would pursue further legal action. On June 26, 1997,
Ruby declared the contract for deed in default, and requested it be cured within 60 days.
She requested that a total sum of $1,779,012.12 be paid in full. This sum represented the
$221,638 purchase price, $449,189 in accrued interest, $1,008,185 in crops and proceeds,
and an additional $100,000 for 1997 crops and proceeds. The court issued an order on
January 30, 1998, denying Ruby's motion to intervene. Ruby filed a request for declaratory
judgment in September 1998.
¶10 Not only did the District Court find that Ruby's quiet title action was a "sham" in its
1996 decree, it also determined that Joyce was entitled to a fifty-percent share of the
property's value, even if it meant selling the operation to achieve such an equitable result.
The court determined that throughout much of their marriage, Joyce managed the affairs
of the ranch and farm, essentially "keeping the business afloat," while George pursued
investment opportunities elsewhere, including several ranch and timber ventures in
Oregon. According to the court's findings, these ventures were less than financially
successful. Additionally, the record indicates that George on more than one occasion
considered selling his family's Fergus County property himself, but stopped short when
faced with the prospect that Joyce might share in the proceeds.
¶11 The court also found that as a result of one of these Oregon deals going sour in 1988,
George quitclaimed his entire interest in all of the ranch properties to Joyce, and assigned
to her his ownership interest in the livestock brands and ranch accounts. It is undisputed
that he took this action in order to protect their ranch from a possible unfavorable
judgment in the event a lawsuit was filed. George contended that the transfer was one of
"trust," in that he could, upon request, have the property reconveyed to him. Once the
parties separated, Joyce refused to reconvey the property to George. These circumstances
would eventually lead to further confusion following the entry of the dissolution decree, as
George took over "exclusive possession" of the farm and ranch, pursuant to the decree,
while financial obligations concerning the ranch were directed to Joyce, who resided in
Lewistown.
¶12 Following the entry of the decree and prior to this appeal, a considerable volume of
legal maneuvers consumed the intervening years in addition to Ruby's appeal. For
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example, Joyce moved the court for temporary maintenance. On January 14, 1997, the
District Court ordered that Joyce be awarded maintenance, retroactive to June 14, 1996, in
the amount of $1,500 per month. George failed to comply with this order, forcing Joyce to
engage in regular executions on George's assets. In May of 1998, Judge Davis recused
himself from the case, and Judge David Cybulski was substituted. Most recently, with a
potential sale of marital property and a final resolution of the dissolution looming, the
parties disputed what marital assets had or had not been distributed since 1996, and who
had paid what farm and ranch obligations. On August 28, 1998, Joyce claimed that the
outstanding distribution owed to her was $341,477--which accounted for appreciation of
the marital assets--and that George still owed her an additional $16,500 in maintenance.
According to George's August 31, 1998 accounting, however, Joyce had received
$190,888 in distributions from the marital estate. This ongoing dispute led to a January 25,
1999 dispositional hearing.
¶13 On January 12, 1999, the court issued its scheduling order, which identified the issues
that would be addressed by the parties at the hearing. Essentially, the court identified those
issues that remained in dispute, which the parties--including Ruby--had spent the prior six
months contesting in an exchange of replies and responses to each other's statements of
accounting filed with the court.
¶14 Joyce objected to the hearing date on January 20, 1999, claiming that the time
between the January 12th order and the January 25th hearing was insufficient to conduct
discovery necessary to fully prepare for the issues identified by the court's order. She did
not file a brief addressing seven issues identified by the court's scheduling order. George,
on the other hand, filed a brief in response to the requests on January 22, 1999.
¶15 Nevertheless, the fact-finding hearing took place as scheduled. The court determined
that as far as resolving the dispute over the marital assets, each party had "contributed to
the mess" and both parties "share equal responsibility in frustrating the exchange of
information between the sides."
¶16 The next day, the District Court issued an Order Implementing Property Division. The
District Court reduced Joyce's 1996 $305,855 net share to $141,660, plus $20,687 owed in
unpaid maintenance. First, based on the mutual concessions of the parties, the court
determined that a total of $8,603, should be deducted from Joyce's share. The court then
deducted $135,020 in assets that Joyce had allegedly received, including $23,721 from
"Livestock and sales," a vehicle worth $10,378, $33,221 from a ranch bank account,
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$59,000 from another bank account in Joyce's name, and $8,700 from full payment of a
promissory note. The court then added a total of $23,709 for obligations that Joyce had
paid, including $5,340 for a vehicle that had been awarded to George, $5,357 for property
taxes on the ranch, and $13,012 for an insurance policy that covered the ranch property.
Finally, the court deducted $44,281, which it determined Joyce owed George's mother in
interest under a contract for deed. Based on the foregoing findings, the court determined
that Joyce's share of the marital estate was $141,660. The court determined that thirteen
back-maintenance payments, or $19,500, plus interest were due for an additional $20,687.
¶17 On January 29, 1999, Joyce filed an objection to the court's order pertaining to ASCS
(Agricultural Stabilization and Conservation Service) payments and requested a hearing.
The court granted this request by order on February 1, 1999. A hearing took place on
February 8, 1999. Joyce filed her notice of appeal that same day.
Standard of Review
¶18 Joyce has argued that the District Court, in issuing a scheduling order within two
weeks of a hearing, and then denying what must be construed as a motion to continue,
abridged her constitutional right to due process. Consequently, she suffered detriment in
that she was deprived of marital property once the court reduced the amount of her marital
estate distribution following the hearing. Our review of questions involving constitutional
law is plenary. See State v. Schnittgen (1996), 277 Mont. 291, 295, 922 P.2d 500, 503.
Further, we will review a district court's decision to grant or deny a motion for a
continuance for abuse of discretion. Any motion for a continuance is within the sound
discretion of the district court and we will not overrule the court's decision to deny Joyce's
request for a continuance unless there is an affirmative showing that she has suffered
prejudice. See In re Marriage of Caras (1994), 263 Mont. 377, 383, 868 P.2d 615, 618
(citations and internal quotations omitted).
¶19 We review the division of marital property by a district court to determine whether the
findings upon which the district court relied are clearly erroneous. In re Marriage of
Engen, 1998 MT 153, ¶ 26, 289 Mont. 299, ¶ 26, 961 P.2d 738, ¶ 26. "If the findings are
not clearly erroneous, we will affirm the distribution of property unless the district court
abused its discretion." Engen, ¶ 26 (citations omitted). The test for abuse of discretion in a
dissolution proceeding is "whether the district court acted arbitrarily without employment
of conscientious judgment" or whether the district court "exceeded the bounds of reason
resulting in substantial injustice." Engen, ¶ 26 (citation omitted).
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¶20 Finally, the standard of review of a district court's conclusions of law is whether the
conclusions are correct. See Scott v. Scott (1997), 283 Mont. 169, 173, 939 P.2d 998, 1000
(citations omitted).
DISCUSSION
¶21 First, and foremost, we must make clear that the original, 1996 dissolution decree in
this matter is not at issue. As Joyce concedes in her briefs, the time to appeal such matters
has long since passed. The District Court, in its 1999 Order Implementing Property
Division, stated that "[t]he Court will not relitigate those matters previously set forth in the
Decree Of Dissolution of Marriage, and the Court finds the Decree to be in full force and
effect." We agree, and accordingly use this pronouncement as a starting point in
determining whether the District Court relied on erroneous findings or abused its
discretion in determining what assets had or had not been distributed, and what assets and
liabilities remained, subsequent to the entry of the 1996 decree. Thus, we begin with the
District Court's 1996 determination that Joyce was entitled to a fixed judgment of
$305,855 under its decree, and proceed in our review of the various adjustments
determined by the District Court.
Issue 1
Did the District Court deny Joyce Pospisil due process by scheduling a hearing date on
fourteen-days notice?
¶22 The alleged deficient notice in question is found in the District Court's January 12,
1999 scheduling order which, in part, provides that each party "can present evidence on
what has happened with these assets since the date of [the 1996] decree and make a
determination of the debt associated with that property and address the issues identified."
This instruction follows a list of 16 items valued and assigned under the 1996 dissolution
decree. The order further required that each party brief seven separate issues prior to the
hearing.
¶23 Joyce argues that the District Court did not provide her sufficient notice of the issues
that would be addressed at the January 25, 1999 hearing, and that consequently she was
denied the opportunity to conduct meaningful discovery and adequately present her case to
the court. She contends that as a result of this short notice and the court's refusal to
reschedule the hearing, she was denied due process under Montana's Constitution, Article
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II, Section 17.
¶24 George counters that the subject matter of the hearing in January, as outlined in the
scheduling order, was the culmination of several prior hearings and conferences directed
at the ongoing dispute between the parties. The issues identified in the scheduling order,
therefore, have existed since the dissolution decree was entered in 1996. At the
commencement of the January hearing, the court agreed with George's assessment, and
refused to delay the adjudication of this matter any further. The court noted that this
dispute commenced in 1994 with a filing for dissolution, and that a decree was entered in
1996. Judge Cybulski informed the parties that "if you guys haven't got it figured out . . .
by the time four years have passed . . . . it's hopeless anyway."
¶25 Article II, Section 17, of the Montana Constitution provides that "[n]o person shall be
deprived of life, liberty, or property without due process of law." In the context of this
dispute, this Court has stated that due process of law refers to those fundamental rights
which "our system of jurisprudence has always recognized, that is, of requiring notice to
be given and a hearing had before property may be taken . . ." In re Marriage of Nordberg
(1995), 271 Mont. 328, 331, 896 P.2d 447, 449 (citation omitted). We agree that the
District Court's January 26, 1999 order, which effectively reduced Joyce's share of the
marital estate, entitled her to notice and a hearing. We disagree, however, that the notice in
this instance was insufficient.
¶26 The defective notice in Nordberg instructed the parties that a "Court-counsel
conference" via telephone would be held that addressed "the format for the disposition of
all pending [matters] in this cause." Nordberg, 271 Mont. at 330, 896 P.2d at 448. During
the conference call, the court requested that one party submit her calculation of the amount
still due under a prior dissolution decree. The party complied. Shortly after the conference
call, she submitted a copy of the calculation to the court and opposing counsel. Without
holding any further proceedings, the court granted her a money judgment. See Nordberg,
271 Mont. at 331, 896 P.2d at 448-49.
¶27 On appeal, this Court concluded that the principles of due process required that the
husband should "be given notice and an opportunity to present evidence of his payments
toward the 1987 judgment before a new judgment was entered against him." Nordberg,
271 Mont. at 332, 896 P.2d at 449.
¶28 Our decision in Nordberg is analogous to the case sub judice. At the January 25, 1999
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dispositional hearing, the court accepted evidence of payment and distribution pursuant to
a prior decree, and then arrived at a new judgment, re-establishing the rights of the
respective parties. Thus, if Joyce can show that she was not afforded the opportunity to
adequately present evidence, similar to the husband in Nordberg, then a new hearing
would be a necessary remedy for such a due process violation.
¶29 Contrary to Joyce's argument, however, the District Court's January 12, 1999
scheduling order did not exactly break virgin ground. The order did nothing more than
restate the contents of an earlier order issued on October 14, 1998. In that order, which
was preliminary to the parties' November 5, 1998 conference, the court required that each
party establish the status of 12 items pursuant to the dissolution decree: (1) the contract for
deed; (2) farm machinery; (3) livestock sales; (4) grain sales; (5) ASCS funds; (6) a ranch
checking account; (7) promissory notes; (8) Moore Oil credit; (9) Fairmont timeshare; (10)
a Northwest life insurance policy; (11) a Ford Aerostar van; and (12) loans and payments
thereon. There was no substantial difference between these items and the 16 identified in
the January 12, 1999 order.
¶30 The October order, in turn, attempted to summarize and consolidate the ongoing
dispute over these marital assets that had been hashed, and rehashed between the parties
since 1997, following George's mother's unsuccessful appeal to this Court regarding the
corollary quiet title action. Between April and October of 1998, for example, the parties--
including George's mother--filed a total of nine documents with the court related to the
accounting and distribution of the marital estate.
¶31 Further, under the January 12, 1999 scheduling order, the only new legal issue of
import that the court requested that the parties brief pertained to whether "preservation of
the marital assets by husband without contribution by wife entitles wife to increases in
value of the assets or income from the assets." This is a legal question which requires
research but certainly no further discovery.
¶32 Thus, it is unclear how Joyce was prejudiced by the refusal of the District Court to
further delay the disposition of the 1996 decree so that the foregoing issues could be more
fully discovered and addressed at the hearing. Furthermore, at the hearing each party was
provided the opportunity to offer documentary evidence--most of which was either
redundant or irrelevant as the discussion below demonstrates. Counsel for the parties cross-
examined witnesses to test the veracity of the offered evidence. And, further, Joyce had
the opportunity to call an expert witness on her behalf to provide further evidence of her
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version of a proper valuation and distribution. Finally, we cannot fault the court for Joyce's
counsel's failure to adequately brief the required issues, which apparently did not pose a
problem for George's counsel.
¶33 Furthermore, on appeal, Joyce argues that the discovery she sought primarily related
to George's financial affairs and income derived from his operation of the ranch and farm
following the 1996 decree, as well as alleged payments made to his mother, that affected
the status of the contract for deed debt. These matters, as will be discussed below, are not
relevant to the legal determination of any appreciation or decrease to the marital estate.
What ultimately will assuage any prejudice to Joyce in this matter is the application of
more law, not the discovery of more facts.
¶34 Accordingly, we hold that the January 12, 1999 scheduling order provided Joyce
sufficient notice as to what issues would be addressed in the January 25, 1999 hearing, she
has not shown sufficient causally related prejudice as a result of the notice, and therefore
no violation of due process occurred.
Issue 2
Did the District Court err by failing to make an equitable division of the marital estate?
¶35 Joyce contends that the District Court, in making what it termed were "minor
adjustments" in its 1999 order, erred by failing to achieve an equitable, fifty-fifty division
of the marital estate pursuant to the 1996 decree. Specifically, she contends that the court
erred by attributing to her money she never received and deducting debts she should not
have to pay. George argues that the court's January 1999 order mirrors, rather than
overturns, the 1996 dissolution decree, and is in fact too generous.
¶36 Considering the parties' arguments as a whole in light of both the 1996 decree and the
1999 order, the only asset adjustments made by the District Court in its 1999 order that
remain at issue are as follows: the $23,721 in "livestock and sales" allegedly received by
Joyce, and the $44,281 in interest that Joyce allegedly owes Ruby pursuant to the contract
for deed obligation. Joyce acknowledges that the timeliness of her disputes over such
marital asset issues as the ranch account and her personal injury account have grown stale,
and concedes to these "adjustments" made by the District Court. Joyce does, however,
raise the issue that the court abused its discretion in not taking into account current values
of the marital estate. Primarily, she focuses her argument on the post-decree appreciation
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of the 1,400 acre ranch and the income George realized in using what she claims were
their mutual marital assets. Finally, she also raises the issue of whether the court erred by
apparently assigning her decreed judgment to a third-party bank.
¶37 Before proceeding, we first observe that the District Court certainly was acting within
its discretion to push this unfortunate, protracted dispute to a final conclusion--as
evidenced by its 24-hour turnaround in issuing its final order. However, we also observe
that certain fundamental rules governing marital dissolutions must be followed regardless
of the evidence presented by the parties, or the imperative for a swift resolution. The
parties in this matter have expended considerable time even on appeal pursuing tenuous
legal theories, while the controlling law has largely been ignored.
¶38 Therefore, to place this matter in its simplest terms, before proceeding, we find it
necessary to reiterate the obvious: pursuant to the 1996 dissolution decree, George does
not owe Joyce half of a ranch or a whole Cadillac; there are no longer "marital assets" that
need to be equitably divided and distributed; rather, Joyce is owed a money judgment
which was given a fixed value in 1996. In this sense, we agree with George's assertion that
the only "assets" Joyce was awarded under the decree were "her personal effects and the
balance in cash." We conclude that all arguments concerning any apparent ambiguities
found within the 1996 decree--which anticipated a timely sale of assets that never
materialized--are immaterial at this point. Therefore, how much of this $305,855 decree
has been realized by Joyce is the focal issue of our inquiry here.
A. Livestock and Sales
¶39 Joyce argues that the District Court abused its discretion by crediting Joyce with the
receipt of $23,721 in "livestock and sales." We agree.
¶40 George's testimony upon which this figure is based clearly reveals that this sum was
allegedly received by Joyce some time in 1994--and that he believes the court in 1996
erred by not including it into the marital assets. Whether or not Joyce received this amount
is immaterial. The year alone (which the District Court did not reference in its findings)
leads to the inevitable conclusion that this money cannot be deemed a "distribution" that
rightfully should be credited against Joyce's judgment. Offsetting the amount due Joyce by
this sum was therefore an abuse of discretion, and is reversed and vacated from the order.
B. Marital Asset Valuation
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¶41 Joyce contends that the subsequent appreciation of the marital assets must be
accounted for in determining the final disposition of the 1996 decree. George strenuously
argues that all financial matters concerning the farm and ranch that have occurred since
the court issued the dissolution decree in 1996 are by his hand alone, and Joyce should not
realize any gain. In this instance, we must agree with both parties.
¶42 In support of his position, George relies on this Court's decision in In re Marriage of
Wagner (1984), 208 Mont. 369, 679 P.2d 753. In Wagner we recognized that a husband's
increased liabilities and the wife's financial success following their separation should not
be accounted for in determining the "marital assets," because both were realized after the
marital relationship was irretrievably broken, and the "disparity of the parties' business
acumen resulted in a change of either's financial status after the separation so that selection
of the later date would create an unjust distribution." Wagner, 208 Mont. at 380, 679 P.2d
at 758. The procedural circumstances in Wagner, however, are clearly distinguishable.
There, the financial status in question pertained to post-separation and pre-dissolution
decree conduct by the parties. Here, we have an uncontested decree in place (aside from
the corollary quiet title action), which in turn has been affected by post-decree actions by
the parties.
¶43 In contrast to Wagner--and more on point--this Court has determined that a district
court abused its discretion by not accounting for the substantial difference in the value of
marital assets from the court's valuation dates to the time of the dispositional hearing
almost three years later. See In re Marriage of Krause (1982), 200 Mont. 368, 654 P.2d
963. But see In re Marriage of Loegering (1984), 212 Mont. 499, 507-508, 689 P.2d 260,
265 (stating that it was improper to value marital property at the time of dispositional
hearing rather than at the time of dissolution 15 months earlier, but concluding that this
error was harmless).
¶44 In Krause, the delay between an expert's valuation of marital assets and the
dispositional hearing was 34 months. Similarly, the delay here between the valuations set
forth in the 1996 decree and the dispositional hearing was 31 months. In Krause, we
observed that a stock holding was valued at $18,000, and by the time of the dispositional
hearing had increased to $31,000. "Failure to recognize these kinds of value fluctuations is
error." Krause, 200 Mont. at 380, 654 P.2d at 969. We identified three essential principles
of determining valuation of marital property subject to dissolution: (1) proper valuation is
not tied to a specific event, (2) there may be more than one valuation point, depending on
the kind of property involved, and (3) preferably, valuation should occur at the time of
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distribution, or, stated another way, present fair market values should be used. See
Krause, 200 Mont. at 379, 654 P.2d at 968 (emphasis added). We further stated that these
principles are tempered by the rule that a district court has broad discretion in property
distribution. See Krause, 200 Mont. at 379, 654 P.2d at 968.
¶45 Seemingly, Joyce's assertions are correct that a proper valuation of the marital estate
must occur in the present, at the time of "distribution," and therefore the District Court's
reliance on the 1996 property values was an abuse of discretion and incorrect. We
conclude that although Joyce's arguments on this issue are certainly meritorious, the
factual circumstances here are nevertheless clearly distinguishable from our decision in
Krause.
¶46 In that case we recognized that the appellant was "never divested of her interest in the
marital property." See Krause, 200 Mont. at 380, 654 P.2d at 969. The original decree in
that matter did not determine a liquidated dollar amount to which each party was entitled;
rather, the "District Court expressly reserved jurisdiction to make the disposition at a later
date." See Krause, 200 Mont. at 370, 654 P.2d at 964. Thus, the husband and wife each
maintained an interest in certain investment properties following the entry of the decree
until the court finally determined what the properties were worth, and what percentage of
ownership each party should be entitled.
¶47 Here, under the 1996 decree, George was "granted exclusive possession of the ranch
properties, bank accounts and other assets necessary to keep the ranch a viable business
entity." Again, contrary to George's argument, Joyce was awarded a liquidated money
judgment of $305,855, based on what the court found was a net marital estate of $651,916.
Similar to the parties in Wagner, from that day forward, they each went their separate
ways.
¶48 Thus, as a matter of law, Joyce is not entitled to either appreciation or, conversely, any
liability that may have accrued on the property exclusively awarded to George, or arising
due to his use thereof subsequent to the court's 1996 dissolution decree. Joyce, however, is
substantively correct that her 1996 decree judgment of $305,855 should appreciate--
namely, this sum should accrue judgment interest.
¶49 The District Court indicates in its 1999 order that Joyce "should not be entitled to
judgment interest" accruing prior to its order because the maintenance award accounts for
what Joyce "would have earned had she had the funds available to invest or had the Court
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previously reduced her interests to a fixed amount and awarded judgment interest." This
assessment is incorrect as a matter of law. Judgment interest is not "awarded." Rather,
judgment interest is a statutory right. Under § 25-9-205, MCA, interest is payable on all
judgments recovered at the annual rate of ten percent. Under Rule 54(a), M.R.Civ.P., a
"judgment" expressly includes a decree and any order from which an appeal lies. Once a
person is liable for a money judgment resulting from a property settlement and payment is
not made, the person entitled to the settlement is further entitled to the statutory rate of
interest. See in re Marriage of Gibson (1983), 206 Mont. 460, 466, 671 P.2d 629, 632-33;
Knudson v. Knudson (1981), 191 Mont. 204, 208-209, 622 P.2d 1025, 1027. Further,
under Rule 31, M.R.App.P., "[i]f a judgment is modified or reversed with a direction that a
judgment for money be entered in the district court, the mandate shall contain instructions
with respect to allowance of interest."
¶50 On this issue, George directs our attention to the rule that interest is not allowable
until the exact amount due is ascertained or is ascertainable. See In re Marriage of Gerhart
(1990), 245 Mont. 279, 284, 800 P.2d 698, 701. Clearly, the court in its 1996 decree
ascertained an exact amount due that was calculated down to the penny. The only
uncertainty that remained was whether the $305,855.09 due Joyce would be discharged
through a resolution between the parties, or by public sale. In the event of sale, the court
reserved some discretion as to interest owed Ruby that may have affected the judgment
amount. Again, this event did not occur and, as further discussion below indicates, is no
longer material to the resolution of this matter.
¶51 We therefore hold that upon remand, the statutory interest rate of ten percent shall be
applied to the resulting balance of Joyce's decree, which began accruing in June of 1996,
according to the foregoing discussion. We affirm, however, that no interest accrued during
the pendency of this appeal, pursuant to the court's order staying execution issued on
March 10, 1999. See generally § 27-1-211, MCA (stating that the right to judgment
interest excludes period in which debtor is prevented by law or by the act of the creditor
from paying the debt).
¶52 We further hold that the District Court's determination that George owes Joyce
$19,500 in unpaid maintenance plus interest is accordingly subject to the same rules. Thus,
each unpaid monthly maintenance payment has continued to accrue ten-percent interest
from the time it was due, until the March 10, 1999 stay of execution, and therefore the
court's determination that $20,687 is owed in back maintenance and interest must be
recalculated consistent with the foregoing.
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C. Interest Owed to Ruby Pospisil
¶53 Under the foregoing rationale, we explicitly affirm that portion of the court's 1999
order which found that "[t]his Court need not address the amounts due Ruby Pospisil from
George Pospisil under the Contract for Deed, or the payments made, as that will be
between Ruby and George and does not involve Wife." Disregarding all arguments from
both parties, we conclude that who actually pocketed these alleged payments is immaterial.
¶54 We conclude, however, that the District Court abused its discretion when it then
arrived at a contradictory conclusion that Joyce must nevertheless share the burden in
discharging what appears to have been an illusory interest-accruing debt. Once the District
Court entered its decree in 1996, and dismissed Ruby's quiet title action, the contract for
deed became an exclusive liability to the party in possession of the ranch and farm,
namely George. Again, we must agree with George's argument that all financial matters
concerning the operation of the ranch and farm following the 1996 decree are his burdens
and benefits that he alone must bear.
¶55 We hold that the District Court abused its discretion when it determined Joyce owed
Ruby an additional $44,281, as an adjustment for interest under the 1996 decree. To hold
otherwise would clearly disregard the court's 1996 decree which established that George,
through his mother, engaged in a "conspiratorial sham." There is substantial evidence that
the only person who would gain from interest payments on the contract for deed at this
point would be none other than George himself. Accordingly, this sum of $44,281 is
hereby reversed and vacated from that order.
D. Assignment of Interest to First Federal
¶56 Joyce contends that the court abused its discretion by, apparently, assigning some or
all of the decreed proceeds to a Lewistown bank, and naming it as a "payee." George
suggests that the court "reformed the security agreement to reflect precisely what Joyce
and First National Bank of Lewistown agree was security for the loan--her interest in the
marital estate, which was her personal items and cash" as set forth in the 1996 decree.
¶57 For obvious reasons, the court's findings and conclusions are less than clear on this
issue. Namely, FNB of Lewistown was not a party to this action. The court observed that
$26,107 in ASCS funds from the Pospisil ranch and farm operation had been deposited
with the court, and that "such amount is hereby made a credit to the sums due Wife
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hereunder." The order further states, however, that "[t]he Clerk is instructed to include
First National Bank of Lewistown as a payee and secured lienholder in Wife's Dissolution
proceeds. It is specifically ordered that all risk of nonpayment or nonreceipt of these funds
is assigned to Wife." The court concluded that the final $136,240 judgment amount due to
Joyce (after subtracting the foregoing ASCS funds she would receive from the $141,660
adjusted decree and $20,687 award for back maintenance) was "subject to a lien to the
First National Bank of Lewistown."
¶58 Whether the court intended to actually assign all of the judgment to a nonparty
creditor--and thereby prevent Joyce from actually receiving any proceeds--or simply
intended to establish the creditor's status as a lienholder is immaterial. It was an abuse of
discretion for the court, in this instance, to establish or adjudicate the rights of a stranger to
this action.
¶59 In Warnack v. Coneen Family Trust (1994), 266 Mont. 203, 879 P.2d 715, we
determined that a person who is not a party to the action cannot be a party to the judgment.
We stated that "it is a fundamental principle of our jurisprudence that it is only against a
party to the action that a judgment can be taken and that the judgment is not binding
against a stranger to the action." Warnack, 266 Mont. at 207, 879 P.2d at 718 (quoting
Moore v. Capitol Gas Corp. (1945), 117 Mont. 148, 156, 158 P.2d 302, 306). We further
stated that this same rule applies where a judgment is awarded in favor of a nonparty.
Warnack, 266 Mont. at 207, 879 P.2d at 718.
¶60 Obviously, the court was concerned about the interests of a party, namely George,
whose property may be encumbered by a lien to which he was never a party. Naturally,
George would desire that the court "reform" any security agreement in his favor.
Accordingly, Joyce may have violated the 1996 decree by first, not transferring title to the
property interests as ordered, and second, by using her share of the "marital estate" as
security on a loan. At this juncture, however, we will not speculate as to the validity of any
security interest that may or may not exist between Joyce and a nonparty. We must
therefore reverse and vacate all references made by the court with respect to the rights of
First National Bank of Lewistown.
F. Summary
¶61 We conclude that the District Court incorrectly offset the amount due Joyce under the
1996 decree by attributing to her the receipt of livestock and sales of $23,721, and an
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interest debt due Ruby Pospisil for $44,281. We conclude that with these sums added to
the $141,660 net due Joyce as determined by the District Court in its 1999 order, the
correct judgment is now $209,662. Furthermore, added to this sum is ten-percent
judgment interest accrued between June 20, 1996, and March 10, 1999.
¶62 We also conclude that the interest due on the $19,500 of owed maintenance must be
recalculated consistent with this opinion. And, finally, all references to any rights of First
National Bank of Lewistown found in the 1999 order should be stricken.
¶63 This matter is affirmed in part, reversed in part, and remanded for further proceedings
consistent with this opinion.
/S/ JAMES C. NELSON
We Concur:
/S/ J. A. TURNAGE
/S/ W. WILLIAM LEAPHART
/S/ WILLIAM E. HUNT, SR.
/S/ JIM REGNIER
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