Anderson v. Anderson , 2015 S.D. LEXIS 59 ( 2015 )

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2015 S.D. 28IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
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DOROTHEA ANDERSON, Plaintiff and Appellee,
v.
JOHN ANDERSON, Defendant and Appellant.
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APPEAL FROM THE CIRCUIT COURT OF
THE FIRST JUDICIAL CIRCUIT
AURORA COUNTY, SOUTH DAKOTA
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THE HONORABLE PATRICK SMITH
Judge
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DAVA A. WERMERS
Mitchell, South Dakota Attorney for plaintiff
and appellee.
CHRIS A. NIPE of
Larson & Nipe
Mitchell, South Dakota Attorneys for defendant
and appellant.
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CONSIDERED ON BRIEFS
ON MARCH 23, 2015
OPINION FILED 05/06/15
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SEVERSON, Justice
[¶1.] Dorothea Anderson and John Anderson obtained a divorce. The circuit
court divided the marital assets, including land and cash that John had inherited
from his mother during the marriage. The court also awarded Dorothea child
support. John appeals. We affirm.
Background
[¶2.] Dorothea and John married in 1996 and separated in 2012. They both
brought vehicles into the marriage but no other assets of value. Neither party
brought debt into the marriage. They have three children who were 16, 11, and 9 at
the time of the divorce. They lived with John’s parents until 2003 or 2004 when
they acquired their marital home. John farmed and worked full time at Scott
Supply. Dorothea took care of the home and children. She also worked at a
restaurant before obtaining full-time employment as a paraprofessional at a local
school where she continued to work at the time of the divorce hearing. Dorothea
helped with various aspects of the farm such as running errands and serving as
bookkeeper. Throughout the marriage both parties placed their income into a joint
checking account. No money or property was kept separate by either party. The
disputed property in this case is two quarters of land, inherited cash, and cash
taken by Dorothea upon separation of the parties.
[¶3.] The circuit court determined that the parties’ farmland, consisting of
two quarter sections, referred to as the SE 1/4 and NE 1/4, was a marital asset
subject to equitable division. John’s mother gifted the SE 1/4 in 2004. At John’s
suggestion, his mother put Dorothea’s name on the deed, despite the strain
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Dorothea caused on the relationship between John and his mother. In 2007, John’s
mother passed away. She bequeathed him the NE 1/4 and $91,296. The circuit
court noted that the SE 1/4 had been obtained eight years into the marriage, and
they received the NE 1/4 eleven years into the marriage. Further, the court found
that John had minimized Dorothea’s contributions to the farming operation and
improvement of the real estate. It found that her management of the home and
children provided John with the time he needed to perform farming tasks and that
her money went into the joint checking account to pay farm-related expenses and
taxes. Therefore, the court included the land in the marital property, concluding
that Dorothea’s contributions were more than de minimis and that she had need for
the financial support the asset can provide. The court determined that each party
would retain an undivided one half interest in the real estate as tenants in common.
It gave John the option, for six months, to purchase Dorothea’s share of the property
for its current appraisal value. Neither party could dispose of the land or bring an
action for partition until his option expired. The court did this in recognition of
John’s family history associated with the land and in an effort to keep the farm
intact.
[¶4.] The court did not include in the marital estate the sum of $10,000,
which Dorothea had withdrawn from the joint account at the time of the parties’
separation. The court found that the money no longer existed. It also found that
John had used marital assets during the separation—specifically the marital
household and farm. Therefore, the $10,000 was determined to be a non-marital
asset, as were the 2012 and 2013 crops, which were in storage at the time of trial.
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John asked the court to require Dorothea to repay him $91,296—the amount he
inherited from his mother. He asserted that it should be considered a marital debt
owed by Dorothea to him. The court noted that the money went into the joint
checking account, had been spent on family needs, and it was not a debt. The
amount was never to be repaid to the estate of John’s mother, and there was no
evidence that John exercised exclusive control and possession of the money. Lastly,
there was no evidence that the parties entered into a debtor/creditor relationship
where Dorothea agreed to repay John for any money she may have spent. Given
that the asset did not exist, and there was no marital debt arising from it, the court
did not consider the sum in the property division.
[¶5.] The parties agreed to joint custody of the children, and the court
ordered John to pay child support in the amount of $351 per month. Prior to John’s
child support obligation, neither party had paid child support to the other during
the separation period. John appeals raising the following issues:
1. Whether the circuit court erred by including inherited and
gifted land as a marital asset.
2. Whether the court erred by failing to make an adjustment
for cash taken by Dorothea at the time of separation.
3. Whether the court erred by failing to make an adjustment
to the property division for cash inherited from John’s
mother.
4. Whether the court erred by ordering John to pay child
support.
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Analysis
Inherited and gifted farmland
[¶6.] SDCL 25-4-44 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.” “In arriving at an equitable division of property, a
circuit court must classify property as ‘marital’ or ‘non-marital.’” Halbersma v.
Halbersma, 2009 S.D. 98, ¶ 10, 775 N.W.2d 210, 215 (Halbersma II). “A circuit
court has broad discretion in determining whether property is marital or non-
marital.” Id. “Only 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.” Novak v. Novak, 2006 S.D. 34,
¶ 5, 713 N.W.2d 551, 552-53. “We review the [circuit] court’s determination of child
support . . . and the division of property under an abuse of discretion standard.”
Hill v. Hill, 2009 S.D. 18, ¶ 5, 763 N.W.2d 818, 822. Findings of fact are reviewed
under the clearly erroneous standard. Id.[¶7.] We have explained that “inherited property ‘is not ipso facto excluded
from consideration in the overall division of property.’” Novak, 2006 S.D. 34, ¶ 5,
713 N.W.2d at 553 (quoting Billion v. Billion, 1996 S.D. 101, ¶ 20, 553 N.W.2d 226,
232). Further, “this Court has consistently held that the [circuit] court has
discretion in determining how to consider premarital assets and gifts during a
marriage; whether to include or exclude them from the marital estate.’” Billion,
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1996 S.D. 101, ¶ 20, 553 N.W.2d at 232 (quoting Strickland v. Strickland, 470
N.W.2d 832, 836 (S.D. 1991)) (internal quotation marks omitted). The circuit court
should consider the following factors when dividing property and when determining
whether inherited property is a marital asset: “(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 S.D. 34, ¶ 4, 713 N.W.2d at
552. “In evaluating the seven principal factors listed above, a circuit court may
consider other evidence to determine whether inherited or gifted property should be
excluded from the marital estate, including the origin and treatment of inherited or
gifted property and the direct or indirect contributions of each party to the
accumulation and maintenance of the property.” Halbersma II, 2009 S.D. 98, ¶ 12,
775 N.W.2d at 215.
[¶8.] John’s main contentions are that Dorothea did not contribute to the
acquisition of the two quarters and that she did not bring any assets into the
marriage through inheritance. He maintains that he should have been granted the
land, even though he recognizes that “[t]his Court has consistently held that a
homemaker’s contribution to the family’s upkeep is valuable and must be
considered as no less significant and substantial to the accumulation of marital
property than the other spouse’s labor outside the home.” Terca v. Terca, 2008 S.D.
99, ¶ 25, 757 N.W.2d 319, 326. He contends that a homemaker’s contribution is
only relevant if the parties “had jointly acquired the property in question.” We
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reject such a notion, as it is clearly contrary to our case law. “South Dakota is an
‘all property state’ which results in all property of both of the divorcing parties
being subject to equitable division by the [circuit] court, regardless of title or origin.”
Billion, 1996 S.D. 101, ¶ 61, 553 N.W.2d at 237. It is well within the court’s
discretion to determine which property is marital or non-marital, and we will not
overturn such a decision absent an abuse of discretion.
[¶9.] John’s analysis improperly focuses solely on the sixth factor to be
considered by the circuit court when dividing property. Even assuming that
Dorothea made de minimis contributions to the accumulation of the property, the
lack of such contributions would not automatically result in an exclusion of the
property from the marital estate. “[N]o one factor should be determinative in cases
where the circuit court equitably divides property under SDCL 25-4-4[4].”
Halbersma II, 2009 S.D. 98, ¶ 19, 775 N.W.2d at 217. In determining that the two
quarters were subject to division, the court properly considered the factors we have
named. It noted that the parties were married for nearly seventeen years. The SE
1/4 was deeded to both parties eight and one-half years into the marriage, and the
NE 1/4 was acquired eleven years into the marriage. It noted that those
“timeframes weigh in favor of including the parcels in the marital estate.” The
court further found that the parties possessed property with a gross value of $1.9
million, which is “almost exclusively bound up in the real estate.” The farmland is
the only asset they have which is capable of producing income. John is 48 years old
and in fairly good health with minimal problems with his back along with high
blood pressure. Dorothea is 44 years old and in good health. Both parties have a
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capacity to earn a living. Further, “Dorothea’s management of the home and
children afforded John the time he needed to maintain the farm equipment, plant
crops, harvest crops, and other similar tasks.” There is no indication that the
court’s findings are clearly erroneous or that it abused its discretion when it
determined the land to be marital property.
[¶10.] John asserts that he does not have the assets to buy the land from
Dorothea and that division of the land will “destroy” his family farm. John correctly
points out that the South Dakota Legislature “recognizes the importance of the
family farm to the economic and moral stability of the state[.]” SDCL 47-9A-1.
However, recognition of the value of family farms does not insulate farmland from
being subject to equitable division pursuant to a divorce. See SDCL 25-4-44. John
summarizes a variety of cases where this Court has addressed farmland as a
marital asset. However, none of the cases he cites stand for the proposition that
inherited or gifted land is automatically excluded from consideration during
property division. The common holding in all the cases cited is that the lower court
has discretion to divide property. 1 In one of the cases cited, the circuit court
awarded all the real property to one spouse so that he could “continue to operate
[the] farm as an ongoing, economically solvent enterprise in order to support
himself and provide for the children.” Hanson v. Hanson, 252 N.W.2d 907, 909
1. See Terca, 2008 S.D. 99, ¶¶ 18-21, 757 N.W.2d at 324-25; Pellegrin v.
Pellegrin, 1998 S.D. 19, ¶ 19, 574 N.W.2d 644, 648; Grode v. Grode, 1996 S.D.
15, ¶ 20, 543 N.W.2d 795, 801; Korzan v. Korzan, 488 N.W.2d 689, 691 (S.D.
1992); Balvin v. Balvin, 301 N.W.2d 678, 680 (S.D. 1981); Andera v. Andera,
277 N.W.2d 725, 728 (S.D. 1979); Hanson v. Hanson, 252 N.W.2d 907, 908
(S.D. 1977).
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(S.D. 1977). This Court reversed and remanded for a more equitable division
regarding certain other assets. Id. We noted: “If [a more equitable division] cannot
be done, the court must acknowledge that an equitable division of the property is
paramount to defendant’s interest in keeping the ranch intact.” Id. at 910.
[¶11.] In this case, the circuit court recognized the importance of the farm,
and granted John the option to purchase the land. It stated:
In an effort to keep the farm intact and in recognition of John’s
long family history associated with ownership of these two 1/4
sections (SE and NE), John shall first be granted by this court,
before any other disposal of this property or action for partition,
the opportunity to purchase from Dorothea her share of this
property for the current appraised value of $685,450.00.
John contends that this option would only be meaningful if he had the assets to buy
the property, and that it is no different than granting him the land and requiring
him to pay Dorothea in cash. He asserts that the court could have instead given
him a credit for the value of the property he received through inheritance or placed
the land in trust for the children. Such contentions are based on the erroneous
assumption that the land is not a marital asset. The court did not abuse its
discretion by determining the property was a marital asset and dividing it as such
between the parties.
Cash taken by Dorothea after separation
[¶12.] Upon separation of the parties, Dorothea moved from the marital home
and withdrew $10,000 from the parties’ joint account. The court found that the
money no longer exists and, as a result, did not include the sum as marital
property. John asserts that Dorothea’s interest in marital property should be
reduced by $10,000 for the amount taken. The court found that “[b]oth parties used
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marital assets throughout their period of separation.” John had exclusive use of the
farm in 2012 and 2013 as well as the marital household. As a result, the court
excluded from the marital assets the 2012 and 2013 crops, which were in storage at
the time of trial. Those were determined to be John’s property. Further, there was
no indication that Dorothea fraudulently dissipated assets. See Johnson v.
Johnson, 471 N.W.2d 156, 161 (S.D. 1991) (“If the [circuit] court finds . . . that [a
spouse] fraudulently dissipated marital assets, they should be included in the
martial estate and charged against [that spouse].”). The circuit court did not abuse
its discretion by not including in the marital estate an amount that no longer exists.
Cash inherited from John’s mother
[¶13.] Similar to the first issue above, John contends that he should have
been given a credit in the amount of $91,296 because his mother bequeathed this
amount to him. John’s mother passed away in 2007, years before the parties’
separation. The court found that the parties spent the amount inherited to pay
debts and purchase a family vehicle. The parties also set $15,000 aside for the
children. The court noted that the money was not a marital debt that the parties
needed to repay to the estate of John’s mother. It further found that there was “no
evidence that the money was under John’s exclusive control and possession.” John
asserts that Dorothea did not have “anything to do with the acquisition of this
money, and she certainly did nothing to add to it.” John’s contention is again
premised on the notion that inherited assets are ipso facto excluded from marital
assets. As addressed above, our cases clearly state otherwise. See Billion, 1996
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S.D. 101, ¶ 20, 553 N.W.2d at 232. As a result, the court did not err when it did not
grant John a credit in the amount of the inheritance.
Child Support
[¶14.] Lastly, John asserts that the court erred when it established a child
support obligation for him. The parties have agreed to share custody of the
children. Because the parties share custody, John contends that they should both
“be required to devote equal time and talents to earning a living[,]” and he should
not be penalized for earning more than Dorothea. The court found that the
children’s needs were met during the separation of the parties. During the
separation, John was not paying child support. By extension, John argues that it is
clear error to award child support now if the children were adequately provided for
without his child support before the divorce but after separation—essentially that
the court should assume that the children will continue to be adequately provided
for after divorce as they were during the separation. “The court is required to set
child support obligation based on an income schedule established by the
Legislature.” Hill, 2009 S.D. 18, ¶ 6, 763 N.W.2d at 822; see also SDCL 25-7-6.2.
Where the parties, as here,
have agreed in writing to a detailed shared parenting plan
which provides that the child will reside no less than one
hundred eighty nights per calendar year in each parent’s home,
and that the parents will share the duties and responsibilities of
parenting the child and the expenses of the child in proportion to
their incomes, and the shared parenting plan has been
incorporated in the custody order, the court may, if deemed
appropriate under the circumstances, grant a cross credit on the
amount of the child support obligation based on the number of
nights the child resides with each parent.
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SDCL 25-7-6.27 (2013). 2 Accordingly, the court exercised its discretion and
did determine the support obligation based on a shared parenting cross credit
calculation. In light of the statutory guidelines for support, John’s arguments
are meritless. See Thomas v. Hague, 2002 S.D. 12, ¶ 11, 639 N.W.2d 520, 523
(Agreement by the parties to “permanently and irrevocably waive[] child
support is contrary to . . . public policy” and therefore invalid). The court did
not abuse its discretion by ordering child support. We affirm.
Motion for attorney fees
[¶15.] We grant Dorothea attorney fees in the amount of $4,875, as requested
pursuant to SDCL 15-26A-87.3.
[¶16.] GILBERTSON, Chief Justice, and ZINTER, WILBUR, and KERN,
Justices, concur.
2. The Legislature has since amended this statute. 2015 S.D. Sess. Laws ch.
147.
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