Marriage of O'Neil v. O'Neil

No. 95-566
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
IN RE THE MARRIAGE OF
DEBRA S. O'NEIL,
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable John Larson, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Richard R. Buley, Tipp & Buley, Missoula, Montana
For Respondent:
Paulette Ferguson, Missoula, Montana
Submitted on Briefs: April 25, 1996
Decided: June 4, 1996
Filed:
I__., - -
Chief Justice J. A. Turnage delivered the Opinion of the Court.
Thomas E. O'Neil appeals from this dissolution of marriage
entered in the Fourth Judicial District Court, Missoula County. We
vacate in part and remand.
The dispositive issue is whether the court erred in its
valuation of the marital estate.
In 1986, just prior to his marriage to Debra S. O'Neil, Thomas
E. O'Neil sold homes he owned in Seattle, Washington, and Twin
Falls, Idaho, and land he owned in Lake Tahoe, Nevada. With
$110,000 in proceeds from those sales and some cashed-in retirement
benefits, he purchased the Lumberjack Saloon in Missoula County,
Montana. Debra S. O'Neil then quit her job with a telephone
company in Idaho and moved to Montana to join Thomas. The couple
married in August 1986.
Both Debra and Thomas worked at the Lumberjack Saloon for
several years and contributed money to that enterprise. They also
purchased real property and a mobile home near Lolo, Montana. In
September 1992, they sold the saloon on a contract. However, the
buyers defaulted and Thomas and Debra retook possession of the
saloon.
After the parties separated in 1994, Thomas resold the saloon,
again on a contract. He used the cash proceeds of the second sale
to open a tile business in Twin Falls, Idaho. Payments on the
second Lumberjack Saloon contract were made to Thomas.
When their marriage ended in 1995, Debra was forty-one years
old and Thomas was fifty-three. No children had been born to them.
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Debra was employed by Missoula County, earning $7.49 per hour. The
parties had $45,000 in equity in their Lo10 mobile home and real
property. Debra was renting the mobile home to others and using
the rent payments to make the monthly payments on the property.
The District Court awarded Debra the mobile home, land, and
debt thereon; her $1,657 retirement account; two vehicles valued at
$1,975 and $5,200; a $400 raft; and a 40 percent interest in the
remaining proceeds of the second sale of the Lumberjack Saloon.
The court awarded Thomas his interest in the tile company; a truck
valued at $10,318; the $100,000 in proceeds received from the first
sale of the Lumberjack Saloon; the $37,500 down payment on the
second sale of the Lumberjack Saloon; payments made on the second
sale through May 1995; and 60 percent of the remaining proceeds of
the second sale of the Lumberjack Saloon. The court found that,
after the property distribution, Debra would have sufficient monies
to support herself, so that maintenance was not appropriate.
Did the District Court err in its valuation of the marital
estate?
The District Court found that, at the time of the dissolution,
the principal balance due on the second contract for sale of the
Lumberjack Saloon was $257,738.62. The court then calculated the
value of the remainder due on the second contract as $538,620,
arriving at its valuation by multiplying the number of future
payments, 192, by the monthly payment amount of $2,610.
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Thomas argues that this was not a proper method of valuing the
contract for two reasons: (1) the monthly payment amount used by
the court includes a $25 monthly bank escrow fee, which is not
marital property, and (2) the valuation includes the total amount
of interest to be paid over the term of the contract, and does not
reflect present value. Debra responds that Thomas cannot now
complain about the court's valuation of the contract because he did
not offer the court any evidence to establish a different value for
the contract.
Debra maintains that the District Court used the same method
of valuing the contract as the method approved by this Court in In
re Marriage of Porter (1991), 247 Mont. 395, 807 P.2d 192. It is
true that in Porter, the court did not discount to present value
the value of a contract for deed. However, in Porter, the court
valued the contract at the balance due thereon, not at the balance
due plus interest and bank escrow fees, as was done in the present
case. Porter, 807 P.2d at 194.
Thomas also points out that the court awarded him the down
payments from the first and second sales of the saloon, but that
the record establishes that these monies were used to acquire other
marital assets, such as the Lo10 mobile home and land which were
awarded to Debra and the tile business which was awarded to Thomas.
The result is that the court included these assets twice in its
valuation of the marital estate.
The District Court found that the net value of the marital
estate was $544,350. It valued the property awarded to Debra at
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$240,090.35, and the property awarded to Thomas at $468,098.84.
The total of those two awards, which should match the net value of
the marital estate, is $708,189.19.
Valuing assets and fixing the net worth of the marital estate
are two important determinations which must be made by the district
court in the process of apportioning marital property under 5 40-4-
202, MCA. This is the basis upon which the court makes an
equitable apportionment of the marital estate. Without these
determinations, the equitable distribution of marital assets
amounts to only guesswork. Cook v. Cook (19801, 188 Mont. 473,
479, 614 P.2d 511, 515.
While the District Court's disposition of future proceeds from
the contract for sale of the Lumberjack Saloon (60 percent to
Thomas and 40 percent to Debra) may be equitable, its valuation of
the balance due on the contract is not supported in the record.
Further, double inclusion of other assets is not supported in the
record. Correction of those errors will result in adjustments to
the values of the portions of the marital estate awarded to the
parties, the total of which, as Debra concedes, should match the
net value of the marital estate. We therefore vacate the portions
of the dissolution decree relating to property valuation and
distribution and remand for reconsideration of these matters.
Thomas also argues that the court erred in failing to credit
him with his substantial contribution of premarital assets to the
marital estate. Because resolution of the dispositive issue above
will require recalculating the net worth of the marital estate, we
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conclude that the question of whether the court erred in its
distribution of marital property cannot further be addressed at
this time.
The property valuations and distribution in the decree of
dissolution are vacated. We remand this case to the District Court
for further proceedings in accordance with this Opinion.
&hief Justice
We concur:
Justices
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