Mischke v. Mischke

NO. 92-128
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
BONNIE L. MISCHKE,
Plaintiff and Appellant,
-v-
CALVIN L. MISCHKE,
Defendant and Respondent.
APPEAL FROM: District Court of the Twentieth Judicial District,
In and for the County of Lake,
The Honorable C. B. McNeil, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
James C. Bartlett, Hash, O'Brien & Bartlett,
Kalispell, Montana
For Respondent:
R. M. Kehew, Kalispell, Montana
Submitted on Briefs: October 29, 1992
Decided: February 2, 1993
Filed:
'Clerk
Justice Fred 3. Weber delivered the Opinion of the Court.
This is an appeal by the Petitioner, Bonnie L. Mischke, from
an order distributing marital assets by the District Court of the
Twentieth Judicial District, Lake County, Montana. We affirm.
We have restated the issues for our review as follows:
1. Whether the District Court erred by including Mrs.
Mischke's "inheritance" in the marital estate.
2. Whether the District Court erred in determining that gifts
from Albert Hoffman were made to both Mr. and Mrs. Mischke.
3. Whether the District Court correctly determined the net
assets of the marital estate.
4. Whether the District Court abused its discretion by
awarding 52% of the marital estate to Mr. Mischke and 48% to Mrs.
Mischke.
Bonnie and Calvin Mischke (the Mischkes) were married on March
27, 1971 in Wolf Point, Montana. At the time, Mr. Mischke worked
for the Wolf Point Fanners' Union Elevator and Mrs. Mischke worked
for her father, Albert Hoffman, doing general farm labor. Shortly
after the marriage, Mr. Mischke lost his job at the elevator and
began working on Mr. Hoffman's farm. The relationship between Mr.
Mischke and Mr. Hoffman was strained throughout the Mischkes'
marriage. Nonetheless, the record establishes that Mr. Hoffman
made substantial gifts to the Mischkes throughout the marriage
until his death in June of 1990.
Shortly after they were married, Mr. Hoffman bought a house in
Wolf Point for the Mischkes to live in. They lived there rent-free
2
for eight years. After their three children were born, Mr. Hoffman
built a larger home for the Mischkes. This new home was built in
1979 on property where an older home was also located. The
Mischkes received the rents from this home to apply as payments to
Mr. Hoffman on the new home.
Albert later deeded the entire property to the Mischkes. They
were to repay Mr. Hoffman for the materials for this new home but
not his labor. Mr. Hoffman later forgave a large part of this
debt. In September 1986, the Mischkes moved to the Flathead area
and rented a home on the East Shore of Flathead Lake. The Mischkes
continued to receive rents from both Wolf Point homes.
In 1987, Mr. Hoffman helped the Mischkes purchase the home
they had been renting for the previous year. The purchase price
was $46,500. Mr. Hoffman and his wife owned an undivided one-half
interest and the Mischkes owned the other one-half interest. The
Mischkes agreed to pay Mr. and Mrs. Hoffman one-half the purchase
price plus $10,000 for debts Albert had paid for them--a total of
$33,250. They subsequently defaulted on the loan to the Hoffmans.
Periodically, the Hoffmans forgave some of the payments and allowed
double credit for others. Approximately one month before Mr.
Hoffman's death in 1990, the Hoffmans conveyed their one-half
interest in the home to the Mischkes.
In February of 1990, the Mischkes sold the Wolf Point rental
homes for $60,000. Some of this money was used for home
improvements to their Flathead home. Mrs. Mischke customarily
handled all the financial affairs for the parties. She testified
3
that the $59,555 cash received from the sale was all spent by
September 1990 for home improvements, living expenses and debts.
She further testified that she transferred some of this to a
Capital Preservation Fund and later to her separate savings account
at Whitefish Credit Union.
Following Mr. Hoffman's death in June of 1990, Mrs. Mischke
received a death benefit which testimony established was to be her
inheritance from Mr. Hoffman. This money was deposited in the
joint checking account. Mrs. Mischke testified that she used some
of her inheritance to pay marital debts. Mrs. Mischke testified
extensively about her reasons for switching funds among various
bank accounts in an attempt to explain how her inheritance could be
traced from the date it was received until after the date of
separation and to show that the inherited funds were kept separate.
She also presented much evidence in an attempt to prove that Mr.
Hoffman's gifts were intended for her alone and not as joint gifts.
Testimony established that the Mischkes enjoyed a standard of
living far beyond what they could have afforded without Mr.
Hoffman's generosity. In addition to the gifts and loans described
above relating to the homes, Mr. Hoffman made numerous other gifts
of cash and other items to the Mischkes. Mr. Hoffman's farm
corporation paid for health and life insurance, telephone service
and $150 in food each month for the Mischkes.
The sole issues for trial were calculation and distribution of
marital property and child support. The District Court determined
that the value of the marital estate, including the home and cash
4
in Mrs. Mischke's account, was $175,402. Mr. Mischke received
assets valued at $91,683 and Mrs. Mischke received assets valued at
$83,719. Mrs. Mischke sold other marital assets after the parties
separated through Gardner Auction Service in Missoula. The award
to Mr. Mischke includes a lump sum child support award as he has
the minor children living with him. Mrs. Mischke was unemployed at
the time of trial except for part-time piano instruction.
I.
Whether the District Court erred by including Mrs. Mischke's
"inheritance" in the marital estate.
Mrs. Mischke contends that her inheritance should be separate
property. Mrs. Mischke testified that she transferred cash from
one account to another in order to keep the inheritance separate
from money received from the sale of the Wolf Point homes.
The record establishes, however, that prior to the parties'
separation in January of 1991, inherited funds were commingled with
other marital income, and although Mrs. Mischke controlled marital
finances, she made little effort to separate her inheritance.
Consequently, we are unable to determine that the total amount of
the inheritance was still intact at the time of trial.
Nonetheless, the record establishes that the District Court
considered the nature of the asset and awarded a substantial sum of
cash to Mrs. Mischke.
Our standard of review for questions of law is whether they
correctly apply the law. In re the Marriage of Hamilton (Mont.
1992), 835 P.2d 702, 704, 49 St.Rep. 604, 606. An inheritance
5
received during the marriage may be a marital asset. Section 40-4-
202(1), MCA. We conclude that under the facts of this case the
marital estate could properly include Mrs. Mischke's "inheritance."
We hold that the District Court did not err by including the
amount of Mrs. Mischke's inheritance in the marital estate.
II.
Whether the District Court erred in determining that gifts
from Albert Hoffman were made to both Mr. and Mrs. Mischke.
Mrs. Mischke disputes the District Court's finding that the
gifts were not made to her individually, particularly the Flathead
area home. She contends that ownership of the family home resulted
from gifts made to her alone from her father and that Mr. Mischke
should not be awarded 100% of property gifted to her. She
presented testimony to establish that both the Flathead home and
her inheritance could be traced as gifts from Mr. Hoffman intended
for her alone, even though the Hoffmans transferred title to the
home to both Mr. and Mrs. Mischke as joint tenants with the right
of survivorship.
However, cash sums received from the sale of the Wolf Point
homes and later from Mrs. Mischke's inheritance were not kept
separate. They were deposited in joint accounts. Mrs. Mischke
testified that although cash was commingled in joint marital
accounts, the $59,555 from the sale of the Wolf Point homes was
exhausted prior to the parties' separation to pay marital debts,
living expenses and home improvements and that all the inheritance
was kept intact. The record does not support her contention that
6
her inheritance can be accounted for separately.
Our standard of review for a district court's factual findings
relating to the division of marital property is whether they are
clearly erroneous. Hamilton, 835 P.Zd at 704. A finding is not
clearly erroneous if it is supported by substantial evidence.
Interstate Prod. Credit Ass'n v. DeSaye (1991), 250 Mont. 320, 322-
23, 820 P.2d 1285, 1287. Substantial evidence is evidence that a
reasonable mind might accept as adequate to support a conclusion:
it consists of more than a scintilla of evidence and may be
somewhat less than a preponderance. Barrett v. Asarco, Inc.
(1990) I 245 Mont. 196, 200, 799 P.2d 1078, 1080.
Letters from Albert discussing his gifts were written to both
Mr. and Mrs. Mischke. All real property was conveyed to them both
as joint tenants with rights of survivorship. The record
establishes that ownership of the Flathead home resulted partly
from Mr. Hoffman's gifts and partly from the Mischke's payments.
Despite Mrs. Mischke's testimony that Mr. Mischke did little
to maintain or enhance the value of this property, the District
Court found that the gifts from Mr. Hoffman were intended as gifts
to both Mr. and Mrs. Mischke. Property gifted during marriage may
be excluded from the marital estate, however, where the objecting
spouse can claim no contribution to the property's value. In re
the Marriage of Dailey (1988), 232 Mont. 235, 242, 756 P.2d 1131,
1135. Such is not the case here. While Mr. Mischke's
contributions may not have been great, the record establishes that
he helped to construct the Wolf Point home, helped to construct
7
improvements to the Flathead home, contributed to the maintenance
of both homes and that his earnings also contributed to payments to
Mr. Hoffman from the parties' combined income during the marriage.
We conclude there is substantial evidence in the record to support
the District Court's finding that Mrs. Mischke failed to prove an
individual gift.
We hold that the District Court did not err in determining
that gifts from Mr. Hoffman were made to both Mr. and Mrs. Mischke.
III.
Whether the District Court correctly determined the net assets
of the marital estate.
Mrs. Mischke's argument focuses upon the net amount of the
marital estate. She claims that the total "cash in bank," found by
the District Court to be $47,999.00, is incorrect. If her
inheritance must be included in the marital estate, she contends
that the correct amount is $34,995.43. This figure represents the
amount of her inheritance ($46,988.41 gross: $43,319.54 actually
received net of taxes) less the amount of pre-separation debts and
attorney's fees she claims to have paid.
To support this contention, Mrs. Mischke introduced into
evidence a copy of a savings account record from Whitefish Credit
Union, showing a balance of $45,667.02 as of April 23, 1991. Mrs.
Mischke did not provide any bank statements or other information to
demonstrate the amount of cash in the account as of the date of
trial, which was December 2, 1991.
Although the District Court did not specifically state a
8
factual finding relating to how it determined the total "cash in
bank," the amount determined ($47,999.00) is only $2,332.00 more
than the amount shown as of April 23, 1991. A trial judge is free
to accept any valuation of property he wishes so long as there is
substantial evidence to support the value selected. In re the
Marriage of Hammill (1987), 225 Mont. 263, 732 P.2d 403. The
District Court could have reasonably determined that this amount
represented earned interest from the date of deposit until the date
of the decree or that it represented an amount Mrs. Mischke
received from sales of marital property that she sold through
Gardner Auction Service in Missoula.
Mrs. Mischke also contends that Mr. Mischke should be ordered
to pay her for 50% of the total pre-separation debts that she paid
from her inheritance, represented by the $13,003.57 figure. She
testified that she borrowed $13,000 after the parties separated,
some of which she used to pay $8,444.31 in pre-separation marital
debts instead of using her inheritance money to pay them. She
subtracted $13,000.00 (the amount of the loan) to arrive at her
calculation for "cash in bank."
Mrs. Mischke failed to produce adequate financial records to
support her contention that the money was used in this manner. The
District Court noted that "the evidence introduced by the parties
with respect to marital debt is confusing, conflicting and
incomplete."
The decree provides that any indebtedness incurred after the
date of separation is not part of the marital estate. This
9
includes the $13,000.00 borrowed by Mrs. Mischke. It also provides
that both parties remain jointly responsible for unpaid marital
debts. Mrs. Mischke testified but produced inadequate proof to
substantiate that two marital debts totalling slightly over
$Z,OOO.OO remained unpaid at the time of trial.
A district court is not required to determine and assign
marital debts based on one party's testimony where copies of
statements from creditors or other evidence to support claims has
not been introduced. In re the Marriage of Purdy (1988), 234 Mont.
502, 764 P.2d 857. The record establishes that Mrs. Mischke
handled all financial matters for the parties and that she did not
provide copies of accounts as requested during discovery. Similar
to Purdv, the evidence Mrs. Mischke introduced at trial to
establish marital debt was sketchy; she testified as to the
amounts, but did not provide copies of statements or other credible
evidence to support her claims. Her evidence consisted of her
handwritten summaries and oral testimony. We affirm the District
Court's refusal to allocate part of the $13,000.00 debt to the
husband.
We hold that the District Court did not err in determining the
net assets of the marital estate.
IV.
Whether the District Court abused its discretion by awarding
52% of the marital estate to Mr. Mischke and 48% to Mrs. Mischke.
The District Court awarded 52% of the marital estate to Mr.
Mischke, including the home, stating that:
10
. .The Court has taken all factors
. into consideration and
awards a larger share of the marital estate, including the
Woods Bay family home, to the Respondent as a one time cash
settlement in lieu of support, and Petitioner shall have no
further child support obligation for the minor children of the
parties.
In dividing marital property, courts must fashion a
distribution which is equitable to each party under the
circumstances. Hamilton, 835 P.2d at 704. Obtaining an equitable
distribution at times requires the court to engage in discretionary
action which cannot be accurately categorized as a finding of fact
or a conclusion of law. Such discretionary findings will not be
disturbed absent an abuse of discretion. In re the Marriage of
Danelson (Mont. 1992), 833 P.2d 215, 49 St.Rep. 597. Abuse of
discretion in apportioning the marital estate is manifested by a
substantially inequitable division of the marital estate. In re
the Marriage of Holston (1983), 205 Mont. 470, 668 P.2d 1048.
Under Montana law, gifts and inheritances are treated
similarly in a dissolution of marriage proceeding. Section 40-4-
202 (1) I MCA, provides
. . . the court. . . shall . . . finally equitably apportion
between the parties the property and assets belonging to
either or both, however and whenever acquired and whether
title thereto is in the name of the husband or wife or both .
. . In dividing property acquired . . . by gift, bequest,
devise or descent; property acquired in exchange for property
acquired . . . by gift, bequest, devise, or descent . . . the
court shall consider those contributions of the other spouse
to the marriage, including:
(a) the nonmonetary contribution of a homemaker;
(b) the extent to which such contributions have
facilitated the maintenance of this property; and
(c) whether or not the property division serves as an
alternative to maintenance arrangements.
Section 40-4-202(l), MCA, is a flexible statute vesting
11
district courts with wide discretion for distributing marital
property. In re the Marriage of Stewart, 232 Mont. 40, 757 P.2d
765. There is no set rule concerning how an inherited asset is to
be divided. Stewart, 757 P.2d at 768.
In addition to the broad discretion given to District Courts
concerning property division, they also have broad discretion in
providing for support for children. In dividing marital property,
the court may take into account child support considerations and
may protect and promote the best interests of the children by
setting aside a portion of jointly and separately held property for
support of their children. In re Marriage of King (1985), 216
Mont. 92, 700 P.2d 591.
Mrs. Mischke testified that she was unemployed except for
part-time piano instruction and could not afford to pay any child
support for the two minor children. She further testified that she
intended to provide for their support from the proceeds of the sale
of the family home. Instead of ordering a sale of the home, the
District Court awarded a larger share of the marital estate to Mr.
Mischke, which was to be considered a lump sum settlement in lieu
of child support from Mrs. Mischke and which relieved her of all
future support obligations for the children.
Considering the facts of this case, we conclude that the
District Court did not abuse its discretion by awarding 52% of the
marital estate to Mr. Mischke and 48% to Mrs. Mischke. We further
conclude that the District Court did not abuse its discretion in
awarding a larger share of the marital estate to Mr. Mischke in
12
lieu of monthly child support payments.
We hold that the District Court did not err in distributing
52% of the marital estate to Mr. Mischke and 48% to Mrs. Mischke.
Pursuant to Section I, Paragraph 3(c), Montana Supreme Court
1988 Internal Operating Rules, this decision shall not be cited as
precedent and shall be published by its filing as a public document
with the Clerk of this Court and by a report of its result to the
West Publishing Company.
Affirmed.
We Concur:
Chief Justice
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February 2, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
James C. Bartlett
HASH, O’BRIEN & BARTLETT
P.O. Box 1178
Kalispell, MT 59903
R.M. KEHEW
Attorney at Law
P.O. Box 5427
Kalispell, MT 59903-5427
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA