Eis v. Eis

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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243Linda A. Eis, appellee, v.
Donald W. Eis, appellant.
___ N.W.2d ___
Filed October 1, 2021. No. S-20-515.
1. Divorce: Child Custody: Child Support: Property Division:
Alimony: Attorney Fees: Appeal and Error. In a marital dissolution
action, an appellate court reviews the case de novo on the record to
determine whether there has been an abuse of discretion by the trial
judge. This standard of review applies to the trial court’s determinations
regarding custody, child support, division of property, alimony, and
attorney fees.
2. Evidence: Appeal and Error. In a review de novo on the record, an
appellate court is required to make independent factual determinations
based upon the record, and the court reaches its own independent con-
clusions with respect to the matters at issue.
3. Judges: Words and Phrases. A judicial abuse of discretion exists if the
reasons or rulings of a trial judge are clearly untenable, unfairly depriv-
ing a litigant of a substantial right and denying just results in matters
submitted for disposition.
4. Divorce: Property Division. Separate property becomes marital prop-
erty by commingling if it is inextricably mixed with marital property or
with the separate property of the other spouse.
5. Property Division. If separate property remains segregated or is trace-
able into its product, commingling does not occur.
6. Property Division: Proof. The party claiming that property is nonmari-
tal has the burden of proving the property’s separate status.
7. Agriculture: Crops: Equity. Courts are allowed flexibility in their
treatment of stored and growing agricultural crops to account for the
equities of the situation.
8. Divorce: Property Division: Equity. Courts are not required to use
only one valuation date in equitably dividing a marital estate.
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 2439. Divorce: Property Division: Appeal and Error. The date upon which
a marital estate is valued should be rationally related to the property
composing the marital estate. The date of valuation is reviewed for an
abuse of the trial court’s discretion.
10. Property Division: Appeal and Error. A single valuation date may not
always be appropriate. What may be a fair and reasonable valuation on
one date for an asset may be unfair and unreasonable for another asset
on the same date.
Appeal from the District Court for Richardson County:
Julie D. Smith, Judge. Affirmed.
Jeffrey A. Gaertig and Gregory D. Kratz, of Smith, Schafer,
Davis & Gaertig, L.L.C., for appellant.
Steven J. Mercure, of Nestor & Mercure, for appellee.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
Papik, and Freudenberg, JJ.
Heavican, C.J.
A decree dissolving the marriage of Donald W. Eis and
Linda A. Eis was entered in March 2020. That decree also
divided the parties’ personal and real marital property, award-
ing “Tract No. 2” (Tract 2) to Linda as her sole and separate
property, awarding “Tract No. 1” (Tract 1) to Donald as his
sole and separate property, and ordering Donald to make an
equalization payment to Linda of $165,062.50 to account for
the remaining discrepancy in value of the property awarded to
each party.
In response to this decree, Linda filed a motion to alter or
amend the judgment to account for grain in storage at the time
of trial that was not accounted for in the original decree.
The district court granted Linda’s motion and modified the
decree, awarding Linda an increased equalization payment of
$176,462.50. Donald filed a motion for new trial, which the
district court denied in June 2020. Donald appeals. We affirm.
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243I. BACKGROUND
Donald and Linda married in November 1984, the second
marriage for both. They had no children together and remained
married for 33 years before separating in March 2018.
Prior to his marriage to Linda, Donald acquired Tract 1 with
his first wife. Tract 1 consists of approximately 120 acres.
Upon his marriage to Linda, Donald owned Tract 1 subject to
two mortgages in the amount of $68,200 and $5,000. These
mortgages were later consolidated in favor of a bank loan
under which Donald and Linda were both obligated. The bank
loan was satisfied during their marriage using funds from the
“farm account.” During the course of their marriage, Donald
and Linda also acquired Tract 2 from Donald’s siblings. Tract 2
consists of approximately 74 acres.
Linda asked the district court to order a sale of both tracts
of land. Donald, conversely, asked that the court grant him
Tract 1 and grant Linda Tract 2. Donald argues that neither
Tract 1 nor the farm account which he uses to finance Tract 1
is marital property and that awarding his one-half interest in
Tract 2 to Linda in lieu of an equalization payment would
therefore satisfy any value due to Linda for her share of the
marital estate.
At trial, Linda presented evidence that in 2007 and 2008,
she spent approximately $60,000 of nonmarital funds to reno-
vate the marital home situated on Tract 1. Linda also pre-
sented evidence that she and Donald had continually borrowed
against Tract 1 throughout the marriage and that the associated
liens were satisfied by the wages of both parties. Donald testi-
fied that the proceeds from farming both tracts were placed
into the farm account to pay for continuing and future farming
expenses, including payment of the original mortgage on the
property. No evidence was presented regarding the valuation
of the tract without the home or the improvements made by
Linda during the marriage. After reviewing the evidence, the
district court found that both Tract 1 and the funds within the
farm account had been commingled and inextricably mixed
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243with marital property, and thus included both in the mari-
tal estate.
As noted above, the decree of the district court dissolved
the marriage of the parties and divided their real and personal
property. Although both tracts were deemed marital property,
Linda was awarded the smaller Tract 2 as her sole and sepa-
rate property and Donald was awarded the larger Tract 1 as
his sole and separate property. An equalization payment of
$165,062.50 was awarded to Linda to account for the discrep-
ancy in value of property awarded to each party. The district
court required the parties to sign quitclaim deeds facilitating
the transfer of each tract in accordance with the terms of its
decree, but did not specifically order that either piece of prop-
erty must be sold.
Linda later filed a motion to alter or amend the judgment or
for a new trial, asking the district court to alter its decree to
account for the grain in storage at the time of trial. The district
court found that the grain in storage at trial was marital prop-
erty, that it had not been properly included in the decree, and
that Linda’s marital share was valued at $11,400. The district
court entered a modified decree in May 2020, awarding Linda
an increased equalization payment of $176,462.50. Donald
filed a motion for new trial, which the district court denied
in June 2020. Donald appealed, and we moved this appeal to
our docket.
II. ASSIGNMENTS OF ERROR
Donald assigns that the district court erred in (1) classifying
nonmarital property as marital property, (2) failing to divide
the marital estate equitably and ordering Donald to make
an equalization payment to Linda, and (3) partially granting
Linda’s motion to alter or amend the judgment and increasing
the equalization payment.
III. STANDARD OF REVIEW
[1-3] In a marital dissolution action, an appellate court
reviews the case de novo on the record to determine whether
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243there has been an abuse of discretion by the trial judge. 1 This
standard of review applies to the trial court’s determinations
regarding custody, child support, division of property, alimony,
and attorney fees. 2 In a review de novo on the record, an
appellate court is required to make independent factual deter-
minations based upon the record, and the court reaches its own
independent conclusions with respect to the matters at issue. 3 A
judicial abuse of discretion exists if the reasons or rulings of a
trial judge are clearly untenable, unfairly depriving a litigant of
a substantial right and denying just results in matters submitted
for disposition. 4
IV. ANALYSIS
1. Classification
In his first assignment of error, Donald asserts that the
district court erred by classifying Tract 1 as marital property
rather than nonmarital property. Donald argues that Tract 1
was nonmarital property which he acquired prior to his mar-
riage to Linda, toward which he made $34,000 in premarital
contributions, and that it did not transform into a marital asset
during his marriage to Linda, because it was not commingled
or inextricably mixed with marital property. Donald argues that
Linda’s contributions to Tract 1 were specifically limited to
the $60,000 home renovation and garage construction, which
is traceable and can be carved out for equalization purposes,
and that Linda did not contribute to Tract 1 outside of this
specific renovation. Linda contends that Tract 1 was marital
property. She specifically contends that the nonmarital funds
she expended during the renovation contributed to the appre-
ciation in value of the entire tract, that funds from Tract 2
contributed to the original mortgage against Tract 1, and that
1
Tierney v. Tierney, 309 Neb. 310, 959 N.W.2d 556 (2021).
2
Id.3
Id.4
Id.- 248 -
Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243the continued borrowing against Tract 1 was paid in part by
wages she earned during the marriage.
[4-6] In Brozek v. Brozek, 5 this court held that separate prop-
erty becomes marital property by commingling if it is inextri-
cably mixed with marital property or with the separate property
of the other spouse. If the separate property remains segregated
or is traceable into its product, commingling does not occur. 6
The burden of proof rests with the party claiming that property
is nonmarital. 7 As the party claiming Tract 1 is nonmarital
property, Donald carries this burden of proof.
We turn to the issue of Tract 1’s appreciation in value during
Donald and Linda’s marriage. Donald asserts that Linda’s con-
tributions to Tract 1 were limited to the remodel of the home
and garage and that Linda did not care for or farm the tract;
thus, her share of any appreciated value should be limited to
the home and not the entire 120 acres upon which the home
is situated.
At trial, Linda presented an appraisal as evidence of the
value of Tract 1. The appraisal found that Tract 1, including the
marital home and detached garage, was worth approximately
$575,000. Despite his burden of proof, Donald presented no
evidence regarding the value of Tract 1 as separate from the
marital home or garage and was unable to prove that the appre-
ciation in value ($88,200 in 1979 versus $575,000 in 2020)
was not linked to Linda’s renovations.
We turn next to the issue of shared mortgage obligations and
continued borrowing against Tract 1. When Donald married
Linda, Tract 1 was subject to two mortgages in the amounts
of $68,200 and $5,000. During Donald and Linda’s marriage,
these liens were discharged when Donald and Linda paid off
the original “FHA” loans in favor of a new consolidated bank
loan. Donald and Linda were both jointly and severally liable
5
Brozek v. Brozek, 292 Neb. 681, 874 N.W.2d 17 (2016).
6
Id.7
Id.- 249 -
Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243on the new promissory note in the amount of $40,742.19,
and the deed of trust for this transaction named both Donald
and Linda.
Linda testified that most of the loan amounts, which the
parties used to purchase the farm, were paid off using marital
funds during her 33-year marriage to Donald. Donald claimed
that the yearly mortgage payments for both the original FHA
loans and the consolidated bank loan were paid directly from
the farm account to which Linda had never contributed.
However, Donald also admitted that income from both Tract 1
and Tract 2 went into the farm account and were commingled
since at least 2006, thus indicating that Linda’s marital income
from Tract 2 may have contributed to the mortgage payments
when Donald paid from this account.
Donald and Linda also continually borrowed against Tract 1
throughout their marriage: $4,250 in 1985, $15,500 in 1990,
and $10,850 in 1995. Both parties testified that these mort-
gages, each made in favor of Lincoln Telephone Employees
Credit Union, were paid either directly with wages of both
parties while they were employed by Lincoln Telephone
Company or from the “town account,” where their assets were
commingled.
Having reviewed the record de novo, we hold that the dis-
trict court’s decision to classify Tract 1 as marital property was
not an abuse of discretion. Donald offered no evidence that
Linda’s contribution of nonmarital funds to the home renova-
tion did not contribute to the appreciation in value of the tract
or that the appreciated value derived from the renovation was
traceable to Linda. Donald also failed to offer evidence that
marital income from Tract 2, deposited into the farm account,
was traceable to either party. And Donald did not offer evi-
dence showing that the payments made toward the FHA loan,
toward the consolidated bank loan, or in favor of Lincoln
Telephone Employees Credit Union were traceable to either
party. Accordingly, Donald’s first assignment of error is with-
out merit.
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 2432. Division
In his second assignment of error, Donald asserts that the
district court erred by failing to divide the marital estate
equitably and ordering him to make an equalization payment
to Linda. Donald argues that the district court should have
adopted his proposal on the division of land wherein Donald
would deed his share of Tract 2, worth $157,500, to Linda in
lieu of an equalization payment. However, Donald’s proposal
for such division was entirely dependent on a finding that Tract
1 was not marital property. Thus, where Tract 1 was properly
classified as marital property, there is no merit to Donald’s sec-
ond assignment of error.
3. Increased Equalization Payment
In his third assignment of error, Donald contends that the
district court erred in partially granting Linda’s motion to alter
or amend the judgment and increasing the equalization pay-
ment in the amount of $11,400.
In Linda’s motion to alter or amend the judgment, she
argued that the district court failed to allocate or award the
grain harvested from the marital estate for the 2017, 2018, and
2019 crop years, including grain held in storage for the 2019
crop year. After a hearing on the motion, the district court
found that the parties had separated in 2018 and that there had
been no testimony regarding grain in storage as of their separa-
tion; thus, no value was owed to Linda for the 2017 or 2018
crop years. However, there had been testimony regarding grain
in storage for 2019, and such grain would have been gener-
ated in part by the ownership of the marital land and in part
by Donald’s efforts after the date of separation. Because the
grain held in storage in 2019 did not yet exist as of the date of
separation of the parties, the district court instead used the date
of trial to give value to the grain.
The district court then calculated the value and shares
of grain as follows: (1) the 2019 grain held in storage had
a value of $28,500; (2) 60 percent of this value should be
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243allocated to Donald for his efforts postseparation ($17,100);
(3) 40 percent of this value should be allocated to the marital
estate due to joint ownership of the land that generated the
grain ($11,400); and (4) where Donald had already sold half
of the grain in storage, the remainder was solely attributable to
Linda’s share of marital property. Based on these calculations,
the district court amended the prior decree and increased the
equalization payment due to Linda in the amount of $11,400 to
account for her share of the 2019 grain.
On appeal, Donald’s argument that the district court erred
is twofold: that Linda should not be entitled to grain proceeds
after she filed for divorce and that the district court should
have used the date of separation rather than the date of trial
as the valuation date for the grain awarded. We disagree on
both counts.
(a) Grain Proceeds
We will first address Donald’s argument regarding Linda’s
entitlement to grain proceeds. There are two issues we must
consider in this regard: (1) whether the grain proceeds resulted
from marital property and (2) whether Linda is entitled to a
portion of the grain proceeds postseparation.
The district court, in awarding Linda a portion of the grain
proceeds, stated that the grain was “generated in part by the
ownership of the marital land,” but did not specify whether it
was referring to Tract 1, Tract 2, or both tracts combined. It
is possible that the grain in storage at the time of trial came
entirely from Tract 1 or from Tract 2, or in part from both. A
finding by this court that Tract 1 is nonmarital property would
thus impact Linda’s ability to receive a share of proceeds if the
grain were entirely derived from that nonmarital property.
Donald, as the party asserting that this grain is nonmarital
property and that Linda is not entitled to a share of proceeds
derived therefrom, carries the burden of proof. Yet he provided
no evidence and no testimony at trial indicating the origin of
the grain in storage. On the other hand, Donald did testify
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243that there were approximately 74 acres of tillable land on
Tract 2. Thus, even if this court were to find that Tract 1 is
non­marital property, there is not enough evidence in the record
to show that the grain in storage is nonmarital or that it derived
entirely from Tract 1 rather than entirely from Tract 2 or from
a combination of both tracts. Accordingly, whether Tract 1 is
marital or nonmarital property, Linda will still be entitled to a
share of the grain as part of the marital estate.
We now turn to the issue of Linda’s ability to receive a share
of proceeds postseparation. Donald argues that he and Linda
separated their finances in March 2018 and that since that
time, Linda had not “paid for anything on the farm” and never
offered to share in the farming expenses or debts. Donald pre-
sented tax returns showing a net loss of between $15,000 and
$30,000 each year beginning in 2015, and he argued that Linda
should not be entitled to grain proceeds on the farm after they
separated their working finances, because she was no longer
associated with these losses or other burdens of the farm.
[7] While it is true that a discrepancy exists between the
parties regarding their contributions toward the farm, the dis-
trict court had already accounted for this discrepancy in its
order. We allow courts flexibility in their treatment of stored
and growing agricultural crops to account for the equities of
the situation. 8 The district court, in accounting for the equities
between Donald and Linda, assigned a 60-40 split to the grain.
It awarded 60 percent solely to Donald as nonmarital property
based on evidence that Donald alone contributed to the farm-
ing operations postseparation and that Linda was no longer
associated with the burdens of the farm. The district court then
awarded the remaining 40 percent to the marital estate based
on evidence that the crops were grown and harvested as a
result of joint marital ownership of the two tracts. The fact that
Linda was not contributing financially to farming operations
8
Osantowski v. Osantowski, 298 Neb. 339, 904 N.W.2d 251 (2017).
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243after March 2018 does not preclude her from receiving a por-
tion of the 2019 grain, because such interest derives from her
share of ownership in the real property.
Linda’s interest in the 2019 grain is distinguishable from
prior cases where we observed that “crops produced before
the marriage and sold during the marriage would generally be
considered marital income, but crops produced during the mar-
riage but sold after would not.” 9 In Osantowski v. Osanowski, 10
we analyzed the effects of crop harvesting and storage post-
separation as it related to marital income, where the husband
owned farmland jointly with his brothers but not with his wife.
The husband farmed the land prior to, during, and after his
marriage, and the parties disagreed as to whether crops grown
during the marriage, but harvested and stored for sale post-
separation, should be considered marital income. Their dispute
centered on the rule that “[i]ncome earned from one or both
spouses’ employment during a marriage is a marital asset.” 11
The wife sought to classify the stored grain as income in order
to include it in the marital estate, where she otherwise would
have no claim to the grain or its proceeds.
In contrast to Osantowski, the grain held in storage by Donald
was harvested from land that was jointly owned by Linda
herself and was already part of the marital estate. The issue
considered by the district court was not one of marital income,
or whether income transformed the crop into a marital asset,
but, rather, the determination and possession of marital prop-
erty upon which the grain was initially grown and harvested.
Linda’s entitlement to the grain does not revolve around the fact
that crops depend upon sale for realization as income, because
the tangible grain itself is already marital property.
9
Id. at 356, 904 N.W.2d at 266 (citing Kalkowski v. Kalkowski, 258 Neb.
1035, 607 N.W.2d 517 (2000)).
10
Osantowski v. Osantowski, supra note 8.
11
Id. at 356, 904 N.W.2d at 265 (citing Davidson v. Davidson, 254 Neb. 656,
578 N.W.2d 848 (1998)).
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Nebraska Supreme Court Advance Sheets
310 Nebraska Reports
EIS v. EIS
Cite as 310 Neb. 243Our holdings in Kalkowski v. Kalkowski 12 are distinguished
here for the same reason. Kalkowski revolved around a deter-
mination of crops as income in order to constitute marital
property when one spouse otherwise had no claim to the crops,
whereas this case was based on a determination that the real
property generating the crop was already a marital asset. 13
Other cases addressing crop storage and marital property deter-
minations are distinguishable on this issue where they relate
only to premarital property or crops already in storage at the
time of marriage. 14 These cases thus do not preclude Linda
from a share of the grain even when it was produced during
the marriage but harvested and sold, or stored for future sale,
postseparation.
The district court used a flexible approach to split the stored
grain between the parties, accounting for the equities of the
situation. We find no abuse of discretion.
(b) Grain Valuation
We next address Donald’s argument regarding the valuation
of the 2019 grain. Donald argues that the district court should
have used the date of separation, rather than the date of trial,
as the valuation date for the stored grain. Donald bases his
argument on the fact that the financial accounts of both parties
(including the farm account, the town account, and Linda’s
inherited funds) were each valued as of the date of separation,
and thus the same date should be used to value the grain in
order to avoid “comparing apples and oranges.”
[8-10] This court has previously declined to mandate that a
trial court must use only one valuation date in equitably divid-
ing a marital estate. 15 The date upon which a marital estate
12
Kalkowski v. Kalkowski, supra note 9.
13
See id.14
See, Brozek v. Brozek, supra note 5; Chmelka v. Chmelka, 29 Neb. App.
265, 953 N.W.2d 288 (2020).
15
Rohde v. Rohde, 303 Neb. 85, 94, 927 N.W.2d 37, 45 (2019).
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Nebraska Supreme Court Advance Sheets
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EIS v. EIS
Cite as 310 Neb. 243is valued should be rationally related to the property compos-
ing the marital estate. 16 The date of valuation is reviewed for
an abuse of the trial court’s discretion. 17 A single valuation
date may not always be appropriate. 18 What may be a fair and
reasonable valuation on one date for an asset may be unfair and
unreasonable for another asset on the same date. 19
As noted by the district court, it could not use the date of
separation to value this grain, because the grain did not yet
exist. Donald and Linda separated in March 2018, but the 2019
grain would not have been planted or harvested until more than
a year after their separation. Donald did not provide any evi-
dence of its value at harvest or its value when he sold “[h]alf
of it” prior to trial. The district court therefore used the date
of trial to value the 2019 grain, because that is the date upon
which Donald first testified to the value of the grain and then-
current market prices.
We find no abuse of discretion in the district court’s decision
to award grain proceeds to Linda or in its decision to value
the grain based on Donald’s testimony at trial. Donald’s final
assignment of error is without merit.
V. CONCLUSION
The decision of the district court is affirmed.
Affirmed.
16
Id.17
Id.18
Id.19
Id.