No. 14595
IN THE SUPREME COURT OF THE STATE OF MONTANA
1979
IN RE THE MARRIAGE OF
STANLEY M. KNUDSON,
Petitioner and Appellant,
VS.
FRANCES ANNE KNUDSON,
Respondent-Counter-Petitioner.
Appeal from: District Court of the Twelfth Judicial District,
Honorable B. W. Thomas, Judge presiding.
Counsel of Record:
For Appellant:
Berger, Anderson,Sinclair and Murphy, Billings, Montana
For Respondent:
Marra, Wenz, Iwen & Johnson, Great Falls, Montana
Submitted on briefs: July 14, 1979
Decided: JAN 3 0 1980
Filed: & 3') aa
!
B
Mr. Justice Daniel J. Shea delivered the Opinion of the Court.
Stanley V. Knudson (herein designated as the husband)
appeals from that portion of a dissolution of marriage
decree entered by the Hill County District Court which
awarded Frances Anne Knudson (herein designated as the wife)
an interest in his retirement benefits to which he is entitled
under the Railroad Retirement Act. The wife cross-appeals
from the same judgment, contending that it was error for the
trial court to award her only 40 percent of the marital
estate. She also contends she is entitled to maintenance,
attorney fees, and costs.
We discuss first the issue of whether the wife can
claim an interest in the husband's benefits to which he is
entitled under the Railroad ~etirementAct. Since the
appeal was filed in this case, the United States Supreme
Court has ruled in Hisquierdo v. Hisquierdo (1979), 439 U.S.
572, 99 S.Ct. 802, 59 L.Ed.2d 1, that such benefits are not
part of the marital estate, and cannot be considered directly
or indirectly in a divorce decree which distributes the
assets of the marriage. For purposes of discussing the
remainder of the property distribution award, it is useful
to set forth how the railroad retirement benefits were
handled by the trial court.
In responding to the husband's petition for divorce and
an equitable distribution of the assets of the marriage,
the wife contended that his railroad retirement benefits were
an asset of the marriage, and therefore she claimed an
interest in them. The court found that the husband through
1976 had accumulated 275 months of employment with the
railroad which would have entitled him to an annuity of $560
per month if he were eligible to retire at the end of 1976.
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In the initial decree the trial court awarded the husband
approximately 60 percent of the marital assets, and
the remaining 43 percent was of course, awarded to the
wife. But for some reason the original decree is silent
as to disposition of the railroad retirement benefits.
After entry of the original decree, both parties moved to
amend the findings and conclusions in several particulars.
The wife at that time requested that the decree be amended
to award her a portion of the husband's interest in his
railroad retirement pension. The Court then arrived at a cal-
culation of the husband's retirement benefits and distributed
40 percent of the benefits to the wife and 6 0 percent of the
benefits to the husband. This was the same formula used by the
trial court in dividing the other marital assets. At the time
the court awarded railroad retirement benefits to the wife as a
property interest, it had before it several state cases, includin*~
the California case of In Re Marriage of Hisquierdo (1977), 139
Cal.Rptr. 5 9 0 , 19 Cal.3d 613, 5 6 6 P.2d 224, which case was then
being reviewed by the United States Supreme Court.
Because of the way in which the railroad retirement benefits
were treated by the trial court, it is clear to us that the
trial court would not have distributed the marital estate in
any different manner if the Court had known from the outset
that Railroad Retirement Act benefits were not part of, and
could not be considered for any purpose, as part of the
marital estate and therefore subject to distribution.
As we have noted, the United States Supreme Court in
Hisquierdo, supra, specifically ruled that retirement benefits
receivable under the Railroad Retirement Act, 4 5 U.S.C.A.
231, et seq. may not be included as part of a property distribution.
The Court determined that distribution of a share of one
spouse's expection in retirement benefits under the Act would
frustrate the purpose of the Act which is to encourage an
early retirement by employees by providing them with
adequate support in their old age. The Court further
noted that the antigarnishment section of the Act, section
231(m), protects not only a direct distribution of a share of
a pension, but also an indirect distribution by an offsetting
award, that is, an award to compensate the nonemployee spouse
for retirement benefits not directly received. The Court
concluded that an offset as well as a direct interest in the
pension wbuld frustrate the purpose of the Act. We note,
however, that the Court was careful to add that pension
benefits under the Act could still be reached for maintenance
or for child support. Hisquierdo, supra.
Here, the trial court clearly awarded the wife as part
of the property settlement a share in the husband's pension
rights under the Railroad Retirement Act. Accordingly, that
portion of the decree must be vacated. The question o f
whether the wife should have been awarded maintenance in
lieu of a share of the railroad pension is discussed later
in this opinion.
We reach now the wife's cross-appeal whereby she contends
that the trial court should have awarded her 50 percent
of the marital assets. She asserts two grounds. First, she
contends that she asked for a 50 percent distribution in
her counterpetition, that the husband did not respond to the
counterpetition, and therefore he is deemed under pleading
rules to have admitted she was entitled to 50 percent of
the marital estate. Second, she argues that if her pleading
argument should not prevail, that the distribution scheme
is unfair to her.
The wife relies on Rule 7(a), and Rule 8 ( d ) of Mont.
R.Civ.P. in contending that the husband had a duty to respond
to her counterpetition, and in failing to do so admitted that
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the wife was entitled to 56 percent of the marital
assets. She argues that because of these rules, the hands
of the trial court was tied, and he was bound by law to
award her 50 percent of the marital estate. To accept
her argument however, would be to exalt form over substance.
The essential pleadings required under the Uniform
Marriage and Divorce Act are set forth in section 40-4-
103(3), MCA. The first pleading is a petition, and the
responsive pleading is denominated a response. If there are
other pleadings under the Act, they are specifically governed
by the Montana Rules of Civil Procedure. In his petition
the husband asked the trial court to equitably apportion the
marital estate. In her response the wife went another step
and asked that she be awarded SO percent of the marital
estate. She contends that the husband was duly bound by the
rules of civil procedure to respond to her demand for fifty
percent of the assets, and that his failure to do so resulted
in an admission that she was so entitled. But the husband was
under no duty to answer the wife's "counter-petition."
The entire marital estate was brought before the trial
court by the husband's petition asking the court to equitably
apportion this estate. The husband did not take a position
in this petition as to precisely how he felt the estate
should be divided, but the wife in her counterpetition alleged
that she was entitled to half of the parties assets. A reply
to this counterpetition, might have indicated to the court how
close or how far away the parties were from arriving at a
percentage figure for distributing the marital estate, but he
had no duty to reply. The entire marital estate was before the
trial court for equitable distribution. We note, furthermore,
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that at the end of the trial counsel for the husband moved
under Rule 15 that the pleadings be amended to conform to
the proof and that the trial court granted this motion.
Nor does the Uniform Marriage and Divorce Act (section
40-4-105, MCA) require that a petition for marriage dissolution
set forth how the petitioner believes the marital estate should
be divided. The purpose of the petition is simply to inform the
trial court that the parties' acquired property during the course
of the marriage and that the court should equitably divide it in
the event the parties' cannot reach an agreement in this regard.
Here both sides conducted extensive discovery and there was a
prolonged trial where the positions of the parties were set
forth in great detail. The issue of an equitable division was
clearly raised by the pleadings, and that is all that is required.
We next discuss the wife's contention that she should
have been awarded 5C percent of the marital assets and
a large share of the income-producing property.
The parties owned a 1,320 acre farm which they used for
farming and ranching, and a 10 acre tract of land upon which
barns, graineries, sheds, and a farmhouse were located. Other
major assets of the parties included personal property
necessary to run the farm, livestock, prospective income
from grain contracts, and grain on hand. The court set the
value of the farmland at $400,000, the 10 acres and associated
buildings at $87,000, and the farm-related assets described
above at $154,487.
At trial, the husband requested the court to keep the
farm intact and to permit him to compensate the wife for her
interest in the farm. The wife on the other hand, wanted a
50 percent share of the marital assets, and had no objection
to the sale of the farm if it was required in order to reach
her 50 percent objective.
The trial court set the net value of the marital estate
at $551,000 and fixed the wife's interest at $220,000. The
decree awarded to the husband the farmland, the livestock,
personal property necessary to run the farm, the income to
be received from grain sale contracts, and the grain on
hand. The husband was ordered to assume responsibility for
the parties' debts which were estimated at $90,586.
The wife was to receive her $220,000 by receiving the
10 acre tract with its associated buildings valued at $87,000,
and payment of $133,000 from the husband. The amended
decree ordered the husband to pay the wife $13,000 by November
1, 1978 and the balance of $120,000 in yearly installments
of $6,000 each. The decree also provided that either party
could seek modification of the payment schedule in the event
the property was sold, and that the balance due the wife
would be a lien upon the farmland.
The wife contends the trial court's property division
was inequitable because she received less than 50 percent of
the net marital estate, and because the husband received
most of the income-producing assets.
The evidence presented by both parties at trial established
that the husband spent practically the whole of his waking
hours working either for the railroad or on the family farm.
Uncontroverted testimony established that the husband as a
general practice worked about 16 hours a day and spent
anywhere from 5 to 8 hours on farm work. The forced sale of
the family farm would have ended the husband's lifetime
dream of developing the family farm. The parties' son has
begun farming a portion of the land and he shares his father's
lifetime goal.
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The wife, on the other hand, does not care for farming,
and has opposed the investment of the family's income in
farm machinery and other farm materials. Although the wife
helped in clearing the land of rocks and performed other
farm chores, she has not displayed the single-minded devotion
to the farm that the husband possesses. The bulk of the
parties' assets consist of the farm and farm-related materials,
and these assets have been maintained primarily through the
enormous contributions of the husband. We see no abuse of
discretion here in awarding the wife 40 percent of the value
of the marital assets rather than her claimed 50 percent.
The thrust of the wife's next contention is that the
court erred in awarding the husband all the income-producing
property and awarding her all the incoming-consuming property.
The court sought to preserve ownership of the farm in the family
and awarded it to the husband primarily because he was most likely
to continue its operation. The wife expressed no interest what-
soever in continuing the farming operations. Her complaint is
that the property awarded her will not produce income equal to
that of the farm and that the property awarded her is primarily
income consuming. This same argument was presented by the wife
when her counsel moved the court to amend its findings and conclusions.
In response to this argument, the trial court found that the 10
acre tract with its barn sheds, graineries and farmhouse gave
the wife property which could generate income by either its sale
or rental. Testimony of the wife's expert at trial confirms
this determination.
At trial, a real estate broker testifying for the wife
estimated the value of the farm buildings and the land upon which
they sit to be $87,000. He described the property as a unique
piece of land on which some people might place a value even higher
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than his estimate. He stated that the property's location
next to the highway would probably make it a quick sale.
This testimony suggests that the wife by selling the property
could in fact produce a sizeable amount of income for her
savings or reinvestment. The trial court also determined
that the property had rental value. We find no abuse of
discretion in these determinations.
The next issue raised by the wife is that the court
erred in denying her maintenance. She argues that her
present income is such that she cannot earn enough to provide
herself a decent standard of living and that the trial
court's distribution of property has cut off her opportunities
for additional income. We determine, however, that the
trial court did not abuse its discretion in not awarding
maintenance to the wife.
The wife left the farm and lived apart from the husband
for two years prior to their divorce. She testified at
trial that she had not received any money from the husband
during this period and that she is able to support herself.
Since the parties' separation, she has rented an apartment
for approximately $140 per month. The trial court distributed
the family home to the wife. By living in the home she can
reduce her expenses by $140 per month, or as discussed
above, the wife could produce a significant amount of income
by selling or renting the property. Moreover, in addition to
the initial $13,000 to be paid the wife, the husband must
pay the balance of the $120,000 in cash in annual installments
of $6,000 each. We cannot conclude, therefore, that the
trial court abused its discretion in not awarding maintenance
to the wife.
We emphasize that in reaching our decision here, we have
considered the impact of Hisquierdo, supra, in that the wife will
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no longer be getting 40 percent of the husband's railroad
retirement benefits when they mature. In the wife's proposed
findings of fact, she requested the trial court to award
maintenance to her in lieu of her claimed share in the husband's
railroad pension. Instead, the trial court's amended decree
awarded her a 40 percent share of the husband's pension as a
property interest, but no maintenance.
By concluding that the wife is foreclosed from receiving
any portion of her husband's railroad retirement benefits as
an interest in property, her monthly income will be reduced by
$220 per month from the date she would first have been entitled
to receive a share of the pension. But the trial court's order
denying maintenance to the wife should still be affirmed. She
has supported herself without aid from the husband for over two
years, and with the annual payments to be made to her by the
husband, together with the property she has received (which she
can either sell or rent for additional income), she has adequate
means to support herself. We note in this regard that although
the husband's income is larger than that of the wife, it is
significantly reduced by a mortgage on the farmland, by debts
connected with the farm machinery, and by payments to the wife
required by the decree.
Ultimately, without regard to the railroad pension which
must be considered the separate property of the husband under
Hisquierdo, supra, the trial court awarded 40 percent of the
marital assets to the wife and 60 percent to the husband. It
found that she was not entitled to maintenance because she was
employed and had been supporting herself for at least two years
prior to the divorce, and because the cash awarded to the wife
by the way of annual installment payments together with other
income-producing property awarded to the wife, eliminated the need
for maintenance. The trial court did not abuse its discretion.
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The wife's final contention is that she is entitled to
attorney fees for the divorce proceeding and this appeal.
A party requesting an award of attorney fees must make a showing
of necessity. See, Brown v. Brown (1978), Mont . , 587
P.2d 361, 35 St.Rep. 1733; Whitman v. Whitman (1974), 164 Mont.
124, 519 P.2d 966. The trial court's award or denial of attorney
fees will not be reversed when there is substantial evidence to
support its findings. Allen v. Allen (19781, Mont . I
575 P.2d 74, 35 St.Rep. 246. Here the wife was employed and
testified that she had sufficient income to support herself.
The wife did not demonstrate a necessity as required before she
is entitled to attorney fees. Upon these facts, we find no
abuse of discretion. The wife is clearly able to pay her own
attorney fees.
The decree of the District Court is affirmed except insofar
as it awards the wife a share of the husband's railroad retirement
pension. This cause is remanded to the District Court for amend-
ment of judgment in accordance with this opinion.
Justice
We Concur:
Ch-ief Justice
. ? f
/ / Justices V