NO. 82-227
I N THE SUPREME COURT OF THE STATE OF M N A J
O T TA
1983
I N RE TIiE YARRIAGE O F
AXDREW J . BECK,
P e t i t i o n e r and Respondent,
-vs-
DORIS BECK,
Respondent and A p p e l l a n t .
Appeal from: District Court of t h e Third J u d i c i a l District,
I n a n d f o r t h e County o f P o w e l l ,
The H o n o r a b l e R o b e r t M. H o l t e r , J u d g e p r e s i d i n g .
C o u n s e l o f Record:
For Appellant:
G a r l i n g t o n , Lohn & R o b i n s o n ; P a u l C . I l e i s m e r ,
M i s s o u l a , Montana
For Respondent:
L e a p h a r t Law F i r m ; H e l e n a , Montana
Submitted: J a n u a r y 1 7 , 1983
Decided: A p r i l 1 4 , 1983
i 4 19113
Filed:
8
.i?, b
d
Clerk
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
This is the second appeal from the property distribution
portion of a marriage dissolution decreed by the Powell
County District Court. The husband brought the first appeal.
In Re Marriage of Beck (1981), - Mont . -, 631 P.2d 282,
38 St.Rep. 1054. In that opinion, we vacated the property
division and remanded the case to the trial court holding
that the trial court's findings of the husband's net annual
income and the value of the marital estate were not supported
by the evidence. We also held that when a property
distribution includes a taxable event which precipitates a
concrete and immediate tax liability, the trial court must
consider that tax liability before entering judgment. During
the pendency of that first appeal, the husband died and the
appeal was continued by his estate.
On remand the trial court held a new evidentiary hearing
and incorporated all the evidence from the first hearing.
The trial court entered new findings and completely
restructured the property distribution, awarding
approximately a third of the marital estate to the wife and
the remaining two-thirds to the deceased husband's estate.
The wife appeals this second distribution claiming first that
the trial court again failed to accurately determine the
parties' net worth and second that the trial court erred by
including the husband's estate tax liability as a marital
debt to be paid before distribution. The wife has also
questioned the equity of a forced sale of the Larabie ranch
to raise money to pay all of the parties debts. We remand
this case to the trial court so that the decree can be
modified in accordance with this opinion.
The parties were married in 1966.
. After 14 years the
marriage was dissolved on April 11, 1980. The husband died
on May 28, 1981. A complete statement of facts can be found
in the first opinion.
In the first property distribution the trial court
awarded the wife the Larabie ranch (valued at $393,000). The
trial court awarded the rest of the property to the husband
and ordered the husband to pay all debts of the parties. In
the second property distribution, the trial court ordered the
Larabie ranch sold and directed that all indebtedness of the
parties be paid from the proceeds; mortgages, accounts,
expenses of this litigation and all taxes, including estate
and inheritance taxes. The trial court ordered the remaining
property to be distributed 66 2/3 percent to the husband's
estate and 33 1/3 percent to the wife.
The wife first contends that the trial court failed to
accurately determine the parties' net worth. The trial court
must determine the net worth of the parties at the time of
their divorce. Grenfell v. Grenfell (1979), 182 Mont. 229,
596 P.2d 205. With this principle in mind we examine the
findings which the wife disputes.
The trial court found that as of the date of the
dissolution the only cash was $7,911 in a Federal Reserve
Bank fund in Missoula. The wife claims that the correct cash
figure should he $24,000. She bases her claim on testimony
of the family accountant given on November 20, 1981 that
there was approximately that amount of cash in an estate
account opened after the husband's death, and after the
dissolution. That account included proceeds from a life
insurance policy on the husband. The policy had been
borrowed against during his life and the accountant testified
that its cash surrender value as of the date of the
dissolution was $651. The insurance proceeds were not a cash
asset of the marital estate and would not properly be
included in the property distribution. The trial court's
finding of the amount of cash available as of the date of
dissolution appears to be accurately based on the amount of
cash held by the parties at the date of dissolution. The
wife has not shown any clear error in that finding and we
will not disturb it on appeal.
The wife next claims that the trial court improperly
determined the value of installment contracts receivable by
discounting them. She has urged the trial court to list
these assets at their face amount rather than at the
discounted amount proposed by the husband's estate. The
trial court found that the contracts carried relatively low
interest rates of s i x to eight percent and all have long
periods of time to run. For those reasons, the trial court
found that the contracts could not be readily marketed
without discounting them. The accountant had testified at
trial that such a discount would be a more accurate
reflection of the value of the contracts. Again, the trial
court's finding is based on substantial credible evidence and
although the wife would prefer some other method of
valuation, she has shown no clear error in the court's
valuation and we will not disturb it on appeal.
The wife next claims that during the pendency of the
first appeal the husband sold his one-eighth interest in the
closely-held Mishmac Corporation for less than the fair
market value. The husband sold that stock to his brother for
$7,000. The wife points out that less than one year after
the husband sold his stock, Mishmac sold most of its property
for $185,506. Had the husband not sold his stock, the wife
claims his one-eighth interest would ha.ve been approximately
$23,000. A post-dissolution sale by Mishmac of most of its
assets is not relevant to this inquiry. We are concerned
only with the va.lue of the stock as of the date of
dissolution. Although the value of a.ssets owned by a
closely-held corporation may be a factor in determining the
stock's value, there are other considerations. The
accountant testified that the Mishmac stock was subject to a
restrictive agreement and could only be sold to existing
stockholders.
The trial court's error lies in omitting any reference
to the Mishmac stock in the second property distribution.
The wife asked the trial court to amend its findings to
include the stock. It was an asset of the parties at the
date of dissolution. The initial decree refers to the fact
that the husband owned stock in Mishmac for which he had been
offered $7,000. There have been two complete hearings and
both parties have had ample opportunity to present evidence
of the stock's value as of the date of dissolution. We
therefore direct the trial court to make a finding of the
stock's value, limited to evidence on the record. We further
direct the trial court to include the value of the stock in
the parties' net worth.
Next, the wife contends that the trial court understated
the value of the Red Hill property by failing to consider the
value of the husband's mineral interest in the property. The
mineral interests had been placed in a trust i.n the 1950's of
which the husband was a beneficiary. Up to the time of the
divorce, little if any income had been received by the
beneficiaries. However, at about the time of the divorce a
phosphate mine was being developed on the land which later
began to return significant royalties. The trial court did
not mention the mineral interest in either the first or the
second property distribution. The wife claims that the trial
court should have assigned a value to the mineral interest in
its findings. The husband's estate argues that he was on1.y
one of several beneficiaries and up to the time of the
dissolution the income was negligible. Also the husband had
only a life interest in the trust. His right to receive
income ended at his death. Because this matter is disputed
by the parties, we hold that the trial court should have made
some specific finding regarding the value of the mineral
interest as of the date of dissolution. We emphasize,
however, that to the extent that increased mining royalties
were merely a possibility as of the date of dissolution, they
shou3.d not figure into the assigned value. We direct the
trial court to make a specific finding of the value, limited
to evidence on the record, and to include that value in the
parties' net worth.
The wife contends that the trial court also erred by
overstating the accounts payable and notes payable at
$47,616.00. Both parties submitted a proposed finding which
set the actual figure at $33,668.00. This was one of the few
values upon which both litigants agreed. The trial court
offered no explanation of how it reached the higher figure.
The trial court should not have disregarded a fact to which
both parties agree without giving its reasons. We therefore
direct the trial- court to modify that finding by changing the
amount of accounts payable and notes payable to the figure
agreed upon by the parties.
We come now to the wife's second issue. She claims that
the trial court erred by including the husband's estate debts
and taxes as a marital debt which must be paid before any
property is distributed. We agree. The effect of ordering
those debts to be paid off the top of the proceeds from the
sale of the Larabie ranch will reduce the wife's portion of
t.he distribution. The husband died after the effective date
of dissolution and the wife is not properly responsible for
debts and taxes of his estate. Such a holding would be
inconsistent with the well established rule that marital
assets are to be valued at the date of dissolution and
distributed as of that date. We direct the trial court to
modify the decree accordingly.
We now turn to the wife's claim that the forced sale of
the entire Larabie ranch to satisfy marital debts goes beyond
the bounds of equity. We agree. Though the husband owned
the ranch before the marriage, he deeded it into joint
tenancy with the wife during the marriage. The trial court
found that as of the date of dissolution the ioint tenancy
had not been terminated and elected to treat it as an asset
of the marriage. The ranch has been the wife's home for the
past seventeen years. The husband is now dead. The wife has
expressed a strong desire to continue living on the ranch,
and she places a great deal of importance in the ranch not
only as a home, but for raising her quarter horses. She has
asked to keep at least a part of the ranch. We see no reason
to force the sale of the entire ranch to satisfy marital
debts. The record shows that the ranch could easily be
partitioned to give the wife the house and the main buildings
and approximately 70 acres. Though it has Long been our
policy to avoid splitting up ranches, we have also held that
that policy ca-nnot be used to avoid a party's right to an
equitable distribution of marital property. In Re Marriage
of Owen (1980), - Mont . 609 P.2d 292, 37 St.Rep. 616.
With these equitable considerations in mind, we direct the
trial court to modify the decree so that the wife can keep
that part of the ranch upon which she makes her home.
Finally, we note that in the first appeal, we held that
when a tax liability will be triggered by a court ordered
distribution, the trial court must consider the impact of
that tax liability. In making the second distribution the
trial court found that "[tlhe requirement of raising cash to
pay the obligations of the parties is greater than the tax
problems generated thereby. Accordingly, and since there is
no formula to escape taxes, the Court deems the foregoing
[property distribution] to be the most advantages [sic] " .
Neither party has argued that the distribution will trigger
tax consequences which were not considered by the trial
court. We can only assume that the parties are satisfied
that in this second distribution the trial court gave
adequate consideration to the tax factor.
We remand this case to the trial court with instructions
to modify the decree in accordance with this opinion.
We Concur:
Chief Justice
Mr. Chief Justice Frank I. Haswell specially concurs:
I concur in the result.