NO. 84-44
IN THE SUPREME COURT OF THE STATE OF MONTANA
1984
IN RE THE MARRIAGE OF
BONITA KAY BUXBAUM,
Petitioner and Respondent,
-vs-
ADAM LEROY RUXBAUM,
Respondent and Appellant.
APPEAL FROM: District Court of the Seventh Judicial District,
In and for the County of Dawson,
The Honorable M. James Sorte, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
R. W. Heineman argued, Wibaux, Montana
For Respondent:
Cox & Simonton; Marvin L. Howe argued, Glendive,
Montana
For Amicus Curiae:
Huntley & Ea.kin; Ira Eakin argued for Adam Buxbaum,
Baker, Montana
Submitted: September 21, 1984
Decided: December 6 , 1984
< : ;
.
, , ,)
! i ~1..1 +:;,:* 1
9
j -., \ .!
'
Filed:
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Adam Leroy Ruxbaum appeals from a decree of dissolution
of marriage in the District Court, Seventh Judicial District,
in and for Dawson County, with respect to the distribution of
the marital estate. The wife, Bonita Kay Buxbaum
cross-appeals.
The pa-rties were married. in 1964 and their marriage was
dissol-ved in 1983. During the marriage, they ranched near
Glendive, Montana. She was 17 years old when she married; he
was 21 years old. At the time of the dissolution, they were
37 and 41 years old respectively. They have two sons, a 20
year old and. 16 year old living with his mother at the time
of the dissolution. Her health is normal; he has had cancer
of his arm.
The wife quit high school her senior year to marry.
From 1964 to 1975, she worked as a homemaker and on the
.
ranch. In 1975, in addition to her home and ranch work, she
began working as a secretary at a parochial school in
Glendive to help maintain the family. Her current net income
is approximately $8,400. Early in the marriage the husband
worked with his father. In 1972, the ranch was incorporated
and the son took over primary responsibility. He contributed
to the corporation a ].ease agreement on over 3,000 acres. He
continues to farm the lease, keeping two-thirds of the profit
and returning one-third to the lessor. His father
contributed ranchland and equipment to the corporation. At
incorporation, the following stock wa.s issued:
Husband's father 45 shares
Husband's mother 41. shares
Husband & wife 14 shares
Total 1-00
Husband's father died in 1976. Prior to his death, the
father and his spouse each reissued four additional shares of
stock to the husband and wife. The father bequeathed six
shares to his spouse and 3 5 shares to a testamentary trust.
.
for the wife's benefit. The ownership of the corporation now
is:
Trust 35 shares
Husband.' s mother 43 sha.res
Husband & wife 22 shares
Total 100
The date-of-death value on December 1-1, 1 9 7 6 was $3,000 per
share.
The father's trust allocated all of the trust income to
the husband's mother, who is living. At her death, the 3 5
shares are to he distributed 8 5 % to Adam, ( 2 9 . 7 5 shares) and
15% to Ad-am's sisters ( 5 . 2 5 shares). The trust principal has
generated no income because the corporation has never paid a
dividend. The husband, as trustee, has the power to invade
the principal of the trust for his mother's benefit but has
never done so.
Financial statements prepared to obtain a loan by the
parties, and submitted by the wife as evidence of net worth,
showed the following:
Corporation's Husband ' s
Net Worth Net Worth
The District Court used the appraised value of the
corporate assets, rather than the financial statements, as
evidence of net worth. The appraised value of the real
estate was determined by the husband's expert witness. The
husband appraised the value of the personal property.
The resulting figures are:
Real Property
Personal Property
Total Corpora.tion Value
Less:
Corporate Debt to PCA ($58,000)
Miscellaneous Corporation Debts ($22,000)
Wages due Husba.ndtsMother ($13,200)
Net Va-Lue $242,900
No value was assigned by the court to the 3,000 acre
leasehold, calves, growing crops, feed on hand or other
miscel~laneousassets.
The District Court included in the marital estate the
husband's remainder interest in the trust of 29.75 shares and
also included the 22 jointly-held. shares for a total of 51.75
shares.
On the basis of the appraised value of the 51.75 shares,
the District Court. awarded to the wife $70,850, plus a 1979
automobile. The court ordered the husband to pay one-sixth
of the sum now and the remainder over 5 yea.rs.
These are the issues on appeal:
1) Should the remainder interest in a trust be incl.ud.ed
in a marital estate?
2 Must a minority interest in a corporation be
discounted?
3) May a District Court order a corporation to be
dissolved in the event of nonpayment of a property
settlement?
4) Is the wife entitled. to one-half of the shares of
the corporation received from the husband's parents as a gift
during the marriage?
5) Is the child support excessive?
6) Is the maintenance excessive?
7) Should attorney's fees be awarded?
The wife for her part contends that the marital estate
was undervalued because the District Court used the appraisal
and not the book value of the corporation.
1) WAS THE HUSBAND'S REMAINDER PROPERLY INCLUDED IN THE
MARITAL ESTATE AND HOW SHOULD IT BE VALUED?
The husband contends that the remainder interest in the
father's testamentary trust estate should not be included in
the marital estate for two reasons: (1) it is a mere
expectancy, without any enforceable rights; (2) our holding
in Hill v. Hill (1982), 1-97 Mont. 451, 643 P.2d 582 should
not apply because Hill involved a future interest in a Life
estate which was not subject t o divestment.
. The wife
responds that it is within the District Court's discretion to
distribute such property; that section 40-4-202, MCA,
requires future acquisitions of estates to be considered; and
the husband has already benefited from his future interests
in this stock by using the same as collateral.
Both parties agree that the husband's right to receive
the shares of stock from the testamentary trust after the
death of his mother is a vested future interest subject to
defeasance. In Hill, supra, the husband's remainder interest
in a life estate was included in the marital estate. The
mother in Hill had the full control, use and possession of
the property, and the income therefrom during her lifetime,
but the son's remainder interest was not subject to
divestment. It was true, however, that in Hill, the son
could have predeceased the mother. Nonetheless, his
remainder interest was included in the marital estate.
In Goodmundson v. Goodmundson (Mont. 19821, 655 ~ . 2 d
509, 39 St.Rep. 2295, a ranch dissolution of marriage case,
we stated:
"Under section 40-4-202, MCA, the District Court
must consider future acquisition of assets. The
husband's expectation of a sizeable inheritance is
therefore a valid consideration in the equitable
distribution of marital property." 655 P.2d at
512.
The District Court in the case at bar assigned a current
value to the remainder interest and the husband contends that
a more accurate value would be the discounted present value
of such future interest. Yet the current value of the
remainder interest is being used as collateral by the
corporation for the purpose of obtaining loans. The court
realistically looked at the circumstances and used a proper
value based on the underlying assets of the trust.
Always to be remembered in these cases is that a
District Court has far-reaching discretion in resolving
property divisions and its judgment will not be altered
unless a clear abuse of discretion is shown. In Re Yarriage
of Kaasa (1979), 181 Mont. 18, 22, 591 P.2d 111-0,1112, 1113;
In Re Marriage of Kramer (1978), 177 Mant. 61, 580 P.2d 439.
The test for reviewing a District Court's discretion is: Did
the District Court, in the exercise of its discretion act
arbitrarily without employment of conscientious judgment, or
exceed the bounds of reason in view of all the circumstances?
In Re the Marriage of Aanerson (1979), 183 Mont. 229, 234,
598 P.2d 1120, 1123.
2) WAS THE MARITAL ESTATE OVERVALUED RECAUSE THE DISTRICT
COURT CID NOT DISCOUNT THE CORPORATE STOCK TO REFLECT A
MINORITY INTEREST?
The husband argues that his minority corporation stock
should be discounted to reflect a minority shareholder's lack
of control. over the corporation; that federal cases have
discounted minority stock values for estate tax purposes and
that we have approved of discounting minority stock in In Re
Marriage of Jorgenson (1979), 180 Mont. 294, 300, 301, 590
P.2d 606, 610. The wife responds on this issue that because
of their use of all the corporate stock in financing, Adam,
as a. fact, controls the corporati.on regardless of its stock
ownership a.nd the District Court has wi.de discretion in these
matters.
This is not a situation where the minority stock should
be discounted to determine j ts value.
. Discounting usually
will apply when the market value of the stock is being
estimated and there really is no market to rely on. In this
case, the value of the corporation was arrived at by the
market value of the underlyinq assets. It would be
inconsistent to discount the minority share of the value of
the corporate assets in this case.
3) IS THE DISTRICT COURT ORDER FOR ENFORCEDIENT AN ER-ROR TO
THE EXTENT IT AFFECTS THE FAMILY CORPORATION?
The District Court ordered the husband to pay the wife
$70,850 in six installments, one within a month of judgment,
and then annua1.l.yfor five years. The order goes on to say:
"If the Respondent fails to exercise his option to
purchase the Petitioner's interest, the corporation
will be dissolved and the property of the
corporation will be sold on the market for cash at
a price agreeable to the Parties. If no buyers are
received, the property shall be sold at a public
sale within three (31 months from the date of
Judgment."
The husband contends that the corporation was not a
party and therefore the court had no jurisdiction over its
property; that section 35-1-921, MCA, controls the court's
power to liquidate corporations and is not applicable in this
case; and that the co-owners of the stock in the corporation
were not joined as parties in this suit and would have to be
ioined in a suit for partition or dissolution of the
corporation.
The wife contends that the District Court was merely
attempting to give her a means of securing her judgment,
relying on Burleigh v. Burleigh (Mont. 1982), 650 P.2d 753,
39 St.Rep. 1538.
The power of a court to dissolve a corporation is found
in section 35-1-921, MCA. The statute does not include
dissolution of a corporation for nonpayment of marital.
obligations by one of the corporation stockholders. However,
a court does have the power to secure a marital settlement by
qranting a security interest in stock or such further
security arrangements as the court may find necessary in
order to enforce its decree. See Burleigh, supra.
Jn this case, the court also distributed a corporzte car
to the wife. The District Court had no way of knowing that
the 1979 car belonged to the corporation because the
inventory of corporate property submitted by the husband did
not include the automobile.
With respect to this issue, we find it necessary to
remand the cause for the District Court to make new
provisions for the enforcement and security of the wife's
property division. Although a corporate asset in the form of
an automobile should not be distributed to the wife, the
decree of dissolution should be revised to provide 2 vehicle
for the wife since the District Court found that the wife
needs a vehicle.
4) DID THE DISTRICT COURT ERR T_N AWARDING TO THE WIFF
ONE-HALF OF THE VALUE OF THE SHARES RECEIVED FROM THE
HUSBAND ' S PARENTS?
Here the husband contends that the shares were a gift
from his parents and that the law in Montana is that a spouse
is entitled to receive one-half of the increase of value from
the date of the gift, but not one-half of the gift itself.
In support, he cites In Re Marriage of Herron (1980), 186
Mont. 396, 608 P.2d 97. Herron is not applicable. The
divorcing husband there was a physician, the wife was a
homemaker. The disputed property was a cabin on Flathead
Lake, acquired with funds received from the wife's father.
In Herron, the court noted that a ranching situation is
distinguishable. We cited with approval, In Re ~arriageof
Brown (1.978), 179 Mont. 417, 587 P.2d 361, where we found
that the wife had acquired a vested interest in the ranch
property regardless of its source by virtue of her 1.4 years
as a mother, housewife and part-time ranch hand. The
District Court determined that the wife's interest i.n the
ranch property was earned by her contributions as a
homemaker.
5) IS CHILD SUPPORT OF $400 PER MONTH UNTTI, OCTOBER 1.988,
EXCESSIVE?
The husband contends that the lower court ignored his
financial resources in setting child support at $400 per
month. Section 40-4-204(5), MCA, makes financial resources
of the husband a relevant factor. The findings of fact
indicate here that the jud.ge was aware of the husband's
financial resources. There is no indication of abuse of
discretion.
6) IS THE $ 2 0 0 MAINTENANCE TO THE WIFE UNTIL OCTOBER 1988,
EXCESSIVE?
Bere again, the court considered the criteria for
maintenance listed in section 40-4-203, MCA, and did not
abuse its discretion.
7) IS THE AWARD OF ATTORNEY FEES REVERSTBLE ERROR?
Section 40-4-110, MCA, allows reasonable attorney fees
if both parties' financial resources are considered. In this
case, the wife was awarded attorney fees of $1,576. The
findings indicate the judge considered both parties'
financial resources. There was, however, no hearing to
determine the reasonableness of the fees. On that point,
since the case is also being remanded for other reasons, the
reasonableness of the attorney fees should be considered by
the court. In Re Marriage of Aanenson (1979), 183 Mont. 229,
598 P.2d 1120. We find no error in the award of attorney
fees to the wife.
8 THE WIFE CONTENDS THAT THE MARITAL ESTATE WAS
UNDERVALUED.
The wife makes three arguments: 1) The District Court
used the appraised value of current real. estate instead of
the corporate hook value. The 3,000 acre lease, the calves,
grains and other assets were omitted using appraised value.
2) The District Court gave no reasons for finding appraised
values of property to be more accurate estimates of the
parties' net worth than book value. 3) A portion of the PCA
loan that was considered by the court was for current
expenses to produce unearned income. By including the loan,
but excluding the crops and calves, the wife is required to
absorb the expenses of income which she will never receive.
The husband responds to the wjfe's a-rguments that the
crop failed, the calves were lost, and the lease was
worthless; that during the dissolution proceedings the
corporation borrowed more money and if unearned income were
included, the loan must also be included and, further that
unrealized income is speculative.
In Krum v. Krum (Mont. 1980), 614 P.2d 525, 37 St.Rep.
1291, this Court upheld the District Court's exclusion of
"the proceeds from the operating loan ... used largely for
noncapital expenses . . [tlhese expenses have no
rel-ationship to d.etermination of marital assets when the
farm proceeds are excluded.." Krum at 527 and 528. The
District Court could have excluded the opera.ting portion of
the PCA loan but it is within its discretion to include it.
This decision operated against the wife, hut the judge also
made decisions that operated in her favor. For example, the
future trust interest could have been discounted for
valuation yet there the wife argues in favor of judicial
discretion.
The wife also contends that the District Court should be
reversed because it omitted the lease and other a.ssets and
because certain bi1.l.sa-mounting to $22,000 and wages to the
husband's mother for $13,200 were disputed. In Larson v.
Larson (Mont. 19821, 649 P.2d 1351., 1354, 39 St.Rep. 1628, a
case relied on by the wife in connection with this issue, we
said:
"Item-by-item fi.ndi.nqsare not required in property
division cases, but findings nevert-heless must be
sufficiently adequate to ensure that this Court
need not succumb to speculation while assessing the
conscientiousness or reasonableness of the District
Court's judgment."
The findings of fact entered by the court acknowledge
the items the wife questions. The District Court did not
abuse its discretion in adopting the husband's values.
The decree of dissol.ution of the District Court is
affirmed, except that the cause is remanded for further
proceedings in the District Court with respect to the
following items:
1. The court shall remove from the decree language
respecting sale of the corporate assets to enforce the
husba.ndlsobligations und-er the decree of dissolution, but
the court may adopt other means of enforcing the terms of its
judgment;
2. The court shall make other provisions for an
automobile for the wife;
3. The court shall conduct a hearing on the
reasonableness of the attorney fees awarded to the wife.
. .-
. .-. ".
We Concur:
%A -Justice L ? ~ & ~
Chidf sI
Mr. Justice L. C. Gulbrandson, deeming himself disqualified, did
not participate in this decision.