No. 82-03
IJ THE SUPREME COURT OF THE STATE OF MONTANA
E
1984
IN RE THE MARRIAGE OF
EARL MYERS,
Petitioner and Appellant,
and
DONNA B Y RS ,
IE
Respondent and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Jack D. Shanstrom, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Holmstrom & Dunaway; Robert Holmstrom, Billings,
Montana
For Respondent:
Robert L. Stephens, Jr., Billings, Montana
Submitted on Briefs: January 19, 1954
Decided: May 29, 1984
illfil L, $ !984
Filed:
Clerk
Mr. Justice Daniel J. Shea delivered the Opinion of the
Court.
Petitioner husband, Earl T. Myers, appeals from a
Yellowstone County District Court judgment awarding
approximately one-sixth of the marital property to him, and
approximately five-sixt-hs of the marital property to the
respondent wife, Donna F. Myers. The husband contends that
because the trial court refused to divide the marital
property on a 50/50 basis pursuant to an agreement executed
between the parties on September 2, 1976, the trial court
abused its discretion. We affirm.
The sole issue is whether the trial court abused its
discretion when it refused to divide the marital. property
according to the September 2, 1976 agreement and awarded
approximately five-sixths to the wife and one-sixth to the
husband.
At the time the parties were married on April 1-4, 1972,
the husband was 47 and the wife 42. He had been married and
divorced four times and she had been married and divorced
twice. The trial court found that at the time of their
marriage, the wife had a net worth of approximately $176,000,
and he had a net worth of approximately $22,000. Following
their marriage, the parties lived in a residence owned by the
wife's father, located on Mariposa Drive in Billings, where
the wife had been living prior to their marriage. The
husband did some renovation work on this house, including
redoing the showers and laying some carpet. The parties paid
no rent to the wife's father.
A majority of the wife's assets at the time of the
marriage consisted of her one-quarter interest in a family
partnership that owned several commercial buildings known as
the Moran Property. The property included the Billings
Pioneer Post Office and parking lot; the Laurel Post Office;
the J. C. Penney building in Laurel; the McCleod Building in
Billings; the Montana Power Complex (three buildings); and, a
building referred to as the "Shell Shack." The wife's
father, John H. Moran, had acquired the property over the
years, and expressed many times his desire to keep the
property in the family.
Four or five months after the marriage, the parties
separated. The wife remained living in the house on
Mariposa, and he moved into an apartment somewhere in
Billings. Sometime later, the wife's mother, Pearl M. Moran,
approached the husband to see if he would be interested in
buying some of the Moran property with his wife. The offer
was made to attempt to persuade the husband to reconcile with
his wife. The husband stated that he would be interested
only if he would be brought in as an equal partner with his
wife.
The plan was for the parties to purcha-se the Billings
Pioneer Post Office and parking lot, the J. C. Penney
building in Laurel, and the Laurel Post Office. To
effectuate the equal ownership, she gifted one-half of her
one-quarter interest in that property to her husband. The
partnership was then dissolved, and the above property was
conveyed to the parties at a total purchase price of
$255,000, though the appraised value of the property was
$340,000.
As a downpayment of $7,500, the wife conveyed to the
other partners (her parents and brother) her one-quarter
interest in the Montana Power Building in Laurel. The
parties then executed a mortgage on the balance of $247,500,
payable in monthly installments of approximately $2,100. The
mortgage payments were made from rental income received from
the properties. At the time of trial, a balance of
$108,155.74 remained on the purcha-se price. It is important
to note that the husband made no financial contribut.ion
toward the purchase of the Moran property. He did, however,
help to manage and maintain the property for a few years.
The parties established the Big-M Company and transacted
business as a partnership. In addition to the Moran real
property, the parties also acquired a small tractor with
attachments, two older model pickup trucks and a dump truck,
and tools and equipment. The total value of this Big-M
Company personal property was $9,100.
In April 1973, after the Moran family partnership had
been dissolved, and after the husband had been brought in as
a 50/50 partner on some of the Moran property, the parties
purchased the residence on Mariposa. in Billings. The husband
paid $15,000 of his funds for a one-half interest in the
house, though the original cost basis of the house was
$32,000 and had appreciated in value since being built. The
other one-half was gifted to the parties by the wife's
father. The parties sold the residence the next year for
$50,000, realizing a handsome gain.
The parties had earlier arranged to purchase a tract of
real estate on the Rimrock area overlooking the City of
Billings, and had mortgaged the Mariposa residence to pay for
the land. When the Mariposa residence was later sold, the
mortgage obligation was retired. The parties began
construction of a home on that property, both parties
contributing time and effort, but with the husband providing
most of the carpentry and labor skills. The husband stopped
working on the home when further marital problems arose, and
the house was unfinished at the time of trial.
At the time of their marriage, the husband owned a tract
of land on the North Frontage Road near Billings. The
husband sold the property, realized the sum of $12,500 and
used the money to make the $11,600 downpayment on the Scott
Building in Laurel on April 1, 1976. The husband also used
his funds to make the first of four $8,574.81 installment
payments. The Scott Building was adjacent to the J. C.
Penney building, and after the purchase, J. C. Penney
expanded into the smaller Scott Building. The final three
installments on the Scott Building were paid for completely
out of rental in.come from the existing 1-eases on real estate
purchased from the wife1s famil-y.
The parties were separated at the time the Scott
Building was purchased in April 1976, and were still
separated in August of that year. During this time, the wife
had been attempting to encourage the husband to reconcile.
But, the husband refused to reconcile unless the wife agreed
to put into writing his one-half interest in all the
property, including the Moran property. The resulting
agreement of September 2, 1976, is the focus of this dispute
because the trial court refused to divide the property
according to its terms--i.e., 50/50.
The pertinent provisions of the agreement state as
follows:
"NOW, THEREFORE, each party agrees as follows:
111 .That each of the parties hereto own an
undivided one half interest in real property
described on Schedule 'A1 (all their real property)
attached hereto, and any real estate acquired
subsequent to the date hereof shall be held as
tenants in common.
"3. In the event of a divorce of the parties, the
title to the real estate which is the subject of
this Agreement, may either:
"A. Remain as it presently is;
"B. Be divided pursuant to agreement between the
parties;
"C. Be sold and the proceeds therefrom divided
equally between the parties hereto . . ."
After the parties executed the agreement, they
reconciled and lived together for a short while. Seven
months after the agreement was executed, and five years into
the marriage, the husband filed for divorce. The divorce
decree was entered November 16, 1977.
The trial court awarded to the wife real property having
an appraised value of $735,000, subject to a mortgage of
$108,155.74. She was also awarded her separate vehicle and
all of her home furnishings. The trial court awarded to the
husband no real property, the Rig-M personal property
consisting of the three trucks, the tractor, tools a.nd
equipment ($9,100), and $95,000 in cash-
Neither party made any steadfast contention at the trial
as to what exactly the September 2, 1976 agreement
represents. The husband contends on appeal that because the
agreement was executed during a period of reconciliation, it
cannot be a separation agreement under section 40-4-201, MCA,
and is therefore a postnuptial agreement under sections
40-2-301 through -311, MCA. He contends in the alternative
that if it was a sepa.ration agreement, it was binding on the
trial court because the court failed to find it
"unconscionable," as required by the statute. The wife
contends that it was a separation agreement because they were
separated at the time it was executed, and in fact the
husband would not reconcile unless she signed the agreement.
She al~soargues that the court's finding of fact no. XVI was
sufficient for purposes of finding 'unconscionability' under
section 40-4-201. The trial court's finding no. XVI
"The history of the parties' marriage is a brief
but stormy one, punctuated by numerous separations
and attempted reconciliations. During the course
of one such reconciliation, the parties entered
into an agreement dated September 2, 1976, which
purported to acknowledge eaual half interests in
all of the parties' property and which was
ostensibly designed to clarify the parties'
respective rights. The parties had previously
discussed other similar agreements which were not
executed. In each case the agreements were created
in an atmosphere of emotional turmoil, the
Petitioner acting as instigator, and the Respondent
seeking to preserve the marriage. While the Court
is required to consider - -an agreement, - - -
- such it is in
no way b n i ; g - - Court finds that under -
- i d ' n and the all
of - circumstances the enforcement of - -an
- the such
agreement would - inequitable - - s case."
be in t E
(Emphasis added.)
We believe the trial court properly refused to divide
the property according to the agreement. We also believe
that the result would. be the same whether the agreement was a
separation agreement or a postnuptial agreement.
Section 40-2-301, PICA, relied on by the husba.nd,
specifica.11~ states that contracts between spouses are
subject to the general rules "which control the a.ctions of
persons occupying confidental relations with each
other. . .," as defined in the trust provisions. The
husband's actions were far from complying with those rules.
In the fall of 1972, four months after their marriage, the
parties were already separated. The wife wished to reconcile
with her husband so she asked her mother to offer him a
chance to join the wife in buying some of her parents'
property. He refused to reconcile unless he was made a 5 0 / 5 0
partner in ownership. Because she wanted to reconcile the
marriage, the wife agreed, and that is when her family's
partnership was dissolved and the Big-M Company formed. But,
the husband made absolutely no financial contribution toward
the purchase of the Moran property.
The husband then made several efforts to ink his
one-half interest in the property. Admitted over the
husband's objections at trial were three separate property
agreements, all drafted at the instigation of the husband,
and all designed to make sure he received one-half of his
wife's property. The first two were never executed and the
last one was the September 2, 1976 agreement.
The fact that makes the husband's attempt to secure
one-half of her property most contrary to a trust
relationship is that he was doing so during a short-lived and
rocky marriage. The trial court found that "in each case the
agreements were created in an atmosphere of emotional
turmoil, the (husband) acting as the instigator, and the
(wife) seeking to preserve the marriage. " Indeed, there was
testimony that the parties were separated more than they were
together during their stormy five year union. Furthermore,
it did not take the husband long (seven months) to file for
divorce after he succeeded in having his wife sign the
September 2, 1976 agreement.
We believe the evidence shows that the husband took
advantage of his wife regarding her property as a condition
to continuing the marriage. Such actions are not consistent
with what is required of one in a confidential relationship.
Therefore the agreement was invalid as a postnuptial
agreement under section 40-2-301, MCA, and the trial court
dividing the marital property was not bound by it.
The only other possible interpretation of the agreement
is as a separation agreement under section 40-4-201, MCA.
This is the most likely interpretation because the agreement
was executed at a time when the parties were separated and
the agreement was made when at least the husband had one eye
on divorce. -
See, section 40-4-201(1), MCA.
The husband contends that if the agreement was a
separation agreement, the trial court was bound by it because
it did not find that the agreement was "unconscionable," as
required by section 40-4-201 ( 2 ) , MCA. Although it is true
the trial court did not specifically find
"unconscionability," (See finding no. XVI, supra), we believe
the evidence supports a finding of "unconscionability" as a
matter of law. We rely on the same evidence in finding
"unconscionability" as a matter of law as we did in holding
that the husband's actions were repugnant to what is required
of one in a confidential relationship. The "agreement" was
reached at a time when he was attempting to secure a greater
cut of her property, and she was attempting to save the
marriage. The marriage had been stormy from the start, and
the husband himself admitted he was "surprised" when his
wife's mother offered to have him join his wife in purchasing
some of the Moran property. It is clear that the offer was
made to encourage the husband to reconcile, but any such
reconciliation was more form than substance.
Based on the circumstances surrounding the execution of
the September 2, 1976 agreement, we hold it was
unconscionable" as a matter of law and the trial. court
properly refused to divide the property according to its
terms.
The final point to be addressed is the overall equity of
the five-sixths/one-sixth split. We must admit such a
division seems inequitable on its face. The well-established
rule in Montana is:
"The apportionment made by the District Court will
not be disturbed on review unless there has been a
clear a.buse of discretion as manifested by a
substantial inequitable division of the marital
assets resulting in substantial injustice." - -
In re
the Ma-rriage of Brown (Mont. 1978), 587 P.2d 361,
35 St.Rep. 1733.
Without more, a divisj-on awarding five-sixths to the
wife would seem to be "substantially unjust." But it must be
noted that the marriage was short-lived and rocky, this is
the husband's fifth and the wife's third divorce, and, most
significantly, a great majority of the property was acquired
from the wife's family. We held in the case of In Re
Marriage of Herron (Mont. 1980), 608 P.2d 97, that the source
of the property was a major factor to be considered by the
court dividing the property under section 40-4-202, MCA. In
Herron, we held that the trial court had abused its
discretion when it split the property 50/50, where "almost
all of the property accumulated by the (husband.and wife) can
be traced to gifts or bequests from (the wife's father)."
"Almost all" of the marital property can be traced to
the Morans, the wife's family. Clearly all the Moran
property purchased in 1972 came from the Morans, and is being
paid off from rental income from that property, without any
financial contribution from the husband. The tract of land
on the Rimrocks where the parties started constructing their
new home was paid for by mortgaging the Moran residence on
Mariposa., and the mortgage was then retired when the Mariposa
residence was sold. The husband did contribute some of his
own money to purchase materials for the partial construction
of the new home, and the trial court considered that fact
when it awarded him $95,000 cash.
The only other real properties in which the husband had
any equity were the Scott Building in Laurel.., and the
residence on Mariposa which the parties sold in 1974. The
husband used his own funds to make the $11,500 downpayment on
the Scott Building and also paid the first $8,574.81
installment. The last three installments were paid with
rental income received from Moran property. The husband's
$20,174.81 equity in the Scott Building was included in his
cash award, as the trial court decided not to partition the
property.
Regarding the residence on Mariposa, the husband did pay
$15,000 for a one-half interest, but that was a bargain
considering the house cost $32,000 to build and had
appreciated. The other one-half interest was gifted to the
parties by the wife's father. The trial court considered the
husband's $15,000 contribution, and also considered the fact
that because the wife' s father had sold the home at such a
bargain price, the parties were able to turn around the next
year and sell it for $50,000. We find no error regarding the
Scott Building or the Mariposa residence.
Because we believe the trial court properly considered
all the required factors set forth in section 40-4-202, MCA,
includi.ng the husband's efforts in helping to manage and
maintain the Moran property, we hold that there was no clear
abuse of discretion resulting in "substantial injustice" by
awarding approximately five-sixths of the property to the
wife and one-sixth to the husband.
The judgment is affirmed..
We Concur:
/\ Justices