NO. 84-490
I N THE SUPREME COURT OF T H E STATE OF MONTANA
1985
I N R E T H E MARRIAGE OF
MARY ISABELLE SIRUCEK,
P e t i t i o n e r and A p p e l l a n t ,
and
ROBERT SIRUCEK,
Respondent and Respondent.
Appeal from: D i s t r i c t Court of t h e Tenth J u d i c i a l D i s t r i c t
I n and f o r t h e County o f F e r g u s
The H o n o r a b l e J o e l G . R o t h , J u d g e p r e s i d i n g .
Counsel o f Record:
For Appellant:
L i n n e l l , Newhall & M a r t i n , G r e a t F a l l s , Montana
Norman L . N e w h a l l , 111, G r e a t F a l l s , M o n t a n a
For Respondent:
S w a n b e r g , Koby, S w a n b e r g & M a t t e u c c i ,
G r e a t F a l l s , Montana
D a n i e l F a l c o n , G r e a t F a l l s , Montana
Submitted on b r i e f s : Sept. 6, 1986
Decided: December 3 1 , 1 9 8 5
-
Clerk
Mr. Justice Fred J. Weber delivered. the Opinion of the Court.
Mary Isabelle Sirucek (wife) sought a dissolution of her
marriage from Robert Sirucek (husband) in the Tenth Judicial
District Court for Fergus County. The wife appeals from the
division of the marital estate. We affirm the District
Court.
The issues on appea.1 are:
1. Did the District Court err in adopting the Stanton
appraisal of the ranch property, in particular the valuation
of timberland?
2. Did the District Court err in including the wife's
teacher's retirement pension in the marital estate?
3. I f the teacher's retirement pension was properly
included in the marital estate, did the District Court
properly value that pension?
4. Was the marital estate equitably divided between the
wife and husband?
5. Did the District Court err in failing to award the
wife any share in the appreciation or equity build-up of the
ranch during the course of the ma-rriage?
6. Did the District Court err in adoptinq inconsistent
discount rates for the ranch real property and the teacher's
retirement pension?
7. Should the District Court have ordered the sale of
the ranch and division of the sale proceeds?
The following findings of the District Court are not
disputed: The parties were married in 1970 and cohabited as
husband and wife for 12% years. At the time of the divorce,
the wife was 52 and the husband was 63. No children were
born of the marriage. The wife had five children from a
previous marriage. Three of her children lived on the
Sirucek ranch for a number of years before reaching the age
of majority. The husband had been married twice before and
had three children of his prior marriages. One of his
children also lived at the ranch after the parties' marriage.
Neither the husband nor the wife adopted any of the other's
children. There is no claim for child support or spousal
~naintenance. At the time of marriage, the wife was teaching
school in Lewistown, and the husband was living on his ranch
about eight miles east of Lewistown. After the marriage, the
wife and her three minor children moved to the ranch, where
they lived as a family unit until. each of the children
graduated from high school. The parties continued to live
together until 1983, when the wife moved to Lewistown.
The wife has a bachelor's degree in education and has
taught school continuously in the rural schools of Montana
since the early 1960's. She has taught in Lewistown since
1967. The husband brought to the marriage ranch real
property, farm machinery and various livestock. At the time
of the marriage, the wife owned certain household items and a
car. In 1973, the husband sold 230 acres of the ranch land,
leaving approximately 1,393 acres of crop land, pasture and
timberland. The ranch includes various improvements,
including a ranch house. During the marriage, the wife
earned approximately $162,000. During the same period of
time, the ranch had a total income tax loss of approximately
$119,000, including the non-cash expense of depreciation.
The ranch operation was not and is not a profitable business
venture. The District Court found that the ranch land had
appreciated in value during the years of marriage as a result
of inflation, not because of labor or money invested by
either party. The husband desires to continue to run a
cattle operation on the ranch. The wife requests that the
ranch be sold and the proceeds divided between them.
Of particular significance are the findings by the
District Court that both the wife and the husband made
substantial contributions to the marriage. The wife served
as homemaker, did most of the cooking and general
housekeeping, performed chores around the ranch, and held a
job as full time teacher. The husband provided a home for
the wife and her three children, was a stepfather for the
three children, provided responsible paternal care and
discipline, taught one of the wife's children how to operate
ranch machinery, shared in the housekeeping duties and meal
preparation, and was responsible for operating the ranch.
The court found an equal and offsetting contribution by each
of the parties to the marriage. The court also found that
the wife was not entitled to a percentage of the increase in
value of ranch land.
In its extensive findings, the District Court considered
the factors set forth in § 40-4-202, MCA, pertaining to the
division of marital property. We will not list all of the
factual findings in connection with the factors in that code
section. However, we note that both parties were found to be
in good health, the wife being 5 2 and the husband 63, and the
parties' basic needs for food, clothing and housing were
identical. The court further found that the wife has a
greater opportunity for acquiring future income and capital
assets because of her continually increasing teacher's
salary, whereas the husband is faced with continuing ranch
operation losses. The husband's ability to acquire capital
assets is premised upon an inflationary increase in value of
land and an opportunity to borrow additional money. The
District Court valued the ranch land and improvements as a
farm and ranch operation and did not consider dividing the
ranch land and selling tracts for recreational, resid-ential
sites. The parties' mutual debts to the Central Montana PCA
and Federal Land Bank were deducted from the value of the
marital assets.
The District Court divided the marital assets between
the parties as follows:
TO ISABELLE
Teacher's Retirement Pension
TO ROBERT
Vehicles (excluding Datsun pickup) $11,320.00
Farm machine and equipment 28,425.00
Horses 15,000.00
Cattle 34,400.00
Gold & silver 1,050.00
Ranch land and improvements 290,000.00
TOTAL $380,195.00
Less Liabilities $114,516.34
NET $265,678.66
The wife appeals from this determination and
distribution.
Did the District Court err in adopting the Stanton
appraisal of the ranch property, in particular the valuation
of timberland.?
The wife's primary objection is that the District Court
essentially adopted the appraisal by Mr. Stanton, including
his appraised value of $80 per acre for timberland. In
contrast, the Thor appraisal, submitted by the wife, showed a
value of $183 per acre for timberland.
We have reviewed the evidence submitted by and through
the appraisers. We have considered the testimony by the
appraisers, who personally appeared before the court. The
testimony of Mr. Stanton established his extensive
qualifications for appraisal of farm and ranch lands in
Montana. His testimony further demonstrated extensive work
in reviewing the records, examining the land, and talking to
knowledgeable realtors and other parties in the area. In
addition, Mr. Stanton explained at length the basis for his
conclusions that hayland on the Sirucek ranch should be
valued at $350 an acre, open grazing land at $200 per acre
and timber grazing land at $80 per acre. So far as the
timberland is concerned, the Stanton appraisal established
that the highest and best use was as a part of a ranching
operation and that the limited grazing available on the
timberland justified a valuation from one-third to one-fourth
that of open grazing land. Mr. Stanton further explained why
he disagreed with Mr. Thor's appraisal of $183 per timber
acre.
We conclude there is substantial evidence to support the
Stanton appraisal of ranch property, including improvements,
at a total value of $285,000. There is substantial evidence
to support Mr. Stanton's conclusion that the timber grazing
acreage should be valued at $80 per acre.
As a result, we affirm the District Court's valua-tionof
the ranch and improvements.
I1
Did the District Court err in including the wife's
teacher's retirement pension in the marital estate?
In substance, the wife argues that because she
contributed in the course of the marriage so many dollars of
her teacher's salary as compared to the ranching losses
contributed by the husband, it is inequitable to include her
teacher's retirement pension as a marital asset.
We will discuss the detailed provisions of S 40-4-202,
MCA, with regard to division of property in a subsequent
issue. The portion of the pension included as a marital
asset was the value of the pension rights earned during the
12% years of the marriage. That value was established by the
testimony of an economist.
It is well established in Montana that retirement
benefits are classed as a part of the marital estate. In Re
Marriage of Rolfe (Mont. 1985), 699 P.2d 79, 83, 42 St.Rep.
623, 627. The opportunity of each party to acquire capital
assets and income in the future must be considered in
apportioning the marital assets. Section 40-4-202(1), MCA.
There is substantial evidence to support the finding of
the District Court that this pension should be included in
the marital estate. The wife has failed to meet her burden
of showing that such finding is clearly erroneous. Where
substantial credible evidence supports a finding of the trial
court, that finding will be upheld. Rule 52 (a), M.R.Civ.P.
We hold that the District Court properly included the
wife's teacher's retirement pension in the marital estate.
I11
Did the District Court properly value the pension?
The wife argues that at the time of the divorce, she had
accumulated $16,726.69 in her retirement pension. She
contends that that amount is the total amount of money
presently available to her. She points out that $949.24 of
that amount was earned prior to the marriage. She therefore
contends that the valuation of the pension fund should be
$15,777.45.
The valuation of the teacher's retirement pension at
$56,362.00 was based upon the extensive testimony and
evidence submitted by an economics professor who testified as
an expert for the husband. The professor's qualifications
were clearly established. He testified at length as to the
manner in which his valuation was prepared and the reasons
for the various conclusions which he reached. The unrebutted
testimony is that the procedure followed is a standard
procedure used in his profession for work life and life
expectancy estimates. We conclude there is substantial
evidence to support the expert's valuation, which was
accepted by the District Court.
The wife argues that the only amount which should be
included is the dollar amount in the pension fund at the time
of the divorce. That is not the test which has been
established in Montana.
In Kis v. Kis (1982), 196 Mont. 296, 639 P.2d 1151, this
Court included in the marital estate the retirement benefits
of a game warden employed by the State of Montana. We held
that the present value of the retirement benefits is the
proper test. We pointed out that such present value might be
affected by the contingency of retirement benefits failing to
reach the levels used by the court. However, no evidence was
offered showing what effect such a contingency would have in
diminishing the present value of the husband's retirement
benefits. We therefore concluded that the finding of
valuation by the District Court must be upheld.
In this case, the economics expert testified in this
case that his objective was to establish the value of pension
rights earned by the wife during the marriage. His testimony
contains substantial evidence as to the present value of the
pension interest. His testimony established that the present
value of the total pension interest as of the date of trial
was $111,476.00, and that the portion of that present value
which was attributable to her 1 2 + years of marriage was
$56,362.00. Thus the record contains substantial evidence to
support the finding of the District Court that, for marital
estate purposes, the value of the wife's pension was
$56,362.00.
There is no legal authority for using the amount paid in
as of a particular date as the present value. The wife
argues that Glasser v. Glasser (Mont. 1983), 669 P.2d 685, 40
St.Rep. 1518, affords a basis for concluding that the amount
paid in by the pension owner is the correct valuation. That
is not a correct statement of the Glasser holding. In
Glasser, this Court sta.ted that the present value is the
proper test for determination of marital interest. The Court
pointed out that evidence established that the wife had
worked for a number of years. Sixty percent of her share of
retirement benefits had vested. with a present value interest
of $10,470.00. We therefore concluded that 60 percent of
$10,470 should have been included in the marital estate.
Glasser, 669 P.2d at 689, 40 St.Rep. at 1523. That
conclusion does not contradict the. holding of - where
Kis,
retirement benefits had vested completely in the husband.
We hold that the District Court properly valued the
wife's teacher's retirement pension.
IV
Was the marital estate equitably divided?
The wife points out that the District Court found that
her income contributions to the ma.rriage were greater than
her husband's and that she had made substantial nonmonetary
contributions which were equal to those of the husband. The
wife does not dispute those findings. She disputes the
court's conclusion that in spite of her equal contribution to
the marriage, it was equitable to award her less than 20
percent of the net marital estate. She argues that the
findings of fact do not support the court's conclusion as to
an equitable distribution of marital property.
Section 40-4-202, MCA requires that the court equitably
apportion between the parties the property and assets
belonging to either or both. In making that apportionment,
the court required consider the duration the
marriage, prior marriages, age, health, station, occupation,
amount and sources of income, vocational skills,
employability, estate, lia.bilities, needs and opportunity for
future acquisition of capital assets and income. The court
is also required to consider the contribution of a spouse as
a homemaker or to the family unit.
... Section 40-4-202 is flexible and its vests a
good deal of discretion in the District Court.
... We have stated, before and after the adoption
of the statute, that each case must be looked at
individually, with an eye to its unique
circumsances.
In Re Marriage of Sell (Mont. 1981), 630 P.2d 222, 225, 38
St.Rep. 956, 959, quoting In Re Marriage of Aamenson (1979),
183 Mont. 229, 598 P.2d 1120 (citations omitted).
The findings of the District Court establish that the
court considered each of these factors. The discretion
granted to the District Court in reaching an equitable
division of a marital estate is broad and far-reaching. As
this Court stated in In Re Marriage of Perry (Mont. 1985) ,
... In dividing property in a marriage
dissolution, the District Court has far-reaching
discretion and its judgment will not be altered
without a showing of clear abuse of discretion.
The test of abuse of d-iscretion is whether the
trial court acted arbitrarily without employment of
conscientious judgment or exceeded the bounds of
reason resulting in substantial injustice.
The District Court made findings as to the 11 year
disparity in age, the comparative good health of the parties,
and the significant difference in the opportunities of each
for future acquisition of capital assets as well as income.
The court pointed out that the husband's ability to acquire
assets was premised upon a continued inflationary increase in
land values and a resulting opportunity to borrow money on
the land. The recent history of the value of Montana ranch
lands does not support a conclusion that an inflationary
increase in land should be presumed. The record does not
establish that a sale of the ranch, which was distributed to
the husband, would necessarily result in a net profit to the
husband substantially equivalent to the retirement pension
fund, which was distributed to the wife. In view of the
limited income potential the ranch, apparent that
the husband would not have a capacity to pay a significant
amount of money out of future earnings to the wife or to
establish an equivalent retirement fund for himself. The
propriety of a forced sale of a family ranch of this type
rests in the discretion of the District Court.
Our review of the record establishes that there is
substantial evidence to support the District Court's division
of the marital estate. Finding no abuse of discretion, we
affirm the court's division of the marital estate.
v
Did the District Court err in failing to award the wife
any share in the appreciation or equity build-up of the ranch
during the course of the marriage?
In dividing property acquired prior to marriage and the
increased value of such property, the District Court must
consider nonmonetary contributions of the homemakers and the
extent to which such contributions facilitated the
maintenance of the property. Section 40-4-202, MCA. The
court clearly did consider these factors.
The wife argues that at the time of marriage, the
husband had a net worth of approximately $110,000. The
ranch-related assets and the gold and silver, less
liabilities, totalled approximately $265,000 at the time of
dissolution. The wife argues that this increase was
essentially the result of inflation and appreciation in land
values. She points out that the District Court found that
she had made a contribution to the marriage equal in amount
to that of her husband, yet she was not given any percentage
of the increase in value of the ranch lands.
It is clear that under the appropriate circumstances,
the contribution of a spouse may entitle that spouse to a
share of the marital estate. That legal question is not at
issue. The issue is whether or not the proof of an
inflationary increase in ranch value of necessity entitles a
spouse, who has made an equal contribution to the marriage,
to some share of that inflationary increase.
We find it inappropriate to focus so heavily on the
inflationary increase. We will not again list the various
factors which the court must consider and balance in making
an equitable distribution of property under the provisions of
5 40-4-202, MCA. The right to share in particular property
must be considered along with all of the other applicable
factors. Our review of the record and the findings and
conclusions of the District Court indicate that the District
Court carefully considered each of the appropriate factors
and attempted to balance the same.
The husband is not unique in his attempt to operate a
ranch at a continuing loss. That is one of the tragedies of
farm and ranch management in this state in recent years.
That also is a factor which the court could properly
consider.
Essentially, the District Court was required to consider
all of the factors mentioned in the statute and use them as a
basis for arriving at a final equitable apportionment. We
will not attempt to take the place of the District Court in
the exercise of discretion in fashioning an equitable
distribution.
We find substantial evidence to support the conclusions
of the District Court. The wife has failed to demonstrate
that the District Court abused its discretion. We affirm the
apportionment of the ranch properties to the husband.
VI
Did the District Court err in adopting inconsistent
discount rates for the ranch real property and the teacher's
retirement pension?
With regard to the present value of the wife's pension
right, the University of Montana professor who testified as
an expert for the husband used a discount rate of 5.4 percent
based upon a 3 0 year earnings average. The expert testified
that this was a factor commonly used by economists in making
such a present value analysis. That testimony was not
contradicted. The wife only argues that it was inconsistent
to use that figure when a different discount percentage was
used with regard to land valuation.
It is true that Mr. Stanton, who also testified for the
husband on the ranch valuation, used a discount in his
consideration of comparable sales in the area of the ranch in
question. He pointed out that some sales were for cash and
others were upon various contractual arrangements. Mr.
Stanton testified that at the time of the entry into the
comparable sales, the sellers could have invested money
safely at 12 percent and that he considered that factor in
adjusting the comparable sales. Again, no evidence was
submitted to negate that testimony.
The wife has failed to present any evidence that the use
of the two different rates is in fact contradictory. There
is no evidence to support a conclusion that a 12 percent rate
could properly have been factored in the pension computation;
nor is there any evidence that a 5.8 percent rate would have
been appropriate so far as the land was concerned. We
conclude that there is no demonstrable reason that the court
should have required any identity in the discount rates.
We hold that the court did not abuse its discretion in
allowing the use of the different discount rates.
VII
Should the District Court have ordered the sale of the
ranch and division of the sale proceeds?
The District Court had the power to require the sale of
the ranch and the distribution of the proceeds between the
parties, had it chosen in its discretion to do so. The wife
argues that the court should be required to take that step.
She a-rgues that the ranch was not an economic unit, and that
all of the factors which traditionally mitigate in favor of
keeping the ranch in tact have been eliminated.
In substance, these contentions are another method of
challenging the equitable apportionment of the marital estate
under S 40-4-202, MCA. The District Court also considered
the husband's desire to stay on the ranch and the fact that
he had been a farmer and rancher all of his life. We do not
find it necessary to again state our reasons for concluding
that the District Court properly apportioned the marital
estate.
We affirm that apportionment and conclude that the
District Court was not required to order a sale of the ranch
and division of proceeds.
The District Court is affirmed in all respects.
We concur:
hie£ Justice
Mr. Justice John C. Sheehy, dissenting:
1 dissent. The division or marita! assets, awarding
$56,362.00 to the wife, and $265,678.00 to the husband is
grossly unjust on its face. It is especial-ly unjust in this
case. The Teacher's Retirement Pension which constitutes the
sole marital asset given tc the wife was completely earned by
the wife, through her own efforts. The portion of the
marital estate swarded to the husband was preserved by the
wife because she contributed 211 of her earnings during her
marriage to the upkeep of the ranch which the husband now
gets to keep in toto. I see this distribution as a flagrant
abuse of discretion.
The excuse ~fferedbcth by the District Court and this
Court to sustain the award to the husband is that he can now
go on operating his money losing venture, the ranch. Cne
senses an unspoken hope both in the District Court and in
this Court that the husband in fact will go broke by
~ o ~ t i n u i nto operate the ranch.
g
Tt would make more economic sense, and he in accord with
justice, to require the sale of the ranch and thereafter to
2ivide the proceeds between the parties, taking into account
the Teacher's Retirement Pension. Instead, this woman,
having worked 1 2 + years for the good of her husband's estate
is told she coul2. work for herself now. I do not see any
justice in it.
> L
,
.
" @<> . ,
Justice