NO. 90-053
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
IN RE THE MARRIAGE OF RODNEY GLENN BUTLER,
Petitioner and Respondent,
and
ALBERTA ESTHER BUTLER,
and
Respondent and Respondent, F FD
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DALE BUTLER,
Intervenor and Appellant,
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CLERMOFSUPREI'JJECOURT
STATE OF MONTANA
GINA KAY COLWELL,
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Michael H. Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Katharine S. Donnelley and Leo Berry; Browning,
Kaleczyc, Berry & Hoven; Helena, Montana
For Respondent:
Donald E. Hedman; Hedman, Hileman & LaCosta;
Whitefish, Montana
Jeffrey D. Ellingson; Ellingson Law Offices,
Kalispell, Montana (Estate of R.G. Butler)
Patrick D. Sherlock; Sherlock & Nardi; Kalispell,
Montana (Colwell)
Amicus Attorneys:
Lewis K. Smith; Teachers1 Retirement Board; Helena,
Montana
submitted on Briefs: June 14, 1990
Decided: July 13, 1990
Filed:
Justice R. C. McDonough delivered the Opinion of the Court.
This appeal involves the distribution of teacher retirement
benefits as part of a marital estate. The intervenor appellant,
Dale Butler, appeals the order of the Eleventh Judicial District
Court, Flathead County, awarding one-half of the teacher's
retirement benefits of his deceased brother, Rodney Glenn Butler,
to Rodney's former spouse, Alberta Esther Butler, and the other
half to Rodney's estate. The court's order is the result of a
remand from an earlier appeal, prior to which order the retirement
benefits were being paid to Dale Butler. We affirm the District
Court's award of one-half the retirement benefits to Alberta as
part of the marital estate and decline, in this divorce action, to
determine title to the remaining benefits, as that issue is not
properly before us and involves a question outside of this
dissolution.
The issue on appeal is as follows: Did the District Court
err in holding that the deceased husband's teacher's retirement
benefits, which were being paid to the named beneficiary after
entry of the initial decree, should be redistributed as part of the
martial estate upon appeal and remand from the initial decree of
dissolution?
Rodney and Alberta were married in 1963. Two children born
of the marriage have now reached the age of majority. Rodney was
a teacher in Chester, Montana, where the Butlers owned a home in
joint tenancy with right of survivorship.
In August of 1982, the Butlers purchased the Cedar Lodge, a
motel in Columbia Falls, Montana, for $245,000.00. The parties
managed the motel together, with Rodney commuting to Chester to
teach, until March of 1984 when the parties separated. Rodney then
returned to Chester and Alberta continued management of the motel
alone as her sole source of income.
Rodney filed for divorce in January of 1985; he was diagnosed
with terminal cancer in September 1986. The District Court
dissolved the marriage in December 1986, and entered an order
dividing the marital estate in February 1987. The court awarded
Rodney his teacher's retirement and the home in Chester and awarded
Alberta the motel. In April of 1987 the District Court set a
hearing for July 1987 on Alberta's motion to alter or amend the
property distribution. Rodney married a second wife, Tammy,
shortly before his death. He died on June 17, 1987, prior to the
hearing. At this time Rodney's brother Dale, as the named
beneficiary of the teacher's retirement account, began receiving
monthly survivorship benefits of $ 1,048.02 per month.
In December of 1987, the District Court denied Alberta's
motion to alter or amend and the first appeal ensued. See In re
Marriage of Butler (1988), 232 Mont. 418, 756 P.2d 1159. In our
first opinion we found that the District Court abused its
discretion by utilizing an outdated appraisal of the Cedar Lodge
Motel. We remanded the case for determination of the partiest
interest in the motel, stating that Ititmay be necessary . . . to
reconsider the allocation of any or all of the marital estate to
reach an equitable distribution." Butler, 756 P.2d at 1162.
A hearing was held upon remand on July 12, 1989, and the court
entered its memorandum and order on October 6, 1989, redistributing
the property. The court essentially revalued the motel at zero net
value due to existing encumbrances. The District Court did not
disturb its prior award of the Chester home, where Tammy now
resides, to Rodney. The court ordered Dale to account for and
return to the marital estate all retirement benefits received, and
awarded one-half of such benefits to Alberta Ester Butler in lieu
of the first award of the defunct Cedar Lodge Motel. The Court
awarded the other half to the Estate of Rodney Butler.
On February 6, 1989, appellant Dale Butler intervened alleging
that he had a vested property right to the retirement benefits
precluding the District Court from redistributing such benefits as
marital property. On April 18, 1989, Gina Kay Colwell, one of the
adult children of Rodney and Alberta, also intervened. She alleged
that pursuant to Rodney's last will and testament and his
correspondence with the Teachers1 Retirement System, a trust was
created by Rodney out of his teacher's retirement account naming
Dale as trustee and Gina and her sister Cynthia Rae Buck as
beneficiaries. She alleges that Dale has breached the fiduciary
duty he has as trustee and has also breached the covenant of good
faith and fair dealing. Thus, all the parties claim an interest
in the teachers1 retirement benefits.
It is well-settled that a district court has far-reaching
discretion in resolving property divisions. In re Marriage of
Luisi (1988), 232 Mont. 243, 247, 756 P.2d 456, 459. Its judgment
will not be altered or overturned absent a clear abuse of
discretion nor will its findings of fact be set aside unless they
are clearly erroneous. Butler, 756 P.2d at 1161; Marriage of Watson
(1987), 227 Mont. 383, 387, 739 P.2d 951, 954. By statute the
district court has the power
finally equitably apportion between the parties the
property and assets belonging to either or both, however
and whenever acquired and whether the title thereto is
in the name of the husband or wife or both.
Section 40-4-202, MCA. Montana law is well-settled that teachers'
retirement benefits are properly considered to be a marital asset
at the time of dissolution. In re Marriage of Sirucek (1985),
219 Mont. 334, 339, 712 P.2d 769, 772; In re Marriage of Rolfe
(1985), 216 Mont. 39, 46, 699 P.2d 79, 83; Sowell v. Teacher's
~etirementSystem (1984), 214 Mont. 200, 207, 693 P.2d 1222, 1226.
Dale contends that the District Court cannot retrieve benefit
payments and the right to receive them and place them back in the
marital estate because his right to receive them vested upon
Rodney's death. He relies heavily on the following language from
the Sowell case:
Even though Montana recognizes that the pension fund of
one spouse must be included in the marital estate at the
time of a divorce action, we have not adopted the
community property concept in this state. Property can
be owned and separately controlled by one spouse without
the permission of the other. We hold that, consistent
with this separate ownership concept, a spouse has the
right to nominate the beneficiary of retirement account
proceeds without consultation or permission from the
other spouse and can designate a beneficiary other than
the spouse. Althoush the retirement account proceeds
must be included as a marital asset at the time of
divorce, at the time of death those proceeds can be
excluded from the decedent's estate and from anv claim
by the survivor.
Sowell, 693 P.2d at 1226. (~mphasis appellant.)
by
Sowell is distinguishable from the case at bar. There, the
decedent husband, who died sometime after the divorce was in full
force and effect, failed to change the beneficiary designation of
his teachers1 retirement benefits from a former wife to his widow.
The widow claimed an interest in those benefits. This Court held
that the widow did not have an interest in those benefits, which
were vested with the former spouse and designated beneficiary,
absent an affirmative act by the husband changing the beneficiary.
Here, at the time the beneficiary designation was made and when
Dale began receiving benefits, the dissolution was still wending
and therefore was subject to subsequent appeal of the property
distribution, and our instructions on remand to consider all
property for reallocation. Where property interests are involved,
an appeal in a divorce case does not abate upon the death of a
party pending its determination. In re Marriage of Lawrence
(1984), 212 Mont. 327, 330, 687 P.2d 1026, 1028; Deich v. Deich
(1958), 136 Mont. 566, 577-578, 323 P.2d 35, 42; Judson v. Anderson
(1945), 118 Mont. 106, 125, 165 P.2d 198, 207.
Dale and amicus curiae, the Teachers1 Retirement Board, also
contend that by statute, teacherst retirement benefits are not
subject to legal process, and that the Board has in rem
jurisdiction over such funds prior to payment to a member or
designated beneficiary. See 6 6 19-4-706 and 19-4-1001, MCA. The
Board further contends that once vested in a beneficiary the
District Court must obtain in personam jurisdiction over a
beneficiary before it can redirect payments.
These arguments beg the question. As long as a dissolution
is still pending, the district court need not I1obtaintt
jurisdiction
over retirement benefits because it already has continuing
jurisdiction over such benefits as part of the marital estate until
the dissolution is final. Sowell, 693 P.2d at 1226; Lawrence, 687
P.2d at 1028. Here the District Court was faced with a difficult
situation upon remand as to how to reallocate the marital estate.
In light of this and the District Court's equitable powers
regarding property disposition, we find no clear abuse of
discretion in the award of one-half of the teacher's retirement
benefits to the former spouse Alberta.
However, Appellant Dale is correct in asserting that any
claims of the other intervenor Gina Kay Colwell or Rodney's estate
are not properly before this Court. Title to the remaining one-
half interest in the retirement accounts is to be determined in a
separate matter. The order of the District Court is affirmed
with respect to the award of one-half of the teacher's retirement
account to Alberta Esther Butler, and the awarding of the other
half of the retirement award is vacated.
AFFIRMED I N PART.
Justice /