NO. 90-598
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
IN RE THE MARRIAGE OF
MICHAEL H. KEEDY,
Petitioner and Appellant,
and
CAROL SUE KEEDY,
Respondent and Respondent.
APPEAL FROM: District Court of the Eleventh Judicial District,
In and for the County of Flathead,
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Katherine R. Curtis; McEwan, Weaver, Kaplan &
Curtis, Columbia Falls, Montana
For Respondent:
James A. Manley; Manley Law Offices, Polson, Montana
Submitted on Briefs: April 18, 1991
Decided: June 13, 1991
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
The appellant, Michael Keedy, appeals from the property
distribution of the Eleventh Judicial District Court, Flathead
County, in this marital dissolution action. We affirm in part,
reverse in part and remand for further proceedings.
The appellant raises the following issues on appeal:
1. Did the District Court err in including the appellant's
entire baseball card collection as a marital asset?
2. Did the District Court err in its valuation and
distribution of the appellant's retirement benefits?
3. Did the District Court err in disregarding the values of
certain marital assets disposed of by the parties following their
separation but prior to the dissolution?
The appellant and the respondent, Carol Keedy, were married
on May 27, 1973, in Lincoln, Nebraska. At the time of the
marriage, Michael's education consisted of a bachelor's degree and
a juris doctorate degree; Carol possessed a bachelor's degree in
education. Two children were born to the marriage: a son, born on
October 29, 1974, and a daughter, born on November 23, 1977.
Throughout the marriage, Michael has been employed as a
lobbyist, attorney, legislator and, for the past seven years,
district court judge. During the marriage, Carol worked primarily
as a homemaker; she currently teaches at a private school.
The parties separated on April 1, 1989, and brought this
matter before the District Court on April 30, 1990. The District
Court entered its Amended Findings of Fact, Conclusions of Law, and
2
Order on August 3, 1990. Michael appeals.
The first issue raised on appeal is whether the District Court
erred in including the entire baseball card collection as a marital
asset.
The baseball card collection consists of approximately 100,000
baseball cards. Michael testified that he began the collection as
a boy in 1954 and continued to collect the cards up through 1963.
He resumed his card collecting again in 1971 and continued
collecting baseball cards after his marriage to Carol in 1973. At
trial he introduced into evidence various lists of cards in an
attempt to demonstrate which cards he had acquired prior to the
marriage and which cards he had acquired after the marriage.
Carol hired an appraiser who estimated the value of the entire
collection at $208,000. Michael testified that he believed the
5
collection to be worth $100,000. After struggling with the
evidence before it, the District Court abandoned its attempt to
determine which cards were brought into the marriage or to place
a value on the baseball cards. The court required Michael to
divide the collection into two equal piles and allow Carol to
select one pile of cards.
Michael argues, first, that the District Court erred in
including in the marital estate those baseball cards he brought
into the marriage. He also contends that the current value of such
cards is not a product of contribution from the marital effort and
should be excluded from the marital estate as his separate
property.
This Court has repeatedly held that distribution of marital
assets by a district court, where based upon substantial credible
evidence, will not be overturned absent a clear abuse of
discretion. In re Marriage of McFarland (1989), 240 Mont. 209,
Section 40-4-202(1), MCA, requires the courts to,
[Elquitably apportion between the parties the property
and assets belonging to either or both, however and
whenever acquired. . .
. In dividing property acquired
prior to the marriage; . . . property acquired in
exchange for property acquired before the marriage . .
. ;[and] the increased value of property acquired prior
to marriaqe; . . . the court shall consider those
contributions of the other spouse to the marriage,
including:
(a) the nonmonetary contribution of a homemaker;
(b) the extent to which such contributions have
facilitated the maintenance of this property; and
(c) whether or not the property division serves as an
alternative to maintenance arrangements. (Emphasis
added. )
The District Court properly determined that the baseball card
collection was a marital asset, however, it erred in not crediting
Michael with the value, at the time of the marriage, of the cards
he brought into the marriage.
The value of the premarital cards at the time of the marriaqe
was undisputed between the parties. Michael testified that the
value of the collection at the time of the marriage, or shortly
thereafter, was approximately $5,000. Carol herself proposed in
her Trial Memorandum, that in order "to equitably divide the
property, the [District] Court should award $5,000.00 to the
Petitioner to represent the value of the baseball card collection
that he brought into the marriage.##
In considering the factors presented in S 40-4-202(1), MCA,
it becomes apparent that the value of the premarital cards is not
properly a part of the marital estate. The undisputed amount of
$5,000 could not have been contributed to in any way by Carol.
However, the appreciation in value of the cards, including the
premarital cards, properly could be included in the marital estate
under 5 40-4-202(1), MCA, if the evidence supported spousal
contribution to that appreciated value. Michael argues that the
increase in value of the premarital baseball cards was not related
to any marital contribution from Carol. We disagree.
In the present case, substantial credible evidence exists to
support the finding that Carol contributed to the maintenance and
growth of the collection. Evidence shows that she encouraged
Michael to collect the cards, participated in the collection by
buying foods associated with particular cards, and, on at least one
occasion, protected the cards from a flood while Michael was away
from home. Testimony also indicated that Michael's card purchases
strained the family budget at times, with the family sacrificing
other items in order to build the collection.
It was not erroneous, under these circumstances, for the
District Court to find that Carol contributed to the maintenance
and growth of the card collection and, therefore, that she is
entitled to share in the postmarital appreciation in value.
Thus, we hold that it was proper to include the baseball card
collection as part of the marital estate, but that the District
Court erred in failing to credit Michael with the undisputed value
of $5,000 for the baseball cards he brought into the marriage.
The second issue on appeal is whether the District Court erred
in its valuation and distribution of Michael's retirement benefits.
Both parties produced expert witnesses to testify as to the
present value of Michael's retirement benefits as a district court
judge; both present value calculations assumed that Michael would
retire at the age of sixty-five as a judge. Carol Is expert witness
testified that as of April 30, 1990, the present value of Michael Is
retirement benefits was $91,364. Michael's expert witness
testified that the present value of Michael's retirement as of
April 30, 1990, was $85,630.
Michael's expert witness also testified that the current value
of Michael's retirement benefits, if he decided to withdraw the
entire amount on April 30, 1990, was $28,115. Michael contended
that this value was the appropriate amount to be distributed
between the parties.
The District Court concluded that Michael's retirement was
worth $91,364, the figure proposed by Carol Is expert. The court
distributed that value equally between the parties and ordered
Michael to pay Carol her half of the $91,364 as part of an
equalizing payment. We find the distribution of Michael's
retirement benefits, although based upon substantial evidence, to
be an abuse of discretion.
Carol's expert testified that his valuation of the retirement
would be meaningless if, for any reason, the assumption that
Michael retire at age sixty-five as a judge became invalid. Thus,
if Michael dies, resigns from the bench, is defeated in a re-
election campaign, or for any other reason is not a judge at age
sixty-five, the expert's valuation is invalid. Given the
significant span of years involved, Michael's uncertainty about
future plans and other factors, it was error for the District Court
to rely on the present value methodology, thus placing all of the
risks of future contingencies on Michael.
This Court stated in Glasser v. Glasser (1983), 206 Mont. 77,
669 P.2d 685, that, although present value of retirement benefits
is the proper test in determining marital interest, further
evidence may demonstrate that the value Itmightbe affected by the
contingency of the retirement benefits failing to reach levels used
by the court.It (Citations omitted.) Glasser at 85, 669 P.2d at
689. We noted several guidelines that are helpful in distributing
retirement funds, including: that the court should disentangle the
parties, where possible and equitable, by fixing a sum certain to
be paid, and where the court determines that the parties will
proportionately share the benefits, the parties should also share
the risks of future contingencies, such as the employee spousets
death or delayed retirement, and payments to the receiving spouse
should be made as the employee spouse receives the retirement pay.
In addition, in determining if a lump sum award is appropriate,
the court should consider the burden it would place on the paying
spouse in view of the financial circumstances. Glasser at 85,
669 P.2d at 689.
In the present case, the District Court failed to consider
these guidelines. By requiring immediate payment of Carol's one-
half interest based on the present value methodology, Carol does
not share at all in the substantial risks that the present value
amount never will be realized. Furthermore, an immediate pay out
of half the benefits places an unreasonable burden on Michael in
view of his financial standing.
If Carol wishes to receive a present lump-sum distribution as
her share of the retirement benefits, it should be based upon the
$28,115 accrued contributions with interest allowed by law as of
April 30, 1990. These funds represent the actual accrued value of
the retirement benefits during the marriage and the amount
available to Michael today should he leave the bench and withdraw
the benefits. To require him to pay Carol half of that amount does
not impose an unreasonable burden on him.
On the other hand, Carol may wish to share in the risk of
future contingencies. If so, she is entitled to her proportionate
share of the future benefits at such time as Michael actually
receives the retirement benefits.
The test for determining the value of a retirement pension is
present value. Kis v. Kis (1982), 196 Mont. 296, 639 P.2d 1151.
However, where there are substantial future risks involved in the
calculations of the value, both parties should share those risks.
The District Court abused its discretion in failing to
consider the future risks relative to the benefits. That abuse of
discretion was compounded by the District Court's not considering
the financial burden placed on Michael by requiring immediate
payment. The two alternatives of distributing the benefits set
forth above take into account these considerations. Carol should
be allowed to select which of the two methods of distribution she
prefers.
The final issue is whether the District Court erred in
disregarding the values of certain marital assets disposed of by
the parties following their separation but prior to the
dissolution.
The District Court found that various items of property had
been sold by the parties during the period that they were
separated. It concluded that the proceeds had been used to pay
normal living expenses and, consequently, the proceeds from those
marital assets were not included in the marital estate.
Michael insists that the District Court has allowed Carol to
unaccountably liquidate and dissipate marital assets. In so doing,
according to Michael, the District Court is encouraging dissipation
of marital assets following separation.
We find that substantial evidence exists in the record to
support the findings of the District Court. Carol testified that
the money was used to pay marital debts. Michael introduced no
evidence to disprove Carol's testimony. As the District Court
noted, Michael's argument was merely speculative.
We hold that the District Court did not abuse its discretion
in concluding that the proceeds of the disposed marital property
had been used for family debts and normal living expenses.
Affirmed in part, reversed in part, and remanded to the
District Court for further proceedings consistent with this
opinion. I
We concur:
Justice Terry N. ~rieweilerconcurring in part and dissenting in
part.
I concur with those parts of the majority opinion which
reverse the ~istrict Court's distribution of appellant's
retirements benefits, and which affirm the ~istrict Court's
exclusion of certain assets from the marital estate.
I dissent from that portion of the majority opinion which
includes any portion of appellant's baseball card collection
acquired prior to the marriage as a marital asset.
The majority correctly points out that the disposition of
property acquired prior to marriage is controlled by B 40-4-202 (1),
MCA. However, conspicuously absent from the majority opinion are
any of our recent decisions which have applied that statute.
Our previous decisions would exclude the appreciated value of
Michael's pre-marriage baseball cards, without some showing that
Carol contributed to their appreciation. In Re Marriage of Herron,
186 Mont. 396, 608 P.2d 97 (1980); Becker v. Becker, 218 Mont. 229,
707 P.2d 526 (1985); In Re Marriage of Sirucek, 219 Mont. 334, 712
P.2d 769 (1985); In Re Marriage of Fitzmorris, 229 Mont. 96, 745
P.2d 353 (1987); In Re ~arriageof McFarland, 240 Mont. 209, 783
P.2d 409 (1989).
For example, in Herron the District Court also divided marital
property on a 50/50 basis, even though the majority of the property
had been given to Mrs. Herron by her father. The Supreme Court
found, however, that gifted property, like pre-acquired property,
is governed by 5 ,
4 0 - 4 - 2 0 2 (1) MCA, and based upon that statute
concluded:
If none of the value of the property is a product of
contribution from the marital effort. [sic] the District
Court can justifiably find that the non-acquiring spouse
has no interest in the property.
. .
. Both parties here should share equally in the
portion of the value of the gift property attributable
to contribution fromthe marriage and appreciation during
marriage. The Herrons should not, however, share equally
in the total value of the property since the marital
assets came to the marriage principally as gifts for Mrs.
Herron's benefit.
Herron, 186 Mont. at 404-05.
Here, the majority justified giving half of the appreciated
value of Michael's baseball cards to Carol because nCarol
contributed to the maintenance and growth of the c~llection.'~
The
majority also relies on the following facts:
Evidence shows that she encouraged Michael to collect
the cards, participated in the collection by buying foods
associated with particular cards, and, on at least one
occasion, protected the cards from a flood while Michael
was away from home. ~estimony also indicated that
Michael's card purchases strained the family budget at
times, with the family sacrificing other items in order
to build the collection.
All of these observations missed the point. None of these
efforts on Carol's part had anything to do with the value of those
cards which were acquired by Michael prior to his marriage. All
of those efforts relate directly to those cards which were acquired
by Michael after his marriage. The appellant agrees that those
cards acquired after his marriage to Carol should be included as
a marital asset and divided equally between the parties.
Even those cards which were saved from a flood by Carol were
cards which were acquired after the marriage. Any appreciation
that occurred to pre-marriage baseball cards occurred simply by the
passage of time and increased national interest in old baseball
cards. It had nothing to do with any contribution by Carol.
The District Court's decision to include all of the baseball
cards as a marital asset was primarily based upon the difficulty
of determining which cards were in the estate before the marriage
and which ones were not.
There was testimony from Michael, including corroboration from
his records, which would have enabled the District Court to make
that determination. However, presuming the District Court was
dissatisfied with the conclusiveness of that testimony, and
understanding that District Judges do not have the time to
personally review a collection of 100,000 baseball cards, it would
have been preferable to appoint a master or referee for that
purpose, rather than divide the collection inequitably.
For these reasons, I dissent from that portion of the majority
opinion which includes all but $5000 worth of appellant's baseball
card collection as a marital asset. I would exclude all of those
cards which the evidence established were acquired by appellant