NO. 93-358
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
IN RE THE MARRIAGE OF
SHIRLEY ANN BROWNELL,
Petitioner and Appellant,
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Russell K. Fillner, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Kevin T. Sweeney, Sweeney & Healow,
Billings, Montana
For Respondent:
Donald L. Harris, Crowley, Haughey, Hanson,
Toole & Dietrich, Billings, Montana
Submitted on Briefs: December 9, 1993
Decided: December 22, 1993
Filed:
Justice Terry N. Trieweiler delivered the opinion of the Court.
Arthur N. Brownell filed a motion to modify his dissolution
decree in the District Court for the Thirteenth Judicial District,
in Yellowstone County. Shirley A. Brownell opposed the
modification and filed a motion to request permanent maintenance.
The District Court granted Arthur's motion to modify, denied
Shirley's motion for permanent maintenance, and ordered that Arthur
pay her costs and a part of her attorney fees. Shirley now appeals
the District Court's order and Arthur cross-appeals that portion of
the order awarding Shirley costs and attorney fees. We affirm in
part, reverse in part, and remand with instructions.
The issues on appeal are:
1. Did the District Court err when it granted Arthur's
motion to modify the original decree?
2. Did the District Court err when it refused to rescind the
modification agreement?
3. Did the District Court err when it characterized payments
to Shirley as maintenance rather than as a division of retirement
benefits?
4. Did the District Court err when it denied Shirley's
request for permanent maintenance?
5. Did the District Court err when it awarded attorney fees
and costs to Shirley?
FACTUAL BACKGROUND
The parties' 30-year marriage was dissolved on May 27, 1987.
At that time, Arthur was employed by Burlington Northern b ail road
and was ordered to pay maintenance to Shirley for a period of five
years. She was also awarded one-half of Arthur's pension and
retirement benefits that had accumulated during the marriage.
Shirley was 50 years old at the time of the decree.
On June 1, 1991, at 57 years of age, Arthur was given an
opportunity for early retirement fromthe railroad. He was offered
severance pay in the amount of $66,259.62, and a moving allowance
in the amount of $6,000. If he retired early, he would receive
$1,872.92 per month from his company pension until age 60, at which
time the pension would be reduced to $1,128.42 per month. However,
at age 60 he would also become eligible to receive railroad
retirement benefits in the amount of $1,480 per month.
Arthur determined that he could not afford to retire based on
the terms of the original decree. After consulting his attorney,
he began negotiating with Shirley and in July 1991, the parties
signed an agreement to modify those terms of the decree that
distributed retirement benefits. Shirley scheduled an appointment
with her attorney, but canceled it when changes were made in the
proposed agreement to her satisfaction. She did not consult an
attorney before she signed the agreement.
The modification agreement, prepared by Arthur's attorney,
including changes requested by Shirley, provided that Arthur would
pay Shirley a $12,000 lump sum and $300 per month beginning
January 1, 1992, for six and one-half years. Commencing in June
1998, Arthur's monthly obligation to Shirley would increase to
$350, terminable upon either party's death. Also in June 1998,
Shirley would begin to receive her own railroad retirement benefits
in the amount of $435 per month.
Shirley's attorney became involved when he was served with
notice of the hearing on Arthur's motion to modify the decree and
to approve the terms of the modification agreement. Shirley then
requested that the District Court deny Arthur's motion for
modification and rescind the modification agreement. 5he
separately moved that the court modify the original decree to award
her permanent maintenance. The maintenance payments provided for
in the original decree were scheduled to end on December 31, 1991.
STANDARD OF REVIEW
We review findings of fact by the district court to determine
if they are ttclearly
erroneous.'I In re Mam'age o Eschenbacher (1992),
f
253 Mont. 139, 142, 831 P.2d 1353, 1355. In Eschenbacher, we applied
the three-part test adopted in Interstate Production Credit Association v DeSaye
.
(1991), 250 Mont. 320, 820 P.2d 1285. We will review the record to
determine if the findings are supported by substantial evidence,
and if there is substantial evidence, we next determine if the
district court has misapprehendedthe effect of the evidence. Even
if there is substantial evidence and a proper understanding of the
evidence, we may yet declare a finding clearly erroneous when it is
clear and definite that a mistake has been committed. See,
Eschenbacher, 831 P.2d at 1355.
We review conclusions of l a w to determine whether the district
court s interpretation of the law was correct. In re Marriage of Bunis
(Mont. 1993), 852 P.2d 616, 619, 50 St. Rep. 525, 526.
I.
Did the District Court err when it granted Arthur's motion to
modify the original decree?
Shirley argues that the District Court erred when it found
that she would "receive more money under the July, 1991 agreement
than under the final decree." She asserts that she will actually
receive less money. However, this argument i based on the
s
assumption that Arthur would have retired early even if Shirley had
not been persuaded to sign the modification agreement. The
evidence is undisputed that Arthur would not have retired early if
Shirley had not agreed to waive her rights as set forth in the
decree.
Under the decree, Arthur paid Shirley monthly maintenance for
five years as follows: $550 in 1987, $500 in 1988, $450 in 1989,
$400 in 1990, and $350 in 1991. Had she not agreed to modify the
decree, Shirley would have been without income f o r approximately
seven years until she qualified for her own spouse's retirement
benefits at the age of 62 and her share of Arthur's retirement
benefits that he would have begun receiving at age 65. However,
under the modified agreement, she immediately received benefits at
age 55, and by age 75 will have received $157,860. Under the
decree, she would have received $129,477 by age 75. The difference
between the total amount received under the decree, as opposed to
5
the modification agreement, will narrow as Shirley grows older.
The break-even point is estimated at age 89.
Section 40-4-208(3), MCA, states that "[tlhe provisions [of a
decree] as to property disposition may not be revoked or modified
by a court, except: (a) upon written consent of the parties
.... 11 To assess whether the terms relevant to property
disposition in a separation agreement are binding, the district
court must consider the economic circumstances of the parties to
determine whether the agreement is unconscionable. Section
40-4-201(2), MCA.
The District Court heard testimony with regard to the economic
circumstances of both parties, and testimony from Arthur with
regard to the comparative economic benefits of the modification
agreement versus the decree. Shirley did not offer any evidence to
dispute Arthur's testimony nor did she rebut his testimony with her
own economic analysis.
We hold that there was substantial evidence to support the
finding of the District Court that Shirley was better off under the
modification agreement and that the modification agreement was not
unconscionable.
11.
Did the District Court err when it refused to rescind the
modification agreement?
Shirley argues that because she has been diagnosed with
schizoaffective disorder, she is a "person of unsound mind but not
entirely without understanding," under 5 28-2-203, MCA, and
therefore, that the agreement she entered into with Arthur is
subject to rescission under 5 28-2-1711, MCA. She further argues
that her consent to enter the agreement was obtained by Arthur
through "duress, menace, fraud, or undue influence."
"It is well settled in Montana case law that undue influence
must be proven by the person contesting a will or contract." A d a m
v. Allen (l984), 209 Mont. 149, 153, 679 P.2d 1232, 1235. Arthur
responds that Shirley failed to meet this burden.
The District Court found that the negotiations between Arthur
and Shirley were ''cordial," and that there was no evidence that he
"threatened, coerced, or misrepresented any factu to her. As for
Shirley, the District Court found that:
She rejected Arthur's first offer and could have rejected
any other offer. This is especially true considering
that Shirley consulted with her four adult children, her
mother and step-father, and her sister and brother-in-law
before signing the agreement ... . She also made an
appointment to consult with her attorney, but canceled it
after reaching what she thought was a fair agreement.
After reviewing the entire record, we conclude there was
substantial evidence to support the District Court's finding that
Shirley was competent to enter into the modification agreement with
Arthur and that the agreement was not the result of undue
influence.
111.
Did the District Court err when it characterized payments to
Shirley as maintenance rather than as a division of retirement
benefits?
Shirley argues that the District Court mistakenly assumed that
the July 1991 agreement modified the decree with respect to
maintenance as well as the settlement of retirement benefits. She
points out that the word "maintenance'' never appears in the
agreement.
Shirley's concern is that maintenance is taxable to her (and
deductible for Arthur); whereas property division transfer payments
are not taxable as income. See I.R.C. §§ 71 and 215.
According to Arthur, Shirley failed to raise the issue in
District Court and therefore, this Court should not consider
Shirley's argument. We note, however, that the payments were first
characterized as maintenance in the District Court's post-trial
findings of fact and conclusions of law and order dated
December 17, 1992. Therefore, Shirley had no prior opportunity to
object to their characterization.
According to the 1987 decree, Arthur's maintenance obligation
ended in December 1991. Arthur moved the District Court to modify
that portion, and only that portion, of the decree which set forth
the parties1 agreement dividing retirement benefits. Furthermore,
he objected to Shirley's motion for further maintenance on the
basis that he was unable to pay it and therefore she was not
entitled to future maintenance under the statute. We conclude that
there was no evidence to support the District Court's finding that
the payments provided for in the modification agreement were
maintenance payments rather than a new form of property division
and we reverse that finding of the District Court.
8
IV.
Did the District Court err when it denied Shirley's request
for permanent maintenance in the amount of $1,200 per month?
Shirley argues that because the District Court was mistaken
when it referred to the monthly payments to Shirley as
"maintenance," that this mistake led the District Court to deny
Shirley's motion for permanent maintenance. She specifically
points to the District Court's finding that Shirley had not shown
changed circumstances "so substantial and continuing since July,
1991 so as to make the terms of the July, 1991 agreement
unconscionable. " She calls our attention to the Commission Comment
to 5 316 of the Uniform Marriage and Divorce Act, which states,
"the person seeking modification must show that circumstances have
changed since the date of the oriqinal order so that the order is
unconscionable at the time the motion is made and will continue to
be unconscionable unless modified." (Emphasis added). See
5 40-4-208, MCA. She argues that there was sufficient evidence
that her mental condition had worsened since the original decree to
the extent that the original award was unconscionable.
While we agree with Shirley that the July 1991 agreement did
not modify Arthur's maintenance obligation under the decree--that
it merely substituted or modified his obligations with regard to
dividing his retirement benefits, we also conclude there was
evidence to support the District Court's finding that Shirley was
not entitled to continued maintenance payments. Her health care
provider testified that the mental condition from which she now
9
suffers is the same condition for which she was being treated in
the 1980s and there was evidence that Arthur did not have
sufficient income after his retirement to pay continued
maintenance. The District Court's order denying Shirley's motion
for continued maintenance is affirmed.
v.
Did the District Court err when it awarded attorney fees and
costs to Shirley?
The standard of review for an award of attorney fees in a
dissolution action is whether the district court abused its
discretion. ~ u n i s ,852 P.2d at 620.
Arthur cross-appeals the District Court's award of costs and
attorney fees to Shirley, arguing that she only incurred these
costs as a result of her own "reneging" on the agreement.
Furthermore, he argues, she had just received $12,000 from which
she could pay these costs.
Section 40-4-110, MCA, gives the district court discretion to
award costs and attorney fees "from time to time, after considering
the financial resources of both parties . . . . Here, the
District Court's finding that Shirley did not have sufficient
financial resources to pay her costs and attorney fees was
accompanied by a finding that Arthur would have access to his
thrift plan valued at $42,000 on or about May 20, 1993.
Pursuant to g 40-4-110, MCA, attorney fees are based on the
respective financial resources of the parties and not based on
which party prevailed. After review of the record, we conclude
10
that the District Court did not abuse its discretion when it
ordered that Arthur pay Shirley's costs and part of her attorney
fees. We also note that while no rule prohibited Arthur from
dealing with Shirley directly, some of the expense of this
litigation might have been avoided if the attorney who represented
her in the original and second proceeding had not been excluded
from the negotiations until after the agreement was executed.
Based on the record before us, with the exception noted, we
find that the District Court made its findings based on substantial
evidence.
The judgment of the District Court is affirmed in part,
reversed in part, and remanded for further proceedings consistent
with this opinion.
We concur: /A-
I
Chief Justice
i/