No. 92-054
IN THE SUPREME COURT OF THE STATE OF MONTANA
IN RE THE MARRIAGE OF
RICHARD DALE ISAAK,
Petitioner and Appellant,
-v-
JUDY L. FUNK SMITH, Personal ~epresentative
of the Estate of LYNN M. ISAAK,
Respondent and Respondent.
APPEAL FROM: District Court of the First Judicial District,
In and for the County of Lewis & Clark,
The Honorable Jeffrey Sherlock, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
John L. Hollow, Attorney at Law, Helena, Montana
For Respondent:
Robert T. Cummins and James P. Greenan, Attorneys at
Law, Helena, Montana
Submitted on Briefs: August 20, 1992
Decided: March 4, 1993
Filed:
Justice Fred J. Weber delivered the Opinion of the Court.
Petitioner, Richard Dale Isaak (Dale), appeals the Findings of
Fact, Conclusions of Law and Order of the First Judicial District
Court, Lewis and Clark County, Montana, which distributed Dale's
inherited real property to Lynn M. Isaak (Lynn), required Dale to
provide health insurance coverage forthe minor child although Dale
is unemployed, and ordered Dale to pay Lynn's attorney fees.
Respondent, Judy L. Funk Smith, personal representative for the
estate of Lynn M. Isaak, cross-appeals claiming that the District
Court incorrectly calculated the net assets of the marital estate.
We reverse in part and affirm in part.
The restated issues are as follows:
1. Did the District Court correctly calculate the net assets
of the marital estate?
2. May the trial court require a person to provide health
insurance coverage for a child when the coverage is not available
through an employer, and partially or entirely paid by the
employer?
3. Did the District Court err procedurally by allowing Lynn
to collect attorney fees from Dale?
Dale and Lynn were married on October 21, 1979 in Helena,
Montana. One child was born during their marriage. Dale also
adopted two children born to Lynn prior to their marriage. At the
time of the trial, Dale was 38 years of age and Lynn was 35 years
of age. During their marriage, Dale and Lynn lived rent-free in
houses provided by Dale's father, Reinhold Isaak. In 1987,
2
Reinhold Isaak built a new home on a 21-acre parcel at 5920 Highway
12 West for Lynn and Dale. The District Court found that Reinhold
Isaak intended to provide a home for Lynn and Dale and included
this property, valued at $115,500.00, in the marital estate, and
subsequently distributed it to Lynn. Other than this real
property, the marital estate consists of personal property valued
at $7,060.00. Dale received personal property valued at $2,310.00;
Lynn received personal property worth $4,750.00.
Dale is the only child of Reinhold and Josephine Isaak.
Josephine Isaak predeceased Reinhold Isaak, who died in January of
1990, devising all of his real and personal property to Dale by a
will dated January 4, 1986. The 21-acre parcel of real property
with the new home built for Dale and Lynn (distributed to Lynn as
marital property) was still in ~einholdIsaak's name at the time of
his death. This property is part of the Reinhold Isaak estate
which is valued at $578,000.00. This estate includes other real
and personal property, including income-producing real estate
contracts. Despite the fact that Reinhold Isaak died while Dale
and Lynn were married, the District Court did not include the bulk
of Dale's inheritance in the marital estate, finding that:
Except as herein modified, this Court is of the view that
the marital estate does not include the estate that Dale has
inherited from Reinhold Isaak. Not only did the inheritance
occur after the parties had separated, but the parties had
clearly done nothing to improve, maintain, or build that
estate.
In addition to the 21-acre parcel of real property and the
personal property valued at $4,750.00, the District Court's order
provided Lynn with $500.00 per month maintenance and $285.00 per
3
month child support for Kristian, the parties' minor child. It
also required Dale to provide medical insurance for Kristian. The
District Court found that Dale, although unemployed, is capable of
earning at least $1,000.00 per month. Dale also can receive over
$1,200.00 per month from his father's estate. Many of Dale's
monthly expenses are paid by the estate. Although the probate has
not been closed, the attorney for the estate testified that there
is no reason not to do so. When this is done, Dale may be able to
eliminate some estate-related monthly expenses such as the attorney
and accountant, thereby increasing his monthly income. The gross
monthly income from real estate contracts is approximately
$3,000.00.
The District Court further found that Lynn was unable to work.
Lynn suffered from breast cancer which had metastasized. At the
trial (May 15 and June 4 , 1991), Lynn testified that she had no
more than three years to live. Lynn died one year later on June 9,
1992. Her interest is represented in this appeal by the personal
representative of her estate, Judy L. Funk Smith, who has cross-
appealed, claiming that the entire Reinhold Isaak estate should
have been included in the marital estate.
I.
Did the District Court correctly calculate the net assets of
the marital estate?
The District Court found that it was not appropriate to
include in the marital estate property devised to Dale by his
father's will. His father died after the parties had separated,
although it appears from the record that Dale and Lynn made
attempts to reconcile up to and after the date of Reinhold Isaak's
death. The testimony indicates that Reinhold Isaak built a home
for Dale and Lynn in 1987. The District Court found that he
intended to provide this as a home for Dale and Lynn. The home is
located on a 21-acre parcel of land which was still in Reinhold
Isaak's name at the time of his death in January 1990.
Dale contends that a mere intention to make a future gift of
real property does not meet the requirements for an inter vivos
gift of real property. He argues that there was no completed gift
because title had not passed to either of the parties. Dale,
therefore, contends that the District Court incorrectly included
this property in the marital estate because to do so requires a
finding of a gift of real property
We review a lower court's conclusion of law by determining
whether it correctly or incorrectly applied the law. In re the
Marriage of Hamilton (Mont. 1992), P.2d , 49 St.Rep. 604,
60G. Section 70-20-101, MCA, governs transfers of real property.
It provides:
Transfer to be in writing--statute of frauds. No estate or
interest in real property, other than an estate at will or for
a term not exceeding 1 year can be created, granted, assigned,
surrendered, or declared otherwise than by operation of law or
a conveyance or other instrument in writing, subscribed by the
party creating, granting, assigning, surrendering, or
declaring it or by his lawful agent thereunto authorized by
writing.
Section 70-20-101, MCA.
Reinhold Isaak executed no written document to effect a
transfer of the property to Dale and Lynn. The general rule is
that a par01 gift of land is invalid and does not pass title to the
donee, even where the gift is accompanied by a transfer of
possession, unless the donee, after taking possession, makes
permanent and valuable improvements or other factors exist that
would make it a fraud upon the donee not to enforce the transfer.
38 C.J.S. Gifts 5 57 (1943). Section 70-20-102, MCA, provides
exceptions to this statute:
Exceptions to statute of frauds. Section 70-20-101 must not
be construed to:
(1) affect the power of a testator in the disposition of
his real property by a last will and testament;
(2) prevent any trust from arising or being extinguished
by implication or operation of law; or
(3) abridge the power of any court to compel the specific
performance of an agreement, in case of part performance
thereof.
There are no circumstances present here which would constitute
an exception to the statute of frauds under § 70-20-102, MCA.
Without a writing signed by Reinhold Isaak to effect an inter vivos
transfer to Dale and Lynn, the property must pass under the 1986
will executed by Reinhold Isaak.
Although we have concluded that this real property could not
be part of the marital estate based on an inter vivos transfer from
Reinhold Isaak, the District Court did not err by including it in
the marital estate. Montana law provides:
Division of property. (1) In a proceeding for dissolution of
marriage, . . .the court, without regard to marital
misconduct, shall . . . 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. ...
In dividing property acquired prior to the marriage; property
acquired by gift, bequest, devise, or descent; . . . the court
shall consider those contributions of the other spouse to the
marriage, including:
the nonmonetary contribution of a homemaker;
the extent to which such contributions have
ted the maintenance of this property; and
whether o r not the property division serves as an
ive to maintenance arrangements.
Section 40-4-202, MCA.
The District Court found that the marital assets included
$7,060.00 in personal property and the 21-acre parcel of real
property with the new home built upon it. It did not include the
other assets inherited by Dale. Clearly, under § 40-4-202, MCA,
Dale's inheritance can be p a r t of the marital estate.
Reinhold Isaak died in January of 1990. The record indicates
that, although Dale and Lynn had separated in 1989, they attempted
to reconcile in late 1989 and early 1990, with Dale moving back
into the home and the parties seeking some marital counseling. It
was not until after Reinhold Isaakfs death that they separated
permanently.
Dale's interest in all of his father's property vested at the
time of Reinhold Isaakls death, Section 72-3-101(2), MCA,
provides: "Upon the death of a person, his real and personal
property devolves to the persons to whom it is devised by his last
will . . . . II Section 72-3-606, MCA, allows the personal
representative to take real or personal property if necessary for
purposes of estate administration. We conclude that the real and
personal property of Reinhold Isaak became vested in Dale upon
~einhold Isaakls death in January 1990, subject only to the
personal representative's power to appropriate the assets, if
necessary, for purposes of administration. The record does not
contain any indication that this was or will be necessary.
Dale's petition to dissolve the marriage is dated August 30,
1990, over seven months after his father died. Dale inherited
property valued at $578,000.00 from Reinhold Isaak before the
petition was filed. An inheritance received during the marriage is
a marital asset. Vivian v. Vivian (1978),178 Mont. 341, 344, 583
P.2d 1072, 1074. From the facts of this case, this inheritance
should properly be considered for inclusion in the marital estate
according to 5 40-4-202, MCA. Section 40-4-202, MCA, is a flexible
statute vesting wide discretion in the district court. In re the
Marriage of Stewart (1988), 232 Mont. 40, 757 P.2d 765. An
inherited asset is to be treated on a case by case basis when
marital property is distributed. Stewart, 757 P.2d at 768. See
also In re the Marriage of Dirnberger (1989), 237 Mont. 398, 402,
773 P.2d 330 (no definite rule can be established for considering
inherited assets; each case must be decided on its own facts). We
conclude that the District Court should have included Dale's
inheritance in the marital estate.
The dissent emphasizes the finding of the District Court that
there is no evidence that either party contributed to or maintained
any of the inherited estate. Based on that finding and a number of
Montana cases, the dissent concludes that the marital estate should
not include the inherited estate or property because the
inheritance occurred after the separation of the parties, and
because the parties had done nothing to improve, maintain, or build
that estate. We do not believe that conclusion is appropriate
under the facts of this case.
For the assistance of the District Court on remand, we
emphasize it must be guided by the provisions of 5 40-4-202, MCA.
The requirement of the court is that it ''finally, equitably
apportionI1 the marital estate, and this extends to inherited
property as well as other property. The statute requires the court
to consider such items as duration of marriage, health, occupation,
amount of income, and needs of the parties. The general provisions
of subparagraph (1) also require that the court consider the
relationship of apportionment to maintenance and the opportunity of
each for future acquisitions of capital assets and income. As
above quoted, the statute also provides that in dividing property
acquired by devise or descent, the court shall consider the
contributions of the other spouse to the marriage including:
(a) the nonmonetary contributions of a homemaker;
(b) the extent to which such contributions have
facilitated the maintenance of the property; and
(c) whether or not the property division serves as
an alternative to maintenance arrangements.
Section 40-4-202(1), MCA. We emphasize that the District Court
should consider all appropriate provisions of 5 40-4-202, MCA.
On remand, the District Court may also be assisted by In re
the Marriage of Alt (l985), 218 Mont. 327, 708 P.2d 258, a case
similar to this one in terms of the inheritance vesting after the
parties separated, in which this Court approved the district
court's treatment of inherited property included in the marital
estate. In & t court awarded the husband's inherited real
the
l ,
property to him, with the proviso that if the property was sold
before the child's majority, one-third of the sale proceeds were to
be put in trust for the education and general welfare of the minor
child. The trust was to include conditions for distribution of the
remainder of the trust to the child upo:nattaining majority. m,
We hold the District Court did n o correctly calculate the
4t
marital estate. We vacate the property distribution and remand to
the District Court for recalculation of the marital estate in a
manner consistent with 5 40-4-202, MCA,,and this opinion.
May the trial court require a parent to provide health
insurance coverage for a child when the coverage is not available
through the parent's employer, and partially or entirely paid by
the employer?
Dale contends that, because he is unemployed, the District
Court had no authority to order that Dale provide health insurance
coverage for Kristian. In support of this argument, Dale cites 5
40-4-204(4)(a), MCA, which provides:
(4) Each district court judgment, decree, or order
establishing a final child support obligation under this title
and each modification of a final order for child support must
include a provision addressing health insurance coverage in
the following cases:
(a) If either party has avail.able through an employer or
other organization health insuranc:e coverage for the child or
children for which the premium is partially or entirely paid
by the employer or organization, the judgment, decree, or
order may contain a provision requiring that coverage for the
child or children be continued or obtained.
Dale's reliance on 5 40-4-204(4)(a), MCA, is misguided. That
section is inapplicable in a situation such as the present one
where there is no medical insurance plan provided by an employer.
It merely requires the district court to include a provision
relating to health insurance when there is such a plan. However,
5 5 40-4-204 (1) and (2), MCA, require the district court to order
either or both parents owing a duty of support to a child to pay an
amount reasonable or necessary for the child's support and to
consider all relevant factors. Among other things, the district
court must consider the "physical and emotional condition of the
child and his educational and medical needs.'' 5 40-4-204(2) (d),
MCA. The District Court complied with Montana's child support
statute and required Dale to provide medical insurance as part of
his support obligation.
We hold that the District Court can require a parent to
provide health insurance coverage for a child, although such
coverage is not available or paid for partially or totally by the
employer.
111.
Did the District Court err procedurally by allowing Lynn to
collect attorney fees from Dale?
Dale contends that Lynn did not file a motion to amend the
judgment under Rule 59 (g), M.R.Civ.P., and that her Affidavit in
Support of Attorney Fees filed on January 16, 1992 was neither
timely nor in proper form. Dale relies on Cook v. Harrington
(1983), 203 Mont. 479, 661 P.2d 1287, to support his contention
that the correct procedure requires a Rule 59(g) motion to amend
the judgment when a Notice of Entry of Judgment has been filed, as
happened here. Ms. Smith, the personal representative for Lynn's
estate, contends that Rule 59(g) is not applicable in this
situation. We agree with Ms. Smith.
Section 40-4-110, MCA, gives district courts the authority to
order one party in a dissolution proceeding to pay a reasonable
amount for costs and attorney's fees to maintain or defend the
action and for costs and fees incurred before the commencement of
the proceedings or after entry of judgment. The District Court
could properly order that Lynn's costs and attorney's fees be paid
by Dale as part of the decree.
Rule 59(g), M.R.Civ.P., applies to petitions for costs and
attorney fees filed after entry of judgment. In re the Marriage of
McDonald (l979), 183 Mont. 312, 314, 599 P.2d 356, 358, citing
Stacy v. Williams (1970), 50 F.R.D. 52 (construing Rule 59(e),
Fed.R.Civ.P., which is identical in content to Rule 59(g),
M.R.Civ.P.): Lichtenstein v. Lichtenstein (1972), 55 F.R.D. 535
(construing Rule 59(e), Fed.R.Civ.P.); see also M & R Construction
v. Shea (1979), 180 Mont. 77, 589 P.2d 138 (this Court applied Rule
59(g) to a motion to strike judgment for attorney fees). A Rule
59(g) motion to amend the judgment must be timely filed when the
judgment does not contain a provision addressing attorney fees.
McDonald, 599 P.2d at 358. && involved a case where attorney
fees were sought after judgment was entered. It is not relevant to
the circumstances of this case.
We hold that the District Court did not err procedurally when
it allowed Lynn to collect attorney's fees from Dale.
We reverse in part and affirm in part, vacating the property
distribution ordered by the District Court with instructions for
the District Court on remand to redetermine the marital estate and
equitably distribute it in a manner consistent with this opinion.
We Concur:
Justices
Justice Terry N. Trieweiler concurring in part and dissenting in
part.
I concur with the majority's disposition of Issue I1
concerning health insurance, and Issue I11 concerning attorney
fees.
I dissent from the majority's opinion regarding Issue I. I
would reverse the District Court's judgment which awarded real
property owned by the estate of Reinhold Isaak to Lynn and conclude
that there was no basis for awarding any real estate to Lynn under
the facts of this case.
The majority concludes that although there was no inter vivos
transfer of the property which was awarded to Lynn, Dale inherited
the property at the time of his father's death, even though the
property was still part of his father's estate at the time the
dissolution judgment was entered. Assuming that part of the
majority opinion was correct, there was still no basis for awarding
to Lynn any real property inherited by Dale.
Section 40-4-202(1), MCA, sets forth the factors which must be
considered by the District Court before inherited property can be
distributed to the noninheriting spouse. That section provides in
relevant part that:
In dividing property . . . acquired by gift,
bequest, devise, or descent . . . 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.
In the case of In re Mam'age ofHerron (1980), 186 Mont. 396, 608
P.2d 97, the district court divided marital property on a
fifty-fifty basis, even though the majority of the property had
either been given or devised to Mrs. Herron by her father.
However, this Court found that gifted or devised property was
governed by the section previously quoted, and based upon that
statute, concluded:
If none of the value of the property is a product of
contribution from the marital effort, 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 from the 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, 608 P.2d at 101-02.
In accord are In re Mam'age of Bantard (lggO), 241 Mont. 147, 785
P.2d 1387; In re Marriage of McFarland (l989), 240 Mont. 209, 783 P.2d
409; InreMam'ageofFitzmonis (1987), 229 Mont. 96, 745 P.2d 353; I n r e
Mam'age of Becker (1985), 218 Mont. 229, 707 P.2d 526
In this case, the parties separated in November 1989, several
months before Reinhold Isaak died. Whether or not they made
occasional efforts to reconcile following Reinhold's death, but
before the dissolution decree was entered, there is no evidence
that during that time any substantial contribution was made by the
parties to the value or maintenance of the property. In fact,
although not discussed by the majority, the District Court
specifically found the following facts to be true:
There is no evidence in the record that would
indicate to this court that either party in any way
contributed to or maintained any of the inherited estate.
Except as herein modified, this court is of the view
that the marital estate does not include the estate that
Dale has inherited from Reinhold Isaak. Not only did the
inheritance occur after the parties had separated, but
the parties had clearly done nothing to improve,
maintain, or build that estate.
Neither can distribution of this property be considered an
alternative to maintenance arrangements since Dale was already
ordered to pay $500 a month to Lynn for her maintenance.
Since Dale had not inherited the property during the time that
the parties lived together, there could have been no contributions
to the value or maintenance of the property during the parties'
marriage. Therefore, there was no basis, pursuant to our previous
decisions interpreting § 40-4-202(l), MCA, for distributing any
part of the real estate inheritance to Lynn.
For these reasons, I dissent from the opinion of the majority.
I would reverse that part of the District Court judgment which
awarded property from Reinhold Isaak's estate to Lynn, and
otherwise, affirm the District Court.
March 4, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
ROBERT T. CUMMINS
Attorney at Law
One North Last Chance Gulch
Helena. MT 59601
John L. Hollow
Attorney at Law
44 West Sixth Avenue
IIelena, MT 59601
ED SMITH
CLERK OF THE SUPREME COURT