No. 94-535
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
IN RE THE MARRIAGE OF
TANYA TRUAX,
Petitioner and Appellant,
and
H. V. "BILL" TRUAX,
Respondent and Respondent.
APPEAL FROM: District Court of the Twentieth Judicial District,
In and for the County of Lake,
The Honorable C. B. McNeil, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Stephen C. Berg, Warden, Christiansen,
Johnson & Berg, Kalispell, Montana
For Respondent:
Marshall Murray and Shelly F. Brander,
Murray and Kaufman, Kalispell, Montana
Submitted on Briefs: March 23, 1995
Decided: April 26, 1995
Justice Terry N. Trieweiler delivered the opinion of the Court.
Petitioner Tanya Truax petitioned the District Court for the
Twentieth Judicial District in Lake County for dissolution of her
marriage to respondent, H.V. "Bill" Truax, and for equitable
division of the couple's property. The District Court entered a
decree in which it dissolved the parties' marriage, and distributed
certain assets to each. Tanya appeals from the District Court's
property distribution. We affirm the decree of the District Court.
The following issues are raised on appeal:
1. Did the District Court abuse its discretion by its
apportionment of the pension funds earned by Bill from Frontier
Airlines?
2. Did the District Court err when it included Tanya's
Glacier Bank account in the marital estate?
FACTUAL BACKGROUND
Bill and Tanya were married on November 20, 1980, in
Kalispell. Tanya had worked as a teacher in North Dakota prior to
the parties' marriage, but quit her teaching position and withdrew
the retirement funds she had earned when she married Bill. Tanya
moved to Kalispell with Bill, helped care for two of his children
from a prior marriage, and helped maintain the couple's home. In
1989, she returned to work as a teacher. At the time of trial, she
earned $27,000 annually in that occupation.
2
Bill worked as a pilot for Frontier Airlines from 1962 until
1986. During that employment, Frontier contributed to a pension
fund on his behalf.
In 1986, Frontier Airlines declared bankruptcy. For several
years afterward, Bill worked for other airlines. However, he
received no additional contributions to any retirement plan. He
retired from flying in 1992. Tanya and Bill separated in
April 1994. At the time of trial, she was 46 and he was 61 years
old.
Bill's Frontier pension was distributed in a lump sum amount
of $328,916.12 on December 26, 1989. The funds were then divided
into two IRAs. One was deposited at BankWest, and the other at
D.A. Davidson. There were withdrawals from the pension funds
during the marriage for living expenses and for construction of a
new home. At the time of trial, the total amount remaining in the
two IRAs was $267,358.
Bill testified that he is now unable to fly commercially
because he is over age 60, and is retired. Tanya testified that
she is now employed as a tenured teacher earning approximately
$27,000 per year.
The parties agreed on the distribution of marital assets, with
the exception of Bill's Frontier Airlines pension. They also
disagreed on the question of whether Tanya's Glacier Bank account
should be designated a marital asset.
3
Johnnie McCann, a CPA retained by Tanya, testified that the
value of Bill's retirement at the time of the marriage was
approximately $32,000, based on figures obtained from a loan
application. However, she admitted that she was unable to obtain
third-party documentation of the actual value. She arrived at the
amount earned during the marriage by subtracting $32,000 from the
current balance. Tanya contended that one-half of that balance was
the share of Bill's pension to which she was entitled.
Tom Torgenson, a CPA retained by Bill, valued the pension by
taking the total number of months Bill was employed at Frontier
(291), and dividing that number by the number of months Bill was
employed by Frontier during the marriage (69). The result was
23.7 percent. He thereby concluded that 23.7 percent of the
pension was earned during the marriage. It was and is Bill's
contention that Tanya is entitled to one-half of that amount, but
that the remaining amount is a pre-marital asset. The District
Court agreed. It distributed approximately $32,000 of the pension
balance to Tanya.
The District Court also designated a Glacier Bank account as
a marital asset, but awarded the entire account to Tanya. Tanya
testified that of the $15,587 in the account, $10,000 was a gift to
her from her father and the remainder belonged to a Canadian
friend.
4
ISSUE 1
Did the District court abuse its discretion by its
apportionment of the pension funds earned by Bill from Frontier
Airlines?
When we review a district court's division of marital
property, we will uphold the district court unless the findings
upon which that division is based are clearly erroneous or there
has been an abuse of discretion. In re Marriage of Maedje (1994) , 263
Mont. 262, 265-66, 868 P.2d 580, 583.
Retirement benefits are part of the marital estate. Rolfe Rolf
(1988), 234 Mont. 294, 296, 766 P.2d 223, 225 (citing Karrv. Karr
(1981), 192 Mont. 388, 628 P.2d 267). The question is how to
equitably divide those benefits.
In this case, the court heard testimony from the parties'
experts, both of whom are certified public accountants, regarding
the value of the pension earned during the marriage. Tanya's
valuation depended on the assumption that the pension had a value
of $32,000 on the date of the couple's marriage. However, that
amount came from a loan application which Bill had not signed and
which was based on a figure that he stated he had not provided. He
testified that he did not know the actual value at the time of the
couple's marriage, and neither party was able to provide
independent confirmation of that value. Under these circumstances,
it was not unreasonable for the District Court to rely on the
testimony of Bill's accountant and apportion benefits based on the
5
time rule approved (for other reasons) in Rolfe, 766 P.2d at 226.
Applying that formula, "the marital interest is represented by a
fraction, the numerator of which is the length of the employee's
service during the marriage, and the denominator is the employee's
total length of service." Rolfe, 766 P.2d at 226.
The dissent contends that Bill's pension should have been
distributed based on its present value without regard to the time
rule. However, an equitable apportionment of the pension based
merely on its present value would require some determination of the
value accumulated during the marriage. While the dissent makes the
factual argument that the value at the time of marriage should be
found based on an unsigned financial statement, the accuracy of
which could not be established, it was the District Court's
responsibility to resolve the factual issue created by this
circumstantial evidence and Bill's denial that he knew the value of
the pension at the time of marriage. The dissent would have us
disregard the District Court's fact-finding function, and establish
our own value for the pension on the date of marriage. However,
doing so would not only require that we ignore the limited scope of
our review, but also that we assume that during the first 18 years
of contributions to Bill's pension, he earned only $32,000, but
that during the next six years of contributions, plus three years
of interest, he earned nearly $297,000. The implausibility of this
assumption supports its rejection by the District Court.
6
While it is true, as pointed out by the dissent, that Rolfe
adopted the time rule based upon contingencies that affected the
value of a party's pension after the marriage, the rule is equally
applicable in this case where the District Court had no reliable
evidence with which to evaluate the pension at the beginning of the
parties' marriage.
We conclude that substantial credible evidence supports the
District Court's apportionment of Bill's retirement benefits. The
District Court's findings were not clearly erroneous, and it did
not abuse its discretion by the manner in which these benefits were
distributed.
ISSUE 2
Did the District Court err when it included Tanya's Glacier
Bank account in the marital estate?
Tanya claims that the Glacier Bank account contained only
money that was a gift to her from her father and money which she
was holding for a Canadian friend, and should not have been
designated as a marital asset. However, the District Court awarded
the entire amount in the Glacier Bank account to Tanya, even though
it was designated a marital asset. We have held that dissolution
decrees will not be reversed for error which does not materially
affect the substantial rights of the parties. In re Marriage of Dreesbach
(1994), 265 Mont. 216, 226, 875 P.2d 1018, 1024 (citing InreMarriage
ofLopez (1992), 255 Mont. 238, 245, 841 P.2d 1122, 1126). Since the
parties agree upon the distribution of all assets other than Bill's
7
retirement benefits (which we have affirmed were distributed
equitably), and since the Glacier Bank account was distributed to
Tanya in its entirety, regardless of its classification, we
conclude that Tanya's substantial rights were not affected by any
misclassification that might have occurred. While the dissent
disagrees with this resolution of our second issue, it offers no
explanation of how Tanya's substantial rights were adversely
affected by the District Court's disposition of her bank account.
The judgment of the District Court is affirmed.
We concur:
Justices
Justice James C. Nelson dissenting.
I respectfully dissent. In deciding Issue 1, we hold that the
District Court properly applied the "time rule" in dividing Bill's
Frontier Airlines pension. I disagree. In Rolfe v. Rolfe (1988),
234 Mont. 294, 766 P.2d 223, a case in which the time rule was
applied, we recognized the general rule that "the proper test for
determining the value of a pension is present value." Rolfe, 766
P.2d at 225, citing In re Marriage of Bowman (1987), 226 Mont. 99,
134 P.2d 197. See also Kis v. Kis 11982), 196 Mont. 296, 301, 639
P.2d 1151, 1153. In -I
Rolfe the time rule was utilized because
various unknowns and contingencies in the husband's pension,
including his contributions, nonvested benefits, employer's future
contributions, benefit formulations, early retirement and
disability, made application of the generally accepted "present
value rule" inadequate. Rolfe, 766 P.2d at 223-224.
We are clearly not presented with that situation in the
instant case. To the contrary, the value of Bill's retirement
benefits as of the date of the parties' marriage was ascertainable;
his benefits were liquidated during the marriage; and the remaining
balance of those benefits was not only clearly ascertainable, but
was sitting in two bank accounts ready for distribution.
While the majority discounts Tanya's evidence of the value of
Bill's pension at the start of the marriage, Bill offered nothing
to refute that evidence, and, in fact, was contradictory in his own
testimony. When asked his opinion of the value of the pension at
the start of the marriage in 1980, Bill stated, alternatively, that
9
it 'I [plrobably didn't have any value at that time," or that he had
"no idea." Yet, having taken that position, he, nevertheless,
maintained that the ultimate value of the pension accrued over a
period of 24 years and 3 months, from 1962 to 1986. Moreover,
while he denied that the figures were in his hand writing, Bill was
apparently willing, nonetheless, to let stand for purposes of his
banking business, the $32,000 valuation of his pension on his
personal financial statement dated December 3, 1980, submitted to
First Security Bank of Kalispell, and the $24,000 valuation on his
financial statement dated August 27, 1979, both of which were
admitted at trial. Taken together, those statements and Bill's
inability or unwillingness to place any other valuation on his
pension as of 1980, provide substantial, and, in fact, the only,
evidence that the value of his pension at the time of the marriage
was $32,000.
The majority concludes that it is implausible, based on
Tanya's evidence, that the value of Bill's pension increased from
$32,000 in 1980 to $371,765, in 1989, when the lump sum was paid.
Yet, the majority apparently has no trouble in accepting the
plausibility of Bill's testimony that his pension increased from
"no value" to $371,165, during that same period of time. At least
Tanya's expert explained that increase, referencing unusually high
interest rates. Bill offered no explanation.
While the trial court is obviously charged with finding the
facts and resolving disputed facts based upon the testimony and the
evidence, the court is not at liberty to simply ignore what
10
evidence there is in order to arrive at some more seemingly
preferable result. Here, according to the only testimony offered,
the pension had either "no value" in 1980 (according to Bill) or it
had a value of $32,000 (according to Tanya); either way the time-
of-marriage value was established by the parties' testimony, and
that evidence could not be simply disregarded.
In short, the facts in this case presented none of the
unknowns or uncertainties that necessitated the application of the
Rolfe time rule. Rather, I would hold that the court erred in not
valuing and distributing Bill's pension on the basis of the
generally accepted present value rule. There is nothing in this
case to justify application of the Rolfe exception. Unfortunately,
in failing to follow the proper rule, we further muddy the waters
in an area of the law where there are already few clear rules to
guide the bench and practicing bar.
With respect to Issue 2, I conclude that, on the evidence
presented at trial, the Glacier Bank account should not have been
included as a marital asset. Clearly, at least two-thirds of the
account balance derived from a gift from Tanya's father;
approximately one-third of the account did not belong to either
Tanya or Bill; and Bill did not contribute to the maintenance of
the account.
On the basis of the foregoing, I would reverse and remand for
further proceedings. Accordingly, I respectfully dissent.
April 26, 1995
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
Stephen C. Berg
Warden, Christiansen, Johnson & Berg
Box 3038
Kalispell MT 59903-3038
Marshall Murray
Murray & Kaufman
Box 728
Kalispell MT 59903-0728
ED SMITH
CLERK~FTHESUPREMECO~RT