August 24 2010
DA 09-0650
IN THE SUPREME COURT OF THE STATE OF MONTANA
2010 MT 188
IN RE THE MARRIAGE OF:
SCOTT DOUGLAS WEISS,
Petitioner and Appellee,
and
RAYNA MARICE WEISS,
Respondent and Appellant.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and For the County of Yellowstone, Cause No. DR 08-1307
Honorable Ingrid Gustafson, Presiding Judge
COUNSEL OF RECORD:
For Appellant:
Kenneth D. Tolliver, Matthew B. Gallinger, Tolliver Law Firm, P.C.,
Billings, Montana
For Appellee:
W. Corbin Howard, Attorney at Law, Billings, Montana
Submitted on Briefs: June 9, 2010
Decided: August 24, 2010
Filed:
__________________________________________
Clerk
Justice James C. Nelson delivered the Opinion of the Court.
¶1 Rayna Weiss appeals from that portion of the Findings of Fact, Conclusions of
Law and Final Decree of Dissolution filed by the District Court for the Thirteenth
Judicial District, Yellowstone County, giving her former husband, Scott Weiss, the
ownership interest in DTS Logistics, LLC. We affirm in part, reverse in part, and remand
for further proceedings consistent with this Opinion.
¶2 Rayna raises three issues on appeal which we have restated and consolidated into
the following two issues:
¶3 1. Whether the District Court erred in allocating the 40% ownership interest in
DTS Logistics, LLC to Scott based on the court’s interpretation of the provisions of the
parties’ premarital agreement.
¶4 2. Whether the District Court erred in determining that the $280,000 Rayna
transferred to Scott in 2004 was an interest free loan.
Factual and Procedural Background
¶5 Rayna and Scott met in 1990. At the time, Rayna was employed with the United
States District Court Clerk’s office in Billings as a deputy clerk. She owned her own
home, was a participant in two federal retirement plans through her employment, and
expected a substantial inheritance. Scott was employed with Diversified Transfer and
Storage in Billings as a truck driver.
¶6 Prior to their marriage in July 1993, Rayna had her attorney draft a document
entitled Agreement in Contemplation of Marriage (the premarital agreement). This
premarital agreement provided that in the event of a divorce, anything separately held in
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Rayna’s name would go to Rayna and anything separately held in Scott’s name would go
to Scott. Scott signed the premarital agreement without making any changes, corrections
or additions.
¶7 In 2000, Scott’s employers formed DTS Logistics, LLC (DTS), a brokerage
service that Scott was instrumental in developing. Scott was hired to manage DTS at a
salary of $65,000 per year. In addition, Scott’s employers offered to sell him a 20%
ownership interest in DTS for $126,692. Scott purchased an initial 6.31% ownership
interest with $20,000 provided by Rayna and $20,000 he had received as a gift from
Rayna’s parents. The remainder was purchased over time with earnings from the initial
6.31% ownership interest and from Scott’s income. This ownership interest was held
solely in Scott’s name.
¶8 In 2004, Scott’s employers offered to sell him an additional 20% ownership
interest in DTS for $330,000. Scott purchased this interest with $50,000 from his 401(k)
and $280,000 provided by Rayna for which Scott provided Rayna a “repayment
forecast.” All of these funds went into Scott’s separate checking account. He then issued
a check from his account to DTS to purchase this additional ownership interest. This
interest was also held solely in Scott’s name. Scott subsequently repaid Rayna the entire
$280,000.
¶9 Scott petitioned for dissolution of the marriage in 2008. The District Court
awarded each party the assets in their separate names and the parties stipulated to the
division of jointly held property. The only issue of contention was the distribution of the
40% ownership interest in DTS. Scott contended that the entire 40% ownership interest
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should be distributed to him because it was titled solely in his name and because the
$20,000 he received from Rayna in 2000 was a gift, while the $280,000 he received from
her in 2004 was a loan which he repaid in full. Rayna contended that, rather than being
gifts or loans, she invested $300,000 in DTS, thus she is entitled to share in the proceeds
in proportion to her investment.1
¶10 The District Court awarded the entire 40% ownership interest in DTS to Scott. In
doing so, the court determined that the original $20,000 Rayna transferred to Scott to
purchase the ownership interest was done as a gift to Scott. Regarding the remaining
$280,000 that Rayna transferred to Scott, the court determined that there was an implied
contract between Rayna and Scott for an interest free loan which Scott repaid in full prior
to the dissolution of the marriage. Rayna appeals the court’s determination.
Standard of Review
¶11 This Court reviews a district court’s distribution of marital property to determine
whether the district court’s findings of fact are clearly erroneous. In re Marriage of
Baker, 2010 MT 124, ¶ 22, 356 Mont. 363, 234 P.3d 70 (citing In re Marriage of
Williams, 2009 MT 282, ¶ 14, 352 Mont. 198, 217 P.3d 67; Bock v. Smith, 2005 MT 40,
¶ 14, 326 Mont. 123, 107 P.3d 488). A finding of fact is clearly erroneous if it is not
supported by substantial evidence, if the district court misapprehended the effect of the
evidence, or if our review of the record convinces us that the district court made a
mistake. Baker, ¶ 22. Moreover, if we determine the district court’s findings are not
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During the parties’ marriage, the 40% DTS ownership interest generated $1.5 million in
cash distributions. However, it is subject to restrictive shareholder agreements limiting
any future sale of the ownership interest to the price Scott paid for it.
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clearly erroneous, we will affirm the district court’s distribution of marital property
unless we find that the district court abused its discretion. Baker, ¶ 22. In addition, we
will review a district court’s conclusions of law to determine whether the court’s
conclusions are correct. Baker, ¶ 22 (citing Williams, ¶ 14; In re Marriage of Bartsch,
2007 MT 136, ¶ 9, 337 Mont. 386, 162 P.3d 72).
Issue 1.
¶12 Whether the District Court erred in allocating the 40% ownership interest in DTS
to Scott based on the court’s interpretation of the provisions of the parties’
premarital agreement.
¶13 Rayna argues on appeal that the District Court erred in its interpretation of the
premarital agreement and, consequently, its allocation of the entire DTS ownership
interest to Scott. She maintains that the $300,000 she transferred to Scott was not a gift
or a loan, but her personal investment in DTS and that, as a co-participant in the business
with Scott, she is entitled to share in the proceeds in proportion to her investment.
¶14 Rayna asserts that under Article 13(4) of the premarital agreement, her mere
delivery of cash to Scott cannot be transmutated into a loan without a notarized written
document to that effect. She also asserts that pursuant to Article 9(1) of the premarital
agreement, the separate property of each party together with its mutations must be
restored to that party in the event of dissolution of the marriage, and that Article 9(2) of
the premarital agreement requires that the ownership interest in DTS be divided between
the parties according to each party’s investment of their separate property in DTS. Rayna
contends that because she put up more than 75% of the funds needed to purchase the
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ownership interest in DTS, she should receive a proportionate share of the after-tax
distributions received from DTS.
¶15 Scott argues that because the ownership interest in DTS is titled solely in his
name, the District Court was correct in distributing it entirely to him under Article 4(1) of
the premarital agreement. In addition, Scott maintains that rather than being Rayna’s
separate investment in DTS, the $280,000 was an interest free loan from Rayna while the
$20,000 was a gift from Rayna. Scott asserts that Rayna transferred these funds from her
sole and separate bank account to Scott’s sole and separate bank account thereby
divesting Rayna of any control or ownership over the funds.
¶16 Premarital agreements are authorized by statute in Montana. See Title 40,
chapter 2 , p a r t 6 , M C A (the Uniform Premarital Agreement Act). Specifically,
§ 40-2-605(1), MCA, authorizes parties contemplating marriage to agree in advance upon
the disposition of their assets in the event of a divorce. In the case sub judice, the District
Court determined that the premarital agreement was legally binding and controlled the
distribution of assets and debts between the parties. Rayna and Scott agree that the
premarital agreement is binding in this case, but each party relies on different provisions
of the premarital agreement to support their arguments.
¶17 Rayna relies on Article 13(4) of the premarital agreement which provides:
Transmutation. Property or interests in property now owned or
hereafter acquired by the parties that by the terms of this Agreement are
classified as the separate property of one of them can become the separate
property of the other or the parties’ joint property only by a written
instrument executed and acknowledged before a notary public by the party
whose separate property is to be reclassified. [Emphasis added.]
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Thus, Rayna contends that her transfer of the $280,000 to Scott did not divest her of
control of these funds because the transfer was done electronically not by “written
instrument,” and because it was not “executed and acknowledged before a notary public.”
We do not find Rayna’s arguments persuasive.
¶18 Section 30-18-106, MCA, provides:
Legal recognition of electronic records, electronic signatures,
and electronic contracts. (1) A record or signature may not be denied
legal effect or enforceability solely because it is in electronic form.
(2) A contract may not be denied legal effect or enforceability
solely because an electronic record was used in its formation.
(3) If a law requires a record to be in writing, an electronic record
satisfies the law.
(4) If a law requires a signature, an electronic signature satisfies the
law. [Emphasis added.]
Rayna instructed her bank to transfer $280,000 from her separate account to Scott’s
separate account. The fact that the transfer was done in electronic form rather than by
check makes no difference. It was still a legally enforceable transfer of funds from her
separate account to Scott’s separate account thereby divesting Rayna of control over
these funds.
¶19 As to the notarial requirement, Scott points out, and we agree, that the purpose of
any notary requirement is to verify the authenticity of the signatory. Section 1-5-603(1),
MCA (“In taking an acknowledgement, the notarial officer shall determine, either from
personal knowledge or from satisfactory evidence, that the person appearing before the
officer and making the acknowledgement is the person whose true signature is on the
instrument.”). Here, Rayna does not dispute that she transferred these funds to Scott.
Rather, she disputes that the funds could be considered as either a loan or a gift to Scott
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rather than her investment as a co-participant with Scott in DTS. However, while Article
13(4) of the premarital agreement requires a “written instrument executed and
acknowledged before a notary public,” Article 13(3) of the premarital agreement provides
that voluntary conveyances only need to have the instrument of conveyance or the
document of title signed by the transferring party.
¶20 And, contrary to Rayna’s assertions that she was part owner with Scott of the 40%
ownership interest in DTS, Article 14(19) of the premarital agreement provides that joint
business ventures can only be created by the execution of a separate, written document:
No Intention to Create Business Association. It is not the intention
of either party to form a joint venture, partnership, or other business
association in which the parties would be co-owners of any property owned
individually by either party. Each party expressly negates the existence of
any such joint ventures, partnerships, or business associations and agrees
that any such arrangement may be created only by the execution of a
separate, written document expressly acknowledging the formation of such
arrangement and specifically delineating the rights of each party to such
arrangement. Each party further acknowledges that it is not their intent to
take any action which would create a claim of ownership or reimbursement
rights on the theory of constructive trust, resulting trust, or any other
equitable or legal theory. Accordingly, each party waives the right to bring
any legal proceeding alleging ownership or reimbursement rights under any
legal or equitable theories, specifically including, but not limited to,
constructive trust, resulting trust, partnership, joint venture, or business
association. [Emphasis added.]
No document exists that satisfies the requirement to show that this was a joint business
venture. Instead, Scott testified that he gave Rayna a repayment schedule for the
$280,000 loan before she made the transfer and that each time he made a payment on the
loan, he printed a new copy of the computer spreadsheet for Rayna showing his payments
and the balance remaining on the loan.
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¶21 Rayna offered a “sticky note” containing the notation “R & S” along with some
figures claiming that this evidenced a joint business venture between her and Scott. The
note, however, did not describe with particularity any joint business venture since it did
not set forth any terms or conditions of a joint business venture, it did not contain a date,
nor was it signed by either party. The District Court quite correctly determined that the
sticky note could not be considered a “written document expressly acknowledging the
formation of” a joint business adventure pursuant to Article 14(19) of the premarital
agreement.
¶22 Scott maintains that Rayna accepted the payments made by him in repayment of
the loan and that she did not assert that the $280,000 was anything other than a loan until
he filed for dissolution of their marriage. Scott also introduced into evidence at trial the
deposition of Rayna’s financial planner wherein he testified that when Rayna met with
him in December 2005 to discuss her investments, rather than advising him that she had
invested in DTS, she reported that she had given Scott money to purchase an interest in
the business and that Scott was now paying her back.
¶23 Scott also points out that not only was the DTS ownership interest titled solely in
his name, but that Rayna never took any role in DTS. She never gave DTS money; she
did not help in the office; she never demanded or received any profit and loss statements
for DTS; and she never demanded or received any profits or distributions from DTS.
¶24 Therefore, we hold that the District Court was correct in concluding that the
$280,000 Rayna transferred to Scott in 2004 was a loan and not Rayna’s personal
investment in DTS.
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¶25 We further hold that the $20,000 Rayna transferred to Scott in 2000 was a gift.
We reiterate that Rayna transferred these funds from her sole and separate bank account
to Scott’s sole and separate bank account thereby divesting Rayna of any control or
ownership over the funds. No repayment schedule for this amount was ever executed and
no consideration was requested by Rayna. Section 70-3-101, MCA, defines a “gift” as a
“transfer of personal property made voluntarily and without consideration.” And,
according to Article 9(2) of the premarital agreement: “Gifts from one party to the other
shall be treated as the sole and separate property of the donee.” The cases Rayna relies
on in support of her argument that the $20,000 was not a gift, Malek v. Patten, 208 Mont.
237, 678 P.2d 201 (1984) and Anderson v. Baker, 196 Mont. 494, 641 P.2d 1035 (1982),
are distinguishable from the instant case because both Malek and Anderson dealt with
deposits made to joint checking and savings accounts.
¶26 The District Court determined that the provision that controls the distribution of
the ownership interest in DTS is Article 4(1) of the premarital agreement which provides,
in pertinent part:
Separate Property. The parties do not intend to share together in the
ownership of any property owned by either party, unless otherwise
specifically conveyed by one to the other or by one to the parties jointly.
Each party agrees that all property, of whatever nature, shall be owned by
the party having title to such property. [Emphasis added.]
The court determined that under this provision, the 40% ownership interest in DTS
should be allocated to Scott since it is titled solely in his name. To that end, the court
stated: “The membership interest in DTS is titled to Scott. This is clearly reflected in
DTS’s tax returns and the K-1’s issued to Scott on an annual basis.”
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¶27 The premarital agreement in this case contains contrary provisions creating an
ambiguity. And, while Article 14(13) of the premarital agreement provides that “[n]o
provision of this Agreement is to be interpreted for or against any party because that
party or that party’s legal representative drafted the provision,” this provision is contrary
to Montana law. Section 28-3-206, MCA, provides:
Uncertainty to be resolved against party causing it. In cases of
uncertainty not removed by parts 1 through 5 of this chapter, the language
of a contract should be interpreted most strongly against the party who
caused the uncertainty to exist. The promisor is presumed to be such party,
except that in the case of a contract between a public officer or body, as
such, and a private party, it is presumed that all uncertainty was caused by
the private party.
Consequently, any ambiguity in the premarital agreement must be resolved against Rayna
since it was her attorney that drafted the premarital agreement. Matter of Estate of
Flasted, 228 Mont. 85, 92, 741 P.2d 750, 754 (1987).
¶28 In this case, with the exception of the property that the parties stipulated to, the
District Court followed Article 4(1) of the premarital agreement to distribute the marital
property to the party having title to such property. Based on the foregoing, we see no
reason that the 40% ownership interest in DTS should be treated any differently.
¶29 Accordingly, we hold that the District Court did not err in allocating the 40%
ownership interest in DTS to Scott based on the court’s interpretation of the provisions of
the parties’ premarital agreement.
Issue 2.
¶30 Whether the District Court erred in determining that the $280,000 Rayna
transferred to Scott in 2004 was an interest free loan.
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¶31 In Montana, there is a statutory presumption that any advance of money is
presumed to be made on interest unless otherwise expressly stipulated in writing at the
time of the loan.
Loan presumed to be on interest. Whenever a loan of money is
made, it is presumed to be made upon interest unless it is otherwise
expressly stipulated at the time in writing.
Section 31-1-103, MCA (emphasis added).
¶32 Scott contends that because there was a written schedule of repayment that did not
include interest, § 31-1-103, MCA, does not apply. But, Scott fails to take into account
that neglecting to include interest in the repayment schedule is not the same as expressly
stipulating that the loan does not include interest. Because there is no evidence in the
record that the loan was to be interest free, § 31-1-103, MCA, does apply.
¶33 And, absent an express provision to the contrary, the rate of interest is determined
by § 31-1-106(1), MCA, which provides in part:
[U]nless there is an express contract in writing fixing a different rate or a
law or ordinance or resolution of a public body fixing a different rate on its
obligations, interest is payable on all money at the rate of 10% a year after
it becomes due . . . . [Emphasis added.]
¶34 Accordingly, we hold that Rayna’s loan of $280,000 to Scott was not interest free,
and we remand to the District Court for calculation of interest at the rate of 10% a year
from the date Rayna first transferred the funds to Scott until the amount was paid in full.
¶35 As a final matter, Scott has requested that we award him his attorney’s fees and
costs for responding to Rayna’s “frivolous arguments.” Because Rayna prevailed on the
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issue of interest, her appeal is not frivolous and we decline to award attorney’s fees.
M. R. App. P. 19(5).
¶36 Affirmed in part, reversed in part, and remanded for further proceedings consistent
with this Opinion.
/S/ JAMES C. NELSON
We Concur:
/S/ MIKE McGRATH
/S/ PATRICIA COTTER
/S/ BRIAN MORRIS
/S/ JIM RICE
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