#24290-rev & rem-RWS
2007 SD 91
IN THE SUPREME COURT
OF THE
STATE OF SOUTH DAKOTA
* * * *
BARBARA R. HALBERSMA, Plaintiff and Appellee,
v.
LAWRENCE M. HALBERSMA, Defendant and Appellant.
* * * *
APPEAL FROM THE CIRCUIT COURT OF
THE SECOND JUDICIAL CIRCUIT
MINNEHAHA COUNTY, SOUTH DAKOTA
* * * *
HONORABLE STUART L. TIEDE
Judge
* * * *
DEBRA M. VOIGT of
Piersol & Voigt, LLP
Sioux Falls, South Dakota Attorneys for plaintiff
and appellee.
AARON J. EMERSON
Myers & Billon, LLP
Sioux Falls, South Dakota Attorneys for defendant
and appellant.
* * * *
CONSIDERED ON BRIEFS
ON APRIL 23, 2007
OPINION FILED 08/22/07
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SABERS, Justice
[¶1.] Lawrence M. Halbersma (Lawrence) appeals from the property
division determination in his divorce from Barbara R. Halbersma (Barbara). The
circuit court found that approximately $1.6 million dollars of assets were Barbara’s
separate property and excluded it from the marital property. We reverse.
FACTS
[¶2.] Lawrence and Barbara were married on October 15, 1955. The young
couple started their farming operation with donations from their families.
Lawrence’s brother gave them five cows and Barbara’s parents gave them some
chickens. Barbara’s father purchased land near White, SD where the couple could
operate their dairy operation. They eventually purchased the land from her father.
Over time, they increased their land to 600 acres and a net worth of almost one
million dollars.
[¶3.] Lawrence operated a dairy business and devoted all of his time to this
operation. Due to his long hours, Barbara was left to take care of the home and
raise their children. She also claims to have helped in the farming/dairy operation, 1
but Lawrence disputes this claim. In addition, the couple agreed Barbara would be
the one in charge of the family finances. She handled the bills and, when they had
money to invest, made their investment decisions.
[¶4.] In 1986, Barbara’s parents left her a substantial inheritance. They left
her the family homestead near Brandon and other cash assets. In addition to
1. Some of the land was used for crops to sell for profit, but most of the land was
used to grow feed for the dairy animals.
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handling the family finances, she also handled this inherited property. However,
instead of commingling the inherited property, she kept the property separate. The
land near Brandon was being rented and Barbara used the income from the land,
along with other inherited funds she invested, to pay the taxes and upkeep on the
land. However, for purposes of federal income tax reporting, Barbara and Lawrence
filed a joint return. This return included income from the inherited properties and
investments. Barbara claims she paid her portion of the federal income tax from
her inherited money.
[¶5.] From 1986 to 2003, Barbara managed the Brandon property, while
Lawrence continued to work on the farm. 2 With the children grown and out of the
home, Barbara had more time to devote to the management of the property. With
Lawrence working long hours on the farm, he was unable to contribute to the
maintenance of the Brandon property. He helped a few times, but Barbara usually
hired people to complete the work.
[¶6.] In 2003, the couple sold their 600 acres in White, SD by a contract for
deed and moved to the Brandon home. The next year, Barbara created a revocable
trust from inherited funds, which named her children as the beneficiaries. She also
created a will that left all of the marital property to Lawrence, while leaving the
inherited property to her children.
2. During this time, the family operation switched from milk cattle to beef
cattle. Their son left the farm and continuation of the milking operation was
not feasible without his help.
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[¶7.] In December of 2005, Barbara sued Lawrence for divorce alleging
extreme mental cruelty. Lawrence consented to the divorce being granted on those
grounds. The children were adults, there was no request for alimony and no debt to
divide, so the sole issue was the property division. In particular, Barbara argued
the entire inheritance should not be included in the marital estate. Lawrence
argued the inherited property should be included as marital property. After the
trial, the circuit court found the inherited property should be kept separate. It
divided the marital estate, awarding Lawrence approximately $465,073 and
Barbara approximately $450,072. 3 Barbara also received all of the inherited
property, which brought her total to $2,249,851.
[¶8.] Lawrence appeals and raises the following issues:
1. Whether the circuit court’s property division was an abuse of
discretion.
2. Alternatively, whether the appreciation in value of the inherited
properties should have been included as a marital asset.
3. Alternatively, whether Lawrence should have received a
disproportionate share of the marital assets.
4. Whether the circuit court erroneously applied the law in its
property division pursuant to SDCL 25-4-44.
3. These figures do not include the proceeds from the sale of the White
farmhouse ($80,300), the remaining Contract for Deed payments on sale of
the White farmland ($200,000) or the proceeds of the time share property in
Branson, Missouri ($10,900). If these figures were included, Lawrence’s
approximate share of the marital estate would be $610,708 and Barbara’s
would be $595,707, a difference of $15,001.
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STANDARD OF REVIEW
[¶9.] In a divorce action, a circuit court’s determination regarding division of
property is reviewed using an abuse of discretion standard. Novak v. Novak, 2006
SD 34, ¶3, 713 NW2d 551, 552 (citing Godfrey v. Godfrey, 2005 SD 101, ¶11, 705
NW2d 77, 80). The property division will not be reversed unless the circuit court’s
“discretion is exercised ‘to an end or purpose not justified by, and clearly against,
reason and evidence.’” Id. We do not decide the question anew, but rather whether
“a judicial mind, in view of the law and the circumstances of the particular case,
could have reasonably reached such a conclusion.” Id. Findings of fact are reviewed
for clear error. Id.
[¶10.] 1. Whether the property division decision, which excluded
Barbara’s inherited property, was an abuse of discretion.
[¶11.] SDCL 25-4-4 gives the circuit court discretion to equitably divide the
marital estate regardless of ownership. The statute provides:
When a divorce is granted, the courts may make an
equitable division of the property belonging to either or
both, whether the title to such property is in the name of
the husband or the wife. In making such division of the
property, the court shall have regard for equity and the
circumstances of the parties.
SDCL 25-4-44. The circuit court is not bound by any mathematical equation when
making an equitable division of property, but there are several factors it is to
consider when dividing marital property. Garnos v. Garnos, 376 NW2d 571, 572-73
(SD 1985). They are:
(1) the duration of the marriage;
(2) the value of the property owned by the parties;
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(3) the ages of the parties:
(4) the health of the parties;
(5) the competency of the parties to earn a living;
(6) the contribution of each party to the accumulation of
the property; and
(7) the income-producing capacity of the parties’ assets.
Novak, 2006 SD 34, ¶4, 713 NW2d at 552 (citing Billion v. Billion, 1996 SD 101,
¶21, 553 NW2d 226, 232).
[¶12.] We have noted that these factors apply and must be examined before
deciding whether inherited property should be included in the marital estate. Id.;
Billion, 1996 SD 101, ¶21, 553 NW2d at 232. Therefore, “inherited property ‘is not
ipso facto excluded from consideration in the overall division of property.’” Novak,
2006 SD 34, ¶5, 713 NW2d at 553 (citing Billion, 1996 SD 101, ¶20, 553 NW2d at
232). Instead, “[o]nly where one spouse has made no or de minimis contributions to
the acquisition or maintenance of an item of property and has no need for support,
should a court set it aside as ‘non-marital’ property.” Id.
[¶13.] Lawrence claims the circuit court abused its discretion when it found
Barbara’s inherited property was separate property. He claims the inherited
property should be included in the marital property because his work on the dairy
farm was a substantial and significant contribution to the inherited property. He
argues that Barbara would not have been able to keep the property separate but for
his contribution through hard work on the farm. Additionally, he claims she always
handled the finances for the family and should not be able to take advantage of her
position of controlling the family finances.
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[¶14.] The circuit court did examine the factors relating to the property
division inquiry. It noted that the parties were married for over fifty years. It
found that Lawrence was 71 and Barbara was 69 years old and both were in good
physical health for their ages, but they were at retirement age and neither one
could earn more than minimum wage. The circuit court found that both parties had
contributed to the accumulation of marital assets.
[¶15.] The circuit court also found that Barbara’s mother intended to pass the
land and money to Barbara alone. Furthermore, it found that Barbara had kept the
inherited property and money separate from the marital estate. Finally, the circuit
court found Lawrence had no control over the property and did not participate in
any decisions as to the inherited property. Consequently, the circuit court found
Lawrence’s contribution to the inherited assets to be de minimis. The circuit court
also noted that Lawrence had no need for support. Accordingly, the inherited
property was excluded from the marital estate.
[¶16.] However, the circuit court erred when it determined Lawrence’s
contribution to the inherited assets was de minimis. Lawrence only performed
some direct maintenance on the inherited property once they moved to Brandon
after retirement. Nonetheless, it is his indirect contribution that is valuable and
was overlooked.
[¶17.] Barbara inherited the property in 1986. This was thirty-one years into
an over fifty-year marriage. See Novak, 2006 SD 34, ¶10, 713 NW2d at 554 (noting
that the property was inherited ten years into a sixteen-year marriage weighed in
favor of including inherited property in the marital estate). For the next twenty
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years, Lawrence continued to work long hours on the farm. While Barbara
continued to control the family’s finances, the children were grown, allowing her to
spend more time away from home. Lawrence placed all of the income from his work
on the farm into the marital estate. This allowed Barbara to keep the inherited
property separate, as the farm was producing enough income to cover their
expenses. His contribution, while not direct in the form of interviewing tenants,
painting fences, or mowing the lawn, is no less significant and substantial. His
indirect contribution was significant and substantial and the circuit court erred in
determining that his contribution was de minimus. This is a finding of fact that is
clearly erroneous.
[¶18.] This Court has indicated that indirect contributions help maintain the
separate property in Garnos v. Garnos. 376 NW2d at 573. In Garnos, we reversed
the circuit court’s determination that inherited real property was to be excluded
from the marital estate. In reversing, we noted that the wife had contributed all of
her earnings to family expenses and the contributions of a wife and mother were
important considerations in determining property awards during divorce
proceedings. Id.
[¶19.] Similarly, Lawrence contributed all of the farming income to the
family and farm expenses. 4 The circuit court indicated it understood the amount of
work and sacrifice a milking/farming operation took. It noted:
4. Moreover, Lawrence contributed $50,000 in money he inherited from his
family into the marital property and did not set it aside as his own
inheritance.
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I know how hard that work is, and it is a 7 day a week, 52
week a year operation. There is very little time, and
you’re constantly trying to find a good friend, neighbor,
relative or somebody to cover the times when you can’t be
there. So I know how hard the work is.
While the circuit court considered this contribution in allocating marital property, it
did not consider this indirect contribution to maintenance of the inherited property.
As in Garnos, it is error not to consider this contribution. The law, much like a
marriage, is not a one way street. If we recognize the significant and substantial
contribution of a housewife and homemaker in the contribution of marital assets,
then we should recognize the significant and substantial contribution this dairy
farmer made to the inherited property in this case.
[¶20.] Furthermore, the court placed too much emphasis on Lawrence’s lack
of control over the property and lack of decisions. Barbara was in control and made
the decisions for all of the marital property finances. He testified that he did not
think anything of her keeping the money separate because she handled all of the
finances.
[¶21.] As the circuit court noted, this is a highly unusual case. It is hard to
imagine a similar case will be before us in the future. This was a fifty-year
marriage, one that Lawrence testified he expected to continue. She received the
inheritance thirty years into the marriage. For over twenty years of the marriage,
that inheritance was maintained separately, at least in part, because of Lawrence’s
indirect contribution by working hard to make the dairy business and therefore,
their lives, self-sufficient and comfortable. He testified that he thought the money
would be used for their retirement, for both of their benefit, even though she kept it
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separate, “[a]fter all they were married, right?” He trusted Barbara with their
finances. Therefore, the fact that Lawrence lacked control over or did not make
decisions about the inherited property does not indicate a separate status. If we
affirmed the property division under these circumstances, we would send a message
to spouses not to trust the other’s financial decisions and investments for fear of
being artfully excluded from assets.
[¶22.] A review of the record indicates the circuit court’s finding of fact was
clearly erroneous and it abused its discretion when it excluded all of the inherited
property from the marital estate. 5 Lawrence made valuable indirect contributions
to the inherited property. It would be unjust and inequitable to award Barbara over
$2 million dollars, while Lawrence received only $600,000.
[¶23.] Barbara has made a motion for appellate attorney’s fees. SDCL 15-17-
38 allows for an award of attorney’s fees, if “the interest of justice” so allows.
However, since Lawrence is the prevailing party, we award her no attorney’s fees.
See Toft v. Toft, 2006 SD 91, ¶26, 723 NW2d 546, 554-55 (awarding attorney’s fees
5. Contrary to Justice Zinter’s dissent, this decision is made by considering
more than just one factor. While it is most important that Lawrence made
indirect contributions to the inherited property, other factors are considered.
For instance, the first factor, length of the marriage was considered. Novak,
2006 SD 34, ¶4, 713 NW2d at 552 (citing Billion, 1996 SD 101, ¶18, 553
NW2d at 231). This is a marriage of long duration, over fifty years.
Furthermore, the inherited property was received after thirty years of
marriage; therefore, it was inherited with twenty years of marriage
remaining. Additionally, the age and health of the parties and their
competency to earn a living is considered. Id. Lawrence and Barbara are 71
and 69, respectively. Lawrence and Barbara are at retirement age and
cannot earn more than minimum wage. The proper factors were considered
in this decision.
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to the prevailing party, but no attorney’s fees to the party that failed to prevail on
appeal).
[¶24.] Due to our decision, we do not address the additional issues. Reversed
and remanded to determine an equitable division of property that includes
Barbara’s inherited property.
[¶25.] GILBERTSON, Chief Justice, concurs.
[¶26.] KONENKAMP, Justice, concurs with a writing.
[¶27.] ZINTER and MEIERHENRY, Justices, dissent.
KONENKAMP, Justice (concurring).
[¶28.] I concur with the Court’s opinion. I write only to emphasize that this
writing should not be read to suggest that Barbara’s inheritance must be divided in
half. On remand, Lawrence should receive an “equitable” share in Barbara’s
inherited property.
MEIERHENRY, Justice (dissenting).
[¶29.] Applying our deferential standard of review, we should affirm the
circuit court’s decision to exclude Barbara’s inherited property from the marital
estate. There is no abuse of discretion under the factors and standard recently
reiterated in Novak v. Novak, 2006 SD 34, ¶¶ 3-4, 713 NW2d 551, 552. We have
consistently said, “[w]e find an abuse of discretion when discretion is exercised to an
end or purpose not justified by, and clearly against, reason and evidence.” Id. ¶3
(additional citations omitted). Under this standard, we do not ask whether we
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would have made the same decision, but “whether a judicial mind, in view of the
law and the circumstances of the particular case, could have reasonably reached
such a conclusion.” Id. (additional citation omitted). Additionally, we review the
circuit court’s findings of fact under the clearly erroneous standard. Id.
[¶30.] In Billion v. Billion, we clearly directed circuit courts in this state to
consider certain factors when deciding whether inherited property should be subject
to division in the marital estate. 1996 SD 101, ¶18, 553 NW2d 226, 231. In Novak,
we said, “[o]nly where one spouse has made no or de minimis contributions to the
acquisition or maintenance of an item of property and has no need for support,
should a court set [it] aside as ‘non-marital’ property.” 2006 SD 34, ¶5, 713 NW2d
at 552-53 (citation omitted). The circuit court, following our directive, considered all
the factors in light of the evidence and concluded that the inherited property should
not be part of the marital estate. The court found that Lawrence’s contribution to
the inherited assets was de minimis, and that his need for support could be met
without dividing the inherited assets. The circuit court’s findings were not clearly
erroneous and its decision was reasonable and justified.
[¶31.] The majority opinion attempts to substitute its own opinion to
conclude that Lawrence’s contribution to the inherited assets was not de minimis
because of Lawrence’s indirect contribution to the inherited assets. However, it was
the indirect nature of Lawrence’s contributions that led the circuit court to conclude
that Lawrence’s contribution was de minimis. This conclusion was based on a
number of factors unique to the facts of this case.
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[¶32.] First, the Brandon property had clearly been given to Barbara alone.
The circuit court noted:
[The inherited assets were] not given to her and her husband,
even though at the time this distribution was made, they
presumably had been married for an extended period of time
even by then. So one would think that if there had been any
intention on the part of her parents to benefit Mr. Halbersma
from the inherited property, they would have given it to him in
his name jointly or in some manner express their intent that
that would be the case.
[¶33.] Second, Barbara kept the inherited assets completely separate from
the marital estate. The circuit court commented that the inherited property
was never used to support the family generally in terms of
acquisition of property by them, the land that they purchased
over the years, the livestock, the things that they did, the
inheritance was never a factor in that. It was always totally
separated and segregated and it was not used to pay the
monthly expenses. It didn’t pay the heat, the lights, the gas,
anything else.
[¶34.] Finally, Lawrence admitted that over the years he told Barbara that
he wanted nothing to do with the Brandon property and that it was her
responsibility alone. The circuit court acknowledged Lawrence’s lack of
involvement and interest at the close of trial.
Mr. Halbersma doesn’t dispute when the inheritance was
received that he in essence said, I remember his words precisely,
he said I was too busy farming to worry about her property down
at Brandon and it was hers and I didn’t want anything to do
with it and that’s what happened over many, many years.
All the decisions, control and contribution in maintaining the inherited property
were made by Barbara without any involvement by Lawrence. All of the accounts
and payments associated with the property were kept separate. Some of the
inherited assets had been placed in a living trust with Barbara’s children as
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beneficiaries. Additionally, the circuit court found that the liquid assets awarded to
Lawrence were adequate to support him “in the style to which the parties were
accustomed during the marriage.” Thus, Lawrence did not show that his need for
support was not met without dividing the inherited assets.
[¶35.] We have stated, “a ‘trial court has broad discretion in determining
whether property is marital in nature and subject to division.’” Billion, 1996 SD
101, ¶20, 553 NW2d at 232 (quoting Heckenlaible v. Heckenlaible, 1996 SD 32, ¶8,
545 NW2d 481, 483). Based on this deferential standard and under the specific
facts of this case, the circuit court’s exclusion of the inherited property from the
marital estate was clearly reasonable and justified by the evidence. I would affirm
the circuit court’s exclusion of the marital property.
ZINTER, Justice (dissenting).
[¶36.] I join Justice Meierhenry’s dissent regarding the Court’s disregard of
the abuse of discretion standard of review. The Court’s analysis is perplexing
because it concedes that the circuit court did consider the relevant factors, see supra
¶¶14-15, the circuit court’s written opinion reflects that it also balanced all of those
factors in arriving at its decision, yet this Court holds it abused its discretion. I also
write to highlight that the Court has substituted its judgment for that of the circuit
court on a disputed issue of fact, and point out that the Court only considers one
relevant factor (contribution to the inherited property) while conceding that there
are “several factors . . . to consider when dividing marital property.” See supra ¶11
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(citing Novak v. Novak, 2006 SD 34, ¶4, 713 NW2d 551, 552 and Billion v. Billion,
1996 SD 101, ¶18, 553 NW2d 226, 231) (emphasis added).
[¶37.] Notwithstanding our multifactor approach to deciding this issue, the
majority reverses on one isolated factor: this Court’s perceived failure of the circuit
court to correctly find the extent of Lawrence’s contribution to the inherited assets,
a finding involving a highly disputed question of fact at trial. See supra ¶22. This
is contrary to our long-standing approach in these cases. See Billion, 1996 SD 101
at ¶21, 553 NW2d at 232.
[¶38.] It is also contrary to the use of the multifactor approach itself. In
other contexts, we have repeatedly emphasized that no one factor should be
determinative. Great West Casualty Co. v. Bergeson, 1996 SD 73, ¶6, 550 NW2d
418, 420 (stating that when determining whether an employment relationship
exists “[n]o single factor can be determinative; each case must be decided on its own
facts.”). Similarly, in our family law cases, we frequently find no abuse of discretion
if the circuit court considered all relevant factors. See Christians v. Christians,
2001 SD 142, ¶19, 637 NW2d 377, 381 (affirming alimony award when findings
supported by the record “show[ed] a consideration of all factors”); Arneson v.
Arneson, 2003 SD 125, ¶26, 670 NW2d 904, 914 (concluding circuit court did not
abuse its discretion when “the court properly considered the relevant factors in
making its custody determination”). In fact, under the multifactor approach, all
factors need not be considered as long as “the decision [is] balanced and
methodical.” Zepeda v. Zepeda, 2001 SD 101, ¶13, 632 NW2d 48, 53 (affirming
circuit court’s child custody order). There is nothing balanced and methodical,
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however, about today’s opinion deciding a case on only one factor to the exclusion of
all others, especially where that factor involves a disputed issue of fact.
[¶39.] If these are the new standards of appellate review, the bench and bar
should be advised that we have abandoned the multifactor approach to deciding
when inherited property should be excluded from the marital estate and that
findings of fact will be reviewed de novo based upon how we perceive a circuit court
should have decided a disputed issue of fact at trial. The Court should also
acknowledge that under its analysis it has effectively overruled Novak and Billion.
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