No. 80-177
IN THE SUPREME COURT OF THE STATE OF MONTANA
1980
IN RE THE MARRIAGE OF
JOANNE D. KARR,
Petitioner and Cross-Appellant,
VS .
JAMES H. KARR,
Respondent and Appellant.
Appeal From: District Court of the First Judicial District,
In and for the County of Lewis and Clark.
Honorable Gordon Bennett, Judge presiding.
Counsel of Record:
For Appellant:
Robert J. Emrnons, Great Falls, Montana
For Respondent:
James L. Norris, Vermillion, So. Dakota
Submitted on briefs: December 23, 1980
Decided: April 1, 1981
Filed: APR 1 1
98
Mr. Justice John C. Sheehy delivered the Opinion of
the Court.
James H. Karr appeals from a judgment entered in the
First Judicial District Court, Lewis and Clark County, in
favor of Joanne D. Karr in a marriage dissolution case where
the District Court awarded the wife $190,926 as a lump sum
settlement of the marital estate, and an additional $15,081.69
for attorney fees.
Judgment was entered on February 28, 1980. Notice of
entry of judgment was served on the same day and James made
timely motions objecting to the personal jurisdiction of the
court over him. He alsomoved to amend the findings of
fact, conclusions of law, and judgment entered by the court.
Timely appeal was filed by James after his motions were
deemed denied.
Joanne cross-appealed with respect to her right upon
dissolution for an equitable portion of the husband's
military retirement.
The facts in this case are long and especially complicated.
For purpose of clarity, we take, essentially, the facts
found by the District Court in its findings.
The first finding of the District Court is significant
because it gives a clearer understanding of the reasons for
the eventual judgment entered by the District Court. The
court found that James was
.
". . a highly unreliable, untrustworthy,
evasive, intentionally confusing, studiously
misleading and, on occasion, patently
perjurious witness. His testimony, given
upon discovery or at trial, on material facts,
was therefore approached with the greatest
caution, accepted in full only where clearly
substantiated by other evidence and weighed
lightly in the face of conflicting evidence.
The Court's distrust of this witness extends
to profferred documents. As will be noted in
the Conclusions of Law set forth herein, the
fifty-one requests for admissions submitted by
[James] after the close of discovery and
immediately before trial by way of a pre-
trial memorandum are not deemed by the Court
to be admitted for failure of the petitioner
to deny them and are not relied upon in the
following Findings of Fact."
The Court further found:
" [Joanne and James] were married in Mobile,
Alabama on July 12, 1946. At the time of
the marriage they had no assets. [James]
was attending flight school for the United
States Navy in Pensacola, Florida. [Joanne]
joined [him] and was employed immediately
thereafter. [James] was transferred to Guam
in 1947 and after a few months [Joannej joined
him and found employment and continued to live
in Guam for the next thirteen months. [James]
was transferred from Guam in 1948 and [Joanne]
returned to the United States, residing with
her mother. [James] was assigned to Moffitt Field,
California in January, 1949 and the parties moved
to Palo Alto, California. While [James] was
stationed at Moffitt Field [Joanne] was not
employed outside the home but did some entertaining
as she was required to do as an officer's wife.
[James] got out of the Navy in 1950 and enrolled
at Stanford University in Palo Alto, California.
[Joanne] was employed outside the home and remained
employed until she had to leave the job when the
parties moved to San Francisco upon [James] being
accepted for dental school in September, 1952.
[Joanne] and [James] each received approximately
$2,000 from their respective father's estates,
which they used to help purchase a residence in
the Palo Alto area in approximately 1950. After
[James] was accepted for dental school and the
parties moved to San Francisco, [Joanne] managed
an apartment house in exchange for free rent.
[Joanne] was accepted for dental hygiene school
in 1953 and the parties moved to an apartment
two blocks from the school. [Joanne] was in the
dental hygiene school for two years and graduated
in 1955. Immediately upon graduation, [Joanne]
accepted a position at the University of California
as director of the dental hygiene program and was
so employed from 1955 until 1959. While
[James] was in dental school he was accepted
in the United States Army as a senior dental
student in 1955 and upon graduation in 1956
he was assigned in the San Francisco Bay area
until 1959. The parties adopted a daughter
KATHERYN ANN in 1957. In that year the parties
purchased a residence located . . . [in] San
Rafael, California. They sold the house in the
Palo Alto area and used the proceeds for the
down payment on the residence, which they purchased
as joint tenants. They resided in the San
Rafael home until August, 1960, when they were
transferred to Turkey. They rented their property
from 1960 to June, 1979; the mortgage payments
on the property were paid from the proceeds of
rent and at the time of trial the property was
unencumbered. Their second daughter, KARYN IRENE
was born to them in May, 1958. During their
residence in San Rafael [Joanne] took care of
the housekeeping and the children and was not
employed. The parties' son, JAMES KURTIS, was
born in September of 1961 while the parties
were stationed in Turkey. While petitioner was
in Turkey she was the secretary of the officers'
wives club where she assisted in writing the club
by-laws and constitution. In addition she was
assigned to assist newly transferred Army families.
She was expected to entertain as an officer's wife
which she did while in Turkey as well as while she
was in the San Francisco Bay area. In the spring
of 1963 [James] was transferred from Turkey to
Fort Douglas in Salt Lake City, Utah. The parties
were stationed at Fort Douglas from April, 1964
until August of 1965. While there, [Joanne] parti-
cipated in the officers' wives club and cared for
families that were transferring into the area from
other installations. In addition, she was on the
church altar committee, taught Sunday School and was
responsible for organizing a pre-school nursery.
She also cared for the house and the children while
in Salt Lake. In August, 1965, [James was] transferred
to San Antonio, Texas but remained there only until
December, 1965, when he became ill and was hospitalized
in November and transferred to Denver, Colorado, where
the parties lived from January, 1966 to February, 1967.
The parties purchased a home while stationed in Denver,
and sold it in 1970. They rented it from February,
1967, until it was sold. From the proceeds of the
sale of this home [James] bought a 1960 Cessna 182
airplane for $9,000. While stationed in Denver
[Joanne] helped in hospital recreation. In February,
1967, the parties were transferred to Fort Campbell,
Kentucky and were stationed there until the latter part
of 1968 when [James] retired from the Army. Fort
Campbell was located in an isolated area and as a
result [Joanne] was very involved in officers' wives
activities and assisted the enlisted men's wives in
community projects. She continued as a Girl Scout
leader and helped newly-arrived Army families in
becoming adjusted to the area. In September, 1968,
[Joanne] began work on her master's degree in dental
hygiene at the University of Iowa. This
schooling was paid for by a federal government
grant. [James] joined [Joanne] in December of 1968
and the parties resided in Iowa until the summer
of 1969. [James] was not employed and drew
unemployment benefits. The parties were both
employed as teachers at the University of Edmonton,
Alberta, in the fall of 1969 and taught there for
two years. [Joanne] was paid $12,000 a year and
[James] $16,000 a year. [Joanne] cared for the house
and children in addition to her teaching. In 1971
they moved to Bounty, Saskatchewan, where they lived
in a small house with a wood stove and grew most of
their own vegetables. Neither party worked while they
lived there until 1972. In 1972 they went to California
to open a dental practice. [James] opened a dental
practice in Chico, California, in February, 1973,
but closed the office after six months. [Joanne]
assisted [James] in the practice. They then
moved to Oyen, Alberta, where [James] signed a
lease with the Big County Medical-Dental Clinic.
While [James] was to open his dental practice in Oyen
in November of 1973, he left to go back to California
in order to take flying lessons to get his pilot's
license. [Joanne] worked in the dental office in
Oyen, but since [James] failed to come back to Oyen
until March of 1974 this led to a lawsuit, but the
parties were successful and as a result stayed in
Oyen for a period of two years. In August, 1975,
[Joanne] came to Helena, Montana where she was
employed by Carroll College teaching in the dental
hygiene program and is so employed at time of trial.
[James] lived variously in Canada, Montana and
California until the filing of this action in May,
1977. He has been generally unemployed for the
past four years."
The District Court concluded from the above facts, which
were essentially uncontested, that during the 31 years of
their marriage, the contributions of the parties to the
family fortune are undistinguishable both as to amount and
kind and should therefore be deemed equal.
After discussing the various assets owned by the
parties and the activities with respect to those separate
assets either as to acquisition or disposition, the court
found the marital property should be valued as follows:
"Real property located at 427 Fairhills Drive,
San Rafael, California
"Real property located at Stettler, Alberta
"Real property located in Bounty, Saskatchewan
"Life insurance
"Equitable Insurance Co.,
"N.Y. Life Insurance Co.,
"Fidelity Mutual Life Insurance Co.,
"Policy 965730
"Policy 858127
"Policy 859116
"Policy 971188
"Equity stock
"Koppers Co.
"Diamond Shamrock
"White Motor
"Canadian dental retirement fund
"Balance of proceeds from Wells Fargo
bank account
"Proceeds of deposit in Treasury Branch
of The Province of Alberta
"Proceeds of deposit in Royal Bank of Conquest
"Canadian Bonds
"~otal
The court further found that the marital property
should be equitably apportioned between the parties on the
ratio of two-to-one in favor of Joanne. The court specifically
referred to section 40-4-202, MCA, in making the apportionment
and considered each of the factors set forth in that section,
particularly that clause that says "the opportunity of each
for future acquisition of capital assets and income." In
connection with that factor, the District Court found:
"F. [Joanne] has a single source of
income from a job of uncertain duration
with a salary of $16,000 a year, and in
which there is little reasonable expect-
ation of advancement. [James] has a
pension that provides him with $13,260 a
year without working and can engage, without
diminution of the pension, in the profession
of dentistry or in commercial aviation. While
no evidence was introduced as to how much dentists
or pilots make, there is no legal requirement that
Courts be born yesterday. I think it is not subject
to reasonable dispute that dentists generally make
a great deal more than their hygienists or more
than assistant professors at Carroll or more than
$16,000 a year gross income. The same could
reasonably be said of commercial pilots, but, con-
cededly, with not so much certainty. I conclude
from this that [James'] ability and actual
opportunities to earn and acquire capital assets
is at least double that of [Joanne's.]"
The principal bone of contention with respect to the
findings of fact seems to be the conclusion of the court
that it could consider, in making the marital assets disposition,
the fact that James was entitled to an army retirement
pension. In connection with that, the court found in Finding
No. 19:
"At the time of the dissolution, [James]
was receiving $1,105 a month as Army
retirement pay. He is 55 years old. It can
be reasonably expected that in the normal course
of events [James] will also have all rights in
the Army's lifetime medical program and its
commissary privileges. [Joanne] will not share
in either the pension or the medical or commissary
benefits. There is no medical reason why he
cannot be employed as either a dentist or pilot,
both of which he is qualified to do, even though
he has been rated 60% disabled for purposes of
Army retirement. No good cause was shown for his
being unemployed since the inception of this
litigation."
The District Court did not include the pension as a
part of the military profit, nor use it as a set off. It
stated:
' "H. While [James'] pension cannot be included
in the marital property, or used as a set-off,
it can be considered as a source of income in
arriving at an equitable apportionment required
by the statute, just as it may be used in deter-
mining alimony or maintenance. Eschenburg v.
Eschenburg [(1977), 171 M. 247, [557 P.2d 10141 ;
I
Cromwell v. Cromwell [ (1979), .
Mont , 588
P.2d 1010,] 36 St. Rep. 60. hef federal law may
hold our wrist from reaching into [James]
retirement salary, but it need not blind our
eyes to the reality of the situation. [James]
has a comfortable secure retirement income, in
being, for the rest of his life. [Joanne], although
she contributed as much to it as he did, will never
receive a cent of it. After [James] had begun enjoying
his retirement income, [Joanne] was forced to begin
a retirement program of her own, at the age of 50,
with an organization from which she could be dismissed,
without fault on her part, next year. She has, in
a word, a very small retirement fund at present and
virtually no retirement security."
The District Court then concluded that to maintain
herself in her present way of life, Joanne required a
monthly expenditure of $800. Using the evidence of a CPA,
the court determined that this $800, at the time she reached
age 62 would require, because of inflation, $1,400 a month to
replace. Inasmuch as James had a pension of $13,260 a year,
and the capacity to earn additional monies as a dentist or
pilot, the court concluded it would award a lump sum settlement
to Joanne sufficient to provide her with a like retirement
source, in view of their 31 years of marriage.
Finally, the District Court concluded that because
his prior record revealed in the proceedings in this cause,
James would not obey court orders, would undoubtedly delay
in any monthly payments, and the making of any order by the
court was useless, unless the court could provide a way that
his obeyance of the order was inescapably necessary. Accordingly,
the District Court entered judgment against James to pay
Joanne $190,926, as and for her portion of marital estate.
She was to deliver to the District Court, in escrow, all
indicia of title to marital assets that would have to be
transferred to James upon satisfaction of the judgment.
The District Court also awarded attorney fees of
$15,081.69, upon its finding that her attorney had expended
306.5 hours of work at $42.21 per hour, which was found
reasonable, and had incurred costs of $2,145.69. The court
further found that 80 percent of the attorney fees incurred
by Joanne could have been avoided if there had been a
"modicum of cooperation" from James.
The issues raised by James on his appeal, restated, are
these:
1. Did the District Court err in considering in any
way the military pension of James?
2. Did the District Court err in awarding attorney
fees of $15,081.69 to Joanne?
3. Did the District Court have jurisdiction over James
when he was served by summons in the marital dissolution
cause?
4. Did the District Court err by including or excluding
certain assets of the estate?
With respect to the cross-appeal of Joanne, the issue
she raises is:
1. Did the District Court err in not determining the
present value of the future pension benefits to be received
by James and including them as a part of the marital estate
for division between the parties?
Issue No. 1. Did the District Court err in considering
in any way the military pension of James?
This issue is inevitably connected with James' further
contention that the District Court, in considering the
capacity of the parties to acquire capital assets,
should not have determined that James, if he chose to be
employed, could earn additional income as a dentist or
pilot.
The District Court was careful not to include the value
of the retirement pension to be received by James as a part
of the marital estate. Instead the District Court considered
the retirement pension, and James' earning capacity as a
dentist or a pilot, in determining the ability of the
parties to acquire capital assets in the future. Since this
is one of the factors required to be determined by a District
'f
Court in section 40~4-202,MCA, the court concluded that
those factors required a two-to-one ratio in the division of
the marital estate to put Joanne on the same footing as
James in her capacity to acquire future capital assets.
In In Re Marriage of Miller (1980), Mont . - 609
,
P.2d 1185, 37 St.Rep. 556, we approved the District Court's
use of the present value of a husband's military retirement
pension as a part of the marital estate. Miller relied (as
does James in this case) on Hisquierdo v. Hisquierdo (1979),
439 U.S. 572, 99 S.Ct. 802, 59 L.Ed.2d 1. Therefthe District
Court had held that the treatment of a railroad pension
receivable under the Railroad Retirement Act, 45 U.S.C. §
231, et seq., as community property, violated the purpose of
the act and was prohibited by the federal supremacy clause.
We distinguished Kisquierdo from the Miller situation,
particularly because the provisions of the Railroad Retirement
Act explicitly terminated a spouse's benefits upon absolute
divorce. We said we could not determine that the federal
statutes relating to military retirement pensions directly
or indirectly prevented the distribution of the value of the
pension rights as a part of the marital estate.
-9-
In, In Re Marriage of McGill (1980), - Mont . -, 609
P.2d 278, 37 St-Rep. 578, we expressed dissatisfaction where
the District Court awarded the wife only 15 percent of the
husband's military pension. There is no other clear holding
in McGill that would be applicable with respect to the
military pension in this case.
In Ebert v. Ebert (1980), - Mont . -, 616 P.2d 379,
37 St.Rep. 1674, we noted a complicated situation in that
the husband had not yet retired so as to be eligible for his
military pension, although the wife claimed the military
pension should be considered as a part of the marital
estate. We reversed and remanded the cause in that case for
a consideration by the District Court as to whether the
military pension should be considered a part of the marital
property.
It is a duty of the District Court, in apportioning the
marital assets, to consider "the opportunity of each for the
future acquisition of capital assets and income." Section
40-4-202, MCA. In Smith v. Smith (1981), - Mont . -, 622
P.2d 1022, 38 St.Rep. 146, we remanded the cause because we
found that the court had failed to consider the wife's
inability to acquire property or income in the future.
Although in the foregoing cases cited, this Court has
come down on the side of including federal military pensions
as a part of the marital estate, such rulings are of no
significant moment here. The District Court in this case
was careful not to include the value of the military pension
as a part of the marital estate. Instead, the District
Court considered James' pension income, and his capacity to
earn other income, in determining their respective opportun-
ities for the future acquisition of capital assets and
income. In that light, the reasoning of the court is not
far separated from that of this Court in Eschenburg v.
Eschenburg (1976), 171 Mont. 247, 252, 557 P.2d 1014, 1016,
wherein we said:
"Defendant argues that his Army pension is
not property jointly acquired during the
marriage and as such is not subject to
division whereby plaintiff received a portion.
What defendant fails to comprehend is that
the district court made no property division
of the pension but directed defendant to pay
$500 per month alimony from the pension or
'in lieu thereof from any earnings he may
acquire in excess of said retirement.' Without
acquired property subject to property division,
the pension - -a source of income to defendant
is
-
which the district courtproperly considered in
fixing his financial ability to pay alimony as
related to the financial needs of plaintiff."
(Emphasis added.)
The Eschenburg case was a decision relating to section
21-139, R.C.M. 1947, now repealed, but the logic of that
case is applicable though the statute here pertinent was
enacted later as a part of the new family law code. Section
21, Ch. 536, Laws of 1975. The command of section 40-4-202,
MCA, is that the District Court make an equitable apportion-
ment of the marital assets. We hold it proper, and in
harmony with the principles of equity, that the District
Court consider the income from a party's federal military
retirement pension, earned during the marriage, in arriving
at an equitable apportionment on the marital assets, parti-
cularly when the District Court is considering the statutory
factor of the parties' opportunity for future acquisition of
capital assets and income.
James contends further that 89 percent of his pension
is exempted from federal taxation, and as such, that portion
of his pension should not have been considered available
when the court apportioned the marital assets. On this
basis, James distinguishes our holding in Miller, because
his pension is a disability pension, whereas, Miller's was
not. On this basis, James contends that the Hisquierdo case
is applicable.
James was discharged from the Armed Services for retire-
ment by reason of physical disability. 10 U.S.C. § 1403,
rexating to disability retirement pay, provides that part of
the retirement pay of a member of the Armed Services,
which exceeds the retirement pay that he would have received
if it were not computed on the basis of percentage disability,
is not considered as pension, annuity or similar allowance.
Under 26 U.S .C., 5 104 (a)(3), the amount of any pension
resulting from an allowance for personal injuries or sick-
ness is exempt from federal income taxation. James contends
that 89 percent of his retirement represents the excess of
his pension received because of his disability, is not
taxable, and should not be regarded as a pension. Therefore,
he insists that it may not be considered by the court for
any purpose in connection with the marital dissolution.
His pension, or a part thereof, is now administered by the
Veteran's Administration. Under 38 U.S.C. S 3101(a), payments
made under any law administered by the Veterans' Administration
are not subject to taxation, creditors claims, nor to any
attachment or levy. These factors, James contends, brings
the disability portion under Hisquierdo, supra, which involved
a flat prohibition against attachment and anticipation.
In answer, Joanne maintains that the administration of
James' military retirement pension, or a portion thereof,
by the Veterans' Administration, was accomplished by him
after the commencement of this litigation in 1979. Joanne
further contends that this issue is answered by the case of
In Re Marriage of Milhan (1980), 27 Cal.3d 765, 613 P.2d 812,
166 Cal.Rptr. 533.
In Milhan, the trial court had awarded the wife one-
half of the husband's military retirement pay and one-
half of the cash surrender of his military insurance policies.
The husband contended that under Hisquierdo, the award of
the pension fund and of property equivalent to her community
property interests in the military insurance policies was
error. The California Supreme Court rejected this Hisquierdo
argument, saying:
"In Fithian [lo Cal.3d 592, 517 P.2d 449,
111 Cal.Rptr. 3691 this court found that
'California community law [does not] interfere
[sic] in any way with the administration or
goals of the federal military retirement pay
system ... ' (Fithian, supra, 10 Cal.3d at p.
604, 111 Cal.Rptr. at p. 377, 517 P.2d at
p. 457.) Accordingly, the court held that state
law was not preempted. Nothing in Hisquierdo
conflicts with this conclusion. Military retire-
ment pay was enacted, inter alia, to 'provide
[servicemen] with an incentive to remain in the
Armed Services .. . ' (Id. at p. 599, 111 Cal.Rptr.
at p. 373, 517 P.2d at p. 453.) The federal interest
which required preemption in Hisquierdo--an
incentive for pension holders to retire--does
not exist in the military retirement system."
(Emphasis added.)
Milhan disposes of the same contention now raised
by James in this case respecting the administration of his
pension by the Veteran's Administration. It is stated in
Mi lhan:
"Mr. Milhan opted to receive a pension
administered by the Veterans' Administration.
This opinion [sic] is computed solely on the
basis of his disability. (See 38 U.S.C. § § 314,
334.) In order to receive this benefit, Mr.
Milhan waived his right to an equivalent amount
of retirement pay. (38 U.S.C. 5 3105.) The
reasoning of Stenquist applies with equal
force to this situation and to title 10 disability
benefits. However classified for administrative
purposes, disability benefits under Stenguist [sic]
are separate property in California only insofar
as they exceed the amount of retirement pay waived.
Significantly, Mr. Milhan does not appear to contest
this proposition. Instead, he contends that under
Hisquierdo the rule in Stenquist violates the
supremacy clause of the United States Constitution.
"This contention lacks merit. Insofar as dis-
ability benefits replace retirement pay waived as
a condition of receipt, they perform the same
functions as retirement pay. (Stenquist, supra,
21 Cal.3d at p. 787, 148 Cal.Rptr. 9, 582 P.2d 96.)
Since the division of military pay as community
property does not violate federal supremacy, it
follows that no substantial federal interest is
damaged by the division of 'disability' benefits
which serve identical purposes.
"Mr. Milhan's attempt to avoid state law by
citing the 'spendthrift' provision the Veterans'
Administration applies to the benefits it
administers would substitute a 'conflict in words'
for the practical clash of interests which the
Supreme Court has required for preemption.
(Hisquierdo, supra, 439 U.S. at p. 5% 99 S.Ct. at
p. 808.) Where a practical understanding of state
and federal objectives demonstrates that both may
be fully achieved, comity precludes the preemption
of state law based only on semantic incon-
sistencies. (Citing cases. ) "
We apply the same rule as did California with respect
to the contention of James that his pension, now administered
by the Veteran's Administration, under its "spendthrift
clause" is secure from anticipation or consideration as a
marital asset.
In objecting to the amount of the lump sum award to the
wife, James also contends that the District Court showed its
preference that he work rather than be unemployed and that
C
it was improper for the District Court to consider James as
having any income beyond the military pension which he is
receiving.
The District Court, noting that James had been un-
employed for some four years, nevertheless found that as a
dentist or as a pilot, although the record showed no income
earnings for these occupations, it would assume that his
earnings from either of those occupations would be at least
$16,000 per year, the amount that Joanne was making as an
associate professor at Carroll College.
In effect, James objected to the District Court including
his capacity for earnings as distinguished from his actual
earnings in fixing the amount of the lump sum award.
It has been held that a trial court may consider the
earning capacity of a husband in fixing the amount of alimony
to be paid, even if the amount of alimony awarded is in
excess of the actual earnings of the husband. See, Knutson
v. Knutson (1961), 15 Wis.2d 115, 111 N.W.2d 905. Under our
statutory scheme, the District Court is not bound by the
actual earnings of the husband in apportioning the marital
assets. The District Court can and must consider the
capacity for greater earnings. Section 40-4-202, MCA,
requires the District Court to consider the opportunity of
the parties for future acquisition of capital assets and
income. "Opportunity" is a broad word when used in this
connection, and includes the capacity of the parties to earn
future income.
The District Court in fixing the amount of the lump sum
award for the wife used the criteria set out in section 40-
4-202, MCA. In Cromwell v. Cromwell (1977), 174 Mont. 356,
570 P.2d 1129, we quoted from other cases of established
standard of review:
". .. In determining whether the trial
court abused its discretion, the question
is not whether the reviewing court agrees
with the trial court, but, rather, did the
trial court in the exercise of its discretion
act arbitrarily without the employment of
conscientious judgment or exceed the bounds
of reason, in view of all the circumstances,
ignoring recognized principles resulting in
substantial injustice."
The District Court was especially thorough in its
findings and in its discussion and conclusions relating to
the lump sum judgment awarded in this case. In any event,
with respect to the principal contention of James, that the
District Court awarded a portion of his federal military
retirement pension, or utilized it as the "lodestone" in
making the lump sum award, it is nevertheless true that
nothing in the court's order affects directly the pension or
James' right to receive the pension. The present marital
assets, as found by the District Court, are more than
sufficient to pay the lump sum judgment. They are assets
that were acquired during the marriage. When the lump sum
judgment is satisfied, James' pension payments will go to
him untrammeled by any restriction or order of the District
Court.
The reasons given by the District Court for the lump
sum payment are cogent. Most of the property comprising the
marital assets is located in either California or Canada.
The District Court has no jurisdiction directly to affect
those parcels of property. James had shown a penchant
through the course of the litigation to ignore the orders of
the District Court. As the District Court alliteratively
concluded, "diversity, diversion, dispersion, difficulty of
division, and inaccessibility of the marital property" make
distribution by parcel not feasible.
We therefore find the amount of the lump sum award, and
method of payment thereof, as provided in the judgment a
proper exercise of the District Court's function in this
case.
- - - No. 2.
Issue The District Court erred - awarding
in
attorney - -of $15,081.69 - Joanne.
fees to
In its findings of fact (no. 25), the District Court
found that Joanne's attorney had spent 306.5 hours at the
rate of $42.21 per hour for a total of $12,936 and had
proven costs of $2,145.69. The District Court went on to
say that a very high percentage of work involved by Joanne's
attorney, perhaps 80 percent, could have been avoided through
cooperation by James.
James does not attack the hourly rate approved by the
court. He does contend that the 306.5 hours is grossly
excessive. James contends that section 40-4-110, MCA,
allows the court to award attorney fees "after consideration
of the financial resources of both parties:' The court may
make such an award. James contends that only the financial
resources of the parties may be considered by the court and
that no reference to lack of cooperation may be had by the
District Court in considering attorney fees. He also
contends that Mrs. Karr, earning $16,000 as an associate
professor, is capable of paying her own fees.
Joanne counters that the number of hours expended by
her attorney was "necessary" and that the attorney fee was
reasonable, considering the skill, complexity and effective-
ness of the services rendered. The record shows substantial
evidence introduced by both sides. Third party witnesses
testified, and substantial documentary evidence was introduced
by Joanne including elaborate time records and analyses
of the services performed by her attorney in conjunction
with the matter. The finding of the hours necessary is
substantiated by evidence in the record and we are bound by
the District Court's determination on that point. Rule
52 (a), M.R.Civ.P.
Issue - - 3.
No. - - personal jurisdiction - - District
The of the
Court over James Karr.
James contends that Montana does not have jurisdiction
over his person in this matter because at the time that he
was served with summons in the dissolution action, he had
been enticed to return to Montana by Joanne.
The court records show that the petition for dissolution
was filed in the District Court, May 19, 1977. James was
served with a summons and complaint on May 31, 1977. His
attorney filed a motion to dismiss on June 16, 1977, which
was overruled on June 23, 1977. James' answer was not filed
until March 26, 1979, after he had changed counsel and had
retained his present counsel.
-17-
James contends that after Joanne filed for dissolution
on May 19, 1977, and she had been granted on an ex parte
application the custody of Kurtis Karr, she telephoned James
stating that she could not control Kurtis and that she was
going to go to Billings for the Memorial Day holiday. James
came to Helena from Canada on May 28, 1977, and was served
May 31, 1977, while he was in Helena. Joanne did not tell
him during the telephone conversation that she had filed for
a dissolution. James contends that the purpose of the
telephone call was to get him to come to Helena, in order
that he might be served with the summons, and that she knew
he would come if he felt that Kurtis was left alone over the
holiday.
Joanne counters that the husband's testimony was that
he lived in Helena, Montana, from November 1976, and prepared
an income tax return showing Helena as his residence.
The District Court specifically found against James on
this contention, stating that he was a resident of the state
at the time by his own declaration, and that he had come to
this state again upon the accurate and truthful representation
of Joanne that she was unable to control their son, and he
was at the time taking care of his own and other family
affairs.
The facts found by the District Court support personal
jurisdiction over James. The fact of service of summons
upon a defendant within the State of Montana, properly
served, gives the District Court jurisdiction over the
person of the defendant. Haggerty v. Sherburne Mercantile
Co. (1947), 120 Mont. 386, 186 P.2d 884. Every court has
judicial power to hear and determine the question of its own
jurisdiction. In Re Boehme (D. Mont. 1941), 41 F.Supp. 426.
Here again, the facts giving rise to the personal juris-
diction of the District Court over James have been found by
the District Court, and its findings are supported by the
record in the case. Rule 52(a), M.R.Civ.P.
- - - 4.
Issue No. The court erred by including - excluding
----- or
certain assets of - marital estate.
- the
There are several items included in the marital estate
to which James makes objection.
Royal --of Conquest.
Bank Here James contends that the
court erred by including the sum of $4,000 as marital
property which had been withdrawn from the Royal Bank of
Conquest on March 11, 1977, two months before the action for
dissolution was filed in Montana. James contends that this
money was paid into the Canadian dental retirement plan and
that the total figure of $10,505 which the court found as
marital assets for the Canadian dental retirement includes
this $4,000. Therefore, James contends that there is a
$4,000 duplication in the marital assets. Joanne contends
that there is no evidence in the record as to this item, and
the District Court apparently agrees, because it found
"there is no substantial evidence as to what was done with
any of this money but I would view the $4,000 withdrawal as
a part of [James'] 'race to the bank.'" There is no merit
to James' contention.
Canadian Bonds. The District Court included $9,000 in
Canadian bonds as a marital asset. Joanne and James held
six $1,000 Canadian bonds in their joint names and three
$1,000 Canadian bonds were held in the name of Joanne and
one each forthe three children or a total of nine additional
bonds. The court found that the nine bonds owned jointly
with the children were purchased with no intent on the part
of the parties that a present gift to the children was being
made. Inasmuch as Joanne was named as a joint payee with
the children in each of the bonds, we see no merit in the
contention that the nine bonds were not properly a part of
the marital estate.
Canadian Dental Retirement Fund. The court valued this
item in the marital estate at $10,505. James complains that
there was no evidence as to what right James had to reduce
this fund to present cash value, what penalty would be
attached if it were withdrawn before he was eligible to use
the deferred tax monies, nor was there any evidence as to
the amount of taxes to be paid by James if he drew on the
fund; further there was no evidence of who the beneficiaries
of the fund would be after the death of James nor any
provision made for discount on the difference between
Canadian funds and American dollars.
The District Court found that there was "no evidence or
law ... submitted as to whether this fund was includable
in the marital estate. In the absence of such a showing and
in view of the fact that [Joanne] contributed to the fund
itself, the fund will be included in the marital estate."
The District Court has a right to rely on the record made
before it. There is no merit in this contention.
Treasury Branch - Stettler.
of With respect to this
matter, the District Court found :
"In January 1976, [James] withdrew $15,231
from the account and sent it to [Joanne] in
Helena. [Joanne] deposited the $15,231 in
American Federal Savings and Loan. A year
later, in January 1977, [James], then in and
about Helena, withdrew $3,000 of this deposit and
spent it on general family expenses. On the
day [James] was served with the petition and summons
in this case, May 31, 1977, he transferred the
remaining $12,000 to the Royal Bank of Canada
in Conquest, Saskachewan, whereupon his instructions
and without the consent and knowledge of Joanne,
it was placed in a certificate of deposit in the
names of the Karr children. This move was patently
made to avoid the inclusion of the $12,000
in the marital estate. It will be included."
On the basis of the facts cited, we must agree with the
District Court.
Appraisal - California and Canadian Properties.
of The
District Court valued the San Rafael, California, real
property at $185,000 and the Stettler, Alberta, property at
$26,000. Both findings were based upon appraisals presented
in court. James disputes the validity of the appraisals on
various grounds, but inasmuch as the court made a finding
based on substantial credible evidence in the record, the
findings must be accepted by us.
Other Contentions. James also disputes the failure of
the District Court to include the value of personal property
owned by the parties in Helena, Montana. The parties,
however, had entered into a personal property division
agreement and no evidence was adduced at trial with respect
to this item. Attorney fees had been incurred by the
parties in Canada over real property in Canada in the amount
of $10,961.50, of which $6,053.75 remained due. James
contends that this matter should have been included by the
court in considering the net estate. The ~istrictCourt
concluded that attorney fees involved were not a marital
debt for which the wife should be obligated. The conclusion
of the District Court that no marital debt here was involved
should not be disturbed.
The final contention of the husband is that in the
award of the lump sum judgment, the court did not give James
an opportunity to sell the real property outside of Montana
in a manner that would allow him to split the proceeds with
his wife, and that because of the lump sum judgment entered
by the court, he may be faced with a deficiency judgment if
the real property, when sold does not realize the amounts
indicated.
A District Court, sitting in a marriage dissolution
case, has the same broad powers as a court of equity in
fashioning decrees that will be responsive to the fact
situations before it, effective to accomplish the objectives
that the District Court, through its judgment, determines
must ensue and to do complete justice. See, Link v. State
by & through Dept. of Fish & ,
Game (1979), - Mont. - 591
P.2d 214, 36 St-Rep. 355. Here, the District Court found as
a fact that James was not,
"the ordinary reluctant litigant. He is an
embittered and resolute opponent of 'the system',
bent on defying and defeating it whenever and
wherever possible and taking unscrupulous
advantage of it when he can. It would therefore
be futile, even specious for this court to order
him to do anything. There can be no scheduled
payments, for [Joanne] would have to obtain
judgment for each one. There can be no division
of property that would rely on his participation
and cooperation because he would not give either.
In view of this, the only realistic judgment this
court can render is one for a lump sum judgment,
knowing full that even that will be avoided and
evaded to the extent possible."
Those are strong words, but they are not the enunciation
of a district judge short of patience or troubled by a sour
stomach. The record fully supports the District Court. It
is time for James to be brought to book, and for him to
realize that he is not above the law, and that a District
Court has the power to compel even the most reluctant or
recalcitrant to obey its mandates.
Joanne's Cross-Appeal. Should the District Court have
included the present value of - federal military pension
- the
- - marital asset?
as a
What we have said foregoing disposes of the cross-
appeal. The District Court, in its discretion, did not
include the present value of James' pension. Yet, the
judgment of the Court, and the method of handling the
distribution of the assets is eminently fair to Joanne. In
this case, the District Court decided, in its discretion,
not to include this item as a marital asset. We will
leave the District Court's decision on this point undis-
turbed.
The judgment of the District Court is affirmed as
to the appeal and the cross-appeal. Costs to Joanne.
i i Justice 6
We Concur:
Chief Justice
This cause was submitted prior to January 5, 1981.