No. 85-103
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
IN RE THE PiARRIAGE OF
SHELTON CROSS WILLIW.S ,
Petitioner and Respondent,
and
DONNA LEA WILLIAMS,
Respondent and Appellant.
APPEAL FROM: District Court of the Fourth Judicial District,
In and for the County of Missoula,
The Honorable Douglas Harkin, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Gough, Shanahan, Johnson & Waterman; Ronald Waterman,
Helena, Montana
For Respondent:
Koch, McKenna, Goheen & Boggs; Gail H. Goheen,
Hamilton, Montana
Submitted on Briefs: July 25, 1985
Decided: February 20, 1986
Filed: "EB 2 8 15;.
Mr. Justice Fred J. Weber delivered the Opinion of the Court.
Donna Lea Williams (wife) and Shelton Cross Williams
(husband) independently appeal an order of the Missoula
County District Court which resolved reserved questions
ancillary to the prior dissolution decree regarding mainte-
nance, child support, valuation and division of marital
assets. We affirm.
The issues on appeal are:
1. Was it error to award maintenance payments to the
wife because of her career foregone during marriage, and to
set the value at $ 1 6 2 , 5 9 7 ?
2. Did the District Court err in requiring that the
maintenance payments be taxable as income to the wife and
deductible to the husband, and in allowing the maintenance
payments to be made without interest?
3. Did the District Court err by awarding all the
income tax deductions for the minor children to the husband?
A. Did the District Court err when it included. the
Williams apartment property in the marital estate?
5. Did the District Court err in its valuation of the
Ashberry apartment property, the Williams apartment property,
and the personal property?
6. Did the District Court err in allowing the husband
to manage specific monetary accounts of the children and to
offset the children's education costs against maintenance or
support?
7. Did the District Court err when it made the child
support obligation subject to review in four years?
8. Did the District Court properly amend its judgment
nunc tunc to require that the wife allow the husband to
prepare and pay her income tax return for the tax year 1983
or be ordered to report a portion of the payments husband had
made to her as maintenance?
The parties were married in December 1963. Eighteen
years later they were divorced. Six children were born
during the marriage. Presently, five are minors requiring
support.
The wife received a Bachelor's degree in Art from
Montana State University in June 1963, and currently holds a
provisional teaching certificate in Art and English. She did
not pursue a career in art or teaching after marriage, but
remained a.t home to care for the children. The husband is an
attorney licensed to practice law in Montana with an estab-
lished law practice in Missoula. The law practice is a
professional corporation, solely owned by the husband. There
are two full-time and one part-time associates working for
the firm.
At the time of dissolution, the net worth of the marital
estate was approximately $600,000. The court divided the
marital estate as follows:
Husband Wife
2110 Greenough (Family home) $ 98,345.82
2.43 acre lot
1515 Ashberry Apts $ 9,505.31
1519 & 1521 Ashberry Apts 25,935.58
21.6 West Main 17,956.55
Williams' Apartments 89,839.54
University Apartments (after taxes 16,900.00
and payment of attorney fees)
Fox Farm road lots 4,666.00
130 West Broadway 16,900.00
Sennes' Contract 16,925.83
Keogh/IRA 5,167.00
Williams Law Firm Pension 17,900.00
Williams Law Firm, P.C. 150,000.00
Personal Property 25,132.83 25,745.00
Tax Refund 1,800.00
TOTAL $396,294.64 $202,890.82
The court found that the wife required maintenance for a
reasonable period to allow her to complete her education and
become employed. The wife was awarded $800 per month as
maintenance and $1,353 per year for school fees and books
beginning July 1984, and continuing until June 1988. The
court also awarded the wife $162,597 additional maintenance,
$16,259.70 a year for ten years commencing July 1988, with no
interest to be paid on that amount. The court ordered that
the husband could deduct the payments as maintenance for
income tax purposes.
Husband and wife were awarded joint custody of the five
minor children. The wife will have physical custody of the
children seven months out of the year, and the husband will
have custody five months. The husband was ordered to make
support payments to the wife of $250 per child while the
children are residing with the wife and $100 per child while
they are residing with him. All of the income tax deductions
for the minor children were awarded to the husband.
The wife's, husband's and children's attorneys' fees
were ordered paid from the proceeds of the sale of the Uni-
versity apartments.
Was it error to award maintenance payments to the wife
because of her career foregone during marriage, and to set
the value at $162,597?
The District Court found that the wife sustained career
value losses of $162,597, which included $76,313 in lost
retirement benefits and $86,284 in salary differential.
Finding of fact 36 stated:
36. Donna introduced an economic consul-
tant, Dr. Dennis O'Donald, to testify
regarding Donna's income producing abili-
ty Dr. OfDonald evaluated Donna's
educational background, her job skills
... As set forth below, the Court has
found that Donna should be entitled to
$16,259.70 per year for ten years as
maintenance in addition to the $800.00
maintenance payment for the next four
years. In consideration of this addi-
tional award of maintenance, the Court
finds that the distribution of property
hereinafter set forth is fair and equita-
ble in light of all of the considerations
set forth in section 40-4-202 MCA, and
the Court rejects Donna's claims that she
is entitled to any additional property
distribution as a result of her claimed
external contribution to the marriage.
The District Court concluded:
Beginning four years following the date
of this decree, Mike shall pay $16,259.70
a year for ten years to Donna for her
claim against the estate. This sum will
be paid on each anniversary of the date
of this decree for ten years. No inter-
est shall be paid on this amount; it
shall be considered maintenance for tax
purposes.
The husband contends that the District Court should not have
considered the career evaluation losses of $162,597 for
maintenance purposes or for any other purpose. We do not
agree with that contention.
Section 40-4-203, MCA, sets forth the elements which a
district court is required to consider in making a mainte-
nance award. As pertinent here, S 40-4-203, MCA, states:
(1) In a proceeding for dissolution of
marriage ... the court may grant a
maintenance order for either spouse only
if it finds that the spouse seeking
maintenance:
(a) Lacks sufficient property to provide
for his reasonable needs; and
(b) Is unable to support himself through
appropriate employment ...
(2) The maintenance order shall be in
such amounts and for such periods of time
as the court deems just ... after
considering all relevant facts including:
(a) The financial resources of the party
seeking maintenance, including marital
property apportioned to him, and his
ability to meet his needs independently.
(c) The standard of living established
during the marriage;
(dl The duration of the marriage;
(f) The ability of the spouse from whom
maintenance is sought to meet his needs
while meeting those of the spouse seeking
maintenance.
The District Court concluded that as a result of the
wife's lost employment for a number of years during marriage,
she suffered lost retirement benefits of $76,313. In other
words, had the wife continued her employment during marriage,
the $76,313 was the present value of the retirement benefits
which would have accrued to her. Under 5 40-4-203, MCA, it
is appropriate to consider retirement benefits in determining
whether a spouse has sufficient property to provide for her
reasonable needs, and whether she is able to support herself
through appropriate employment. The terms sufficient proper-
ty for reasonable needs and inability to support through
appropriate employment have been discussed and interpreted as
follows:
The appropriate construction of the
language of section ... (1) (a) and (b)
... is whether the spouse seeking
maintenance lacks sufficient property and
is unable to support herself through
appropriate employment according to the
standard of living established during the
marriage. ... We recognize there are
public policy considerations behind
rehabilitative spousal maintenance awards
which, under appropriate circumstances,
may give incentive to the spouse receiv-
ing maintenance to procure job skills so
as to become self-sufficient. However,
this public policy must be balanced with
some :
"realistic appraisal of the probabilities
that the receiving spouse will in fact
subsequently be able to support herself
in some reasonable approximation of the
standard of living established during the
marriage, especially when a marriage of
long-term duration is involved and the
employment history shows a long-term
absence of the spouse from the labor
market with lack of a presently existinq
employment skill." ~ i ~ d s a 6~ ,P.2d at
5 5
205.
In re Marriage of Dale A. Madson (1979), 180 Mont. 220,
224-25, 590 P.2d 110, 112-13. - - Levandowski v.
See also,
Levandowski (Mont. 1981), 630 P.2d 239, 38 St.Rep. 1002. We
conclude that the District Court properly considered the loss
of retirement benefits in computing a maintenance award for
the wife .
In a similar manner, the District Court found a salary
differential loss of $86,284 when it contrasted the salary
the wife would have earned had she continued her outsj.de
employment during marriage with what she will be able to earn
after the dissolution. Again, under the terms of the
statute, the consideration of such loss of earnings is sig-
nificant in determining whether the wife is able to support
herself through appropriate employment, and in considering
her ability to meet her needs independently, together with
the standard of living, duration of marriage, and ability of
the husband to meet his needs while meeting the maintenance
needs. We conclude that the District Court properly consid-
ered the salary differential in making a maintenance award to
the wife.
The parties also discuss whether or not it would be
appropriate to consider the sustained career value losses in
making a distribution of property. While it is not necessary
that we rule on this question, we do point out that
5 40-4-202, MCA, sets forth in great detail the elements to
be considered by the District Court in making an equitable
apportionment of a marital estate. Included in those ele-
ments are the requirement that the court consider the oppor-
tunity of each of the parties for future acquisition of
capital assets and income. It seems clear that lost retire-
ment benefits and loss of earnings as a result of salary
differential properly could be considered as the court looks
at the ability of the wife to make an acquisition of both
capital assets and income in the future.
The District Court here had a choice of distributing
marital property to the wife or making an award of mainte-
nance based upon the career value losses. The evidence
submitted would have supported. a property distribution from
the marital estate had that been done. Instead, the District
Court chose to award maintenance of $16,259.70 per year for
ten years, beginning four years after the date of the decree.
We have extensively reviewed the findings of fact,
conclusions and decree of the District Court. The District
Court made over 40 separate written findings of fact covering
distribution of the marital estate, support of the children
and maintenance for the wife. These findings and the record
demonstrate careful consideration on the part of the District
Court of the complex facts presented by the strongly contest-
ing parties.
The findings of fact also show that the District Court
carefully considered the needs of the wife in the next few
years when education is reasonably required, and also her
needs after that period up to and following retirement. In
substance, the court concluded that the wife lacked suffi-
cient property to provide for her reasonable needs during
that period of time. The court considered the monetary
effect of the foregone earnings, and after balancing all of
the factors involved in a maintenance award under § 40-4-203,
MCA, and considering the factors involved in the distribution
of the marital estate under S 40-4-202, MCA, concluded that
an award of maintenance was the appropriate manner of satis-
fying the reasonable needs of the wife. We approve the
analysis of the District Court, and affirm the maintenance
award to the wife in the total amount of $162,597.
The husband also contends that the District Court erred
in valuing the lost retirement benefits and earnings in the
amount of $162,597. The District Court heard conflicting
testimony from two experts on the issue of the value of
foregone earnings. "The trier of fact is free to disregard
the expert testimony of one party and adopt the testimony of
the other party as long as the other party's evidence is
credible and substantial." Rose v. Rose (Mont. 1982), 651
P.2d 1018, 1020, 39 St.Rep. 1971, 1974. The District Court
accepted the valuation submitted by the professor of econom-
ics, who testified as an expert for the wife. His
qualifications and method of valuation were clearly estab-
lished and set forth. We conclude that the record contains
substantial credible evidence to support the value selected
by the District Court.
I1
Did the District Court err in requiring that the mainte-
nance payments be taxable as income to the wife and deduct-
ible to the husband, and in allowing the maintenance payments
to be made without interest?
The award of tax deductions is one factor among many
which the court considers in determining an equitable divi-
sion of the marital estate. "Where a property distribution
ordered by a court includes a taxable event precipitating a
concrete and immediate tax liability, such tax liability
should be considered by the court before entering its final
judgment." In re Marriage of Beck (Mont. 1981), 631 P.2d
282, 285, 38 St.Rep. 1054, 1058.
In substance, the District Court provided that the
maintenance award was a tax deduction to the husband and
taxable income to the wife. Here, the wife received a prop-
erty distribution of $202,890.82 plus $9,600 per year mainte-
nance for four years, $1,353 per year for four years for
school fees and books, $11,150 per year in child support
which decreases a-s the minor children become adults, and a
yearly lump sum payment of $16,259.70 as additional mainte-
nance beginning in four years.
We conclude that the District Court fairly balanced all
of the factors to be taken into consideration, including as a
key part of that balancing, the allocation of income tax
consequences. We conclude that the District Court did not
abuse its discretion in requiring maintenance payments to be
taxable as income to the wife and deductible to the husband.
In addition, the wife contends that she should have been
awarded interest on the total of $162,597. That contention
could be made if that amount was a property distribution.
However, maintenance accrues only as it becomes due. If the
wife should die, the need for maintenance would terminate.
Here the court chose to award maintenance over a period of
ten years. We affirm the holding of the District Court that
a award of future maintenance does not warrant an interest
charge.
Did the District Court err by awarding all the income
tax deductions for the minor children to the husband?
This issue has been substantially answered by our pre-
ceding analysis. In awarding the husband the tax deductions,
the District Court stated:
Because of his higher income, the deduc-
tions would result in a greater tax
savings to Mike, and it would provide him
with a greater potential to provide funds
for the future use of the children, which
is to their benefits. In addition, the
level of support to be paid by Mike for
the children's use compels that he should
be allowed to claim the children as a tax
deduction.
We affirm the award of income tax deductions to the
husband.
Did the District Court err when it included the Williams
apartment property in the marital estate?
The husband testified that he and his parents bought the
Williams apartment property together, but his parents paid
the total down payment. He later paid them back for one-half
of the down payment out of the profits made on the property.
The husband contends that his interest in the property was a
gift and therefore should not be included. a.s a part of the
marita.1 estate. There is substantia.1 evidence to support a
conclusion that a gift was not made. The husband contends
more specific findings were required on the issue of gift.
We conclude that the District Court need make specific find-
ings only if it finds the contested property is a traceable
gift. See In re Marriage of Herron !1980), 186 Mont. 396,
F e affirm the inclusion by the District Court of the
J
Williams apartment property in the marital estate.
Did the District Court err in its valuation of the
Ashberry apartment property, the Williams apartment property
and the personal property?
Husband argues that the court erred in not accepting his
expert's appraisal value.
The trial judge is free to select and
reject appraisal va.lues as he wishes, so
long as there is substantial credible
evidence in support of the values he
selects. However, where the values
presented at trial are widely conflict-
ing, the trial judge must state the
reasons for his selection. Where, as
here, the trial judge states his reasons
for selecting one appraisal over the
others, there is no abuse of discretion.
In re Marriage of Glass (Mont. 1985), 697 P.2d 96, 100-01, 42
St.Rep. 328, 332 (citations omitted). Regarding the Williams
and Ashberry apartment properties, the court stated that it
accepted the appraisal offered by the wife's expert because
it was more comprehensive, reflecting three different ap-
proaches to valuation. F e conclude the court did not abuse
7
its discretion in selecting the wife's appraisal.
Husband contends that the property distribution should
be readjusted in his favor because some household furnishings
were counted twice when the District Court divided the mari-
tal estate. It does appear that some furnishings may have
been counted twice. However, this Court will not attempt to
review every element of a complex property distribution in
the same manner as might be done if an accountant were audit-
ing. Our function is to examine whether there is substantial
evidence to support the property distribution. Viewing the
overall apportionment in light of the District Court's com-
prehensive and extensive findings of fact, and considering
the complexities involved, we conclude that the property
distribution, including that of household furnishings, is
affirmed.
Did the District Court err in allowing husband to manage
specific monetary accounts of the children and to offset the
children's education costs against maintenance or support?
Wife contends that husband has mismanaged certain mone-
tary accounts of the children and that an independent trustee
should be appointed. The court stated in Finding of Fact No.
In order to address the concern that the
appropriate accounts belonging to the
children be kept separate from other
accounts owned by the parties, the Court
finds that Mike should provide Donna. with
an annual report on the condition of the
funds held for the benefit of the chil-
dren ...
We find no abuse of discretion. The wife's concerns have
been appropriately addressed and adequately provided for.
Wife argues that the court's amended order creates havoc
in her future budget by allowing husband to offset the chil-
dren's education against support or maintena.nce and by order-
ing her to share the uninsured medical costs of the children.
Finding of Fact No. 21 states:
It is reasonable to require both parties
to contribute equally to the cost of
maintaining the children in their private
grade schools. The Court Orders that
this should be accomplished by Mike
paying all of the tuition and book pay-
ment costs for the children as the same
become due, and in turn, thereafter
deducting 50 percent of those costs from
future support and maintenance obliga-
tions owing to Donna.
We find no abuse of discretion. The wife is capable of
cal.cu1ating when the offset should take place and will have
twelve months each year to prepare her budget for the offset.
Husband was ordered to provide medical and dental cover-
age for the children. and to select an appropriate plan.
However, the court also ordered each parent to bear 50 per-
cent of the uninsured medical and dental costs. The wife
argues that the husband should pay all the uninsured costs.
We find no abuse of discretion. We note that husband should
use reasonable care to select a plan that is adequa.te and
keeps uninsured costs to a minimum.
VII
Did the District Court err when it made the child sup-
port obligation subject to review in four years?
Wife contends that S 40-4-208, MCA, permits modification
of a child support decree only upon a showing of changed
circumstances so substantial and continuing as to make the
terms unconscionable. Wife argues that husband intends the
support obligation to be reviewed under a different standard.
That contention is not an issue presently before us. The
standard of review to be applied by the District Court in
four years will be the standard then in effect under the
appropriate statutes and cases. We will not presume the
District Court will disregard the law. We conclude the court
did not abuse its discretion in making the child support
obligation subject to review in four years.
VIII
Did the District Court properly amend its iudgment nunc
pro tunc to require that the wife allow the husband to pre-
pare and pay her income tax return for the tax year 1983 or
be ordered to report a portion of the payments husband had
made to her as maintenance?
Finding of Fact No. 43 gave the wife a choice with
regard to filing an income tax return for the year 1983:
The .. . [husband] has paid to the .. .
[wife] the sum of $22,534.00 during the
1983 tax year. ... [Husband] has re-
quested the ... [wife] to allow him to
prepare the returns for both parties
. .
. with the understa-nding that if
. ..[husband] were allowed to do so, he
would pay all taxes due and owing ...
The Court Orders that ... effective
January 1, 1983, that $200.00 per month
of the payments made by ... [husband]
to ... [wife] in 1983 for each of the
parties' five minor children be treated
as child support (for a total of $12,000)
and the balance of $10,534 shall be
treated as maintenance ... with ...
[husband] entitled to deduct the same
Erom his taxes, and .. . [wife] Ordered
to declare those amounts as income; or,
in the alternative, at ... [wife's]
option, that the arrangement proposed by
.
. . [husband] for preparation of both
parties' returns in 1983 as set forth
above shall be implemented providing that
if .. . [wife] chooses this option, she
peys all penalties and interest if - she
has not requested extensions in the
filing of her return, ... In the event
... [wife] fails to provide the neces-
sary tax information and execute the
documents within the time limitations set
forth, ... [husband] may proceed by
filing a separate return declaring alimo-
ny as described in the first alternative
set forth above.
The wife argues that the retroa.ctive order will be
considered invalid by the Internal Revenue Service. She
bases this argument on various United States District Courts
cases. No Montana federal district court cases or Ninth
Circuit Court of Appeals cases are cited as authority to us.
State district court's, of course, do not have jurisdiction
to determine deductibility under the Internal Revenue Service
Code. That is reserved to the federal courts.
We conclude that the choice offered the wife was equita-
ble in view of the overall distribution and award. We hold
that the court did not abuse its discretion in awarding the
husband maintenance nunc pro tunc.
We affirm the District Court
We concur:
A