NO. 91-255
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
IN RE THE MARRIAGE OF
BENNIE LEE DANELSON,
Petitioner and Appellant,
and
CLO ANN DANELSON,
Respond nt
APPEAL FROM: District Court of the Fifteenth Judicial District,
In and for the County of Daniels,
The Honorable M. James Sorte, Judge presiding.
COUNSEL F RE 3RD:
For Appellant:
Richard A. Simonton, Simonton, Howe & Schneider,
Glendive, Montana
For Respondent:
Jerrold L. Nye, Nye & Meyer, Billings, Montana
Submitted on Briefs: December 12, 1991
Decided: J u l y 9, 1992
Filed:
Clerk
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Appellant Bennie Lee Danelson brought a petition for
dissolution of marriage on September 2 4 , 1987. On November 18,
1988, following a bench trial, the District Court of the Fifteenth
Judicial District, Daniels County, entered a decree of dissolution.
Respondent Clo Ann Danelson then filed a motion for a new trial
which was granted on January 11, 1989, over appellant's objection.
Following the new trial, the District Court entered a second decree
on March 13, 1991. The second decree was more favorable to
respondent than the first. Appellant brought this appeal attacking
both the order granting the new trial and the decree resulting from
the new trial. We affirm in part and reverse in part.
We phrase the issues before the Court as follows:
1. Did the District Court err in granting respondent a new
trial?
2. Did the District Court err in its distribution of the
marital estate following the second trial?
The parties were married on March 25, 1967. Two children were
born to the parties. Neither child custody nor support issues were
involved in the second trial and are not at issue on appeal. The
issues in the second trial concerned the distribution of the
parties' property. Over the 21-year marriage, the parties
accumulated a considerable amount of land, farm equipment, and
livestock, which were held in two Montana corporations. The
marital estate consisted primarily of stock in these two
corporations. Each party owned a 50 percent interest in Bennie Lee
Danelson, Inc. Additionally, each party owned a 25 percent
interest in Lazy D Diamond, Inc., with two other individuals owning
the other 50 percent interest.
At the conclusion of the first trial, which was held in
October 1988 without a jury, the District Court determined the net
worth of Bennie Lee Danelson, Inc., to be $81,135. This was
discounted by 40 percent, making the final value $48,681. The
District Court found the net worth of Lazy D Diamond, Inc., to be
negative $550,560.93. (The court noted that while all four owners
of Lazy D Diamond, Inc., personally guaranteed the loans, the other
two owners had completed a Chapter 12 bankruptcy and no longer had
any liability on their individual guarantees for the corporate
loans.) Combining these two figures the court found the marital
estate of the parties was a negative $501,879.
Finding no net marital estate to be divided, the court
determined that it was not in the best interests of the parties to
allow the ownership of the corporations to continue as it was. The
court ordered respondent to transfer all of her shares of stock in
the corporations to appellant. Appellant was to assume all
liabilities of both corporations and was to hold respondent
harmless and indemnify her from the liabilities and creditors of
both corporations. Appellant was ordered to pay maintenance in the
amount of $350 per month for 68 months, and to pay $10,000 to
respondent for her to purchase dependable transportation.
Respondent, after a lengthy marriage, did not receive any other
property from the marital estate.
J
Respondent filed a motion for a new trial or in the
alternative an amended judgment. Over appellant's objection, the
District Court granted a new trial in January 1989. In light of
the order for a second trial, respondent did not turn over her
shares in the corporations as ordered in the first trial. In
January 1991, a second nonjury trial was held regarding the issues
of maintenance and property distribution. At the conclusion of the
second trial, the judge issued findings of fact and conclusions of
law which varied from the results reached in the first trial.
Following the second trial, the District Court determined that
the net worth of Bennie Lee Danelson, Inc., was $132,615. The
court further determined that the net marital estate in Bennie Lee
Danelson, Inc., should be divided equally between the parties. To
this end, the court ordered that appellant pay respondent $10,000
within 30 days of the decree. Additionally, appellant was to pay
the remainder over a seven-year period at ten percent interest in
equal annual payments of $11,197.80. Respondent was to hold her
shares in the stock of Bennie Lee Danelson, Inc., as security for
the payment of her share of the corporate net worth. A s long as
the payments were current, the shares held by respondent would be
nonvoting shares and she would not participate in corporate
affairs. Once the final payment was made, respondent was to turn
over to appellant all of her shares in Bennie Lee Danelson, Inc.
In the first trial, the District Court ordered respondent to
turn over her shares of Lazy D Diamond, Inc., to appellant. In
return, appellant was to assume all the liabilities of the
4
corporation and hold respondent harmless for these debts. Because
the District Court granted a new trial, this order was not carried
out, and at the time of the second trial respondent still held her
shares in the corporation. In the second trial, the District Court
determined that appellant did not have the means to hold respondent
harmless in the event she turned her shares in the corporation over
to appellant. Therefore, the District Court determined that
respondent would keep her shares. Respondent would have the right
to her share of the corporate earnings and would be liable for the
corporate liabilities. Maintenance was to remain as initially
determined in the first trial. Appellant brought this appeal
attacking both the order granting the new trial and the findings
and conclusions of the District Court following the second trial.
I
Did the District Court abuse its discretion in granting
respondent a new trial?
The decision to grant a new trial is within the sound
discretion of the district court and will not be disturbed by this
Court absent a manifest abuse of discretion. Larson v. X-Mart
Corp. (1990), 241 Mont. 428, 430-31, 787 P.2d 361, 362. Appellant
presents three arguments in support of his contention that it was
an abuse of discretion for the District Court to grant respondent
a new trial. First, appellant argues that respondent was
incorrectly allowed to argue matters additional to those initially
raised in the motion for a new trial. Second, appellant alleges
the District Court erred in not ruling on his motion to reconsider
5
the order granting the new trial. Finally, in granting the new
trial, appellant contends that the District Court did not state
with particularity in the order the reasons for granting the new
trial.
All the grounds argued by appellant in support of his
contention that the District Court abused its discretion in
granting a new trial must fail. Appellant failed to object or
bring an appeal in a timely fashion.
Appellant initially contends that respondent's second counsel
was allowed to present arguments by way of an affidavit and a brief
in support of the original motion for a new trial which went beyond
the grounds relied on in the original motion. However, appellant
had the opportunity to object to these arguments but failed to do
so. Appellant filed both a reply brief and a supplemental reply
brief in opposition to respondent's motion for a new trial. After
reviewing these briefs it is clear that appellant did not raise
this objection. The objection is now raised for the first time on
appeal and will not be considered by this Court. In re Marriage of
Glass (1985), 215 Mont. 248, 697 P.2d 96.
Second, appellant alleges the District Court erred in not
ruling on his motion to reconsider the order granting the new
trial. The District Court entered the order granting the new trial
on January 11, 1989. Appellant's motion to reconsider was filed on
February 15, 1990, more than a year after the District Court's
order granting a new trial. Appellant's motion to reconsider was
not timely filed pursuant to the Montana Rules of Civil Procedure.
6
In any event Rule 60(c), M.R.Civ.P., provides that such a motion is
deemed denied if the trial court fails to rule on the motion within
45 days from the time it is filed.
Finally, in granting the new trial, appellant contends the
District Court did not state with particularity in the order the
reasons for granting the new trial. Rule 59(f), M.R.Civ.P.,
provides that in granting a new trial the District Court:
[Slhall specify the grounds therefor with sufficient
particularity as to apprise the parties and the appellate
court of the rationale underlying the ruling, and this
may be done in the body of the order, or in an attached
opinion.
The order granting the new trial in this case clearly did not
comply with the requirement of Rule 59(f), M.R.Civ.P.
However, despite the fact that Rule 1, M.R.App.P., makes an
order granting a new trial immediately appealable to this Court,
appellant failed to appeal the District Court's order. Instead,
appellant waited until after the second trial, which took place two
years after the order granting the new trial, to object to the
content of the District Court's order. It is not entirely clear
what appellant is requesting that this Court do at this stage, but
it appears that appellant is requesting that the matter be remanded
to the District Court for a ruling on appellant's motion to
reconsider. As previously mentioned, the motion is deemed denied
by the trial court's failure to rule on the motion within 45 days.
In any event, the question of the propriety of the trial court's
order is one which should have been considered earlier and is now
rendered moot by the fact that a second trial has already occurred.
7
The proper procedure would have been to appeal the initial order
granting the new trial. This Court could then have remanded to the
District Court, directing that an order be entered stating the
reasons for granting the new trial. Appellant, if he still
objected to the order granting the new trial, could then have
appealed the order of the District Court and this Court could have
considered the question of whether the District Court abused its
discretion in granting the new trial. See Shannon v. Hulett (1983),
205 Mont. 345, 668 P.2d 228; Campbell v. Johnson (1990), 246 Mont.
122, 802 P.2d 1262. Appellant‘s attempt to now raise this matter
f o r the first time is barred by the doctrine of laches.
I1
Did the District Court err in its distribution of the marital
estate following the second trial?
Appellant attacks the findings, conclusions, and decree
entered by the District Court following the second trial which
relate to the distribution of the marital estate. In the past,
this Court has employed an abuse of discretion standard in
reviewing a lower court’s determination of the appropriate division
of the marital estate. This Court has recently clarified that our
standard of review in regard to the factual findings of the
district court relating to the division of marital property is
whether the district court’s findings are clearly erroneous. In re
Marriage of Sacry (Mont. 1992), 49 St. Rep. 452. Concerning this
Court’s review of conclusions of law made by a lower court we have
stated that “[wle are not bound by the lower court’s conclusions
8
and remain free to reach our own." Schaub v. Vita Rich Dairy
(1989), 236 Mont. 389, 391, 770 P.2d 522, 523. The basis for
simply determining if the lower court's conclusions are correct is
that there is no discretion in determining a question of law. The
lower court either correctly or incorrectly applies the law.
Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 803
P.2d 601.
In adopting these standards of review in division of marital
property cases, this Court is not in any way discounting the
considerable discretionary power that must be exercised by district
courts in these cases. The courts are obligated to fashion a
distribution which is equitable to each party under the
circumstances. In re Marriage of Jones (1987), 229 Mont. 128, 745
P.2d 350; 5 40-4-202, MCA. The courts, working in equity, must
seek a fair distribution of the marital property using reasonable
judgment and relying on common sense. Obtaining this equitable
distribution will at times require the lower court to engage in
discretionary action which cannot be accurately categorized as
either a finding of fact or a conclusion of law. These
discretionary judgments made by the trial court are presumed to be
correct and will not be disturbed by this Court absent an abuse of
discretion by the lower court. Meridian Minerals v. Nicor
Minerals, Inc. (1987), 228 Mont. 274, 742 P.2d 456.
In distributing the marital estate following the second trial,
the District Court relied primarily on the values of both assets
and liabilities as determined at the time of the first trial in
9
1988 when the part:tes' dissolution of marriage was granted. This
procedure was in compliance with the general rule that the proper
time for valuing the marital estate is at or near the time of
dissolution, unless unique circumstances of the marital
relationship exist. In re Marriage of Swanson (1986), 220 Mont.
490, 716 P.2d 219. Appellant alleges it was error for the District
Court to reach such varied results in the second trial when the
values from the first trial were used.
Following the first trial, the District Court determined that
the value of Bennie Lee Danelson, Inc., was $81,135, which was
discounted by 40 percent, making the final value $48,681. At the
conclusion of the second trial, the value was determined to be
$132,615. This variance results from the trial court's inclusion
of certain items in determining the net value of Bennie Lee
Danelson, Inc., at the second trial. The court included in the
marital estate certain premarital property and anticipated expenses
which had been excluded at the first trial. Additionally, the
court did not discount the value of the marital estate in the
second trial.
At the second trial, the District Court properly included the
value of certain premarital property of appellant which was
previously excluded. The District Court found that the property
did not exist in 19;38 and that there had been no attempt during the
marriage to segregate either the property or the funds from the
sale of the property from the marital estate. The property was
commingled with a t became a part of the marital estate and was
ni
10
properly included as such at the second trial. In re Marriage of
Metcalf (1979), 183 Mont. 266, 598 P.2d 1140. The inclusion of the
premarital property of appellant was not clearly erroneous.
In the first trial, the District Court excluded from the value
of Bennie Lee Danelson, Inc., certain anticipated expenses and
short-term debt of appellant. At the second trial, the District
Court included the anticipated expenses on the basis that it found
the anticipated expenses had been included in the amount previously
excluded for short-term debt and had in effect been excluded twice.
This finding of the District Court is not clearly erroneous.
After obtaining the net value of Bennie Lee Danelson, Inc., in
the first trial the District Court discounted that figure by
40 percent. The District Court refused to discount the net value
as determined in the second trial. The District Court found that
appellant has had and will continue to have full control over the
corporate affairs and that appellant had no intention of selling or
otherwise disposing of the corporation. Under these circumstances,
the court was not clearly erroneous in not discounting the net
value of the corporation as it had in the first trial. In re
Marriage of Johnson (1986), 223 Mont. 383, 726 P.2d 332.
The method used by the District Court in the second trial to
determine the value of Bennie Lee Danelson, Inc., resulted in a
finding that the net value was $132,615. The District Court
determined that appellant would keep the property and pay
respondent one-half of the net value. Upon payment of the final
installment, respondent was to turn over her shares in Bennie Lee
11
Danelson, Inc., to appellant. The District Court's decision to
equally divide the value of Bennie Lee Danelson, Inc., between the
parties resulted in an equitable division of the property.
Appellant was allowed to keep intact the property and continue his
ranching business, while respondent received her share of the
monetary value of the asset. This decision by the District Court
was not an abuse of discretion.
In the first trial, the District Court ordered respondent to
turn over her shares of the Lazy D Diamond to appellant. This
order was not carried out in light of the District Court's decision
to allow a new trial. In the second trial, the District Court
determined that appellant did not have the means to hold respondent
harmless from their creditors in the event she turned over all her
shares in the corporation. The court then determined that
respondent would keep her shares, along with the right to corporate
earnings and the liability for the corporate debt.
The evidence at trial suggested that since the separation
respondent had not participated in the management of the
corporation or assisted in paying the corporate liabilities. The
testimony at trial further indicated that respondent had possibly
even attempted at times to frustrate the operation of the Lazy D
Diamond. In light of the acrimonious relationship between the
parties, a different method of obtaining an equitable apportionment
of the Lazy D Diamond might have been employed by the District
Court. However, the District Court was acting well within its
12
discretion and this Court will not disturb what appears to be an
equitable apportionment of the marital asset in question.
Finally, appellant was awarded 25 percent of the 1990
Conservation Reserve Program (CRP) payment, even though she had not
participated in the management of the corporation for several
years, and the CRP payments were traditionally earmarked to pay
certain corporate debts. In this instance, the payment to
appellant of a portion of the CRP payment, which was obtained
several years after the separation due to the efforts of
respondent, effectuates an injustice and is an abuse of discretion.
In re Marriage of Wagner (19841, 208 Mont. 369, 679 P.2d 753. We
reverse the award of the CRP payment to respondent and affirm as to
all other aspects of the District Court's judgment.
/
Justice
We concur:
/ Chief Justice fl
13
July 9, 1992
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the following
named:
Richard A. Simonton
Simonton, Howe & Schneider, P.C.
P.O. Box 1250
Glendive, MT 59330
Jerrold L. Nye
Nye & Meyer, P.C.
3317 Third Ave. No.
Billings, MT 59101
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA