Title: Nielson v. Thompson

State: wyoming

Issuer: Wyoming Supreme Court

Document:

Nielson v. Thompson1999 WY 83982 P.2d 709Case Number: 97-310Decided: 06/17/1999Supreme Court of Wyoming
 
JANICE and LENUS NIELSON, Appellants (Intervenors),

v.

RUSSELL J. THOMPSON, 
Appellee (Plaintiff), and KAREN E. THOMPSON, Appellee 
(Defendant).

 

Appeal from the District 
Court of Sheridan County The Honorable John C. Brackely, 
Judge

Clay B. Jenkins, 
Sheridan, Wyoming, Representing Appellants.

Hayden F. 
Heaphy, Jr. of Davis & Cannon, Sheridan, Wyoming, Representing Appellee 
Russell J. Thompson.

Micheal K. 
Shoumaker, Westminster, Colorado, Representing Appellee Karen E. 
Thompson.

Before 
LEHMAN, C.J., and THOMAS, MACY, GOLDEN, and TAYLOR,* 
JJ.

* Chief Justice at time of 
expedited conference; retired November 2, 1998.

THOMAS, 
Justice.

[¶1]      Janice and Lenus 
Nielson (the Nielsons) assert that the district court erred in limiting their 
participation in the property settlement negotiations between Russell J. 
Thompson and Karen E. Thompson (the Thompsons) in the Thompsons' divorce 
proceeding. The Nielsons are judgment creditors of Russell J. Thompson, and the 
district court permitted them to intervene in the divorce case. Thereafter, the 
district court entered its Amended Order Re Intervention, in which the district 
court ruled that, "Nielsons should not be a party to settlement negotiations, 
but should be afforded an opportunity to review and offer any lawful objections 
to proposed settlements. " We hold that the district court did not err in 
limiting the participation of the Nielsons in the property settlement 
negotiations in the Thompsons' divorce case because the Nielsons enjoyed no 
right to initially intervene. The only judgment in this case is the Decree of 
Divorce, which is affirmed together with all interlocutory orders entered by the 
district court.

[¶2]      In the 
Appellants' Corrected Brief, the issue that is raised is:

I.

Can an 
intervenor under W.R.C.P. Rule 24 be denied the right to participate in the 
case?

This Statement 
of the Issues is found in the Brief of Appellee Karen E. 
Thompson:

I. Did the 
district court have the right to limit the intervenors?

II. Did [the] 
Nielsons[] lose any rights to any property as a result of the court 
decree?

This Statement 
of the Issues is found in Appellee Russell J. Thompson's 
Brief:

1. Whether a 
judgment creditor of one spouse can intervene in the spouse's divorce as a 
matter of right under W.R.C.P. 24(a)(2) and dictate the terms of the parties' 
settlement agreement and the divorce decree in order to assure that the judgment 
debtor spouse receives assets against which the judgment creditor may 
execute.

2. Did the 
Court's Amended Order re: Intervention * * * which provided 
Appellants/Intervenors an opportunity to participate in all discovery, to 
preserve their lawful interest in any property distributed to 
Plaintiff/Appellee, and to review and offer lawful objection to proposed 
settlements, constitute a denial of due process to Intervenors/Appellants and 
reversible error[?]

[¶3]      The Nielsons are 
judgment creditors of Mr. Thompson by virtue of a judgment entered in Wyoming on 
January 8, 1986 in the amount of $14,378.50. Mrs. Thompson was not a party to 
that litigation and the judgment does not affect her property. The Nielsons 
allowed their judgment to lapse after collecting only a few hundred dollars, but 
on May 21, 1996, the judgment was revived by order of the district court. The 
amount of the judgment when it was revived with the appropriate addition for 
interest was $39,190.28. The prospects of collecting the judgment from Mr. 
Thompson were slim because he owned no assets that were not exempt from 
execution. He received income from a spendthrift trust established by his mother 
and a firefighter's pension, neither of which were available to judgment 
creditors. However, when Mr. Thompson filed a complaint seeking a divorce from 
Mrs. Thompson on September 10, 1996, the Nielsons perceived a new possibility. 
The Nielsons requested, and they were granted, intervention pursuant to W.R.C.P. 
24(a)(2).1 Later, the district court issued an 
amended order that limited the Nielsons' role as intervenors. The latter order 
allowed the Nielsons to review proposed settlements and offer objections, but 
specified they were not to be involved as a party in any settlement 
negotiations.

[¶4]      The Nielsons 
objected to this limitation of their rights as intervenors, claiming it 
restricted their ability to protect their interests. Ultimately, the Thompsons 
arrived at a settlement agreement, which the district court approved over the 
objection of the Nielsons. The settlement agreement of the Thompsons divided 
their considerable marital debts, personal property, and Mr. Thompson's 
firefighter's pension. Mr. Thompson retained the income from the spendthrift 
trust, and Mrs. Thompson kept real property and investments that she had 
inherited from her parents. Mrs. Thompson also kept rental property which she 
owned in her name alone as well as the marital residence in which she had 
previously purchased Mr. Thompson's interest for fair value. The Nielsons appeal 
from the Decree of Divorce asserting as error the order limiting their rights as 
intervenors.

[¶5]      The contention 
argued by the Nielsons is that the district court erred when it restricted the 
scope of their rights as intervenors and that this impaired their ability to 
protect their interests. We hold that no error occurred in the disposition by 
the district court for two reasons. The first reason is that the Nielsons had no 
right to intervene, and even a limited intervention was more than the law 
permits. The second reason is that the district court was well within its 
authority in limiting the scope of the intervention.

[¶6]      By its order, the 
district court allowed the Nielsons to intervene as a matter of right under 
W.R.C.P. 24(a)(2), which requires an intervenor to have an interest in the 
subject of the action. The Nielsons contend that the judgment against Mr. 
Thompson afforded them an interest in the subject of the divorce action because 
the Nielsons contend that Mr. Thompson had an interest in Mrs. Thompson's 
property even though he did not own property. The Nielsons rely on language in 
Kane v. Kane, 706 P.2d 676, 680 (Wyo. 1985), in which we 
said:

[E] ven though 
property is held separately by one spouse, as in this case, at the time the 
complaint in the divorce action is filed the other spouse acquires a 
co-ownership interest in that property which is not defined until the entry of 
the decree which articulates the property settlement.

[¶7]      This statement 
appears to support the Nielsons' contention when it is taken out of context. A 
more careful examination of Kane, on the other hand, demonstrates that the 
coownership status discussed is not as extensive as the Nielsons would prefer. 
What we actually said in Kane, 706 P.2d  at 680, is:

Our statutes 
specifically reserve the right of each spouse to own and convey his or her 
separate property. Sections 20-1-201 and 20-1-202(a), W.S. 1977. That right, 
however, is adjusted upon the filing of a complaint for divorce. At that 
juncture the jurisdiction of the district court is invoked to provide for an 
equitable distribution of the property of the parties in accordance with § 
20-2-114, W.S. 1977. We conclude that the effect of our statute is quite similar 
to the effect ascribed to the Kansas statute in Cady v. Cady, 224 Kan. 339, 581 P.2d 358 (1978). That court held that prior to the filing of the divorce 
petition a spouse had only an inchoate interest in property held in the name of 
the other spouse. When the divorce complaint is filed, however, that inchoate 
interest vests subject to definition and determination by the divorce court. At 
that juncture a species of common or co-ownership is identified, but that 
property is not then divided until the ultimate decree of the court. Other 
courts have reached a similar conclusion with respect to equitable distribution 
statutes. Marriage of Brown, 179 Mont. 417, 587 P.2d 361, 365 (1978); Imel v. 
United States, 184 Colo. 1, 517 P.2d 1331 (1974); Imel v. United States, 523 F.2d 853 (10[th] Cir. 1975); Collins v. Oklahoma Tax Commission, Okla., 446 P.2d 290 (1968); Collins v. C. I. R., 412 F.2d 211 (10th Cir. 
1969).

[¶8]      In this regard 
then we hold that even though property is owned separately by one spouse, as in 
this case, at the time the complaint in the divorce action is filed the other 
spouse acquires a co-ownership interest in that property which is not defined 
until the entry of the decree which articulates the property settlement. The 
inchoate interest of the spouse in separate property of the other spouse is 
vested at the time the divorce action is filed and at that time is converted 
into a species of common or co-ownership. When the decree is entered it divides 
property which is held by the parties as co-owners. In any instance in which, as 
here, the trial court grants each party a one-half interest in a given property, 
the co-ownership continues until disposition of the property. If the trial court 
awards all of a given property to one party, that award is also a disposition of 
property held by co-owners, but the party awarded the property then owns it as 
an individual. Because of our prior opinions in this case we have no difficulty 
in extending this concept to the ranching property which was situated in 
Montana.

[¶9]      It is clear from 
this language that the interest vested in the separate property of the other 
spouse does not afford an ownership interest to the non-owning spouse; instead, 
it is a right to have the assets included in the marital estate which the court 
will divide. Mr. Thompson had no possessory or marketable interest in Mrs. 
Thompson's property, and he had nothing to which a lien could attach. The 
limited purpose of the co-ownership right as identified in Kane does not provide 
Mr. Thompson with an ownership interest to which any rights of the Nielsons 
could attach. It is clear that the Nielsons could not have levied execution on 
any property involved in the marital estate until it actually was divided by the 
district court.

[¶10]   While this Court has said that 
third parties claiming rights in property that is subject to a property 
settlement may intervene or be joined, we were not addressing the rights of a 
judgment creditor. Merritt v. Merritt, 586 P.2d 550, 554 (Wyo. 1978). Some 
states, notably those with community property laws, permit creditors to 
intervene in divorce actions as a matter of course. Elms v. Elms, 4 Cal. 2d 681, 
52 P.2d 223, 224 (1935); Malcolm v. Malcolm, 75 N.M. 566, 408 P.2d 143, 144 
(1965); Fletcher v. National Bank of Commerce, 825 S.W.2d 176, 179 (Tex. App. 
1992); Boyle v. Boyle, 194 W. Va. 124, 459 S.E.2d 401, 404 (1995). On the other 
hand, several states bar creditors from intervening in divorce cases. Eberly v. 
Eberly, 489 A.2d 433, 446 (Del. Supr. 1985); Poteat v. Poteat, 632 S.W.2d 511, 512 (Mo.App. 1982); Foundation Sav. & Loan Co. v. Rosenbaum, 113 Ohio App. 
501, 171 N.E.2d 359, 360 (1960); Bailey v. Bailey, 312 S.C. 454, 441 S.E.2d 325, 
327 (1994). We are convinced that the authority of the court in a divorce action 
to divide property is simply ancillary to its authority to dissolve the 
marriage. The primary subject of a divorce action is the dissolution of the 
marriage, and the only proper parties to such an action are the spouses seeking 
to be divorced. In re Marriage of Soriano, 44 Wn. App. 420, 722 P.2d 132, 133 
(1986). 

[¶11]   We also have defined, subsequent to 
Kane, an inchoate interest. In Bummer v. Collier, 864 P.2d 453, 457 (Wyo. 1993), 
we said:

An inchoate lien 
is one that Amay become certain as to amount, identity of the lienor, or the 
property subject thereto only at some time subsequent to [the date of the lien's 
creation.] " United States v. New Britain, 347 U.S. 81, 86, 74 S. Ct. 367, 
370-71, 98 L. Ed. 520, 526 (1954). See also Danbury Sav. & Loan Ass'n v. 
Delaney, 207 Conn. 743, 542 A.2d 1153, 1156 (1988), cert. denied, 488 U.S. 1004, 
109 S. Ct. 783, 102 L. Ed. 2d 775. In our case, the real property subject to the 
lien could not be identified until the partnership had conveyed title to the 
real property to Mr. Collier.

As was true in 
Bummer, the real property which might have been subject to any lien on the part 
of the Nielsons could not be identified until the district court had made the 
property division in the divorce case. The Nielsons' interest was inchoate 
according to this definition. It is clear that the Nielsons did not have the 
requisite interest in the property involved in the divorce case between the 
Thompsons that would afford them standing to intervene. Poteat, 632 S.W.2d  at 
512, states this concept very clearly. Consequently, the Nielsons had no right 
to intervene and should not be heard to complain over having been permitted to 
intervene but having their rights as intervenors limited.

[¶12]   The Nielsons cite three cases from 
other jurisdictions for the proposition that intervention is an Aall or nothing" 
proposition. Once it is granted, it is not subject to limitation or conditions. 
A Wyoming case exists, not mentioned by either party in this case, that suggests 
the same thing without precisely articulating that concept. Rocky Mountain 
Packing Co. v. Branney, 393 P.2d 131, 132-33 (Wyo. 1964). Subsequent to the 
decision of this Court in Branney, however, a body of law had developed that 
clearly supports the authority of the district court to limit the role of an 
intervenor. Beauregard, Inc. v. Sword Services, L. L. C., 107 F.3d 351, 352-53 
(5 th Cir. 1997) (A[a] lthough not without some controversy, it is now a firmly 
established principle that reasonable conditions may be imposed even upon one 
who intervenes as of right. ") (footnote omitted); 28 U.S.C.A. Rule 24, Advisory 
Committee Notes, 1966 Amendment (1992) (A[a] n intervention of right under the 
amended rule may be subject to appropriate conditions or restrictions responsive 
among other things to the requirements of efficient conduct of the proceedings. 
").

[¶13]   We have said repeatedly that 
federal interpretations of federal rules are highly persuasive in our 
interpretations of similarly worded state rules. In re Paternity of IC, 941 P.2d 46, 50 (Wyo. 1997); Dobbins v. State, 483 P.2d 255, 258 (Wyo. 1971). Our rule 
which governs intervention, W.R.C.P. 24, is identical to F. R. C. P. 24. The 
authorities cited above clearly have interpreted F. R. C. P. 24 to allow 
limitations on the scope of intervention. We are persuaded that this is the 
appropriate interpretation of the rule relating to intervention, and we hold 
that even if an intervenor comes in as a matter of right, a district court may 
limit the role of the intervenor in the litigation.

[¶14]   In summary, we hold that the 
Nielsons had no right to intervene in the Thompsons' divorce action. Therefore, 
the Nielsons' complaints about the limited scope of the intervention afforded 
are without merit. Furthermore, we hold that a district court is within the 
proper exercise of its discretion when it places reasonable limits or conditions 
upon intervenors even if they properly intervened.

[¶15]   We affirm the district court's 
Decree of Divorce.

Footnotes

1 W.R.C.P. 24 
reads, in relevant part:

(a) 
Intervention of right. - Upon timely application anyone shall be permitted to 
intervene in an action:

(1) 
When a statute confers an unconditional right to intervene; 
or

(2) 
When the applicant claims an interest relating to the property or transaction 
which is the subject of the action and the applicant is so situated that the 
disposition of the action may as a practical matter impair or impede the 
applicant's ability to protect that interest, unless the applicant's interest is 
adequately represented by existing parties.

(b) 
Permissive intervention. B Upon timely application anyone may be permitted to 
intervene in an action:

(1) 
When a statute confers a conditional right to intervene; 
or

(2) 
When an applicant's claim or defense and the main action have a question of law 
or fact in common.