Title: MARRIAGE OF JACOBSON v JACOBSON

State: montana

Issuer: Montana Supreme Court

Document:

No. 14728 IN THE SUPREME COURT OF THE STATE OF MONTANA 1979 IN RE THE MARRIAGE OF VERNA B . JACOBSON, Petitioner and Respondent, -vs- THEODORE F. JACOBSON, d ~ i ) ; c ~ n N i - Respondent and Resptxderrt. Appeal from: District Court of the Third Judicial District, Honorable Robert J. Boyd, Judge presiding. Counsel of Record: For -~etibi&& , I - Poore, Roth, Robischon & Robinson, Butte, Montana For Respondent: Corette, Smith, Dean, Pohlman & Allen, Butte, Montana James J. Masar, Deer Lodge, Montana - -- Submitted on briefs: August 2, 1979 Decided : iJCI - 5 fgj Clerk M r . J u s t i c e Gene B. Daly delivered t h e Opinion of t h e Court. his i s an appeal from a judgment of t h e D i s t r i c t Court of t h e Third J u d i c i a l D i s t r i c t d i s s o l v i n g t h e marriage of Theodore and Verna Jacobson and d i s t r i b u t i n g t h e m a r i t a l property of t h e p a r t i e s . The husband appeals from t h a t p o r t i o n of t h e decree a f f e c t i n g t h e property d i s t r i b u t i o n . The p a r t i e s were married i n Butte, Montana, on March 16, 1952. A t t h e t i m e of t r i a l , Verna Jacobson was 47 y e a r s of age and Theodore Jacobson was 49. The p a r t i e s have two c h i l d r e n , a son aged 22 r e s i d i n g i n Alaska, and another son aged 18 who graduated from high school i n 1978 and r e s i d e s on t h e family ranch near Deer Lodge, Montana, i n Powell County. Ted Jacobson was r a i s e d on t h e ranch and h i s s o l e occupation has been ranching. H i s formal education ended i n t h e n i n t h grade. Verna Jacobson i s a high school graduate who worked as a s e c r e t a r y p r i o r t o her marriage t o Ted. I n 1948 Ted and h i s brother formed a p a r t n e r s h i p t o o p e r a t e t h e ranch. I n t h a t year they leased a p o r t i o n of t h e ranch from t h e i r f a t h e r f o r t h e purpose of r a i s i n g potatoes. I n 1953 t h e b r o t h e r s and t h e i r wives leased t h e e n t i r e home ranch and bought some c a t t l e from t h e i r f a t h e r , and i n 1959, they purchased t h e ranch on a c o n t r a c t f o r deed. The p a r t n e r s h i p continued u n t i l 1969. Thus, when t h e p a r t i e s w e r e married i n 1952, Ted and h i s brother were already i n t h e process of taking over t h e operation of t h e ranch. The D i s t r i c t Court found t h a t "Ted Jacobson w a s and i s a hard-working and a b l e rancher." Through h i s e f f o r t s and knowledge of t h e business, t h e value of t h e Jacobson ranch increased s u b s t a n t i a l l y both during t h e t i m e it was operated i n p a r t n e r s h i p with h i s brother and a f t e r t h e partnership terminated in 1969. Throughout the marriage of the parties, Ted did the outside work on the ranch. In addition to the usual ranch work he made substantial improve- ments to an existing house located on the ranch, and he and his brother later assisted in building a new house in which the parties resided. A significant part of the increased value of the ranch can be attributed to the installation of a lateral irrigation system by Ted and his brother in 1966 and the installation of a sprinkler irrigation system by Ted in 1975. For her part, Verna performed the duties of a ranch wife and homemaker for over 25 years. Although she did not participate in the outside work, she spent great amounts of time caring for her two sons, the elder of whom had heart problems discovered at an early age, and the younger, who was found at an early age to have a serious physical ail- ment. She spent a considerable amount of time working with the younger son to assist him in completing school. Until 1969 Verna boarded the hired hands, generally feeding them three meals a day in the family home. In addition to these contributions, she did the bookkeeping for the ranch after the partnership between Ted and his brother terminated in 1969, maintaining the ranch record books and accounts, keeping track of ranch income and expenses, paying the bills, paying the ranch help, keeping the records necessary for ranch income withholding, social security, and workers' compensation, and delivering this information to their accountant each year for the purposes of preparing income tax returns. She also occasionally drove to town to pick up ranch supplies. The D i s t r i c t Court, a f t e r r e c i t i n g t h e c o n t r i b u t i o n s t o t h e marriage made by each of t h e p a r t i e s , concluded t h a t t h e p a r t i e s had made equal c o n t r i b u t i o n s t o t h e m a r i t a l e s t a t e and t h a t t h e wife had acquired a vested one-half i n t e r e s t i n a l l property acquired by t h e p a r t i e s during t h e i r marriage. "None of t h e property now owned by t h e p a r t i e s was acquired d i r e c t l y o r i n d i r e c t l y through in- h e r i t a n c e o r g i f t and t h e Court f i n d s t h a t t h e w i f e ' s c o n t r i b u t i o n a s a homemaker and mother, along with t h e husband's c o n t r i b u t i o n i n doing work on t h e ranch, i s e n t i t l e d t o equal weight and t h e Court f i n d s t h a t M r s . Jacobson acquired a vested one-half (1/2) i n t e r e s t i n t h e property accumulated by t h e p a r t i e s during t h e marriage." (Emphasis supplied. ) Pursuant t o t h i s finding t h e District Court's judgment entered on January 25, 1979, g i v e s t h e husband t h e option t o purchase t h e w i f e ' s i n t e r e s t i n t h e m a r i t a l property. The t o t a l m a r i t a l property, c o n s i s t i n g primarily of t h e family ranch, w a s found t o have a value of $1,147,786. Within t h r e e months of t h e decree, t h e husband has t h e option t o e i t h e r pay t o t h e wife one-half of t h e t o t a l sum o r t o pay 20 percent down with t h e balance payable i n t h i r t y equal annual i n s t a l l m e n t s with i n t e r e s t a t t h e rate of 7 percent per annum. These i n s t a l l m e n t s a r e t o be secured by a mort- gage on a l l r e a l property. I f t h e husband f a i l s t o e x e r c i s e h i s option t o purchase t h e w i f e ' s i n t e r e s t , t h e property i s t o be sold on t h e market f o r cash a t a p r i c e agreeable t o t h e p a r t i e s . I f no buyers a r e secured, t h e property i s t o be sold a t a p u b l i c sale within a f u r t h e r t h r e e months from t h e d a t e of t h e decree. The a p p e l l a n t husband r a i s e s two i s s u e s on appeal: 1. Did t h e D i s t r i c t Court abuse its d i s c r e t i o n and f a i l t o equitably apportion t h e m a r i t a l a s s e t s by neglecting t o consider t h e more s u b s t a n t i a l c o n t r i b u t i o n s of t h e husband t o t h e development and maintenance of t h e m a r i t a l property? 2. Did t h e District Court abuse i t s d i s c r e t i o n i n providing a s an a l t e r n a t i v e a purchase by t h e husband of one-half of t h e p a r t i e s ' m a r i t a l a s s e t s a t an i n t e r e s t r a t e of 7 p e r c e n t p e r annum? S e c t i o n 40-4-202, MCA, s t a t e s i n r e l e v a n t p a r t : " I n a proceeding f o r d i s s o l u t i o n of a marriage . . . t h e c o u r t . . . s h a l l . . . f i n a l l y equi- t a b l y apportion between t h e p a r t i e s t h e property and a s s e t s belonging t o e i t h e r o r both, however and whenever acquired and whether t i t l e t h e r e t o i s i n t h e name of t h e husband o r wife o r both. I n making apportionment t h e c o u r t s h a l l consider t h e d u r a t i o n of t h e marriaqe and [ o t h e r f a c t o r s ] - . . . The c o u r t s h a l l a l s o consider. . . - t h e c o n t r i b u t i o n of a spouse a s a homemaker o r t o - - - - -- t h e family u n i t . " (Emphasis supplied.) - - The standard f o r review of a D i s t r i c t C o u r t ' s d i s p o s i - t i o n of m a r i t a l a s s e t s upon a d i s s o l u t i o n of marriage i s w e l l s e t t l e d : "A D i s t r i c t Court has far-reaching d i s c r e t i o n i n r e s o l v i n g property d i v i s i o n s , and its judgment w i l l n o t be a l t e r e d u n l e s s a c l e a r abuse of d i s - c r e t i o n is shown. Kaasa v. Kaasa (1979), Mont. , 591 P.2d 1110, 1113, 36 St.Rep. 425, 428; K r a m e r v. Kramer (1978), Mont. I 580 P.2d 439, 35 St.Rep. 700; Eschenburg v. Eschenburg (1976), 171 Mont. 247, 557 P.2d 1014. The test f o r reviewing t h e District C o u r t ' s d i s - c r e t i o n is: Did t h e D i s t r i c t Court i n t h e exer- cise of i t s d i s c r e t i o n act a r b i t r a r i l y without employment of conscientious judgment, o r exceed t h e bounds of reason i n view of a l l t h e circum- stances? Kuntz, 593 P.2d a t 43; Jorgensen, supra; K r a m e r , supra; Z e l l v. Z e l l (1977), Mont. , 570 P.2d 33, 34 St.Rep. 1070; B e r - thiaume v. Berthiaume (1977) , Mont. I 567 P.2d 1388, 34 St.Rep. 921." Aanenson v. Aanenson (1979), Mont. I P.2d , 36 St.Rep. 1525, 1528. The d u t y o f t h e D i s t r i c t Court is t o consider t h e s t a t u t o r y criteria and e q u i t a b l y apportion t h e m a r i t a l a s s e t s . Each case must be looked a t i n d i v i d u a l l y w i t h an eye t o i t s unique circumstances. Aanenson, supra; Jorgenson Jorgenson Mont. 36 St.Rep. 233, 237; Cook v. Cook (1972), 159 Mont. 98, 104, 495 P.2d 591. "An equal d i v i s i o n under normal conditions of property accumulated through j o i n t e f f o r t s i s not regarded a s unreasonable." Cook, 159 Mont. a t 103, 495 P.2d a t 594, quoting Johnson v. Johnson (1960), 137 Mont. 11, 17, 349 P.2d 310. See a l s o Z e l l v. Zell (1977), Mont. 570 P.2d 33, 34 St.Rep. 1070; Roe v. Roe (1976), 171 Mont. 79, 83, 556 P.2d 1246, 1248. I n t h e p r e s e n t case t h e D i s t r i c t Court d e t a i l e d t h e r e s p e c t i v e c o n t r i b u t i o n s of t h e p a r t i e s i n i t s f i n d i n g s of f a c t . There i s s u b s t a n t i a l evidence i n t h e record t o sup- p o r t t h e D i s t r i c t C o u r t ' s equal d i s t r i b u t i o n a s an e q u i t a b l e apportionment of t h e m a r i t a l property. There was no abuse of d i s c r e t i o n by t h e lower c o u r t , which followed t h e s t a t u - t o r y mandate of s e c t i o n 40-4-202, MCA, t o "consider . . . t h e c o n t r i b u t i o n of a spouse a s a homemaker o r t o t h e family u n i t . " Appellant's second contention i s more troublesome. Appellant s t a t e s t h a t it has always been t h e policy of t h e c o u r t s of t h i s s t a t e t h a t a farm o r ranch should be kept i n t a c t and operated as a u n i t . Appellant argues t h a t t h e option afforded t o him by t h e District Court t o purchase h i s former w i f e ' s i n t e r e s t i n t h e family ranch by paying 20 percent down and t h i r t y annual i n s t a l l m e n t s a t 7 percent i n t e r e s t i s n o t an economically r e a l i s t i c a l t e r n a t i v e . H e contends t h a t t h e ranch does n o t generate s u f f i c i e n t income t o support such payments, t h a t it w i l l have t o be sold t o s a t i s f y t h e D i s t r i c t Court decree, and t h u s , t h a t it w i l l be l o s t t o t h e sons of t h e p a r t i e s who are opposed t o i t s s a l e , p a r t i c u l a r l y t h e younger son, who i s now working on t h e ranch. It is a l l e g e d , t h e r e f o r e , t h a t t h e District Court abused its d i s c r e t i o n . It i s c l e a r t h a t a D i s t r i c t Court may make an e q u i t a b l e d i s t r i b u t i o n of t h e m a r i t a l property and y e t abuse i t s d i s c r e t i o n i n c a r r y i n g o u t t h e award. I n Kruse v. Kruse (1978) , - Mont. , 586 P.2d 294, 298, 35 St.Rep. 1502, 1507, t h e t r i a l c o u r t properly made a n equal apportionment of t h e m a r i t a l a s s e t s , b u t abused i t s d i s c r e t i o n i n f a i l i n g t o consider t h e a s s e t s a t t h e i r c u r r e n t market value which r e s u l t e d i n t h e wife r e c e i v i n g less than h e r equal share. Montana c a s e s have accepted t h e premise t h a t a ranch o r farm should be k e p t i n t a c t and operated as a u n i t . A p o l i c y t o t h a t e f f e c t is r e f l e c t e d i n d e c i s i o n s involving t h e d i s p o s i t i o n of farming and ranching property: Kaasa v. Kaasa (1979) , Mont. , 591 P.2d 1110, 1113, 36 St.Rep. 425, 428; I n re Marriage of Brown (1978), Mont. , 587 P.2d 361, 35 St.Rep. 1733; Biegalke v. Biegalke (1977), 172 Mont. 311, 564 P.2d 987; Hunnewell v. Hunnewell (1972), 160 Mont. 125, 500 P.2d 1198, 1202. Biegalke involved f a c t s similar t o those i n t h e p r e s e n t case. I n r e f e r r i n g t o t h e District C o u r t ' s property d i s t r i - bution whereby t h e husband was given t h e opportunity t o purchase h i s former w i f e ' s m a r i t a l i n t e r e s t i n t h e family farm by making a down payment and paying t h e remaining balance i n annual i n s t a l l m e n t s , t h i s Court s t a t e d , " [ t l h e d i v i s i o n w a s based on t h e premise t h a t t h e ranch be k e p t i n t a c t and operated." Biegalke, 172 Mont. a t 314. Likewise i n Hunnewell, where t h e couple moved onto t h e ranch which had been owned by t h e husband's f a t h e r and where t h e husband had been a rancher a l l h i s l i f e , t h e c o u r t gave t h e husband t h e o p t i o n t o m e e t a l l b i d s t o purchase h i s former w i f e ' s i n t e r e s t i n t h e m a r i t a l e s t a t e by making a down payment and paying t h e remaining balance i n annual i n s t a l l m e n t s , s t a t i n g "[tlhe purpose of this provision is to permit [the husband] to continue to ranch and farm the premises without being met with a sudden emergency to raise money, the Court being aware that all the property is presently mortgaged and such an emergency demand might cause hardship." Hunnewell, 500 P.2d 1202. The District Court valued the marital estate, consist- ing primarily of the family ranch, at $1,147,786 and found that Verna Jacobson was entitled to one-half of that property as her marital share. Pursuant to this finding, the District Court's judgment gives Ted Jacobson the option to purchase Verna's interest in the marital property. Within three months of the decree, the husband must purchase her share by paying her one-half of the total sum in cash, or exercise his option to pay her 20 percent down with the balance payable annually in 30 equal installments with interest at 7 percent, the installments secured by a mortgage on the real property. Otherwise, the ranch will be sold on the market or at a public sale to generate cash to satisfy Verna's marital share. Translated to dollar amounts, the installment option entails annual installments of approximately $34,000. Appellant contends that this amount is practically equiva- lent to the total annual cash income of the ranch before purchases of equipment are taken into consideration. He argues that after the purchase of necessary replacement equipment, annual cash income for the ranch has averaged about $16,000 per year. Therefore, according to appellant, the ranch does not generate sufficient income to support the installment payments that would be required under the pur- chase option given him by the District Court, and so the District Court allegedly abused its discretion. The D i s t r i c t Court, while it d i d make extensive find- i n g s of f a c t concerning t h e m a r i t a l a s s e t s and each p a r t y ' s c o n t r i b u t i o n t h e r e t o , d i d n o t make a f i n d i n g t o t h e e f f e c t t h a t it would be f i n a n c i a l l y p o s s i b l e f o r a p p e l l a n t t o s a t i s f y t h e judgment s h o r t of s e l l i n g t h e ranch. I t is, however, i m p l i c i t i n t h e D i s t r i c t Court's judgment t h a t t h e c o u r t considered t h e a l t e r n a t i v e s i n t h e decree t o be eco- nomically r e a l i s t i c considering t h e r a n c h ' s income-producing c a p a c i t y and its borrowing capacity. There i s s u f f i c i e n t evidence i n t h e record t o support such a conclusion; there- f o r e , t h e r e was no abuse of d i s c r e t i o n . The evidence i n t h e record supporting t h e conclusion t h a t t h e i n s t a l l m e n t purchase option i s an economically r e a l i s t i c a l t e r n a t i v e i s a s follows: (1) t h e ranch i s unen- cumbered save f o r t h e D i s t r i c t Court decree, from which t h e c o u r t may have i n f e r r e d t h a t its borrowing c a p a c i t y i s high; ( 2 ) t h e husband's brother and former p a r t n e r i n t h e ranch i s a rancher and a banker who might be a b l e t o procure a loan o r lend money f o r t h e purchase of t h e w i f e ' s i n t e r e s t ; ( 3 ) t h e r e i s a cash a s s e t held i n t r u s t by one of t h e a t t o r n e y s f o r t h e wife i n t h e amount of $ 3 3 , 7 9 2 less c e r t a i n expenses, representing t h e balance of t h e s a l e of c a t t l e i n t h e pre- vious year; ( 4 ) t h e cash income of t h e ranch has averaged approximately $35,000 a year before equipment purchases, and $16,000 a f t e r purchases of equipment; and ( 5 ) t h e p a r t i e s ' accountant t e s t i f i e d t h a t t h e maximum annual payment t h a t an operator of t h e ranch could reasonably be expected t o pay o u t of ranch income t o purchase an e q u i t y i n t h e ranch would be t h e t o t a l cash flow income of t h e ranch. ~t must be remembered t h a t t h e primary r i g h t t o be considered i n disposing of m a r i t a l property i s t h e r i g h t of each p a r t y t o an e q u i t a b l e apportionment of t h e m a r i t a l assets. While it i s t h e policy of t h e c o u r t s of t h i s s t a t e t o avoid s p l i t t i n g up a ranch o r forcing i t s s a l e where t h e r e i s any reasonable a l t e r n a t i v e , t h a t p o l i c y , however commendable, cannot be used t o o v e r r i d e t h e w i f e ' s r i g h t t o an e q u i t a b l e share of t h e m a r i t a l property. I n t h e p r e s e n t case, t h e D i s t r i c t Court gave the husband t h e option t o purchase h i s former w i f e ' s share by paying 20 percent down and paying t h e remaining balance i n annual i n s t a l l m e n t s over t h i r t y y e a r s a t 7 percent i n t e r e s t . The wife i s 47 years of age. A payment schedule of more than t h i r t y years would n o t allow her t o r e c e i v e t h e equal marital s h a r e t o which she i s e n t i t l e d within her l i f e expectancy. The 7 percent i n t e r e s t r a t e i s below t h a t charged by commercial and governmental lending i n s t i t u t i o n s , The c a s e of I n re Marriage of Brown (1978) Mont. , 587 P.2d 361, 367, 35 St.Rep. 1733, merely suggested t h a t t h e D i s t r i c t Court could order t h e remaining balance paid without i n t e r e s t . It d i d n o t say t h a t t h e t r i a l c o u r t could n o t allow i n t e r e s t , and t h e allowance of i n t e r e s t lies within t h e c o u r t ' s sound d i s c r e - t i o n . The judgment of t h e D i s t r i c t Court s affirmed. /4 W e concur: