No. 87-519 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1988 

IN RE THE MARRIAGE OF: 

FARRELL C . STEWART, 

Petitioner, Appellant, and 

Cross/Respondent 

and 

ROBERT B. STEWART, 

Respondent, Respondent, and 

Cross/Appellant. 

APPEAL FROM: District Court of the Thirteenth Judicial District 

In and for the County of Yellowstone 

The Honorable Robert Holmstrom, Judge presiding 

COUNSEL OF RECORD: 

For Appellant: 

Virginia A. Bryan; Bryan Law Firm, Billings, Montana 

For Respondent: 

Frances M. Calton and Calvin A. Calton; 

Calton, Hamman, Calton and Wolff, Billings, Montana 

Submitted On Briefs: March 31, 1988 

Decided: May 9, 1988 

Filed: " nv 9 - 1988 

&r2fL *,- 4 --- 

Clerk 
Mr. Chief Justice J. A. Turnage delivered the Opinion of the 

Court. 

Petitioner Farrell Stewart appeals the September 25, 

1987, decree of the Thirteenth Judicial District, Yellowstone 

County, dividing the marital estate. We affirm. 

Farrell Stewart raises two issues for our review: 

1. Did the District Court abuse its discretion in 

ordering that Farrell Stewart participate in $32,823 of 

marital debts? 

2. Did the District Court abuse its discretion in 

awarding a $32,000 promissory note to Robert Stewart? 

Respondent Robert Stewart cross-appeals and raises two 

additional issues: 

3. Did the District Court abuse its discretion in 

determining the net worth of the marital estate? 

4. Did the District Court abuse its discretion in 

distributing Farrell Stewart's inheritance to her? 

Farrell Stewart and Robert Stewart were married in 

Minneapolis, Minnesota, in 1958. Farrell was twenty-two and 

Robert was twenty-six. Four children were born of the Stewart marriage, all of whom have reached the age of majority. 

Farrell filed for dissolution in June of 1986. 

Both Farrell and Robert have college degrees. Farrell 

has worked as a part-time journalist at Eastern Montana 

College since 1971. In 1986 she earned approximately $10,000 

from her job and received approximately $7,500 in investment 

income. 

Robert has worked as a stockbroker during most of the 

marriage. His income has fluctuated. In 1981 and 1982 he 

earned approximately $50,000 per year, but after 1983 his 

income dropped sharply. Robert's net income in 1986 was 

approximately $2,500. 
Issue 1. S32,823 debt. 

In the final two years of the marriage, Robert received 

$32,823 in loans from various sources. The District Court 

concluded that the loans were marital debts: 

[Tlhere was no evidence to suggest that 

the Respondent spent the money, represented by the various notes, upon anything but living and business expenses. 

It was clear from the testimony that 

much of the parties' difficulties centered around the way they handled their 

finances throughout their married life 

and it was clear that the Respondent 

had, in the three or four years preceding the parties' dissolution, sustained 

a substantial decrease in earnings. He 

borrowed the money to try to keep his 

business afloat and to pay household 

expenses. In the Court's view, it was 

therefore equitable for the Petitioner 

to participate in those debts. 

Section 40-4-202 (I), MCA, states: "The court shall 

also consider the contribution or dissipation of value of the 

respective estates . . ." Farrell contends that Robert 

dissipated the money through "reckless borrowing and spending 

habits.'' Farrell asserts that she knew nothing about the 

loans. Farrell concludes that the District Court erred by 

failing to find dissipation. 

A District Court has far-reaching discretion in dividing the marital property. Our standard of review is that the 

District Court's judgment, when based upon substantial credible evidence, will not be altered unless a clear abuse of 

discretion is shown. Marriage of Watson (Mont. 1987), 739 

In prior marital cases, this Court has stated that the 

standard of review was whether the District Court, in the 

exercise of its discretion, acted arbitrarily without employment of conscientious judgment or exceeded the bounds of 
reason. For the guidance of the bench and bar, we specifically reject this phraseology for our standard of review in 

marital cases and adopt the standard of review set forth in 

Watson, supra. In re Marriage of Hall (Mont. 1987), 740 P.2d 

684, 686-687, 44 St.Rep. 1321, 1324. 

In this case, Robert borrowed the money in small increments to pay household bills and meet costs of running his 

office. Farrell freely accepted the benefits of these loans 

while the parties were still living together. Farrell's 

unsupported allegations do not create a presumption that 

Robert dissipated the marital estate. Any finding of dissipation must be supported by substantial evidence. In Re the 

Marriage of Merry (Mont. 1984), 689 P.2d 1250, 1256, 41 

St.Rep. 2009, 2017. Farrell supplied no such evidence and 

failed to meet her burden of proof. 

The District Court specifically looked at the nature 

and purpose of the loans and found no dissipation. The court 

had ample opportunity to review the evidence and observe the 

testimony of the parties. We hold that the District Court 

properly considered the loans under the guidelines of Watson 

and equitably distributed the $32,823 of marital debts. 

Issue 2. $32,000 promissory note. 

In 1984, Robert withdrew approximately $83,000 from his 

retirement plan. As a result of the early withdrawal, the 

Stewarts' joint tax liability exceeded $32,000. In September 

1985, Farrell loaned Robert $32,000 to pay the Internal 

Revenue Service. Farrell insisted that Robert sign a promissory note for the amount. 

The District Court found that the $83,000 was used for 

the parties' living expenses and Robert's business expenses. 

The District Court specifically noted the criteria of 

5 40-4-202, MCA, regarding the parties' occupations, sources 
and amounts of income, and earning capacity. The Court then 

stated that "the setting over of the note to the Respondent 

was an equitable distribution." Farrell contends that the 

District Court improperly absolved Robert of his legal obligation to repay the $32,000 to her. 

In analyzing this issue, we note that a husband and 

wife may legally contract with each other. Section 40-2-301, 

MCA. Furthermore, "contracts between married parties, if 

-- fair and equitable, are enforceable contracts if they do not 

conflict with the laws and public policy of this State." 

(Emphasis added.) In Re the Marriage of Feisthamel (Mont. 

1987), 739 P.2d 474, 477, 44 St.Rep. 1117, 1120. 

In the instant case, however, the enforceability of the 

$32,000 contract is subject to equitable distribution of the 

marital estate. Farrell received the benefits of the $83,000 

while the marriage was in force and while living with Robert. 

The $32,000 loan helped relieve Farrell of the joint tax 

liability she incurred as an income-earning spouse. 

In a proceeding for dissolution, property belonging to 

either of the parties may be apportioned between them equitably. Section 40-4-202(1), MCA. The District Court removed 

the inequitable burden of repayment from Robert. "The court 

is not required to distribute equally but rather to consider 

the criteria set forth in 5 40-4-202, MCA, to make an equitable distribution." In Re the Marriage of Edwards (Mont. 

1985), 699 P.2d 67, 70, 42 St.Rep. 593, 596. We hold that 

the District Court duly considered the purpose of the note 

and properly awarded the note to Robert. 

Issue 3. Net worth. 

Robert contends that the trial court distributed the 

marital estate without making a specific finding of net worth 

and therefore abused its discretion. 
We disagree. As we stated in In Re the Marriage of 

Metcalf (1979), 183 Mont. 266, 271, 598 P.2d 1140, 1142, a 

trial court must consider the parties' assets and liabilities 

before making a distribution. Our review of the record 

reveals that the District Court listed the Stewarts' assets 

and liabilities and arrived at the net worth figure of 

$154,358.78 in Finding of Fact V. We hold that the court 

properly determined the net worth of the marital estate. 

Issue 4. Farrell's inheritance. 

In 1985, Farrell received an inheritance of approximately $110,000. She did not disclose the amount of the 

inheritance to Robert. Farrell invested the inheritance 

separately and maintained sole control over the funds. 

The District Court found that Robert "has not made any 

contribution to the maintenance of the said inheritance." 

The court concluded that the assets directly traceable to the 

wife's inheritance should be set over to Farrell. Robert 

contends that the court should have divided the inheritance 

equally. 

We review this issue under the guidelines of 

5 40-4-202(1), MCA, which states that the court may "equitably apportion between the parties the property and assets 

belonging to either or both, however and whenever acquired 

. . ." (Emphasis added.) Section 40-4-202, MCA, is a flexible statute which vests wide discretion in the District 

Court. "There is no specific rule concerning how an inherited asset is to be treated when marital property is divided." 

In Re the Marriage of Martin (Mont. 1985), 705 P.2d 1114, 

1116, 42 St.Rep. 1376, 1379. 

In the instant case, Farrell's inheritance arrived on 

the eve of dissolution. The inheritance was not comingled 

into the marital estate. Robert did not contribute to the 
investment or maintenance of the inherited assets. "If none 

of the value of the property is a product of contribution 

from the marital effort, the District Court can justifiably 

find that the non-acquiring spouse has no interest in the 

property. " In Re the Marriage of Herron (1980) , 186 Mont. 

396, 404, 608 P.2d 97, 101. 

The District Court assessed the inheritance within the 

context of assets acquired during the marriage. We hold that 

the District Court properly distributed the inheritance to 

Farrell. 

Af firmed. 

We concur: