No. 82-03 IEJ THE SUPREME COURTOF THE STATEOF MONTANA 1984

IN RE THEMARRIAGE OF EARL MYERS, Petitioner andAppellant, and DONNABIYERS

## ,Respondent and Respondent.

APPEAL FROM: District Court of the Thirteenth Judicial District, Inand for the County of Yellowstone, TheHonorable Jack D. Shanstrom, Judgepresiding.

COUNSEL OF RECORD: ForAppellant: Holmstrom & Dunaway;Robert Holmstrom, Billings, Montana

For Respondent: Robert L. Stephens,Jr., Billings,Montana

Submittedon Briefs: January 19, 1954 Decided: May 29, 1984

illfil

### L,$

### !984 Filed:

ClerkMr. Justice Daniel J. Shea delivered the Opinion of the Court.

Petitioner husband, Earl T. Myers, appeals from a Yellowstone County District Court judgment awarding approximately one-sixth of the marital property to him, and approximately five-sixt-hsof the marital property to the respondent wife, Donna F. Myers. The husband contends that because the trial court refused to divide the marital property on a 50/50 basis pursuant to an agreement executed between the parties on September 2, 1976, the trial court abused itsdiscretion. We affirm. The sole issue is whether the trial court abused its discretion when it refused to divide the marital. property according to the September 2, 1976 agreement and awarded approximately five-sixths to the wife and one-sixth to the husband. At the time the parties were married onApril 1-4, 1972, the husband was 47 and the wife 42. He had been married and divorced four times and she had been married and divorced twice. The trial court found that at the time of their marriage, the wife had a networth of approximately $176,000, and he had a net worth of approximately $22,000. Following their marriage, theparties lived in a residence ownedby the wife's father, located on Mariposa Drive in Billings,where the wife had been living prior to their marriage. The husband did some renovation work on this house, including redoing the showersand laying some carpet. Thepartiespaid

no rent to thewife's father. A majority of the wife's assets at the time of the marriage consisted 

### of her one-quarter interest in 

### a familypartnership that owned several commercial buildings known as the Moran Property. The property included the Billings Pioneer Post Office and parking lot; the Laurel Post Office; the J. C. Penney building in Laurel; the McCleod Building in Billings; the Montana Power Complex (threebuildings); and,a building referred to as the "Shell Shack." The wife's father, John H. Moran, had acquired the property over the years, and expressed many times his desire to keep the property in the family. Four or five months after the marriage, the parties separated. The wife remained living in the house on Mariposa, and 

### he moved into an apartment somewhere in Billings. Sometime later, the wife'smother, PearlM. Moran, approached the husband to see if he would be interested in buying some of the Moran property with his wife. The offer

wasmade to attempt topersuade thehusband to reconcilewith his wife. The husband stated that he would be interested only if he would be brought in as an equal partner with his wife.The plan was for the parties to purcha-sethe Billings Pioneer Post Office and parking lot, the J. C. Penney building in Laurel, and the Laurel Post Office. To effectuate the equal ownership, she gifted one-half of her one-quarter interest in that property to her husband. The partnership was then dissolved, and the above property was conveyed to the parties at a total purchase price of $255,000, though the appraised value of the property was $340,000. As a downpayment of $7,500, the wife conveyed to the other partners (her parents and brother) her one-quarter interest in the Montana Power Building in Laurel. Theparties then executed amortgage on the balance of $247,500, payable inmonthly installments of approximately $2,100. The mortgage payments were made from rental income received from the properties. At the time of trial, a balance of $108,155.74 remained on the purcha-seprice. It is important to note that the husband made no financial contribut.ion toward the purchase of the Moran property. He did, however, help to manage and maintain the property for a few years. Theparties established theBig-M Company and transacted business as a partnership. In addition to the Moran real property, the parties also acquired a small tractor with attachments, two older model pickup trucks and a dump truck, and tools and equipment. The total value of this Big-M Companypersonal property was $9,100. In April 1973, after the Moran family partnership had been dissolved,and after the husband had been brought in 

### as

a 50/50 partner on some of the Moran property, the parties purchased the residenceonMariposa.in Billings. Thehusband paid $15,000 of his funds for a one-half interest in the house, though the original cost basis of the house was $32,000 and had appreciated in value sincebeing built. The other one-half was gifted to the parties by the wife's father. The parties sold the residence the next year for $50,000,realizingahandsome gain. The parties had earlier arranged to purchase a tract of real estate on the Rimrock area overlooking the City of Billings, and had mortgaged theMariposa residence topay for the land. When the Mariposa residence was later sold, the mortgage obligation was retired. The parties began construction of a home on that property, both parties contributing time and effort,but with the husband providingmost of the carpentry and labor skills. The husband stopped working on the home when further marital problems arose, and the housewas unfinished at the time of trial. At the time of their marriage, thehusband owned a tract of land on the North Frontage Road near Billings. The husband sold the property, realized the sum of $12,500 and used the money to make the $11,600 downpayment on the Scott Building in Laurel on April 1, 1976. The husband also used his funds to make the first of four $8,574.81 installment payments. The Scott Building was adjacent to the J. C. Penney building, and after the purchase, J. C. Penney expanded into the smaller Scott Building. The final three installments on the Scott Building were paid for completely out of rental in.comefrom the existing 1-easeson real estate purchased from thewife1 s famil-y. The parties were separated at the time the Scott Building was purchased in April 1976, and were still separated inAugust of thatyear. During this time, the wife had been attempting to encourage the husband to reconcile. But, the husband refused to reconcileunless the wife agreed to put into writing his one-half interest in all the property, including the Moran property. The resulting agreement of September 2, 1976, is the focusof this dispute because the trial court refused to divide the property according to its terms--i.e., 50/50. The pertinent provisions of the agreement state as follows: "NOW, THEREFORE, each party agrees as follows: 111 

# . That each of the parties hereto own an undivided one half interest in real property described on Schedule 'A1 (alltheir realproperty) attached hereto, and 

### any real estate acquiredsubsequent to the date hereof shall be held as tenants in common.

"3. In the event of a divorce of the parties, the title to the real estate which is the subject of thisAgreement,may either: "A. Remain as itpresently is; "B. Be divided pursuant to agreement between the parties; "C. Be sold and the proceeds therefrom divided equally between theparties hereto

# . .." After the parties executed the agreement, they reconciled and lived together for a short while. Seven months after the agreementwas executed,and five years into the marriage, the husband filed for divorce. The divorce decreewas enteredNovember 16,1977. The trial court awarded to the wife realproperty having

an appraised value of $735,000, subject to a mortgage of $108,155.74. She was also awarded her separate vehicle and all of her home furnishings. The trial court awarded to the husband no real property, the Rig-M personal property consisting of the three trucks, the tractor, tools a.nd equipment ($9,100),and $95,000 in cashNeitherpartymade any steadfast contentionat the trial

as to what exactly the September 2, 1976 agreement represents. The husband contends on appeal that because the agreementwas executed during a period of reconciliation, it cannotbe a separation agreement under section 40-4-201,MCA, and is therefore a postnuptial agreement under sections 40-2-301 through -311, MCA. He contends in the alternative that if itwas a sepa.rationagreement, itwas binding on the trial court because the court failed to find it "unconscionable," as required by the statute. The wifecontends that itwas a separation agreementbecause theywere separated at the time it was executed, and in fact the husband would not reconcile unless she signed the agreement. She al~soargues that the court's finding of factno. XVIwas sufficient for purposes of finding 'unconscionability' under section 40-4-201. The trial court's finding no. XVI

"The history of the parties' marriage is a brief but stormy one, punctuated by numerous separations and attempted reconciliations. During the course of one such reconciliation, the parties entered into an agreement dated September 2, 1976, which purported to acknowledge eaual half interests in all of the parties' property and which was ostensibly designed to clarify the parties' respective rights. The parties had previously discussed other similar agreements which were not executed. In each case the agreementswere created in an atmosphere of emotional turmoil, the Petitioner acting as instigator,and theRespondent seeking to preserve the marriage. While the Court is required to consider such an agreement,it is in 

### - -- --- no 

### way bindi';ng and the Court finds that under all 

### - -- 

## - of the circumstances the enforcement of such an 

### -- -- agreement would 

### - be inequitable 

### -- in tEs case." (Emphasisadded.) We believe the trial court properly refused to divide the property according to the agreement. We also believe that the resultwould.be the samewhether the agreementwas a separation agreement or a postnuptialagreement. Section 40-2-301, PICA, relied on by the husba.nd, specifica.11~states that contracts between spouses are subject to the general rules "which control the a.ctionsof persons occupying confidental relations with each other.

# ..," as defined in the trust provisions. The husband's actions were far from complying with those rules. In the fall of 1972, four months after their marriage, the parties were already separated. Thewife wished to reconcile with her husband so she asked her mother to offer him achance to join the wife in buying some of her parents' property. He refused to reconcileunless he wasmade a 50/50 partner in ownership. Because she wanted to reconcile the marriage, the wife agreed, and that is when her family's partnershipwas dissolved and the Big-M Company formed. But, the husband made absolutely no financial contribution toward thepurchase of theMoran property. The husband then made several efforts to ink his one-half interest in the property. Admitted over the husband's objections at trial were three separate property agreements, all drafted at the instigation of the husband, and all designed to make sure he received one-half of his wife's property. The first twowere never executed and the lastonewas the September 2, 1976 agreement. The fact that makes the husband's attempt to secure one-half of her property most contrary to a trust relationship is thathewas doing soduring a short-lived and rocky marriage. The trial court found that "ineach case the agreements were created in an atmosphere of emotional turmoil, the (husband) acting as the instigator, and the

(wife) seeking to preserve themarriage. " Indeed,therewas testimony that the partieswere separatedmore than theywere together during their stormy five year union. Furthermore, it did not take the husband long (seven months) to file for divorce after he succeeded in having his wife sign the September 2, 1976 agreement. We believe the evidence shows that the husband took advantage of his wife regarding her property as a condition to continuing the marriage. Such actions are not consistent with what is required of one in a confidential relationship. Therefore the agreement was invalid as a postnuptialagreement under section 40-2-301, MCA, and the trial court dividing the maritalpropertywas notbound by it. The only other possible interpretationof the agreement is as a separation agreement under section 40-4-201, MCA. This is the most likely interpretation because the agreement

was executed at a time when the parties were separated and the agreementwasmade when at least the husband had one eye

on divorce. 

## - See, section 40-4-201(1),MCA. The husband contends that if the agreement was a separation agreement, the trial courtwas bound by it because it did not find that the agreementwas "unconscionable,

# " as required by section 40-4-201(2), MCA. Although it is true the trial court did not specifically find "unconscionability," (Seefindingno. XVI, supra),webelieve the evidence supports a finding of "unconscionability"as a matter of law. We rely on the same evidence in finding "unconscionability"as 

### a matter of law as we did in holding that thehusband's actionswere repugnant towhat is required of one in a confidential relationship. The "agreement"was reached at a time when he was attempting to secure a greater cut of her property, and she was attempting to save the marriage. The marriage had been stormy from the start, and the husband himself admitted he was "surprised" when his wife's mother offered tohavehim joinhiswife inpurchasing

some of the Moran property. It is clear that the offerwas made to encourage the husband to reconcile, but any such reconciliation was more form than substance. Based on the circumstances surrounding the execution of the September 2, 1976 agreement, we hold it was 

### unconscionable" as a matter of law and the trial. courtproperly refused to divide the property according to its terms. The finalpoint tobe addressed is the overall equity of the five-sixths/one-sixth split. We must admit such a division seems inequitable on its face. Thewell-established rule inMontana is: "The apportionment made by the DistrictCourtwill not be disturbed on review unless there has been a clear a.buse of discretion as manifested by a substantial inequitable division of the marital assets resulting in substantial injustice." 

### -- In re the Ma-rriageof Brown (Mont. 1978), 587 P.2d 361, 35 St.Rep. 1733. Without more, a divisj-onawarding five-sixths to the wife would seemto be "substantiallyunjust." But it must be noted that the marriage was short-lived and rocky, this is the husband's fifth and the wife's third divorce, and,most significantly, a greatmajority of the propertywas acquired from the wife's family. We held in the case of In Re Marriage of Herron (Mont. 1980), 608P.2d 97,that the source of the property was a major factor to be considered by the court dividing the property under section 40-4-202,MCA. In Herron, we held that the trial court had abused its discretion when it split the property 50/50,where "almost all of theproperty accumulatedby the (husband. and wife) can be traced to gifts or bequests from (thewife's father)." "Almost all" of the marital property can be traced to the Morans, the wife's family. Clearly all the Moran property purchased in 1972 came from the Morans, and isbeing paid off from rental income from that property,without any financial contribution from the husband. The tract of land

on the Rimrockswhere the parties started constructing their

new home was paid for by mortgaging the Moran residence on Mariposa.,and the mortgagewas then retiredwhen theMariposaresidence was sold. The husband did contribute some of his

own money to purchase materials for the partial construction of the new home, and the trial court considered that fact when it awarded him $95,000cash. The only other realproperties in which the husband had any equity were the Scott Building in Laurel.., and the residence on Mariposa which the parties sold in 1974. The husband used his own funds tomake the $11,500 downpayment on the Scott Building and also paid the first $8,574.81 installment. The last three installments were paid with rental income received from Moran property. The husband's $20,174.81 equity in the Scott Building was included in his cash award, as the trial court decided not to partition the property. Regarding the residenceonMariposa, the husband did pay $15,000 for a one-half interest, but that was a bargain considering the house cost $32,000 to build and had appreciated. The other one-half interest was gifted to the partiesby the wife's father. The trial court considered the husband's $15,000 contribution, and also considered the fact that because the wife's father had sold the home at such a bargain price, the partieswere able to turn around the next year and sell it for $50,000. We find no error regarding the Scott Building or theMariposa residence. Because we believe the trial court properly considered all the required factors set forth in section 40-4-202,MCA, includi.ng the husband's efforts in helping to manage and maintain the Moran property,wehold that therewas no clear abuse of discretion resulting in "substantial injustice" by awarding approximately five-sixths of the property to the wife and one-sixth to thehusband.The judgment is affirmed..

We Concur:



## /\ Justices