NO. 92-128 IN THESUPREMECOURTOFTHESTATE OFMONTANA 1992 BONNIE L. MISCHKE,

Plaintiff and Appellant,
-vCALVIN L. MISCHKE,

Defendant and Respondent.

APPEAL FROM: District Court of the Twentieth Judicial District,

In and for the County of Lake, The Honorable C. B. McNeil, Judge presiding.

COUNSELOFRECORD:

For Appellant: James C. Bartlett, Hash, O'Brien & Bartlett, Kalispell, Montana For Respondent: R. M. Kehew, Kalispell, Montana

Filed: Submitted onBriefs: October 29, 1992 Decided: February 2, 1993

'Clerk

### Justice Fred3. Weberdelivered the Opinion of the Court.

This is anappeal bythe Petitioner, Bonnie L. Mischke, from
anorder distributing marital assets bythe District Court of the Twentieth Judicial District, LakeCounty, Montana. Weaffirm. Wehave restated the issues for our review asfollows: 1. Whether the District Court erred by including Mrs. Mischke's "inheritance" in the marital estate. 2. Whether the District Court erred indetermining that gifts from 

### Albert Hoffman were madeto both Mr. andMrs. Mischke. 3. Whether the District Court correctly determined the net assets of the marital estate. 4. Whether the District Court abused its discretion by awarding 52%of the marital 

### estate to Mr. Mischke and48%to Mrs. Mischke. Bonnie andCalvin Mischke (the Mischkes) weremarried onMarch 27, 

### 1971inWolf Point, Montana. At the time, 

### Mr. Mischke worked for the Wolf Point Fanners' Union Elevator andMrs. Mischke worked for her father, Albert Hoffman, doing general farm labor. Shortly after the marriage, 

### Mr. Mischke lost his job at the elevator and beganworking onMr. Hoffman's farm. Therelationship between Mr. Mischke and Mr. Hoffman was strained throughout the Mischkes' marriage. 

### Nonetheless, the record establishes that Mr. Hoffman madesubstantial gifts to the Mischkes throughout the marriage until his death in June of 1990. Shortly after they weremarried, Mr. Hoffman bought ahouse in Wolf Point for the Mischkes to live in. Theylived there rent-free 2for eight years. After their three children were born, Mr. Hoffman

built alarger home for the Mischkes. This newhomewas built in 1979 on property where an older home was also located. The Mischkes received the rents from this hometo apply as payments to Mr. Hoffman onthe newhome. Albert later deeded the entire property to the Mischkes. They
were to repay Mr. Hoffman for the materials for this new home but not his labor. Mr. Hoffman later forgave a large part of this debt. In September 1986, the Mischkes moved to the Flathead area and rented ahomeonthe East Shore of Flathead Lake. The Mischkes continued to receive rents from both Wolf Point homes. In 1987, Mr. Hoffman helped the Mischkes purchase the home they had been renting for the previous year. The purchase price
was $46,500. Mr. Hoffman and his wife owned anundivided one-half interest and the Mischkes owned the other one-half interest. The Mischkes agreed to pay Mr. and Mrs. Hoffman one-half the purchase price plus $10,000 for debts Albert had paid for them--a total of $33,250. They subsequently defaulted onthe loan to the Hoffmans. Periodically, the Hoffmans forgave someof the payments andallowed double credit for others. Approximately one month before Mr. Hoffman's death in 1990, the Hoffmans conveyed their one-half interest in the home to the Mischkes. In February of 1990, the Mischkes sold the Wolf Point rental homes for $60,000. Some of this money was used for home improvements to their Flathead home. Mrs. Mischke customarily handled all the financial affairs for the parties. Shetestified

3

### that the $59,555 cash received from the sale was all spent by

September 1990for homeimprovements, living expenses anddebts. She further testified that she transferred some of this to a Capital Preservation Fundandlater toherseparate savings account at Whitefish Credit Union. Following Mr. Hoffman's death in June of 1990, Mrs. Mischke received adeath benefit which testimony established wasto beher inheritance from Mr. Hoffman. This moneywas deposited in the joint checking account. Mrs. Mischke testified that sheusedsome of her inheritance to paymarital debts. Mrs. Mischke testified extensively about her reasons for switching funds amongvarious bankaccounts in anattempt to explain howher inheritance could be 

### traced from the date it was received until after the date of separation andtoshowthat the inherited funds werekept separate. Shealso presented muchevidence in anattempt to prove that Mr. Hoffman's gifts were intended for her alone andnot asjoint gifts. Testimony established that the Mischkes enjoyed astandard of living far beyond what they could have afforded without Mr. Hoffman's generosity. In addition tothe gifts andloans described aboverelating tothe homes, Mr. Hoffman madenumerous other gifts of cash and other items to the Mischkes. Mr. Hoffman's farm corporation paid for health andlife insurance, telephone service and$150in food eachmonth for the Mischkes. Thesole issues for trial werecalculation anddistribution of marital property andchild support. TheDistrict Court determined that the value of the marital estate, including the homeandcash
4in Mrs. Mischke's account, was $175,402. Mr. Mischke received

assets valued at $91,683 andMrs. Mischke received assets valued at $83,719. Mrs. Mischke sold other marital assets after the parties separated through Gardner Auction Service in Missoula. The award to Mr. Mischke includes alump sumchild support award as he has the minor children living with him. Mrs. Mischke wasunemployed at the time of trial except for part-time piano instruction. I. Whether the District Court erred by including Mrs. Mischke's "inheritance" in the marital estate. Mrs. Mischke contends that her inheritance should beseparate property. Mrs. Mischke testified that she transferred cash from
one account to another in order to keep the inheritance separate from money received from the sale of the Wolf Point homes. The record establishes, however, that prior to the parties' separation in January of 1991, inherited funds were commingled with other marital income, and although Mrs. Mischke controlled marital finances, she made little effort to separate her inheritance. Consequently, weare unable to determine that the total amount of the inheritance was still intact at the time of trial. Nonetheless, the record establishes that the District Court considered the nature of the asset andawarded asubstantial sumof cash to Mrs. Mischke. Our standard of review for questions of law is whether they correctly apply the law. In re the Marriage of Hamilton (Mont. 1992), 835 P.2d 702, 704, 49 St.Rep. 604, 606. An inheritance
5received during the marriage maybeamarital asset. Section 40-4-

202(1), MCA. Weconclude that under the facts of this case the marital estate could properly include Mrs. Mischke's "inheritance." Wehold that the District Court did not err by including the amount of Mrs. Mischke's inheritance in the marital estate. II. Whether the District Court erred in determining that gifts from Albert Hoffman were made to both Mr. and Mrs. Mischke. Mrs. Mischke disputes the District Court's finding that the gifts were not madeto her individually, particularly the Flathead
area home. Shecontends that ownership of the family homeresulted from gifts made to her alone from her father and that Mr. Mischke should not be awarded 100% of property gifted to her. She presented testimony to establish that both the Flathead home and her inheritance could betraced asgifts from Mr. Hoffman intended for her alone, even though the Hoffmans transferred title to the hometo both Mr. and Mrs. Mischke as joint tenants with the right of survivorship. However, cash sums received from the sale of the Wolf Point homes and later from Mrs. Mischke's inheritance were not kept separate. They were deposited in joint accounts. Mrs. Mischke testified that although cash was commingled in joint marital accounts, the $59,555 from the sale of the Wolf Point homes was exhausted prior to the parties' separation to pay marital debts, living expenses and home improvements andthat all the inheritance
was kept intact. The record does not support her contention that
6her inheritance can beaccounted for separately.

Ourstandard of review for adistrict court's factual findings relating to the division of marital property is whether they are clearly erroneous. Hamilton, 835 P.Zd at 704. Afinding is not clearly erroneous if it is supported by substantial evidence. Interstate Prod. Credit Ass'n v. DeSaye (1991), 250Mont. 320, 322- 23, 820 P.2d 1285, 1287. Substantial evidence is evidence that a reasonable mind might accept as adequate to support aconclusion: it consists of more than a scintilla of evidence and may be somewhat less than a preponderance. Barrett v. Asarco, Inc. (1990) I245 Mont. 196, 200, 799 P.2d 1078, 1080. Letters from Albert discussing his gifts were written to both Mr. and Mrs. Mischke. All real property wasconveyed to them both
as joint tenants with rights of survivorship. The record establishes that ownership of the Flathead home resulted partly from Mr. Hoffman's gifts and partly from the Mischke's payments. Despite Mrs. Mischke's testimony that Mr. Mischke did little to maintain or enhance the value of this property, the District Court found that the gifts from Mr. Hoffman were intended asgifts to both Mr. and Mrs. Mischke. Property gifted during marriage may beexcluded from the marital estate, however, where the objecting spouse can claim nocontribution to the property's value. In re the Marriage of Dailey (1988), 232 Mont. 235, 242, 756 P.2d 1131, 1135. Such is not the case here. While Mr. Mischke's contributions maynot have been great, the record establishes that he helped to construct the Wolf Point home, helped to construct
7improvements to the Flathead home, contributed to the maintenance

of both homes andthat his earnings also contributed to payments to Mr. Hoffman from the parties' combined income during the marriage. Weconclude there is substantial evidence in the record to support the District Court's finding that Mrs. Mischke failed to prove an individual gift. Wehold that the District Court did not err in determining that gifts from Mr. Hoffman were madeto both Mr. andMrs. Mischke. III. Whether the District Court correctly determined the net assets of the marital estate. Mrs. Mischke's argument focuses upon the net amount of the marital estate. Sheclaims that the total "cash in bank," found by the District Court to be $47,999.00, is incorrect. If her inheritance must be included in the marital estate, she contends that the correct amount is $34,995.43. This figure represents the amount of her inheritance ($46,988.41 gross: $43,319.54 actually received net of taxes) less the amount of pre-separation debts and attorney's fees she claims to have paid. To support this contention, Mrs. Mischke introduced into evidence acopy of asavings account record from Whitefish Credit Union, showing abalance of $45,667.02 asof April 23, 1991. Mrs. Mischke did not provide any bank statements or other information to demonstrate the amount of cash in the account as of the date of trial, which was December 2, 1991. Although the District Court did not specifically state a
8

### factual finding relating to howit determined the total "cash in

bank," the amount determined ($47,999.00) is only $2,332.00 more than the amount shownasofApril 23, 1991. Atrial judge is free to accept anyvaluation of property hewishes solong asthere is substantial evidence to support the value selected. In re the Marriage of Hammill (1987), 225Mont. 263, 732 P.2d 403. The District Court could have reasonably determined that this amount represented earned interest from 

### the date ofdeposit until the date of the decree or that it represented an amount Mrs. Mischke received from sales 

### of marital 

### property that she sold through Gardner Auction Service in Missoula. Mrs. Mischke also contends that Mr. Mischke should beordered to payher for 50%of the total 

### pre-separation debts that shepaid from her inheritance, represented bythe $13,003.57 figure. She testified that sheborrowed $13,000 after the parties separated,
someof which sheusedto pay$8,444.31 in pre-separation marital 

### debts instead of using her inheritance moneyto pay them. She subtracted $13,000.00 (the amount of the loan) to arrive at her calculation for "cash in bank." Mrs. Mischke failed to produce adequate financial records to support her contention that the moneywasusedinthis manner. The District Court noted that "the evidence introduced bythe parties with respect to marital debt is confusing, conflicting and incomplete." Thedecree provides that any indebtedness incurred after the date of separation is not part of the marital estate. This
9includes the $13,000.00 borrowed byMrs. Mischke. It also provides

that both parties remain jointly responsible for unpaid marital debts. Mrs. Mischke testified but produced inadequate proof to substantiate that two marital debts totalling slightly over $Z,OOO.OO remained unpaid at the time of trial. A district court is not required to determine and assign marital debts based on one party's testimony where copies of statements from creditors or other evidence to support claims has not been introduced. In re the Marriage of Purdy (1988), 234Mont. 502, 764 P.2d 857. The record establishes that Mrs. Mischke handled all financial matters for the parties and that she did not provide copies of accounts as requested during discovery. Similar to Purdv, the evidence Mrs. Mischke introduced at trial to establish marital debt was sketchy; she testified as to the amounts, but did not provide copies of statements or other credible evidence to support her claims. Her evidence consisted of her handwritten summaries and oral testimony. Weaffirm the District Court's refusal to allocate part of the $13,000.00 debt to the husband. Wehold that the District Court did not err in determining the net assets of the marital estate.IV. Whether the District Court abused its discretion by awarding 52%of the marital estate to Mr. Mischke and 48%to Mrs. Mischke. The District Court awarded 52%of the marital estate to Mr. Mischke, including the home, stating that:
10. . . 

### TheCourt hastaken all factors into consideration and

awards alarger share of the marital estate, including the WoodsBayfamily home, to the Respondent asaonetime cash settlement in lieu of support, andPetitioner shall have no further child support obligation for the minor children ofthe parties. In dividing marital property, courts must fashion a distribution which is equitable to each party under the circumstances. Hamilton, 835P.2d at 704. Obtaining anequitable distribution attimes requires the court to engageindiscretionary action which cannot beaccurately categorized asafinding of fact
or aconclusion of law. Suchdiscretionary findings will not be disturbed absent anabuse of discretion. In re the Marriage of Danelson (Mont. 1992), 833 P.2d 215, 49St.Rep. 597. Abuse of discretion in apportioning the marital estate is manifested bya substantially inequitable division of the marital estate. In re the Marriage of Holston (1983), 205Mont. 470, 668P.2d 1048. Under Montana law, gifts and inheritances are treated similarly in adissolution of marriage proceeding. Section 40-4-
202 (1) I 

### MCA,provides

. . .the court.

. . shall

. . .finally equitably apportion between the parties the property and assets belonging to either or both, however andwhenever acquired andwhether title thereto is inthe nameofthe husband orwife orboth

.

. . In dividing property acquired

. . . by gift, bequest, devise ordescent; property acquired in exchange for property acquired

. . .bygift, bequest, devise, ordescent

. . .the court shall consider those contributions of the other spouse to the marriage, including: (a) the nonmonetary contribution of ahomemaker; (b) the extent to which such contributions have facilitated the maintenance of this property; and (c) whether or not the property division serves as an alternative to maintenance arrangements. Section 40-4-202(l), MCA, is a flexible statute vesting
11district courts with wide discretion for distributing marital

property. In re the Marriage of Stewart, 232 Mont. 40, 757 P.2d 765. There is noset rule concerning howan inherited asset is to bedivided. Stewart, 757 P.2d at 768. In addition to the broad discretion given to District Courts concerning property division, they also have broad discretion in providing for support for children. In dividing marital property, the court may take into account child support considerations and may protect and promote the best interests of the children by setting aside aportion of jointly andseparately held property for support of their children. In re Marriage of King (1985), 216 Mont. 92, 700 P.2d 591. Mrs. Mischke testified that she was unemployed except for part-time piano instruction and could not afford to pay any child support for the two minor children. Shefurther testified that she intended to provide for their support from the proceeds of the sale of the family home. Instead of ordering asale of the home, the District Court awarded alarger share of the marital estate to Mr. Mischke, which was to be considered alump sumsettlement in lieu of child support from Mrs. Mischke and which relieved her of all future support obligations for the children. Considering the facts of this case, we conclude that the District Court did not abuse its discretion by awarding 52%of the marital estate to Mr. Mischke and 48%to Mrs. Mischke. Wefurther conclude that the District Court did not abuse its discretion in awarding a larger share of the marital estate to Mr. Mischke in
12lieu of monthly child support payments.

Wehold that the District Court did not err in distributing
52% of the marital estate to Mr. Mischke and 48%to Mrs. Mischke. Pursuant to Section I, Paragraph 3(c), Montana Supreme Court 1988 Internal Operating Rules, this decision shall not becited as precedent andshall bepublished by its filing asapublic document with the Clerk of this Court and by areport of its result to the West Publishing Company. Affirmed.

WeConcur:

Chief Justice

13February2,1993 CERTIFICATE OFSERVICE IherebycertifythatthefollowingorderwassentbyUnitedStatesmail,prepaid,tothefollowing named:

JamesC.Bartlett HASH,O’BRIEN&BARTLETT P.O.Box 1178 Kalispell, MT 59903 R.M.KEHEW AttorneyatLaw P.O.Box5427 Kalispell, MT 59903-5427

EDSMITH CLERKOFTHESUPREMECOURT STATEOFMONTANA