80-04 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1980 

IN RE THE MARRIAGE OF 

LINDA KRUM, 

Petitioner and Respondent, 

GERALD JACOB KRUM, 

Respondent and Appellant. 

Appeal from: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone. 

Honorable Charles Luedke, Judge presiding. 

Counsel of Record: 

For Appellant: 

R. P. Ryan, Billings, Montana 

For Respondent: 

George T. Radovich, Billings, Montana 

Submitted on briefs: April 25, 1980 

~ecided: 3gL 26 19@ 

Filed: J[~L jqB[) 
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the 

Court. 

Gerald Krum appeal s from the property settlement provisions of a divorce decree entered in the Yellowstone County 

District Court. 

Gerald and Linda Krum were married in 1964. They were 

separated briefly in 1976 and were permanently separated in 

December, 1977. Linda filed for divorce on August 30, 1978, the 

trial was held on August 16, 1979, and the District Court entered 

its findings of fact, conclusions of law, and decree of dissolution on October 25, 1979. 

Until December, 1977, both husband and wife took an active 

part in the family farming operation located near Huntley, 

Montana. Following the separation, Linda li ved in the family's 

trailer home with the parties' two children. She no longer took 

an active part in the farming operation, although she did not 

interfere with Gerald's use of the land and equipment which was 

held in their joint name. Following the separation, Jerry continued to operate the farm and received all the profit and loss 

from the operations. He paid Linda $500 per month in child support in addition to allowing her the use of the family home. 

Linda began working parttime as a legal secretary-receptionist and 

attending Eastern Montana College. 

The principal assets of the marital estate were 120 acres 

of irrigated farm land, acquired from Gerald's parents in 1975 

through a contract for deed, and farm machinery, acquired partly 

from Gerald's parents and partly during the marriage and after 

separation. The principal liabilities were the amount owing on 

the contract for deed and a fluctuating farm operating loan. 

The District Court made the following valuation of the 

marital estate as of the trial date: 
Farm Land 

MARITAL ESTATE 

$165,000.00 

Balance owing - 73,000.00 $ 92,000.00 

Farm Equipment : 

From respondent's father $ 13,560.00 

During marriage 44,880.00 

Since separation 12,800.00 

Mobile Home (in place) 

Savings Account 

Keogh Plan (discounted) 

1978 Ponti ac (actual equity) 

Horse 

Furniture 

TOTAL $185,840.00 

The District Court also found that husband and wife had 

contributed equally to the accumulation of the marital estate 

prior to the separation and that although Linda did not function 

as a marital partner following the separation, her unfulfil led 

obligation was offset by Gerald's use of her interest in the land 

and machinery. As a result, the District Court entered a divorce 

decree which required Gerald to provide support of $250 per month 

per child and made the following equal property division: 

- TO PETITIONER LINDA ANN KRUM: 

Mobile Home and 5 acres of farmstead $ 27,000.00 

Savings Account 2,000.00 

1978 Pontiac (net) 1,500.00 

Horse 100.00 

Furniture 500.00 

Cash Payment - 61,820.00 

GRAND TOTAL $ 92,920.00 
- TO RESPONDENT GERALD JACOB KRUM: 

Farm Land (net) 

Farm Equipment and pickup truck 71,240.00 

Keogh Plan 6,500.00 

TOTAL $154,740.00 

LESS cash payment to petitioner - 61,820.00 

FINAL TOTAL - $ 92,920.00 

It will be noted that this division does not make provision for the farm operating loan. The amount of this loan fluctuates considerably. The lowest it has been in the last seven or 

eight years is approximately $7,000 and the highest was $49,500 

on the date of trial. The note balance on the date of separation 

was $28,000 and the balance on April 1, 1979, was $22,000. The 

proceeds have been used for farm expenses and personal items. 

The testimony at trial does not reveal the exact disposition of 

the proceeds and no attempt was made to quantify the amounts. 

Gerald testified that the balance on the note is directly related 

to the income that will come out of the farm for 1979. He estimated that approximately $35,000 is attributable to 1979 farm 

expenses. Also a pickup truck and combine were purchased 

through the borrowings. Gerald also testified that portions of 

the note were used to pay child support, to buy personal items, 

and to repair his current leased residence. The last expense 

will be reimbursed in the future. 

Gerald Krum moved to amend the findings, conclusions and 

decree to include the operating loan in the net marital estate 

and to value the estate as of the date of separation in December, 

1977, instead of the date of trial. The District Court entered 

an order denying the husband's motion. In an attached memorandum 

the court stated: 

"The primary adjustment being urged by respondent in 

his motion to amend Findings and Conclusions, and 

the principal cognizable one, is to incorporate into 

marital estate calculations the amount of the farm 

operating loan which, at the time of trial, was 

$49,500.00. This loan account exists upon a continuing basis, is renewed annually, and fluctuates 

widely. It was intentionally omitted in the Court's 

calculations because of a lack of sufficient information to do otherwise. For example: The evidence 

showed that respondent purchased a combine, a pickup 
truck, a camper she1 1, CB radio and stereo in 

1978, after the parties separated, for a total 

cost of $12,800.00. The money for these purchases came from the operating loan and, as a 

consequence, no speci f ic encumbrance became 

imposed upon the equipment itself and, although 

the evidence advises that some $22,000.00 in 

payments were made upon the loan in 1978, there 

is no itemization given to show the relationship 

of such payments to the indebtedness incurred in 

purchasing this equipment; so its net equity is 

impossible of determi nation under the evidence 

presented. Consequently, the Court was left 

with the alternative of either using the 

purchase price as the value to the marital 

estate as though it was paid in full, or considering it encumbered to its full value and, 

therefore, having no equity whatever. 

Obviously, it is not valueless, so the first 

alternative had to apply. 

"Further, in connection with using the whole 

amount of the loan balance as a deduction from 

marital assets, as is urged by the respondent, 

it appears that the proceeds from the operating loan are used largely for noncapital 

expenses, being $35,000.00 in 1979 to date of 

trial. These expenses have no relationship to a 

determination of marital assets when the farm 

proceeds are excluded as has been the case here. 

Even if included, however, in the circumstances 

of these parties there would be a problem of 

detailed accounting to determine which expenditures are relevant to the marriage and the 

marital assets of these parties and which are 

not. Also, it would very likely require a 

reconci 1 iation of the operating loan account 

over several years in the past, as well as into 

the future, by reason of the mechanics of its 

continuing operation. 

"The respondent has had, and under the decree 

continues to have, the farm operation exclusively to himself, with both expenses and income 

his, as well as any profit or loss. That was 

the basis upon which the evidence tendered the 

issues to the Court for its decision and it was 

on that basis that the matter had to be 

decided." 

With regard to the future proceeds, Gerald Krum testified 

that he could not estimate the value of his sugar beets, corn, 

grain and hay crops which were growing on the jointly owned land 

and 260 additional acres that he leased. 

The District Court also found no authority to support 

Gerald Krum's contention that the marital estate should be valued 

as of the date of separation rather than the date of trial. 

The following issues are raised on appeal: 

(1) Whether the District Court committed reversible error 

by refusing to deduct the value of a farm operating loan from 
the value of the marital estate; and 

(2) Should the net marital estate be determined on the 

date of separation or on the date of dissolution? 

The disposition of a marital estate is governed by section 

40-4-202, MCA, and is largely within the discretion of the 

District Court. This Court will not disturb the decision of the 

trial court absent a clear abuse of discretion. Eschenburg v. 

Eschenburg (1976), 171 Mont. 247, 557 P.2d 1014. The test for 

abuse of discretion is whether the trial court acted arbitrarily 

without the employment of conscious judgment or exceeded the 

bounds of reason. In re Marriage of Berthiaume (1977), 173 Mont. 

421, 567 P.2d 1388; Fredericksen v. Fredericksen (1980), 

Mont. , 605 P.2d 1135, 37 St.Rep. 191. 

Of the $49,500 balance of the farm operating loan, Geral d 

Krum testified that he estimated that $35,000 represented 1979 

noncapi tal farm expenses and $1,400 represented residence 

repairs. The $1,400 will be reimbursed by the owner of the residence at a later date and the $35,000 will be reimbursed by farm 

profit or absorbed in farm loss from the 1979 crops and the sale 

of cattle. Neither of these future proceeds were included in the 

marital estate; thus the District Court was entirely correct in 

offsetting $36,400 of the $49,500 note. The husband also 

testified that a portion of the loan represented child support 

payments and personal living expenses. Apparently a portion of 

the remaining balance of the loan represents the unpaid balance 

of the operating loan from prior years. Evidence also reveals 

that the only proceeds used to purchase capital assets following 

the separation were $7,500 to purchase a combine and approximately $6,000 to purchase a pickup truck. Both purchases occurred 

in 1978. 

Thus, the District Court was faced with whether or not to 

include any, a part or all of the unquantified balance of 

$13,100, which represented child support, personal expenses, and 
prior borrowings. This was a difficult question, largely 

accounting oriented. We find the District Court's reasoning in 

the previously quoted memorandum persuasive. Geral d Krum 

operated the family farm entirely on his own for the years 1978 

and 1979 and was entitled to the profit and loss from the 

operation. The entire port ion of the loan representing operating 

expense should be absorbed by him, and the only items which could 

rationally be deducted from the estate were the amounts attributable to the acquisition of farm equipment. Depending upon the 

accounting method used, this amount could be a proportionate 

amount of the $13,500 equipment purchased in 1978 or nothing if 

the first-in first-out accounting method is used. We find the 

omission of the $49,500 note to be reasonable under the circumstances of this case. 

With regard to the valuation date issue, it is admitted in 

appellant's brief that the valuation will not alter the result in 

the present case since the appreciation in land after the separation was nearly equal to the depreciation of equipment. The only 

authority presented by appel lant is sect ion 40-2-206, MCA, which 

pertains to earnings and accumulations of a married person while 

living separate from his spouse. The only increase in asset 

values between the date of separation and the date of dissolution 

was the appreciation of land, which can hardly be characterized 

as an accumulation solely of Gerald Krum since the property is 

held jointly. The value of farm equipment in fact declined due 

to depreciation. Consistent with In re Marriage of Krarner 

(19781, Mont. , 580 P.2d 439, 35 St.Rep. 700, and Hamilton 

v. Hamilton (1980), Mont , 607 P.2d 102, 37 St.Rep. 247, 

we find the date of dissolution to be the date of valuation of 

the marital estate. 

Affirmed. 

................................. 

Chief Justice