NO. 90-053 IN THE SUPREME COURT OF THE STATE OF MONTANA 1990

IN RE THE MARRIAGE OF RODNEY GLENN BUTLER, Petitioner and Respondent, and ALBERTA ESTHER BUTLER, Respondent and Respondent, 

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# FD %,.A and DALE BUTLER, Intervenor and Appellant, 

# Cd5kitL CLERMOFSUPREI'JJECOURT STATEOF MONTANA GINA KAY COLWELL,

APPEAL FROM: District Court of the Eleventh Judicial District, In and for the County of Flathead, The Honorable Michael H. Keedy, Judgepresiding.

COUNSEL OF RECORD: For Appellant: Katharine S. Donnelley and Leo Berry; Browning, Kaleczyc, Berry & Hoven; Helena,Montana For Respondent: Donald E. Hedman; Hedman, Hileman & LaCosta; Whitefish, Montana Jeffrey D. Ellingson; Ellingson Law Offices, Kalispell, Montana (Estateof R.G. Butler) Patrick D. Sherlock; Sherlock & Nardi; Kalispell, Montana (Colwell) Amicus Attorneys: LewisK. Smith;Teachers1Retirement Board;Helena, Montana submitted on Briefs: June 14, 1990

Filed: Decided: July 13, 1990Justice R. C. McDonough delivered the Opinion of the Court.

This appeal involves the distribution of teacher retirement benefits as part of a marital estate. The intervenor appellant, Dale Butler, appeals the order of the Eleventh Judicial District Court, Flathead County, awarding one-half of the teacher's retirement benefits of his deceased brother, Rodney Glenn Butler, to Rodney's former spouse, Alberta Esther Butler, and the other half to Rodney's estate. The court's order is the result of a remand froman earlier appeal,prior towhich order the retirement benefits were being paid to Dale Butler. We affirm the District Court's award of one-half the retirement benefits to Alberta as part of themarital estate and decline, in this divorce action, to determine title to the remaining benefits, as that issue is not properly before us and involves a question outside of this dissolution. The issue on appeal is as follows: Did the District Court

err in holding that the deceased husband's teacher's retirement benefits, which were being paid to the named beneficiary after entry of the initialdecree, should be redistributedaspart of the martial estate upon appeal and remand from the initial decree of dissolution? Rodney and Alberta were married in 1963. Two children born of themarriage have now reached the age of majority. Rodney was

a teacher in Chester, Montana,where the Butlers owned a home in joint tenancy with right of survivorship. In August of 1982, the Butlers purchased the Cedar Lodge, 

### amotel in Columbia Falls, Montana, for $245,000.00. The parties managed the motel together, with Rodney commuting to Chester to teach,untilMarch of 1984 when theparties separated. Rodney then returned to Chester and Alberta continued management of themotel alone asher sole source of income. Rodney filed for divorce inJanuaryof 1985;hewas diagnosed with terminal cancer in September 1986. The District Court dissolved the marriage in December 1986, and entered an order dividing the marital estate in February 1987. The court awarded Rodneyhis teacher'sretirementand thehome inChesterand awarded Alberta the motel. In April of 1987 the District Court set a hearing for July 1987 on Alberta's motion to alter or amend the property distribution. Rodney married a second wife, Tammy, shortly before his death. He died on June 17, 1987, prior to the hearing. At this time Rodney's brother Dale, as the named beneficiary of the teacher's retirement account, began receiving monthly survivorship benefits of $ 1,048.02 per month. In December of 1987, the District Court denied Alberta's motion to alter or amend and the first appeal ensued. 

### See In re Marriage of Butler (1988), 232 Mont. 418, 756 P.2d 1159. In our first opinion we found that the District Court abused its discretion by utilizing an outdated appraisal of the Cedar Lodge Motel. We remanded the case for determination of the partiest interest in themotel, stating that Ititmay be necessary 

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# . to reconsider the allocation of any or all of the marital estate to reach an equitable distribution." Butler, 756 P.2d at 1162.

### Ahearingwasheldupon remand onJuly 12, 1989,and the court entered itsmemorandumandorder on October 6,1989,redistributing theproperty. The courtessentiallyrevaluedthemotel at zeronet value due to existing encumbrances. The District Court did not disturb its prior award of the Chester home, where Tammy now resides, to Rodney. The court ordered Dale to account for and return to themarital estate all retirement benefits received,and awarded one-half of such benefits toAlberta Ester Butler in lieu of the first award of the defunct Cedar Lodge Motel. The Court awarded the other half to the Estate of Rodney Butler. On February6,1989,appellant DaleButler intervened alleging that he had a vested property right to the retirement benefits precluding theDistrict Court fromredistributingsuchbenefits as marital property. OnApril 18, 1989,Gina Kay Colwell,one of the adult childrenof Rodney andAlberta, also intervened. Shealleged that pursuant to Rodney's last will and testament and his correspondence with the Teachers1Retirement System, a trust was created by Rodney out of his teacher's retirement account naming Dale as trustee and Gina and her sister Cynthia Rae Buck as beneficiaries. She alleges that Dale has breached the fiduciary duty he has as trustee and has also breached the covenant of good faith and fair dealing. Thus, all the parties claim an interest in the teachers1retirement benefits. It is well-settled that a district court has far-reaching discretion in resolving property divisions. In re Marriage of Luisi (1988),232Mont. 243, 247, 756 P.2d 456, 459. Its judgment

### will not be altered or overturned absent a clear abuse of discretion nor will its findings of factbe set aside unless they are clearlyerroneous. Butler, 756 P.2d at 1161;Marriage ofWatson

(1987), 227 Mont. 383, 387, 739 P.2d 951, 954. By statute the district courthas the power finally equitably apportion between the parties the property andassetsbelonging toeither or both,however and whenever acquired and whether the title thereto is in the name of the husband or wife or both. Section 40-4-202,MCA. Montana law is well-settled that teachers' retirement benefits are properly considered to be a marital asset at the time of dissolution. In re Marriage of Sirucek (1985), 219 Mont. 334, 339, 712 P.2d 769, 772; In re Marriage of Rolfe (1985), 216 Mont. 39, 46, 699 P.2d 79, 83; Sowell v. Teacher's ~etirement System (1984),214Mont. 200, 207, 693 P.2d 1222, 1226. Dale contends that the District Court cannot retrievebenefit payments and the right to receive them and place themback in the marital estate because his right to receive them vested upon Rodney's death. He relies heavily on the following language from the Sowell case: Even thoughMontana recognizes that the pension fund of one spousemust be included in themarital estate at the time of a divorce action, we have not adopted the communityproperty concept in this state. Property can be owned and separatelycontrolledby one spousewithout the permission of the other. We hold that, consistent with this separate ownership concept, a spouse has the right to nominate the beneficiary of retirement account proceeds without consultation or permission from the other spouse and can designate a beneficiary other than the spouse. Althoush the retirement account proceeds must be included as a marital asset at the time of divorce, at the time of death those proceeds can be excluded from the decedent's estate and from anv claim by the survivor.Sowell, 693 P.2d at 1226. (~mphasis by appellant.) Sowell is distinguishable from the case at bar. There, the decedent husband, who died sometime after the divorce was in full force and effect, failed to change the beneficiary designation of his teachers1retirement benefits froma formerwife tohis widow. The widow claimed an interest in those benefits. This Court held that the widow did not have an interest in those benefits, which

were vested with the former spouse and designated beneficiary, absent an affirmative actby thehusband changing thebeneficiary. Here, at the time the beneficiary designation was made and when Dale began receiving benefits, the dissolution was still wending and therefore was subject to subsequent appeal of the property distribution, and our instructions on remand to consider all property forreallocation. Where property interestsare involved, an appeal in a divorce case does not abate upon the death of a party pending its determination. In re Marriage of Lawrence

(1984), 212 Mont. 327, 330, 687 P.2d 1026, 1028; Deich v. Deich (1958), 136Mont. 566, 577-578,323 P.2d 35, 42;Judsonv. Anderson (1945), 118Mont. 106, 125, 165 P.2d 198, 207. Dale and amicus curiae, the Teachers1Retirement Board, also contend that by statute, teacherst retirement benefits are not subject to legal process, and that the Board has in rem jurisdiction over such funds prior to payment to a member or designated beneficiary. See 66 19-4-706 and 19-4-1001,MCA. The Board further contends that once vested in a beneficiary the District Court must obtain in personam jurisdiction over abeneficiary before it can redirect payments. These arguments beg the question. As long as a dissolution isstill pending, thedistrict courtneednot I1obtaintt jurisdiction over retirement benefits because it already has continuing jurisdiction over such benefits aspart of themarital estateuntil the dissolution is final. Sowell, 693 P.2d at 1226; Lawrence, 687 P.2d at 1028. Here the District Court was faced with a difficult situation upon remand as to how to reallocate the marital estate. In light of this and the District Court's equitable powers regarding property disposition, we find no clear abuse of discretion in the award of one-half of the teacher's retirement benefits to the former spouseAlberta. However, Appellant Dale is correct in asserting that any claims of the other intervenorGina Kay Colwell or Rodney's estate are not properly before this Court. Title to the remaining onehalf interest in the retirement accounts is to be determined in a separatematter. The order of the District Court is affirmed with respect to the award of one-half of the teacher's retirement account to Alberta Esther Butler, and the awarding of the other half of the retirement award is vacated. AFFIRMED INPART.

Justice

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