No. 95-566

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996

IN RE THE MARRIAGE OF

DEBRA S. O'NEIL,

APPEAL FROM: District Court of the Fourth Judicial District,

In and for the County of Missoula,

The Honorable John Larson, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Richard R. Buley, Tipp & Buley, Missoula, Montana

For Respondent:

Paulette Ferguson, Missoula, Montana

Filed:

Submitted on Briefs: April 25, 1996

Decided: June 4, 1996

I__., - -
Chief Justice J. A. Turnage delivered the Opinion of the Court.

Thomas E. O'Neil appeals from this dissolution of marriage

entered in the Fourth Judicial District Court, Missoula County. We

vacate in part and remand.

The dispositive issue is whether the court erred in its

valuation of the marital estate.

In 1986, just prior to his marriage to Debra S. O'Neil, Thomas

E. O'Neil sold homes he owned in Seattle, Washington, and Twin

Falls, Idaho, and land he owned in Lake Tahoe, Nevada. With

$110,000 in proceeds from those sales and some cashed-in retirement

benefits, he purchased the Lumberjack Saloon in Missoula County,

Montana. Debra S. O'Neil then quit her job with a telephone

company in Idaho and moved to Montana to join Thomas. The couple

married in August 1986.

Both Debra and Thomas worked at the Lumberjack Saloon for

several years and contributed money to that enterprise. They also

purchased real property and a mobile home near Lolo, Montana. In

September 1992, they sold the saloon on a contract. However, the

buyers defaulted and Thomas and Debra retook possession of the

saloon.

After the parties separated in 1994, Thomas resold the saloon,

again on a contract. He used the cash proceeds of the second sale

to open a tile business in Twin Falls, Idaho. Payments on the

second Lumberjack Saloon contract were made to Thomas.

When their marriage ended in 1995, Debra was forty-one years

old and Thomas was fifty-three. No children had been born to them.

2
Debra was employed by Missoula County, earning $7.49 per hour. The

parties had $45,000 in equity in their Lo10 mobile home and real

property. Debra was renting the mobile home to others and using

the rent payments to make the monthly payments on the property.

The District Court awarded Debra the mobile home, land, and

debt thereon; her $1,657 retirement account; two vehicles valued at

$1,975 and $5,200; a $400 raft; and a 40 percent interest in the

remaining proceeds of the second sale of the Lumberjack Saloon.

The court awarded Thomas his interest in the tile company; a truck

valued at $10,318; the $100,000 in proceeds received from the first

sale of the Lumberjack Saloon; the $37,500 down payment on the

second sale of the Lumberjack Saloon; payments made on the second

sale through May 1995; and 60 percent of the remaining proceeds of

the second sale of the Lumberjack Saloon. The court found that,

after the property distribution, Debra would have sufficient monies

to support herself, so that maintenance was not appropriate.

Did the District Court err in its valuation of the marital

estate?

The District Court found that, at the time of the dissolution,

the principal balance due on the second contract for sale of the

Lumberjack Saloon was $257,738.62. The court then calculated the

value of the remainder due on the second contract as $538,620,

arriving at its valuation by multiplying the number of future

payments, 192, by the monthly payment amount of $2,610.

3
Thomas argues that this was not a proper method of valuing the

contract for two reasons: (1) the monthly payment amount used by

the court includes a $25 monthly bank escrow fee, which is not

marital property, and (2) the valuation includes the total amount

of interest to be paid over the term of the contract, and does not

reflect present value. Debra responds that Thomas cannot now

complain about the court's valuation of the contract because he did

not offer the court any evidence to establish a different value for

the contract.

Debra maintains that the District Court used the same method

of valuing the contract as the method approved by this Court in In

re Marriage of Porter (1991), 247 Mont. 395, 807 P.2d 192. It is

true that in Porter, the court did not discount to present value

the value of a contract for deed. However, in Porter, the court

valued the contract at the balance due thereon, not at the balance

due plus interest and bank escrow fees, as was done in the present

case. Porter, 807 P.2d at 194.

Thomas also points out that the court awarded him the down

payments from the first and second sales of the saloon, but that

the record establishes that these monies were used to acquire other

marital assets, such as the Lo10 mobile home and land which were

awarded to Debra and the tile business which was awarded to Thomas.

The result is that the court included these assets twice in its

valuation of the marital estate.

The District Court found that the net value of the marital

estate was $544,350. It valued the property awarded to Debra at

4
$240,090.35, and the property awarded to Thomas at $468,098.84.

The total of those two awards, which should match the net value of

the marital estate, is $708,189.19.

Valuing assets and fixing the net worth of the marital estate

are two important determinations which must be made by the district

court in the process of apportioning marital property under 5 40-4-

202, MCA. This is the basis upon which the court makes an

equitable apportionment of the marital estate. Without these

determinations, the equitable distribution of marital assets

amounts to only guesswork. Cook v. Cook (19801, 188 Mont. 473,

479, 614 P.2d 511, 515.

While the District Court's disposition of future proceeds from

the contract for sale of the Lumberjack Saloon (60 percent to

Thomas and 40 percent to Debra) may be equitable, its valuation of

the balance due on the contract is not supported in the record.

Further, double inclusion of other assets is not supported in the

record. Correction of those errors will result in adjustments to

the values of the portions of the marital estate awarded to the

parties, the total of which, as Debra concedes, should match the

net value of the marital estate. We therefore vacate the portions

of the dissolution decree relating to property valuation and

distribution and remand for reconsideration of these matters.

Thomas also argues that the court erred in failing to credit

him with his substantial contribution of premarital assets to the

marital estate. Because resolution of the dispositive issue above

will require recalculating the net worth of the marital estate, we

5
conclude that the question of whether the court erred in its

distribution of marital property cannot further be addressed at

this time.

The property valuations and distribution in the decree of

dissolution are vacated. We remand this case to the District Court

for further proceedings in accordance with this Opinion.

We concur:

&hief Justice

Justices

6