No. 93-471 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1994 

IN RE THE MARRIAGE OF 

KENNETH G. CRAIB, 

Respondent and Appellant, 

and 

DEBRA L. RHODES, 

Petitioner and Respondent. 

APPEAL FROM: District Court of the Eighth Judicial District, 

In and for the County of Cascade, 

The Honorable John M. McCarvel, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Susan J. Rebeck, Great Falls, Montana 

For Respondent: 

K. Dale Schwanke, Jardine, Stephenson, Blewett & 

Weaver, Great Falls, Montana 

Submitted on Briefs: May 11, 1994 

SEP 22 1994 Decided: September 22, 1994 
Justice Fred J. Weber delivered the Opinion of the Court. 

Appellant Kenneth G. Craib (Kenneth) appeals an Order of the 

District Court of the Eighth Judicial District, Cascade County, 

which increased his child support obligation; awarded petitioner 

Debra L. Rhodes (Debra) a judgment for recovery of money she has 

paid for income taxes, interest and penalties; and awarded Debra 

attorney's fees and costs incurred in the action. The District 

Court's order covered motions by both parties to modify their 

original decree of dissolution of marriage entered on June 8, 1988 

in Cascade County. We affirm. 

The issues presented for review are: 

I. Did the District Court abrogate the benefit that Kenneth 

received from his discharge in a federal bankruptcy proceeding? 

11. Did the District Court abuse its discretion by increasing 

the amount of child support that Kenneth must pay? 

111. Did the District Court abuse its discretion in granting 

judgment to Debra for 100 percent of the parties' income tax 

liability that she was required to pay following the dissolution of 

their marriage? 

IV. Did the District Court abuse its discretion in refusing 

to admit certain evidence offered by Kenneth? 

V. Did the District Court err in adopting Debra's findings 

of fact? 

VI. Did the District Court err in awarding attorney's fees 

and costs to Debra? 

The Property Settlement and Child Custody Agreement 

2 
(Agreement) signed by Debra and Kenneth in connection with the 

dissolution of their marriage in 1988 provided, among other things, 

that Kenneth would pay to Debra $200 per month for support of the 

parties' minor son; that Debra would receive the family home and 

would be responsible for the first mortgage on the home; that 

Kenneth would remain responsible for the second mortgage on the 

home, which had been taken out so that Kenneth could buy shop 

equipment for his business; and that the prevailing party in any 

subsequent action related tothe Agreement would recover attorney's 

fees and costs incurred in that action. Unbeknownst to Debra, 

Kenneth had not filed the parties' previously prepared income tax 

returns for the years 1984, 1986 and 1987 at the time of the 

dissolution in 1988, and therefore, these liabilities were not 

included in the Agreement. The Agreement was prepared by Debra's 

attorney; Kenneth was not represented by counsel although he was 

encouraged to obtain separate counsel and represented in the 

Agreement that he had done so for purposes of reviewing the 

Agreement prior to signing it. 

In June of 1990, Debra filed an affidavit of contempt alleging 

Kenneth was in arrears $1802 in child support and $900 on a marital 

debt he had assumed. Subsequently, at a hearing held in July of 

1990, Kenneth volunteered to pay an additional $50 per month in 

support and a lump sum of $1,000. Although Kenneth began making 

payments of $250 per month, he paid only $650 of the lump sum 

promised. 

In addition to being in arrears in his support payments, 
Kenneth also failed to make payments on a loan from Beneficial 

Mortgage Co. to cover the second mortgage on the home. Debra was 

required to pay $730 to prevent foreclosure and has made payments 

on the Beneficial loan since Kenneth's default in early 1990. In 

December of 1990, Kenneth filed a Chapter 7 bankruptcy petition and 

has since been discharged and relieved of his liability on the 

second mortgage. Kenneth also failed to pay a Sears account and a 

loan he had taken out at Village Bank which was collateralized by 

Debra's car. Because the bank failed to perfect its security 

interest in the car, Debra has not been required to make payments 

on the loan from Village Bank. 

After filing his bankruptcy petition in December of 1990, 

Kenneth filed the late tax returns with the Internal Revenue 

Service (IRS) and the Montana Department of Revenue (MDOR) for tax 

years 1984, 1986 and 1987. In February of 1991, Debra received 

notices from the IRS assessing penalty and interest in addition to 

the unpaid taxes from those years. Debra had signed the returns 

shortly after they were prepared and testified she was unaware of 

any unpaid tax liability at the time of the dissolution in 1988 and 

until she received the IRS notices. She subsequently received 

similar notices from MDOR for taxes, penalty and interest. Debra 

had taxes withheld from her income during those years; the unpaid 

taxes represented tax liability for Kenneth's income from selfemployment in his auto body repair business. 

Debra was forced to borrow money to pay the IRS and to make 

payment arrangements with MDOR to prevent her property from being 
levied upon. Kenneth had scaled back his business, was not then 

employed and had petitioned for discharge in bankruptcy, making it 

impossible for the IRS or MDOR to collect from him at that time 

even though the taxes would not be discharged in his bankruptcy 

proceeding. Kenneth did not notify Debra that he was filing the 

returns after his bankruptcy petition. Debra testified that, had 

she known, she could have filed separately for those years and not 

owed any taxes. 

Soon thereafter, in February of 1991, Kenneth contracted with 

the Great Falls Tribune to paint newspaper dispensing machines and 

to deliver newspapers. Kenneth received a Chapter 7 bankruptcy 

discharge on April 5, 1991. In July 1991, he also began full-time 

employment with Procraft, a Great Falls automobile body repair 

business. He earns in excess of $40,000 per year from these 

sources. He also has purchased a building for use in automobile 

body work; although he claimed he was not doing any body work for 

profit, he acknowledged that he had done so in the past on a 

"trade-out" basis and to assist in the payment of attorney fees in 

this and another proceeding. At the time of the trial in this 

proceeding, Kenneth had more than twenty vehicles located on this 

property. 

In October of 1991, Kenneth remarried and has since supported 

his new wife and her two children. In February of 1992, Kenneth 

filed a petition to adopt one of his stepchildren on grounds her 

father was not supporting her. In that proceeding, Kenneth 

testified he was not current in the support of his own son because 
of personal disagreements with Debra but that he was able to meet 

his support obligations for their son. His petition to adopt his 

second wife's daughter was later denied. 

Just prior to filing his bankruptcy petition, Kenneth filed 

motions on November 28, 1990, to modify support and to be relieved 

of the liability for the Beneficial mortgage loan, the loan on 

Debra's automobile and the Sears account. Debra later moved for an 

increase in child support, for maintenance, for child support 

arrearages, for judgment for the amounts she had been forced to pay 

due to Kenneth's default of the Agreement, and for recovery of what 

she had paid to the IRS and MDOR. 

The Agreement contains a provision by which each party 

represented to the other there were no debts incurred for which the 

other was not aware and could be held liable. In addition, it 

contains a provision providing that a non-defaulting party is 

entitled to recover payment such party is required to make because 

of default, together with interest, attorney's fees and costs, 

including those incurred because of default under the Agreement. 

The District Court awarded increased child support retroactive 

to the date of the petition to modify support in the amount of $400 

per month through the end of 1992 and increased support in the 

amount of $475 per month beginning in January of 1993. The Court 

denied Debra's request for maintenance but did award her a judgment 

for the amounts she had paid to the IRS and the MDOR and for 

delinquent child support. The court further awarded to Debra her 

attorney's fees and costs incurred in this action according to the 
provision in the Agreement. The court also found Kenneth in 

contempt for his arrearages in child support. 

ISSUE I. 

Did the District Court abrogate the benefit received by 

Kenneth from his discharge in a federal bankruptcy proceeding? 

Kenneth has provided the Court with a lengthy argument on this 

first issue which essentially contends that the District Court 

substituted an increase in support from $200 per month to $400 and 

$475 per month for an award of maintenance, which was barred by the 

two-year limitation period set forth in § 40-4-208(2) (a), MCA, and 

for amounts which Debra has been forced to pay on the second 

mortgage obligation to Beneficial Mortgage Co. which was discharged 

in his bankruptcy proceeding. According to Kenneth, he is now 

being forced to pay maintenance and to pay for a debt that has been 

discharged in his bankruptcy proceeding by way of an unfounded 

increase in support for his son. 

Debra moved for both increased support and an award of 

maintenance. The District Court denied her motion for maintenance 

and granted her motion to increase support. The amount of the 

child support award is addressed separately in Issue I1 below. The 

record does not support Kenneth's argument that the District Court 

substituted child support for the Beneficial loan which was 

discharged in Kenneth's bankruptcy proceeding. 

Kenneth's argument that the increase in his support obligation 

is a substitute for maintenance or debt is similar to that 

presented and rejected by this Court in In re the Marriage of Jones 

(1990), 242 Mont. 119, 122-23, 788 P.2d 1351, 1353-54. In that 

7 
case, the husband argued that he was being penalized by the court 

for using proper bankruptcy procedures in discharging a $43,594 

debt to the wife and that the court erred by increasing a 

maintenance award because the debt to the wife had been discharged 

in the husband's bankruptcy action. In Marriaae of Jones, this 

Court concluded that substantial credible evidence supported the 

award of maintenance and that the maintenance was not a mere 

substitute for the husband's debt to the wife. Similarly, we 

conclude here that Kenneth is not being penalized for using 

procedures under the Bankruptcy Code to obtain a new start. His 

argument relating to the bankruptcy is simply not applicable to the 

circumstances of this appeal. The Bankruptcy Act at 11 U.S.C. I 

523 does not allow a debtor to discharge obligations for child 

support or for income taxes, the obligations we are concerned with 

in this appeal. As discussed below, an increase in child support 

is justified at the discretion of the District Court upon a showing 

of a substantial and continuing change of circumstances. Section 

40-4-208(2)(b)(i), MCA; Marriaae of Jones, 788 P.2d at 1354. 

We hold the District Court did not abrogate the benefit 

received by Kenneth from his discharge in the federal bankruptcy 

proceeding. 

ISSUE 11. 

Did the District Court abuse its discretion by increasing the 

amount of child support that Kenneth must pay? 

The standard of review this Court uses for child support 

awards is whether a district court has abused its discretion. In 

re the Marriage of Anderson (1993), 260 Mont. 246, 255, 859 P.2d 

8 
451, 457. Factors to consider in setting support orders are set 

forth in 5 40-4-204(3)(a), MCA, which provides in pertinent part: 

Whenever a court issues or modifies an order concerning 

child support, the court shall determine the child 

support obligation by applying the standards in this 

section and the uniform child support guidelines adopted 

by the department of social and rehabilitation services 

pursuant to 40-5-209. . . . 

The district court must use the child support guidelines in effect 

at the time it makes its decision. Marriaqe of Anderson, 859 P.2d 

at 256. 

The court must initially determine, however, there has been "a 

showing of changed circumstances so substantial and continuing as 

to make the terms unconscionable. Section 40-4-208 (2) (b) (i) , MCA. 

The District Court stated as follows: 

Debra has proven that there are substantial and 

continuing changes in circumstances such that the 

original award of $200 a month child support to her is 

unconscionable. The Agreement of the parties was made 

when Jason was 12 years of age. By the time Debra's 

Motion was filed he was nearly 14 and he is now 17. The 

funds that Debra would have envisioned would have been 

used from her earnings to provide for Jason have had to 

be redirected to pay and discharge the Beneficial loan 

Ken had agreed to pay. Within months after he filed his 

Motion he had taken on work at the Great Falls Tribune 

and at Procraft and earns substantial sums from both 

employments. He is acquiring a shop for $22,500.00 and 

has at least $5,000.00 equity in it. Any inability he 

had to not pay support for a time was brought upon 

himself. Debra is entitled to an increase in child 

support of $200 a month, for a total of $400.00 per 

month, retroactive to December, 1990, payable through the 

end of December, 1992. Commencing January, 1993, she is 

entitled to an increase of $275.00 a month for total 

support of $425.00 [sic] per month. She is also entitled 

to interest on the retroactive amounts. 

Although the court's conclusion of law incorrectly states $425 per 

month, the judgment clearly orders a payment of $475 per month. 
The court attached calculations to its decision which had been 

prepared by Debra that reflect Kenneth's ability to pay at least 

$288 a month child support in 1992 based on the parties' 1991 

income, and at least $353 a month beginning in January of 1993 

based on 1992 income figures. Kenneth's argument that the court 

used the guidelines in effect prior to July 30, 1992 for the award 

of $400 through the end of 1992 and the higher award of $475 per 

month after that date is inapplicable here: the difference in the 

award beginning in January of 1993 is supported by Kenneth's change 

in income in 1992 and his purchase of a shop building making it 

possible for him to earn self-employment income in addition to his 

wages and contract income. 

Because Debra's guideline calculations were attached to the 

court's order, Kenneth translates the amount of support awarded 

over the calculated amounts as maintenance or dischargeable debt. 

Debra's calculations, however, are the only calculations which 

include the income attributable to Kenneth as well as the 

appropriate tax liability. The District Court made no indication 

whatsoever that the increase in support was a substitute for 

maintenance or dischargeable debt. 

The child support guidelines are termed "guidelines" and as 

such are not set in stone. Moreover, the District Court had the 

discretion to consider other matters affecting the parties as well 

as their income. Child support awards necessarily require a 

district court to consider numerous factors in addition to the 

amount of income of each parent. 
The courts can also impute income to a party based on the 

particular facts of a case. In this case, there was substantial 

evidence presented which indicated that Kenneth had not reported 

all income from self-employment during the years the parties were 

married. Debra did not include imputed income in calculating her 

proposed support payment under the guidelines. However, evidence 

was introduced that Kenneth had more than twenty vehicles--many 

belonging to others--at his shop at the time of the trial in this 

matter. The District Court noted: 

THE COURT: There is another old aphorism that says -- 

Patrick Henry said, "I know no better way of judging the 

future than by the past." But you have got to have 

proof. 

. . . She suspects he did. And he probably did. Even 

now he has got 20 cars over there on the lots, and he 

probably is remodeling them, and refurbishing, and 

reselling them, and making a lot more profit than would 

appear. 

The District Court's findings justify an award of support in excess 

of the amount calculated under the guidelines. There is evidence 

of an increased need in support as Jason, although still a minor, 

was attending college at the time of the trial 

Kenneth also contends that the District Court erred by 

including income from Kenneth's contracts with the Great Falls 

Tribune in computing support. The 1992 guidelines state as 

follows: 

If a person with a subsequent family has income from 

overtime or a second job, that income is presumed to be 

for the use of the subsequent family, and is not included 

in gross income for the purposes of determining support 

for a prior family. The presumption may be rebutted upon 
a showing that the additional income is discretionary. 

46.30.1508 (3) , ARM. Evidence introduced at trial indicated that 

Kenneth did not take on extra jobs after acquiring his second 

family and that he was working all these jobs prior to his marriage 

to his second wife. He provided no testimony that the income from 

the second and third jobs was necessary for the support of his 

second family although he testified that his stepson was handling 

the newspaper delivery job and garnering the income from that 

contract. Kenneth did not produce documentation to this effect 

and, in fact, his tax returns show that he receives the income from 

this contract with the Tribune. 

Kenneth further testified that this income would be used for 

support of his stepson in any case. We note that Kenneth has no 

obligation to support his stepchildren; however, he has an 

obligation to support his son Jason from his marriage to Debra. 

See In re the Marriage of Carlson (1984), 214 Mont. 209, 218, 693 

P.2d 496, 501. Although Kenneth attempted to adopt one of his 

stepchildren based on her father's nonpayment of support, his 

petition for adoption was denied. We conclude that any money 

Kenneth uses to support his stepchildren may be classed as 

discretionary income for purposes of this case. 

Contrary to Kenneth's contentions, the 1992 guidelines allow 

the court to include income from his second and third jobs when 

computing support. The inclusion of this income is supported by 

the findings of the District Court. The court enumerated extensive 

findings which include the following: 
[Finding No. IV.] AlthoughKentestifieddissolutionof 

the marriage had a negative effect on him emotionally, 

which affected his business, his self employment income 

in 1988 and 1989 was significantly greater than it had 

been in 1987 or before. . . . [Finding No. VI. ] During much of the time Ken was 

reporting low amounts of income from his self-employment 

in the early to mid-1980's the parties were refurbishing 

the family residence. Ken testified he did work for 

individuals who in turn worked on the home on a trade-out 

basis. The value of the work performed on the home was 

not reflected in the parties' income. Ken also had 

trade-out arrangements with others. It is not possible 

to determine the value of this trade-out work because 

there are no records reflecting what the trade-outs may 

have been. However, he testified he did $1,000 of tradeout work for fees Attorney Brett Asselstine charged him 

when Asselstine represented Ken in a 1992 adoption 

proceeding. He also testified he had done $3,000 to 

$4,000 of work for his attorney in this proceeding to pay 

a portion of her fees. 

[Finding No. XVIII.] . Based on [Ken's] 

experience and expertise, and the availability of jobs, 

he should have been able to find employment in 1989 or 

1990 as an auto body repairman within three months after 

starting to look for such work, and would have earned no 

less than $11.50 an hour. 

[Finding No. XXIII.] . . . The form 1099 issued by 

the Tribune was issued to Ken and the contract for the 

route is in Ken's name. Ken testified he was uncertain 

as to what he was going to do with respect to the route 

after Nathan graduated from school in 1994. Even if 

Nathan was receiving some of the income from this 

contract work Ken testified it was going to pay sums that 

otherwise would have had to have been provided for 

Nathan. 

[Finding No. XXV.] Ken remarried in October, 1991. At 

that time he was substantially delinquent in his child 

support obligation for Jason. He also knew his present 

wife, Elisa, could not work, that she had two children 

that would be living with them, that she owed various 

debts, and that her children weren't receiving child 

support. 

[Finding No. XXXIII.] Jason has just turned age 17. 

He is 5 years older than when the marriage was dissolved 

and it costs more to care for him now than it did when 

the marriage was dissolved. This together with the 
additional sums Debra has had to pay out to secure the 

home for them increased her need for child support beyond 

what the need was when the marriage was dissolved. 

In the Conclusions of Law, the District Court stated: 

[Conclusion No. I. ] . . . The Court believes Ken has not 

and does not report all the income he earns from selfemployment, but even so his 1988 and 1989 income tax 

returns reflect that he was earning more after the 

marriage was dissolvedthan before. Even if his business 

commenced to fail he could have secured work as an auto 

body repairman in Great Falls for no less than $11.50 an 

hour, in a short time, which is imputed to him, and in 

fact, he had obtained a job for $11.50 an hour at Bison 

Motors, which he apparently did not take. By July 1, 

1991, he was working at Procraft for $13.50 an hour. He 

also testified in another proceeding that he was able to 

pay the support for Jason, but didn't do so because of a 

dispute with Debra. If anything his ability to pay child 

support was only temporarily changed and a temporary 

change in circumstances is not sufficient to justify 

modification of child support. Section 40-4-208, M.C.A.; 

In Re Marriase of Forsman, 229 Mont. 411, 747 P.2d 861. 

The record supports Debra's increased need for support based 

on her having to pay debts assigned to Kenneth from as far back as 

early 1990. In 1991, Debra paid the past due amounts to the IRS 

and MDOR and is obligated to repay her aunt for money she borrowed 

to pay some of the taxes. Further, Debra testified she had 

borrowed $3,000 against her Tribune retirement plan to use for 

living expenses for herself and Jason. Clearly Debra has used and 

continues to use money for Kenneth's debts and for tax liabilities 

which otherwise would have gone to the support of Jason. Moreover, 

had the taxes been filed on time as Debra thought they had been, 

the penalties and interest--substantial sums--would not have been 

assessed. According to the record, this was entirely Kenneth's 

fault. The support increase is retroactive to December of 1990. 

Although the District Court noted that the support obligation for 
the year 1991 should be based on the child support guidelines that 

were in effect at that time, there is no evidence that the amount 

awarded is actually calculated on previous guidelines. In fact, 

the District Court proceeded on the premise that the amount of the 

guidelines was a discretionary recommendation which he did not have 

to follow. On this basis, we conclude the amount awarded for 

support can be justified under either set of guidelines. 

Kenneth also contends that the court erred by miscalculating 

his equity in his shop property. The record indicates that Kenneth 

paid a $2,500 down payment on this property and another $2,500 

balloon payment and that he is paying in excess of $250 per month 

on this property. The second $2,500 payment was made with money 

borrowed from his employer and some of that was not repaid at the 

time of trial. The entire $5,000 in equity was included as incomeproducing property in the calculations made by Debra which were 

attached to the court's order. The total annual income attributed 

to Kenneth from the $2,500 which was borrowed from his employer is 

approximately $175. According to the facts of this case, we 

conclude this amount is insignificant for a determination of 

support. 

Finally, Kenneth argues that Debra's retirement accounts 

should have been included as income-producing property in 

determining the amount of support under the guidelines. Debra has 

approximately $40,000 in two retirement accounts. One of these 

accounts is through her employer, the Great Falls Tribune; the 

other is with Buttreys, a previous employer. She has taken out a 
loan for $3,000 against the Tribune account and is making payments 

on that loan. We conclude these accounts are not properly included 

as income-producing property. 

Kenneth's argument that these accounts should be included as 

income-producing property based on our recent decision in In re the 

Marriage of Hunt (1994), 870 P.2d 720, 729-30, 51 St.Rep. 209, 216, 

is misguided. In Marriaqe of Hunt, the husband argued that the 

wife's contributions to her unqualified retirement account could 

not be deducted from income; here Kenneth contends that all 

contributions to date should be included as income-producing 

property. He has not made the argument made in Marriase of Hunt 

that Debra has contributions which should be included in gross 

income. 

Moreover, Kenneth did not argue in the trial court that these 

were not qualified retirement accounts. Debra had no notice that 

he would argue this on appeal and thus did not submit evidence on 

this issue. An issue will not be reviewed if it is raised for the 

first time on appeal. Erler v. Erler (l993), 261 Mont. 65, 73, 862 

P.2d 12, 18. Therefore, we conclude that Kenneth is precluded from 

making this argument on appeal to this Court. 

Section 40-4-204 (3) (a), MCA, provides that the amount of 

support awarded using the applicable standards and guidelines is 

presumed to be adequate and reasonable unless the court finds by 

clear and convincing evidence that the application of them is 

unjust to the child or to any of the parties or is inappropriate in 

the case. We hold the District Court properly exercised its 
discretion in increasing the amount of child support that Kenneth 

must pay for the support of Jason. 

ISSUE 111. 

Did the District Court abuse its discretion in granting 

judgment to Debra for 100 percent of the parties' income tax 

liability she was required to pay subsequent to the dissolution of 

their marriage? 

The tax returns for tax years 1984, 1986 and 1987 were never 

filed by Kenneth during the parties' marriage, apparently because 

there was money due for those periods. The return for 1985 was 

timely filed and a refund received by the parties during the 

marriage. Kenneth had control of the returns after he received 

them from the parties' accountant and after Debra signed them. The 

relevant evidence in the record supports the District Court's 

finding that Debra was unaware at the time of the dissolution in 

1988 that the tax returns had not been filed and taxes had not been 

paid. 

Debra testified that she would have filed separate returns for 

those years had she known they were not filed. This testimony is 

supported by further evidence that her employer withheld sufficient 

tax from her salary to cover her separate tax liability for the 

three years. Moreover, Debra did not include unpaid tax 

liabilities as part of the Agreement between the parties. 

Further, Kenneth did not notify Debra that he was going to 

file the returns late prior to filing them in January of 1991. 

Debra's first notice came when she received the first assessment 

notices from the IRS in late February of 1991. If Kenneth had 

notified Debra or if he had filed separately, Debra would have had 

17 
the option of filing separate returns for those years, and since 

she had had enough withheld from her salary to cover her separate 

tax obligations, she would not have owed any tax personally. 

The Agreement contains the following clause: 

Wife represents and warrants to Husband she has not 

incurred any debts or made an (sic) contracts of which 

Husband may be unaware and for which Husband or his 

estate may be liable, and Wife will not incur any such 

debts or make any such contracts. If Wife violates this 

provision and as a result thereof Husband is obliged to 

make a payment or payments to others, he shall have the 

right to recover the same from Wife together with 

interest at the highest rate allowed by law, and, if 

reasonably necessary, he shall also be entitled to any 

costs of collection, including reasonable attorney's 

fees. Husband makes the same representations and 

warranties to Wife as Wife has hereinabove made to 

Husband and assumes the same obligations in the event 

Wife must make a payment or payments to others by reason 

of debts assumed by Husband hereunder. 

It also includes the following "Hold Harmless Agreement": 

Wife and Husband agree each with the other to 

defend, indemnify and save each other harmless of, from 

and against any and all loss, damage, costs and expenses, 

including reasonable attorney's fees, which either of 

them may hereafter suffer, incur, sustain or be subjected 

to as a result of any and all defaults in connection with 

this agreement and payment of any of the debts and 

obligations assumed by them. 

Although the unpaid tax liabilities to the IRS and MDOR should 

have been included in the Agreement, they were not included based 

on Kenneth's silence. Because Kenneth withheld this information, 

the debt became larger. When he finally filed the returns, he had 

temporarily insulated himself from having to pay the debts. Debra, 

on the other hand, was in a position whereby the IRS and MDOR could 

collect the taxes, penalties and interest from her. In all 

likelihood, Kenneth was aware of this and his actions may have been 
intentional, judging from the acrimony between the parties. When 

the tax debts had been paid by Debra, Kenneth began his employment 

with Procraft. 

Clearly, the Agreement covers a situation such as this where 

a debt is not included as part of a property settlement agreement 

despite the knowledge and representation of one of the parties. We 

conclude the Agreement provides for indemnification by the 

defaulting party and speaks for itself. 

District courts working in equity are given great discretion 

in dividing the marital estate in order to achieve a fair 

distribution of marital property using reasonable judgment and 

relying on common sense. In re the Marriage of Kimm (1993), 260 

Mont. 479, 483, 861 P.2d 165, 168. Allocating the entire tax debt 

to Kenneth is reasonable under the facts of this case. We conclude 

the District Court's findings which support the allocation of the 

entire tax liability to Kenneth are not clearly erroneous and the 

court did not abuse its discretion in determining that Kenneth 

should be responsible for the entire tax liability for the years 

1984, 1986 and 1987 and in granting a judgment in favor of Debra 

for the joint taxes, penalty and interest she has paid subsequent 

to the dissolution. 

We hold the District Court did not err or abuse its discretion 

in granting judgment to Debra for all income tax liability she was 

required to pay subsequent to the dissolution of the parties1 

marriage. 
ISSUE IV. 

Did the District Court abuse its discretion in refusing to 

admit certain evidence offered by Kenneth? 

Kenneth contends that certain information should have been 

admitted by the District Court to demonstrate that the Agreement 

unfairly divided the marital property. That Agreement was signed 

by the parties in May of 1988 prior to the dissolution of their 

marriage in June of 1988. Kenneth's reason for trying to introduce 

this information is as follows: 

MS. REBECK: If I might, there is an issue that is 

missing from the agreement, and that is the income tax 

responsibility. And it's our position when something is 

missing from that agreement, this Court has to construe 

whose responsibility that is. 

And to do that, the Court needs to understand the 

relative positions of the parties at the time the 

agreement was entered into, and who got what so you can 

construe the responsibility for the income tax. 

The court denied admission of any evidence pertaining to the 

circumstances at the time of the dissolution, repeatedly stating 

that "the agreement speaks for itself." 

The Agreement contains no reference to unfiled tax returns or 

tax liability. Debra's attorney prepared the Agreement which 

Kenneth signed. Kenneth represented that he had contacted an 

attorney prior to signing the Agreement and that it covered all 

assets and liabilities of the parties at that time. For reasons 

unknown, he knowingly withheld information about liabilities which 

should have been included as part of that agreement. 

Rulings on the admissibility of evidence are within the sound 

discretion of the trial court and will not be overturned on appeal 
absent an abuse of discretion. Zimmerman v. Robertson (1993), 259 

Mont. 105, 110, 854 P.2d 338, 341. Evidence which is not relevant 

is inadmissible. Rule 402, M.R.Evid. We conclude the District 

Court properly refused to admit evidence in this proceeding about 

the circumstances at the time of the dissolution. We further 

conclude that the court's statement that the agreement speaks for 

itself is a determination that the evidence sought to be admitted 

was not relevant to this proceeding. 

We hold the District Court properly exercised its discretion 

in refusing to accept evidence pertaining to circumstances at the 

time of the dissolution. 

ISSUE V. 

Did the District Court err in adopting Debra's proposed 

findings of fact verbatim? 

Kenneth contends that the findings of fact signed by the 

District court are a "verbatim replication1' of the findings 

proposed by Debra. The District Court, in fact, did adopt Debra's 

proposed findings with very little change. We note also that the 

court stated during the trial: 

But it appears to me there isn't much dispute about the 

facts of this case. Most of those facts can be 

stipulated to. That's why I don't know why we are having 

all this testimony. 

This Court has repeatedly stated that a trial court's findings 

of fact, although verbatim from or similar to those proposed by a 

party, will be affirmed if they are supported by substantial 

credible evidence in the record. In re the Marriage of Bolt 

(1993), 259 Mont. 54, 57-58, 854 P.2d 322, 324. Kenneth does not 
point to findings which are inaccurate: rather, he claims there are 

numerous factual findings which can be made from the evidence which 

were not listed in the District Court's order. We conclude the 

District Court's findings are supported by substantial credible 

evidence in the record. 

We hold the District Court did not err by adopting Debra's 

proposed findings of fact almost verbatim. 

ISSUE VI. 

Did the District Court err in awarding attorney's fees and 

costs to Debra? 

Kenneth also contends that the District Court erred by 

awarding attorney's fees and costs to Debra because there was no 

clear winner in the case and also because there is no evidence to 

show that Debra is without resources to pay her counsel. Kenneth's 

arguments on this issue have no merit. The award in this case was 

not based on § 40-4-110, MCA, as Kenneth contends; rather, the 

Agreement clearly provides for an award of attorney's fees and 

costs under the circumstances present here. It provides: 

Wife and Husband agree each with the other to 

defend, indemnify and save each other harmless of, from 

and against any and all loss, damage, costs and expenses, 

including reasonable attorney's fees, which either of 

them may hereafter suffer, incur, sustain or be subjected 

to as a result of any and all defaults in connection with 

this agreement and payment of any of the debts and 

obligations assumed by them. 

Clearly this provides for attorney's fees and costs to be awarded 

to Debra in connection with Kenneth's conduct and misconduct 

subsequent to the dissolution of marriage. The District Court 

based the award of attorney's fees and costs on the contract 
between the parties including the above-quoted provision and the 

provision by which Kenneth represented that there were no other 

debts of the marriage. 

We hold the District Court correctly awarded attorney's fees 

and costs to Debra. 

Af f inned. 

We Concur: 

Justices 
Justice James C. Nelson specially concurs and dissents. 

I concur with the Court's opinion on all issues except Issue 

2. On that issue I would remand and require application of the 

1992 guidelines, and if the ~istrict Court awards support in excess 

of those guidelines, I would require proper justification in the 

courtis findings and conclusions. In that regard I would also hold 

that the District Court (a) was correct in including Ken's earned 

income from his second and third jobs. Section 46.30.1508(3), ARM; 

(b) was correct in excluding Debra's retirement fund, but in error 

in not including her monthly contribution to that fund in her gross 

income, unless there is evidence that Debra is contributing to an 

IRS-approved plan. Section 46.30.1516 (1) , ARM; and (c) erred in 

including Ken's equity in his shop building since it was a 

performing asset. Section 46.30.1514, ARM.