No. 96-397 IN THE SUPREME COURT OF THE STATE OF MONTANA 1997

ARRIAGE OF KATHLEEN D. GAUF, Petitioner and Appellant, and DOUGLAS H. GAUF, Respondent and Respondent.

APPEAL FROM: District Court ofthe Fifth Judicial District, In and for the County of Madison, TheHonorable Frank M. Davis, Judge presiding.

COUNSEL OF RECORD: For Appellant: Anne H. Watson, Watson & Watson, Bozeman. Montana For Respondent: Douglas H. Gauf, Pro Se, Belgrade, Montana

Submitted onBriefs: July 23, 1997 Decided: September 8, Filed:Justice Terry N. Trieweiler delivered the opinion ofthe Court. Pursuant to Section 

### I, Paragraph 3(c), Montana Supreme Court 1995 Intemal Operating Rules, the following decision shall notbe cited asprecedent and shallbepublished by its filing as a public document with the Clerk of the Supreme Court and by a report ofits result to State Reporter Publishing Company andWest Publishing Company. Kathleen 

### D. Gauf filed apetition for dissolution ofher marriage to Douglas H. Gauf in the District Court for the Fifth Judicial District in Madison County. A court-appointed master made findings of fact, conclusions of law, and a proposed decree which granted Kathleen's petition and divided theparties' property. The District Court adopted the master's findings, conclusions, anddecree, andentered judgment on thatbasis. Kathleen appeals. We affirm in part and vacate in part thejudgment of the District Court, and remand this caseto the District Court forproceedings consistent with this opinion. The following issues are presented on appeal: 

### 1. Did the District Court err when it adopted the master's division and valuation ofthe ranch property? 

### 2. Did the District Court err when it adopted the master's valuation 

### of the outfitting business? 3. Did the District Court err when it adoptedthe master's calculation and division ofthe parties' debts and assets? 4. Did the District Court err when it assessed the master's fee?FACTUAL BACKGROUND The following facts are taken from the master's findings of fact: Kathleen and Douglas Gauf were married on October 

### 3, 1981. They have one child, who wasborn July 1, 1988. Kathleen's parents, Thomas and Diana Wilson, owned 165 acres ofland in Madison County, known generally asWilson Ranch. Thereal property includes 152acres ofpasture, two one-acre homesteads, a one-acre parcel on which an old schoolhouse is located, and a separate ten-acre parcel. Kathleen and Douglas lived on the property until their separation in July 1994. In June 1987,Thomas andDiana Wilson made a gift of an undivided one-halfinterest in thereal property to Kathleen and Douglas as joint tenants; Diana Wilson is the owner of the remaining one-half interest. Kathleen and Douglas dispute whether the gift also included the livestock and equipment on the ranch. Thereafter, Kathleen and Douglas operated the ranch by paying all necessary expenses, hiring help, performing labor, and retaining all profits from the ranch. In 1994 and 1995, following the parties' separation, Kathleen and Diana Wilson sold the livestock and equipment and retained the proceeds from the sales. In 1989,Kathleen and Douglas established an outfitting business known as Douglas Fir and Furs. The business was originally hnded by a $30,095 loan, secured by a trust indenture against ten acres ofthe ranch. The assets of thebusiness include aboat and trailer, miscellaneous outfitting equipment, and an outfitting license.On December 7, 1994, Kathleen sought a dissolution of the marriage in the Fifth Judicial District Court in Madison County. After an initial hearing, the District Court found that the parties' contentions created an exceptional condition, and, pursuant to Rule 53, M.R.Civ.P., appointed a master topreside over trial of the matter. After four days oftrial, the master filed a report with the District Court, including findings of fact, conclusions of law, and a decree of dissolution of marriage, as well as a memorandum in support of the findings. Themaster determined thatthe undivided one-half interest in the real property was marital property, and that Douglas was entitled to a one-fourth share of the value of the ranch. In addition, the master found that an undivided one-half interest in the livestock and equipment on theranch was included inthegift and thus, marital property subject to division. The District Court did not require the master to file a transcript ofthe proceedings. Pursuant to Rule 53(e)(2), M.R.Civ.P., Kathleen objected to portions ofthe master's report which pertained to theproperty division; neither party made any objection regarding custody, child support, orvisitation. The District Court found that the report was not clearly

erroneous,but rather that itreflected a fair and equitable resolution ofthis matter. Therefore, the District Court adopted the report and ordered the property to be divided pursuant to its

terms. Kathleen now appeals from the District Court's decree. ISSUE 1 Did the District Cou~t err when it adopted the master's division and valuation ofthe ranch property?We review findings of factrelated to the division of marital property to determine if they are clearly erroneous. If they are not, the judgment will be affirmed unless the district court abused its discretion. See In re Marriage ofSnzitlz (1995). 270 Mont. 263,267-68, 891 P.2d 522, 525; Irz reMarriage ofRock (1993), 257 Mont. 476,479-80, 850 P.2d 296, 298. The Lest hr abuse of'discretion in dissolution proceedings is "'whether the trial court acted arbitrarily without employment of conscientious judgment or exceeded the bounds ofreason resulting in substantial injustice."' liz reMar-riageofMeeks (1996), 276 Mont. 237,242,915 P.2d 831, 834 (quoting In re Marriage of Torzrze (1987), 226 Mont. 1, 3, 733 P.2d 1280, 1282).The division ofmarital property in a dissolution action is governed by 

## 5 40-4-202, MCA. Pursuant to this statute,the district court is vested with broad discretion to distribute the marital estate in a mannerwhich is equitableto each party according to the circumstances ofthe case. See In reMarriage ofMaedje (1994), 263 Mont. 262, 265, 868 P.2d 580, 582. Rule 

### 53, M.R.Civ.P.,authorizes the appointment of a master by the district court. Pursuant to Rule 53(e)(2), M.R.Civ.P., "[iln an action to be tried without aju~y the court shall accept the master's findings offact unless clearly erroneous." Kathleen implies that the District Court erredby appointing the master. Herprimary challenge, however, isto specific findings made by the master. Accordingly, we will review the challenged findings to dctcrminc whcthcr thcy arc clcarly crroncous. See Schmidt v. Colonial Ter-I-ace Assocs. (1985), 215 Mont. 62, 66,694 P.2d 1340, 1344.First, Kathleen contends that the master erred in finding that the gift ofreal property to the couple is a marital asset and that it should be divided equally. Here, both parties acquired their interest in the ranch by deed during the marriage, and asjoint tenants. The record is devoid of evidence to support Kathleen's claims that the gift ofthe ranch was made entirely toher and that Douglas is not entitled to an interest in the ranch. Accordingly, we affim~ the master's finding that the ranch is marital property. When it distributed theparties' interest in the ranch, the District Court was required, pursuant to § 40-4-202, 

### MCA, to consider, among other things, the contribution of each spouse to the property. Here, the record clearly supports the master's finding that "[bloth parties have contributed financially to and facilitated the preservation and maintenance of [the ranch]." Kathleen contends that the ranch has deteriorated due to Douglas's negligent management, and therefore, that he is not entitled to an equal share of its value. However, that fact alone, even if true, does not establish that the master "acted arbitrarily without employment of conscientious judgment or exceeded the bounds ofreason." Therefore, we conclude that the master's determinationthat an equitable division of theproperty is to award eachparty a one-quarter interest in the value ofthe ranch is not an abuse of discretion. In addition, Kathleen contends that the master erred when she determined the size of the ranch. However, while there was a conflict in the evidence of the ranch's size, the master's finding in that regard was supported by substantial evidence and was not clearly erroneous. Therefore, we affirm that finding.Kathleen also objects to the District Court's valuation of the ranch. However, "the [district] court remains free, in its discretion, to adopt any reasonable valuation ofproperty which is supported by the record." In re Marriage ofLuisi (1988), 232 Mont. 243, 247, 756 P.2d 456, 459. "Its valuation can be premised on expert testimony, lay testimony, documentary evidence, or any combination thereof." Meeks, 276 Mont. at 242, 915 P.2d at 834-35. 

### A court is free to adopt proposed values of a party or a layman, or to set its own values, but when faced with widely conflicting values, the court is required to give reasons for selecting one value over the others. SeeIn re Marriage ofHurley (1986), 222 Mont. 287, 296, 721 P.2d 1279, 1285. Where the parties present conflicting testimony asto the value ofproperty, the court must use its fact-finding power to determine which evidence is more credible. See

### In reMarriage ofOtto (1990), 245 Mont. 271,278, 800 P.2d 706, 710. Here, the master found that the total value of the ranch was $421,180. Kathleen's appraisal placed its value at $357,000, while Douglas's appraisal ofthe ranch, not including the value of the buildings, was $396,000. Despite Kathleen's claim in her brief that the master chose not to consider her appraisal, the master adopted many ofher values directly from Kathleen's appraisal. The crucial values on which the master and Kathleen diverge pertain to the two one-acre homesteads on the ranch. Kathleen's appraisal recognized their replacement costs at $78,795 and $72,150, but then uscd substantially dcprcciatcd valucs of $22,376 and $0,respectively, in arriving at the total value ofthe ranch. In 

### In re Marriage ofPopp (1

### 983), 206 Mont. 415,420, 671 P.2d 24, 26-27, we stated: It is also clear from a thorough review ofthe file onthis matter that the court valued some assets at their depreciated value as listed on the parties' incometax returns instead ofat their fair market value. Yet there is no finding stating that the depreciated value is equal to fair market value of certain items of equipment. Without such a finding we hold the District Court's decision was "clearly erroneous." Here, the master relied on

### Popp to find that valuation of the homesteads at such depreciated values would not reflect their fair market value or a reasonable valuation pursuant to 

## 5 40-4-202, MCA. Based on ourreview ofthe evidence, we conclude that theDistrict Court did not err when it did so. Kathleen contendsthat the master's valuation violates Montana law because it ignores the values presented by the evidence. We stated in 

### In 

### re Marriage of Taylor (1993), 257 Mont. 122, 127, 848P.2d 478,481, that if there is a dispute over the value ofproperty, the district court may assign any value that is within the range of values presented by the evidence. When there is a great disparity between or among values, the court must state its

reasons for ail-iving at its valuation. Hel-e,the master explained that the lack of credible evidence regarding the ranch's value as a whole necessitated independent valuation ofthe component parcels to arrive atthe overall value ofthe ranch. In arriving at the value ofthe component parcels, the master assigned only values which werewell supported in the recordand fully explained the basis of each part of her valuation. Accordingly, we conclude that the master's valuation ofthe ranch as a whole is not clearly erroneous Second, Kathleen contendsthat the master erred by including the ranch livestock and equipment in the marital estate. The parties dispute whether the Wilsons' 1987gift ofthe real property also included a gift ofthe personal property, orwhether the gift was limited to the use andproceeds ofthe livestock and equipment. The master heard substantial testimony regarding the couple's authority to use, control, manage, maintain, andenjoythe livestock and equipment.Themaster was in the best position to weigh that evidence against the testimony of Thomas and Diana Wilson, who stated that it was their intent to transfer only the use and proceeds of the livestock and equipment. Accordingly, we 

### affim~ the master's finding that the couple owned a one-half interest in the livestock and equipment, and that any proceeds from their sale are subject to an equal division between them. We also conclude that the master's valuation of the livestock was supported by substantial evidence and was not clearly erroneous. However,

we conclude that the master erred when she valued the ranch equipment based on the proceeds of a 

### 1994auction which included items that were clearly the personal property of Thomas and Diana Wilson. We therefore vacate the District Court's valuation ofthe ranch equipment, and remand to the District Court for a valuation ofthe ranch equipment without the nonmarital property.ISSUE 2 Did the District Court err when it adopted the master's valuation of the outfitting business? Kathleen contends that the District Court erred by basing its valuation of Douglas's outfitting business on the testimony of a previously unidentified witness. Wereview a district court's evidentiary rulings to determine whether there has been

an abuse ofdiscretion. See United First Fed. Sav. &Loan v. mite-Stevens,Ltd. (1992), 253 Mont. 242,244, 833 P.2d 170, 172. Rule 26(b)(4)(A)(i), M.R.Civ.P., permits a party, through interrogatories, to identify the name of eachperson whom the otherparty expectsto call as an expert witness attrial and the subject matter of that person's testimony. Furthennore, a party has a duty pursuant to Rule 26(e)(l), M.R.Civ.P.,to supplement any prior response regarding expert witnesses. A trial court's refusal to exclude the testimony of a witness whose identity has not been disclosed, despite interrogatories requesting their identities, is a violation of Rule 26, M.R.Civ.P., and constitutes an abuse of discretion. See UnitedFirst Fed., 253 Mont. at 248, 833 P.2d at 173. See also Sanders v. MountHaggin Livestock Co. (1972), 160Mont. 73,79, 500 P.2d 397,401. Here, Kathleen's first set of discovery requests asked for a list of all witnesses whom Douglas intended to call at trial, as well as the substance of their testimony, Douglas's answer did not identify Glen Gallentine as a witness, nor did he identify the witness at anysubsequent time. Kathleen pointed this out when she objected to Douglas's attempt to have Gallentine testify regarding the value of the outfitting business. Nonetheless, the master allowed the witness to testify, and ultimately relied almost exclusively on that testimony to determine a value ofthebusiness. We conclude that the master's admission of and reliance

on Gallentine's testimony was an abuse of discretion. Accordingly, we vacate the master's finding regarding the valuation of the outfitting business, and remand to the District Court for findings consistent with this opinion.

### ISSUE 3 Did the District Court err when it adoptedthe master's calculation and division ofthe parties' debts and assets? Kathleen p~incipally challenges the master's findings regarding two of the pai-ties' debts and assets: (1) pasture income and hay sales; and (2) operating expenses ofthe ranch after the parties separated. First, the master determined that 1994pasture income in the amount of $7,075 was

a marital asset, as well as other pasture income andhay salesinthe amount of$6,859. While the latter figure is supported by substantial evidence, the former figure was not. The only possible referenceintherecord for the District Court's findingthat the ranch received pasture income in 1994was the following question and answer: Q. And again, could you take a look and indicate what the total revenue developed from the pasture forthe year 1994--or 1995 has been?

11A. [BYDOUGLAS GAUF] $7,075.00. However, the question makes the answer unclear regarding the year beingreferred to, and to find that it referred to 1994is contrary to other evidence that the pasture had not been leased in 1994. We therefore conclude that the District Court's finding that the ranch received pasture income in 1994is clearly erroneous. Second, Kathleen contends that the master erredby dividingthe assets fromthe ranch equally without considering the expenses incurred by her for operation of the ranch. However, the court's responsibility is to make an 

### equitable division of all of the marital property. 

### See $40-4-202(1), MCA;

### In reMarriage ofBarker (1994), 264 Mont. 110, 114, 870P.2d 86, 88. Accordingly, the appropriate question in reviewing the master's findings is not whether Kathleen and Douglas share equally in the ranch income and expenses, but rather, whether they share equitably in the marital estate. We conclude that they do. Therefore, we conclude that the fact that the master did not specifically offset Douglas's share to account for Kathleen's expenses was not an abuse of discretion. ISSUE 4 Did the District Court errwhen it assessed the master's fee? Rule 53(a),M.R.Civ.P., provides in relevant part: The compensationtobe allowed to a master shall be fixed by the court, and shall be charged upon such ofthe parties orpaid out of any fund or subject matter ofthe action, which is in the custody and control ofthe court asthe court may direct.Here, the court ordered the parties each to pay half of the master's $3000 fee. Kathleen contends that the $3000 fee is excessive and unjustified without an accounting to justify the amount. TheMontana rule is essentially identical to the Federal rule regarding compensation of masters. Federal decisions have held that district courts have discretion to determine the amount and allocation of a master's compensation, subject to review in case of abuse. See, e.g.,Aird 

### v.Ford Motor Co. (D.C. Cir. 1996), 86 F.3d 216,221;Broclc v. Ing (10th Cir. 1987), 827 F.2d 1426, 1428;Morgan v. Kerrigan (1st Cir. 1976), 530 F.2d 401,427. We will dothe same. A review ofwhether the district court abused its discretion in its determination of the master's fee requires consideration of a number of factors, including the time spent by the master, the master's background and distinction, the thoroughness of the services, the difficulty, amount, or importance of the matter involved, and the assistance provided by the master to the final disposition of the matter. SeeA~nerican Safety Table 

### Co.v. Sclzveiber(2d Cir. 1969), 415 F.2d 373, 379-80. Here, the master conducted four days of hearings involving many witnesses, and made findings on multiple contentions between the parties, including child custody, support, and the 

### property division. In addition to the numerous findings and calculations, the master alsoprepared a substantialmemorandum in support of the findings. The hearings and findings in this case dcmandcd considcrablc timc and effortto complete. Therefore,we conclude that the $3000 fee was not unreasonably high for the master's services in this case, andthat the District Court did not abuse its discretion. We affirmthis case in part and remand it

### in part to the District Court for a hearing to determine the appropriate marital share and valuation ofthe ranch equipment, the value of the outfitting business, and an appropriate division of the marital estate considering those values and other deletions from the marital estate as decided by this opinion.



### / justice

We Concur: