No. 94-535

IN THE SUPREME COURT OF THE STATE OF MONTANA

1995

IN RE THE MARRIAGE OF

TANYA TRUAX,

Petitioner and Appellant,

and

H. V. "BILL" TRUAX,

Respondent and Respondent.

APPEAL FROM: District Court of the Twentieth Judicial District,

In and for the County of Lake,

The Honorable C. B. McNeil, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Stephen C. Berg, Warden, Christiansen,

Johnson & Berg, Kalispell, Montana

For Respondent:

Marshall Murray and Shelly F. Brander,

Murray and Kaufman, Kalispell, Montana

Submitted on Briefs: March 23, 1995

Decided: April 26, 1995
Justice Terry N. Trieweiler delivered the opinion of the Court.

Petitioner Tanya Truax petitioned the District Court for the

Twentieth Judicial District in Lake County for dissolution of her

marriage to respondent, H.V. "Bill" Truax, and for equitable

division of the couple's property. The District Court entered a

decree in which it dissolved the parties' marriage, and distributed

certain assets to each. Tanya appeals from the District Court's

property distribution. We affirm the decree of the District Court.

The following issues are raised on appeal:

1 . Did the District Court abuse its discretion by its

apportionment of the pension funds earned by Bill from Frontier

Airlines?

2 . Did the District Court err when it included Tanya's

Glacier Bank account in the marital estate?

FACTUAL BACKGROUND

Bill and Tanya were married on November 20, 1980, in

Kalispell. Tanya had worked as a teacher in North Dakota prior to

the parties' marriage, but quit her teaching position and withdrew

the retirement funds she had earned when she married Bill. Tanya

moved to Kalispell with Bill, helped care for two of his children

from a prior marriage, and helped maintain the couple's home. In

1989, she returned to work as a teacher. At the time of trial, she

earned $27,000 annually in that occupation.

2
Bill worked as a pilot for Frontier Airlines from 1962 until

1986. During that employment, Frontier contributed to a pension

fund on his behalf.

In 1986, Frontier Airlines declared bankruptcy. For several

years afterward, Bill worked for other airlines. However, he

received no additional contributions to any retirement plan. He

retired from flying in 1992. Tanya and Bill separated in

April 1994. At the time of trial, she was 46 and he was 61 years

old.

Bill's Frontier pension was distributed in a lump sum amount

of $328,916.12 on December 26, 1989. The funds were then divided

into two IRAs. One was deposited at BankWest, and the other at

D.A. Davidson. There were withdrawals from the pension funds

during the marriage for living expenses and for construction of a

new home. At the time of trial, the total amount remaining in the

two IRAs was $267,358.

Bill testified that he is now unable to fly commercially

because he is over age 60, and is retired. Tanya testified that

she is now employed as a tenured teacher earning approximately

$27,000 per year.

The parties agreed on the distribution of marital assets, with

the exception of Bill's Frontier Airlines pension. They also

disagreed on the question of whether Tanya's Glacier Bank account

should be designated a marital asset.

3
Johnnie McCann, a CPA retained by Tanya, testified that the

value of Bill's retirement at the time of the marriage was

approximately $32,000, based on figures obtained from a loan

application. However, she admitted that she was unable to obtain

third-party documentation of the actual value. She arrived at the

amount earned during the marriage by subtracting $32,000 from the

current balance. Tanya contended that one-half of that balance was

the share of Bill's pension to which she was entitled.

Tom Torgenson, a CPA retained by Bill, valued the pension by

taking the total number of months Bill was employed at Frontier

(291), and dividing that number by the number of months Bill was

employed by Frontier during the marriage (69). The result was

23.7 percent. He thereby concluded that 23.7 percent of the

pension was earned during the marriage. It was and is Bill's

contention that Tanya is entitled to one-half of that amount, but

that the remaining amount is a pre-marital asset. The District

Court agreed. It distributed approximately $32,000 of the pension

balance to Tanya.

The District Court also designated a Glacier Bank account as

a marital asset, but awarded the entire account to Tanya. Tanya

testified that of the $15,587 in the account, $10,000 was a gift to

her from her father and the remainder belonged to a Canadian

friend.

4
ISSUE 1

Did the District court abuse its discretion by its

apportionment of the pension funds earned by Bill from Frontier

Airlines?

When we review a district court's division of marital

property, we will uphold the district court unless the findings

upon which that division is based are clearly erroneous or there

has been an abuse of discretion. In re Marriage of Maedje (1994) , 263

Mont. 262, 265-66, 868 P.2d 580, 583.

Retirement benefits are part of the marital estate. Rolfe Rolf

(1988), 234 Mont. 294, 296, 766 P.2d 223, 225 (citing Karrv. Karr

(1981), 192 Mont. 388, 628 P.2d 267). The question is how to

equitably divide those benefits.

In this case, the court heard testimony from the parties'

experts, both of whom are certified public accountants, regarding

the value of the pension earned during the marriage. Tanya's

valuation depended on the assumption that the pension had a value

of $32,000 on the date of the couple's marriage. However, that

amount came from a loan application which Bill had not signed and

which was based on a figure that he stated he had not provided. He

testified that he did not know the actual value at the time of the

couple's marriage, and neither party was able to provide

independent confirmation of that value. Under these circumstances,

it was not unreasonable for the District Court to rely on the

testimony of Bill's accountant and apportion benefits based on the

5
time rule approved (for other reasons) in Rolfe, 766 P.2d at 226.

Applying that formula, "the marital interest is represented by a

fraction, the numerator of which is the length of the employee's

service during the marriage, and the denominator is the employee's

total length of service." Rolfe, 766 P.2d at 226.

The dissent contends that Bill's pension should have been

distributed based on its present value without regard to the time

rule. However, an equitable apportionment of the pension based

merely on its present value would require some determination of the

value accumulated during the marriage. While the dissent makes the

factual argument that the value at the time of marriage should be

found based on an unsigned financial statement, the accuracy of

which could not be established, it was the District Court's

responsibility to resolve the factual issue created by this

circumstantial evidence and Bill's denial that he knew the value of

the pension at the time of marriage. The dissent would have us

disregard the District Court's fact-finding function, and establish

our own value for the pension on the date of marriage. However,

doing so would not only require that we ignore the limited scope of

our review, but also that we assume that during the first 18 years

of contributions to Bill's pension, he earned only $32,000, but

that during the next six years of contributions, plus three years

of interest, he earned nearly $297,000. The implausibility of this

assumption supports its rejection by the District Court.

6
While it is true, as pointed out by the dissent, that Rolfe

adopted the time rule based upon contingencies that affected the

value of a party's pension after the marriage, the rule is equally

applicable in this case where the District Court had no reliable

evidence with which to evaluate the pension at the beginning of the

parties' marriage.

We conclude that substantial credible evidence supports the

District Court's apportionment of Bill's retirement benefits. The

District Court's findings were not clearly erroneous, and it did

not abuse its discretion by the manner in which these benefits were

distributed.

ISSUE 2

Did the District Court err when it included Tanya's Glacier

Bank account in the marital estate?

Tanya claims that the Glacier Bank account contained only

money that was a gift to her from her father and money which she

was holding for a Canadian friend, and should not have been

designated as a marital asset. However, the District Court awarded

the entire amount in the Glacier Bank account to Tanya, even though

it was designated a marital asset. We have held that dissolution

decrees will not be reversed for error which does not materially

affect the substantial rights of the parties. In re Marriage of Dreesbach

(1994), 265 Mont. 216, 226, 875 P.2d 1018, 1024 (citing InreMarriage

ofLopez (1992), 255 Mont. 238, 245, 841 P.2d 1122, 1126). Since the

parties agree upon the distribution of all assets other than Bill's

7
retirement benefits (which we have affirmed were distributed

equitably), and since the Glacier Bank account was distributed to

Tanya in its entirety, regardless of its classification, we

conclude that Tanya's substantial rights were not affected by any

misclassification that might have occurred. While the dissent

disagrees with this resolution of our second issue, it offers no

explanation of how Tanya's substantial rights were adversely

affected by the District Court's disposition of her bank account.

The judgment of the District Court is affirmed.

We concur:

Justices
Justice James C. Nelson dissenting.

I respectfully dissent. In deciding Issue 1, we hold that the

District Court properly applied the "time rule" in dividing Bill's

Frontier Airlines pension. I disagree. In Rolfe v. Rolfe (1988),

234 Mont. 294, 766 P.2d 223, a case in which the time rule was

applied, we recognized the general rule that "the proper test for

determining the value of a pension is present value." Rolfe, 766

P.2d at 225, citing In re Marriage of Bowman (1987), 226 Mont. 99,

134 P.2d 197. See also Kis v. Kis 11982), 196 Mont. 296, 301, 639

P.2d 1151, 1153. In Rolfe -I the time rule was utilized because

various unknowns and contingencies in the husband's pension,

including his contributions, nonvested benefits, employer's future

contributions, benefit formulations, early retirement and

disability, made application of the generally accepted "present

value rule" inadequate. Rolfe, 766 P.2d at 223-224.

We are clearly not presented with that situation in the

instant case. To the contrary, the value of Bill's retirement

benefits as of the date of the parties' marriage was ascertainable;

his benefits were liquidated during the marriage; and the remaining

balance of those benefits was not only clearly ascertainable, but

was sitting in two bank accounts ready for distribution.

While the majority discounts Tanya's evidence of the value of

Bill's pension at the start of the marriage, Bill offered nothing

to refute that evidence, and, in fact, was contradictory in his own

testimony. When asked his opinion of the value of the pension at

the start of the marriage in 1980, Bill stated, alternatively, that

9
it 'I [plrobably didn't have any value at that time," or that he had

"no idea." Yet, having taken that position, he, nevertheless,

maintained that the ultimate value of the pension accrued over a

period of 24 years and 3 months, from 1962 to 1986. Moreover,

while he denied that the figures were in his hand writing, Bill was

apparently willing, nonetheless, to let stand for purposes of his

banking business, the $32,000 valuation of his pension on his

personal financial statement dated December 3, 1980, submitted to

First Security Bank of Kalispell, and the $24,000 valuation on his

financial statement dated August 27, 1979, both of which were

admitted at trial. Taken together, those statements and Bill's

inability or unwillingness to place any other valuation on his

pension as of 1980, provide substantial, and, in fact, the only,

evidence that the value of his pension at the time of the marriage

was $32,000.

The majority concludes that it is implausible, based on

Tanya's evidence, that the value of Bill's pension increased from

$32,000 in 1980 to $371,765, in 1989, when the lump sum was paid.

Yet, the majority apparently has no trouble in accepting the

plausibility of Bill's testimony that his pension increased from

"no value" to $371,165, during that same period of time. At least

Tanya's expert explained that increase, referencing unusually high

interest rates. Bill offered no explanation.

While the trial court is obviously charged with finding the

facts and resolving disputed facts based upon the testimony and the

evidence, the court is not at liberty to simply ignore what

10
evidence there is in order to arrive at some more seemingly

preferable result. Here, according to the only testimony offered,

the pension had either "no value" in 1980 (according to Bill) or it

had a value of $32,000 (according to Tanya); either way the timeof-marriage value was established by the parties' testimony, and

that evidence could not be simply disregarded.

In short, the facts in this case presented none of the

unknowns or uncertainties that necessitated the application of the

Rolfe time rule. Rather, I would hold that the court erred in not

valuing and distributing Bill's pension on the basis of the

generally accepted present value rule. There is nothing in this

case to justify application of the Rolfe exception. Unfortunately,

in failing to follow the proper rule, we further muddy the waters

in an area of the law where there are already few clear rules to

guide the bench and practicing bar.

With respect to Issue 2, I conclude that, on the evidence

presented at trial, the Glacier Bank account should not have been

included as a marital asset. Clearly, at least two-thirds of the

account balance derived from a gift from Tanya's father;

approximately one-third of the account did not belong to either

Tanya or Bill; and Bill did not contribute to the maintenance of

the account.

On the basis of the foregoing, I would reverse and remand for

further proceedings. Accordingly, I respectfully dissent.
April 26, 1995

CERTIFICATE OF SERVICE

I hereby certify that the following certified order was sent by United States mail, prepaid, to the

following named:

Stephen C. Berg

Warden, Christiansen, Johnson & Berg

Box 3038

Kalispell MT 59903-3038

Marshall Murray

Murray & Kaufman

Box 728

Kalispell MT 59903-0728

ED SMITH

CLERK~FTHESUPREMECO~RT