Source: http://mn.gov/law-library-stat/archive/ctapun/0604/opa050911-0425.htm
Timestamp: 2018-05-21 10:47:46
Document Index: 774302299

Matched Legal Cases: ['§ 518', '§ 518', '§ 518', '§ 518', '§ 518', '§ 518']

In re the Marriage of: Zelda M. Scheff, petitioner, Respondent, vs. David A. Scheff, Appellant. A05-911, Court of Appeals Unpublished, April 25, 2006.
A05-911
Zelda M. Scheff, petitioner,
David A. Scheff,
File No. F8-03-1306
Zelda M. Lyons, Post Office Box 238, Grand Rapids, MN 55744 (pro se respondent)
James Perunovich, Law Office of James Perunovich, P.F., 402 East Howard Street, Suite 7, Hibbing, MN 55746 (for appellant)
Considered and decided by Minge, Presiding Judge; Toussaint, Chief Judge; and Peterson, Judge.
On appeal in this marital dissolution, appellant-husband David A. Scheff argues that the district court erred in ruling that certain stock was marital property and argues that respondent-wife Zelda M. Scheff’s delay of more than two years between serving husband with the dissolution petition and her filing of that petition was not “reasonable” under Minn. R. Civ. P. 5.04, and therefore husband should not be penalized for transferring assets during the period between service and filing when the parties tried to reconcile. We affirm.
On January 8, 2001, wife served husband with a summons and petition for dissolution of marriage. For the next two years, the parties attempted to reconcile and continued to live together. Husband and wife were not able to reconcile their marriage, and on June 24, 2003, husband filed an answer and counter petition for dissolution of marriage to wife’s January 2001 summons and petition. On June 26, 2003, wife filed the January 2001 summons and petition for dissolution of marriage with the court.
During the dissolution proceedings, the parties stipulated to all matters except one, the property status a of stock interest received by husband from his brother, James Scheff (Scheff). Prior to and during his marriage to wife, husband worked for his brother, who owned Scheff Logging and Trucking, Inc. Scheff incorporated his logging business in 1995 and owned all assets. After incorporating, Scheff transferred 20% of the stock in his logging business to his mother and 20% to husband. Scheff testified that he transferred the stock to husband in pre-dissolution planning to prevent the loss of property in Scheff’s marital dissolution. No consideration was paid to Scheff by husband for receipt of the stock, nor was a gift tax return ever filed by husband. Prior to husband’s marital dissolution, he transferred his 20% ownership in Scheff Logging back to Scheff without wife’s consent or knowledge. Husband testified he did so because of his marital problems.
Husband challenges the district court’s finding that his 20% ownership in Scheff Logging constitutes marital property. In addition, he argues that wife’s delay of more than two years between serving him with the dissolution petition and her filing of that petition was not reasonable under Minn. R. Civ. P. 5.04, and he should not be penalized for transferring assets during the period when the parties tried to reconcile.
Husband argues that the district court erred by finding that the 20% stock interest given to him by his brother was marital property. He argues the stock was given solely to him as a gift and therefore is nonmarital property.
Property acquired during a marriage is presumed to be marital. Olsen v. Olsen, 562 N.W.2d 797, 800 (Minn. 1997); see Minn. Stat. § 518.54, subd. 5 (2004) (defining “marital property”). Whether property is actually marital is a legal question reviewed de novo, but this court defers to the district court’s underlying findings of fact unless they are clearly erroneous. Olsen, 562 N.W.2d at 800.
Nonmarital property is statutorily defined as “property real or personal, acquired by either spouse before, during, or after the existence of their marriage, which (a) is acquired as a gift, bequest, devise or inheritance made by a third party to one but not to the other spouse; [or] (b) is acquired before the marriage[.]” Minn. Stat. § 518.54, subd. 5(a)(b). In order to determine whether property was given as a gift, the district court must consider the (1) donative intent of the giver, (2) the delivery of the gift, and (3) the absolute disposition of the property. McCulloch v. McCulloch, 435 N.W.2d 564, 568 (Minn. App. 1989). The burden is on husband to prove by a preponderance of the evidence that the property is in fact nonmarital. Olsen, 562 N.W.2d at 800.
The district court’s findings of fact support its decision that the stock is marital property. Husband did not bear his burden to establish that the property was nonmarital. Although it is undisputed that Scheff delivered the stock in the logging business to husband, he argues that the property must be classified as a gift because Scheff intended the transfer to be a gift. In Olsen, the Minnesota Supreme Court held that the “most important factor in determining whether a gift is marital or nonmarital is the donor’s intent.” Id. When analyzing the donor’s intent, we must determine whether the district court’s findings of fact regarding the donor’s intent are clearly erroneous. Id.
There was conflicting testimony during trial. Scheff testified that the stock transfer was intended to be a gift solely to husband. But both Scheff and husband also testified that the stock transfer was part of Scheff’s pre-dissolution planning. Scheff testified that he transferred the stocks to “protect his assets from a pending marital dissolution and that the stock shares were never really [husband’s].” On direct examination, when asked, “Were you trying to protect some assets should there be a divorce?,” Scheff answered, “Yes.” Husband also testified that he understood that Scheff transferred the stock to him in order to protect assets while Scheff proceeded with his marital dissolution. Although both parties labeled the transfer of stock as a gift, they fully understood that the immediate and dominating purpose was to transfer Scheff’s ownership in order to protect Scheff during his dissolution proceedings. Most tellingly, Scheff testified the stock was “basically never [husband’s].”
Husband argues that his retention of the stock after Scheff’s wife died is proof that the stock transfer to him was a gift. He argues that after Scheff’s wife died, there was no need for him to keep the stock for Scheff’s pre-dissolution planning, but he nevertheless retained possession. We are not persuaded that this established a gift.
Although Scheff labels the transfer of stock to his mother and husband as gifts, he never intended the absolute disposition of the stock to them. There is no evidence to show that Scheff intended to surrender absolute control and dominion over the stock; the evidence shows that he intended to transfer the stock only temporarily for pre-dissolution planning.
Husband argues the transferred stock was intended as a gift because certain tax preparation forms identify him as the sole recipient of the stock. Although certain tax forms may show husband the sole holder of the stock, husband failed to file a gift tax return. The district court did not credit husband’s tax agent’s testimony that it was he who forgot to file the form.
Husband also points to the fact that there was no consideration paid by husband for the receipt of the stock and that this further supports the argument that the stocks were given as a gift. Although there was no consideration, a donor must have the requisite donative intent. “For a donor to have the requisite donative intent, the gift must be voluntary and gratuitous.” Cooke v. Belzer, 413 N.W.2d 623, 626 (Minn. App. 1987). Scheff’s transfer was an attempt to hide the assets during his marital dissolution proceedings: both Scheff and husband knew that the transfer would benefit Scheff during his dissolution proceedings. The transfer was not gratuitous.
The record supports the district court’s findings, which indicate that the stock is marital property.
Husband argues that wife’s delay of more than two years between serving husband with the dissolution petition and her filing of that petition was unreasonable under Minn. R. Civ. P. 5.04. As a result, he argues that his transfer of assets during the two-year period did not violate Minn. Stat. § 518.58. Minn. Stat. § 518.58, subd. 1(a) provides:
During the pendency of a marriage dissolution, separation, or annulment proceeding, or in contemplation of commencing a marriage dissolution, separation, or annulment proceeding, each party owes a fiduciary duty to the other for any profit or loss derived by the party, without the consent of the other, from a transaction or from any use by the party of the marital assets. If the court finds that a party to a marriage, without consent of the other party, has in contemplation of commencing, or during the pendency of, the current dissolution, separation, or annulment proceeding, transferred, encumbered, concealed, or disposed of marital assets except in the usual course of business or for the necessities of life, the court shall compensate the other party by placing both parties in the same position that they would have been in had the transfer, encumbrance, concealment, or disposal not occurred.
He also argues that he was not effectively served with wife’s summons and petition for dissolution of marriage in 2001.
The determination of whether service is proper is a question of law. Amdahl v. Stonewall Ins. Co., 484 N.W.2d 811, 814 (Minn. App. 1992), review denied (Minn. July 16, 1992). The application of law to stipulated facts is a question of law, which this court reviews de novo. Morton Bldgs. v. Comm'r of Revenue, 488 N.W.2d 254, 257 (Minn. 1992).
Minn. R. Civ. P. 5.04 instructs that “[a]ll papers after the complaint required to be served upon a party. . . shall be filed with the court within a reasonable time after service.” The rule creates uniform requirements for the filing of documents, requiring that all papers served on a party be filed with the court. Minn. R. Civ. P. 5.04 1985 advisory comm. note. In regard to the time between service and filing of documents, the advisory committee notes that it “rejected any fixed deadlines for the filing of such papers, and rather, determined simply that the papers should be filed within a reasonable period of time.” Id.
Husband argues that he believed he and wife had reconciled and that any distribution of assets was not in violation of Minn. Stat. § 518.58. The record indicates that the parties attempted to reconcile their relationship, continued living together, and attended counseling. When these attempts failed, however, wife filed the summons and petition with the court. Service of the complaint put husband on notice that wife wanted to end the marriage. Under these facts, wife’s more than two-year delay between service and filing of the summons and petition was not unreasonable.
Husband transferred the stock back to Scheff while husband and wife attempted to reconcile. Husband owed a fiduciary duty to wife not to involve marital assets in any transactions without her consent. Minn. Stat. § 518.58, subd. 1(a) (2004). Because the district court correctly found that the stock was marital property, husband breached his fiduciary duty to wife when he transferred the stock back to Scheff.
Husband also argues that wife’s service of the summons and petition was ineffective. The defense of ineffective service is deemed waived if not raised as a defense, made by motion, or included in a responsive pleading. Minn. R. Civ. P. 12.08(a); see also Majestic, Inc. v. Berry, 593 N.W.2d 251, 258 (Minn. App. 1999). Rule 12.08(a) does not “preclude waiver by implication.” Patterson v. Wu Family Corp., 608 N.W.2d 863, 868 (Minn. 2000). It has long been the rule that a party may, by consent, give jurisdiction over his person, and it follows as a consequence that, where there is any defect of jurisdiction, or it has ceased, he may waive the objection, and does so when he takes or consents to any step in the cause that assumes that jurisdiction exists or continues. Quaker Creamery Co. v. Carlson, 124 Minn. 147, 150, 144 N.W. 449, 449 (1913). Taking such a step constitutes a general appearance that subjects the party to the jurisdiction of the court. Slayton Gun Club v. Town of Shetek, 286 Minn. 461, 467, 176 N.W.2d 544, 548 (1970). We conclude that husband waived any ineffective service defense by actively participating in the proceedings, making an appearance, and failing to challenge wife’s service until this appeal. See State v. Modern Recycling, Inc., 558 N.W.2d 770, 772 (Minn. App. 1997) (refusing to consider issues raised for first time on appeal).