Title: MARRIAGE OF KRUM
Citation: N/A
Docket Number: 80-004
State: Montana
Issuer: Montana Supreme Court
Date: July 25, 1980

80-04 IN THE SUPREME COURT OF THE STATE OF MONTANA 1980 IN RE THE MARRIAGE OF LINDA KRUM, Petitioner and Respondent, GERALD JACOB KRUM, Respondent and Appellant. Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone. Honorable Charles Luedke, Judge presiding. Counsel of Record: For Appellant: R. P. Ryan, Billings, Montana For Respondent: George T. Radovich, Billings, Montana Submitted on briefs: April 25, 1980 ~ecided: 3gL 26 1 9 @ Filed: J [ ~ L jqB[) M r . C h i e f J u s t i c e F r a n k I. H a s w e l l d e l i v e r e d t h e O p i n i o n o f t h e C o u r t . G e r a l d Krum a p p e a l s f r o m t h e p r o p e r t y s e t t l e m e n t p r o v i - s i o n s o f a d i v o r c e d e c r e e e n t e r e d i n t h e Y e l l o w s t o n e C o u n t y D i s t r i c t C o u r t . G e r a l d and L i n d a Krum w e r e m a r r i e d i n 1964. They w e r e s e p a r a t e d b r i e f l y i n 1976 and were p e r m a n e n t l y s e p a r a t e d i n December, 1977. L i n d a f i l e d f o r d i v o r c e on A u g u s t 30, 1978, t h e t r i a l was h e l d on A u g u s t 1 6 , 1979, and t h e D i s t r i c t C o u r t e n t e r e d i t s f i n d i n g s o f f a c t , c o n c l u s i o n s o f l a w , and d e c r e e o f d i s s o l u - t i o n on O c t o b e r 25, 1979. U n t i l December, 1977, b o t h husband and w i f e t o o k an a c t i v e p a r t i n t h e f a m i l y f a r m i n g o p e r a t i o n l o c a t e d n e a r H u n t l e y , M o n t a n a . F o l l o w i n g t h e s e p a r a t i o n , L i n d a li ved i n t h e f a m i l y ' s t r a i l e r home w i t h t h e p a r t i e s ' t w o c h i l d r e n . She no l o n g e r t o o k an a c t i v e p a r t i n t h e f a r m i n g o p e r a t i o n , a l t h o u g h she d i d n o t i n t e r f e r e w i t h G e r a l d ' s use o f t h e l a n d and e q u i p m e n t w h i c h was h e l d i n t h e i r j o i n t name. F o l l o w i n g t h e s e p a r a t i o n , J e r r y con- t i n u e d t o o p e r a t e t h e f a r m and r e c e i v e d a l l t h e p r o f i t and l o s s f r o m t h e o p e r a t i o n s . He p a i d L i n d a $ 5 0 0 p e r m o n t h i n c h i l d sup- p o r t i n a d d i t i o n t o a l l o w i n g h e r t h e use o f t h e f a m i l y home. L i n d a began w o r k i n g p a r t t i m e as a l e g a l s e c r e t a r y - r e c e p t i o n i s t and a t t e n d i n g E a s t e r n Montana C o l l e g e . The p r i n c i p a l a s s e t s o f t h e m a r i t a l e s t a t e w e r e 1 2 0 a c r e s o f i r r i g a t e d f a r m l a n d , a c q u i r e d f r o m G e r a l d ' s p a r e n t s i n 1 9 7 5 t h r o u g h a c o n t r a c t f o r deed, and f a r m m a c h i n e r y , a c q u i r e d p a r t l y f r o m G e r a l d ' s p a r e n t s and p a r t l y d u r i n g t h e m a r r i a g e and a f t e r s e p a r a t i o n . The p r i n c i p a l l i a b i l i t i e s w e r e t h e amount o w i n g on t h e c o n t r a c t f o r deed and a f l u c t u a t i n g f a r m o p e r a t i n g l o a n . The D i s t r i c t C o u r t made t h e f o l l o w i n g v a l u a t i o n o f t h e m a r i t a l e s t a t e as o f t h e t r i a l d a t e : Farm Land MARITAL ESTATE $165,000.00 B a l a n c e owing - 73,000.00 $ 92,000.00 Farm Equipment : From r e s p o n d e n t ' s f a t h e r $ 13,560.00 D u r i n g m a r r i a g e 44,880.00 S i n c e s e p a r a t i o n 12,800.00 M o b i l e Home ( i n p l a c e ) S a v i n g s A c c o u n t Keogh P l a n ( d i s c o u n t e d ) 1978 P o n t i ac ( a c t u a l e q u i t y ) H o r s e F u r n i t u r e TOTAL $185,840.00 The D i s t r i c t C o u r t a l s o f o u n d t h a t husband and w i f e had c o n t r i b u t e d e q u a l l y t o t h e a c c u m u l a t i o n o f t h e m a r i t a l e s t a t e p r i o r t o t h e s e p a r a t i o n and t h a t a l t h o u g h L i n d a d i d n o t f u n c t i o n as a m a r i t a l p a r t n e r f o l l o w i n g t h e s e p a r a t i o n , h e r u n f u l f i l l e d o b l i g a t i o n was o f f s e t by G e r a l d ' s use o f h e r i n t e r e s t i n t h e l a n d and m a c h i n e r y . As a r e s u l t , t h e D i s t r i c t C o u r t e n t e r e d a d i v o r c e d e c r e e w h i c h r e q u i r e d G e r a l d t o p r o v i d e s u p p o r t o f $250 p e r month p e r c h i l d and made t h e f o l l o w i n g e q u a l p r o p e r t y d i v i s i o n : TO PETITIONER LINDA ANN KRUM: - M o b i l e Home and 5 a c r e s o f f a r m s t e a d $ 27,000.00 S a v i n g s A c c o u n t 2,000.00 1978 P o n t i a c ( n e t ) 1,500.00 H o r s e 100.00 F u r n i t u r e 500.00 Cash Payment - 61,820.00 $ 92,920.00 G R A N D TOTAL TO RESPONDENT GERALD JACOB K R U M : - F a r m Land ( n e t ) F a r m E q u i p m e n t and p i c k u p t r u c k 71,240.00 Keogh P l a n 6,500.00 TOTAL $154,740.00 LESS c a s h payment t o p e t i t i o n e r - 61,820.00 FINAL TOTAL - $ 92,920.00 I t w i l l be n o t e d t h a t t h i s d i v i s i o n does n o t make p r o v i - s i o n f o r t h e f a r m o p e r a t i n g l o a n . The amount o f t h i s l o a n f l u c - t u a t e s c o n s i d e r a b l y . The l o w e s t i t has been i n t h e l a s t s e v e n o r e i g h t y e a r s i s a p p r o x i m a t e l y $7,000 and t h e h i g h e s t was $49,500 o n t h e d a t e o f t r i a l . The n o t e b a l a n c e on t h e d a t e o f s e p a r a t i o n was $28,000 and t h e b a l a n c e on A p r i l 1, 1979, was $22,000. The p r o c e e d s h a v e been used f o r f a r m e x p e n s e s and p e r s o n a l i t e m s . The t e s t i m o n y a t t r i a l does n o t r e v e a l t h e e x a c t d i s p o s i t i o n o f t h e p r o c e e d s and no a t t e m p t was made t o q u a n t i f y t h e amounts. G e r a l d t e s t i f i e d t h a t t h e b a l a n c e on t h e n o t e i s d i r e c t l y r e l a t e d t o t h e i n c o m e t h a t w i l l come o u t o f t h e f a r m f o r 1979. He e s t i - m a t e d t h a t a p p r o x i m a t e l y $35,000 i s a t t r i b u t a b l e t o 1 9 7 9 f a r m e x p e n s e s . A l s o a p i c k u p t r u c k and c o m b i n e w e r e p u r c h a s e d t h r o u g h t h e b o r r o w i n g s . G e r a l d a l s o t e s t i f i e d t h a t p o r t i o n s o f t h e n o t e were used t o pay c h i l d s u p p o r t , t o buy p e r s o n a l i t e m s , a n d t o r e p a i r h i s c u r r e n t l e a s e d r e s i d e n c e . The l a s t e x p e n s e w i l l be r e i m b u r s e d i n t h e f u t u r e . G e r a l d Krum moved t o amend t h e f i n d i n g s , c o n c l u s i o n s and d e c r e e t o i n c l u d e t h e o p e r a t i n g l o a n i n t h e n e t m a r i t a l e s t a t e a n d t o v a l u e t h e e s t a t e as o f t h e d a t e o f s e p a r a t i o n i n December, 1 9 7 7 , i n s t e a d o f t h e d a t e o f t r i a l . The D i s t r i c t C o u r t e n t e r e d a n o r d e r d e n y i n g t h e h u s b a n d ' s m o t i o n . I n an a t t a c h e d memorandum t h e c o u r t s t a t e d : "The p r i m a r y a d j u s t m e n t b e i n g u r g e d b y r e s p o n d e n t i n h i s m o t i o n t o amend F i n d i n g s and C o n c l u s i o n s , and t h e p r i n c i p a l c o g n i z a b l e one, i s t o i n c o r p o r a t e i n t o m a r i t a l e s t a t e c a l c u l a t i o n s t h e amount o f t h e f a r m o p e r a t i n g l o a n w h i c h , a t t h e t i m e o f t r i a l , was $49,500.00. T h i s l o a n a c c o u n t e x i s t s upon a con- t i n u i n g b a s i s , i s renewed a n n u a l l y , and f l u c t u a t e s w i d e l y . It was i n t e n t i o n a l l y o m i t t e d i n t h e C o u r t ' s c a l c u l a t i o n s b e c a u s e o f a l a c k o f s u f f i c i e n t i n f o r - m a t i o n t o do o t h e r w i s e . F o r e x a m p l e : The e v i d e n c e showed t h a t r e s p o n d e n t p u r c h a s e d a c o m b i n e , a p i c k u p t r u c k , a camper she1 1 , CB r a d i o and s t e r e o i n 1 9 7 8 , a f t e r t h e p a r t i e s s e p a r a t e d , f o r a t o t a l c o s t o f $12,800.00. The money f o r t h e s e p u r c h a - s e s came f r o m t h e o p e r a t i n g l o a n and, as a c o n s e q u e n c e , no s p e c i f i c encumbrance became i m p o s e d upon t h e e q u i p m e n t i t s e l f and, a l t h o u g h t h e e v i d e n c e a d v i s e s t h a t some $22,000.00 i n p a y m e n t s were made upon t h e l o a n i n 1978, t h e r e i s no i t e m i z a t i o n g i v e n t o show t h e r e l a t i o n s h i p o f s u c h payments t o t h e i n d e b t e d n e s s i n c u r r e d i n p u r c h a s i n g t h i s e q u i p m e n t ; so i t s n e t e q u i t y i s i m p o s s i b l e o f d e t e r m i n a t i o n u n d e r t h e e v i d e n c e p r e s e n t e d . C o n s e q u e n t l y , t h e C o u r t was l e f t w i t h t h e a l t e r n a t i v e o f e i t h e r u s i n g t h e p u r c h a s e p r i c e as t h e v a l u e t o t h e m a r i t a l e s t a t e as t h o u g h it was p a i d i n f u l l , o r con- s i d e r i n g i t encumbered t o i t s f u l l v a l u e and, t h e r e f o r e , h a v i n g no e q u i t y w h a t e v e r . O b v i o u s l y , i t i s n o t v a l u e l e s s , so t h e f i r s t a l t e r n a t i v e had t o a p p l y . " F u r t h e r , i n c o n n e c t i o n w i t h u s i n g t h e w h o l e amount o f t h e l o a n b a l a n c e as a d e d u c t i o n f r o m m a r i t a l a s s e t s , as i s u r g e d b y t h e r e s p o n d e n t , i t a p p e a r s t h a t t h e p r o c e e d s f r o m t h e o p e r a - t i n g l o a n a r e u s e d l a r g e l y f o r n o n c a p i t a l e x p e n s e s , b e i n g $35,000.00 i n 1 9 7 9 t o d a t e o f t r i a l . These e x p e n s e s have no r e l a t i o n s h i p t o a d e t e r m i n a t i o n o f m a r i t a l a s s e t s when t h e f a r m p r o c e e d s a r e e x c l u d e d as has been t h e c a s e h e r e . E v e n i f i n c l u d e d , h o w e v e r , i n t h e c i r c u m s t a n c e s o f t h e s e p a r t i e s t h e r e w o u l d be a p r o b l e m o f d e t a i l e d a c c o u n t i n g t o d e t e r m i n e w h i c h expen- d i t u r e s a r e r e l e v a n t t o t h e m a r r i a g e and t h e m a r i t a l a s s e t s o f t h e s e p a r t i e s and w h i c h a r e n o t . A l s o , it w o u l d v e r y l i k e l y r e q u i r e a r e c o n c i 1 i a t i o n o f t h e o p e r a t i n g l o a n a c c o u n t o v e r s e v e r a l y e a r s i n t h e p a s t , as w e l l as i n t o t h e f u t u r e , b y r e a s o n o f t h e m e c h a n i c s o f i t s c o n t i n u i n g o p e r a t i o n . "The r e s p o n d e n t has had, and u n d e r t h e d e c r e e c o n t i n u e s t o h a v e , t h e f a r m o p e r a t i o n e x c l u s i - v e l y t o h i m s e l f , w i t h b o t h e x p e n s e s and i n c o m e h i s , as w e l l as any p r o f i t o r l o s s . T h a t was t h e b a s i s upon w h i c h t h e e v i d e n c e t e n d e r e d t h e i s s u e s t o t h e C o u r t f o r i t s d e c i s i o n and i t was o n t h a t b a s i s t h a t t h e m a t t e r had t o be d e c i d e d . " W i t h r e g a r d t o t h e f u t u r e p r o c e e d s , G e r a l d Krum t e s t i f i e d t h a t he c o u l d n o t e s t i m a t e t h e v a l u e o f h i s s u g a r b e e t s , c o r n , g r a i n and hay c r o p s w h i c h w e r e g r o w i n g on t h e j o i n t l y owned l a n d a n d 260 a d d i t i o n a l a c r e s t h a t he l e a s e d . The D i s t r i c t C o u r t a l s o f o u n d no a u t h o r i t y t o s u p p o r t G e r a l d K r u m ' s c o n t e n t i o n t h a t t h e m a r i t a l e s t a t e s h o u l d be v a l u e d a s o f t h e d a t e o f s e p a r a t i o n r a t h e r t h a n t h e d a t e o f t r i a l . The f o l l o w i n g i s s u e s a r e r a i s e d on a p p e a l : ( 1 ) W h e t h e r t h e D i s t r i c t C o u r t c o m m i t t e d r e v e r s i b l e e r r o r b y r e f u s i n g t o d e d u c t t h e v a l u e o f a f a r m o p e r a t i n g l o a n f r o m t h e v a l u e o f t h e m a r i t a l e s t a t e ; and ( 2 ) S h o u l d t h e n e t m a r i t a l e s t a t e be d e t e r m i n e d on t h e d a t e o f s e p a r a t i o n o r on t h e d a t e o f d i s s o l u t i o n ? The d i s p o s i t i o n o f a m a r i t a l e s t a t e i s g o v e r n e d b y s e c t i o n 4 0 - 4 - 2 0 2 , MCA, and i s l a r g e l y w i t h i n t h e d i s c r e t i o n o f t h e D i s t r i c t C o u r t . T h i s C o u r t w i l l n o t d i s t u r b t h e d e c i s i o n o f t h e t r i a l c o u r t a b s e n t a c l e a r abuse o f d i s c r e t i o n . E s c h e n b u r g v. E s c h e n b u r g ( 1 9 7 6 ) , 1 7 1 M o n t . 247, 5 5 7 P.2d 1014. The t e s t f o r a b u s e o f d i s c r e t i o n i s w h e t h e r t h e t r i a l c o u r t a c t e d a r b i t r a r i l y w i t h o u t t h e employment o f c o n s c i o u s j u d g m e n t o r e x c e e d e d t h e b o u n d s o f r e a s o n . I n r e M a r r i a g e o f B e r t h i a u m e ( 1 9 7 7 ) , 1 7 3 M o n t . 421, 567 P.2d 1388; F r e d e r i c k s e n v. F r e d e r i c k s e n ( 1 9 8 0 ) , M o n t . , 605 P.2d 1135, 3 7 St.Rep. 191. O f t h e $49,500 b a l a n c e o f t h e f a r m o p e r a t i n g l o a n , G e r a l d K r u m t e s t i f i e d t h a t he e s t i m a t e d t h a t $35,000 r e p r e s e n t e d 1 9 7 9 n o n c a p i t a l f a r m e x p e n s e s and $1,400 r e p r e s e n t e d r e s i d e n c e r e p a i r s . The $1,400 w i l l be r e i m b u r s e d b y t h e owner o f t h e r e s i - d e n c e a t a l a t e r d a t e and t h e $35,000 w i l l be r e i m b u r s e d b y f a r m p r o f i t o r a b s o r b e d i n f a r m l o s s f r o m t h e 1 9 7 9 c r o p s and t h e s a l e o f c a t t l e . N e i t h e r o f t h e s e f u t u r e p r o c e e d s w e r e i n c l u d e d i n t h e m a r i t a l e s t a t e ; t h u s t h e D i s t r i c t C o u r t was e n t i r e l y c o r r e c t i n o f f s e t t i n g $36,400 o f t h e $49,500 n o t e . The husband a l s o t e s t i f i e d t h a t a p o r t i o n o f t h e l o a n r e p r e s e n t e d c h i l d s u p p o r t p a y m e n t s and p e r s o n a l l i v i n g e x p e n s e s . A p p a r e n t l y a p o r t i o n o f t h e r e m a i n i n g b a l a n c e o f t h e l o a n r e p r e s e n t s t h e u n p a i d b a l a n c e o f t h e o p e r a t i n g l o a n f r o m p r i o r y e a r s . E v i d e n c e a l s o r e v e a l s t h a t t h e o n l y p r o c e e d s used t o p u r c h a s e c a p i t a l a s s e t s f o l l o w i n g t h e s e p a r a t i o n were $7,500 t o p u r c h a s e a c o m b i n e and a p p r o x i m a - t e l y $6,000 t o p u r c h a s e a p i c k u p t r u c k . B o t h p u r c h a s e s o c c u r r e d i n 1978. Thus, t h e D i s t r i c t C o u r t was f a c e d w i t h w h e t h e r or n o t t o i n c l u d e any, a p a r t o r a l l o f t h e u n q u a n t i f i e d b a l a n c e o f $13,100, w h i c h r e p r e s e n t e d c h i l d s u p p o r t , p e r s o n a l e x p e n s e s , and p r i o r b o r r o w i n g s . T h i s was a d i f f i c u l t q u e s t i o n , l a r g e l y a c c o u n t i n g o r i e n t e d . W e f i n d t h e D i s t r i c t C o u r t ' s r e a s o n i n g i n t h e p r e v i o u s l y q u o t e d memorandum p e r s u a s i v e . G e r a l d Krum o p e r a t e d t h e f a m i l y f a r m e n t i r e l y on h i s own f o r t h e y e a r s 1 9 7 8 a n d 1979 and was e n t i t l e d t o t h e p r o f i t and l o s s f r o m t h e o p e r a t i o n . The e n t i r e p o r t i o n o f t h e l o a n r e p r e s e n t i n g o p e r a t i n g e x p e n s e s h o u l d be a b s o r b e d b y him, and t h e o n l y i t e m s w h i c h c o u l d r a t i o n a l l y be d e d u c t e d f r o m t h e e s t a t e w e r e t h e amounts a t t r i b u - t a b l e t o t h e a c q u i s i t i o n o f f a r m e q u i p m e n t . D e p e n d i n g upon t h e a c c o u n t i n g method used, t h i s amount c o u l d be a p r o p o r t i o n a t e amount o f t h e $13,500 e q u i p m e n t p u r c h a s e d i n 1 9 7 8 o r n o t h i n g i f t h e f i r s t - i n f i r s t - o u t a c c o u n t i n g m e t h o d i s used. W e f i n d t h e o m i s s i o n o f t h e $49,500 n o t e t o be r e a s o n a b l e u n d e r t h e c i r - c u m s t a n c e s o f t h i s c a s e . W i t h r e g a r d t o t h e v a l u a t i o n d a t e i s s u e , i t i s a d m i t t e d i n a p p e l l a n t ' s b r i e f t h a t t h e v a l u a t i o n w i l l n o t a l t e r t h e r e s u l t i n t h e p r e s e n t c a s e s i n c e t h e a p p r e c i a t i o n i n l a n d a f t e r t h e s e p a r a - t i o n was n e a r l y e q u a l t o t h e d e p r e c i a t i o n o f e q u i p m e n t . The o n l y a u t h o r i t y p r e s e n t e d b y a p p e l l a n t i s s e c t i o n 40-2-206, MCA, w h i c h p e r t a i n s t o e a r n i n g s and a c c u m u l a t i o n s o f a m a r r i e d p e r s o n w h i l e l i v i n g s e p a r a t e f r o m h i s spouse. The o n l y i n c r e a s e i n a s s e t v a l u e s b e t w e e n t h e d a t e o f s e p a r a t i o n and t h e d a t e o f d i s s o l u t i o n was t h e a p p r e c i a t i o n o f l a n d , w h i c h c a n h a r d l y be c h a r a c t e r i z e d a s an a c c u m u l a t i o n s o l e l y o f G e r a l d Krum s i n c e t h e p r o p e r t y i s h e l d j o i n t l y . The v a l u e o f f a r m e q u i p m e n t i n f a c t d e c l i n e d due t o d e p r e c i a t i o n . C o n s i s t e n t w i t h I n r e M a r r i a g e o f Krarner ( 1 9 7 8 1 , M o n t . , 580 P.2d 439, 3 5 St.Rep. 700, and H a m i l t o n v. H a m i l t o n ( 1 9 8 0 ) , Mont , 607 P.2d 102, 37 St.Rep. 247, we f i n d t h e d a t e o f d i s s o l u t i o n t o be t h e d a t e o f v a l u a t i o n o f t h e m a r i t a l e s t a t e . A f f i r m e d . ................................. C h i e f J u s t i c e