Title: GRACE v GRACE
Citation: N/A
Docket Number: 81-458
State: Montana
Issuer: Montana Supreme Court
Date: April 28, 1982

No. 81-458 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982 IN RE THE MARRIAGE OF: PHILLIP A- GRACE, Petitioner and Appellant, and PAULINE K. GRACE, Respondent and Respondent. Appeal from: District Court of the First Judicial District, In and for the County of Lewis and Clark Honorable Arnold Olsen, Judqe presiding. Counsel of Record: For Appellant: Herron, Meloy and Llewellyn, Helena, Montana For Respondent : Small, Hatch and Doubek, Helena, Montana Submitted on briefs: March 3, 1982 Decided : M r . J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e C o u r t . T h i s is an a p p e a l from a judgment of t h e District Court of t h e F i r s t J u d i c i a l District, S t a t e of Montana, i n and f o r t h e County of L e w i s and C l a r k , a r i s i n g o u t of a marital d i s s o l u t i o n . A t t h e t i m e of t h e i r d i v o r c e , P h i l l i p and P a u l i n e Grace e n t e r e d i n t o a p r o p e r t y agreement, d a t e d September 26, 1979. T h i s agreement was approved by t h e c o u r t and e n t e r e d i n t o t h e d e c r e e o f d i s s o l u t i o n of t h e m a r r i a g e on t h e same d a t e , September 26, 1979. Under t h e terms of t h e p r o p e r t y agreement, among o t h e r p r o v i s i o n s , t h e a p p e l l a n t husband promised : ( 1 ) to pay one-ha1 f o f t h e income t a x l i a b i l i t y f o r t h e y e a r of 1977; ( 2 ) to pay one- h a l f of t h e real p r o p e r t y t a x e s f o r y e a r 1978 o n t h e f a m i l y resi- dence l o c a t e d a t 556-1/2 South Rodney, Helena, Montana; ( 3 ) to r e l i n q u i s h to r e s p o n d e n t w i f e , a b o a t and equipment and t o exe- c u t e a l l documents n e c e s s a r y to e f f e c t t h e t r a n s f e r and t i t l e of same; and ( 4 ) t o a s s i s t r e s p o n d e n t i n r e f i n a n c i n g a second mortgage on t h e f a m i l y r e s i d e n c e . During t h e f o l l o w i n g y e a r , t h e r e s p o n d e n t was unable t o pay o f f t h e second mortgage a g a i n s t h e r r e s i d e n c e because t h e IRS had f i l e d a t a x l i e n a g a i n s t a l l of t h e p r o p e r t y she r e c e i v e d under t h e p r o p e r t y s e t t l e m e n t agreement because of a p p e l l a n t ' s f a i l u r e t o pay h i s s h a r e of t h e 1977 f e d e r a l income t a x . I n a d d i t i o n , t h e a p p e l l a n t f a i l e d to pay h i s s h a r e of t h e 1978 pro- p e r t y t a x e s as provided by t h e agreement and f a i l e d to t u r n o v e r t h e b o a t trailer t i t l e and c e r t a i n b o a t i n g equipment to t h e r e s p o n d e n t . The r e s p o n d e n t f i l e d a p e t i t i o n i n t h e D i s t r i c t Court r e q u e s t i n g t h a t t h e a p p e l l a n t be found i n contempt and r e q u i r e d t o perform as agreed t o under t h e d e c r e e . In a d d i t i o n , s h e asked f o r a t t o r n e y f e e s and costs f o r having to b r i n g t h e s e matters b e f o r e t h e c o u r t . A show cause h e a r i n g w a s h e l d on J u l y 1 6 , 1981, and t h e c o u r t o r d e r e d on September 17, 1981, t h a t t h e a p p e l l a n t : (1) immediately pay h i s one-half of t h e 1978 real e s t a t e p r o p e r t y t a x e s a g a i n s t t h e f a m i l y r e s i d e n c e l o c a t e d a t 556 and 556-1/2 South Rodney, t o g e t h e r w i t h p e n a l t y and accrued i n t e r e s t t h e r e o n ; ( 2 ) e x e c u t e and d e l i v e r t i t l e to t h e b o a t t r a i l e r and c e r t a i n o t h e r b o a t i n g equipment to the repondent; ( 3 ) pay t h e r e s p o n d e n t t h e sum of $1,118.64 t h a t she had i n c u r r e d i n a d d i t i o n a l i n t e r e s t because of t h e t a x l i e n which encumbered h e r p r o p e r t y from October 1980 to June 1981; and ( 4 ) pay t h e r e s p o n d e n t ' s a t t o r n e y f e e s i n t h e amount of $705. From t h i s o r d e r t h e husband a p p e a l s . Three i s s u e s are p r e s e n t e d f o r c o n s i d e r a t i o n : 1. Whether t h e wife f a i l e d to make a showing t h a t t h e award of a t t o r n e y f e e s was n e c e s s a r y and t h e District Court, t h e r e f o r e , e r r e d i n awarding a t t o r n e y f e e s under s e c t i o n 40-4-110, MCA. 2. Whether t h e w i f e was e n t i t l e d to damages f o r loss of i n t e r e s t when h e r a c t i o n s ( o r l a c k t h e r e o f ) were t h e proximate c a u s e of h e r damages and t h e c o u r t e r r e d i n awarding same. 3. Whether t h e c o u r t e r r e d i n r e f u s i n g to set a s i d e t h e p r o p e r t y agreement of t h e p a r t i e s on t h e b a s i s of a r e c e n t United S t a t e s Supreme Court r u l i n g excluding m i l i t a r y p e n s i o n s from marital estates. A p p e l l a n t a r g u e s t h a t under o u r r e c e n t case l a w and under s e c t i o n 40-4-110, MCA, r e c o v e r y of a t t o r n e y f e e s and costs is b a r r e d u n l e s s t h e r e s p o n d e n t makes a showing of n e c e s s i t y , c i t i n g Whitman v. Whitman ( 1 9 7 4 ) , 164 Mont. 124, 519 P.2d 966; In re Marriage of Gohner ( 1 9 8 0 ) , Mont. , 609 P.2d 288, 37 St.Rep. 613; I n re Marriage of Brown ( 1 9 7 8 ) , 1 7 9 Mont. 417, 587 P.2d 361; In re Marriage of McLean ( 1 9 8 0 ) , Mont . , 609 P.2d 282, 37 St.Rep. 589. It is a p p e l l a n t ' s p o s i t i o n t h a t inas- much as t h e wife p r e s e n t e d no p r e s e n t f i s c a l s t a t e m e n t showing h e r p r e s e n t f i n a n c i a l s i t u a t i o n t h a t t h e c o u r t e r r e d i n awarding h e r a t t o r n e y f e e s and c o s t s . S e c t i o n 40-4-110, MCA, c o v e r i n g costs and a t t o r n e y f e e s came i n t o o u r Code w i t h t h e passage of Chapter 536, Laws of 1975, which provided f o r t h e f a m i l y law of t h i s state. T h i s s e c t i o n was new t o o u r law and p r o v i d e s : "Costs--Attorney's f e e s . The c o u r t from t i m e t o t i m e , a f ter c o n s i d e r i n s t h e f i n a n c i a l r e s o u r c e s o f b o t h p a r t i e s , may ogder a p a r t y to pay a r e a s o n a b l e amount f o r t h e cost to t h e o t h e r p a r t y of m a i n t a i n i n g o r defending any proceeding under c h a p t e r s 1 and 4 o f t h i s t i t l e and f o r a t t o r n e y ' s f e e s , i n c l u d i n g sums f o r l e g a l ser- v i c e s rendered and c o s t s i n c u r r e d p r i o r to t h e commencement of t h e proceeding o r af ter e n t r y of judgment. The c o u r t may o r d e r t h a t t h e amount b e p a i d d i r e c t l y to t h e a t t o r n e y , who may e n f o r c e t h e o r d e r i n h i s name." S i n c e t h e a d o p t i o n of t h i s p r o v i s i o n of o u r code t h i s C o u r t h a s approved t h e award of a t t o r n e y f e e s i n a number of c a s e s . See I n re t h e Marriage of Brown ( 1 9 7 8 ) , 179 Mont. 417, 587 P.2d 361; In re t h e Marriage of Kaasa ( 1 9 7 9 ) , Mont. 1 5 9 1 P.2d 1110, 36 St.Rep. 425; In re t h e Marriage of Houtchins ( 1 9 7 9 ) 1 Mont. - - , 592 P.2d 158, 36 St.Rep. 50; A l l e n v. A l l e n ( 1 9 7 8 ) , 175 Mont. 527, 575 P.2d 74; Easton v. Easton ( 1 9 7 8 ) , 175 Mont. 416, 574 P.2d 989. I n a d d i t i o n , n o t e 69 ALR3d 152. W e w i l l n o t d i s t u r b t h e lower c o u r t ' s d i s c r e t i o n where s u b s t a n t i a l e v i d e n c e is found i n t h e record to s u p p o r t t h e award. I n reviewing t h i s record w e f i n d s u b s t a n t i a l e v i d e n c e to s u p p o r t t h e award. Respondent s u p p o r t s h e r s e l f by working as a t e l e p h o n e o p e r a t o r . A p p e l l a n t ' s f a i l u r e to pay h i s s h a r e of t h e f e d e r a l t a x e s as o r d e r e d i n t h e p r o p e r t y s e t t l e m e n t caused a t a x l i e n to be l e v i e d a g a i n s t t h e p r o p e r t y p r e v e n t i n g r e s p o n d e n t from paying o f f t h e second mortgage on h e r r e s i d e n c e . A s a r e s u l t , r e s p o n d e n t i n c u r r e d a d d i t i o n a l i n t e r e s t a c c r u i n g a t $4.74 a day p l u s p e n a l ties. I n a d d i t i o n , r e s p o n d e n t ' s c r e d i t r a t i n g s were damaged which could a f f e c t h e r a b i l i t y t o o b t a i n l o a n s i n t h e f u t u r e . W e uphold t h e D i s t r i c t C o u r t ' s award of a t t o r n e y f e e s . The n e x t i s s u e is d i r e c t e d to whether t h e wife w a s e n t i t l e d to damages f o r loss of i n t e r e s t and whether h e r a c t i o n s o r l a c k t h e r e o f were t h e proximate cause of t h o s e damages. The a p p e l l a n t a r g u e s t h a t as p a r t of t h e p r o p e r t y settle- ment agreement he agreed t o pay one-half of t h e c o u p l e ' s income t a x f o r 1977. H e f a i l e d to do so. However, he a l l e g e s t h a t t h e w i f e ' s f a i l u r e to r e f i n a n c e t h e second mortgage so a s to avoid a b a l l o o n payment due s e v e r a l months af ter t h e p r o p e r t y s e t t l e m e n t agreement was s i g n e d , caused t h e damages t h a t she a l l e g e d . A p p e l l a n t argues t h a t respondent waited some f i f t e e n months, u n t i l October 1980, b e f o r e making any e f f o r t to r e f i n a n c e t h e second mortgage, a t which time she discovered t h a t s e v e r a l weeks e a r l i e r t h e I n t e r n a l Revenue S e r v i c e had placed a l i e n on h e r p r o p e r t y because of a p p e l l a n t ' s f a i l u r e to pay t h e t a x e s . A p p e l l a n t a r g u e s t h a t i f respondent had f u l f i l l e d h e r o b l i g a t i o n w i t h i n a r e a s o n a b l e t i m e t h e r e would have been no loss o f i n t e r e s t d u r i n g t h e pendency of t h e removal of t h e tax l i e n . T h e r e f o r e , respondent is asking a p p e l l a n t to pay damages which could e a s i l y have been avoided had she c a r r i e d o u t h e r o b l i g a t i o n t o r e f i n a n c e t h e p r o p e r t y w i t h i n a r e a s o n a b l e t i m e a f t e r t h e pro- p e r t y s e t t l e m e n t was signed. Having f a i l e d to do so, respondent c a n n o t now t a k e advantage of h e r own f a i l u r e by r e q u i r i n g a p p e l l a n t to pay i n t e r e s t from the d a t e of r e f i n a n c i n g to t h e d a t e t h e t a x l i e n was removed. A p p e l l a n t f s argument begs t h e q u e s t i o n . The t r i a l judge found: (1) t h a t t h e a p p e l l a n t f a i l e d to pay t h e one-half of t h e f e d e r a l income t a x f o r 1977 a s he had agreed ; ( 2 ) on March 8 , 1980, t h e IRS placed a l i e n a g a i n s t a l l r e s p o n d e n t ' s p r o p e r t y ; ( 3 ) t h a t t h e l i e n prevented t h e respondent from c l o s i n g a l o a n which would have enabled h e r to pay t h e second mortgage a g a i n s t h e r home due on October 15, 1980; ( 4 ) t h a t t h e l i e n remained u n t i l June 8 , 1981; and ( 5 ) t h a t t h e respondent became o b l i g a t e d f o r t h e i n t e r e s t on t h e second mortgage i n t h e amount of $4.74 a day from October 15, 1980, to June 8 , 1981, f o r a t o t a l sum of $1,118.64. A p p e l l a n t ' s argument concerning avoidance does not a p p l y t o t h i s c a s e . Under t h e p r o p e r t y s e t t l e m e n t agreement, respon- d e n t was compelled to assume i n d e b t e d n e s s a g a i n s t t h e r e s i d e n c e , and when she became o b l i g a t e d to r e f i n a n c e t h e second mortgage s h e was prevented from s e c u r i n g a l o a n because of a tax l i e n t h a t - 4 - had been f i l e d a g a i n s t t h e p r o p e r t y . A p p e l l a n t f a i l e d to pay h i s p o r t i o n of 1977 income t a x and t h a t f a i l u r e caused t h e t a x l i e n t o be f i l e d , c a u s i n g r e s p o n d e n t to pay c o n s i d e r a b l e i n t e r e s t . A p p e l l a n t ' s f a i l u r e to make t h e t a x payment w a s a v i o l a t i o n of t h e agreement, and t h e c o u r t p r o p e r l y so h e l d . The t h i r d i s s u e is whether t h e c o u r t e r r e d i n r e f u s i n g to set a s i d e t h e p r o p e r t y s e t t l e m e n t agreement on t h e b a s i s of a r e c e n t United S t a t e s Supreme Court case e x c l u d i n g m i l i t a r y pen- s i o n s from marital estates. A t t h e t i m e t h e p e t i t i o n to d i s s o l v e t h e m a r r i a g e was f i l e d , t h e w i f e asked f o r , among o t h e r t h i n g s , i n t h e d i s t r i b u - t i o n of t h e marital estate a one-half i n t e r e s t i n h e r husband I s n o n d i s a b i l i t y m i l i t a r y r e t i r e m e n t . During a recess i n t h e d i s s o - l u t i o n h e a r i n g r e s p o n d e n t t s a t t o r n e y c o n t a c t e d t h e a p p e l l a n t and h i s a t t o r n e y and proposed a s e t t l e m e n t awarding t h e e n t i r e mari- t a l estate to t h e r e s p o n d e n t . She i n t u r n would r e l i n q u i s h h e r c l a i m t o h i s m i l i t a r y r e t i r e m e n t . A p p e l l a n t now a r g u e s t h a t he a g r e e d to t h i s s e t t l e m e n t on t h e assumption t h a t r e s p o n d e n t had a marital estate i n t e r e s t i n h i s m i l i t a r y r e t i r e m e n t on t h e b a s i s o f t h e C a l i f o r n i a d e c i s i o n i n I n re F i t h i a n ( 1 9 7 4 ) , 111 Cal.Rptr. 369, 10 C.3d 592, 517 P.2d 449, and t h i s C o u r t ' s d e c i s i o n i n I n re Marriage of Miller ( 1 9 8 0 ) , Mont . - - , 609 P.2d 1185, 37 St.Rep. 556. The r e s p o n d e n t f i l e d h e r p e t i t i o n on A p r i l 1, 1981, to e n f o r c e t h e p r o p e r t y s e t t l e m e n t . A p p e l l a n t f i l e d a motion to quash and set a s i d e t h e o r i g i n a l p r o p e r t y s e t t l e m e n t agreement on t h e b a s i s of t h e United S t a t e s Supreme Court d e c i s i o n i n McCarty v . McCarty ( 1 9 8 1 ) , U . S . , 1 0 1 S.Ct. 2728, 6 9 L.Ed.2d 589. T h a t case r e v e r s e d t h e C a l i f o r n i a Supreme Court and h e l d t h a t m i l i t a r y r e t i r e m e n t pay is n o t p a r t of t h e marital a s s e t s t h a t c o u l d be d i s t r i b u t e d i n state d i v o r c e p r o c e e d i n g s . A f t e r a j o i n t h e a r i n g w a s h e l d on t h e motion t o quash and t h e p e t i t i o n f o r e n f o r c e m e n t , t h e t r i a l c o u r t denied a p p e l l a n t t s motion to quash and o r d e r e d , among o t h e r t h i n g s , t h a t he pay t h e r e s p o n d e n t t h e sum o f $1,118.64 f o r a d d i t i o n a l i n t e r e s t she had become o b l i g a t e d f o r on t h e n o t e . A p p e l l a n t now a r g u e s t h a t i n view of t h e h o l d i n g i n McCarty v. McCarty, s u p r a , t h e p r o p e r t y s e t t l e m e n t agreement is u n f a i r to him and should be set a s i d e and t h e pro- p e r t y d i s t r i b u t i o n redetermined. W e f i n d McCarty d i s t i n g u i s h a b l e i n a number of areas. F i r s t , M r . McCarty c o n s i s t e n t l y took t h e p o s i t i o n t h a t o n l y he was e n t i t l e d t o h i s m i l i t a r y pension. H e took t h a t p o s i t i o n a l l t h e way t o t h e United S t a t e s Supreme C o u r t , having lost i n t h e state c o u r t . A p p e l l a n t , i n t h i s case, e n t e r e d i n t o an agreement, or a c o n t r a c t , w i t h h i s w i f e b e f o r e t h e d e c i s i o n i n McCarty. A t t h e t i m e he made t h e agreement he w a s n o t coerced by t h e c o u r t i n t o any p r o p e r t y s e t t l e m e n t agreement. H e w a s r e p r e s e n t e d by c o u n s e l and a r r i v e d a t t h e agreement through n e g o t i a t i o n s w i t h t h e r e s p o n d e n t . A p p e l l a n t chose t o settle t h e p r o p e r t y d i s t r i b u t i o n i s s u e b y c o n t r a c t u a l r e l a t i o n s w i t h t h e r e s p o n d e n t . The agreement bet- ween t h e p a r t i e s was e n t e r e d i n t o on September 26, 1979, approved by t h e c o u r t and i n c o r p o r a t e d i n t o its d e c r e e on t h a t d a t e . McCarty was n o t decided u n t i l June 26, 1981, some twenty-one months l a t e r . In t h e meantime, t h e a p p e l l a n t had disobeyed t h e p r o v i s i o n s of t h e agreement, c a u s i n g t h e r e s p o n d e n t c o n s i d e r a b l e expense. W e f i n d no b a s i s t o o v e r r u l e t h e D i s t r i c t Court i n its f i n d i n g s of f a c t and c o n c l u s i o n s of law i n t h i s matter. The e v i d e n c e c l e a r l y shows t h a t a p p e l l a n t f a i l e d to keep h i s agreement. The c o u r t was a c t i n g e n t i r e l y w i t h i n its preroga- t i v e and a u t h o r i t y i n e n f o r c i n g t h e terms of t h e agreement by o r d e r i n g t h e a p p e l l a n t to pay t h e unpaid p o r t i o n of t h e 1 9 7 8 pro- p e r t y t a x e s , t o d e l i v e r t h e b o a t i n g equipment t h a t he was still h o l d i n g , and to pay t h e a d d i t i o n a l i n t e r e s t on t h e second mortgage d u r i n g t h e t i m e t h a t t h e t a x l i e n f o r e c l o s e d t h e c l o s u r e of r e s p o n d e n t ' s l o a n to pay o f f t h e second mortgage. I n a d d i t i o n , w e f i n d t h a t t h e c o u r t ' s o r d e r awarding a t t o r n e y f e e s t o r e s p o n d e n t caused by h e r having to s e e k t h e enforcement d e c r e e was proper. W e affirm the D i s t r i c t Court and return t h i s matter to the t r i a l court for setting reasonable attorney fees and costs on t h i s appeal. I ' W e concur: , '