Opinion ID: 2570462
Heading Depth: 1
Heading Rank: 3

Heading: findings regarding repair alloy

Text: In Worzala I, the Court remanded with instructions to make further findings as to the source of the assets used to purchase MacKenzie's interest in Welding Alloys. Worzala, 128 Idaho at 412, 913 P.2d at 1182. The magistrate judge was persuaded that the funds used to purchase MacKenzie's shares in Welding Alloys could be traced either to Edward's separate property or to the retained earnings of Welding Alloys which were traceable to Edward's separate property. He felt constrained, however, by the Court's decision in Worzala I and therefore concluded the funds used to purchase MacKenzie's shares could not be traced with certainty to Edward's separate property. Because he felt this Court had already determined that the property used to purchase MacKenzie's interest could not be considered separate property, he felt he had no choice but to conclude that Repair Alloy was one-half Edward's separate property and one-half community property. It is understandable that the judge was misled by the Court's earlier opinion. While we stated in Worzala I that the case was remanded for further findings as to the source of the funds used to purchase MacKenzie's shares, this is inconsistent with earlier statements in the opinion which appear to hold that there is not sufficient evidence in the record to support the magistrate judge's determination that MacKenzie's shares were purchased exclusively with Edward's separate property. Had that been the Court's holding, however, there would have been no reason to remand the case for further findings; there simply would have been no support in the record for the judge's decision. Although it is not entirely clear from the decision, the Court was remanding in order to give the judge the opportunity to make the necessary findings to support his conclusion. We believe he has now done so, but reached the wrong conclusion simply because of some unfortunate language in our previous opinion. We, therefore, reverse the magistrate judge's decision, but only because he understandably misinterpreted our earlier decision. Ascertaining the character of property begins with the rebuttable presumption that property acquired during marriage is presumed community property. Smith v. Smith, 124 Idaho 431, 436, 860 P.2d 634, 639 (1993). Because Edward formed Repair Alloy during marriage and because MacKenzie's shares were repurchased during marriage, Repair Alloy is subject to the rebuttable presumption. Edward asserts Repair Alloy is his separate property and thus bears the burden of proving, to a reasonable certainty, that Repair Alloy is his separate property. Id. Edward may prove Repair Alloy is his separate property by tracing the funds used to acquire Repair Alloy. I.C. § 32-903; Stahl v. Stahl, 91 Idaho 794, 797, 430 P.2d 685, 688 (1967). The record establishes, and the magistrate judge so found, that Repair Alloy was simply Welding Alloys without MacKenzie. Edward physically moved the assets of Welding Alloys to Repair Alloy and operated with the same employees, serving the same customers. Furthermore, the magistrate judge found that MacKenzie's shares were repurchased with the proceeds and accounts receivable from Welding Alloys, which was wound down when Repair Alloy was incorporated. The balance sheet of Welding Alloys' 1978 tax return indicates $40,000 was paid to MacKenzie as consideration for his 100 shares in Welding Alloys. This evidence sufficiently traces the funds used to purchase MacKenzie's shares to Edward's separate property and supports the determination that Repair Alloy was entirely Edward's separate property. The magistrate judge's findings of fact are supported by substantial and competent evidence and would support a conclusion that Edward's interest in the proceeds of Repair Alloy is entirely separate property. The judge would have so concluded but for the language in our earlier decision. We therefore remand this case with instructions to enter a Decree reflecting Edward's interest in Repair Alloy as his separate property.