Heley v. Heley
| Decision Date | 29 September 1993 |
| Docket Number | No. 930016,930016 |
| Citation | 506 N.W.2d 715 |
| Parties | Vikki R. HELEY, Plaintiff and Appellant, v. Larry H. HELEY, Defendant and Appellee. Civ. |
| Court | North Dakota Supreme Court |
John Bullis (argued) and Tracy Lindberg (appearance), Lies, Bullis, Grosz & Lindberg, Wahpeton, for plaintiff and appellant.
Mark Andrew Meyer (argued), Wahpeton, for defendant and appellee. Appearance by Larry H. Heley, appellee.
Vikki R. Heley appealed from a November 1992 amended judgment granting her a divorce from Larry H. Heley. We agree with her assertion that the trial court erred in matters involving property distribution, spousal support, and child support. Accordingly, we reverse and remand for further proceedings.
Vikki and Larry were married in 1975, and had five children: Derryn James, born in 1976; Marisa Joy, born in 1980; Heather Marie, born in 1981; Jordan Michael, born in 1985; and Ryan Patrick, born in 1987. Upon the parties' stipulation, the trial court awarded Neither party obtained a post-high school education. Larry grew up farming with his father and has been a farmer all of his life. Vikki worked for three years prior to the marriage as a babysitter, secretary, store clerk, bar maid, and as a laborer in a plant nursery and in a nursing home. She did not work outside of the home during the parties' 17-year marriage. The trial court found that Larry was "verbally and physically abusive" to Vikki during the marriage which resulted in a six-month separation in the late 1980s. The parties underwent counseling, but, the trial court found, since their "reconciliation they continued to have problems although physical abuse was not one of them."
Vikki and Larry joint legal custody of the children, placing physical custody of Derryn with Larry and of the four younger children with Vikki. At the time of the divorce trial, both Vikki and Larry were 40 years old.
During the latter part of the marriage, the family lived in an $82,000 house they had built in 1987 on a quarter section of land owned by Larry's father. The parties received the income from this land during the marriage but made only two rent payments to Larry's parents. They also owned other real property which they farmed. The trial court found that a "substantial portion of the parties' income and assets were attributable to the free use of the quarter of land of [Larry's] father."
The court valued the couples' assets at $329,981 and their debts at $124,050. The debts included $50,300 remaining in unpaid, interest-free loans Larry's father had advanced the couple during the marriage. This money was used for construction of the house and acquisition of real estate. The couple's payments on these loans were sporadic during the marriage. After the divorce proceedings were started, Larry began paying his father $500 per month on this debt and executed an unsecured promissory note to his father that was "payable upon demand." The remainder of the debts consisted of money owed to the Federal Land Bank. The trial court subtracted the debts, as well as $7,000 in property Larry "brought into the marriage," from the total assets and found the net value of the parties' property to be $198,931.
The court distributed the property as follows:
Larry estimates that this distribution results in $102,965 being awarded to Vikki and $92,096 being awarded to himself. The trial court did not order Larry to pay spousal support for Vikki, except
Based on income tax returns for the past five years, the trial court found that Larry had an average monthly income of $2,921 per month after state and federal income taxes were deducted and appreciation added to the adjusted gross income. The trial court then deducted monthly principal payments of $500 to Larry's father and $311 to the Federal Land Bank to arrive at an average net
monthly income of $2,088. The trial court ordered Larry to pay $504 per month for support of the four youngest children. The court further ordered that each party pay their own attorney fees. Vikki appealed.
A trial court's determinations on matters of property division are treated as findings of fact and will not be set aside on appeal unless they are clearly erroneous under NDRCivP 52(a), or they are induced by an erroneous conception of the law. Anderson v. Anderson, 368 N.W.2d 566, 568 (N.D.1985). When a divorce is granted, NDCC Sec. 14-05-24 requires the trial court to distribute the parties' real and personal property as may seem just and proper. In doing so, the trial court must consider all of the real and personal property accumulated by the parties as part of their marital estate, regardless of the source. Freed v. Freed, 454 N.W.2d 516, 520 (N.D.1990). It is within the discretion of the trial court, after hearing the testimony and applying the Ruff- Fischer guidelines, see Fischer v. Fischer, 139 N.W.2d 845 (N.D.1966) and Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952), to determine an equitable distribution of the property depending on the facts and circumstances in each individual case. Zander v. Zander, 470 N.W.2d 603, 605 (N.D.1991); Routledge v. Routledge, 377 N.W.2d 542, 549 (N.D.1985). A property division need not be equal to be equitable, but a substantial disparity should be explained. Spooner v. Spooner, 471 N.W.2d 487, 491 (N.D.1991). We are definitely and firmly convinced that a mistake has been made in the manner of distributing the marital property to Vikki in this case.
First, we agree with Vikki that the trial court erred in excluding from the marital estate, prior to distribution, Larry's $7,000 worth of "pre-marital property." This $7,000 is property Larry "brought into the marriage" and consists of the balance in savings and checking accounts on the date of the marriage and the value of a car he bought prior to the marriage. We have often said that property acquired prior to the marriage by one spouse should be considered as part of the marital estate in determining an equitable division. E.g., Gronneberg v. Gronneberg, 412 N.W.2d 84, 92 (N.D.1987). "[S]eparate property, whether inherited or otherwise, must initially be included in the marital estate and is subject to distribution as may be necessary to achieve an equitable distribution." Anderson, 368 N.W.2d at 568. Although the premarital acquisition of property can be considered in distributions under the Ruff- Fischer guidelines, we have "never decreed that the property brought into a marriage by a party be irrevocably set aside to that party, ..." Freed, 454 N.W.2d at 521-522. It seems particularly inappropriate here, where the so-called "pre-marital assets" have been commingled over a 17-year marriage, and no longer have any separate identity. The trial court misapplied the law by excluding this $7,000 in pre-marital property from the value of the distributable marital estate.
We disagree with Vikki, however, that the trial court erred in not awarding her immediate title to one-half of the real property owned by the parties, and that the trial court improperly computed the value of her award. We have previously upheld distribution of farms or other business assets to one spouse with an offsetting monetary award to the other spouse. See, e.g., Martin v. Martin, 450 N.W.2d 768, 769-770 (N.D.1990); Linn v. Linn, 370 N.W.2d 536, 543 (N.D.1985). This type of property distribution alleviates reducing the farmer or business person's ability to successfully operate the enterprise as an economic unit, which would effectively work a disadvantage to both spouses, and avoids the course of conflict that would likely arise if divorced spouses continued to effectively share ownership of a farm or business. See Martin; Linn. As to the value of the award, the trial court's requirement that Larry pay Vikki $90,000 over a period of 20 years also included interest at the rate of 8%. Because the amortized payments include interest on the $90,000, it is not necessary to reduce the $90,000 to a present value in order to determine the true worth of the award. Compare Lucy v. Lucy, 456 N.W.2d 539 (N.D.1990), and Tuff v. Tuff, 333 N.W.2d 421 (N.D.1983), in which no interest was ordered. Nor was the interest If we were to view the value of the assets awarded to each party purely in a vacuum, we would have no difficulty concluding that the division of property was not clearly erroneous. But we cannot consider the property distribution alone, without considering other factors in this case. We have said that "property distribution and spousal support often need to be examined and dealt with together." Pfliger v. Pfliger, 461 N.W.2d...
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