van Oosting v. van Oosting

• Decision Date: 07 September 1994
• Docket Number: No. 940003,940003
• Citation: 521 N.W.2d 93
• Parties: Shirley VAN OOSTING, Plaintiff, Appellant and Cross-Appellee v. William B. VAN OOSTING, Defendant, Appellee and Cross-Appellant. Civ.
• Court: North Dakota Supreme Court

Page 93

521 N.W.2d 93

Shirley VAN OOSTING, Plaintiff, Appellant and Cross-Appellee v. William B. VAN OOSTING, Defendant, Appellee and Cross-Appellant.

Civ. No. 940003.

Supreme Court of North Dakota.

Sept. 7, 1994.

Timothy D. Lervick of Rolfson Schultz Lervick Law Offices, Bismarck, for plaintiff, appellant and cross-appellee.

Ann Mahoney of Mahoney & Mahoney, for defendant, appellee and cross-appellant.

SANDSTROM, Justice.

In this divorce judgment appeal, we decide if the trial court erred in failing to distribute a portion of one spouse's interest in a trust. We also decide whether the court erred in not awarding permanent support to a spouse suffering from multiple sclerosis--an incurable, progressively debilitating disease. We hold the trial court clearly erred and reverse and remand on the issues. On the remaining property division issues, we affirm.

I

Bruce and Shirley van Oosting were married on June 28, 1969. Bruce was 20 and Shirley was 19. At the time of their marriage, Bruce owned a one-third interest in 1,040 acres of farmland (the Schulte place) with his parents. Bruce and Shirley moved into a house on the Schulte place, adjacent to his parents' farm, and continued to farm with his father.

Bruce farmed with his father for a monthly wage until 1984, when he started gradually taking over management and operation of the farm from his father who was 92 years old.

In 1970, Shirley was diagnosed with multiple sclerosis (M.S.), a disease to the nervous system affecting sensory, motor, vision, hearing, and mental capacities. There is no known cure for M.S., and the effects of the disease never completely go away. Shirley has suffered several exacerbations since being diagnosed with M.S. Exacerbation occurs when the effects of the disease intensify. Shirley's M.S. is currently in remission, but will likely cause more severe physical problems in the future.

During the parties' 24-year marriage, Bruce primarily managed the farm and Shirley primarily took care of the household and the parties' two children, William, Jr., age 22, and Melisa, age 19. During most of their marriage, Shirley did not work outside of the farm. Shirley's total outside employment was approximately three months of part-time employment as a sales clerk, and approximately three months of employment as an assistant activities director in a nursing home.

In the spring of 1992, Bruce and Shirley's marriage deteriorated when Bruce admitted to Shirley he had been having an affair. The parties dispute whether there were marital problems prior to Bruce's revelation. Although they talked of reconciliation, the marriage irretrievably broke down when Bruce left the family home on October 12, 1992, without telling Shirley where he was going or when he would return. Shirley filed for divorce.

After a two-day trial, the trial court issued a 23-page memorandum decision dividing the parties' marital property. The trial court found the marital estate had assets of $1,014,543, debts of $208,297, for a net value of $806,246. Bruce was immediately awarded $909,297, less debt of $208,297, for a net of $701,000. Shirley was immediately awarded $105,246. To equalize the disparity in property, Bruce was ordered to pay Shirley $233,813 with interest at seven percent over 15 years. In summary, excluding interest, Bruce was awarded $467,187 and Shirley was awarded $339,059. In addition, the trial court ordered Bruce to pay Shirley spousal support of $500 per month for one year.

Shirley appeals from the divorce judgment, claiming the trial court's property division and award of temporary spousal support are clearly erroneous. Shirley claims the trial court decision is clearly erroneous when it (1) fails to include and divide as a marital asset Bruce's interest in a credit trust, created by Bruce's father; (2) unequally divides the marital estate by giving Bruce credit for property given to him by his parents and inherited from his uncle; and (3) fails to award her permanent spousal support. This Court has jurisdiction under Art. VI, Sec. 6 N.D. Const., and N.D.C.C. Sec. 28-27-01. The appeal is timely under Rule 4(a), N.D.R.App.P.

II

In a divorce, the trial court must "make such equitable distribution of the real and personal property of the parties as may seem just and proper, ..." N.D.C.C. Sec. 14-05-24. In dividing the property, the trial court must consider all relevant factors and should follow the Ruff- Fischer guidelines. See Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952); Fischer v. Fischer, 139 N.W.2d 845 (N.D.1966). The objective is to equitably divide property based on the circumstances of the case. Blowers v. Blowers, 377 N.W.2d 127, 129 (N.D.1985). In the total marital estate to be divided, the trial court must include all of the real and personal property owned by the parties, regardless of the source. Gaulrapp v. Gaulrapp, 510 N.W.2d 620, 621 (N.D.1994). Separate property, whether inherited or otherwise, must initially be included in the marital estate. Gaulrapp. The origin of the property can, however, be considered in making an equitable property division. Gaulrapp; Winter v. Winter, 338 N.W.2d 819, 822 (N.D.1983). A property division need not be equal to equitable, but a substantial disparity must be explained. Heley v. Heley, 506 N.W.2d 715, 718 (N.D.1993).

The trial court has discretion in applying the guidelines to the facts of the case and to decide an equitable distribution of the property. Heley. A trial court's property division is a finding of fact and will not be set aside on appeal unless it is clearly erroneous under Rule 52(a), N.D.R.Civ.P. Heley. A finding of fact is clearly erroneous if, although there is some evidence to support it, a reviewing court, on the entire record, is left with a definite and firm conviction a mistake has been made. Rueckert v. Rueckert, 499 N.W.2d 863, 868 (N.D.1993). Conclusions of law are fully reviewable on appeal. In Interest of Kupperion, 331 N.W.2d 22, 27 (N.D.1983).

III

Bruce's father died November 15, 1988, at the age of 97. In his will, he created a marital trust and a credit trust to dispose of his sizable estate. Under the will, his wife has the right to withdraw all assets of the marital trust, even to complete exhaustion. Upon her death, she has a general power of appointment over any remaining assets in the marital trust. If during her lifetime, the corporate trustee decides funds for her care are not reasonably available from her own property, the marital trust, or other sources, she may receive both principal and income distributions from the credit trust.

Bruce, as the only child, is entitled to receive income and principal distributions from the credit trust, in the sole discretion of the corporate trustee. Any assets remaining in the credit trust upon his mother's death are to be distributed to Bruce.

The trial court, in its final memorandum decision, recognized Bruce's "expectancy under this [credit] trust is subject to certain contingencies," but concluded, "it is realistic to expect he will survive his mother and eventually receive a sizeable settlement." The trial court also estimated the credit trust to be worth approximately $607,112, but found that due to the contingencies involved no present value could be placed on Bruce's interest. The court concluded the dispositive question is whether Shirley should share in the trust. On this question, the court answered:

"Based on the testamentary wish of the defendant's father, the fact that plaintiff has benefited from the many gifts from defendant's parents, the fact that her share of the property division includes a portion of those gifts and that her share of property division is substantial, it is not equitable to divide a portion of defendant's expectancy in this trust to plaintiff."

A

Shirley claims the trial court erred in not awarding her a portion of the credit trust as part of the property distribution. "Inherited property can be divided between spouses to make an equitable division of property." Behm v. Behm, 427 N.W.2d 332, 336 (N.D.1988). The origin of the property, even if acquired before marriage or inherited, is simply one factor to consider in determining an equitable property division. Winter, 338 N.W.2d at 822.

Here, the trial court considered the source of the credit trust, and found it would not be equitable for Shirley to share in Bruce's interest because of his father's testamentary intent, the many prior gifts from his parents, and the sizable amount of property Shirley was awarded under the property division. We hold the trial court clearly erred on this issue.

The trial court's reliance upon the testamentary intent of Bruce's father is misplaced. At the time of divorce Bruce had a vested interest in the trust. Although contingent in nature, his interest is certain to reach him upon the death of his mother. Further, Bruce is currently entitled to receive, at the trustee's discretion, income and principal distributions. We are in agreement with numerous other courts that the trust is a property interest subject to division. See Davidson v. Davidson, 19 Mass.App.Ct. 364, 474 N.E.2d 1137, 1144 (1985); Chilkott v. Chilkott, 158 Vt. 193, 607 A.2d 883, 884 (1992); Flaherty v. Flaherty, 138 N.H. 337, 638 A.2d 1254, 1256 (1994); Buxbaum v. Buxbaum, 214 Mont. 1, 692 P.2d 411, 413-14 (1984); Lauricella v. Lauricella, 409 Mass. 211, 565 N.E.2d 436, 439 (1991); Trowbridge v. Trowbridge, 16 Wis.2d 176, 114 N.W.2d 129, 134 (1962). See generally Michael Diehl, Note, The Trust in Marital Law: Divisibility of a Beneficiary Spouse's Interests on Divorce, 64 Tex.L.Rev. 1301 (1986) (describing diversity on approaches to division by various jurisdictions, but recognizing trend toward divisibility). We note that this Court's previous holding in Fries v. Fries, 288 N.W.2d 77 (N.D.1980), is distinguishable. In that case, this Court held a pending personal injury claim is too speculative to be included in a...