Field v. Field

• Decision Date: 09 September 2020
• Docket Number: 28901
• Citation: 949 N.W.2d 221
• Parties: Aren FIELD, Plaintiff and Appellant, v. Matthew FIELD, Defendant and Appellee.
• Court: South Dakota Supreme Court

949 N.W.2d 221

Aren FIELD, Plaintiff and Appellant,

v.Matthew FIELD, Defendant and Appellee.

28901

Supreme Court of South Dakota.

CONSIDERED ON BRIEFS SEPTEMBER 30, 2019

OPINION FILED September 9, 2020

JENNIFER GOLDAMMER of Helsper, McCarty & Rasmussen, P.C., Brookings, South Dakota, Attorneys for plaintiff and appellant.

TODD D. WILKINSON, GARY W. SCHUMACHER of Wilkinson & Schumacher Law Prof. LLC, De Smet, South Dakota, Attorneys for defendant and appellee.

SALTER, Justice

[¶1.] Following a divorce trial, the circuit court excluded farmland Aren Field purchased with her former husband from the marital estate. A relative of Aren's husband sold the land to the Fields at a significantly discounted purchase price, and the court determined the transfer to be a partial gift solely to the husband. Aren challenges this determination and also argues that, in any event, the court abused its discretion by not considering evidence of her contribution to the acquisition and maintenance of the farmland. We reverse and remand for further proceedings consistent with this opinion.

Background

[¶2.] Aren and Matt Field were married in 2001. The two began dating when they were both students at South Dakota State University. Matt later graduated with a bachelor's degree in animal science and moved to Iowa to work at a commercial hog facility. Aren joined him and eventually obtained a bachelor's degree, also in animal science, from Iowa State University.

[¶3.] The couple moved back to South Dakota in 2002 and settled on an acreage they purchased from Matt's grandmother near Lake Preston. Both Matt and Aren obtained jobs connected to agriculture, but Matt's long-held ambition was to have his own farm and livestock operation. Aren supported Matt's aspiration, and the two started modestly by acquiring some livestock.

[¶4.] Over time, Matt grew close to his relative, Dennis Ryland, who farmed east of Lake Preston. Matt helped Dennis for several years with all aspects of Dennis’ row-crop farming operation, and eventually Matt and Aren rented some of the land for their own crops. Dennis saw Matt as a hard worker with an earnest desire to farm for himself. In 2006, Dennis granted "to Matthew Field and Aren Field" an option to purchase his farm (the Ryland Farm)¹ for $300,000, which was significantly below its market value.

[¶5.] Dennis was interested in keeping the land in the family after he was done farming. During his trial testimony, Dennis explained that the land was homesteaded in 1878 by his great-grandfather and has been owned and farmed by family members ever since.

[¶6.] Dennis’ effort to plan for his succession was impacted by the fact that his only child lived out of state and did not want to farm. However, Dennis came to view Matt as a worthy successor because of his strong work ethic and kinship. As a result, Dennis set the purchase price for his farm substantially below its market value to allow Matt and Aren the chance to operate the farm without incurring a prohibitive amount of debt.

[¶7.] In 2010, Aren and Matt exercised their option to purchase the Ryland Farm. The terms of the sale were incorporated into a contract for deed that required payment of the $300,000 purchase price in annual principal payments of $15,000 and applied an interest rate of 5% to the unpaid balance. Both Aren and Matt signed the contract for deed, which described them as joint tenants with rights of survivorship. Prior to the couple's separation, they made the periodic principal and interest payments using money from their joint checking account.

[¶8.] Aren worked outside of the home for much of the marriage, but in 2014, she quit her full-time job and worked at home, raising the parties’ three children and assisting Matt in various aspects of the family farming operation. Aren later returned to full-time employment after the parties separated. Matt also maintained other employment over the course of the parties’ marriage and was working as a contracted seed dealer at the time of trial.

[¶9.] The parties’ marriage deteriorated, and Aren commenced this divorce action in May 2016. She moved out of the marital home with the parties’ children a short time later. The parties stipulated to a divorce on the grounds of irreconcilable differences, but they were unable to reach an agreement concerning the division of marital property and child custody. They agreed to try these issues separately, and the circuit court conducted a court trial to determine an equitable division of the marital estate. The principal issue before the court was whether the Ryland Farm should be treated as Matt's separate property.

[¶10.] Matt argued that the Ryland Farm was essentially a gift from Dennis solely to him, and it should therefore not be subject to equitable division. Matt introduced evidence indicating the farm was worth $1,826,000 in 2010 when he and Aren purchased it and was worth $2,200,000 at the time of trial. He proposed including only the discounted $300,000 purchase price and the appreciated value of $374,000 in the marital estate. Matt claimed the remaining $1,526,000 should be excluded from the marital estate as his separate property because it represented the value of Dennis’ gift to only him, not Aren.

[¶11.] For her part, Aren argued the entire value of the Ryland Farm should be subject to the court's equitable division as an asset of the marital estate because it was not exclusively given to Matt. Through the presentation of her testimony and other witnesses, Aren also contended that she had contributed directly and indirectly to the acquisition of the Ryland Farm and its maintenance and operation.

[¶12.] The circuit court accepted Matt's view and determined $1,526,000 should be excluded from the marital estate and treated as Matt's separate property. The court's decision turned on its determination of Dennis’ donative intent.

[I]t was very clear to this Court that Dennis Ryland wanted this land to go to a family member that farms the property and the only one ... was Matt. Matt is a relative and he farmed with Dennis for a period of time and it's clear that Dennis wanted to offer him a chance to farm. Dennis was impressed with Matt's work ethic.

* * * *

And it really did not matter whether [Matt] was married, whether he was single, who he was married to, the fact is Dennis Ryland would not have sold him that land for a discounted price of $300,000 on a piece of property that was valued at 1.8 million unless he was Matt Field, his relative.

[¶13.] Although the circuit court made a general finding that both parties had contributed equally to the accumulation of property, the court excluded the $1,526,000 gift because Matt was the reason for Dennis’ benevolence. Beyond this, though, the court did not make specific findings concerning the extent that Aren contributed, directly or indirectly, to the acquisition or maintenance of the Ryland Farm.

[¶14.] Aren appeals, presenting the single issue of whether the circuit court abused its discretion by excluding $1,526,000 of the Ryland Farm's appraised value from the marital estate.

Analysis

[¶15.] We review a circuit court's decision to determine whether property is marital or non-marital for an abuse of discretion. Anderson v. Anderson , 2015 S.D. 28, ¶ 8, 864 N.W.2d 10, 14. We have recently reaffirmed our formulation of the abuse of discretion standard, describing it as "a fundamental error of judgment, a choice outside the range of permissible choices, a decision, which, on full consideration, is arbitrary or unreasonable." State v. Delehoy , 2019 S.D. 30, ¶¶ 21-22, 929 N.W.2d 103, 108-09 (quoting Thurman v. CUNA Mut. Ins. Soc'y , 2013 S.D. 63, ¶ 11, 836 N.W.2d 611, 616 ). In so doing, however, we did not abandon the self-evident corollary that an error of law is never within the range of permissible choices and necessarily constitutes an abuse of discretion. Lewis v. Sanford Med. Ctr. , 2013 S.D. 80, ¶ 27, 840 N.W.2d 662, 668.

[¶16.] We have described South Dakota, in general terms, as an "all property state," which means that "all property of both of the divorcing parties [is] subject to equitable division by the [circuit] court, regardless of title or origin." Billion v. Billion , 1996 S.D. 101, ¶ 61, 553 N.W.2d 226, 237 (citation omitted). This principle reflects an uncomplicated interpretation of SDCL 25-4-44, which provides as follows:

When a divorce is granted, the courts may make an equitable division of the property belonging to either or both, whether the title to such property is in the name of the husband or the wife. In making such division of the property, the court shall have regard for equity and the circumstances of the parties.

[¶17.] Spouses are certainly "entitled to maintain separate property and do with it as they see fit." Halbersma v. Halbersma , 2009 S.D. 98, ¶ 9, 775 N.W.2d 210, 215. However, gifted or inherited property is not automatically deemed separate and "ipso facto excluded from consideration in the overall division of property." Anderson , 2015 S.D. 28, ¶ 7, 864 N.W.2d at 14 (quoting Novak v. Novak , 2006 S.D. 34, ¶ 5, 713 N.W.2d 551, 553 ). In making its decision whether to include inherited or gifted property, a circuit court may consider "other evidence ... including the origin and treatment of ... property and the direct or indirect contributions of each party to the accumulation and maintenance of the property." Halbersma , 2009 S.D. 98, ¶ 12, 775 N.W.2d at 215.

[¶18.] We have often held that the question of whether to exclude property from the marital estate should be guided by the same factors used to determine an equitable division for a divorcing couple's assets and liabilities. See, e.g. , Novak , 2006 S.D. 34, ¶ 4, 713 N.W.2d at 552 (listing seven factors considered to determine an equitable division of marital assets). However, the principal rule for analyzing a discrete claim of separate property provides that "[o]nly where one spouse has made no or de minimis contributions to...