Godfrey v. Godfrey, 23312.

• Decision Date: 28 September 2005
• Docket Number: No. 23312.,23312.
• Parties: Daniel C. GODFREY, Plaintiff and Appellee, v. Pamila K. GODFREY, Defendant and Appellant.
• Court: South Dakota Supreme Court

705 N.W.2d 77

2005 SD 101

Daniel C. GODFREY, Plaintiff and Appellee, v. Pamila K. GODFREY, Defendant and Appellant.

No. 23312.

Supreme Court of South Dakota.

Considered on Briefs May 23, 2005.

Decided September 28, 2005.

Barton R. Banks of Banks, Johnson, Colbath, Sumner & Kappelman, Rapid City, South Dakota, Attorneys for plaintiff and appellee.

Linda Lea M. Viken of Viken Law Firm, Rapid City, South Dakota, Attorneys for defendant and appellant.

GIENAPP, Circuit Judge.

[¶ 1.] Pamila K. Godfrey appeals from a judgment and decree of divorce. This appeal challenges the division of property and, specifically, the determination by the trial court that certain property was non-marital property.

[¶ 2.] The trial of this matter was held on January 28 and 29, 2003. Additional hearings were held on May 19, 2003, September 30, 2003, December 31, 2003, and April 6, 2004. The judgment and decree of divorce was signed and filed on April 26, 2004. We reverse and remand.

FACTS

[¶ 3.] Pamila and Daniel Godfrey were married in Florida in 1977. At the time of the marriage Pamila was eighteen years old and Daniel was twenty-four. That same year the couple moved to South Dakota and Daniel began his employment with a family owned business. The couple had three children, all of whom were adults at the time of the divorce. Both parties resided in South Dakota.

[¶ 4.] Daniel was employed and was a minority stockholder in the family owned business known as Godfrey Brake Service, Inc. The business was located in Rapid City, South Dakota. Daniel was earning a base salary of $50,000 per year plus dividends ranging from $20,000 to $48,000 per year.

[¶ 5.] Pamila was a stay-at-home mother for approximately ten years while the children were at a young age. She held a volunteer position at the YMCA during portions of that ten year time period. The volunteer position evolved into a paid position with the gymnastics program. Pamila ultimately rose to the position of gymnastics director at the YMCA. She was injured in a work related accident in 1989 that resulted in nine surgeries over a seven year period. She resigned her position in 1995.¹ The accident caused injuries to Pamila's femur, ribs, back and pelvis. Pamila received a worker's compensation settlement of $387,485.43. Approximately $70,000 of the settlement was used to pay off a mortgage on the parties' homestead.

[¶ 6.] After leaving her employment with the YMCA in 1995, Pamila started a private business called Rising Star Gymnastics. The profitability of the business was minimal.²

[¶ 7.] Daniel's parents owned real estate on Highway 16 near Rapid City. His parents had three children and in 1992 they made lifetime distributions of some of their estate. One of the three children did not want real estate and was given a cash distribution. Daniel and Pamila and Daniel's brother and his spouse were deeded portions of the Highway 16 real estate. Daniel and Pamila received 66.410 acres of land platted as Lot 2 of the Godfrey Addition. On July 31, 1992, Daniel's parents executed a warranty deed conveying Lot 2 to Daniel and Pamila as joint tenants with rights of survivorship. A corrective deed was filed in 1994 which also listed Daniel and Pamila as joint tenants. In addition, Daniel's father and mother filed separate gift tax returns. Each return specified that an undivided one-fourth interest in the property was gifted to Pamila and an undivided one-fourth interest was gifted to Daniel.

[¶ 8.] Subsequent to their receipt of the gifted property, Daniel and Pamila sold their previous residence and built a home on the 66.410 acre tract. They were still residing in that home at the time of the commencement of this action.

[¶ 9.] During pretrial negotiations Daniel and Pamila agreed that the home and approximately 10 acres out of the 66.410 acre tract were marital property. They did not agree that the remaining 56 acres³ of gifted property was marital property subject to distribution. Resolution of that dispute was left to the trial court. The trial court found that the remaining 56 acres of gifted property was non-marital property and awarded it to Daniel.

ISSUES

[¶ 10.] The following issues are presented in this appeal:

Whether the trial court erred in excluding the 56 acres of gifted property from marital property and in failing to consider the value of the 56 acres in making the appropriate distribution of property.

If the trial court was correct in excluding the 56 acres of gifted property from marital property, whether the appreciation in value of the gifted property should have been included as a marital asset.

Whether Pamila is entitled to attorney fees on appeal.

STANDARD OF REVIEW

[¶ 11.] The standard of review is the abuse of discretion standard. Pellegrin v. Pellegrin, 1998 SD 19, ¶ 10, 574 N.W.2d 644, 646. Abuse of discretion refers to a discretion exercised to an end or purpose not justified by, and clearly against, reason and evidence. Id. The determination is not "`whether we would have made the same ruling, but whether "a judicial mind, in view of the law and the circumstances of the particular case, could reasonably have reached such a conclusion."'" (quoting DeVries v. DeVries, 519 N.W.2d 73, 75 (S.D.1994)). Findings of fact, reviewed under the clearly erroneous standard, will not be overturned unless the reviewing court is left with a firm conviction that a mistake has been made. Hilbrands v. Hilbrands, 429 N.W.2d 750, 751 (S.D.1988).

ANALYSIS

ISSUE ONE

[¶ 12.] Whether the trial court erred in excluding the 56 acres of gifted property from marital property and in failing to consider the value of the 56 acres in making the appropriate distribution of property.

[¶ 13.] The evidence in this case established certain specific and unique facts that require reversal and the inclusion of the disputed 56 acres as marital property subject to distribution by the trial court.

[¶ 14.] SDCL 25-4-44 provides:

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.

[¶ 15.] In Billion v. Billion, 1996 SD 101, 553 N.W.2d 226, this Court stressed the fact that a court must consider both equity and the circumstances of the parties when a property division is made.

[¶ 16.] Before a court sets aside properties as non-marital there are seven principal factors that this Court has repeatedly held should be considered. These seven factors are:

(1) the duration of the marriage; (2) the value of the property owned by the parties; (3) the ages of the parties; (4) the health of the parties; (5) the competency of the parties to earn a living; (6) the contribution of each party to the accumulation of the property; and (7) the income-producing capacity of the parties' assets.

Pellegrin, 1998 SD 19 at ¶ 21, 574 N.W.2d at 648 (quoting Billion, supra.) The Pellegrin court went on to state: "Only in the case where one spouse has made no or de minimis contributions to the acquisition or maintenance of an item of property and has no need for support, should a court set it aside as `non-marital' property." Id.

[¶ 17.] In this case the trial court made the following finding of fact relating to the real estate at issue:

Despite the form of this transaction, the Court finds that this land was intended to be Plaintiff's inheritance and is not marital property. No marital monies were spent in the acquisition of this property and the monies used to pay the real estate taxes were largely, if not entirely, obtained from dividends issued by Godfrey Brake Service. Further, this property borders other land gifted to Plaintiff's brother as well as land retained by Raymon and Gladys Godfrey. Accordingly, based upon the intent of the donor and the treatment of the property by the parties after the gift, the Court finds that this property is not marital property except as to the 10 acres that the parties have stipulated is appurtenant to the marital residence.

[¶ 18.] The trial court made the following conclusion of law:

The real property gifted by Raymon and Gladys Godfrey along Highway 16, other than the ten acres associated with the marital residence as stipulated between the parties, is not marital property and shall be retained by the Plaintiff as his sole and separate property free of any claim by the Defendant. In making this conclusion, the Court is considering the intention of the donor who made the gift, the date of the gift, the nature of the property gifted, the treatment of the gifted property by the parties during their marriage, the assets and debt being distributed to each party, and is placing substance over form.

[¶ 19.] The trial court did not address in either its findings of fact or its conclusions of law the seven principal factors to be considered. Rather, the trial court relied primarily on the intention of the donor. The intention of the donor may be considered by the trial court, but it is not the deciding factor. With respect to inherited property, it is not ipso facto excluded from consideration in the overall division of property. Garnos v. Garnos, 376 N.W.2d 571, 573 (S.D.1985).

[¶ 20.] An examination of the seven principal factors, combined with other evidence unique to this case, establishes that the disputed property should have been included as marital property. The duration of this marriage was approximately twenty-six years and brought into this world three children who are now adults. Pamila had significant health problems as a result of the 1989 accident that led to nine surgeries over a seven year period. This resulted in a significant worker's compensation settlement.⁴ Daniel has a significantly greater competency to earn a living than Pamila. Daniel retained the stock in the family corporation, an...