Halbersma v. Halbersma

• Decision Date: 10 November 2009
• Docket Number: No. 25127.,No. 25115.,25115.,25127.
• Citation: 775 N.W.2d 210,2009 SD 98
• Parties: Barbara R. HALBERSMA, Plaintiff and Appellant, v. Lawrence M. HALBERSMA, Defendant and Appellee.
• Court: South Dakota Supreme Court

775 N.W.2d 210

2009 SD 98

Barbara R. HALBERSMA, Plaintiff and Appellant, v. Lawrence M. HALBERSMA, Defendant and Appellee.

No. 25115.

No. 25127.

Supreme Court of South Dakota.

Argued August 25, 2009.

Decided November 10, 2009.

Debra M. Voigt of Burd Law Office, Sioux Falls, South Dakota, Attorneys for plaintiff and appellant.

Aaron J. Emerson of Myers & Billon, LLP, Sioux Falls, South Dakota, Attorneys for defendant and appellee.

SEVERSON, Justice.

[¶ 1.] Barbara Halbersma appeals the circuit court's property division decision on remand. Lawrence Halbersma also raises three issues by notice of review. We affirm in part, reverse in part, and remand.

FACTS

[¶ 2.] The underlying facts of this case are set forth in Halbersma v. Halbersma (Halbersma I), 2007 SD 91, 738 N.W.2d 545. Lawrence and Barbara were married on October 15, 1955. In 1986, Barbara inherited real and personal property from her mother, which, at the time of trial, was valued at approximately $1,799,779.00. The bulk of the inheritance consisted of real property, including a residence located near Brandon, South Dakota. After selling their farm near White, South Dakota, Barbara and Lawrence moved into the Brandon residence in 2003. Barbara filed for divorce in 2005.

[¶ 3.] The only contested issue in the divorce proceeding was the division of Barbara's inherited property. The circuit court in Halbersma I found that Barbara's mother intended to pass the land and money to Barbara alone, that Barbara kept her inherited property and money separate from the marital estate, and that Lawrence had no control over the property and did not participate in any decisions regarding it. The circuit court found Lawrence's contribution to the inherited property to be de minimis. The circuit court also noted Lawrence had no need for support. Accordingly, the inherited property was excluded from the marital estate. Lawrence appealed.

[¶ 4.] In Halbersma I, this Court, in a divided three to two opinion with one concurrence, reversed the circuit court's exclusion of the inherited property from the marital estate upon determining the court overlooked Lawrence's indirect contribution to the inherited property. 2007 SD 91, ¶ 16, 738 N.W.2d at 549. The circuit court was ordered on remand "to determine an equitable division of property that includes Barbara's inherited property." Id. ¶ 24.

[¶ 5.] The remand hearing was held on September 3, 2008. The circuit court determined the Brandon residence should be included in the division of property as it became marital property when the couple moved into it in 2003. The circuit court awarded Lawrence one-half of the home's equity, $111,250.00, less the sum of $7,500.00 previously awarded for his contribution to the residence, for a net award of $103,750.00. The circuit court excluded the remainder of Barbara's inheritance from the marital estate. Furthermore, the circuit court, sua sponte, included in the marital estate monies Lawrence inherited in the early 1970s and 1980s. These inheritances totaled approximately $50,000.00, which the circuit court determined had a present value of $143,670.00 after factoring in investment earnings, inflationary discounts, and taxes. As a result, Barbara was ordered to pay Lawrence an additional $247,420.00, plus interest, at the rate of 5% per year from and after October 6, 2006. Barbara appeals, raising three issues:

1. Whether the circuit court abused its discretion and erred in the application of law in its division of the parties' marital estate.

2. Whether, in the alternative, Lawrence's indirect contribution should have been determined by awarding Lawrence an appropriate share in the appreciation of value of Barbara's inherited properties.

3. Whether the circuit court erred by assessing Barbara interest during a period of delay caused by Lawrence and the court.

Lawrence filed a notice of review, identifying three issues:

1. Whether the circuit court abused its discretion by awarding Lawrence approximately 15% of the value of Barbara's previously excluded inherited assets and thereby awarding Barbara approximately 72% of the total assets and Lawrence approximately 28% of the total assets.

2. Whether the circuit court erred by utilizing a valuation methodology for determining the value of Lawrence's equitable interest in the previously excluded inherited assets, where such methodology was not advocated by either party, no evidence was offered to support the methodology, and which was different than the property stipulation of the parties that had been accepted by the circuit court.

3. Whether the circuit court erred by limiting the judgment interest awarded to Lawrence to 5%, rather than the Category B rate of interest specified in SDCL 54-3-5.1.

To prevent repetition, we combine and restate the issues.

STANDARD OF REVIEW

[¶ 6.] The applicable standard of review varies depending on whether the issue is one of fact or one of law. A circuit court's findings of fact will not be set aside unless they are clearly erroneous. SDCL 15-6-52(a). The question is not whether this Court would have made the same findings the circuit court did, but whether on the entire evidence, "we are left with a definite and firm conviction that a mistake has been committed." New Era Mining Co. v. Dakota Placers, Inc., 1999 SD 153, ¶ 7, 603 N.W.2d 202, 204 (citations omitted). By contrast, conclusions of law are reviewed under a de novo standard, giving no deference to the circuit court's conclusions of law. Id.

[¶ 7.] It is well established that a circuit court's division of property "is not bound by any mathematical formula." Johnson v. Johnson, 2007 SD 56, ¶44, 734 N.W.2d 801, 812 (quoting Grode v. Grode, 1996 SD 15, ¶ 9, 543 N.W.2d 795, 800). See Endres v. Endres, 532 N.W.2d 65, 71 (S.D.1995); Kost v. Kost, 515 N.W.2d 209, 213 (S.D.1994); Kappenmann v. Kappenmann, 479 N.W.2d 520, 524 (S.D.1992); Hanson v. Hanson, 252 N.W.2d 907, 908 (S.D.1977). We will not overturn a property division unless the circuit court abused its discretion, which occurs when a court exercises its discretion "to an end or purpose not justified by, and clearly against, reason and evidence." Kost, 515 N.W.2d at 212 (citation omitted). The inquiry is not whether we would have made a like 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." DeVries v. DeVries, 519 N.W.2d 73, 75 (S.D.1994) (citation omitted). The law requires an equitable, not necessarily equal, division of assets. Halbersma I, 2007 SD 91, ¶ 28, 738 N.W.2d at 551 (Konenkamp, J., concurring).

DECISION

[¶ 8.] 1. Whether the circuit court abused its discretion on remand in making an equitable division of property that included Barbara's inherited property.

[¶ 9.] South Dakota is an "all property state," meaning all property of the "divorcing parties is subject to equitable division by the circuit court, regardless of title or origin." Endres, 532 N.W.2d at 68 (quoting Radigan v. Radigan, 465 N.W.2d 483, 486 (S.D.1991)). 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.

Other than the duty of support, a spouse does not have any vested rights in the property of his or her mate during the course of their marriage.¹ See SDCL 25-2-4; SDCL 25-7-1. Thus, spouses are entitled to maintain separate property and do with it as they see fit. Id.

[¶ 10.] In arriving at an equitable division of property, a circuit court must classify property as "marital" or "non-marital." Midzak v. Midzak, 2005 SD 58, ¶¶ 22-24, 697 N.W.2d 733, 739-40. A circuit court has broad discretion in determining whether property is marital or non-marital. Heckenlaible v. Heckenlaible, 1996 SD 32, ¶ 8, 545 N.W.2d 481, 483 (citation omitted). The circuit court, however, is not to become entangled in the semantics of marital versus non-marital property. Billion v. Billion, 1996 SD 101, ¶ 21, 553 N.W.2d 226, 232.

[¶ 11.] This Court has repeatedly identified certain factors for the circuit court to consider in dividing marital property. These factors also apply to the circuit court's determination whether to include inherited property in the marital estate. Novak v. Novak, 2006 SD 34, ¶ 4, 713 N.W.2d 551, 552 (citation omitted). These 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.

Id. See Hill v. Hill, 2009 SD 18, ¶ 18, 763 N.W.2d 818, 824; Terca v. Terca, 2008 SD 99, ¶ 20, 757 N.W.2d 319, 325; Billion, 1996 SD 101, ¶ 21, 553 N.W.2d at 232; Johnson v. Johnson, 471 N.W.2d 156, 159 (S.D.1991); Ryken v. Ryken, 461 N.W.2d 122, 126 (S.D.1990); Clement v. Clement, 292 N.W.2d 799, 801 (S.D.1980).

[¶ 12.] Ultimately, the circuit court must make an equitable division of the property. "Inherited property is not ipso facto excluded from consideration in the overall division of the property." Novak, 2006 SD 34, ¶ 5, 713 N.W.2d at 553 (citation omitted). In evaluating the seven principal factors listed above, a circuit court may consider other evidence to determine whether inherited or gifted property should be excluded from the marital estate, including the origin and treatment of inherited or gifted property and the direct or indirect contributions of each party to the accumulation and maintenance of the property. Terca, 2008 SD 99, 757 N.W.2d 319; Halbersma I, 2007 SD 91, 738 N.W.2d 545; Novak, 2006 SD 34, 713 N.W.2d 551; Heckenlaible, 1996...