Heggen v. Heggen, 910196

• Decision Date: 19 August 1992
• Docket Number: No. 910196,910196
• Citation: 488 N.W.2d 627
• Parties: Patricia Ellen HEGGEN, Plaintiff, Appellee and Cross-Appellant, v. John Peter HEGGEN, Defendant, Appellant and Cross-Appellee. Civ.
• Court: North Dakota Supreme Court

Page 627

488 N.W.2d 627

Patricia Ellen HEGGEN, Plaintiff, Appellee and Cross-Appellant, v. John Peter HEGGEN, Defendant, Appellant and Cross-Appellee.

Civ. No. 910196.

Supreme Court of North Dakota.

Aug. 19, 1992.

Robert W. Harms (argued), of Harms Law Offices, Ltd., Williston, for plaintiff, appellee, and cross-appellant.

Dennis Edward Johnson (argued), of Johnson Law Office, Watford City, for defendant, appellant, and cross-appellee. Appearance by John Peter Heggen, appellant.

MESCHKE, Justice.

John Heggen appealed and Patricia Heggen cross-appealed ¹ from an amended divorce decree. We reverse and remand for reconsideration of the method of implementing the property division.

The trial court initially (1) granted a divorce; (2) determined child custody; (3) ordered John to pay child support of $240 per month per child for the couple's two youngest children; (4) awarded Patricia spousal support of $600 per month; (5) distributed marital property to John that the court calculated had a net value of $79,081; and (6) distributed marital property to Patricia that the court calculated had a net value of $64,682. On appeal, we affirmed the custody and child support awards, reversed the property division, and remanded for a recalculation and redistribution of the marital estate. Heggen v. Heggen, 452 N.W.2d 96 (N.D.1990) (Heggen I.). We directed the trial court to revalue three marital assets: Heggen Equipment real estate, Heggen Equipment, Inc., and a Heggen Equipment, Inc. debt to John of $40,000.

The trial court initially valued the Heggen Equipment real estate at $40,000 in accordance with evidence that focused on coerced sales and the property's liquidation value. We remanded for revaluation in accordance with fair market value. Heggen I, 452 N.W.2d at 99-100. We held that the trial court's finding of a negative $55,108 as the value of Heggen Equipment, Inc. was clearly erroneous. Id. at 100. We also instructed the trial court to determine the value of a Heggen Equipment, Inc. debt to John, an item omitted in the first distribution. Id. at 100.

On remand, the trial court: (1) valued the Heggen Equipment real estate at $200,000; (2) found that Heggen Equipment, Inc. had a net value of $242,000; (3) increased John's assets by $40,000 owed him by Heggen Equipment, Inc.; (4) found that the assets awarded to John had a net value of $483,129, while the assets awarded to Patricia had a net value of $64,100; and (5) directed John to pay Patricia $200,000 to redress the disparity in value of assets awarded. At first, the court directed that the $200,000 be secured by a mortgage on the real estate interests of John and Heggen Equipment Inc., with payments to be amortized over ten years at six percent interest. After post-trial motions, and without explanation, the trial court entered an amended decree that abandoned the deferred payment formula and, instead awarded Patricia a money judgment against John for the $200,000 with interest at 12 percent per annum and otherwise left the initial decree in effect.

John contends on appeal ² (1) that the trial court's valuations of the Heggen Equipment real estate, Heggen Equipment, Inc., and its $40,000 debt to John are clearly erroneous; (2) that liquidation value of the property awarded him, rather than its fair market value, is appropriate in light of the money judgment awarded Patricia; (3) that the trial court abused its discretion in strictly following our instructions in Heggen I; and (4) that the spousal support award should have been modified in light of John's inability to pay, Patricia's needs, and her $200,000 money judgment against John.

John contends that the trial court erred in valuing Heggen Equipment, Inc. at $242,000 and its $40,000 debt to him at face value. A trial court's valuation of marital property is treated as a finding of fact. Dick v. Dick, 414 N.W.2d 288 (N.D.1987). "Findings of fact are presumptively correct." Branson v. Branson, 411 N.W.2d 395, 396 (N.D.1987). There is evidence to support the trial court's valuations and those valuations are not clearly erroneous.

John's expert valued the Heggen Equipment real estate at $80,000 and Patricia's expert valued it at $200,000. The trial court believed Patricia's expert and valued the real estate at $200,000. Relying on Kaiser v. Kaiser, 474 N.W.2d 63 (N.D.1991), John argues:

Where there is great disparity between valuations of assets at trial, a conclusion can be reached that the trial court erred in uncritically accepting the valuations as testified to by one party over the valuations as testified to by another.

John's reliance on Kaiser is misplaced. In that case, the husband, using a base of $500 per acre, testified to the value of nonproducing minerals and leaseholds of Imperial Oil of North Dakota, Inc., a corporation partly owned by his former wife. Using bases of only $17.50 and $150 per acre, the husband also testified to the value of his own nonproducing minerals. There was no explanation for why he used the different bases. The trial court uncritically accepted the valuations presented by one spouse, who, without explanation, used two different bases in valuing nonproducing minerals so that his minerals were valued low and those of his wife (through her ownership of shares in Imperial) were valued high. No comparable situation is present in this case, and Kaiser is inapposite. There is evidence to support the trial court's valuation of this real estate, and the valuation is not clearly erroneous.

On remand, the trial court valued the various assets in the Heggens' marital estate at fair market value, as directed in Heggen I. The trial court then awarded most of the marital property to John and, to redress the disparity, awarded Patricia a money judgment against John for $200,000. While the division of values was no doubt appropriate, we conclude that the trial court's action in forcing immediate payment of the monetary award to Patricia was an abuse of discretion.

We recognized in Heggen I, 452 N.W.2d at 99, that, "Ordinarily, fair market value, not 'liquidation value,' is the proper method of valuing property in a divorce." We also recognized, however, that "liquidation value, rather than fair market value, may be appropriate under certain circumstances involving distressed conditions." Id. at 99. See also Kaiser, 474 N.W.2d at 68-69, where Chief Justice Erickstad wrote that valuing a corporation on the basis of its liquidation value might be appropriate where there was evidence that the corporation had no value as a going business and that the whole value of the corporation was in the liquidation value of its underlying assets.

In Heggen I, 452 N.W.2d at 99, there was "no evidence that the property in question was threatened by foreclosure or other market stress." Hence, use of liquidation values to design a value division was inappropriate. The bulk of the Heggens' marital estate consists of the family home, farmland, Heggen Equipment, Inc., and Heggen Equipment real estate. The property is relatively illiquid, and it is heavily burdened by debt that the trial court apportioned to John. It is evident that John would have to liquidate much of the marital property awarded him when Patricia executes on her judgment or forecloses her judgment lien. Thus, the sale of much of the marital assets will take place in "circumstances involving distressed conditions" requiring John to accept a " 'depressed price' " under "coercive circumstances." Heggen I, 452 N.W.2d at 99. We wrote in Pankow v. Pankow, 371 N.W.2d 153, 157 (N.D.1985), that ...