Herr v. Herr
| Decision Date | 08 October 2021 |
| Docket Number | Docket No. 47941 |
| Citation | 496 P.3d 886,169 Idaho 400 |
| Court | Idaho Supreme Court |
| Parties | Anne M. HERR, Petitioner-respondent, v. John E. HERR, Respondent-Appellant. |
Madsen Law Offices, P.C., Coeur d'Alene, for appellant.Henry D. Madsen argued.
Powell & Reed, P.C., Sandpoint, for respondent.Todd Reed argued.
After Anne Herr petitioned for divorce from John Herr, John asserted that two investment accounts opened during the marriage were his separate property.The magistrate court disagreed, finding that separate and community property had been commingled in the accounts, triggering the presumption that all assets in the accounts were community property.Because John did not present an argument to rebut this presumption, the magistrate court ordered the accounts divided equally between the parties.The district court affirmed the magistrate court's decision on intermediate appeal.John argues that the district court's decision should be reversed because evidence sufficient to trace his separate property was admitted at trial.We affirm because John was obligated to present an argument at trial to rebut the presumption that the assets were community property, not merely to provide evidence from which an argument might have been made.
Anne petitioned for divorce from John in July 2018 and requested a division of their property.The dispute here centers on the division of two investment accounts opened during the parties’ marriage.
AccountNo. 178-XXXXX-1-2(hereinafter, "first account") was created in February 2011, and funded solely with the proceeds of an inheritance from John's mother.According to John, the parties did not contribute additional funds to this account after its creation.However, in March 2015, John's brother Charles (who maintained an investment account at the same financial services firm as John) transferred a gift of mutual fund shares worth $99,945.04 directly into the first account.The record contains only four monthly account statements for the first account, covering December 2014, March 2015, November 2018, and December 2018.The statements show the account contained a variety of asset types, including money market and deposit accounts, an annuity, stocks, mutual funds, and other securities.
AccountNo. 178-XXXXX-1-0(hereinafter, "second account") was created in January 2016 by "splitting the [first account] into two accounts."As with the first account, John testified that no additional funds were deposited into the account by the parties after its creation.The record contains only two monthly statements for the second account, covering November 2018 and December 2018.
In February 2019, the magistrate court held a trial at which Anne, John, and Charles testified.Several exhibits were also admitted into evidence, including the account statements discussed above, a transfer authorization form for the gift of mutual funds from Charles, and the parties’ 2016 joint income tax return.In lieu of closing arguments, the parties submitted post-trial briefs.
The magistrate court issued an order granting the divorce and deciding the property issues in March 2019.It found that the first account was initially John's separate property because it had been created with proceeds from his inheritance.However, the magistrate court held that the gift from Charles was community property, based on testimony that it was given to both parties for the purpose of remodeling their home.Further, because the gift was commingled with John's separate property in the first account—and John made no attempt to trace the portion of the account that was his alone—the magistrate court deemed the entire first account to be community property:
The burden is on the party claiming it is separate property, [John], to prove it remained his separate property with reasonable certainty and particularity.[John] has failed to meet this burden.There has been no tracing presented to this court to determine otherwise.The evidence provides no accounting regarding what portion of the funds remaining were solely from the inheritance and what portion is from the gift of funds from Charles ....The court finds that these funds are community property[.]
Likewise, the magistrate court found the second account was community property because it had been created from the first account after commingling, and John failed to trace his separate property in this account as well.As such, the magistrate court ordered both accounts divided equally between the parties.
John appealed the decision of the magistrate court to the district court.John elected not to challenge the magistrate court's determination that Charles’ gift was a gift to the community.The district court affirmed the magistrate court's decision because, as the magistrate court found, John failed to trace his separate property.
After a substitution of counsel, John filed a petition for rehearing and brief in support of the petition.The district court denied the petition for rehearing and John filed a timely notice of appeal to this Court.
Where a district court has affirmed the decision of a magistrate court on intermediate appeal, "this Court must focus on the findings of fact and conclusions of law made in the magistrate court proceeding and determine whether they were (1) supported by the evidence in the record and (2) consistent with the law."State v. Dacey , 169 Idaho 102, 491 P.3d 1205, 1210(2021)(citingPelayo v. Pelayo , 154 Idaho 855, 858–59, 303 P.3d 214, 217–18(2013) ).If so, we affirm the district court's decision as a matter of procedure; if not, we must reverse.Id. at ––––, 491 P.3d at 1209.
Idaho recognizes two categories of property in marriage: separate and community.Separate property is property acquired by one spouse before marriage, as well as any property acquired by either spouse during the marriage through gift, bequest, devise, or descent.I.C. § 32-903.In divorce, separate property remains the sole property of the spouse who acquired it.Id.Community property is "[a]ll other property acquired after marriage by either [spouse]."I.C. § 32-906(1).This includes accrued interest or dividend payments earned from a spouse's separate property.SeeSimplot v. Simplot , 96 Idaho 239, 242–43, 526 P.2d 844, 847–48(1974).In divorce, courts must divide community property substantially equally between the spouses, absent "compelling reasons otherwise."I.C. § 32-712(1).
When separate property is commingled with community property, courts presume all the commingled property is community property.SeeHouska v. Houska , 95 Idaho 568, 570, 512 P.2d 1317, 1319(1973)(citingStahl v. Stahl , 91 Idaho 794, 430 P.2d 685(1967) ).However, the presumption may be overcome if a party can demonstrate the separate character of his property with "reasonable certainty and particularity" through tracing.Id .
Here, John contends that application of the community property presumption was erroneous because the account statements, transfer authorization form, and 2016 joint income tax return were admitted at trial as exhibits.But notably John does not claim to have argued in the magistrate court that his separate property could be traced through a review of these exhibits.Nor could he.While John's post-trial brief noted the commingling doctrine, acknowledged his burden to rebut the presumption, and disputed Anne's position that Charles’ gift was a gift to the community, it made no attempt to distinguish between assets derived from John's inheritance and those derived from Charles’ gift.Nevertheless, John contends that the magistrate court erred because a "simple review" of the admitted exhibits would have revealed the separate character of property in the accounts.
"In our adversarial system of adjudication, we follow the principle of party presentation."United States v. Sineneng-Smith , ––– U.S. ––––, 140 S. Ct. 1575, 1579, 206 L.Ed.2d 866(2020).As such, it is presumed "that parties represented by competent counsel know what is best for them, and are responsible for advancing the facts and argument entitling them to relief."Id.(quotingCastro v. United States , 540 U.S. 375, 386, 124 S.Ct. 786, 157 L.Ed.2d 778(2003)(Scalia, J., concurring in part and concurring in judgment))(brackets omitted).In other words, a court's role is to sit as a neutral arbiter, not to act as an additional advocate sifting through each party's evidence to determine the most persuasive arguments that might have been made.Here, John's argument flouts the principle of party presentation.Simply put, the magistrate court did not err by failing to see what John made no attempt to show.
John tries to avoid this straightforward conclusion in a handful of ways.First, he claims that the magistrate court"cut off" tracing arguments at trial by stating it would review the exhibits admitted into evidence.There is no merit in this contention.To begin, it is misleading to suggest that arguments were "cut off" at trial.Because the parties submitted post-trial...
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