Isaak v. Smith

• Decision Date: 25 March 1993
• Docket Number: No. 92-054,92-054
• Parties: In re The Marriage of Richard Dale ISAAK, Petitioner and Appellant, v. Judy L. Funk SMITH, Personal Representative of the Estate of Lynn M. Isaak, Respondent and Respondent.
• Court: Montana Supreme Court

Page 1014

848 P.2d 1014

257 Mont. 176

In re The Marriage of Richard Dale ISAAK, Petitioner and Appellant, v. Judy L. Funk SMITH, Personal Representative of the Estate of

Lynn M. Isaak, Respondent and Respondent.

No. 92-054.

Supreme Court of Montana.

Submitted on Briefs Aug. 20, 1992.

Decided March 4, 1993.

Rehearing Denied March 25, 1993.

John L. Hollow, Helena, for petitioner and appellant.

Robert T. Cummins and James P. Greenan, Helena, for respondent and respondent.

WEBER, Justice.

Petitioner, Richard Dale Isaak (Dale), appeals the Findings of Fact, Conclusions of Law and Order of the First Judicial District Court, Lewis and Clark County, Montana, which distributed Dale's inherited real property to Lynn M. Isaak (Lynn), required Dale to provide health insurance coverage for the minor child although Dale is unemployed, and ordered Dale to pay Lynn's attorney fees. Respondent, Judy L. Funk Smith, personal representative for the estate of Lynn M. Isaak, cross-appeals claiming that the District Court incorrectly calculated the net assets of the marital estate. We reverse in part and affirm in part.

The restated issues are as follows:

1. Did the District Court correctly calculate the net assets of the marital estate?

2. May the trial court require a person to provide health insurance coverage for a child when the coverage is not available through an employer, and partially or entirely paid by the employer?

3. Did the District Court err procedurally by allowing Lynn to collect attorney fees from Dale?

Dale and Lynn were married on October 21, 1979 in Helena, Montana. One child was born during their marriage. Dale also adopted two children born to Lynn prior to their marriage. At the time of the trial, Dale was 38 years of age and Lynn was 35 years of age. During their marriage, Dale and Lynn lived rent-free in houses provided by Dale's father, Reinhold Isaak. In 1987, Reinhold Isaak built a new home on a 21-acre parcel at 5920 Highway 12 West for Lynn and Dale. The District Court found that Reinhold Isaak intended to provide a home for Lynn and Dale and included this property, valued at $115,500.00, in the marital estate, and subsequently distributed it to Lynn. Other than this real property, the marital estate consists of personal property valued at $7,060.00. Dale received personal property valued at $2,310.00; Lynn received personal property worth $4,750.00.

Dale is the only child of Reinhold and Josephine Isaak. Josephine Isaak predeceased Reinhold Isaak, who died in January of 1990, devising all of his real and personal property to Dale by a will dated January 4, 1986. The 21-acre parcel of real property with the new home built for Dale and Lynn (distributed to Lynn as marital property) was still in Reinhold Isaak's name at the time of his death. This property is part of the Reinhold Isaak estate which is valued at $578,000.00. This estate includes other real and personal property, including income-producing real estate contracts. Despite the fact that Reinhold Isaak died while Dale and Lynn were married, the District Court did not include the bulk of Dale's inheritance in the marital estate, finding that:

Except as herein modified, this Court is of the view that the marital estate does not include the estate that Dale has inherited from Reinhold Isaak. Not only did the inheritance occur after the parties had separated, but the parties had clearly done nothing to improve, maintain, or build that estate.

In addition to the 21-acre parcel of real property and the personal property valued at $4,750.00, the District Court's order provided Lynn with $500.00 per month maintenance and $285.00 per month child support for Kristian, the parties' minor child. It also required Dale to provide medical insurance for Kristian. The District Court found that Dale, although unemployed, is capable of earning at least $1,000.00 per month. Dale also can receive over $1,200.00 per month from his father's estate. Many of Dale's monthly expenses are paid by the estate. Although the probate has not been closed, the attorney for the estate testified that there is no reason not to do so. When this is done, Dale may be able to eliminate some estate-related monthly expenses such as the attorney and accountant, thereby increasing his monthly income. The gross monthly income from real estate contracts is approximately $3,000.00.

The District Court further found that Lynn was unable to work. Lynn suffered from breast cancer which had metastasized. At the trial (May 15 and June 4, 1991), Lynn testified that she had no more than three years to live. Lynn died one year later on June 9, 1992. Her interest is represented in this appeal by the personal representative of her estate, Judy L. Funk Smith, who has cross-appealed, claiming that the entire Reinhold Isaak estate should have been included in the marital estate.

I.

Did the District Court correctly calculate the net assets of the marital estate?

The District Court found that it was not appropriate to include in the marital estate property devised to Dale by his father's will. His father died after the parties had separated, although it appears from the record that Dale and Lynn made attempts to reconcile up to and after the date of Reinhold Isaak's death. The testimony indicates that Reinhold Isaak built a home for Dale and Lynn in 1987. The District Court found that he intended to provide this as a home for Dale and Lynn. The home is located on a 21-acre parcel of land which was still in Reinhold Isaak's name at the time of his death in January 1990.

Dale contends that a mere intention to make a future gift of real property does not meet the requirements for an inter vivos gift of real property. He argues that there was no completed gift because title had not passed to either of the parties. Dale, therefore, contends that the District Court incorrectly included this property in the marital estate because to do so requires a finding of a gift of real property.

We review a lower court's conclusion of law by determining whether it correctly or incorrectly applied the law. In re the Marriage of Hamilton (Mont.1992), 835 P.2d 702, 49 St.Rep. 604, 606. Section 70-20-101, MCA, governs transfers of real property. It provides:

Transfer to be in writing--statute of frauds. No estate or interest in real property, other than an estate at will or for a term not exceeding 1 year can be created, granted, assigned, surrendered, or declared otherwise than by operation of law or a conveyance or other instrument in writing, subscribed by the party creating, granting, assigning, surrendering, or declaring it or by his lawful agent thereunto authorized by writing.

Section 70-20-101, MCA.

Reinhold Isaak executed no written document to effect a transfer of the property to Dale and Lynn. The general rule is that a parol gift of land is invalid and does not pass title to the donee, even where the gift is accompanied by a transfer of possession, unless the donee, after taking possession, makes permanent and valuable improvements or other factors exist that would make it a fraud upon the donee not to enforce the transfer. 38 C.J.S. Gifts Sec. 57 (1943). Section 70-20-102, MCA, provides exceptions to this statute:

Exceptions to statute of frauds. Section 70-20-101 must not be construed to:

(1) affect the power of a testator in the disposition of his real property by a last will and testament;

(2) prevent any trust from arising or being extinguished by implication or operation of law; or

(3) abridge the power of any court to compel the specific performance of an agreement, in case of part performance thereof.

There are no circumstances present here which would constitute an exception to the statute of frauds under Sec. 70-20-102, MCA. Without a writing signed by Reinhold Isaak to effect an inter vivos transfer to Dale and Lynn, the property must pass under the 1986 will executed by Reinhold Isaak.

Although we have concluded that this real property could not be part of the marital estate based on an inter vivos transfer from Reinhold Isaak, the District Court did not err by including it in the marital estate. Montana law provides:

Division of property. (1) In a proceeding for dissolution of marriage, ... the court, without regard to marital misconduct, shall ... finally equitably apportion between the parties the property and assets belonging to either or both, however and whenever acquired and whether the title thereto is in the name of the husband or wife or both.... In dividing property acquired prior to the marriage; property acquired by gift, bequest, devise, or descent; ... the court shall consider those contributions of the other spouse to the marriage, including:

(a) the nonmonetary contribution of a homemaker;

(b) the extent to which such contributions have facilitated the maintenance of this property; and

(c) whether or not the property division serves as an alternative to maintenance arrangements.

Section 40-4-202, MCA.

The District Court found that the marital assets included $7,060.00 in personal property and the 21-acre parcel of real property with the new home built upon it. It did not include the other assets inherited by Dale. Clearly, under Sec. 40-4-202, MCA, Dale's inheritance can be part of the marital estate.

Reinhold Isaak died in January of 1990. The record indicates that, although Dale and Lynn had separated in 1989, they attempted to reconcile in late 1989 and early 1990, with Dale moving back into the home and the parties seeking some marital counseling. It was not until after Reinhold Isaak's death that they separated permanently.

Dale's interest in all of his father's property vested at the time of Reinhold Isaak's death. Section 72-3-101(2), MCA, provides: "Upon the death of a person, his real and personal property devolves to the persons to whom it is devised by his last will...." Section 72-3-606, MCA, allows the personal representative to...