Kostelecky v. Kostelecky, 940402

• Decision Date: 22 September 1995
• Docket Number: No. 940402,940402
• Parties: Pamela J. KOSTELECKY, Plaintiff and Appellant, v. Marvin G. KOSTELECKY, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 551

537 N.W.2d 551

Pamela J. KOSTELECKY, Plaintiff and Appellant, v. Marvin G. KOSTELECKY, Defendant and Appellee.

Civ. No. 940402.

Supreme Court of North Dakota.

Sept. 22, 1995.

Daniel J. Chapman (argued), of Chapman & Chapman, Bismarck, for plaintiff and appellant.

Orell D. Schmitz (argued), of Schmitz, Moench & Schmidt, Bismarck, for defendant and appellee.

MESCHKE, Justice.

Pamela Kostelecky appealed from an amended divorce decree clarifying the property division and related tax burdens. We affirm.

Pamela and Marvin Kostelecky were married in 1966 and subsequently divorced. They reconciled and remarried in 1976. They acquired stock in two closely held corporations, Sax Motor Company and General Investment Corporation [GIC]. GIC owned the land and buildings where Sax Motor operated. Sax Motor was an automobile dealership in Dickinson that had been owned by Pamela's family for three generations.

Pamela filed for divorce in 1992. The trial court valued Sax Motor at $637,106 and GIC at $353,000. Pamela received all stock in the two corporations and was ordered to pay Marvin $150,000 with interest in five annual installments. Pamela was ordered to direct Sax Motor to forgive a debt of $37,106 owed by Marvin for past insurance premiums and to deliver title to a $25,000 vehicle to Marvin. In making these distributions, the court valued the stock of Sax Motor decreed to Pamela at $600,000 with the notation, "net after forgiveness of insurance premium note receivable from Marv." Pamela received total net values of $853,434, while Marvin received $447,366 in values.

The divorce decree was entered on July 6, 1993. Neither spouse appealed.

At the end of 1993, Sax Motor issued a Form 1099 to Marvin showing the $37,106 debt forgiveness and $25,000 vehicle transfer as 1993 income to Marvin as a shareholder and employee. Marvin moved to amend the decree, asserting that the court did not intend to make Marvin bear the tax liability for these transactions. The trial court agreed and amended the decree nunc pro tunc. As amended, the decree compels Marvin to pay the $37,106 debt to Sax Motor and to pay $25,000 for the vehicle in two annual payments in 1998 and 1999, and compels Pamela to make corresponding payments on the same dates to Marvin. The effect of the amendment is to make these distributions non-taxable to Marvin, as contemplated by the court at the time of the original decree. Pamela appeals from the amended decree.

Pamela argues that the trial court improperly modified the original decree, altering the substantive property rights of the spouses after the time for an appeal had passed. We disagree.

When a decree or judgment is vague, uncertain, or ambiguous, a trial court may clarify it. Anderson v. Anderson, 522 N.W.2d 476, 478 (N.D.1994); Sullivan v. Quist, 506 N.W.2d 394, 398 (N.D.1993). As we held in Wastvedt v. Wastvedt, 371 N.W.2d 142, 144 (N.D.1985), judicial action to later clarify the decreed obligations of the spouses is permissible if their substantive property rights remain essentially unchanged.

We elaborated in Anderson, 522 N.W.2d at 478:

Where, as here, the clarification has been done by the same trial court which ordered entry of the original judgment, logic suggests we should afford such a clarification considerable deference.... "[T]he [Minnesota] [S]upreme [C]ourt held that where the terms of a judgment are ambiguous or indefinite, upon a party's motion, the court that ordered the judgment may clarify or interpret it." Hanson [v. Hanson], 379 N.W.2d [230,] 232 [ (Minn.Ct.App.1985) ] (citing Stieler [v. Stieler, 244 Minn. 312], 70 N.W.2d [127,] 131 [ (1955) ]. Such "a clarification does not result in a judgment different from that originally ordered, but serves only to express accurately the thoughts which the original judgment intended to convey." Id. (citing Stieler, 70 N.W.2d at 132). We are persuaded by the logic of permitting a trial court, upon motion by a party, the ability to clarify its previous judgment. A clarification must, however, truly be a clarification of the original judgment and not merely a trial court's vehicle for amending or changing its original decree. See Mitchell v. Mitchell, 307 Mich. 366, 11 N.W.2d 922, 923 (1943) (requiring that clarifications of divorce decrees are to "be made with reference to the findings of fact and conclusions of law" of the original decree).

Because a court is clarifying its own decree, it quite naturally is in a position superior to ours for the construction of items commonly referred to as findings of fact. It only follows then that "[c]onstruction of its own decree by the trial court must be given great weight in determining the intent of the trial court." Palmi v. Palmi, 273 Minn. 97, 140 N.W.2d 77, 82 (1966).

We accord particular deference to an amendment when the same trial court clarifies its own prior decree.

This clarification is factually similar to one we upheld in Volk v. Volk, 435 N.W.2d 690 (N.D.1989). Aleta Volk was decreed certain marital real property but, upon transfer, she learned that her ex-husband had failed to pay past due real estate taxes on the land. The trial court granted her motion under NDRCivP 60(a) for an order directing him to pay the back taxes. The court specifically explained that, " '[a]lthough the issue of unpaid taxes was not brought up at the hearing, it was the Court's intent that [Aleta] would receive the property free and clear of all liens, including tax liens.' " Volk, 435 N.W.2d at 692. See also Gruebele v. Gruebele, 338 N.W.2d 805, 811 (N.D.1983). We affirmed the order clarifying the Volk decree, 435 N.W.2d at 692, holding that Rule 60(a) allows the trial court to correct errors created by oversight or omission that cause the decree to fail to reflect what was intended when it was entered.

In this case, the original decree similarly failed to specify which spouse was to bear the tax burdens associated with certain distributions to Marvin out of Pamela's Sax Motor corporation. At the hearing on the motion, Pamela's accountant testified that, when assets are taken out of a corporation, tax consequences result. He further...