Marriage of Engen, In re

• Decision Date: 18 June 1998
• Docket Number: No. 97-442,97-442
• Citation: 961 P.2d 738,55 St. Rep. 595
• Parties: In re MARRIAGE OF Jon ENGEN, Petitioner and Appellant, and Diana Lynn Brogger Engen, Respondent, Respondent, and Cross-Appellant.
• Court: Montana Supreme Court

Page 738

961 P.2d 738

1998 MT 153

In re MARRIAGE OF Jon ENGEN, Petitioner and Appellant and Diana Lynn Brogger Engen, Respondent, Respondent, and Cross-Appellant.

No. 97-442.

Supreme Court of Montana.

Submitted on Briefs April 2, 1998.

Decided June 18, 1998.

Rienne M. McElyea; Berg, Lilly, Andriolo & Tollefsen, P.C.; Bozeman, for Appellant.

Kent M. Kasting; Kasting, Combs & Kauffman; Bozeman, for Respondent.

TRIEWEILER, Justice.

¶1 The petitioner, Jon Engen, filed a petition for dissolution of his marriage to the respondent, Diana Engen, in the District Court for the Eighteenth Judicial District in Gallatin County. Following a nonjury trial, the District Court divided the couple's property by a decree of dissolution based on its findings of fact and conclusions of law. Jon appeals from the District Court's property distribution. We affirm in part and reverse in part the judgment of the District Court, and remand this case to the District Court for entry of judgment consistent with this opinion.

¶2 Jon presents three issues on appeal:

¶3 1. Did the District Court err when it awarded Diana one-half the value of the condominium which was purchased during the marriage with proceeds from the sale of a home in Norway which was given to Jon before the couple's marriage?

¶4 2. Did the District Court err when it awarded Diana one-half of a set of Norwegian dishes which were acquired before and during the marriage?

¶5 3. Did the District Court err when it declined to enforce a premarital property agreement which had been executed by Jon and Diana?

FACTUAL BACKGROUND

¶6 Jon Engen and Diana Lynn Brogger met in the early 1980s while they attended Montana State University in Bozeman. After their graduation in 1983, they moved to Norway, where Jon was born and raised, with the expectation that they would marry and possibly live there.

¶7 Jon's Norwegian grandfather built a home in Norway in 1930 and lived there until shortly before his death in the mid-1980s. Jon's mother inherited an interest in the home and used her savings to purchase the remaining interests in the home from the remaining heirs. She then gave the home to Jon.

¶8 While Jon and Diana were in Norway, Jon had an agreement prepared, in the Norwegian language, which provided that the home was Jon's separate property. Diana signed the agreement on March 2, 1984, and it was filed with the court where the property was located.

¶9 Diana contends that at the time the agreement was executed, her understanding of the Norwegian language was elementary and that she did not understand the effect of the document she had executed. Jon testified that he interpreted the agreement to Diana, line-by-line, and that she indicated her understanding of the document's effect before she signed it.

¶10 Jon and Diana moved back to Montana in May 1984 and were married in August 1984 in Polson, near Diana's home. They then returned to Bozeman to live.

¶11 Jon owned the home in Norway from the time that it was given to him until it was sold in 1994. During that time, no marital income was invested in the home. Maintenance of the home and taxes were paid for by the rent that the home generated. Jon's father, who continued to reside in Norway, took care of the home when it was necessary to do so.

¶12 Jon's degree was in engineering and he worked at various jobs as an engineer following the couple's marriage. Diana had a degree in geographical planning, and also worked at a variety of jobs. In 1989, Diana returned to MSU to take courses which would enable her to pass the examination for certified public accountants. During the following three years that she attended school, she worked part-time.

¶13 Jon's work was also interrupted periodically during the marriage by training for the U.S. Olympic Nordic Ski Team for which he competed in 1988, 1992, and 1994. However, from 1988 until the couple's separation in 1995, Jon was the primary income producer for the household.

¶14 In 1994, Jon's home in Norway was sold for approximately $100,000. The proceeds were deposited in a bank account in Norway in Jon's name. The title to the home had also been held in Jon's name alone.

¶15 Jon and Diana acquired very little property during their marriage. Most of the District Court's property division is uncontested. The primary asset that was purchased was a condominium located in Bozeman. The condominium was purchased in November 1994 for $112,500. At the time of trial, the value had appreciated to $115,000. The deed indicated that Jon and Diana held the condominium as joint tenants. However, the primary source of funds for the purchase was the money received from the sale of Jon's home in Norway. Jon had $92,450 transferred from his account in Norway to joint accounts held by the couple in Ronan and Bozeman, where $82,669.69 of that amount was combined with a $30,000 loan from Jon's parents to make the purchase. The promissory note to Jon's parents is dated November 30, 1994.

¶16 Jon and Diana lived together in the condominium from November 1994 until their separation on July 1, 1995. Jon filed a petition for dissolution on July 19, 1995. The District Court entered a temporary order in September 1995, which allowed Diana to live in the condominium, where she remained until September 1996.

¶17 Jon testified that when he purchased the condominium, he had no intention of relinquishing his sole ownership of the proceeds from the sale of the house he had been given in Norway, and that he and Diana had no conversation about joint ownership of the condominium. He testified that the documents indicating joint ownership were just part of the paperwork that was executed at the time of the real estate closing without any real forethought.

¶18 Diana agreed that she was not on the title to the property in Norway and that she had never contributed, either financially or otherwise, to its maintenance or appreciation. She agreed that the purchase of the condominium was made with the proceeds from the sale of the Norway home, but testified that it was her understanding that she and Jon would own the condominium together.

¶19 During the six to seven months that the couple occupied the condominium during their marriage, Diana testified that she "kept it up," but acknowledged that she had not invested money in its maintenance, nor made any other improvements, other than to hang some drapes. Any increase in the value of the condominium seems to have resulted from a general increase in the value of real property in the area, rather than improvements made by either Jon or Diana.

¶20 At the time of trial, Jon and Diana had annual incomes of $18,000 and$19,000, respectively.

¶21 The District Court found that Jon owned the home in Norway prior to the marriage and that he transferred the proceeds from its sale in 1994 to the couple's joint bank accounts in Montana. The District Court concluded as a matter of law that Jon's "transfer of [his] premarital funds to the parties' joint account and the subsequent purchase of the condominium in [their] joint names ... constituted a gift of one half interest in [the condominium] from [Jon] to [Diana]." It held that Jon was precluded from claiming the condominium was not part of the marital estate by the fact that he commingled his separate funds with the couple's joint funds. It awarded Jon the condominium, but ordered him to pay Diana $42,500, or one-half of the couple's equity in the condominium.

¶22 In addition, the District Court declined to reach the issue of whether the premarital agreement was binding. It based its conclusion on its finding that Jon permitted his separate property to be commingled and, therefore, that the parties' premarital intentions were irrelevant.

¶23 Finally, the District Court concluded that the couple should "equally divide the 8-12 place settings of Norwegian porcelain dishes" which it found "were received for the most part as wedding gifts to both parties."

¶24 On May 1, 1997, the District Court entered its decree of dissolution.

ISSUE 1

¶25 Did the District Court err when it awarded Diana one-half the value of the condominium which was purchased during the marriage with proceeds from the sale of a home in Norway which was given to Jon before the couple's marriage?

¶26 We review a district court's division of marital property to determine whether the findings on which it relied are clearly erroneous. See In re Marriage of Stufft (1996), 276 Mont. 454, 459, 916 P.2d 767, 770. If the findings are not clearly erroneous, we will affirm the distribution of property unless the district court abused its discretion. See Stufft, 276 Mont. at 459, 916 P.2d at 770; In re Marriage of Hogstad (1996), 275 Mont. 489, 496, 914 P.2d 584, 588; In re Marriage of Smith (1995), 270 Mont. 263, 267-68, 891 P.2d 522, 525. In a marriage dissolution proceeding, the test for an abuse of discretion is whether the district court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice. See In re Marriage of Meeks (1996), 276 Mont. 237, 242, 915 P.2d 831, 834.

¶27 Without citing to authority, the District Court concluded that because Jon's separate money, which was received in exchange for preacquired, gifted property, passed through a joint account to purchase a condominium that was jointly titled, Jon gifted one-half of his separate property to Diana. Diana contends that this result finds support in our prior decision in Bloom v. Bloom (1968), 150 Mont. 511, 437 P.2d 1. However, Bloom was decided in 1968, and Montana's version of the Uniform Marriage and Divorce Act, which applies to this case, became effective on January 1, 1976. In our decisions since that date, we have uniformly held that the manner in which title is held does not control the disposition of preacquired, gifted, or inherited property, or the proceeds from such property. See In re Marriage of Fitzmorris ...