Mattern v. Frank J. Mattern Estate, 20140296.

• Decision Date: 11 June 2015
• Docket Number: No. 20140296.,20140296.
• Citation: 864 N.W.2d 458
• Parties: Jeanette J. MATTERN, Plaintiff and Appellant v. FRANK J. MATTERN ESTATE, by and through Anne M. ERICKSON, personal representative, Defendant and Appellee.
• Court: North Dakota Supreme Court

864 N.W.2d 458

Jeanette J. MATTERN, Plaintiff and Appellant

v.FRANK J. MATTERN ESTATE, by and through Anne M. ERICKSON, personal representative, Defendant and Appellee.

No. 20140296.

Supreme Court of North Dakota.

June 11, 2015.

Clark J. Bormann (argued) and Sophie Y. Morgan (appeared), Bismarck, N.D., for plaintiff and appellant.

Sheldon A. Smith (argued), David J. Smith (on brief), and Tyler J. Malm (on brief), Bismarck, N.D., for defendant and appellee.

Opinion

SANDSTROM, Justice.

[¶ 1] As surviving spouse of Frank Mattern, Jeanette Mattern appeals a district court judgment dividing the couple's marital homestead into three individual apartments and ordering Jeanette Mattern to pay rent retroactively and in the future while she lives in the homestead. We affirm the portion of the district court judgment granting Jeanette Mattern a homestead in the second-floor residence of the property, but reverse the portion of the judgment ordering her to pay rent for residing at the homestead. We therefore remand for further proceedings consistent with this opinion.

I

[¶ 2] Frank and Jeanette Mattern were married on January 6, 1995. Following the marriage, Jeanette Mattern moved into a house owned by Frank Mattern. The house, central to this dispute, consists of three units—two on the main level, which are rented, and one on the second floor (“marital home”), in which Frank and Jeanette Mattern lived during the course of their marriage and where Jeanette Mattern currently resides. Shortly after moving in with Frank Mattern, Jeanette Mattern sold her home and farm machinery and kept the proceeds from those sales separate from Frank Mattern's assets.

[¶ 3] In March 2011, Frank Mattern was diagnosed with cancer

and began experiencing serious health complications. Shortly after, Frank and Jeanette Mattern and Frank Mattern's adult children began estate planning discussions. Specifically, the parties discussed whether Jeanette Mattern would continue living in the marital home following Frank Mattern's death. Eventually, the parties agreed that Jeanette Mattern would be permitted to live in the second-floor residence for eighteen months after Frank's death, with the option to rent if she decided to live there longer. Prior to his death, Frank Mattern drafted a will consistent with this arrangement.

[¶ 4] After Frank Mattern died on July 18, 2011, his oldest daughter was appointed personal representative of the estate. After Frank Mattern's will was admitted to informal probate, Jeanette Mattern petitioned for the right to reside in the marital home and to collect any exempt property and profits from rent and for reimbursement of insurance premiums paid from the couple's joint checking account and costs expended in maintaining the household. The personal representative objected to Jeanette Mattern's requests, arguing she verbally waived her rights to the homestead estate and to exempt property and was not entitled to the family allowance or reimbursement for insurance premiums paid. In December 2011, Jeanette Mattern then commenced a separate action against the Estate of Frank J. Mattern (“Estate”), seeking to enforce the claims for which she petitioned.

[¶ 5] The case was tried in January 2014, and in April the district court issued an order concluding Jeanette Mattern had not waived her homestead rights and was entitled to the value of the marital home up to $100,000, and ordering an appraisal of the property's three units as of July 18, 2011, the date of Frank Mattern's death.

[¶ 6] Because of uncertainty regarding the effect of the April 2014 order, a status conference was held in May 2014. On July 2, 2014, the personal representative submitted a proposed order for judgment and an appraisal report dated June 17, 2014. Jeanette Mattern objected to the proposed order for judgment, arguing the appraisal was incorrectly based upon the value of the property as of June 17, 2014, rather than the date of Frank Mattern's death. She also objected to the requirement that she pay rent, both retroactively and in the future, for living in the marital home. According to the electronic record, the next day, before the electronic filing of Jeanette Mattern's objections reached the judge, the district court had already signed the proposed order for judgment.

[¶ 7] On July 17, 2014, Judge Sonna Anderson was assigned to the case as a result of Judge Jorgensen's retirement. The next day, the district court issued a memorandum to the parties stating it would not make any rulings on Jeanette Mattern's objections to the proposed order for judgment or any modifications to the previously issued order. On August 20, 2014, the district court entered judgment, ordering: 1) the homestead consists solely of the second floor of the house owned by the decedent, the value of which exceeds the statutory homestead exemption amount by approximately $75,000.00 as determined by the June 17, 2014, appraisal; 2) the fair market value of rent on the homestead is $1,700.00 a month; 3) Jeanette Mattern shall pay $729.00 per month in rent to the Estate, which represents the proportionate fair market value of rent on the homestead to the extent it exceeds the statutory exemption amount, for as long as she occupies the homestead; and 4) Jeanette Mattern shall also pay the Estate rent of $729.00 per month retroactively from August 2011. Jeanette Mattern then filed a notice of appeal.

[¶ 8] The district court had jurisdiction under N.D. Const. art. VI, § 8, and N.D.C.C. §§ 30.1–02–02 and 27–05–06. Jeanette Mattern's appeal was timely under N.D.R.App.P. 4(a). We have jurisdiction under N.D. Const. art. VI, §§ 2 and 6, and N.D.C.C. §§ 30.1–02–06.1 and 28–27–02.

II

[¶ 9] On appeal, Jeanette Mattern argues the district court abused its discretion in dividing the property as it did when no creditors exist, refusing to award her rental income from the property's rental units, and ordering her to pay rent while living in the marital home. She contends that because the property cannot be divided without material injury and no creditors have claims against the property, she is entitled to a homestead in the second-floor residence of the property, rent free, during her lifetime or until she remarries, and to receive any profits produced from the adjoining rental units.

[¶ 10] “Statutory interpretation is a question of law subject to full review upon appeal.” Estate of Kimbrell, 2005 ND 107, ¶ 9, 697 N.W.2d 315 (internal quotation marks and citation omitted). Under N.D.C.C. § 1–02–02, “[w]ords used in any statute are to be understood in their ordinary sense, unless a contrary intention plainly appears, but any words explained in this code are to be understood as thus explained.” We construe statutes as a whole and harmonize them to give meaning to related provisions. See N.D.C.C. §§ 1–02–01 and 1–02–02.

A

[¶ 11] Jeanette Mattern argues the district court abused its discretion in dividing the property so as to grant her a homestead only in the second-floor residence and failing to award her the rental income from the property's first-floor rental units. She claims, under N.D.C.C. § 30–16–09, a homestead cannot be divided unless 1) division is necessary to satisfy a judgment on a debt; 2) division will not cause material injury; and 3) the value of the homestead at the time of the decedent's death exceeds the homestead exemption amount. She also argues that when a homestead cannot be divided without material injury, the homestead must be preserved intact as against heirs even though the homestead exceeds the exemption amount. See Calmer v. Calmer, 15 N.D. 120, 106 N.W. 684, 688 (1906). According to her, because the property cannot be divided without material injury and no creditors have claims against it, she is entitled not only to a homestead in the entire property but also to all rental income generated from the property's rental units.

[¶ 12] The Estate presents a two-fold argument in response to Jeanette Mattern's contention that the district court abused its discretion by dividing the homestead property when there were no creditors of the Estate. First, the Estate claims this argument is not reviewable on appeal because it was not previously raised to the district court. See Niles v. Eldridge, 2013 ND 52, ¶ 7, 828 N.W.2d 521 (“Issues or contentions not adequately developed and presented at trial are not properly before this Court.”). Because the record reflects Jeanette Mattern raised this argument to the district court at the May 29, 2014, status conference, this argument by the Estate is without merit.

[¶ 13] Alternatively, the Estate argues that under N.D.C.C. § 30–16–09, the existence of estate creditors is not a prerequisite to finding the homestead property divisible. The Estate claims N.D.C.C. § 30–16–09 merely provides that to the extent a homestead exceeds the statutorily imposed value limitation of $100,000, any excess in value may be subjected to the payment of debts after all of the other available property has been exhausted. The Estate therefore argues that because each of the property's ground-floor units has separate electricity, water, and gas and the property is divisible without material injury, the district court correctly determined the property could be divided so the homestead consists solely of the second-floor residence and Jeanette Mattern is not entitled to the income from the property's rental units.

[¶ 14] “Homestead rights are a creature of statute and, it seems, peculiar to America.” Farstveet v. Rudolph ex rel. Eileen Rudolph Estate, 2000 ND 189, ¶ 11, 630 N.W.2d 24 (citing 40 Am. Jur. 2d Homestead § 2 at 251 (1999) ). Historically, North Dakota's homestead laws were founded upon sound public policy, their purpose being “to protect the family to the end that it may not be without a home or opportunity for self-support.” Id.;seeSwingle v. Swingle, 36 N.D. 611, 162 N.W. 912, 915 (1917) ; Dieter v. Fraine, 20 N.D. 484, 128 N.W. 684, 687 (1910) ; Calmer v. Calmer, ...