Nygren v. Nygren

• Decision Date: 20 September 2005
• Docket Number: No. A-03-1042.,A-03-1042.
• Citation: 704 NW 2d 257,14 Neb. App. 1
• Parties: RICHARD R. NYGREN, APPELLANT, v. CHERYL A. NYGREN, APPELLEE.
• Court: Nebraska Court of Appeals

14 Neb. App. 1

704 NW 2d 257

RICHARD R. NYGREN, APPELLANT, v. CHERYL A. NYGREN, APPELLEE.

No. A-03-1042.

Nebraska Court of Appeals.

Filed September 20, 2005.

Benjamin M. Belmont and Anthony W. Liakos, Senior Certified Law Student, of Brodkey, Cuddigan, Peebles & Belmont, L.L.P., for appellant.

Frank X. Haverkamp, of Penke & Haverkamp, for appellee.

CARLSON, MOORE, and CASSEL, Judges.

CASSEL, Judge.

INTRODUCTION

Richard R. Nygren appeals the decree of the Douglas County District Court dissolving his marriage to Cheryl A. Nygren and dividing the parties' property. On appeal, he essentially argues that the trial court erred in classifying certain items and assets as marital property and in dividing the marital estate. We hold that the trial court incorrectly applied the rule from Gerard-Ley v. Ley, 5 Neb. App. 229, 558 N.W.2d 63 (1996), that was specifically disapproved in Schuman v. Schuman, 265 Neb. 459, 658 N.W.2d 30 (2003), prior to the trial court's decision. We also hold that the trial court abused its discretion in characterizing some of Richard's nonmarital property as marital property, and we affirm as modified.

BACKGROUND

On November 22, 1991, Richard and Cheryl entered into an antenuptial agreement. It provided that the farm owned by Richard and the insurance agency owned by Cheryl, along with all other assets owned by the parties at that time, would remain their separate property. Additionally, any income derived from any businesses or assets held by the parties at that time would remain their separate property. Richard and Cheryl provided disclosures of their assets and liabilities as of the date of the antenuptial agreement and attached them to the agreement.

The parties married on November 23, 1991. No children were born to the marriage. Richard had farmed since 1960 on a farm that, as of the time of trial, had been in his family for over 100 years. In 1964, Richard had acquired 40 acres, and then had inherited an additional 40 acres in 1991 (we will refer to these parcels below as the 80-acre property). Richard denied ever gifting or transferring the farm to Cheryl. From the time of their marriage until December 1995, the parties lived on the family farm. At the time of trial, Richard had been employed full time as a truckdriver since 1997 or 1998 and farmed part time. Cheryl had been an agent with an insurance company since 1985. She also possessed a real estate license. During the marriage, Richard and Cheryl maintained separate bank accounts, although Cheryl testified that they had one joint account to which they both contributed for living expenses, such as groceries and entertainment.

On March 12, 1992, Richard obtained a loan from Wahoo State Bank, secured by a deed of trust on the 80-acre property, for approximately $120,000. Cheryl signed the deed of trust, but did not sign the note. Richard used the loan to pay his first wife the final payment pursuant to their divorce decree and to reduce his operating debts at Bank of Mead.

On July 19, 1994, Cheryl made Richard's annual loan payment at Wahoo State Bank in the amount of $14,459.29, from funds generated by her insurance agency. Cheryl presented evidence that $13,629.62 of her contribution went toward interest on the loan, while the remainder went toward debt reduction. Cheryl testified that Richard had asked her to lend him the money, having tried but failed to obtain it elsewhere. She stated that Richard was worried because the loan was in default and that he told her that he feared he would lose the family farm without her help. Cheryl testified that the loan was in danger of foreclosure and that she knew this because the payment was over 3 months overdue and the bank had called. Based on information from the bank showing that only a slight portion of the principal had been paid, it was Cheryl's understanding that the secured debt on Richard's land still totaled all or nearly all of the value of the land, as it had when they married.

Cheryl suspected that Richard was unable to obtain money elsewhere because of his bad credit. Cheryl testified that many creditors called repeatedly and often. Richard testified that he had been involved in a co-op since 1960, but according to Cheryl, the co-op had refused to bring propane in 1994 "because there was no money." Credit card companies called, "[t]he phone was shutting off," and the local electric utility "was threatening to shut down the power." As of July 1994, Richard still had an outstanding loan at Bank of Mead. Cheryl testified that the loan was always in default. Richard denied ever receiving a notice of default regarding nonpayment at Wahoo State Bank or Bank of Mead.

In July or August 1994, the antenuptial agreement was destroyed by mutual agreement of the parties. The trial court received into evidence a letter, dated August 18, 1994, from the attorney who prepared the antenuptial agreement confirming their intent to destroy it. According to Cheryl, when Richard asked her to help him pay his debt at Wahoo State Bank, she told him that she would not loan him money because of his history with loans. Instead, she offered to "invest in our future together." Cheryl offered to give Richard the money if they destroyed the antenuptial agreement, and they agreed that it was the best thing to do. Richard testified that he considered Cheryl's payments toward his debt to be loans. Cheryl testified that when she and Richard decided to destroy the antenuptial agreement, it was her intention to commingle all of the property that each of them had brought into the marriage and make it marital property, and Cheryl stated that Richard told her that he had the same intention. Richard denied indicating to Cheryl before or after the antenuptial agreement was destroyed that she would have an interest in his farm while he was alive, and he did not recall agreeing to give Cheryl an interest in the farm in return for the payments she made.

On September 26, 1994, Richard executed a new will. According to Cheryl, Richard executed the will to protect her. Richard's original will had stated that upon his death, Cheryl would have the opportunity to stay in their house and use the income from the farm as long as she did not remarry. Cheryl testified that when they destroyed the antenuptial agreement, however, the provisions of the original will still gave Richard's children standing to inherit the farm completely. Cheryl testified that Richard therefore executed the new will, which provided, in part:

DISTRIBUTION OF FARM: My beloved wife, Cheryl . . . has contributed to reducing the debt on my farm, and has otherwise contributed to my farm. In consideration of this, as well as my love and devotion to her, if she shall survive me, I give, devise and bequeath to her a one-half interest in my farm, to include the land and all appurtenances thereon, subject to the right and obligation of my children to purchase her interest within eighteen months of the date of my death. Should Cheryl and I die simultaneously under the terms of this will, my personal representative, if sufficient assets are available, or the distributees of my farm shall pay Cheryl's children all sums which she contributed to the farm, plus interest at the rate of seven percent thereon from the date of advancement until paid.

Richard explained that the reference to "my farm" meant the 80-acre property. Cheryl stated that in June 1999, Richard reviewed the will and approved it. According to Richard, the will was no longer in existence at the time of trial.

On March 1, 1995, Cheryl paid $7,500 from her business account to Wahoo State Bank toward Richard's annual loan payment, and Richard paid the remaining sum to complete that payment. Cheryl testified that Richard had told her that his crops and the price of hogs "were not good" and that he needed more help. According to Cheryl, Richard again expressed fear that he would lose the family farm without her help.

Cheryl admitted that part of the approximately $22,000 that she put toward the loan payments at Wahoo State Bank came from funds that she had prior to the marriage, though not more than $5,200, which was an estimate of the total amount in Cheryl's checking and savings accounts when she signed the antenuptial agreement. The remainder came from funds she had earned between 1991 and 1995. Cheryl did not recall how much money was in her savings account when she made the 1995 payment.

Cheryl testified that when she first moved to the parties' farmhouse, the "interior was in bad shape." Cheryl, her brothers, her parents, and her sons made substantial repairs and modifications, including gutting and modernizing an existing bathroom, adding a new bathroom, joining two rooms to make a large bedroom, installing closets, replacing floor coverings, replacing ceilings, and painting inside and outside. Richard admitted that Cheryl did some "decorating" and that her father and brothers "took a wall out" and helped install a new bathroom. According to Richard, it was "debatable" whether such improvements added to the value of the house. Richard denied that Cheryl ever worked on the farm or made any improvements to it during the 4 years they lived there.

On December 26, 1995, Richard sold the house and the 3 acres upon which it stood—part of the aforementioned 80-acre property—to his daughter and son-in-law for approximately $85,000. Richard testified that the 3 acres did not include farmland or buildings other than the house. Cheryl opined, as a real estate agent, that when she and Richard married, the house and the surrounding 3 acres were worth approximately $55,000. Cheryl testified that she could not accurately estimate how much the house increased in value from the time the parties married until the house was sold, but she stated, "I'm sure we had to improve the value with that complete renovation . . . ." On cross-examination, Cheryl admitted that she was not an appraiser and that any...