Strickland v. Strickland

• Decision Date: 22 May 1991
• Docket Number: No. 17159,17159
• Citation: Strickland v. Strickland, 470 NW2d 832 (S.D. 1991)
• Parties: Judy Gail Graham STRICKLAND, Plaintiff and Appellee, v. Chester Dejuan STRICKLAND, Defendant and Appellant.
• Court: South Dakota Supreme Court

Page 832

470 N.W.2d 832

Judy Gail Graham STRICKLAND, Plaintiff and Appellee, v. Chester Dejuan STRICKLAND, Defendant and Appellant.

No. 17159.

Supreme Court of South Dakota.

Argued Jan. 7, 1991.

Decided May 22, 1991.

Allen G. Nelson, Bang, McCullen, Butler, Foye & Simmons, Rapid City, for plaintiff and appellee.

Linda Lea M. Viken, Finch, Viken, Viken & Pechota, Rapid City, for defendant and appellant.

HENDERSON, Justice.

PROCEDURAL HISTORY/ISSUES

This is a divorce action, commenced by Judy Gail Graham Strickland (Judy) against Chester DeJuan Strickland (DeJuan) on December 2, 1988. A trial was held on August 1 through August 4, 1989. Upon completion, the trial court signed Findings of Fact and Conclusions of Law, as well as Judgment and Decree, some seven months later, on March 6, 1990. On appeal, DeJuan raises the following issues: ¹

(1) The trial court erred in not granting the divorce to DeJuan Strickland; ²

(2) The trial court failed to properly consider the premarital assets, gifts, and contributions of DeJuan Strickland, as well as the gifts received by him, during the marriage. Likewise, the trial court improperly included trust land when making the property division;

(3) The trial court failed to recognize the children's vested property rights;

(4) The trial court erred in including the children's interests in the "joint venture" as part of the marital assets;

(5) The trial court failed to consider the potential tax and criminal liability to the parties involved by the setting aside of the venture;

(6) The trial court failed to give proper allowance to the effect of the "conservation reserve program" on the real property;

(7) The trial court erred in its property valuations of certain property stipulated to and property which did not belong to the parties;

(8) The trial court erred in establishment of liability against the marital estate;

(9) The trial court erred in its grant of alimony;

(10) The trial court erred in dividing the "working unit";

(11) The trial court erred in granting $20,000.00 in attorney's fees for pre-appeal legal services to Judy.

Both parties have filed motions for appellate attorney's fees.

We affirm in part, reverse in part and remand.

FACTS

On June 22, 1962, Judy and DeJuan were married in Plainview, Texas. They have three children. Over the years, both parties have had health problems. Judy was diagnosed as having cancer in 1984 and had surgery to remove the cancer. Presently, Judy has no indication of a reoccurrence of the cancer. However, it is not a given fact that she will be free of this disease during the rest of her life. As a result of Judy's cancer surgery, she is uninsurable. DeJuan did not desire--nor provide--insurance for Judy prior to her being stricken with this disease. DeJuan has received medical treatment for a heart irregularity that is being treated with medication.

- Property Facts -

We now address the complicated, extensive property facts of this marriage. When the parties were married, DeJuan had a net worth of approximately $80,000. ³ Judy owned an automobile with a value of approximately $300.00.

Shortly after the marriage took place, DeJuan's father helped him purchase an interest in G & S Grain Company in Texas. DeJuan later sold his interest in G & S to his father. DeJuan and Judy received approximately $7,500.00.

In March, 1963, Judy's parents were in a plane crash, with Judy's mother being killed. Judy received a $12,000.00 settlement from her mother's estate, certain household furniture, and an interest in Muncy Elevator. She subsequently sold her interest in Muncy Elevator for $20,000.00. From this inheritance, a lot was purchased upon which a house was built. Judy's father contributed monies by making the house payment for approximately two years. Later, this residence in Plainview, Texas was sold. The profit, approximately $36,500.00, was used by DeJuan in his farming operation and to purchase land in South Dakota.

In December, 1979, DeJuan purchased nine sections of land in South Dakota from W.J. Asmussen for $1,728,000.00. Without consulting Judy, DeJuan assigned one section of this property to each of the parties' three children. He also prepared documents which stated that the debt of $21,700.00 owed to his three children incurred during the December 1979, transaction was forgiven by his children. The same document also stated that DeJuan and Judy are giving $18,000.00 to their children as of December 31, 1979, and further provided that an additional $17,900.00 was to be given equally to the children on January 1, 1980. However, Judy did not sign any of the documents and did not agree to the transactions. The forgiveness of the debt, as well as the two gifts of money, were necessary to provide the down payment money, so that on paper each of the children would be able to purchase the three sections of land, which DeJuan claims belong to the children.

Subsequently, in an attempt to put the Strickland family earnings into a lower tax bracket, DeJuan filed tax returns for his children and himself. These returns purported to show that DeJuan and each of his children were involved in the farming operation. Taxes were paid for each of the individuals. As a result of the documentation prepared, the three children and DeJuan were able to qualify for monetary payments from the United States Government, substantially in excess of what would have been available without the children being involved in the farming operation.

In 1986, in an attempt to qualify for additional monetary payments from the United States Government, the three children, DeJuan, and DeJuan's father purported to enter into a joint venture for farming purposes. After having the joint venture papers prepared, DeJuan and his children qualified for $50,000 in United States Government payments. DeJuan was also eligible to participate in the Conservation Reserve Program (CRP). However, DeJuan withdrew his prior approval to participate in the CRP for personal reasons.

The trial court critically, and very importantly, determined that DeJuan controlled and enjoyed the beneficial use of all of the before-mentioned property and all finances generated by this property, as well as the money received from the United States Government. This determination was made, notwithstanding many interlocking business associations.

After Judy decided to file for divorce, DeJuan, for the first time, decided to pay interest on the loans that he claimed to have with his children. About the same time, DeJuan's accounting records reflected that almost an identical amount was withdrawn from the children's checking accounts by way of a loan to DeJuan.

DeJuan did not show any debt to his children on any of his 1987 or 1988 financial statements. He first recognized debt to his children after Judy filed for divorce. The trial court also determined that DeJuan did not deliver any notes to his children nor did he place them in their possession.

After Judy filed for divorce, DeJuan provided Judy with a financial statement showing that DeJuan and Judy had approximately a $12,000.00 negative net worth. This is also what he told the trial court concerning his financial status. Considering the assets and liabilities, this testimony was incredible, the trial court deeming there were approximately 2 1/2 million dollar net assets.

DECISION

The issues will be condensed into three.

I. The trial court did not err in determining the extent of the marital estate. However, it did err in its valuation of the marital estate.

Initially, DeJuan argues that the trial court abused its discretion in failing to recognize and take into account, in the property division, the premarital assets and contributions of DeJuan's parents during the parties' marriage. This Court has consistently held that the trial court has discretion in determining how to consider premarital assets and gifts during a marriage. Lien v. Lien, 278 N.W.2d 436 (S.D.1979). The trial court recognized various gifts and premarital assets that DeJuan claims the trial court should have excluded. However, in its discretion, the trial court determined that these items must be part of the marital estate to make the division equitable. We find no abuse of discretion.

DeJuan argues further that the trial court failed to recognize his children's vested property rights and erred by including his children's interests in the joint venture as part of the marital assets. The trial court found:

Based upon all of the evidence presented to this court, including the fact that there was never a legal delivery of any notes payable to the children, it is legally appropriate for this court to set aside any debt Defendant claims is owed to his children. In addition, it is equally legally appropriate for this court to specifically determine that Strickland Corporation and all assets owned by Strickland Corp.; DeJuan Strickland's, Michael Strickland's, Karen Strickland's and Deidi Strickland's ownership interest in Strickland Farms; as well as the real estate assigned to the children at or about the time of the Asmussen purchase, are all assets to be included within the marital estate of Plaintiff and Defendant, all arising out of the equal and joint effort of both Plaintiff and Defendant. (emphasis supplied).

Although the trial court did not specifically find that the before-mentioned transactions were fraudulent, the trial court did state that the transfers were improperly made. We believe this case can be reconciled with Pennock v. Pennock, 356 N.W.2d 913 (S.D.1984) for that very reason. It is certainly within the trial court's discretion to disregard such transfers when confronted with substantial evidence in the record. We do not believe it is appropriate to remand for further findings on this issue.

DeJuan continues his argument by stating that the trial court's setting aside of the joint venture will result in tax and potential criminal liability...