Archive for the ‘ASSET AND DEBT DIVISION’ Category

Loan from Dad = No Loan

Friday, October 14th, 2011

Husband and wife married in 2006 and filed for divorce in 2009. Husband built his home in 2003. He took out a construction loan. At trial he testified he had borrowed $25,000 from his dad in 2003 to build the home. He offered an undated note stating that the loan was to be repaid with interest in 2011. Husband made no payments during the marriage. Wife testified that during the marriage Husband stated that he never had to pay his dad back. Husband offered no evidence of the 2006 value of the residence.

The trial court awarded the home to Husband, but refused to deduct the alleged loan. Affirmed by the Supreme Court.

It may have been possible to argue that the $25,000 in value was separate premarital property in the alternative — but not without a 2006 valuation of the home.

Marriage of Chamberlain, 2011 MT 253

LOVE MAY ONLY TAKE A MOMENT, BUT COMMON LAW MARRIAGE IS NOT SO QUICK.

Saturday, May 30th, 2009

James and Jacqueline fell in love in the State of Washington. They held an informal ceremony in Washington October 4, 1994, and vowed to each other to be married “under God”. Washington does not recognize common law marriages and apparently would not have recognized this one. The next year, however, they moved to Montana. James sold property he had previously owned and bought a ranch in Montana where they lived for the next 11 years. The ranch didn’t make money but doubled in value by the time Jacqueline filed for divorce in 2006. By then, the couple had made multiple representations to multiple institutions that they were married. James told his union they were married. He told the IRS he was married on his tax returns. They held themselves out as married to others. The trial court found that they were married and pegged the date of their marriage to the October 1994 event in Washington. James appealed on the basis of a line of cases that held that common law marriage comes about in an instant. Those cases were overruled (and good riddance). The only curious thing is the retroactive effectiveness of a marriage to a date time and place it was clearly legally impossible.

Also of interest here was the fact that post trial motions of the parties substantially affected the ultimate outcome. The trial court greatly reduced James’ cash payment due Jacqueline. Rarely do post trial motions produce much. Here, clearly the effort was well rewarded, however — for James, at least.

Finally, Jacqueline contended that although the ranch was purchased with proceeds from the sale of James’ premarital property, she was entitled to share in the increase in its value. They bought the ranch for $340,000 and its value at the time of divorce was $660,000 — so serious money was at issue here.

The Supreme Court repeated its earlier standards: that Jacqueline would have to show that she contributed to the preservation or appreciation in value of the ranch and that she would have no entitlement if the increase in value was solely the result of market forces. The Supreme Court reversed and remanded on this issue, holding that the trial court had not made any specific findings of fact about Jacqueline’s contribution to the appreciated value of the ranch or whether she acquired any marital interest in the appreciated value.

The case is Marriage of Swanner-Renner 2009 MT 186

Partitioning Co-Habiting Couple’s Real Estate

Thursday, April 30th, 2009

Vern and Nancy lived half the year in California and half in Montana. They were not married. Vern inherited a home from his dad in Glasgow that served as their Montana residence. Vern purchased two additional properties in Glasgow: an additional home they fixed up for a rental with a loan secured by his inherited home and another run-down property for cash. He placed both of these two additional acquired properties in his and Nancy’s name jointly.

Vern and Nancy ended their relationship after 8 years. Vern sued for partition of the two jointly titled properties. The trial court awarded the rental to him and ordered him to pay Nancy $5,400 for her contribution to the property. Based upon emails between the parties post-separation as well as testimony, the trial court found Vern intended the run-down property as a gift to Nancy. The court ordered Vern to deed the property to her or pay her $5,300 for the property.

Vern appealed the portion of the decision awarding Nancy the run-down property. He argued that he had not intended to simply give Nancy the property — and in any event, legal title was in their names jointly and there was no evidence of delivery.

The Montana Supreme Court affirmed the decision, emphasizing that partition actions are actions in equity. In a partition action, the court starts with the presumption that jointly titled property is owned in equal shares. That presumption is rebuttable, however. Evidence of unequal contribution to the property is sufficient to lead to another presumption: that the parties own shares based upon their relative contribution. That presumption is rebuttable too: by evidence that one party intended a gift to the other. According to the Supreme Court evidence of intent to gift casts a wide net: “The party may establish proof of a gift by parol evidence, such as conduct over the course of time, the relationship between the two parties, the sharing of expenses, labor, or any other admissible means.” One might wonder what evidence could not be offered as proof of a gift.

The case is Anderson v. Woodward 2009 MT 144