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Bellanich v. Bellanich (4/18/97), 936 P 2d 141
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Notice: This opinion is subject to correction before publication in the Pacific Reporter.
Readers are requested to bring errors to the attention of the Clerk of the Appellate
Courts, 303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907)
264-0878.
THE SUPREME COURT OF THE STATE OF ALASKA
MICHAEL M. BELLANICH, )
) Supreme Court No. S-7021
Appellant, )
) Superior Court No.
v. ) 1KE-94-258 CI
)
BARBARA Y. BELLANICH, ) O P I N I O N
)
Appellee. ) [No. 4807 - April 18, 1997]
______________________________)
Appeal from the Superior Court of the State of Alaska, First
Judicial District, Ketchikan,
Michael A. Thompson, Judge.
Appearances: C. Keith Stump, Ketchikan, for Appellant. Dennis
L. McCarty, Clifford H. Smith, P.C., Ketchikan, for Appellee.
Before: Compton, Chief Justice, Rabinowitz, Matthews,
Eastaugh, and Fabe, Justices.
MATTHEWS, Justice.
FABE, Justice, with whom RABINOWITZ, Justice, joins,
concurring in part and dissenting in part.
I. INTRODUCTION
A husband appeals the superior court's property division
in a divorce case.
II. FACTS AND PROCEEDINGS
Michael and Barbara Bellanich, both Ketchikan residents,
were married in 1954. They had five children. They divorced in
1959 but remarried after four or five months. Barbara filed for
divorce on March 17, 1994. The end of the marriage and the divorce
were acrimonious.
The parties acquired eight pieces of real estate during
the marriage. Of these eight pieces of property, two were given or
sold to individual children. Michael's parents' former home was
sold to the parties' son Mike Jr., and Lot 3 and part of Lot 1A
were gifted to the parties' daughter Tami. The remaining six
pieces of property were subjected to distribution by the superior
court. (EN1)
In making its property distribution, the superior court
held that, given the almost forty-year marriage between the
parties, all of the property involved was part of the marital
estate. The court explicitly ignored testimony by Michael relating
to recent or intended transfers of his interest in some of the
property to the children.
The court awarded Barbara personal property and debts
which it valued at $40,215. It awarded Michael personal property
and debts valued at $28,330. It awarded Barbara three pieces of
property -- 17 Shoup, the Waterfront Lot, and a unitary parcel
consisting of Lot 4 and half of Lot 5 -- with a value of $206,800.
It awarded Michael the remaining three parcels -- 54 Shoup,
Shangri-La, and the half-interest in the Pennock Island Lot -- with
a value of $328,300.
The court reasoned that because Barbara had been awarded
$11,885 worth of personal property more than Michael, and Michael
had been awarded $121,500 worth of real property more than Barbara,
then there existed in the division an "overall disparity"of
$109,615 in Michael's favor. The court wrote:
The best way to cure the inequity stemming
from the unbalanced property division is to
award [Barbara] a mortgage against the
"Shangri-La"parcel in the amount of
$109,615.00. The mortgage will require a
liquidation schedule of 20 years at 10.5% with
the initial monthly payment due January 10,
1996.
Michael challenges the superior court's ordered mortgage
arrangement, the designation of certain real property as martial
property, the division of the real property, and the court's
valuation of certain items of personal property.
III. STANDARD OF REVIEW
In dividing property in a divorce case, the superior
court undertakes a three-step process: (1) determining what
property is available for distribution; (2) valuing the property;
and (3) determining the most equitable allocation. Wanberg v.
Wanberg, 664 P.2d 568, 570 (Alaska 1983).
Determining what property is available for distribution
may involve both legal and factual questions. Legal questions
decided by a subordinate court are reviewed de novo; we "adopt the
rule of law that is most persuasive in light of precedent, reason
and policy." Guin v. Ha, 591 P.2d 1281, 1284 n.6 (Alaska 1979).
Factual determinations made by a trial court may be set aside only
if clearly erroneous. Alaska R. Civ. P. 52(a). The valuation of
property is a factual determination. Cox v. Cox, 882 P.2d 909,
913-14 (Alaska 1994). This court reviews a trial court's
allocation of property under the abuse of discretion standard, and
will reverse a trial court's determination only if it is clearly
unjust. Compton v. Compton, 902 P.2d 805, 808 n.2 (Alaska 1995).
The trial court has broad discretion in fashioning a property
division. Cox, 882 P.2d at 913.
IV. DISCUSSION
A. The Mortgage Arrangement
1. The amount of the mortgage debt
Michael points out that, by awarding Barbara a mortgage
in the same amount as the apparent inequity in the parties'
respective awards, the court has served only to reverse the
disparity rather than to eliminate it. In other words, instead of
giving a mortgage to Barbara in the amount of $109,615, the court
should have awarded Barbara one-half of that amount, or $54,807.50.
As it stands, the distribution would create an inequity of $109,615
in Barbara's favor. Michael's argument has obvious merit.
Barbara in response argues that there is evidence in the
record to support the award in her favor. However, the superior
court was clearly trying to divide the property equally. (EN2) It
wrote in its memorandum of decision: "The Court's goal is to
equalize the division between the parties." And further: "The best
way to cure the inequity stemming from the unbalanced property
division is to award the plaintiff a mortgage . . . ." Barbara's
task is not to justify an award in her favor, but to show that the
court meant, despite its language to the contrary, to make a
property award weighted unequally in her favor. She cannot do
this. (EN3)
The court's order must be reversed and remanded on this
issue.
2. The propriety of the interest rate on the mortgage
debt
Michael argues that the award of a twenty-year mortgage
to Barbara at 10.5% creates an "unwarranted windfall"to Barbara
since she would not be able to realize that rate of return on a
similarly secure investment. He also notes that, if he wanted to
pay off the debt early, he would have to sell the property and
renege on an understanding through which the parties' daughter Jody
occupies the "Shangri-La"property.
Michael has not demonstrated an abuse of discretion by
these arguments. He has not demonstrated that the 10.5% rate is
unusually high or is out of line with current interest rates on
similar obligations.
B. The Pennock Island Property
The trial court found without elaboration that all of the
real property held by the parties was marital property. Michael
argues that the Pennock Island property was separate property
because it was given by his parents to him.
Property which is inherited is the separate property of
the recipient, even if the property is received when the recipient
is married. Lundquist v. Lundquist, 923 P.2d 42 (Alaska 1996);
Chotiner v. Chotiner, 829 P.2d 829 (Alaska 1992); Julsen v. Julsen,
741 P.2d 642, (Alaska 1987). We explained the policy underlying
this rule in Julsen, 741 P.2d at 648:
The philosophy underlying equitable
distribution is that marriage is a partnership
and both spouses contribute, either directly
or indirectly, to the acquisition of property
obtained during the marriage. If property is
acquired without the joint efforts of the
parties such property arguably should not be
subject to division. For this reason, and
because most inheritances are from family
members and may have strong sentimental value,
many states . . . categorize inherited
property as separate property.
(Quoting L. Golden, Equitable Distribution of Property sec. 5.19 at
113 (1983)). As this rationale also applies to property that is
conveyed by gift, we conclude that property which is given to one
spouse alone is also separate property. (EN4)
Separate property can be transmuted into marital property
"where that is the intent of the owner and there is an act or acts
which demonstrate that intent." Chotiner, 829 P.2d at 832; Cox v.
Cox, 882 P.2d 909 (Alaska 1994); Rhodes v. Rhodes, 867 P.2d 802
(Alaska 1994). As the court made no findings as to the intent of
Michael or the existence of any acts of transmutation, the court's
treatment of the Pennock Island property as marital must be
vacated.
C. Other Property Given by Michael's Parents
A number of other parcels were given to Michael by his
parents. He admits that these parcels have become marital but
argues that the trial court should have taken into account the
source of this property in making the property division.
Alaska Statute 25.24.160(a)(4)(H) specifies that "the
time and manner of acquisition of the property in question"is a
factor to be considered in dividing marital property. The trial
court's memorandum of decision does not indicate that this factor
was taken into consideration. (EN5) We have ruled that a factor
listed in AS 25.24.160(a)(4) should be adverted to by the trial
court in dividing the property of the parties where the factor is
relevant. (EN6) See Davila v. Davila, 908 P.2d 1027, 1032 (Alaska
1995) ("[T]he trial court need not make findings as to every
factor, nor do these findings need to be exhaustive, but where the
parties raise significant issues regarding particular factors, the
trial court must address these issues . . . ."); Cox, 882 P.2d at
918-19 ("In making an equitable allocation of the marital property
. . . the trial court must consider the Merrill factors, . . . as
codified in AS 25.24.160(a)(4)."); Hanlon v. Hanlon, 871 P.2d 229,
234 (Alaska 1994) (trial court should specifically address AS
25.24.160(a)(4)(F) factor on remand); Money v. Money, 852 P.2d
1158, 1160-61 (Alaska 1993) (equal division of marital property
does not relieve court of duty to address relevant statutory
factors); Laing v. Laing, 741 P.2d 649, 652 (Alaska 1987) (In
dividing property the court "should consider, though not
necessarily exclusively or exhaustively, the factors set out in
Merrill . . . ."); Burgess v. Burgess, 710 P.2d 417, 422 (Alaska
1985) (trial court directed to demonstrate consideration of
relevant Merrill factors on remand); Brooks v. Brooks, 677 P.2d
1230 (Alaska 1984) (remand necessary because trial court did not
explicitly consider certain relevant Merrill factors). This rule
applies here. On remand the court should consider the time and
manner of acquisition of the property which was given to Michael by
his parents.
D. Personal Property
1. Art and furnishings
Michael disputes the superior court's valuation of
certain pieces of artwork and furnishings at the marital home. The
trial court valued these at $5,000 and awarded them to Barbara.
Michael asserts that they were undervalued.
The evidence before the superior court regarding the
value of the art and furnishings consisted of two elements. The
first was an appraisal conducted by Mary Ida Henrikson giving
values for the artwork in the house. The second was testimony by
Barbara that certain of the estimates given by Henrikson were
overstated, or that certain of the objects were not hers, or that
certain of the objects were personal gifts to her from friends or
family. Michael points to the appraisals to claim that the court
clearly erred in valuing the artwork and furnishings at only
$5,000. Barbara points to her testimony to argue that the superior
court was justified in reducing the total. Neither party examines
the inventory item-by-item.
In our view the factual findings concerning the valuation
of the art and furnishings are not clearly erroneous.
2. Jewelry
Michael challenges the superior court's valuation of
Barbara's jewelry. He notes that Barbara gave a value for her
jewelry at both a deposition and the trial of $50,000 to $60,000.
Barbara did testify that at one time her jewelry was probably worth
$50,000, but that she had given much of it away and lost some
pieces. (EN7) She claimed that the jewelry in her possession at
the time was worth $3,000 to $4,000. On this record we are unable
to say that the trial court clearly erred in valuing the jewelry at
$25,000.
3. Troll permit
Michael possessed a troll permit which he claimed was
worth $7,000; he presented an advertisement listing a troll permit
for that price to the court. Barbara testified at trial that
Michael had paid either $9,000 or $10,000 for the permit, and that
she based her estimate of $8,600 on another advertisement in the
paper. The trial court did not commit clear error in valuing the
permit at $7,500.
4. Coins
Michael claimed at trial to have collected at least
$30,000 worth of gold coins, bars, and Eisenhower dollars. Barbara
testified that she cashed in $1,500 worth of Eisenhower dollars at
face value, that there was no gold, and that there were a few other
collectible coins.
The superior court assigned to Barbara $3,010 worth of
coins. Michael has offered no proof that he had $30,000 worth of
coins except testimony that he once gave a Kruggerand to his
daughter.
The superior court found as to the coins: "The chief
testimonial dispute relates to the presence or absence of some
$30,000.00 or so in cash/precious metals which [Michael] states he
left behind . . . . Someone is obviously lying about this but the
state of the evidence represents in effect an even split on the
issue." On this record the finding is not clearly erroneous.
V. CONCLUSION
The property division in this case is vacated and
remanded for the following purposes: (1) The court shall correct
the amount of the mortgage awarded to Barbara, (2) the court shall
make findings as to whether the Pennock Island property has been
transmuted into marital property, and (3) the court shall consider
the source of the other real property which was given to Michael in
making the property division. The court shall make any adjustments
in the overall property division as may be appropriate in light of
the above.
VACATED and REMANDED.
FABE, Justice, with whom RABINOWITZ, Justice, joins, concurring in
part and dissenting in part.
I agree with all aspects of the court's opinion except
for Part IV.C, which concerns the superior court's division of real
property given to Michael by his parents. Although Michael admits
that these parcels are marital property, he argues that the
superior court erred in dividing them equally between the parties.
In my view, the superior court's equal division of this property
was proper and supported by the facts, and there is no necessity
for a remand for further findings.
We have held that under AS 25.24.160(a)(4), "[p]roperty
available for distribution includes all property acquired during
marriage, whether title is joint or separate." Carlson v. Carlson,
722 P.2d 222, 224 (Alaska 1986). Michael received the real
property at issue from his parents during the course of the
marriage, and it was thus available for distribution. The law
presumes that a fifty-fifty division of marital property is
equitable. Lundquist v. Lundquist, 923 P.2d 42, 53 (Alaska 1996);
Jones v. Jones, 666 P.2d 1031, 1034 (Alaska 1983).
The majority faults the trial court for failing to make
specific findings regarding its consideration of the source of the
real property acquired from Michael's parents. In Carlson, we held
that the trial court "always should consider the property's source
when determining what assets are available for distribution."
Carlson, 722 P.2d at 224 (emphasis added). Here, however, there
was no question that the assets were available for distribution;
Michael conceded this point. The Carlson court further emphasized
that the need to consider the property's source is greater "in a
marriage of short duration." Id. In the case before us, Michael
and Barbara were married for forty years, and they held the
disputed property jointly for twenty-two years.
We have stated that the trial court's findings "need not
be extensive"as long as they provide "a clear indication of the
factors which the superior court considered important in exercising
its discretion." Bird v. Starkey, 914 P.2d 1246, 1249 n.4 (Alaska
1996). A trial judge's decision should not be overturned merely
because of the judge's failure to "tally the statutory factors"if
the trial court has made "a sound decision and no reason exists
. . . to overturn it." Julsen v. Julsen, 741 P.2d 642, 649 n.10
(Alaska 1987).
The trial court in this case was clearly aware of the
source of the various parcels of real property in this marital
estate and decided on an equal division of the property acquired
during the parties' forty-year marriage. I cannot agree that this
decision should be remanded due to inadequate findings. I would
therefore affirm the superior court's equal division of the marital
property received from Michael's parents.
ENDNOTES:
1. One of the properties, a lot on Pennock Island, had been given
to Michael and his brother, so that only a one-half interest was
subject to distribution. The propriety of this distribution is one
of the issues in this appeal.
2. Such an equal division is presumptively valid under Brooks v.
Brooks, 733 P.2d 1044, 1058 (Alaska 1987).
3. Barbara correctly points out the Civil Rule 60(b)(1) is
available to a party to obtain relief from a judgment on the
grounds of mistake. But she does not claim that Rule 60(b) was
Michael's exclusive remedy or that he should somehow be barred from
appealing because he did not pursue a Rule 60(b) motion. She only
implies that Michael appealed rather than using Rule 60(b) because
the superior court actually meant to create an award in her favor.
This implication is directly contrary to the superior court's
explicitly stated goal of "equaliz[ing] the division between the
parties."
4. See Section 4(g)(1) of the Uniform Marital Property Act, 9A
U.L.A. 29 (Supp. 1986) (cited with approval in Julsen: "Property
acquired by a spouse during marriage . . . is individual property
if acquired: (1) by gift or a disposition at death made by a third
person to the spouse and not to both spouses.").
5. Michael requested such consideration in the trial court. At
the outset of his final argument Michael counsel stated:
First of all, I just hope that the Court
doesn't lose sight of the nature of the source
of the major part of the property of this
couple.
The Supreme Court has -- of Alaska has
stated that the Court should take into
consideration the source of property when it
makes its decision regarding equity. The
source of the bulk of the property of these
people stems as gifts from Michael's parents
to Mike, and that a very substantial amount
then began, even if it didn't continue, began
as a separate property to Mike. The -- and I
believe that that should account for this in
the court's determination as to how to divide
this property.
6. AS 25.24.160(a)(4) codifies and slightly expands the listing
of "principal factors"relevant to property division set forth in
Merrill v. Merrill, 368 P.2d 546, 547-48 n.4 (Alaska 1962).
7. Michael does not allege that these gifts, apparently effected
within two or three years prior to the trial, were fraudulent
transfers.
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