author: MR. JUSTICE WEBER MR. JUSTICE SHEEHY,

text:
    In the MATTER OF MARTHA R. SORINI, Licensed Real Estate Broker.
    No. 85-503.
    Submitted on Briefs Dec. 19, 1985.
    Decided April 1, 86.
    Rehearing Denied May 9, 1986.
    717 P.2d 7.

      Robert P. McGee, Butte, for appellant.
    F. Lon Mitchell, Helena, for respondent.
   MR. JUSTICE WEBER

delivered the Opinion of the Court.

Ms. Sorini appeals the decision of the Butte/Silver Bow County District Court which upheld a Board of Realty Regulation decision revoking her real estate broker’s license. We affirm.

The issues are:

1. Was Ms. Sorini denied her rights at her administrative hearing because the hearing examiner and the attorney for the Board of Realty Regulation were both deputy attorneys of the State of Montana?

2. Did the matter of Ms. Sorini’s competence or trustworthiness become moot because the Board of Realty Regulation was required to take those characteristics into consideration before issuing her a real estate broker’s license?

3. Is the Board of Realty Regulation required to rule with particularity upon the objections and exceptions filed with it, and is their failure to issue such a ruling a deprivation of Ms. Sorini’s rights?

4. Was the penalty imposed by the hearing examiner based upon a finding of fact which was not an issue, and should the decision be therefore reversed for unusual and unwarranted punishment?

In December 1983, a complaint was filed with the Board of Realty Regulation (“Board”) against Martha Sorini, a licensed real estate salesperson. In spring 1984, Ms. Sorini passed the real estate broker’s examination and was issued a broker’s license. The complaint against her was amended to reflect her change in status, and the matter was heard before a hearing examiner in June 1984. Ms. Sorini was represented by counsel and testified at the hearing. The hearing examiner’s proposed findings, conclusions and order recommended that Ms. Sorini’s broker’s license be revoked for violations of Section 37-51-321, MCA, including failure to account for or remit money belonging to others, failure by a real estate salesperson to deposit money of others in a broker’s trust account, and demonstrated unworthiness or incompetence. Ms. Sorini filed exceptions to these recommendations, and oral argument was held before the full Board. Later, the Board issued an order adopting the findings of fact, conclusions of law and order of the hearing examiner. Ms. Sorini then filed a petition for judicial review in District Court and obtained a temporary restraining order suspending the revocation of her broker’s license. A hearing on that petition was conducted and the court affirmed the Board’s order revoking her broker’s license. Revocation of the license has again been stayed during this appeal.

I

Was Ms. Sorini denied her rights at her administrative hearing because the hearing examiner and the attorney for the Board of Realty Regulation were both deputy attorneys of the State of Montana?

Ms. Sorini argues that the independence of the hearing examiner was impaired because he was a deputy attorney general as was the attorney representing the Board. Next, she argues that the Board gave extra consideration to the hearing examiner’s recommendations because he was from the attorney general’s office. Ms. Sorini failed to submit any proof to support these allegations. There is nothing in the record to suggest a factual basis for her position.

Section 2-4-611, MCA, establishes the manner in which a party may file an affidavit of personal bias, lack of independence, disqualification by law, or other disqualification of a hearing examiner. In the absence of a request for disqualification, it is not proper to raise the question on appeal. As we pointed out in Western Bank of Billings v. Mont. St. Banking (1977), 174 Mont. 331, 570 P.2d 1115, a party may not raise on appeal a question which was not presented before the administrative agency except the validity of the statute under which the agency is proceeding, unless it is shown that there was good cause for failure to raise the question before the agency. Such good cause has not been shown here.

While we tend to agree with the District Court’s observation that having a greater separation of prosecutorial and decision-making functions would eliminate an appearance of impropriety, we find nothing to warrant a reversal of the District Court. We therefore affirm the conclusion of the District Court that there was no reversible error on this issue.

II

Did the matter of Ms. Sorini’s competence or trustworthiness become moot because the Board of Realty Regulation was required to take those characteristics into consideration before issuing her a real estate broker’s license?

After the charges had been filed against Ms. Sorini, she was allowed to sit for the real estate broker’s examination and was subsequently issued a real estate broker’s license. She argues that her honesty, trustworthiness and competency were considered in the licensing process, under the provisions of Section 37-51-302(3), MCA. She therefore maintains that the issues of her competence and trustworthiness have been determined so far as this case is concerned.

Clearly, the issues are not the same. The Board is required by statute to determine that an applicant for a broker’s license meets certain standards of conduct. In the absence of evidence that the Board considered the pending charges against her, the determination that Ms. Sorini met those standards of conduct is not dispositive of the pending charges against her. There is no such evidence in the record — in fact, there are indications that the Board did not consider the charges because they had not been proven.

We conclude that the issue of the competence and trustworthiness of Ms. Sorini as raised by these charges was not determined by the issuance of her real estate broker’s license.

III

Is the Board of Realty Regulation required to rule with particularity upon the objections and exceptions filed with it, and is their failure to issue such a ruling a deprivation of Ms. Sorini’s rights?

The proposed findings of fact, conclusions of law and order as prepared by the hearing examiner detail the factual basis for his conclusions that the Board had power to either suspend or revoke Ms. Sorini’s license. The hearing examiner found that there had been a failure by Ms. Sorini to deposit money of others in a trust account, that there had been a failure to account for money belonging to others, and that she had demonstrated unworthiness and incompetence. The hearing examiner therefore recommended that her license as a real estate broker be revoked.

Prior to her appearance before the full Board, Ms. Sorini submitted her contentions of claimed error in these findings and conclusions. The Board considered these contentions and voted unanimously to adopt the findings of fact, conclusions of law and recommended order of the hearing examiner. Ms. Sorini was entitled to nothing further. The Board was not required to specifically state in writing that her exceptions to the proposed findings were insufficient.

We affirm the conclusion of the District Court that the Board was not required to rule with particularity upon Ms. Sorini’s exceptions to the proposed findings.

IV

Was the penalty imposed by the hearing examiner based upon a finding of fact which was not an issue, and should the decision be therefore reversed for unusual and unwarranted punishment?

Ms. Sorini argues that the penalty imposed upon her is based on the finding of the hearing examiner that the mortgage on her clients’ home was foreclosed and the clients lost their home because of her actions. The violations with which Ms. Sorini was charged do not include causing the foreclosure, and she does not feel it was proven that her actions caused the foreclosure. She maintains that she was punished to an unusual and unwarranted degree for the violations with which she was charged.

The Board found that Ms. Sorini had violated three statutory prohibitions under Section 37-51-321, MCA. The penalty for violation of any of the standards set out in that section is revocation or suspension of the broker’s or salesperson’s license. Revocation of Ms. Sorini’s license was within the discretion of the Board, as a penalty for her violations of the statute. There were enough facts before the Board to allow it to revoke Ms. Sorini’s license without considering whether she caused the foreclosure. We conclude that the penalty was not unusual or unwarranted punishment. We affirm the District Court’s conclusion that the Board’s revocation of Ms. Sorini’s broker’s license was based upon her violations of the three standards set out in the complaint against her.

Affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON and GULBRANDSON concur.

MR. JUSTICE SHEEHY,

dissenting:

I dissent on the first issue.

I should have thought that the mere appearance of impropriety would be sufficient for this Court, which so lately approved the Rules of Professional Conduct (June 6, 1985) to rise and strike so anomalous a case as we have here: a deputy attorney general acting as hearing examiner in a case where the state agency is represented by another deputy attorney general.

For my part, I heartily discountenance such a cozy arrangement.

For the convenience of this Court and counsel, I point out that Rule 1.12(a) of the Rules of Professional Conduct debar a lawyer from representing a party in a matter where the lawyer participated personally and substantially as an adjudicative officer. Rule 1.12(c) debars any lawyer in a firm with which the first lawyer is associated from knowingly undertaking or continuing representation in the matter, unless certain conditions are met, which are not met here.

The most elemental notions of due process ought to tell us that objectivity is impossible when one party owns both the prosecutor and the judge.

There is indeed evidence that the Board bowed to the supposed superiority of a hearing examiner from the attorney general’s office. The minutes of the Board for August 15, 1984 reveal that John Dudis, a member of the Board and himself an attorney stated that if the hearing examiner “from the attorney general’s office has made his findings after going through this from top to bottom, and you [appellant’s counsel] should have had opportunities to put on witnesses and cross-examine, I am going along with the hearing examiner.”

We should send this case back to the Board of Realty Regulation for a new beginning.


source: Caselaw Access Project

author: MR. JUSTICE MORRISON

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. KIRT C. CARROLL, Defendant and Appellant.
    No. 85-558.
    Submitted on Briefs Feb. 20, 1986.
    Decided April 1, 1986.
    716 P.2d 212.
    John Keith, Great Falls, for defendant and appellant.
    Mike Greely, Atty. Gen., Joe R. Roberts, Asst. Atty. Gen., Helena, Patrick L. Paul, Co. Atty., Great Falls, Antonia P. Marra, Deputy Co. Atty., for plaintiff and respondent.
   MR. JUSTICE MORRISON

delivered the Opinion of the Court.

On July 2,1985, defendant entered a plea of guilty to the charge of felony theft, in violation of Section 45-6-301, MCA (1983). On August 2, 1985, the district judge sentenced defendant to five years in the Montana State Prison with the last two years suspended. Defendant appeals the sentence.

The information filed in this case reveals that on the evening of March 23, 1985, defendant unlawfully entered the Medstar Towing garage in Great Falls, Montana, and stole equipment and tools valued in excess of $300. Defendant was charged with felony burglary pursuant to Section 45-6-204(1), MCA (1983), and felony theft, pursuant to Section 45-6-301(l)(a), MCA (1983).

At his arraignment on July 2, 1985, defendant entered a plea of guilty to the theft charge; the burglary charge was dismissed under the terms of the plea agreement defendant entered into with the county attorney. Sentencing was scheduled for August 2, 1985.

The pre-sentence report indicated that defendant was 20 years old, did not complete high school, had no job skills, and had only slight income working part-time for his father. Defendant’s prior criminal record consisted of three misdemeanor theft convictions.

The sentence hearing was held August 2, 1985. At the hearing, defendant’s counsel pointed out that although the victim had been reimbursed in the amount of $16,000 by his insurance company, defendant contended that the actual amount of goods stolen amounted to about $6,484.43.

The district judge sentenced defendant to five years in the Montana State Prison with the last two years suspended. Additionally, defendant was ordered to pay restitution in the minimum amount of $6,484.43, or as much as he could pay during the suspended sentence, to attend alcohol and drug counseling during the suspended part of his sentence, and to enroll in a GED program. The district judge also recommended defendant be transferred to the Swan River Forest Camp as soon as space became available. In the sentencing order, the district judge noted: “The value of the property stolen is quite significant and it is questionable if restitution will ever be paid in this case. The Court concludes that a period of incarceration is required in this case for the protection of the property of other persons.”

On appeal, defendant raises the following issue: Did the District Court err when imposing the sentence by considering the inability of the appellant to pay restitution?

Defendant asserts he was sentenced to a prison term primarily due to his inability to pay restitution, which violated his right to equal protection guaranteed by the Fourteenth Amendment. We disagree.

An examination of the sentencing order and the transcript of the sentence hearing reveals no abuse of discretion by the district judge, nor any violations of defendant’s constitutional rights. Section 45-6-301(5), MCA, provides that a person convicted of felony theft shall not be fined in excess of $50,000 nor imprisoned for a term exceeding 10 years. Clearly, the sentence imposed in this case is well within these parameters. “This Court has consistently held that if a sentence is within the limits provided by statute, it is not an abuse of discretion.” State v. Lemmon (Mont. 1984), [214 Mont. 121,] 692 P.2d 455, 41 St.Rep. 2359.

Defendant argues he was sentenced to a prison term because of his indigence. However, the district judge specifically noted the prison term was necessary to protect the property of others, and that defendant’s criminal record contained three previous misdemeanor thefts. These are sufficient reasons supporting incarceration and uphold this state’s correctional policy “to protect society by preventing crime through punishment and rehabilitation of the convicted.” Section 46-18-101, MCA.

Defendant’s argument taken to its logical end would prohibit the State from imposing a prison term upon an indigent defendant where restitution is arguably an alternative. Such a result would essentially eliminate punishment for the indigent defendant. In this case, the district judge sentenced defendant to a prison term to impress upon him that he cannot continually violate the laws of this state and escape incarceration.

The conditions of the sentence given are designed to deter future criminal conduct and rehabilitate defendant in conformance with the correctional policy of the State of Montana. The District Court is affirmed.

MR. JUSTICES HARRISON, WEBER, SHEEHY and HUNT concur.


author: MR. JUSTICE SHEEHY

text:
    TWENTY-SEVENTH STREET, INC., a Montana Corporation, Plaintiff and Respondent, v. BOB JOHNSON and Beverly Johnson, d/b/a Rail Inn, Defendants and Appellants.
    No. 85-587.
    Submitted on Briefs Feb. 26, 1986.
    Decided April 1, 1986.
    716 P.2d 210.

      Calton & Hamman, Robin A. Wolff, Billings, for defendants and appellants.
    English & Lee, Bruce E. Lee, Billings, for plaintiff and respondent.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Bob Johnson and Beverly Johnson d/b/a Rail Inn appeal from an order of the District Court, Thirteenth Judicial District, Yellowstone County denying their motion to set aside a default judgment. We reverse and remand.

The sole issue on appeal is whether the District Court erred in not setting aside the default judgment on the basis of mistake, inadvertence or excusable neglect.

Bob and Beverly Johnson are the owners of the Rail Inn Motel in Forsyth. In the summer of 1983, they negotiated with Cash Register Systems, Inc. for a cash register and a drink mixer. The salesman told them that because the equipment would be left at the motel, they had to sign a lease, but that no payments would be due until the equipment was installed and operating properly. The Johnsons signed a lease agreement with Rubick Leasing Co. that obligated them to pay $359.37 per month for the next four years. Johnsons claimed the equipment was never properly installed so the Johnsons returned it to Cash Register Systems, Inc. in July 1983.

Meanwhile, Rubick Leasing assigned its interest in the lease to Twenty-seventh Street, Inc. In September 1984, Twenty-seventh Street instituted an action against the Johnsons for over $14,000. The Johnsons hired an attorney who entered negotiations with Twenty-seventh Street, Inc. In January 1985 the Johnsons dismissed their attorney. He filed a praecipe to clerk and sent letter to opposing counsel explaining he had been dismissed. In March 1985, he moved to withdraw as counsel of record. On the same day the attorney also moved for additional time for Johnsons to file their answer and get substitute counsel. However, the motion for withdrawal did not include any documentation that the Johnsons agreed to the dismissal. The motion was never set for hearing and the Court did not issue an order allowing the attorney to withdraw. On June 12, 1985, Twenty-seventh Street moved for default judgment. They served notice of this motion on the attorney of record. On June 19 default judgment was entered and the next day Twenty-seventh Street executed on the Johnson’s bank account.

The Johnsons hired a new attorney who moved to set aside the default judgment against the Johnsons under Rule 60(b), M.R.Civ.P. on the basis of mistake, inadvertence, surprise, or excusable neglect. The District Court denied this motion. The Johnsons have appealed.

Rule 55(c) of the Montana Rules of Civil Procedure allows a default judgment to be set aside in accordance with Rule 60(b). Rule 60(b) states that a judgment may be set aside due to mistake, inadvertence, surprise or excusable neglect. The Johnsons contend the facts show mistake and excusable neglect, thus the judgment should be set aside. They contend they received no notice of the impending default judgment, and that they had believed the suit was resolved by their first attorney. Twenty-seventh Street argues the facts show inexcusable negligence and wanton disregard of the judicial process. They argue they properly served the attorney of record and it would have been improper for them to communicate directly with the Johnsons. The court file shows that counsel for Twenty-seventh Street had in fact communicated by letter with the Johnsons on October 5, 1983, when Johnsons were represented by counsel.

The standard of review of a refusal to set aside a default judgment is a slight abuse of discretion by the District Court. If a motion to open a default is made, and is supported by a showing that leaves responsible minds in doubt, courts tend to resolve doubts in favor of the motion, since courts favor a trial on the issues over a default judgment. Cure v. Southwick (1960), 137 Mont. 1, 349 P.2d 575; Patterson v. Patterson (1947), 120 Mont. 127, 179 P.2d 536; Brothers v. Brothers (1924), 71 Mont. 378, 230 P. 60.

In Reynolds v. Gladys Belle Oil Co. (1926), 75 Mont. 332, 243 P. 576, we dealt with a similar situation. In Reynolds a default judgment was entered against a foreign corporation because the registered agent of the company forwarded the papers served on him to the attorney who had been general counsel of the company. Unbeknownst to the agent, the company had dismissed that attorney. The papers mailed to the attorney did not come into the hands of the president of the company until the day before the default judgment was entered.

We held in Reynolds that the agent was negligent and opened the default judgment for further proceedings. Likewise here, the attorney was negligent in not properly withdrawing and not notifying his former clients of the pending motion for judgment of default. We reverse the denial of the motion to set aside the judgment and remand for further proceedings.

Twenty-seventh Street also contends that this appeal is moot to the extent that the judgment has been satisfied by execution. We disagree. If a judgment has been paid voluntarily, it amounts to an accord and satisfaction. However, if a judgment has been paid under legal coercion, that judgment remains a proper subject for judicial review. State v. Rafn (1956), 130 Mont. 554, 304 P.2d 918. In this case, the judgment was partially paid after execution by Twenty-seventh Street. That does not constitute voluntary payment which would moot the issues on appeal.

The denial by the District Court of the motion to set aside the default judgment is reversed and the cause remanded for further proceedings.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES WEBER, GULBRANDSON and HUNT concur.


text:
    CARSON H. VEHRS, JR., Plaintiff and Appellant, v. CHARLES F. MOSES, and the Moses Law Firm, Defendant and Respondents.
    No. 85-588.
    Submitted on Briefs Jan. 30, 1986.
    Decided April 1, 1986.
    716 P.2d 207.

      Patrick A. Holt and Dan Torgenrud, Lolo, for plaintiff and appellant.
    Garlington, Lohn & Robinson, Susan P. Roy and Sherman V. Lohn, Missoula, for defendants and respondents.
   MR. JUSTICE MORRISON

delivered the Opinion of the Court.

Plaintiff Carson Vehrs, Jr., appeals the September 3, 1985, order of the Fourth Judicial District Court granting a change of venue from Missoula County to Yellowstone County. We affirm.

In March of 1978, Carson Vehrs (Vehrs) retained the legal services of Charles Moses (Moses) to defend Vehrs in criminal proceedings filed against him in Missoula County, Montana, relating to Vehrs’ conduct while employed at the University of Montana. Vehrs met with Ralph Wright, one of Moses’ partners, in Missoula County, in order to retain Moses. All legal fees paid by Vehrs to Moses were delivered to Mr. Wright in Missoula County.

Vehrs maintained complete innocence on all charges. Moses agreed to conduct his defense in a manner which would not prejudice Vehrs’ statutory right to recover costs and expenses resulting from the charges, and if necessary, Moses would represent Vehrs in a subsequent civil suit to recover Vehrs’ costs and damages.

On October 24, 1978, a jury found Vehrs not guilty on the charge of felony theft. Shortly thereafter, a charge of official misconduct against Vehrs was dismissed. On January 18, 1979, Vehrs pled guilty to a misdemeanor charge of selling wine without a license.

Following termination of the criminal proceedings, Moses informed Vehrs that Vehrs was entitled to reimbursement for his legal expenses pursuant to Section 2-9-305(4), MCA, (1978), which states:

“(4) In any action in which a governmental entity employee is a party defendant, the employee shall be indemnified by the governmental entity employer for any money judgments or legal expenses to which he may be subject as a result of the suit unless the conduct upon which the claim is brought did not arise out of the course and scope of his employment or is an intentional tort or felonious act of the employee.”

On October 3, 1979, Moses presented a claim for reimbursement to University of Montana legal counsel in Missoula. The Board of Regents denied the claim on July 22, 1980. Moses informed Vehrs the only remaining avenue was to file a civil suit.

On February 27, 1981, Moses filed a complaint on behalf of Vehrs in the Fourth Judicial District Court, County of Missoula, requesting reimbursement for expenses and damages arising out of the criminal proceedings against Vehrs. Following discovery and a summary judgment motion by defendants, count I of the complaint, which focused on Vehrs’ claim to reimbursement under Section 2-9-305(4), MCA, was dismissed by the district judge in a summary judgment order dated July 14, 1982. Moses appealed the summary judgment order; this Court dismissed the appeal as being premature on November 12, 1982.

On July 19, 1983, following hearing, Count IV of the complaint was dismissed. This order was appealed and affirmed by this Court in Vehrs v. Piquette, Mitchell, et al., (Mont. 1984), [210 Mont. 386,] 684 P.2d 476, 41 St.Rep. 1110. During the ensuing months Vehrs attempted to contact Moses concerning the status of the case, but Moses did not respond. The case was never set for trial.

On July 12,1985, Vehrs filed a legal malpractice action in Missoula County against Moses. The complaint alleged negligence, breach of contract, breach of fiduciary duty, constructive fraud, and willful delay. Some of these acts were alleged to have occurred in Missoula. Defendants filed a motion for dismissal and change of venue to Yellowstone County, the location of Moses’ law office. The district judge granted change of venue by order dated September 3, 1985.

On appeal, the sole issue is whether the District Court erred in granting change of venue to Yellowstone County.

Although the order granting change of venue was entered September 3, 1985, the 1985 amendments to the venue provisions in the Montana Code, effective October 1, 1985, apply to this appeal. See Weiss v. State (Mont. 1986) [219 Mont. 448,] 712 P.2d 1315, 43 St.Rep. 82.

The district judge relied primarily upon Whalen v. Snell (Mont. 1983), [205 Mont. 299,] 667 P.2d 436, 40 St.Rep. 1283, in granting a change of venue. In Whalen, the issue was proper venue where an attorney was suing a former client for non-payment of fees. We found venue to be proper in the county where the attorney’s office was located rather than in the county of defendant’s residence.

Vehrs’ complaint sounds primarily in tort, therefore we look to Section 25-2-122, MCA, which provides proper venue for a tort action to be where defendant resides, or where the tort was committed.

In Whalen, we said: “For the purposes of venue, a tort is committed where there is a concurrence of breach of obligation and the occasion of damages.” 667 P.2d 437, 40 St.Rep. 1285. The damages suffered by Vehrs occurred when the statute of limitations ran on his statutory right to reimbursement for the legal fees he had incurred.

The location of Moses’ alleged breach of obligation is a difficult question. Vehrs’ complaint alleges Moses negligently filed a claim with University of Montana legal counsel in Missoula rather than with the Department of Administration in Helena. Thereafter, Vehrs’ statutory claim for reimbursement was dismissed from the civil suit in Missoula County as not being within the statute of limitations. Vehrs argues Moses’ negligence occurred in Missoula, where Moses pursued Vehrs’ claim for reimbursement. Moses contends any alleged tort occurred in Yellowstone County, where preparation for the case occurred, or in Helena, where the claim should have been filed. We find venue was proper in Yellowstone County and affirm the District Court.

If any recovery of fees could arguably be made under Section 2-9-305(4), MCA, (1978), a claim would first have to be filed with the Department of Administration pursuant to Section 2-9-301, MCA, (1978). Section 2-9-302, MCA, (1978) provides claim filing is governed by statutes of limitation governing other actions. Here, a claim would have to be filed within two years from October 28,1978, pursuant to Section 27-2-211, MCA, (1978).

The concurrence of damages and the alleged breach of duty by Moses occurred on the date the statute of limitations ran. Moses may arguably have been negligent in pursuing the civil action in Missoula. However, there was no harm until the statute of limitations ran on filing a claim in Helena, Lewis & Clark County. If there was a concurrence of damages and breach of obligation, it was when Moses failed to file in Helena and the statute of limitations ran. A tort, if one occurred at all, would have resulted from the inaction in Yellowstone County, the site of Moses’ law office.

Affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES GULBRANDSON, SHEEHY and HUNT concur.


author: MR. JUSTICE GULBRANDSON

text:
    In re the MARRIAGE OF MABEL RINGLING ANDERSON, Petitioner and Appellant and RUSSELL ALVIN ANDERSON, Respondent and Respondent.
    No. 85-403.
    Submitted on Briefs Dec. 19, 1985.
    Decided April 3, 1986.
    Rehearing Denied May 6, 1986.
    717 P.2d 11.

      Lineberger & Harris, Peter S. Lineberger, Kelly M. Hogan, Bozeman, for petitioner and appellant.
    Jardine, McCarthy & Grauman, John Jardine, Whitehall, Berg, Coil, Stokes & Tollefson, Ben Berg, Bozeman, for respondent and respondent.
   MR. JUSTICE GULBRANDSON

delivered the Opinion of the Court.

The wife appeals from a judgment and order of the Madison County District Court dividing the marital estate between the parties. She claims that the District Court abused its discretion by miscalculating the value of certain marital assets and inequitably dividing the marital estate, and that the District Court’s decision was not based on substantial credible evidence. We affirm in part and reverse and remand for additional findings.

Mabel Ringling and Russell Anderson were married on November 12, 1949. Before their separation in May 1981 and their divorce in April 1985, they jointly acquired and operated ranch properties. The down payment on the Harrison Ranch, the first property acquired, was made possible by financial assistance from the wife’s family. The wife’s family later partially financed some additional property and farm equipment for the ranch. The parties repaid loans from the family during the course of their marriage. In 1968, the parties acquired additional properties using jointly held assets. The parties negotiated a sale of these properties in 1976, reserving 191 acres of the Harrison Ranch for their home. The proceeds from the sales were initially deposited into joint accounts and securities. Later, after their separation, the parties agreed to divide the payments equally. The wife has occupied the Harrison Ranch since their separation.

In December 1978, the parties purchased a one-half interest in the “Bruce-Ridder contract.” The husband testified that, when he and the wife separated, they agreed she would have the Harrison Ranch, he would have the Bruce-Ridder contract and that these were about equal in value. The wife disputes both the agreement and the valuation of this contract.

The husband, in partnership with others, entered into two business ventures, the “Cameron Group” investment and the “Blue Anchor Bar and Cafe” in 1980 and 1981. The District Court found that he invested $21,000 of marital funds; that these investments, made only in the husband’s name, have proved unprofitable; and that the husband currently discharges these obligations through monthly payments.

Prior to their separation, the parties made a number of other investments using jointly held funds. Some lost money. Some were profitable. Generally, the parties shared the losses and profits equally.

The District Court excluded the cash value of one-half of the investments in the Cameron Group and Blue Anchor Bar and Cafe, in addition to the wife’s share of her family trust, from the net value of the marital estate. The wife received her family trust shares and the cash value of these investments. The District Court then divided the remaining amount equally, awarded the Harrison Ranch to the wife and awarded the Bruce-Ridder contract to the husband. They shared the income from the ranch sales equally. The husband also received his interest in the Cameron Group and Blue Anchor Bar and Cafe investments, some securities, his current home in Butte, one-half interest in his business partnership, and his personal property. The wife also received securities, her Arabian horse breeding business, her personal property, and some miscellaneous assets.

In order to effect equal distribution, the District Court ordered the wife to pay the husband $82,912.24 or assign to him the equivalent of that sum from the ranch sale contracts.

We address two issues on appeal:

(1) Did the District Court correctly value the marital assets and the total marital estate?

(2) Did the District Court equitably divide the marital estate?

The parties agree on the standard of review.

“. . . In dividing property in a marriage dissolution the District Court has far-reaching discretion and its judgment will not be altered without a showing of clear abuse of discretion. The test of abuse of discretion is whether the trial court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice . . .” [Citations omitted.]

In re Marriage of Perry (Mont. 1985), [217 Mont. 162,] 704 P.2d 41, 43, 42 St.Rep. 1101, 1104.

The wife argues in the first issue that the District Court clearly abused its discretion by accepting the husband’s valuations of assets and the total estate. The evidence shows no substantial difference between the parties valuation of assets claimed by and assigned to the wife. The parties disagree only on the value of the Bruce-Ridder contract, the Cameron Group, the Blue Anchor Bar and Cafe, and the husband’s share of the R & J Amusements business, all claimed by and assigned to the husband.

The District Court expressly valued the Bruce-Ridder contract using a 25% discount of the net value, with the husband’s interest then valued at $100,766.63. The wife argues that a discount in the value is unrealistic when the balance of the contract was due within one year of the trial date, as in this case. The husband testified that applying a discount of 25% is a normal procedure in the purchase and sale of contracts in the secondary market. He also testified that the upcoming balloon payment would probably not be made. As we stated in Marriage of Summerfelt (Mont. 1984), [212 Mont. 332,] 688 P.2d 8, 11, 41 St.Rep. 1775, 1778, the fair market value of a contract rarely, if ever, equals the balance due. Under these circumstances, the District Court did not abuse its discretion when he adopted the husband’s valuation of the Bruce-Ridder contract.

The District Court found that the parties had orally agreed the wife would receive the Harrison Ranch and the husband would receive the interest in the Bruce-Ridder contract and found that these properties were substantially equal in value. The wife contends the District Court abused its discretion in finding the parties reached an agreement on this division of property. The wife’s past financial statements listed the ranch as her property and the husband’s financial statements listed the Bruce-Ridder contract as his property. The wife lived at the ranch and testified that, up to the time of trial, this division had been carried out. During the husband’s testimony on the agreement, she objected only that the testimony was inadmissible as evidence of compromise negotiations. Even ignoring his testimony, the District Court had sufficient evidence with the wife’s testimony and the parties’ financial statements to award the Harrison Ranch to the wife and the Bruce-Ridder contract to the husband. We find no abuse of discretion on this point.

The District Court’s finding that the properties were approximately equal in value is harmless error. Erroneous findings of fact that are not necessary to support the District Court’s decision are not grounds for reversal. Eaton v. Morse (Mont. 1984), [212 Mont. 233,] 687 P.2d 1004, 1010, 41 St.Rep. 1708, 1715. Prior to their separation, the parties together owned the Harrison Ranch, valued at about $253,000 and one-half of the Bruce-Ridder contract, with a face value of about $135,000. Clearly these are not equal in value. However, the value of these assets did not affect which party received them and the lack of equivalent value had no effect on the overall equitable division of property. Thus, this finding, although erroneous, is unnecessary to support the District Court’s decision and is harmless. Therefore, we decline to reverse the decision on this basis.

The financial statements submitted by the parties reflect contradicting value of the Cameron Group and the Blue Anchor Bar and Cafe. The wife asks for a return of one-half of the joint funds invested in these ventures. She questions the District Court’s apparent acceptance of the husband’s valuation of the net value of the properties and its finding that $15,000 and $6,000, respectively, of joint funds were invested initially. She concurs with the District Court’s reduction of the marital estate by one-half of the amount of joint funds invested.

This court will not disturb a district court’s findings unless there is a clear preponderance of evidence against such findings, Cameron v. Cameron (1978), 179 Mont. 219, 227, 587 P.2d 939, 944. In this case, the record shows no support for valuing the joint funds invested in Cameron Group at $15,000. The husband’s financial statement suggests an investment of $23,000 and the wife’s evidence, part of the husband’s tax return, shows a contribution of $20,000. The evidence on the amount of joint funds invested in the Blue Anchor Bar and Cafe is unclear as well. Since the evidence does not support the finding that a total of $21,000 of joint funds were invested in these ventures, we remand to the District Court for new findings on the amount of joint funds invested.

The difference in the parties’ estimates of the total net value of the marital estate, excluding the Bruce-Ridder contract, result from the difference in their estimates of the net values of the Cameron Group, the Blue Anchor Bar and Cafe, and R & J Amusements. The District Court made no specific findings on the value of each of these investments and valued the total marital estate at $1,776,024.49. This finding must be reversed for lack of supporting evidence.

Using the husband’s valuation of their net worth, which did not include $10,000 worth of the wife’s personal property, the total comes to $1,716,024.49. Using the wife’s statements of value, the total net worth comes to $1,832,165.83. Neither figure reflects that used by the District Court, although a mathematical error may explain the difference between the District Court’s and the husband’s figures. This Court cannot determine the net worth from the findings. Given the wide disparity between the parties’ valuations and an apparent mathematical error on the part of the District Court, we reverse and remand for findings which reflect the basis of the net worth.

The wife questions the District Court’s equal division of marital assets in the second issue. She asserts that without her family’s funds and borrowing power, the parties would not have acquired their marital estate and wants a substantially larger share of the estate on this basis.

This Court will not disturb an apportionment made by the District Court “unless there has been a clear abuse of discretion as manifested by a substantially inequitable division of the marital assets resulting in substantial injustice.” In re Marriage of Brown (1978), 179 Mont. 417, 422, 587 P.2d 361, 364. Section 40-4-202, MCA, requires a district court to consider property received by gift or bequest when apportioning marital assets. In re Marriage of Herron (1980), 186 Mont. 396, 401, 608 P.2d 97, 99-100. It goes on to require a District Court to consider the contributions of the non-acquiring spouse when dividing the property. “In determining the exact distribution of this type of marital asset, no set formula can be established as to how the assets should be equitably distributed. Each case has to be decided on its own merits.” Herron, supra. In this case, funds borrowed from the wife’s family during the early years of the marriage were mostly repaid from the parties’ joint funds. Money inherited from the wife’s family was invested in jointly-held property. The record shows the substantial marital estate resulted from the joint efforts of both parties in contributing to the maintenance and appreciation of their property throughout their thirty-five years of marriage. Where a gift or inheritance is not traceable and both parties contribute to the increasing value, “it is inequitable to award the non-acquiring spouse only a fraction of the value of the asset on dissolution.” Herron, 186 Mont. at 404, 608 P.2d at 101. We hold that the District Court’s division of property is an equitable one and shows no abuse of discretion.

We reverse and remand for additional findings consistent with the above opinion.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES MORRISON, SHEEHY and HUNT concur.


author: MR. JUSTICE HARRISON

text:
    GALE WOOD, Plaintiff and Appellant, v. ROBERT BUTOROVICH, Sheriff of Butte-Silver Bow County, et al., Defendants and Respondents.
    No. 85-570.
    Submitted on Briefs Jan. 30, 1986.
    Decided April 3, 1986.
    716 P.2d 608.

      Leonard J. Haxby, Butte, for plaintiff and appellant.
    Robert M. McCarthy, Co. Atty., Butte, for defendants and respondents.
   MR. JUSTICE HARRISON

delivered the Opinion of the Court.

This is an appeal from the decision of the District Court of the Second Judicial District of the State of Montana, in and for the County of Silver Bow, involving the firing of a policeman. Following a hearing before the Butte-Silver Bow Law Enforcement Commission, appellant filed a petition in District Court seeking a review of the commission’s order. The District Court, after consideration, affirmed the order of the Law Enforcement Commission. We affirm.

The sole issue on appeal is whether the Butte-Silver Bow Law Enforcement Commission was properly empanelled when, following a hearing pursuant to Section 7-32-4155, MCA, it decided to discharge the appellant police officer.

Appellant was a police officer of the Butte-Silver Bow Law Enforcement Department. At the time he was dismissed, he had served just short of twelve years as a police officer. On August 11, 1983, appellant was suspended from duty. Shortly thereafter a complaint was filed against him by the Sheriff of Butte-Silver Bow asking for his dismissal and charging him with several offenses, basically of conduct unbecoming an officer in violation of Section 7-32-4155(l)(b), MCA, and of Section 11A of Butte-Silver Bow Ordinance No. 14.

A hearing was held before the Butte-Silver Bow Law Enforcement Commission on September 27, 1983. Members sitting on the commission were R.C. Lemm, chairman; John Lynch, secretary; Rev. Robert A. Craver, member; and F.L. Stradinger, member. On September 28, 1983, all four members of the Butte-Silver Bow Law Enforcement Commission entered findings of fact and conclusions of law, terminating appellant and recommending that the Chief Executive of Butte-Silver Bow carry the termination into effect. On the same date, the Chief Executive permanently terminated appellant in his employment as a police officer.

The Butte-Silver Bow Law Enforcement Department is controlled by the Metropolitan Police Act. That Act provides for a three-member commission with each member to hold office for three years, one member to be appointed annually. The Butte-Silver Bow Ordinance creating its Law Enforcement Commission is Ordinance No. 12. This Ordinance mandates a Law Enforcement Commission of five members, holding office for three years each, with at least one member elected annually at their first meeting in January of each year.

Appellant notes that at the time of his hearing, there were only four commissioners because one of the commissioners had moved to Helena and could not act as he was no longer a resident of Butte-Silver Bow. He then argues that, of the other four members, R.C. Lemm, who was the acting chairman, and Rev. Robert A. Craver, were not duly appointed as commissioners at the time of his hearing. Appellant argues therefore that of the four members trying the case, two of the subject members who tried the case and voted for his dismissal were not properly appointed members of the Butte-Silver Bow Law Enforcement Commission and they acted over the objection of appellant at the hearing.

Respondent argues that Butte-Silver Bow is a local government with self-governing powers. Pursuant to the authority given to self-governing entities, Butte-Silver Bow enacted legislation creating a Law Enforcement Commission with five members, each serving three years. These terms were staggered so that each year one or more of the commissioners’ terms would be concluded. It is important to note here that appellant on this appeal does not contest the authority of Butte-Silver Bow to enact its five-member commission, nor the commission’s authority to act. Further, appellant has not demonstrated in any manner how his substantial rights were prejudiced by a five-member commission rather than a three-member commission as provided for in Metropolitan Police Act.

The evidence at the hearing before the commission consisted of testimony by supervising officers that they found the appellant in an intoxicated condition at a private residence, behind which he had concealed his patrol vehicle. In addition, appellant had failed to report his location to the dispatch center as required by police regulations. Following discovery of the appellant, he was allowed to go home because of his condition, but he returned to duty on his next regularly assigned shift. Thereafter a complaint was filed against him which found him guilty of neglect of duty, misconduct in office, and of conduct unbecoming an officer.

The sole argument of appellant centers around the validity of the appointment of two members of the Butte-Silver Bow Law Enforcement Commission, R.C. Lemm and Rev. Robert Craver. As noted previously, at the time of the hearing only four members of the five-member commission participated because one member had moved outside the Butte-Silver Bow area. Of the other four members, R.C. Lemm was appointed to the commission on May 17, 1977. He was properly appointed and confirmed at that time. At the time of the hearing before the District Court, neither party could find the documentation to show that R.C. Lemm had been reappointed to his position, which should have taken place in 1979 and again in 1982. It was agreed, however, that R.C. Lemm had acted as a commissioner since he was appointed in 1977 in all matters that the commission dealt with during that period. His present term was due to expire in January 1986.

Rev. Robert A. Craver was appointed commissioner in 1982 to replace an individual whose term was to expire in 1985. Appellant here raises the issue of the validity of this appointment because the minutes which reflect the confirmation of the appointment incorrectly refer to Rev. Craver as “Reverend Fargher.” Rev. Craver, however, was in fact properly appointed and empaneled at the time of appellant’s hearing.

Appellant argues that, in the absence of any consistent records showing appropriate appointment of the two commissioners during this period of time, they could not act at the hearing in this case because they were not properly appointed. He notes that since there is no record of their appropriate and proper appointment, the commission was improperly appointed and empaneled at the time of his hearing and any actions on behalf of the commission were a nullity and were void. In support of this argument he cites several old Montana cases: State ex rel. Rusch v. Bd. of County Commissioners of Yellowstone County (1948), 121 Mont. 162, 191 P.2d 670; State ex rel. Nagle v. Stafford (1934), 97 Mont 275, 34 P.2d 372; and Marcellus v. Wright (1921), 61 Mont. 274, 202 P. 381.

In Rusch, this Court’s decision centered upon a now defunct constitutional prohibition against extending the term of a public officer. The Court’s decision was based on an interpretation of this provision, which is not now part of the 1972 Constitution. Stafford also involved interpretation of a constitutional mandate concerning the appointment of the office of the Commissioner of Agriculture. In that case the Court held that the present commissioner could “hold over” until his successor was appointed. Finally, in Marcellus, the Court considered a specific constitutional provision regarding the term of office of a district judge who had left office and then later filed an opinion. Each of these decisions relied upon by appellant concerned specific constitutional provisions that are no longer in the Constitution of the State of Montana since our adoption of the 1972 Constitution.

Respondents’ position concerning R.C. Lemm is that he was properly reappointed and acting in his official capacity at the time of the hearing. It was uncontested that Lemm was still acting in the position to which he had been properly appointed in 1977 and that he had acted in this capacity through the entire period of time since his original appointment. In addition, respondents note that appellant made no objection to R.C. Lemm sitting in appellant’s case at the time of the commission hearing. Nor was any showing made that appellant’s substantial rights had been prejudiced (as required by Section 2-4-704(2), MCA) by having R. C. Lemm sitting as a de facto commissioner in this case. The trial judge so found.

The Kansas Supreme Court addressed a similar situation concerning de facto public officers where technical objections as to the legal status of an officer were raised and the officer was found to be a de facto officer of the county or city. In State v. Miller (1977), 222 Kan. 405, 565 P.2d 228, a coroner had been apparently appointed to the office in 1967 and had taken the oath of office at that time. His last appointment was in January 1969 for a term of four years. There, the court held he had a color of right or title to the office at the time he made an autopsy by reason of his original appointment although his term had expired. The court found that he had acted as a coroner since 1967; that he had qualifications for the office of coroner; and that he was in possession of the office and exercising the duties thereof. In addition, the general public and public authorities believed him to be the coroner and relied upon him as such through his term even though his term had expired. The Kansas court found that these are the classic characteristics of a de facto officer, noting:

“A person who assumes and performs the duties of a public office under color of authority and is recognized and accepted as a rightful holder of the office by all who deal with him is a de facto officer, even though there may be defects in the manner of his appointment, or he was not eligible for the office, or failed to conform to some condition precedent to assuming the office.”

Miller, 565 P.2d at 235. See Olathe Hospital Foundation, Inc. v. Extendicare, Inc. (1975), 217 Kan. 546, 539 P.2d 1. Also see Will v. City of Herington (1968), 201 Kan. 627, 443 P.2d 667; State v. Roberts ( 1930), 130 Kan. 754, 288 P. 761.

We agree with the Kansas court that a de facto officer’s acts are valid insofar as they involve the interest of the public and a third person.

Here, R.C. Lemm, at the least, was acting as a de facto commissioner at the time of the hearing and his actions were valid. We agree with the District Court in its Conclusion of Law No. 6 which held that:

“Even assuming that it was improper for Robert Lemm to sit on the Plaintiff’s hearing, that would not prejudice the substantial rights of the Plaintiff because the other three (3) members who sat on the hearing were properly appointed and impaneled, and as a majority of the Commission the three (3) of them voted to terminate the Plaintiff’s employment.”

As to the objection of appellant to the appointment of Rev. Robert A. Craver, we find no merit. As previously pointed out, the minutes of the meeting of the Butte-Silver Bow Law Enforcement Commission incorrectly reflect that the “Reverend Fargher” was appointed to fill the vacancy left by the resignation of Ron Ashabrenner. Rev. Fargher had, in fact, previously served on the Law Enforcement Commission, and common sense dictates that is why his name was inadvertently substituted for that of Rev. Robert A. Craver. There was submitted at the hearing a letter from the Chief Executive of Butte-Silver Bow to the commissioners requesting the appointment of Rev. Robert A. Craver to fill the vacancy vacated by Ron Ashabrenner, whose term began February 1, 1982, and expired in 1985. This error was pointed out to the District Court. The court found that Rev. Craver was properly appointed and we agree.

The decision of the District Court is affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES GULBRANDSON, WEBER and HUNT concur.


text:
    In re the MARRIAGE OF HARVEY C. SWANSON, Petitioner and Appellant, and NANCY E. SWANSON, Respondent and Respondent.
    No. 85-577.
    Submitted on Briefs Feb. 26, 1986.
    Decided April 3, 1986.
    716 P.2d 219.

      George B. Best, Kalispell, for petitioner and appellant.
    Stephen C. Berg, Kalispell, for respondent and respondent.
   MR. JUSTICE MORRISON

delivered the Opinion of the Court.

Harvey Swanson appeals the August 26, 1985, decree of the Eleventh Judicial District Court, County of Flathead, dissolving the marriage of the parties, distributing the marital estate, establishing child custody and child support, and awarding maintenance to Nancy Swanson. We affirm the decree.

Harvey and Nancy Swanson began living together in 1971 while Harvey was attending medical school. They were married June 2, 1973, and remained together until June of 1983.

During the course of the marriage, Harvey finished medical school, completed his internship and practiced medicine in at least three different locations. In 1980, the couple moved to Kalispell, Montana. In 1981, Harvey took over the practice of a deceased Kalispell doctor. He also works in the emergency room of the Kalispell hospital.

Nancy is college educated in marine biology. In recent years, she has primarily worked in the home and waitressed. A son was born prematurely in the fall of 1975. He has undergone intestinal surgery, open heart surgery and two eye surgeries. He still experiences neurological difficulties, learning disabilities and motor control problems. Since his birth, most of Nancy’s time and energies have been directed toward her son. When her husband left in 1983, Nancy began plans to operate a greenhouse out of her home. The business has not yet opened, but will eventually provide Nancy with a means of support.

Harvey’s medical practice has blossomed. In 1984 his gross income, after paying his employees, was $109,000. He also has Keogh and IRA accounts totaling over $58,000. The medical practice was valued at $127,200; $76,700 of which is goodwill.

In a well-reasoned and detailed decree, the District Judge valued the marital estate as of the date of dissolution at $254,374. After awarding Nancy $48,000, the amount of her inheritance directly traceable to present day assets, the trial judge divided the remainder of the estate equally between the parties. Nancy’s share consists of: 1) a $17,000 lump sum payment from Harvey due September 15, 1985; 2) the unpaid principle balance on the family home, $46,200, which is to be paid by Harvey; and 3) $10,000 annual payments commencing in November of 1987 and running until Harvey’s obligation to Nancy is fulfilled. The decree also awarded Harvey and Nancy joint custody of their son, Colin, with Nancy designated as the primary residential parent. Harvey was ordered to make $890 a month child support payments and $300 a month education fund payments to Nancy. In addition, maintenance payments from Harvey to Nancy were ordered as follows:

1) the monthly $568 payment on the family home through December 15, 1986; and

2) commencing, January 15, 1987, and continuing for five years from the date of the decree, $450 a month maintenance payments. Finally, the trial judge ordered Harvey to pay Nancy $3,400 for attorney’s fees.

In his appeal of the decree, Harvey asserts that the District Judge abused his discretion in the following respects:

1. In requiring Harvey Swanson to pay Nancy Swanson $890 a month child support and $300 a month toward Colin’s education fund.

2. In awarding maintenance to Nancy Swanson.

3. In valuing the marital estate as of the date of dissolution rather than the date of separation.

4. In valuing the good-will of Harvey’s practice at $76,700.

5. In awarding $3,400 in attorney’s fees to Nancy Swanson.

CHILD SUPPORT

Contrary to Harvey’s contentions in his brief on appeal, the statute governing child support is Section 40-4-204, MCA. Section 40-4-202, MCA, relied on by Harvey, pertains to the distribution of the marital estate between the parties.

Section 40-4-204(1), MCA, requires the trial judge to consider the financial resources of the child and the custodial parent, the standard of living the child would have enjoyed had the parties remained married, the physical and emotional condition of the child, his educational needs and the financial resources and needs of the noncustodial parent. These factors were each given in-depth consideration by the trial judge.

The trial judge was well aware of Nancy’s and Colin’s financial resources as their only resources are those awarded Nancy in the dissolution decree.

Since his father’s income exceeds $100,000 a year, Colin would have obviously enjoyed a very high standard of living had his parents remained married. Conclusion of law number three notes the judge’s consideration of this fact.

Findings of fact numbers five and 23 concern Colin’s physical problems and learning difficulties. Finding of fact 23 and conclusion of law number five refer to the special educational needs of Colin.

Finally, the trial judge in findings of fact numbers 19 and 20 notes Harvey’s financial situation. The contingent nature of Harvey’s work in the emergency room is irrelevant. He was earning money from that job at the time of the decree. The trial judge was required to consider that income. Section 40-4-204(1) (e), MCA.

The child support and educational fund awards are clearly supported by the evidence before the trial judge. Colin’s needs are more specialized than the normal ten year old. He requires language therapy and physical therapy. Individualized instruction in various sports which emphasize coordination could also prove helpful. Colin’s father has the financial ability to provide this education for his son. We find no abuse of discretion by the trial judge.

MAINTENANCE

Section 40-4-203, MCA, governs when maintenance should be awarded. Harvey’s major objection appears to be over the length of the award, five years. Section 40-4-203(2), MCA, is thus particularly relevant:

“(2) The maintenance order shall be in such amounts and for such periods of time as the court deems just, without regard to marital misconduct, and after considering all relevant facts including: (a) the financial resources of the party seeking maintenance, including marital property apportioned to him, and his ability to meet his needs independently, including the extent to which a provision for support of a child living with the party includes a sum for that party as custodian;
“(b) the time necessary to acquire sufficient education or training to enable the party seeking maintenance to find appropriate employment.
“(c) the standard of living established during the marriage;
“(d) the duration of the marriage;
“(e) the age and the physical and emotional condition of the spouse seeking maintenance; and
“(f) the ability of the spouse from whom maintenance is sought to meet his needs while meeting those of the spouse seeking maintenance.”

Again, each of these factors was considered by the trial judge. Harvey relies heavily on Nancy’s testimony that in two or three years she will be able to support herself with monies earned through operation of the greenhouse. In fact, Nancy testified that she hoped to be netting $5,000 annually from the greenhouse in two to three years. This testimony was hopeful speculation. Even if Nancy succeeds in this goal, $5,000 a year certainly will not allow Nancy to live within the standard established during her marriage.

A large amount of Nancy’s share in the estate is non-liquid. Over $38,000 of the $48,000 recognized as her inheritance is tied up in her house. The majority of the other lump sum payments have gone to the greenhouse. The $10,000 annual payments do not start until November of 1987. Even then, Nancy’s standard of living will be far lower than that to which she has grown accustomed. The trial judge did not abuse his discretion in awarding Nancy maintenance for five years.

VALUATION OF THE MARITAL ESTATE

Time of Valuation

The general rule provides that the value of the marital estate should be determined at or near the time of dissolution. Vivian v. Vivian (1978), 178 Mont. 341, 344, 583 P.2d 1072, 1074. In In re the Marriage of Wagner (Mont. 1984), [208 Mont. 359,] 679 P.2d 753, 758, 41 St.Rep. 409, 416, however, this Court recognized “that unique circumstances of marital relationships can modify this generally-accepted date of valuation of assets.” The trial judge found no “unique circumstances” in this case to justify valuing the estate as of the date of separation. Neither do we.

Harvey argues that he should not be penalized for investing his money in retirement funds during the separation if Nancy is not penalized for investing her money in the greenhouse. However, Harvey has sources of income other than the retirement funds. Nancy’s sole source of income outside her marriage is the greenhouse. We find no abuse of discretion by the trial judge.

Goodwill

Harvey Swanson also objects to the consideration by the trial judge of the goodwill associated with his medical practice. Harvey contends that his practice has no goodwill. The trial judge valued the goodwill of the practice at $76,700 and included this amount in the marital estate. Once again we find no abuse of discretion.

This Court recognized the existence of the goodwill of a professional practice and included it in the marital estate in In re the Marriage of Hull (Mont. 1986), [219 Mont. 481,] 712 P.2d 1317, 43 St.Rep. 107. In Hull, the trial judge relied on the testimony of a certified public accountant (CPA) hired by the wife in determining the value of the goodwill of an anesthesiologist’s practice. Likewise, here the trial judge relied on the testimony of a CPA hired by the wife. We find no error. The CPA had recent experience in valuing the goodwill of medical practices. She had access to all relevant records from the medical practice. The method of valuation was reasonable and essentially unrebutted. Harvey’s expert on the subject was not even aware that goodwill is recognized in Montana. Nor did he have access to Harvey’s accounts receivable. The CPA’s testimony was “understandable, substantial in nature, and reasonable.” Hull, 712 P.2d at 1323, 43 St.Rep. at 114.

Valuation of the Retirement Funds

Harvey objects to the failure by the District Court to consider his tax obligations on the retirement funds. There is no evidence that Harvey intended to liquidate those funds to pay his marital obligation. The current value of those funds is not affected by taxes. Therefore, there is no error in the Court’s refusal to consider tax consequences at this time.

ATTORNEY’S FEES

Harvey’s last contention is that the trial judge erred in ordering him to pay Nancy $3,400 in attorney’s fees. The order is valid pursuant to Section 40-4-110, MCA.

“Costs — attorney’s fees. The court from time to time, after considering the financial resources of both parties, may order a party to pay a reasonable amount for the cost to the other party of maintaining or defending any proceeding under chapters 1 and 4 of this title and for attorney’s fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding or after entry of judgment. The court may order that the amount be paid directly to the attorney, who may enforce the order in his name.”

The award of attorney’s fees under this statute is “largely discretionary with the District Court, and we will not disturb its judgment in the absence of an abuse of that discretion.” In re the Marriage of Milanovich (Mont. 1985), [215 Mont. 367,] 697 P.2d 927, 929, 42 St.Rep. 436, 439, quoting Talmage v. Gruss (1983), 202 Mont. 410, 412, 658 P.2d 419, 420.

The decision of the District Court is affirmed in all aspects.

MR. JUSTICES GULBRANDSON, HARRISON, WEBER and HUNT concur.


text:
    In re the MARRIAGE OF TERI Di PASQUALE, Petitioner and Respondent, and HENRY GETZ, Respondent and Appellant.
    No. 85-450.
    Submitted on Briefs Jan. 23, 1986.
    Decided April 4, 1986.
    716 P.2d 223.
    J. Robert Riley, Christopher Daly, Missoula, for respondent and appellant.

      Nancy LaFlamme, Montana Legal Services, Measure, Ogle & Ellingson, Darrell S. Worm, Kalispell, for petitioner and respondent.
   MR. JUSTICE SHEEHY

delivered the Opinion of the Court.

Appellant, Henry Getz, appeals from the order of the District Court, Fourth Judicial District, County of Missoula, dated June 6, 1985, granting custody of the parties’ two minor children, namely, Jeremy Albert Getz and Amy Louise Getz to respondent, Teri Di Pasquale, and ordering Getz to pay monthly child support of $155.00 per month per child until each child attains the age of majority or is otherwise emancipated. With regard to the child support, the District Court further ordered that Getz make retroactive payment for the months August, 1982, through April, 1985, with future payments beginning on May 1, 1985. We affirm.

The parties to this action began cohabitation in March, 1977. They lived in the same household, except for brief separations, until August, 1982. During this cohabitation there was born as issue the two minor children named above.

At no time during the period of cohabitation was there any holding out to the public that the parties considered themselves to be husband and wife and the District Court concluded that the parties were not and had never been married.

In awarding custody of the children to Di Pasquale, the District Court found that the minor children had been in the custody of Di Pasquale since the parties’ separation, that Di Pasquale was a fit and proper parent to have custody of the children and that the children were well-behaved and emotionally well adjusted to their home environment.

The District Court also found, after considering that Getz’s earning capacity was $25,000.00 per annum after deductions of Federal and State income tax and social security taxes, that Di Pasquale was entitled to monthly child support payments in the sum of $155.00 per month per child.

Getz raises two issues on appeal:

1. Does the District Court have issue jurisdiction to award retroactive child support which is neither alleged or prayed for in the pleadings nor supported by evidence heard at the time of trial?

2. Is the award of custody to Di Pasquale in the best interest of the children?

Di Pasquale raises one issue on cross-appeal:

1. Did the District Court commit reversible error in determining Getz’s child support obligation?

With regard to the first issue raised by Getz, we hold that the District Court properly awarded Di Pasquale retroactive child support from August, 1982, through April, 1985. In reviewing an award of child support, this Court’s task is to examine the final child support award to determine whether an abuse of discretion by the District Court has occurred. Brown v. Brown (1978), 179 Mont. 417, 587 P.2d 361. If there is no clear abuse of discretion resulting in substantial injustice, the award made by the District Court will not be disturbed. Grenfell v. Grenfell (1979), 182 Mont. 229, 596 P.2d 205.

Getz contends that the District Court had no issue jurisdiction to award retroactive child support because Di Pasquale did not pray for it in her original petition or her amended petition. Getz further contends that no evidence was introduced at trial which showed a desire on the part of Di Pasquale for retroactive child support.

The record indicates that in Di Pasquale’s original petition, she prayed for child support of $200.00 per month per child and in her amended petition she prayed for $250.00 per month per child. Getz answered by means of a denial and a request for joint custody of the children.

With regard to issue jurisdiction, this Court has stated that a “judgment is conclusive only so far as it determines matters which by the pleadings are put in issue.” Sloan v. Byers (1908), 37 Mont. 503, 511, 97 P. 855, 857. Here, we hold that the pleadings properly placed the issue of child support before the District Court. Further, once the issue of child support is properly before the District Court pursuant to the parties’ pleadings, or amendments thereto, the District Court has issue jurisdiction to award retroactive child support from the time of separation of the parties and is never limited to the child support prayed for or agreed to by the parties. In Re the Marriage of Crabtree (1982), 200 Mont. 178, 651 P.2d 29; Hill v. Hill (1982), 197 Mont. 451, 643 P.2d 582. Our holding here is further buttressed by Rule 54(c), M.R.Civ.P. which provides in part: “Except as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings.” The District Court did not abuse its discretion.

Getz next raises the issue of whether the award of custody to Di Pasquale was in the best interest of the children. Getz contends that the District Court erred by failing to make specific findings as to each factor listed in Section 40-4-212, MCA. Getz further contends that the District Court reached its result by applying the “tender years” doctrine.

Section 40-4-212, MCA, provides:

“Best interest of child. The court shall determine custody in accordance with the best interest of the child. The court shall consider all relevant factors including:
“(1) the wishes of the child’s parent or parents as to his custody;
“(2) the wishes of the child as to his custodian;
“(3) the interaction and interrelationship of the child with his parent or parents, his siblings, and any other person who may significantly affect the child’s best interest;
“(4) the child’s adjustment to his home, school, and community; and
“(5) the mental and physical health of all individuals involved.”

This Court has stated that in awarding custody, the District Court must consider the guidelines set forth in Section 40-4-212, MCA, although the Court need not make specific findings on each of the elements. In Re Custody of Ericka M. (Mont. 1984), [208 Mont. 201,] 676 P.2d 231, 41 St.Rep. 267; Speer v. Speer (1982), 201 Mont. 418, 654 P.2d 1001. In the instant case, the District Court addressed the issue of custody in its amended finding of fact No. 4, which provides:

“4. The children are now in the custody of the Petitioner, Teri Di Pasquale, and have been ever since the parties’ separation. The Petitioner is a fit and proper parent to have the custody of the children. The children are well-behaved and emotionally well adjusted to their home environment with the Petitioner.”

A review of the entire record in this case demonstrates that the District Court heard sufficient testimony on each of the relevant factors to support its findings. We will not disturb the findings of the District Court, absent a clear abuse of discretion. Speer, 201 Mont. at 420, 654 P.2d at 1003. We hold the District Court did not abuse its discretion in awarding custody of the minor children to Di Pasquale.

We also find Getz’s contention that the District Court based its custody award on the “tender years” doctrine which this Court expressly rejected in Markegard v. Markegard (Mont. 1980), 616 P.2d 323, 325, 37 St.Rep. 1539, 1541, is based wholly on conjecture. We therefore decline to address the issue further.

Finally, Di Pasquale, on cross-appeal, challenges the sufficiency of the District Court’s grant of child support. In amended finding of fact No. 10, the District Court addressed child support. The finding provides:

“Based upon his income, Respondent is able to pay to Petitioner child support payments in the amount of One Hundred Fifty Five Dollars ($155.00) per month, per child . . . .”

As stated previously in this opinion, Di Pasquale must demonstrate a clear abuse of discretion, resulting in substantial injustice before we will disturb the award made by the District Court.

Di Pasquale contends that the District Court abused its discretion in two respects: first, she claims the District Court made a mistake in determining her income, and second, she claims that the decreed support is so disproportionate to Getz’s income as to be arbitrary.

In amended finding of fact No. 9, the District Court found that Di Pasquale’s income was $11,250.00 per year after taxes. The record, however, does indicate that Di Pasquale’s annual income, after taxes was approximately $9,000.00. Section 40-4-204, MCA, lists as one of the factors the District Court must consider before ordering payment of child support: “the financial resources of the custodial parent.” The intent of Section 40-4-212, MCA, is merely to indicate the factors which the District Court should consider in setting the amount of support to be paid by either the mother or father or both. In this case we find that the District Court did not abuse its discretion even though it was mistaken as to Di Pasquale’s income because after considering all of the relevant factors set forth in Section 40-4-212, MCA, the District Court awarded Di Pasquale $155.50 per month, per child for support “[b]ased upon his income” and not hers.

Di Pasquale next contends that the District Court abused its discretion because the award of child support is disproportionate to his income. In support of her contention, Di Pasquale relies on Carlson v. Carlson (Mont. 1984), [214 Mont. 209,] 693 P.2d 496, 41 St.Rep. 2419, wherein this Court suggested an algebraic formula to assist District Courts in the computation of a child support award. We find no abuse of discretion here because the Carlson formula is just what we said it was in Carlson, a suggested guideline and nothing more.

Getz urges this Court to remand this case on the issue of sufficiency of the amount of child support for further hearing based on change of circumstances. We can only assume that Getz believes there has been a change of circumstances that would somehow entitie him to reduction in child support. The proper procedure for such action, however, is a motion for modification of support pursuant to Section 40-4-208, MCA.

We affirm the District Court.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, WEBER and MORRISON concur.


author: MR. JUSTICE MORRISON MR. JUSTICE HUNT,

text:
    RICHARD A. COLE, Claimant and Appellant, v. GREYHOUND LINES, INC., Employer-Defendant and Respondent.
    No. 85-283.
    Submitted Feb. 20, 1986.
    Decided April 8, 1986.
    716 P.2d 611.
   MR. JUSTICE MORRISON

delivered the Opinion of the Court.

Claimant, Richard A. Cole, appeals the May 10, 1985, order of the Workers’ Compensation Court dismissing his petition for an emergency hearing on the issue of whether claimant’s biweekly benefit payments should have been reinstated. We affirm the order of the court.

Cole was a bus driver for Greyhound. In 1978, he injured his back and leg while attempting to lift a bag from the cargo hold of a bus. Cole filed a Workers’ Compensation claim. In its order of May 11, 1983, the Workers’ Compensation Court declared Cole permanently totally disabled. The court further ordered that the parties attempt to agree on Cole’s life expectancy, and the amount of an annuity which would reduce Cole’s benefits to present value. If the annuity was over $48,500, Greyhound was ordered to pay it in a lump sum to enable Cole to invest in a business offering a reasonable likelihood of success. If the annuity was less than $48,500, Greyhound was to pay biweekly benefits.

On June 2, 1983, Cole requested a rehearing challenging the court’s determination that his biweekly permanent total disability benefits must be reduced to present value when converted to a lump sum. The court denied Cole’s request for a hearing on June 9, 1983. The parties agreed that Cole’s life expectancy was 24 years and agreed to a payment. Cole was paid a lump sum of $60,170.69. He signed a satisfaction of judgment on July 14, 1983. The case was not appealed.

On November 1, 1984, this Court decided Willis v. Long Construction Co. (Mont. 1984), [213 Mont. 203,] 690 P.2d 434, 41 St.Rep. 2050. In Willis, we held that a lump-sum award of Workers’ Compensation benefits cannot be discounted to present value. On November 30, 1984, Cole filed a petition for an emergency hearing to require Greyhound to reinstitute biweekly benefit payments on the basis of this Court’s decision in Willis. On May 10, 1985, the Workers’ Compensation Court dismissed Cole’s petition in an order grounded on res judicata.

The issue on appeal is whether the doctrine of res judicata bars Cole from relitigating his lump-sum award based upon a subsequent change in the law regarding lump-sum awards.

Res judicata is a judicially-created doctrine which literally means a matter adjudged. A “final judgment rendered upon the merits, without fraud or collusion, by a court of competent jurisdiction, is conclusive of causes of action and of facts or issues thereby litigated.” 46 Am.Jur.2d Judgments Section 394 (1969). We have stated that res judicata is applied to uphold the generally recognized public policy that there must be some end to litigation. Wellman v. Wellman (1982), 198 Mont. 42, 46, 643 P.2d 573, 576. While Workers’ Compensation actions serve a different social policy than other civil litigation, that of providing benefits, there is still a need for finality. Moen v. Peter Kiewit & Sons’ Co. (1982), 201 Mont. 425, 436, 655 P.2d 482, 487. It follows that res judicata applies to decisions of the Workers’ Compensation Court.

Several exceptions to the doctrine of res judicata have been codified in the Restatement (Second) of Judgments Section 28 (1982). Appellant argues that because of our decision in Willis, supra, the second of those exceptions should be applied to this case.

That exception is set forth as follows:

“Section 28. Exceptions to the General Rule of Issue Preclusion. Although an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the issue in a subsequent action between the parties is not precluded in the following circumstances:
“(2) The issue is one of law . . . (b) a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws . . .”

The Restatement suggests that relitigation of a previously resolved issue in a subsequent action is warranted when the law changes between the original and subsequent action.

The authors of the Restatement at page 278 provide the following example to illustrate the intended application of Section 28 (2)(b) of the Restatement (Second) of Judgments.

“4. A, a non-profit organization, brings an action against B, the tax commissioner, for a refund of property taxes on the ground that it is exempt as a charity. The court gives judgment for B, adopting a narrow definition of the charitable exemption. Shortly after, a higher court of the same jurisdiction grants a property tax refund to C, an organization quite similar to A, and in doing so formulates a much broader definition of the exemption. In a subsequent action by A against B for a refund of property taxes paid for the following year, A is not precluded from asserting that it is entitled to the charitable exemption. It does not matter that the nature of A’s activities has not changed since the first action.”

The tax payer in the example did not seek to change his adverse result based upon the new holding. Instead, he sought to apply the new interpretation to a subsequent tax year. This is the kind of result effected by Restatement Section 28(2) (b).

We refuse to apply the exception stated in Section 28(2) of the Restatement to the case presently before us. No “subsequent action” has been filed. The doctrine of res judicata bars the reopening of claimant’s original case. The litigation has ended. An award has been paid and an acknowledgment of satisfaction of judgment has been signed. The parties are entitled to a final judgment.

According to Wheeler v. Carlson Transport (Mont. 1985), [217 Mont. 254,] 704 P.2d 49, 42 St.Rep. 1177, a final judgment of the Workers’ Compensation Court can only be reopened upon one of two conditions: 1) the benefits may be changed, reviewed, diminished or increased only when “the disability of the claimant has changed.” Section 39-71-2909, MCA; and 2) a decision may be vacated and a new trial granted when the applicant’s rights are materially affected by newly discovered evidence which could not, with reasonable diligence, have been discovered in time for the trial. Section 25-11-102(4), MCA. Claimant fails to allege the existence of either of these conditions.

For the reasons set forth above, the decision of the trial judge is affirmed.

MR. CHIEF JUSTICE TURNAGE and MR. JUSTICES HARRISON, GULBRANDSON and WEBER concur.

MR. JUSTICE HUNT,

dissenting:

The majority holds that the exception to res judicata found in the Restatement (Second) of Judgments Section 28 (1960) does not apply in this case. I cannot agree. The situation in this case falls within the purview of the Restatement exception. Restatement (Second) of Judgments Section 28 (1960) states:

“Section 28. Exceptions to the General Rule of Issue Preclusion.
“Although an issue is actually litigated and determined by a valid and final judgment, and the determination is essential to the judgment, relitigation of the issue in a subsequent action between the parties is not precluded in the following circumstances:
“(2)(b) a new determination is warranted in order to take account of an intervening change in the applicable legal context or otherwise to avoid inequitable administration of the laws . . .

When Cole filed his claim, the Workers’ Compensation Court decided a number of factual issues. The court found that Cole’s disability was permanent and total. The court further found that Cole was entitled to a conversion of his biweekly benefits to a lump sum for the purpose of capitalizing a new business offering a reasonable likelihood of success. As appellant concedes, res judicata bars relitigation of these factual determinations. However, the decision to reduce Cole’s lump-sum award to present value was purely one of law, no factual determinations were made. The court decided that as a matter of law Cole’s lump-sum payment must be reduced to its present value. Subsequent to that decision, and in a different case, we held that lump-sum awards cannot be discounted to present value. Therefore, a new determination is warranted in order to take account of that intervening change in the applicable legal context.

Further, a new determination is warranted in order to avoid inequitable administration of the laws. The reduction of a lump-sum award to its present value is inequitable. In Hall v. State Compensation Insurance Fund (Mont. 1985), [218 Mont. 181,] 708 P.2d 234, 42 St.Rep. 1502, we held that the 1972 Mont. Const., Art. II, Section 16 as applied to the Workers’ Compensation Act gives workers a right to be made whole. In 1975, when the legislature considered and adopted an amendment eliminating the statutory requirement that lump-sum awards be discounted, abundant testimony was elicited that a worker who received his benefits in a lump sum could only be made whole by receiving the lump-sum payment undiscounted to present value.

Cole’s undiscounted lump-sum payment would have been $217,152. The payment after discount was $75,670, a little over one-third of the undiscounted amount. His right to be made whole warrants reconsideration of this issue. In the interest of equitable administration of the laws, relitigation of appellant’s claim to biweekly benefits is justified.

Instead of applying an analysis such as that presented, the majority bases its decision on the language of the Restatement section which states that relitigation is not precluded “in a subsequent action between the parties.” The majority’s narrow interpretation of the phrase, “in a subsequent action,” is inconsistent with both the spirit of Workers’ Compensation law and the intention of the Restatement.

As the majority admits, Workers’ Compensation actions serve a different social policy than other types of litigation, that of providing benefits. In cases such as this, where liability is not contested, the litigants seek a resolution of their disputes based upon the knowledge that the very purpose of the Workers’ Compensation Act is to provide benefits. Yet Cole received merely a fraction of the amount he is now known to have been entitled to under the Act. Granting Cole’s petition for emergency rehearing would uphold the policy behind the Workers’ Compensation Act.

Further, the phrase, “in a subsequent action,” should not be construed so narrowly as to frustrate the very intention of the framers of the Restatement exception. The authors of the Restatement include the following illustration of the application of Section 28:

“5. A, an employer, brings an action against B, a labor union, to enjoin a strike in breach of a collective bargaining agreement. The action is dismissed on the ground that a statute deprives the court of jurisdiction to issue such injunctions. In a subsequent case involving two different parties, the decision in A v. B is overruled and jurisdiction to enjoin such a strike is sustained. A is not precluded from asserting jurisdiction in an action to enjoin B from continuing the same strike, from engaging in another strike in breach of the same contract, or from engaging in a strike in breach of a subsequent contract.” (Emphasis added.)

Restatement (Second) of Judgments Section 28 at 278-9.

As this example illustrates,the “subsequent action” referred to in the Restatement includes the same parties seeking a different result in a continuing situation where there has been no change in the facts, but a significant change in the law. Just as an employer is not precluded, by a previous court ruling, from returning to court to enjoin the same ongoing strike, so too should Cole not be precluded, by a previous court ruling, from returning to court to obtain a redetermination of his compensation award.

I cannot agree with the majority’s holding that appellant’s petition for an emergency rehearing constitutes a “subsequent action,” thereby precluding application of Section 28 of the Restatement.

MR. JUSTICE SHEEHY concurs in the foregoing dissent.