author: KERN, Circuit Court Judge. AMUNDSON, Justice

text:
    2001 SD 37
    The ESTATE OF Douglas Leroy TROBAUGH, Deceased, By and Through Kendra TROBAUGH, Personal Representative of the Estate, Plaintiff and Appellant, v. FARMERS INSURANCE EXCHANGE, Defendant and Appellee. The Estate of Douglas Leroy Trobaugh, Deceased, By and Through Kendra Trobaugh, Personal Representative of the Estate, Plaintiff and Appellant, v. Michael Thomas Sylvester, Thomas H. Juffer, and Jefferson Township, a political subdivision of Union County, South Dakota, Defendants and Appellees. The Estate of Douglas Leroy Trobaugh, Deceased, By and Through Kendra Trobaugh, Personal Representative of the Estate, Plaintiff and Appellant, v. Amy Sylvester, Defendant and Appellee.
    Nos. 21032, 21203 and 21355.
    Supreme Court of South Dakota.
    Argued Feb. 15, 2000.
    Nos. 21032, 21203 Considered on Briefs March 21, 2000.
    No. 21355 Considered on Briefs Sept. 19, 2000.
    Decided March 21, 2001.
    Rehearing Denied May 1, 2001.

      Michael J. McGill, Beresford, for plaintiff and appellant.
    Kristine L. Kreiter of Woods, Fuller, Shultz & Smith, Sioux Falls, for defendants and appellees.
   KERN, Circuit Court Judge.

[¶ 1.] Estate of Trobaugh (Estate) filed three separate suits seeking damages resulting from Douglas Trobaugh’s (Tro-baugh) death in an automobile accident.

APPEAL # 21302

[¶ 2.] The first suit against Farmers Insurance Exchange (Farmers) sought a declaration that the driver of the car, Mike Sylvester (Mike) was a permitted driver of the 1986 Ford Taurus involved in the fatal November 30, 1996 accident. Estate contended that although the car was titled and insured in Thomas Juffer’s (Juffer) name, coverage for the accident was available under the omnibus clause of Juffer’s policy. However, Farmers sought summary judgment contending there were no genuine issues of material fact since Mike had neither express nor implied permission from Juffer to drive the Taurus and was not a permitted driver. The trial court granted summary judgment in favor of Fanners. We reverse.

APPEAL # 21203

[¶ 3.] The second suit brought as a result of this accident was against Mike, Juffer, and Jefferson Township. Estate alleged Juffer negligently entrusted the Taurus to Mike. Estate also moved to amend its complaint to add Amy Sylvester (Amy), Mike’s wife, as a defendant for negligently entrusting the vehicle to Mike. The trial court granted Juffer’s motion for summary judgment and denied Estate’s request to amend its complaint. We reverse.

APPEAL # 21355

[¶ 4.] This suit arose when Estate filed a separate action against Amy for negligent entrustment. Amy did not answer the complaint. Instead, she moved for dismissal under SDCL 15 — 6—12(b)(5), or in the alternative, summary judgment based on matters outside of the pleadings. The trial court granted Amy’s motion. We reverse.

CONSOLIDATION

[¶ 5.] These actions were filed from one settled record, and raise similar issues and therefore, for purposes of judicial economy, are hereby consolidated.

FACTS

[¶ 6.] Juffer, of Yankton, South Dakota, provided vehicles for his adult children, which were titled and insured in his name. His daughter Amy received a 1988 Nissan Sentra. Amy was listed as the permitted driver and named insured although the vehicle was titled in Juffer’s name. In June 1995, Juffer provided a 1986 Honda Civic to his son-in-law Mike for his use in commuting to work from Sioux City, Iowa, to Jefferson, South Dakota. The vehicle was titled in Juffer’s name and insured by him, but no permitted driver was ever listed on the policy.

[¶ 7.] In the spring of 1996, Mike blew up the Honda’s engine and was without transportation. In March, Mike admitted to Amy that he did not have a valid driver’s license because the State of Iowa had revoked his license for alcohol related offenses. Estate produced evidence that Mike was a problem drinker and that this was well known to Amy and a source of friction in their relationship.

[¶ 8.] On July 16,1996, Mike purchased a 1986 Ford Taurus to replace Juffer’s Honda. Juffer told Mike to keep the vehicle since he had three vehicles at the time and did not need it. Mike informed Juffer that he did not have a valid driver’s license and could not title or insure the car in his own name. Juffer testified that he then accepted the car but told Mike that he could no longer drive the Taurus or any of Juffer’s vehicles. Mike and Amy stated in their depositions that they knew and understood this prohibition.

[¶ 9.] Later in July, Juffer transferred physical custody of the Taurus to Amy. In August, Juffer gave Amy express permission to use the Taurus in Yankton if she needed it, but required her to obtain permission from him before taking the vehicle out of town. Mike did not have a car at this time and was working four miles outside of Yankton. Amy was working in Yankton and needed her car to get to work and take their baby to the day care. In August Juffer also titled and insured the Taurus in his own name. Again, no designated operator was ever listed on the policy-

[¶ 10.] Juffer testified in his deposition that at the time of the transfer he told Mike not to drive the vehicle. Despite this alleged prohibition Mike admitted that he took the vehicle on at least three occasions, including the date of the accident. Amy admitted that she knew Mike had used the vehicle on one occasion prior to the accident. Whether Juffer knew of Mike’s use of the Taurus is in dispute.

[¶ 11.] On November 27, 1996, Amy’s 1988 Nissan was in the shop for repairs. She and Mike had been invited to his father’s home in Sioux City, Iowa, for the Thanksgiving holiday. She called Juffer and obtained permission to take the Taurus to Sioux City for the weekend.

[¶ 12.] On the morning of November 30, 1996, Amy went shopping with her mother-in-law. She left the Taurus in the driveway with the keys in the ignition so that it could be moved to accommodate other cars if necessary. Trobaugh, Mike’s friend of several years, stopped by the house with a six-pack of beer and asked for a ride to Jefferson, South Dakota. Mike agreed to take him, and the two left together in the Taurus. Mike admitted that he took the Taurus without getting permission from anyone.

[¶ 13.] Instead of going immediately to Jefferson, Mike and Trobaugh drove around Sioux City and finished the beer. They stopped at the Town House Bar, ate lunch, and continued to drink. At 12:30 p.m., they proceeded to the Derby Bar where they played pool and drank. At 7:30 p.m. Mike and Trobaugh left for Jefferson, taking the back roads.

[¶ 14.] Mike missed a turn on a township road southeast of Jefferson. The Taurus slid off the road, rolled on its top, and landed in a drainage ditch containing two feet of water. Mike was able to get out of the Taurus but Trobaugh died in it as a result of drowning. Seven hours after the accident Mike’s blood alcohol content was .155.

[¶ 15.] From the time of its purchase until the date of the accident, the Taurus’ odometer revealed that it had been driven approximately 4,635 miles. Juffer had used it seven or eight times and could account for 1,000 miles. Amy’s usage accounted for 1,200 miles, leaving 2,435 miles unexplained. Estate produced evidence that Mike was seen driving the Taurus on many occasions during the months of July through November. David Trobaugh, brother of the decedent, stated in his affidavit that on two occasions in the summer of 1996, Mike stopped by to pick up his brother and that Amy was a passenger in the car.

STANDARD OF REVIEW

[¶ 16.] The standard of review of a trial court’s grant of a motion for summary judgment is well settled and was recently reiterated in Estate of Shuck v. Perkins County, 1998 SD 32, ¶ 6, 577 N.W.2d 584, 586:

Summary judgment is authorized “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact, and that the moving party is entitled to judgment as a matter of law.” SDCL 15-6-56(c). We will affirm only when there are no genuine issues of material fact and the legal questions have been correctly decided. Bego v. Gordon, 407 N.W.2d 801, 804 (S.D.1987). All reasonable inferences drawn from the facts must be viewed in favor of the non-moving party. Morgan v. Baldwin, 450 N.W.2d 783, 785 (S.D.1990). The burden is on the moving party to clearly show an absence of any genuine issue of material fact and an entitlement to judgment as a matter of law. Wilson v. Great N. Ry. Co., 83 S.D. 207, 212, 157 N.W.2d 19, 21 (1968).

[¶ 17.] When reviewing a grant of summary judgment, we are not bound by the trial court’s 'factual findings, but, rather, must undertake an independent review of the record. Walz v. Fireman’s Fund Insurance Co., 1996 SD 135, 556 N.W.2d 68.

[¶ 18.] In these consolidated cases, the trial court granted summary judgment in favor of Farmers finding no coverage under the omnibus clause for Mike. Estate sued both Juffer and Amy under the theory of negligent entrustment. The trial court granted summary judgment in the action against Juffer and demuired the action against Amy.

ANALYSIS AND DECISION Appeal # 21032

The Suit Against Farmers Insurance For Coverage Under the Omnibus Clause.

[¶ 19.] At the time of the accident, Juffer carried a liability insurance policy through Farmers on the Taurus. The policy defined an insured person as:

1) You or any family member;
2) Any person using your insured car.

The policy excluded from coverage any person who used the vehicle without having sufficient reason to believe that the use was with the permission of the owner.

[¶ 20.] The omnibus insurance clause in South Dakota is codified at SDCL 32-35-70 and states in pertinent part:

An owner’s policy of liability insurance referred to in § 32-35-68 shall insure the person named therein and any other person as insured, using any insured vehicle or vehicles within the express or implied permission of the named insured, against loss from liability imposed by law for damages arising out of the ownership, maintenance or use of the vehicle or vehicles within the United States of America.

[¶ 21.] The operation of an omnibus clause creates liability insurance in favor of persons other than the named insured to the same degree as the insured. To trigger coverage under this policy, Estate must establish that Mike was operating Juffer’s vehicle with either expressed or implied permission. Estate specifically contends that there is a legitimate inference that Mike had permission from Juffer to use the vehicle based upon their close relationship and past conduct.

Express Permission

[¶ 22.] “To constitute express permission, the evidence must be of an affirmative character, directly, and distinctly stated, clear and outspoken, and not merely implied or left to inference.” American Family Ins. Group v. Howe, 584 F.Supp. 369, 372 (1984)(quoting Hinton v. Indemnity Insurance Company, 175 Va. 205, 8 S.E.2d 279, 283 (1940)). In this case, Juffer, Mike and Amy testified that Juffer expressly prohibited Mike from driving any of his vehicles. Estate presented no evidence to the contrary and has failed to establish the existence of express permission. Accordingly, there can be no coverage under the omnibus clause unless Juf-fer gave implied permission to Mike to use the car.

Implied Permission

[¶ 23.] To establish the existence of implied permission or consent, there must be a “showing of a course of conduct or practice known to the owner and acquiesced in by him that would lead to an application of permission for a particular venture.” Western Casualty & Surety Co. v. Anderson, 273 N.W.2d 203, 205 (S.D.1979). An owner’s failure to object to the use of a vehicle will not in and of itself be deemed consent. Id. The evidence must establish that under all of the circumstances a course of conduct or practice existed which Juffer knew or acquiesced in which would lead to the clear inference that Mike had permission to use the vehicle on the evening in question.

Implied permission arises upon consideration of such factors as the past and present conduct of the insured, relationship between the driver and the insured, and usage and practice of the parties over an extended period of time prior to the use in question.
[T]he usage and practice of the paiTies must be such that would indicate to a reasonable mind that the driver had the right to assume permission under the particular circumstances.

Howe, 584 F.Supp. at 372.

[¶ 24.] When examining the nature of the relationship between Juffer and Mike, the Court must give weight to the relationship of the parties and the probabilities which that relationship would normally generate. See 12 Couch on Insurance, 2d (rev ed) § 45:352 at 699 (1981). Generally, if the relationship is one of blood or of principal and agent, weaker evidence will support a finding of permissive use. Elkinton v. California State Auto. Assn., Interstate Ins. Bur., 173 Cal.App.2d 338, 343 P.2d 396 (1959).

[¶ 25.] In this case, the relationship between the parties is close, that of father-in-law to son-in-law. The issues involving the past and present conduct of the insured and the usage or practice of the parties over time are closely related. When examining Juffer’s past conduct and practice it is clear that he provided Mike with the Honda to drive as his own. Juffer titled and insured the Honda in his own name, but did not list a permitted driver. Mike rendered the Honda inoperable and bought the Taurus as a replacement car for Juffer. The evidence established that Juffer told Mike to keep the car, because he did not need it. When Mike informed Juffer that he did not have a driver’s license and could not title or insure the vehicle in his own name, Juffer took possession of the Taurus, licensed and titled it in his own name, and, following his prior course of conduct, did not list a permitted driver. Juffer stored the Taurus at Mike and Amy’s home and informed Mike that he could not drive it. He required Amy to get permission from him before she took it out of town. The circumstances strongly suggest that the usage and practice of the parties remained constant. Juffer provided, licensed and titled the vehicle, and delivered it to Mike’s home where he had regular and immediate access to it for his own use. Juffer did not list a permitted driver on the insurance policies for the Honda or Taurus although he always listed Amy and his other children as the drivers of the automobiles he supplied for each of them. Furthermore, after the car was delivered to Mike’s residence it was driven 4,635 miles before the accident. Excluding the miles placed on the car by Amy and Juffer there were 2,435 unexplained miles on the car. No one else but Mike had access to the vehicle.

[¶ 26.] Viewing the evidence in the light most favorable to the non-moving party, a fair inference can be drawn that Juffer knew Mike was employed four miles outside of town, that Mike could not license and title the car in his own name, and that he needed a vehicle. Indeed when initially presented with the Taurus, Juffer refused to accept it. Only after Mike told him he could not license and insure the vehicle in his own name did Juffer take possession, title and insure the vehicle, and return it to Mike’s residence. Thus, material issues of fact exist as to whether Juffer, in light of his knowledge of Mike and Amy’s situation, by his own actions impliedly consented to Mike’s use of the vehicle in making it readily accessible for his use. Thus, the trial court’s grant of summary judgment is reversed and the case remanded for trial.

[¶ 27.] Estate also claims that coverage is available under the omnibus clause claiming Amy, as permittee, had the authority to permit Mike to use the car. This Court, in State Farm Mut. Auto. Ins. Co. v. Ragatz, 1997 SD 123, 571 N.W.2d 155, had occasion to review the scope of a permittee’s ability to lend an insured’s vehicle to a third party. In Ragatz, David McGaugh (McGaugh) had an automobile insurance policy issued by State Farm covering his 1976 Chevrolet pickup. McGaugh gave his adult son, Carl, permission to use the vehicle. For years McGaugh instructed Carl not to allow third parties to use his cars. Carl allowed his roommate, Ragatz, to drive the pickup. Ragatz had an accident, injuring two passengers in the vehicle. The passengers brought suit against Ragatz for injuries sustained as a result of the accident. State Farm filed a declaratory judgment action seeking a determination that Card’s insurer, Farm and City, was responsible for providing coverage for the accident. The trial court granted State Farm’s motion for summary judgment and we affirmed, finding that

If the owner of the car expressly forbids the permittee to lend his car to another, but the permittee nevertheless allows the second permittee to drive the car in violation of the named insured’s express orders, the insurer is not hable while the second permittee is driving on the theory that a prohibition against delegation is a restriction upon the use of the vehicle. [Thus, the second permittee] is not an omnibus insured.

Ragatz, 1997 SD 123 at ¶ 18, 571 N.W.2d at 158.

[¶ 28.] Estate submitted several affidavits in support of its contention that Amy knew Mike was driving the Taurus. In his affidavit, Brad Kieler alleged that he saw Mike drive the Taurus to work and to visit friends on numerous occasions and that it was common to see Mike drive the Taurus during the relevant time frame. David Trobaugh submitted an affidavit stating that he observed Mike on two more occasions after July 1, 1996 driving the vehicle when Amy was the passenger. If Amy gave Mike permission to drive the vehicle, this would be a material deviation from the objectives of the initial permission Juffer granted her, that she was allowed to use the car but Mike was not. It would preclude coverage for Mike.

[¶ 29.] In summary, it is undisputed that Juffer never gave express permission to Mike to operate the Taurus at any time, much less on the date of the accident. Additionally, if Amy authorized or acquiesced in Mike’s use of the vehicle, this use would be a material deviation from the restrictions placed upon the use of the vehicle by Juffer, which would prohibit coverage under the omnibus clause. Accordingly, the only remaining basis for coverage under the omnibus clause is a finding that Juffer, by his own actions, impliedly consented to Mike’s use of the Taurus. Because material issues of fact exist as to this precise question, the summary judgment is reversed and the case is remanded for trial.

The Suits Against Thomas Juffer and Amy Sylvester for Negligent Entrustment

Appeal # 21203

Thomas Juffer

[¶ 30.] This Court has recognized negligent entrustment as a valid cause of action in South Dakota. Colonial Ins. Co. of Cal. v. Lundquist, 539 N.W.2d 871, 872 (S.D.1995). “Negligent entrustment is an action to hold the owner of an insured motor vehicle liable for his negligence in acts arising out of the ownership of the vehicle.” Lundquist, 539 N.W.2d 871 at 876. “An owner of a vehicle may be guilty of negligence if he permits an incompetent, inexperienced and knowingly reckless and accident prone person to drive his vehicle.” Stover v. Critchfield, 510 N.W.2d 681, 684 (SD 1994) (citing Robe v. Ager, 80 S.D. 597, 129 N.W.2d 47, 51 (S.D.1964); see also Arbach v. Gruba, 89 S.D. 322, 232 N.W.2d 842, 846 (S.D.1975)). This doctrine applies to situations where an owner negligently permits another to drive his vehicle. Permission, either express or implied, is a prerequisite to a suit for negligent entrustment.

[¶ 31.] From our analysis of the omnibus clause claim, we have determined that there is no evidence that Juffer gave Mike express permission to drive the vehicle. However, there is a material question of fact as to whether Juffer gave implied permission to Mike to drive the vehicle. If a jury determines that implied permission existed, then the other requirements of negligent entrustment can be addressed. Accordingly, the trial court’s grant of summary judgment in favor of Juffer is reversed.

Appeal # 21355

Amy Sylvester

[¶ 32.] In the suit against Amy, Estate asserted that Amy negligently entrusted the Taurus to Mike. Estate argued that Amy had actual control over the Taurus via Juffer’s express consent.

[¶ 33.] South Dakota case law does not address the precise issue of who may be sued for a claim of negligent entrustment. See, Robe, 80 S.D. 597, 129 N.W.2d 47; Western Casualty, 273 N.W.2d 203; Great Central Ins. Co. v. Roemmich, 291 N.W.2d 772 (S.D.1980); Lundquist, 539 N.W.2d 871. Other courts considering this question have looked to the Restatement (Second) of Torts § 308 (1965) for guidance. That section provides:

It is negligence to permit a third person to use a thing or to engage in an activity which is under the control of the actor, if the actor knows or should know that such person intends or is likely to use the thing or to conduct himself in the activity in such a manner as to create an unreasonable risk of harm to others.

Comment (a) to § 308 interprets the phrase under the control of the actor:

The words “under the control of the actor” are used to indicate that the third person is entitled to possess or use the thing or engage in the activity only by the consent of the actor, and that the actor has reason to believe that by withholding the consent he can prevent the third person from using the thing or engaging in the activity.

See also, Mills v. Crone, 63 Ark.App. 45, 973 S.W.2d 828 (1998); Vilas v. Steavenson, 242 Neb. 801, 496 N.W.2d 543 (1993); Neary v. McDonald, 956 P.2d 1205 (Alaska 1998); Zedella v. Gibson, 165 I11.2d 181, 209 Ill.Dec. 27, 650 N.E.2d 1000 (Ill 1995).

[¶ 34.] Courts interpreting this language are split over the importance of actual ownership in a negligent entrustment case. The Nebraska Supreme Court determined that a son who allowed a Mend to drive his father’s vehicle could not be sued for negligent entrustment since he was not the owner of the vehicle. Vilas v. Steavenson, 496 N.W.2d at 550. However, the Restatement language regarding “under the control of the actor” has also been interpreted as not necessarily requiring “ownership” per se, but instead requiring proof that the “defendant had sufficient control of the vehicle, and negligently supplied it to an incompetent third party;” that in essence “the defendant must have a greater right of possession or control than the ‘entrustee.’ ” Neary v. McDonald, 956 P.2d at 1209; see also, Mills v. Crone, 973 S.W.2d at 831 (“one is not liable for negligent entrustment of a thing if he has no right to control it.”). “The defendant must have the power to permit or prohibit the third party from using the vehicle.” Neary v. McDonald, 956 P.2d at 1209 (citing Neale v. Wright, 322 Md. 8, 585 A.2d 196, 201 (1991)). The Neale court explained this power:

[I]n order for [defendant] to ... be liable under a negligent entrustment theory, [defendant] had to have the power to permit or prohibit [entrustee] from using the vehicle. That power could emanate from a superior right to control the operation of the car, or from a special relationship between the “entrustor” and the driver, such as a parent-child relationship.

Neale, 585 A.2d at 201.

[¶ 35.] In the present case, Amy was given permission to operate the Taurus that was owned, licensed and insured by her father. Amy was allowed to use the vehicle, which was stored at her residence, providing her immediate access and physical possession of the car. Although Amy was not the legal owner of the Taurus, and there were some restrictions placed on her use of it, she was given permission to use the vehicle basically as if it was her own. It is reasonable to conclude that she had sufficient control of the vehicle to entrust it to another.

[¶ 36.] Because Amy had the ability to entrust the vehicle, it must be determined whether Amy gave Mike permission to use the car and if she was aware of his problems with drinking and driving. Amy admitted in her deposition that she knew Mike had used the car on at least one occasion prior to the accident. Estate submitted an affidavit that Mike was observed driving the car with Amy as the passenger on two occasions. Additionally, Amy left the keys in the car the day of the accident. A jury could infer from this action that Amy was giving Mike permission to use the car.

[¶37.] Regarding Amy’s knowledge of Mike’s proclivity for drinking and driving, Estate submitted affidavits establishing that Mike was a problem drinker and that he was prone to drink and drive. Additionally, Amy admitted that Mike told her he did not have a valid driver’s license because the State of Iowa had revoked it for alcohol related offenses. There exists a genuine issue of material fact as to Amy’s knowledge that Mike would become intoxicated and drive the vehicle in a manner creating an unreasonable risk of harm to others. Accordingly, the summary judgment is reversed.

CONCLUSION

[¶ 38.] For the previously stated reasons, we reverse the trial court’s grant of summary judgment in #21032 Estate of Trobaugh v. Farmers Insurance Exchange; #21203 Estate of Trobaugh v. Michael Thomas Sylvester, Thomas H. Juffer, and Jefferson Township; and # 21355 Estate of Trobaugh v. Amy Sylvester. These cases are remanded for jury trial.

[¶ 39.] MILLER, Chief Justice, and KONENKAMP and GILBERTSON, Justices, concur.

[¶ 40.] AMUNDSON, Justice, dissents.

[¶ 41.] KERN, Circuit Judge, for SABERS, Justice, disqualified.

AMUNDSON, Justice

(dissenting).

[¶ 42.] I agree with the majority’s analysis concluding there was a lack of express permission by Juffer as to prohibit coverage under the omnibus clause. I disagree, however, with the majority’s conclusion that there is a genuine issue of material fact as to implied permission. Hence, there should also be a dismissal of the negligent entrustment claims. As such, the trial court should be affirmed on all grounds.

Implied Permission

[¶ 43.] Certain facts are undisputed. In the present ease Amy was given conditional permission to operate the Taurus, which was owned, licensed and insured by her father, Juffer. It is also clear from the record that Juffer placed an express restriction on the use of the ear telling Amy that her husband, Mike, could not drive it. In his deposition, Mike admitted that he knew that he was not to operate the Taurus and that he had no permission, express or implied, to use the vehicle. Mike understood that only Amy was authorized to drive the vehicle. Mike admitted that he had violated Juffer’s restrictions by taking the Taurus the day of the accident. Simply put, there are absolutely no facts in the record to support a finding of implied permission. In fact, these undisputed facts support Juffer’s express for-biddance of Mike from driving the Taurus.

[¶ 44.] To establish the existence of implied permission or consent, there must be a showing of “a course of conduct or practice known to the owner and acquiesced in by him that would lead to an application of permission of a particular venture.” Western Casualty & Surety Co. v. Anderson, 273 N.W.2d 203, 205 (S.D.1979). The majority, however, relies on speculative, hypothetical reasons for finding a dispute of fact as to implied permission. The majority relies on facts that the vehicle was being stored in Amy’s garage; that Mike’s work is four miles outside of town; and that the Taurus’ odometer does not coincide with Juffer’s and Amy’s driving patterns to conclude it is “disputed” whether Juffer gave Mike implied permission to drive the Taurus. Those facts cited by the majority and the inferences drawn therefrom do not form a basis for implied permission. The majority concedes that there is absolutely no evidence that Juffer actually knew Mike drove the Taurus. “The permission contemplated by an omnibus clause is something more than mere sufferance or tolerance without taking steps to prevent.” 46 CJS Insurance § 1049. It logically follows that there is no evidence that Juffer acquiesced to Mike’s prohibited driving of the Taurus because Juffer lacked knowledge of Mike’s unpermitted driving.

[¶ 45.] The burden of proof is upon the Trobaughs to show that Mike’s use at the time of the accident was with the permission of Juffer since Mike “is a stranger to the policy and not the named insured.” Howe, 584 F.Supp. at 372 (D.S.D.1984) (citing Western, supra at 205). I submit that the express prohibition by Juffer cannot be overcome by the speculative inferences drawn by the majority as such “course of conduct or practice” was not “known” to Juffer at the time of the accident. “[T]here must be some connection between the named insured’s conduct and the operation of the car by the third person, the critical question being whether the named insured said or did something that warranted the belief that the ensuing use was with his consent.” 46 CJS Insurance § 1052. As the evidence is contrary to Trobaugh’s position, he has failed to meet his burden.

[¶ 46.] It appears the majority confuses implied permission or authority with ratified permission or authority. Ratified permission or authority may overcome an express prohibition. See Bank of Hoven v. Rausch, 382 N.W.2d 39 (S.D.1986). Implied permission, however, is analyzed only if there is an absence of whether the owner, or named insured, has either allowed or denied express permission to another. In other words, if the insured has expressly allowed or denied a third party permission to drive the insured’s vehicle, then implied permission is not analyzed. This is because the insured has spoken, and his or her permission or non-permission cannot be overcome by the actions of the third party. “It is incongruous to first recognize that the named insured has expressly forbidden the original permittee to extend permission to another, and then proceed to hold he has given implied consent under these circumstances.” Tristan v. Government Employees Ins. Co., 489 S.W.2d 365, 367 (Tex.Civ.App. 1973). Implied permission cannot overcome express non-permission. Being that implied permission does not apply to this case, we should affirm the trial court on this issue.

[¶ 47.] It is undisputed that Juffer gave neither express nor implied permission to Mike to operate the Taurus at any time, much less on the date of the accident. To the contrary, Juffer expressly forbade Mike from driving the Taurus. Additionally, there is no evidence in the record to suggest that Juffer ever acquiesced or consented to Mike’s use of the vehicle prior to the accident. Accordingly, the trial court’s grant of summary judgment in favor of Farmers Insurance should be affirmed.

Negligent Entrustment

[¶ 48.] The issue of negligent entrustment is moot as such a cause of action is predicated on permission from the owner. The “owner of a vehicle ‘may be guilty of negligence if he permits an incompetent, inexperienced and knowingly reckless and accident prone person to drive’ his vehicle.” Stover v. Critchfield, 510 N.W.2d 681, 684 (citing Robe v. Ager, 80 S.D. 597, 129 N.W.2d 47, 51 (S.D.1964); see also Arbach v. Gruba, 89 S.D. 322, 232 N.W.2d 842, 846 (S.D.1975)) (emphasis supplied). As discussed above, Juffer expressly forbade Mike from driving the Taurus. Without the requisite permission, Tro-baugh cannot make out a claim based on negligent entrustment.

[¶ 49.] Even assuming that there is some lingering question as to issue of implied permission, the negligent entrustment issue in this case is clearly answered by our holding in State Farm Mut. Auto. Ins. Co. v. Ragatz, 1997 SD 123, 571 N.W.2d 155. In Ragatz, this Court made clear that

If an owner of the car expressly forbids the permittee to lend his car to another, but the permittee nevertheless allows the second permittee to drive the car in violation of the named insured’s express orders, the insurer is not liable while the second permittee is driving on the theory that a prohibition against delegation is a restriction upon the use of the vehicle. [Thus, the second permittee] is not an omnibus insured.

Ragatz, 1997 SD 123 at ¶ 18, 571 N.W.2d at 158. Under Ragatz, what more could Juffer do to show he denied Mike permission to use the vehicle? He expressly forbade Mike from driving the Taurus. He placed restrictions on Amy’s permission to drive the vehicle. He also instructed Amy to not allow Mike to drive the vehicle. Our holding in Ragatz makes it clear that Juffer cannot be held liable under a theory of negligent entrustment.

      . As unpersuasive as these facts are and do not create implied permission, I address them individually. First, the Taurus was at Amy’s residence because she had limited permission to drive it. Mike’s access to the vehicle was not a fact contemplated by Juffer, and Tro-baugh has not shown otherwise. Second, Mike’s job being four miles out of town is also a non-issue. Although not a popular way to get to work in South Dakota, Mike could have easily carpooled to work or used alternative transit. The use of the Taurus was not the only mode of transportation available to him. Third, the unaccounted for mileage does not, inter alia, rise to the level of a disputed fact whether Mike had driven the vehicle. The restrictions and limitations fashioned by Juf-fer in the use of his vehicle by Amy does not in any way dilute his unwavering prohibition of Mike being able to use the Taurus. “Providing the opportunity for [Mike] to take the [Taurus] without any physical impediments does not constitute consent for [Mike] to use the vehicle for his own personal ventures.” American Family Ins. Group v. Howe, 584 F.Supp. 369, 377 (D.S.D.1984) (citing Dickinson v. Great American Indemnity Co., 296 Mass. 368, 6 N.E.2d 439 (1937)).

      . Ratification by a named insured of a third party's use after the fact creates no omnibus coverage. Pettis v. State Farm Mut. Ins. Co., 286 Ala. 344, 239 So.2d 772 (1970). “The permission must be given before the accident for coverage to apply; subsequent notification of the use is insufficient to invoke coverage.” 8 Couch on Insurance 3d § 112:5. Thus, we are left with Juffer’s express prohibition versus this Court’s hypothetically driven idea of implied permission.


source: Caselaw Access Project

author: MILLER, Chief Justice.

license: Public Domain

text:
    2001 SD 39
    H & R ROOFING OF SOUTH DAKOTA, INC., Appellee, v. DEPARTMENT OF REVENUE, State of South Dakota, Appellant.
    Nos. 21586, 21593.
    Supreme Court of South Dakota.
    Considered on Briefs on Jan. 8, 2001.
    Decided March 21, 2001.

      Arvid J. Swanson, Sioux Falls, SD, Attorney for appellee.
    Mark Barnett, Attorney General, Michael T. Kenyon, Department of Revenue, Special Attorney General, Pierre, SD, Attorney for appellant.
   MILLER, Chief Justice.

[¶ 1.] The South Dakota Department of Revenue (DOR) appeals the circuit court decision reversing DOR’s assessment of municipal use taxes against H & R. We reverse.

FACTS

[¶ 2.] H & R is a roofing contractor. It receives and stores bulk quantities of roofing materials in its rural Lincoln County warehouse. H & R pays the South Dakota state sales tax due and owing on the materials at the time they are delivered to its warehouse, but, as the warehouse is not located in a municipal taxing jurisdiction, no municipal use tax is due at that time. H & R sends these materials to different job sites to complete roofing jobs where the materials are stored, used or consumed. Often these job sites are located in municipal taxing jurisdictions, which have enacted municipal sales and use taxes pursuant to SDCL chapter 10-52. H & R does not pay the municipal use taxes when it transports its roofing materials to these various municipal taxing jurisdictions. It does pay such taxes when the materials are shipped directly to the job sites within taxing municipalities.

[¶ 3.] DOR audited H & R’s records and issued a certificate of assessment for $22,114.95. At the hearing, H & R contested only the assessment of municipal use taxes. The Secretary of Revenue upheld the DOR’s assessment. H & R appealed to the circuit court, which reversed the Secretary’s decision. We reverse the circuit court.

STANDARD OF REVIEW
The question of whether a statute imposes a tax under a given factual situation is a question of law. Statutes which impose taxes are to be construed liberally in favor of the taxpayer and strictly against the taxing body.

Appeal of Real Estate Tax Exemption for Black Hills Legal Services, Inc., 1997 SD 64, ¶ 7, 563 N.W.2d 429, 431 (citing National Food Corp. v. Aurora Cty. Bd. of Comm’rs, 537 N.W.2d 564, 566 (S.D.1995); Thermoset Plastics, Inc. v. Department of Revenue, 473 N.W.2d 136, 138 (S.D.1991)). Accordingly, we apply the de novo standard of review.

DECISION

[¶ 4.] 1. H & R owes municipal use tax.

[¶ 5.] This case involves SDCL 10-52-2, which permits municipalities to impose sales and use taxes. The statute states in pertinent part:

Any incorporated municipality within this state may impose any non-ad valo-rem tax in accordance with the provisions of this chapter, except upon fuel used for motor vehicles, by ordinance enacted by its local governing board. However, no tax may be levied on the sale, use, storage and consumption of items taxed under chapters 10-45 and 10-46, unless such tax conforms in all respects to the state tax on such items with the exception of the rate, and the rate levied does not exceed two percent.

SDCL 10-52-2 (emphasis added). This statute authorizes municipalities to impose sales and use taxes. When the items sought to be taxed are also taxed under state sales and use taxes, the municipal taxes must conform in every manner to the state tax with the exception of the rate. When the language of a statute is plain there is no occasion for construction, we simply declare the plain meaning of the statute as expressed in the statute. Nickerson v. American States Ins., 2000 SD 121, ¶ 11, 616 N.W.2d 468, 470 (citing South Dakota Subsequent Injury Fund v. Federated Mut. Ins., Inc., 2000 SD 11, ¶ 17, 605 N.W.2d 166,169).

[¶ 6.] Important to our disposition of this case is the purpose of the use tax. We observed in Northwestern Nat’l Bank of Sioux Falls v. Gillis, 82 S.D. 457, 467, 148 N.W.2d 293, 298 (1967) that not only was the use tax intended to raise money but it was also intended, “to help the retailers in this state, who are subject to the sales tax, compete on an equal footing with out-of-state competitors.” By analogy, the legislature allowed municipalities to impose sales and use taxes for the same reason-to level the playing field between in-municipality competitors and out-of-municipality competitors. Otherwise, out-of-municipality competitors would have an unfair advantage in competing for jobs within the municipality. In this case, H & R would have an unfair advantage over roofing contractors who operate within the municipal taxing jurisdictions where H & R competes for business if H & R is not subject to municipal use taxes in those municipalities.

[¶ 7.] H <& R argues, and the circuit court held, that if municipal taxes attach to its roofing materials it must occur concurrently with the imposition of the state sales tax. H & R points to language in SDCL 10-46-6 which prevents the state from simultaneously imposing a sales tax and a use tax on the same items and argues this means that once they have paid their state sales tax a municipal use tax cannot attach at a later time. SDCL 10-46-6 states:

The use in this state of tangible personal property or services, the gross receipts from the sale of which are to be included in the measure of the tax imposed by chapter 10-45, and any amendments made or which may hereafter be made thereto, is hereby specifically exempted from the tax imposed by this chapter.

[¶ 8.] H & R’s interpretation ignores the two level of taxes, state and municipal, provided for by the South Dakota Legislature. On the state level, sales and use taxes cannot be simultaneously imposed. SDCL 10-46-6. Under SDCL 10-52-2 the same is true on the municipal level. A municipality cannot simultaneously impose a sales tax and a use tax on the same items. SDCL 10-52-2; SDCL 10-46-6. Contrary to H & R’s assertion, however, the same items can be subject to the state sales or use tax and then later, upon entering a municipal taxing jurisdiction, be subject to that municipality’s sales or use tax. SDCL 10-46-6; SDCL 10-52-2. Additionally we note and are mindful:

The use tax complements and supplements the sales tax by imposing upon those subject to it a tax burden equal to the sales tax in order that property sold or utilized in this state would be taxable once for support of state government. It is not intended to apply to property subject to the sales tax.

Northwestern Nat’l Bank of Sioux Falls, 82 S.D. at 467, 148 N.W.2d at 298. This analysis, however, only examines sales and use taxes on the state level because it preceded the legislature’s grant of authority allowing municipalities to tax on the municipal level as a separate taxing entity. The circuit court’s reliance on Northwestern Nat’l Bank of Sioux Falls in this case is misplaced and leads it to an erroneous result.

[¶ 9.] Although we construe statutes imposing taxes liberally in favor of the taxpayer, accepting H <& R’s interpretation would lead to an absurd result. Nelson v. State Bd. of Dentistry, 464 N.W.2d 621, 624 (S.D.1991). H & R’s interpretation would defeat the purpose of the Legislature’s grant of permission to municipalities to impose sales and use taxes because everyone would avoid it by building receiving warehouses outside of municipal taxing jurisdictions.

[¶ 10.] Additionally, H & R’s argument based on a single taxable moment lacks support. Following H & R’s suggested interpretation would create an exemption from municipal taxes that are not imposed simultaneously with a state sales' tax. This would defy the will of the Legislature expressed in the pertinent statutes. Creation of tax exemptions is exclusively within the province of the Legislature, not the judiciary. See Burlington Northern R.R. Co. v. Strackbein, 398 N.W.2d 144, 147 (S.D.1986).

[¶ 11.] 2. H & R is not entitled to recover attorney fees.

[¶ 12.] H & R asked to recover attorney fees under SDCL 10-59-34. SDCL 10-59-34 states:

If a court determines that the losing party has taken a position in an audit, hearing or appeal that was not substantially justified, the losing party shall reimburse the other party for all court costs and attorney fees associated with the hearing or appeal. The department’s reimbursable costs are limited to nonemployee costs.

SDCL 10-59-34 (emphasis added). According to the language of the statute, it is the losing party who is to pay court costs and attorney fees. In this case, H & R is the losing party and thus not entitled to recover attorney fees.

[¶ 13.] Reversed.

[¶ 14.] SABERS, AMUNDSON, KONENKAMP, and GILBERTSON, Justices, concur.


author: LARSON, Justice.

text:
    BRAZELTON GROUP, L.C., Ramada Limited Motel, A & D Management Co., and S.S. Real Estate Investment, Inc., Appellants, v. IOWA DEPARTMENT OF TRANSPORTATION, Appellee.
    No. 99-0710.
    Supreme Court of Iowa.
    Jan. 18, 2001.

      Louis R. Hockenberg and Jill Mataya Corry of Sullivan & Ward, P.C., Des Moines, for appellants.
    Thomas J. Miller, Attorney General, David A. Ferree, Special Assistant Attorney General, and Noel C. Hindt, Assistant Attorney General, for appellee.
   LARSON, Justice.

The owner of a motel near a primary highway attempted to retain an advertising sign it had placed on property within 660 feet of the highway. The Iowa Department of Transportation (DOT) ordered the sign removed. The district court affirmed on judicial review, and the owner appealed. We affirm.

I. Facts and Prior Proceedings.

Brazelton Group, L.C., is the owner of a Ramada motel in Mt. Pleasant, Iowa. To advertise the motel, Brazelton erected a sign on an adjacent lot owned by S.S. Real Estate Investment, Inc. and occupied by a Sirloin Stockade Restaurant. Brazelton and S.S. Real Estate share some common shareholders and have cooperated in some of their business activities; however, they are separate legal entities. The motel, restaurant, and sign are all shown on the attached plat.

A written agreement between the owners of Ramada and the Sirloin Stockade provide for sharing conference areas, catering services, and parking facilities between the motel and the restaurant. The parties have also planned for a lounge to be located between them to serve both businesses. Brazelton has a permanent easement to place a sign at a described point on the Sirloin Stockade property (lot 6), shown as “proposed site” .on the attached plat. The Ramada motel is on lots 12 and 13.

Prior to Brazelton’s construction of the sign, the DOT advised it the proposed sign would not be permitted under applicable statutes and agency rules. Brazelton erected the sign anyway. On August 22, 1997, the DOT sent Brazelton a notice pursuant to Iowa Code section 306C.19 (1997) to remove the sign. Brazelton requested an administrative hearing to contest the DOT notice. An administrative law judge held a hearing and determined the sign could not remain. The agency and the district court affirmed that decision.

II. Disposition.

On appeal from judicial review of agency action, review of the judgment is for correction of errors at law. Gaffney v. Dep’t of Employment Servs., 540 N.W.2d 430, 433 (Iowa 1995). A court is bound by the agency’s findings of fact if they are supported by substantial evidence. Iowa Code § 17A.19(8)(f); Terwilliger v. Snap-On Tools Corp., 529 N.W.2d 267, 271 (Iowa 1995). We accord only limited deference to the agency’s interpretation of law, including statutory and agency rule interpretation. Staceyville Cmty. Nursing Home v. Dep’t of Inspections & Appeals, 528 N.W.2d 557, 559 (Iowa 1995).

Iowa Code section 306C.11 prohibits placement of an advertising device “within any adjacent area or on the right-of-way of any primary highway” subject to certain exceptions. Iowa Code section 306.10(1) defines “adjacent area” as within 660 feet of the highway. The sign involved in this case is within the controlled zone.

One of the exceptions is contained in Iowa Code section 306C.11(2), which allows these signs on areas adjacent to a highway:

Advertising devices concerning activities conducted on the property on which they are located, [however,] the property upon which they are located [shall not] be construed to mean located upon any contiguous area having inconsistent use, size, shape, or ownership.

The DOT calls these signs “on-premise” signs and further expands on the concept of on-premise signs in its administrative rules:

“On-premise sign” means an advertising device advertising ... activities being conducted upon[ ] the property where the sign is located. The criteria to be used to determine if an advertising device qualifies as on-premise signing include but are not limited to the following:
1. An on-premise sign must be located on the same property as the advertised activity.... A subdivided property is considered to be one property if all lots remain under common ownership and all lots share a common private access to public roads....
2. Contiguous lots or parcels of land combined for development purposes are considered to be one property for outdoor advertising purposes provided they are owned or leased by the same party or parties. However, land held by lease or temporary easement must be used for a purpose related to the advertised activity other than signing.
3. An on-premise sign shall not be located on a narrow strip of land that cannot reasonably be used for a purpose related to the advertised activity other than signing.

Iowa Admin.Code r. 761-117.1.

The sign in this case fails the tests of these statutes and rules for several reasons. First, the Ramada sign is located on the Sirloin Stockade property, not the Ramada property, and the properties are not owned by the same party. They are separate legal entities with only a partial overlap of ownership by common shareholders. The fact these are separate entities is illustrated by one of Brazelton’s own exhibits — an agreement between Brazelton Group, owner of the Ramada, and S.S. Real Estate Investment, Inc., owner of the Sirloin Stockade, under which the parties agreed to “work[ ] together to jointly develop their adjacent businesses through sharing parking facilities, and providing sign easements, shared conference facilities, catering services, and joint access .... ” This agreement demonstrates these business owners treat each other at arms’ length, as separate businesses, and not businesses under common ownership.

Also, the easement on which the sign is located, which is only large enough to accommodate the sign, is a “narrow strip of land that cannot reasonably be used for a purpose related to the advertised activity [the Ramada] other than signing” and is therefore not allowable under Iowa Administrative Code rule 761-117.1(3). Although Brazelton contests this finding, the agency determined this issue as one of fact, and substantial evidence supports that finding. Even if the respective properties were part of the same subdivision, they cannot be considered “one property” under Iowa Administrative Code rule 761-117.1(1) because they do not share a common access to a public street or highway.

The DOT’s ruling denying permission to retain the sign is supported by the law and the record.

III. Constitutionality of Rule 761-117.1.

Iowa Administrative Code rule 761-117.1 has been quoted above. Brazel-ton challenges two of its provisions on vagueness grounds. One part of the rule provides that “[t]he criteria to be used to determine if an advertising device qualifies as an on-premise sign include but are not limited to the following....” (Emphasis added.) Brazelton also claims the phrase “[a]n on-premise sign shall not be located on a narrow strip of land that cannot reasonably be used for a purpose related to the advertised activity other than signing” is too vague to be constitutional.

This Court has summarized the standard for determining whether a statute or rule is unconstitutionally vague:

A civil statute is unconstitutionally vague under the due process clauses only when its language does not convey a sufficiently definite warning of proscribed conduct as measured by common understanding or practice. Vagueness exists when persons must necessarily guess at the meaning of a statute and its applicability. A party attacking the constitutionality of the statute must overcome a presumption of constitutionality by negating every reasonable basis on which the statute can be sustained.
We have also recognized that in “regulating certain matters a degree of indefiniteness is necessary to avoid unduly restricting the applicability of the proscribing rule.”

Fisher v. Iowa Bd. of Optometry Exam’rs, 510 N.W.2d 873, 876 (Iowa 1994) (quoting Eaves v. Bd. of Med. Exam’rs, 467 N.W.2d 234, 236 (Iowa 1991)).

As to Brazelton’s first challenge, it is clear the DOT did not rely on any unexpressed criteria contained in the rule to disallow the sign. The sign was determined not to qualify as an on-premise sign for reasons specified in the rule: the sign is not on “the same property as the advertised activity” under rule 761-117.1(1), and even if the lots were contiguous, they were not “owned or leased by the same party or parties” under rule 761-117.1(2). As to the second vagueness challenge, it might successfully be argued that the phrase “narrow strip of land” is too indefinite if it stood alone, but it does not. It is refined by adding “that cannot reasonably be used for a purpose related to the advertised activity other than signing.” Although the word “reasonably” allows some leeway in the rule, we do not believe it could be construed to require one to guess at its meaning. Here, the DOT found that Bra-zelton’s small easement, located in a distant corner of an adjoining lot and only large enough to accommodate the sign, cannot reasonably be used for any “purpose related” to the Ramada motel except to provide a site for a sign. It therefore is not an on-premise sign under the rule. This finding is also supported by substantial evidence.

We find no basis on which to disturb the ruling of the DOT or the district court and therefore affirm.

AFFIRMED.


author: VOGEL, Judge.

text:
    In re the MARRIAGE OF Scott W. CAMPBELL and Kumhi Kim Campbell. Upon the Petition of Scott W. Campbell, Appellant, and Concerning Kumhi Kim Campbell, Appellee.
    No. 99-1412.
    Court of Appeals of Iowa.
    Jan. 10, 2001.

      Stephen N. Greenleaf of Lynch, Green-leaf & Michael, L.L.P., Iowa City, for appellant.
    Constance Peschang Stannard of McKinley, Stannard & Carter, Coralville, for appellee.
    Heard by STREIT, P.J., and VOGEL and HECHT, JJ.
   VOGEL, Judge.

Scott W. Campbell appeals two economic provisions of the parties’ dissolution decree. We find the trial court correctly used the date of the trial to value and divide the assets and agree with the trial court in ordering the sale of the marital home. We affirm.

Background facts. Scott and Kumhi Kim Campbell were married in July 1980. A son, Bruce, was born to the marriage in October 1986. Scott and Kumhi separated in September 1994. The trial court ordered the dissolution of the marriage on July 20, 1999. Scott appeals two of the financial provisions ordered by the trial court.

Standard of review. Dissolution of marriage decrees are reviewed in equity. In re Marriage of Knickerbocker, 601 N.W.2d 48, 50-51 (Iowa 1999). Our standard of review is therefore de novo. Iowa R.App.P. 4. In such cases, “[w]e examine the entire record and adjudicate anew rights on the issues properly presented.” In re Marriage of Beecher, 582 N.W.2d 510, 512-13 (Iowa 1998). In doing so, we give weight to the fact findings of the trial court, especially when considering the credibility of witnesses, but we are not bound by them. Iowa R.App.P. 14(f)(7); Beecher, 582 N.W.2d at 513.

The partners to a marriage are entitled to a just and equitable share of the property accumulated through their joint efforts. In re Marriage of Russell, 473 N.W.2d 244, 246 (Iowa App.1991). Iowa courts do not require an equal division or percentage distribution. Id. The determining factor is what is fair and equitable in each circumstance. Id.

Valuation date of retirement account. Scott alleges the property division of the trial court was inequitable because it used the trial date, July 1999, rather than the date of separation, September 1994, to determine the value of his retirement account. During the marriage, both parties worked and accrued retirement accounts, which appreciated in value with the passage of time. Scott’s retirement account remained intact, and increased from a 1994 value of $20,096 to $60,800 at the time of trial. Kumhi’s retirement account was withdrawn from the employer’s retirement plan and rolled over into an IRA account. Although the record does not contain a 1994 value for the account, the value re-fleeted and used at the time of trial was $37,867.

Scott asserts his retirement account, which demonstrated excellent growth over the period of the parties’ separation, should have been valued at the time of the separation rather than at the time of the trial. He contends the parties strictly maintained separate lives, financial accounts and goals during this period and, therefore, the only equitable solution is to divide this asset based on the lower value at the time of the separation rather than the appreciated value at the time of trial. Recognizing the difficulty to the parties and the court to wade through five years of financial information to divide the remaining assets at the time of the separation, Scott maintains all other property of the parties should be based on the values at the time of trial. Kumhi claims the trial court correctly determined the most equitable date of the valuation of all assets, including Scott’s retirement account, to be the time of trial.

To support his position, Scott relies on this court’s ruling in In re Marriage of Driscoll, 563 N.W.2d 640, 642 (Iowa App. 1997), where we stated:

There may be occasions when the trial date is not appropriate to determine values. Equitable distributions require flexibility and concrete rules of distribution may frustrate the court’s goal of obtaining equitable results. For example, when parties separate several years before even filing a petition for dissolution of marriage, an alternate valuation date is appropriate. Hence, we are not locked into a set date as it is inherent in the court’s equitable powers, to make appropriate adjustments, according to the unique facts of each case.

See, e.g., In re Marriage of Tzortzoudakis, 507 N.W.2d 183, 186 (Iowa App.1993) (filing of dissolution petition thirty years after separation of the parties). Our analysis in Driscoll clearly calls for allowing flexibility for the trial court to make such determinations depending on the unique facts of each case. There is no indication, however, in the Driscoll language that our appellate courts will adopt a specific time period between the date of separation and the date of trial, which will be determinative of a valuation date. As in all dissolution cases, our review of decrees is driven by our overarching goal of assuring equity between the parties.

With this backdrop, we review Scott’s request to declare the value of one asset, his retirement account, at the time of the separation while the remaining assets be valued at the time of trial. He claims he should be rewarded for not tampering with the account over the years, which allowed the asset to experience phenomenal growth. Scott points to our decision in In re Marriage of Oakes, 462 N.W.2d 730 (Iowa App.1990), which concluded that because the wife did not contribute to the growth of the husband’s retirement account during the separation period, she should not share in that growth. We found no basis to distinguish the rationale in Oakes, from that of a prior decision, In re Marriage of Muelhaupt, 439 N.W.2d 656 (Iowa 1989). Upon further reflection and the developing case law in this area, we find the cases clearly distinguishable.

In Muelhaupt the husband purchased with borrowed funds, a minority interest in a closely held corporation for $2500 subsequent to the filing of a petition for dissolution of the marriage. Muelhaupt, 439 N.W.2d at 661. The following year, the trial court set the value of the stock at $151,680. Id. Our supreme court, recognizing both the phenomenal growth of the stock and the wife’s limited contribution to the asset, nonetheless awarded her $25,000 of its value. Id. That award neither restricted the wife to a portion of the purchase price of the stock nor denied her a portion of the post separation growth of the asset. Id. Rather, the court considered the value as of the date of trial and made an equitable distribution under the circumstances of that particular case. Id. Because Oakes tends to distort the equitable spirit of Muelhaupt, and is otherwise contrary to our developing case law, we now overrule that portion of the Oakes decision, which distributed property based on separation date values merely because the other party did not contribute to the growth of an asset prior to trial. Oakes, 462 N.W.2d at 733; see also In re Marriage of McLaughlin, 526 N.W.2d 342, 344 (Iowa App.1994) (holding eighteen month separation did not justify use of separation date to value and divide assets); In re Marriage of Clinton, 579 N.W.2d 835, 839 (Iowa App.1998) (affirming district court’s use of trial date to value and divide retirement account after nine month separation); In re Marriage of Helmle, 514 N.W.2d 461, 463 (Iowa App.1994) (finding trial court’s use of trial date to divide post-separation assets was equitable).

In reviewing Scott’s assertion that we use the date of separation to value his retirement account, we first note that he did not make any additional contributions to that account from the date of separation to the date of trial. That means the tripling of the value of the account was strictly fortuitous. While Scott acknowledges Kumhi had rights in the account at the time of separation, he denies that she should be entitled to profit from her share of the growth of the asset over the past five years. We reject this argument just as we did in Driscoll. It is apparent in both cases, that when an asset increases in value during a period of separation, the party who controls the asset wants to solely reap the benefit of the increase in value. However a party who wanted to retain an asset would likely not argue its value be set as of the time of separation if that asset had lost value prior to trial. Accordingly, we find it difficult to believe Scott would have asked the court to value his retirement account at the time of separation had it substantially decreased in value over the same separation time period.

In addition, we have previously noted the practical complexities in choosing a date other than the trial date to value assets.

The court, in rejecting respondent’s argument that the net worth be determined at time of separation, said “[hjowever, respondent’s position would require a determination of the exact date of the marital breakdown, an impossible task in most, if not all, dissolution cases. It would appear the date of trial is the only reasonable time at which an assessment of the parties’ net worth should be undertaken.”

In re Marriage of Meerdink, 530 N.W.2d 458, 460 (Iowa App.1995) (citing Locke v. Locke, 246 N.W.2d 246, 252 (Iowa 1976)). A separation is often not a clear demarcation in time, as is a trial date. Furthermore, during a separation the possibility of reconciliation is present until the entering of the dissolution decree. This case bears out these concepts, where Scott initially filed a petition for dissolution of marriage in February of 1994. That action was dismissed in January of 1997 under Iowa Rule of Civil Procedure 215.1 for want of prosecution. In March of 1997, Scott filed a second petition. There is a dispute as to how much contact, including financial dealings, the parties had during the intervening years from 1994 to the time of trial.

We continue to use the date of trial as the most appropriate date to value assets, while recognizing the need for flexibility in making equitable distributions based on the unique circumstances of each case. Under the facts of this ease, it is neither practical nor equitable to use the date of separation to value just one asset. We therefore agree with the trial court using the date of trial to value Scott’s retirement account.

Sale of house. The trial court ordered the house to be sold and the net proceeds equally divided between the parties. Scott, who has physical care of the parties’ son, Bruce, objects to the sale of the home. He asserts it is in the best interests of Bruce, to allow him to remain in the home and prevent further disruption of his life. See Iowa Code § 598.21(l)(g). In her response to Scott’s 179(b) motion, Kumhi conceded that she is willing, upon a fair appraisal, to accept half the net value of the home, so Bruce may remain in the family home. The trial court, without rescinding its prior order, noted the parties’ willingness to arrive at a mutually beneficial agreement regarding the sale of the home. The trial court has thoughtfully considered this issue while noting the development of a workable solution between the parties. We concur with the trial court’s observations in its post trial ruling and decline to modify the trial court’s order.

Because we find the trial court’s property valuation and division to be equitable to both parties, we affirm.

AFFIRMED.


author: PAGE, Justice. LANCASTER, Justice

text:
    In re the Marriage of Rosemary Ann MAURER, Respondent, v. Michael Patrick MAURER, Petitioner, Appellant.
    No. C7-99-1319.
    Supreme Court of Minnesota.
    March 22, 2001.

      Thomas Zupanc, St. Cloud, for plaintiffs. Kay R. Snyder, St. Cloud, for defendants.
   OPINION

PAGE, Justice.

The sole issue presented in this marriage dissolution case is whether the trial court abused its discretion when it considered future tax consequences in valuing appellant Michael Maurer’s (“Maurer”) retirement assets. The trial court awarded respondent Rosemary Galvin (“Galvin”) (formerly known as Rosemary Maurer) property valued at $77,846 and Maurer property valued at $77,840. The award to Maurer included funds he held in three deferred compensation plans and one retirement plan. The trial court used the after-tax value of the four plans in calculating the value of the parties’ marital property. The four plans had a pre-tax value of $98,406 and an after-tax value of $63,964. The court of appeals held that, because there was no evidence that a taxable event was required by the dissolution or certain to occur shortly thereafter, the trial court engaged in speculation when it used the after-tax value of the plans in valuing the marital property. Maurer v. Maurer, 607 N.W.2d 176, 183-84 (Minn. App.2000). The court of appeals reversed the trial court and remanded for reconsideration of the property distribution between the parties. Id. at 184. We reverse.

Maurer and Galvin were married on July 9, 1971, and separated in March of 1997. Maurer was 49 years old and Galvin 48 years old when their marriage was dissolved. At the time, Maurer owned the following retirement assets:

State of Minnesota Deferred Comp. Plan $ 6,377.88
MSRS Deferred Comp. Supp. Investment Fund $22,074.13
Minn. Life Deferred Comp. Account $21,841.71
MSRS Termination Payment Plan $48,112.00
TOTAL $98,406.00

Maurer, seeking to have the trial court distribute the funds in the four plans based on their after-tax value, offered the testimony of a certified public accountant, David Hinnenkamp, to establish that value. The trial court allowed this testimony over Galvin’s objection that it was speculative. Hinnenkamp testified that he regularly values assets in performing business valuations and preparing personal financial statements. He further testified that both business valuations and personal financial statements take into account the anticipated tax to be paid on an asset when it is converted to cash. According to Hinnen-kamp, professional standards and generally accepted accounting principles require that current income tax rates be used to calculate the tax on these assets, as opposed to making assumptions about what the rates might be when the asset is converted to cash.

Hinnenkamp also testified that he was familiar with Maurer’s retirement assets and the laws governing the taxation of those assets. According to Hinnenkamp, funds from Maurer’s deferred compensation plans can be withdrawn in only four circumstances: retirement, disability, death, or an unforeseeable emergency. Hinnenkamp further testified that any funds withdrawn from Maurer’s retirement assets would be subject to taxation as ordinary income, and that Maurer’s combined federal and state marginal tax rate for such withdrawals would be approximately 35%. Hinnenkamp testified that an additional 10% penalty would apply to any withdrawal made from Maurer’s MSRS Termination Payment Plan before Maurer reached the age of 59 1/2. Using the 35% marginal tax rate, Hinnen-kamp calculated the after-tax value of the plans to be $63,964. In establishing the 35% marginal tax rate, Hinnenkamp used Maurer’s 1997 taxable income and a projection of Maurer’s 1998 income, in addition to assuming that Maurer’s 1999 income would not fluctuate and that his other income and deductions would remain consistent. In his testimony, Hin-nenkamp acknowledged that the deferred compensation plans could be divided between the parties as part of the dissolution without any immediate tax consequences to either party; that the tax laws periodically change; and that the effective tax rate would depend on the dollar amount of any withdrawal from the plans.

At trial, Maurer testified that he was “considering” cashing in his MSRS Termination Payment Plan, but that he did not know if he would. He indicated that, although he had no definite plans, he was also “thinking about” terminating his employment, which would allow him to withdraw funds from his deferred compensation plans.

The trial court found that the retirement assets would be taxable upon distribution. Applying the 35% combined federal and state marginal tax rate, the trial court also found the after-tax value of Maurer’s retirement assets to be $63,964. Both parties moved for amended findings and Gal-vin alternatively moved for a new trial, arguing, among other things, that the trial court should not have considered future income tax consequences in valuing Maurer’s retirement assets. In response to Galvin’s alternative motions, the trial court stated that “[t]he evidence before the Court is that the marginal tax rate is what would apply. While it may be possible a higher tax rate could apply, no evidence suggests that a lower tax rate would apply.” Although the trial court amended its findings, it denied Galvin’s motion for a new trial and did not change its findings with respect to the value of Maurer’s deferred compensation and retirement plans.

On appeal, the court of appeals reversed, holding that the trial court’s consideration of the 35% marginal tax rate was speculative because there was no evidence presented at trial that a taxable event was required by the dissolution or certain to occur shortly thereafter. Maurer, 607 N.W.2d at 183-84. The court of appeals remanded with instructions that the trial court “revisit the property settlement because the consideration of the tax consequences rendered the division of property inequitable.” Id. at 184.

I.

A trial court has broad discretion in dividing property upon dissolution of a marriage. E.g., Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn.1984). Determining the specific value of an asset is a finding of fact. Hertz v. Hertz, 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975) (per curiam). “Such findings of fact, when made without a jury, shall not be set aside unless clearly erroneous on the record as a whole.” Id. Such broad deference is appropriate because “valuation is necessarily an approximation in many cases.” Id. Accordingly, the value arrived at by the trial court need only fall “within a reasonable range of figures.” Id.

Galvin contends that the trial court’s consideration of tax consequences here constituted impermissible speculation under a line of this court’s cases beginning with Aaron v. Aaron, 281 N.W.2d 150 (Minn.1979). In essence, Galvin argues that Aaron and its progeny establish a bright-line rule that, unless a taxable event is either required by or likely to occur shortly after the dissolution, the consideration of future tax consequences is speculative and impermissible. Maurer argues that the Aaron line of cases does not establish such a bright-line rule. According to Maurer, those cases merely establish that, where no evidence of tax consequences has been introduced, a court engages in speculation by considering tax consequences.

We have, on several occasions, addressed the issue of whether a trial court may consider future tax consequences when dividing marital property in marriage dissolution cases. See Aaron, 281 N.W.2d at 153; Miller v. Miller, 352 N.W.2d 738, 744 (Minn.1984); O’Brien v. O’Brien, 343 N.W.2d 850, 854 (Minn.1984); Johnson v. Johnson, 277 N.W.2d 208, 213 (Minn.1979). In Aaron, the appellant husband was awarded a 25% interest in certain apartment properties. 281 N.W.2d at 152. He argued that the trial court erred by failing to consider that he would have to pay significant capital gains taxes when the apartment properties were sold. Id. at 152-53. We stated that it was within the trial court’s discretion to consider the tax consequences of its award. Id. at 153. At the same time, we expressed our agreement with cases from other jurisdictions that “ ‘the court is not required to speculate about what either or both of the spouses may possibly do with his or her equal share and therefore to engraft on the division further adjustments reflecting situations based on theory rather than fact.’ ” Id. (quoting In re Marriage of Fonstein, 17 Cal.3d 738, 131 Cal.Rptr. 873, 552 P.2d 1169, 1175 (1976)). We then observed that the husband failed to show that he needed or intended to sell his interest in the properties. Id. We also noted that the husband testified that the properties were a long-term investment and would probably not be sold until fully depreciated. Id. We held that, in light of this evidence, the trial court did not abuse its discretion when it refused to consider the possible tax consequences upon the sale of the properties. Id.

We added, however, that we were not holding “that in a proper case, where sale of real estate is required or is likely to occur within a short time after the dissolution, that the court should not consider tax consequences — indeed it should.” Id. at 153. Galvin argues, and the court of appeals agreed, that this language from Aaron establishes that only two situations permit a court to consider future tax consequences — when a sale of the property is either required or certain to occur within a short time of the dissolution. Maurer, 607 N.W.2d at 183; Hattstrom v. Hattstrom, 385 N.W.2d 332, 336 (Minn.App.1986); Brockman v. Brockman, 373 N.W.2d 664, 666 (Minn.App.1985). In fact, that is not what we held in Aaron. Nor have any of our subsequent cases so held. To have so held would have been inconsistent with our recognition that “it is within the trial court’s discretion to consider the tax consequences of its award.” Aaron, 281 N.W.2d at 153; Miller, 352 N.W.2d at 744; Johnson, 277 N.W.2d at 213. Such a bright-line rule would leave little, if any, room for the exercise of discretion.

Moreover, our analysis in Aaron did not turn upon the husband’s failure to satisfy a bright-line rule, but rather upon the evi-dentiary record and our standard of review. The husband in Aaron simply failed to introduce evidence at trial that rendered the trial court’s refusal to consider the future tax consequences of its award an abuse of discretion. Our decisions in O’Brien and Miller similarly demonstrate that our concern in Aaron was speculation in the form of reliance on generally insufficient evidence rather than with determining whether a bright-line rule had been met. O’Brien, 343 N.W.2d at 854 (“[T]he law precludes any consideration where the court must speculate because the evidence is lacking or nonspecific.”); Miller, 352 N.W.2d at 744 (“The court must have sufficient information that the actual tax liability resulting from the property division can be calculated with a reasonable degree of certainty.”); see also Johnson, 277 N.W.2d at 213 (finding no error in trial court’s refusal to consider tax consequences “where no evidence on the issue was presented at trial”).

A bright-line rale is also inconsistent with our pronouncements that property “valuation is necessarily an approximation in many cases, and it is only necessary that the value arrived at lies within a reasonable range of figures.” Hertz, 304 Minn, at 145, 229 N.W.2d at 44; see also Johnson, 277 N.W.2d at 211 (noting that “[e]xaetitude is not required of the trial court in the valuation of assets in a dissolution proceeding”). We note that other jurisdictions are divided on the question of whether a trial court may consider future tax consequences. Courts in some jurisdictions have held that the consideration of future tax consequences in valuing retirement assets is too speculative because tax rates are subject to change. Courts in other jurisdictions, however, have concluded that such uncertainty is outweighed by the fact that, while the tax rate that will actually be applied to a retirement asset may be unknown, it is practically certain that the asset will be taxed. As one court aptly put it, “[bjecause it is a virtual certainty that [the owner] will not receive his retirement [assets] free of income tax liability, the only question is what the probable tax liability will be.” Alexander, 742 P.2d at 64. We find this reasoning persuasive. It is also important to note that retirement assets such as Maurer’s deferred compensation and retirement plans have little or no real value until the funds within them are withdrawn, which, ironically, is the event that triggers their taxation. We therefore conclude that it would be inequitable to preclude a trial court from considering future tax consequences when the trial court has a “reasonable and supportable basis for making an informed judgment as to [the] probable liability.” Id.

II.

Having rejected the notion that Aaron and its progeny created a bright-line rule, we must now determine whether the trial court abused its discretion when it valued Maurer’s deferred compensation and retirement plans using their after-tax value. Testimony at trial established that it is proper to consider future income taxes when valuing assets; that professional standards and generally accepted accounting principles require that current income tax rates be used to calculate future income taxes; and that the lowest combined federal and state income tax rate that would apply to Maurer’s retirement assets is 35%. The record further reflects that the 35% rate is based on the following: Maurer’s 1997 income; his projected 1998 income; the assumption that Maurer’s 1999 income would not fluctuate; and the assumption that Maurer’s other income and deduction items would remain consistent.

Galvin argues that, because the 35% tax rate was calculated using mere anticipations and assumptions, the rate is speculative. Ultimately, this argument goes to the question of whether the trial court had a “reasonable and supportable basis for making an informed judgment as to [the] probable liability.” Alexander, 742 P.2d at 64. Specifically, the question we must now answer is whether the 35% tax rate used in calculating the value of Maurer’s retirement assets caused the trial court’s valuation to fall outside a “reasonable range of figures.” Hertz, 304 Minn, at 145, 229 N.W.2d at 44. Based on the record before us, we conclude that it did not. The testimony provided by Maurer’s expert, Hin-nenkamp, provides support in the record for the 35% marginal tax rate. There is no evidence in the record suggesting that some lower rate would be more appropriate. Indeed, the parties made no effort to have the trial court consider a lower rate. While it may be that evidence could have been produced supporting application of a lower marginal tax rate, no such evidence was offered at trial. Because the trial court’s valuation did not fall outside a “reasonable range of figures,” we hold that the trial court did not abuse its discretion.

Because we hold that the trial court’s consideration of future income tax consequences in valuing Maurer’s deferred compensation and retirement plans was not rendered speculative in that a taxable event was not required by or likely to

occur within a short time after the dissolution, and that the trial court did not abuse its discretion when it applied the 35% marginal income tax rate in valuing those plans, we reverse the court of appeals.

Reversed.

LANCASTER, Justice

(concurring).

I concur with the result reached by the majority. I write separately to emphasize that the decision is based upon the facts of this case, and does not represent a departure from the general rule that tax consequences may not be taken into account when to do so would be speculative. Aaron v. Aaron, 281 N.W.2d 150, 153 (Minn. 1979); Miller v. Miller, 352 N.W.2d 738, 744 (Minn.1984); O’Brien v. O’Brien, 343 N.W.2d 850, 854 (Minn.1984). Restricting consideration of tax consequences to events that are likely to occur within a short time of the dissolution is a safeguard against unfair speculation. Although I am not convinced the consideration of future tax consequences in this case resulted in an equitable distribution of assets, I concur in the result because the record is lacking in evidentiary support for application of a lower tax rate, which may well be appropriate in many retirement situations.

BLATZ, Chief Justice (concurring).

I join in the concurrence of Justice Joan Ericksen Lancaster.

RUSSELL A. ANDERSON, Justice (concurring).

I join in the concurrence of Justice Joan Ericksen Lancaster.

      . This figure appears to reflect the trial court’s rounding of the total value to the nearest dollar,

      . See Wilkins v. Wilkins, 111 N.C.App. 541, 432 S.E.2d 891, 897 (1993) (holding that the trial court erred in considering hypothetical tax consequences because to predict variables including the government’s tax structure, plaintiffs financial condition, and the date of plaintiffs retirement several years into the future "requires the trial court to engage in impermissible speculation”); Hovis v. Hovis, 518 Pa. 137, 541 A.2d 1378, 1380, 1381 (1988) (reversing the trial court's deduction of 10% of the value of certain stock and a pension plan because the trial court could not reasonably predict future tax liability "because tax rates constantly change”).

      . See Dodson v. Dodson, 955 P.2d 902, 909-10 (Alaska 1998) (concluding that the trial court did not abuse its discretion by acknowledging that the transfer of a 401 (k) plan to the wife also shifted a tax liability to her, or by applying a 31% marginal tax rate, stating, "[although the precise magnitude of the tax liability may be unpredictable * ⅜ * [the wife] would have to pay deferred taxes on the 401(k) plan before she could use the plan’s funds’’); Day v. Day, 40 Ohio App.3d 155, 532 N.E.2d 201, 205-06 (1988) (concluding that, although the tax consequences at the time the husband withdraws funds from his retirement plan are too speculative to be ascertained, "the trial court properly could apply the present tax rates in considering the tax consequences” because, "[gjiven the current tax rates, we cannot say that the rates applied by the trial court are unreasonable, even if they be the highest applicable rate”); In re Marriage of Alexander, 87 Or.App. 259, 742 P.2d 63, 64 (1987) (concluding that, where the husband presented expert testimony that funds withdrawn from his retirement account would be taxed between 35% and 45%, the trial court properly considered tax consequences because, "[although the amount of the tax liability frequently cannot be determined with complete certainty, the expert testimony in this case provides a reasonable and supportable basis for making an informed judgment as to [the] husband’s probable liability”).