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Findlen v. Findlen
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MAINE SUPREME JUDICIAL COURT Reporter of Decisions
Decision: 1997 ME 130
Docket: Aro-95-742
Submitted
on Briefs: May 23, 1997
Decided: June 11, 1997
Panel:WATHEN, C.J., and ROBERTS, GLASSMAN, CLIFFORD, RUDMAN, DANA, and
LIPEZ, JJ.
JANE H. FINDLEN
v.
MICHAEL FINDLEN
GLASSMAN, J.
[¶1] Michael Findlen appeals and Jane H. Findlen cross-appeals from
the judgment entered in the Superior Court (Aroostook County, Archibald,
A.R.J.), granting a divorce on the ground of irreconcilable differences.
Michael contends the trial court erred by (1) finding that 50% of
Greenridge Farms, Inc. was marital property; (2) evenly dividing between
the parties the stock representing that 50% interest; (3) failing to allocate
responsibility between the parties for the repayment of the loan from
Greenridge Farms, Inc. to Michael in the amount of $166,700 and to
consider that debt in its allocation of the marital estate; (4) valuing the
Marshall Farm at $88,000; (5) its disposition of the property held by the
irrevocable trust created by Michael's mother; (6) failing to state in its
decision the reasons for not awarding shared parental rights and
responsibility as agreed to by the parties; and (7) awarding Jane counsel fees
for this appeal. Jane contends the trial court erred by not including the
$166,700 loan to Michael as part of Michael's gross income for child
support purposes. We vacate the judgment.
[¶2] The record discloses the following undisputed facts: Jane and
Michael were married on December 15, 1972. Michael has a degree in life
sciences and Jane has a degree in nursing. They have three children:
Benjamin, born September 14, 1976; Jennifer, born November 11, 1980;
and Timothy, born May 15, 1982. In 1975, Michael joined his father and
brother in a potato farming operation at Fort Fairfield and was given a one-
third interest in the operation. In 1986, the operation was divided with
Michael's brother taking one-third of the assets. The remaining two-thirds
of the assets were transferred to Greenridge Farms, Inc., with Michael
receiving 50 of the 100 shares issued and his father receiving the remaining
50 shares.
[¶3] Michael's father died on July 5, 1990. Pursuant to his 1986 will,
he devised to Michael his stock in Greenridge Farms, Inc., the Trafton Farm
and his interest in a large box storage potato warehouse. Because at the
time of his father's death the Trafton Farm was owned by Michael's father
and mother, Louise, as joint tenants, the title of the property vested in
Louise. By a deed dated December 26, 1991, Louise transferred the Trafton
Farm to Michael and Jane as joint tenants. The box storage warehouse had
been sold during the lifetime of Michael's father. Louise used proceeds from
this sale to pay the outstanding mortgage on the family home of Michael and
Jane, purchased by them in 1982. Title to the home was subsequently
transferred to Louise. In September 1993, Louise transferred this property
to a trust, entitled "Irrevocable Trust for the Benefit of Michael D. Findlen
and Jane H. Findlen" and naming Susan C. Nickerson and Brent K. Jepson as
trustees.
[¶4] Jane instituted the present action in May 1994. Following the
entry of the divorce judgment on October 26, 1995, the court denied Jane's
motion for findings of fact and conclusions of law and Michael's motion for
reconsideration and correction of the judgment. In response to Jane's
motion to compel Michael to comply with the provision of the judgment
awarding her $5,000 for attorney fees and seeking attorney fees and costs to
defend Michael's appeal, the court ordered Michael within 10 days from the
date of the order to pay Jane's attorney the $5,000 previously awarded and
an additional sum of $2,500 for fees and expenses necessary to defend
Michael's appeal with the provision "for which counsel shall account to
Defendant at the conclusion of the appeal."{1}
[¶5] Michael first contends that the trial court erred by determining
that 50 shares of stock in Greenridge Farms, Inc. he received in his own
name in 1986 is marital property.{2} He argues that the original interest he
obtained in the family business in 1975 subsequently converted into 50
shares of stock in Greenridge Farms, Inc. was a gift from his father and not
marital property subject to division by the court. We disagree. Marital
property is defined in 19 M.R.S.A. § 722-A (1981 & Supp. 1996) that
provides in pertinent part:
2. Definition: For purposes of this section only, "marital
property" means all property acquired by either spouse
subsequent to the marriage, except:
A. Property acquired by gift, bequest, devise or
descent;
B. Property acquired in exchange for property acquired
prior to the marriage or in exchange for property acquired
by gift, bequest, devise or descent;
C. Property acquired by a spouse after a decree of legal
separation;
D. Property excluded by valid agreement of the parties;
and
E. The increase in value of property acquired prior to
the marriage.
3. Acquired subsequent to marriage. All property acquired by
either spouse subsequent to the marriage and prior to a decree
of legal separation is presumed to be marital property regardless
of whether title is held individually or by the spouses in some
form of co-ownership such as joint tenancy, tenancy in common,
tenancy by the entirety and community property. The
presumption of marital property is overcome by a showing that
the property was acquired by a method listed in subsection 2.
[¶6] In a divorce proceeding, "[t]he party claiming that a piece of
property is nonmarital bears the burden of proof on that issue at trial."
Stevenson v. Stevenson, 612 A.2d 852, 854 (Me. 1992). "When a party has
the burden of proof at trial, we will reverse a ruling against that party only if
the evidence compelled the court to find in that party's favor." Id. Here,
Michael testified that after working through the shipping season the first
year of his return to Fort Fairfield, his father asked if he were interested in
staying on and farming with his father and brother. In response to Michael's
affirmative reply, arrangements were made "to take me on as a one-third
partner in the partnership." He further testified that during the first eight
or ten years he farmed with his father and brother he was paid "pretty low
wages," but was building "sweat equity" in the business. On this evidence,
the court could conclude that the one-third interest acquired by Michael
was contingent on his continuing to work in the operation at a low wage
until he had built sufficient "sweat equity" to justify the one-third interest.
Accordingly, we cannot say the trial court was compelled to find Michael's
50 shares in Greenridge Farms, Inc. was his sole and separate property.
[¶7] Michael next contends, and Jane agrees, that the court erred by
dividing the 50 shares of stock equally between the parties. He argues that
the division requires a lingering connection between the parties who
obviously wish to sever their ties, and points to Berry v. Berry, 658 A.2d
1097 (Me. 1995), to support his contention. We agree.
[¶8] "The disposition of marital property is a matter committed to
the sound discretion of the trial court and reviewable only for an abuse of
discretion." Arey v. Arey, 651 A.2d 351, 353 (Me. 1994). Recently, in Smith
v. Smith, 690 A.2d 970, 971-72 (Me. 1997), we vacated a divorce judgment
on the ground that the trial court erred by dividing equally between the
parties the stock holdings in closely held corporations. We affirmed the
principle stated in Berry v. Berry, 658 A.2d at 1099, that:
We cannot expect divorced parties to continue a business
relationship that will optimize resources and profits. Therefore,
it is particularly important to avoid creating situations where the
divorced parties remain in joint management of income
producing property.
[¶9] Here, there was evidence before the trial court that to allow
Greenridge Farms, Inc. to continue to operate and produce any income, it
was essential that annual operating loans be arranged. This required
signatures from all the shareholders. For the year 1996 no financing had
been secured because Jane refused to sign any loan applications or loan
documents. In this case, as in Smith, it was within the court's power to
provide other means of distribution of this marital property to avoid future
conflicts between the parties. See, e.g., Baker v. Baker, 444 A.2d 982, 986
(Me. 1982) (achieving division of marital property by requiring sum of
money be paid by one party or mortgage be given on that party's separate
property). Accordingly, we conclude the trial court was not acting within its
discretion by its division of the marital stock in this closely held
corporation.
[¶10] As to the parties' respective contentions concerning the
$166,700 loan from Greenridge Farms, Inc. to Michael, the record supports
the trial court's sole determination with regard to the $166,700 that it was
a debt and not income, royalties, bonuses or dividends to Michael. We have
previously stated that "[m]arital debt is apportioned pursuant to the same
considerations as the division of marital property." Arey v. Arey, 651 A.2d at
354. See also Harding v. Murray, 623 A.2d 172, 175-76 (Me. 1993) (trial
court's allocation of marital debt will not be disturbed if it appears equitable,
and there is rational and credible evidence to support the decision).
[¶11] Here, the trial court made no determination, however, whether
the debt was a marital debt and, if so, how its repayment should be allocated
between the parties. These determinations are a prerequisite to any
conclusion relating to Michael's contention that the trial court did not
consider the effect of the debt on the value of that portion of the marital
estate awarded to each of the parties.
[¶12] Michael next contends the trial court erred by placing a value
on the Marshall Farm at $88,000 and ordering that he pay Jane $44,000 for
her interest in that farm. We agree. We have previously noted that when the
court is presented with two appraisals as to the value of property that the
parties agree is marital and should be equitably divided between them, a
mere averaging of the two may not be acceptable; however, we will let stand
any estimate within the range of expert opinion reached by the court
through an independent review of the evidence. Shirley v. Shirley, 482 A.2d
845, 849 (Me. 1984) (citation omitted).
[¶13] In the instant case, the record reflects there were three farms
considered by the court. The parties do not challenge the court's
determination that the Trafton Farm and the Findlen Farm were the
separate property of Michael and the Marshall Farm was marital property.
The only evidence before the court was an appraisal, to which the parties
agreed, that stated the total value of all three farms was $411,000 and were
subject to a combined debt of $323,107, leaving a net value of approximately
$88,000 for the three farms. Accordingly, on this record we conclude the
court erred by placing a net value of $88,000 on the Marshall Farm alone.
[¶14] Michael next contends the trial court erred by including as
marital property the residence placed in the irrevocable trust by his mother.
He argues that the trust or its trustees were not parties to this action, and
accordingly, the court had no authority to award the property to either
party. The record reflects that the provisions in the trust place numerous
restrictions on Michael and Jane's ability to reach the corpus of the trust. It
also grants to their three children a contingent remainder in the trust.{3}
[¶15] The record reflects that the court's valuation of the property at
$95,000 is not challenged by the parties. The court determined the
property was marital, awarded it to Michael and ordered that he pay Jane
$47,500 for her interest. The court further provided that Jane had the
right to occupy the residence free of rent until she moved or Timothy
graduated from high school. We conclude that the marital interest subject
to division is not the residence itself but the parties interest in the trust and
the trial court erred by its determination that the residence was marital
property and could be divided as between the parties.
[¶16] Michael next contends the court erred in failing to allocate
parental rights and responsibilities of the two minor children of the parties
in accordance with the agreement of the parties. To support his position,
he points to 19 M.R.S.A. § 752(6) (Supp. 1996) that provides in pertinent
part:
The order of the court must award allocated parental
rights and responsibilities or sole parental rights and
responsibilities, according to the best interest of the child.
When the parents have agreed to an award of shared parental
rights and responsibilities or so agree in open court, the court
shall make that award unless there is substantial evidence that it
should not be ordered. The court shall state in its decision the
reasons for not ordering a shared parental rights and
responsibilities award agreed to by the parents.
Section 752(2)(C) and (2)(D) set forth the definitions of "shared" and "sole"
parental rights and responsibilities as follows:
C. "Shared parental rights and responsibilities" means
that most or all aspects of the child's welfare remain the joint
responsibility and right of both parents, so that both parents
retain equal parental rights and responsibilities and both parents
must confer and make joint decisions regarding the child's
welfare.
D. "Sole parental rights and responsibilities" means
that one parent is granted exclusive parental rights and
responsibilities with respect to all aspects of a child's welfare,
with the possible exception of the right and responsibility for
support.
[¶17] Both parties agree that they had agreed to shared parental
rights and responsibilities as to their two minor children at mediation and
this agreement was communicated to the court. Without giving any reason
for its decision, the record reflects the trial court stated: "Subject to the
right of the Defendant to visit with and be visited by the two minor children,
custody is awarded to the Plaintiff." Accordingly, we conclude that the order
violates the mandate of section 752(6).
[¶18] We find no merit in Michael's final contention that the trial
court erred by awarding Jane counsel fees for the defense of his appeal. He
argues the award must be vacated because by the award the court modified
the alimony provision of the divorce judgment without a showing of a change
in circumstances. We have previously stated that "[a]ttorney fees in divorce
cases for appeals to the Law Court are allowed pursuant to 19 M.R.S.A. §§
693, 722 (1981 & Supp. 1996)." Cheoros v. Cheoros, 690 A.2d 974, 975
(Me. 1997). See also M.R. Civ. P. 54(b)(3) (if appeal filed, application for
attorney fees filed within 30 days after entry of final judgment may be acted
on in trial court). The award of attorney fees is a matter of the trial court's
discretion. Rosen v. Rosen, 651 A.2d 335, 336 (Me. 1994). Here, the
record reflects that Jane's motion for attorney fees was supported by a
memorandum of law and an affidavit of her counsel setting forth his fee
arrangements with Jane and his hourly rate. Michael responded by filing an
objection denying some of the allegations in Jane's motion. We also note the
court provided in its order that Jane's counsel was to account to Michael for
the $2500 awarded for counsel fees and expenses at the conclusion of the
appeal.
[¶19] On remand the trial court must not only address the issues
discussed herein, |