I N THE SUPREME COURT OF THE STATE OF MONTANA

No. 81-50

I N RE THE MARRIAGE OF:

KAY J O Y PETERSON,

P e t i t i o n e r and A p p e l l a n t ,

VS.

RAYMOND P. PETERSON,

R e s p o n d e n t and R e s p o n d e n t .

O R D E R

PER CURIAM:

I T I S HEREBY ORDERED t h a t t h e o p i n i o n o f t h i s C o u r t d a t e d

October 22, 1981, be c o r r e c t e d i n t h e f o l l o w i n g manner. The

f o u r t h p a r a g r a p h o n p a g e 2 w h i c h b e g i n s " B o t h r a n c h e s were

s u b s t a n t i a l l y encumbered. . ." s h o u l d read as f o l l o w s :

" B o t h r a n c h e s were s u b s t a n t i a l l y e n c u m b e r e d . The D i s t r i c t C o u r t f o u n d t h e home r a n c h to h a v e a n e g a t i v e v a l u e of $74,625 a f t e r d e d u c t i n g a l l l i a b i l i t i e s from its f a i r market v a l u e of $402,500. The c o u r t f o u n d t h e f a i r m a r k e t v a l u e o f t h e A l b e e Ranch t o be $ 2 , 0 0 3 , 0 0 0 a n d t o t a l l i a b i l i t i e s to be $ 1 , 3 2 4 , 7 6 1 . 3 0 . The c o u r t awarded t h e a p p e l l a n t t h e s t o c k sale p r o c e e d s , f u r n i t u r e from t h e home r a n c h , a h o r s e , h o r s e t r a i l e r , j e w e l r y and o n e - h a l f o f $ 9 0 0 0 i n l e a s e f e e s owed t o t h e P e t e r s o n s f o r g r a z i n g r i g h t s o n t h e home r a n c h . The r e s p o n d e n t was a w a r d e d t h e home r a n c h , c a t t l e v a l u e d a t $ 5 2 , 9 2 4 , t h r e e h o r s e s , farm machinery, p e r s o n a l p r o p e r t y , $ 4 5 0 0 i n lease f e e s and $ 9 0 0 0 f r o m t h e sale o f a c a t e r p i l l a r tractor." DATED t h i s p d a y o f November, 1 9 8 1 .

Justices No. 81-50

I N THE SUPREME C U T O THE STATE O M N A A O R F F OTN

1981

I N RE THE MARRIAGE OF

KAY J O Y PETERSON,

P e t i t i o n e r and A p p e l l a n t ,

and

RAYMOND P. PETERSON,

Respondent and Respondent.

Appeal from: D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t , I n and f o r t h e c o u n t y o f Beaverhead. Honorable Frank B l a i r , Judge p r e s i d i n g .

Counsel o f Record:

For A p p e l l a n t :

D a t s o p o u l o s , ~ M a c D o n a l d & L i n d , M i s s o u l a , Montana

F o r Respondent:

C o r e t t e , Smith, Pohlman & A l l e n , B u t t e , Montana

Submitted on b r i e f s : J u l y 30, 1981

Decided: at Filed: Mr. Justice Frank B. Morrison, Jr., delivered the Opinion of the Court. Kay Peterson appeals from a judgment of the Fifth Judicial District, Beaverhead County, apportioning marital assets, denying child support and maintenance, and awarding custody of one child to the respondent. Kay and Raymond Peterson were married September 23, 1960. They have three children: two sons, Guy, age 18, and Jade, age 17, and one daughter, Andrea, age 15. The appellant and respondent accumulated substantial property during their marriage. They owned a 1400-acre cattle ranch where they resided, livestock, farm machinery and other personal property. Prior to September 1980, appellant and respondent each owned ninety shares which represented fifty percent of an incorporated 12,000-acre ranch near Wisdom, Montana, called the Albee Ranch. The remaining fifty percent was owned by Mr. and Mrs. Tom Ford. The appellant sold her ninety shares to the Fords for $230,000 before trial. The respondent was not involved in the sale and retained his ninety shares at the time of trial . Both ranches were substantially encumbered. The District Court found the home ranch to have a negative value of $74,625 after deducting all liabilities from its fair market value of $402,500. The court found the fair market value of the Albee Ranch to be $2,003,000 and total liabilities to be $1,324,761.30. The court equally divided the stock sale proceeds between the parties and ordered the shares owned by the respondent sold and the proceeds equally divided within thirty days or individually reissued in equal amounts to the parties. The home ranch, three horses and farm machinery were awarded to the respondent. Petitioner was awarded furniture, jewelry, a horse and a horse trailer. The remainder of the marital estate, which included cattle valued at $52,924, was equally apportioned. The appellant raises the following issues in this appeal: 1. Whether the District Court accurately determined the net worth of the marital estate. 2. Whether the District Court abused its discretion in apportioning the marital estate. 3. Whether the District Court erred in denying child support and maintenance. 4. Whether the District Court erred in granting the respondent custody of the minor daughter. We have carefully reviewed the record before us and find the judgment must be reversed and the case remanded for complete findings regarding the true net worth of the marital estate and the awarding of child custody. Further, it is obvious that the District Court failed to adequately follow the applicable statutory mandates and case law in apportioning the marital estate and in denying child support and maintenance.

Net Worth of the Marital Estate The appellant contends the District Court abused its discretion first by omitting marital assets proven at trial and second in its determination of the value of assets included by the court. The first omission complained of arises from the sale by respondent of 160 cattle to one Andrew Leep in December 1979. The r e s p o n d e n t t e s t i f i e d t h e t o t a l s a l e s p r i c e was

$ 7 6 , 0 0 0 which was a p p l i e d t o a p r o m i s s o r y n o t e t o S t a t e Bank

and Trust Company of Dillon, Montana, the holder of the

security interest in the cattle.

The a p p e l l a n t c o n t e n d s t h e s a l e s p r i c e was a c t u a l l y

$ 9 6 , 0 0 0 p a i d t o t h e r e s p o n d e n t i n two c h e c k s ; a downpayment

o f $ 2 0 , 0 0 0 made p a y a b l e t o t h e r e s p o n d e n t i n d i v i d u a l l y a n d a

second check of $ 7 6 , 0 0 0 made j o i n t l y p a y a b l e t o r e s p o n d e n t

and the bank. In support of her allegation appellant

o f f e r e d t e s t i m o n y of a Department of L i v e s t o c k i n v e s t i g a t o r ,

the canceled $20,000 check, copies of the bank's deposit

r e c o r d s and l o a n n o t a t i o n s , and t h e o f f i c i a l f i n d i n g s o f t h e

Montana Board of L i v e s t o c k i n v e s t i g a t i o n r e l a t i n g t o L e e p ' s

livestock d e a l e r ' s license. The D i s t r i c t C o u r t r e f u s e d t o

admit the Board of Livestock findings. Rule 803(8),

Mont . R . E v i d .

The D i s t r i c t C o u r t d i d n o t make a f i n d i n g r e g a r d i n g

this matter. Appellant presented substantial credible

evidence i n support of her contention that the respondent

received $96,000 for the cattle and may h a v e a t t e m p t e d t o

conceal the $20,000 payment. Respondent first testified

t h a t he c o u l d n o t remember t h e t o t a l s a l e s p r i c e b u t l a t e r

testified if he had received t h e second check f o r $20,000

t h a t he d e p o s i t e d t h a t check w i t h t h e bank. Respondent d i d

not present any documentary evidence in support of his

contention. Upon t h e e v i d e n c e f o u n d i n t h i s r e c o r d , we h o l d t h e D i s t r i c t Court abused i t s d i s c r e t i o n by ignoring this

contested issue in its findings. On remand the District

C o u r t m u s t make a f i n d i n g r e g a r d i n g t h i s c l a i m .

Appellant n e x t c o n t e n d s t h e D i s t r i c t C o u r t e r r e d by failing to include prepaid grazing fees in the marital estate. The respondent paid a Washington landowner $18,000 in anticipation of pasturing one hundred cattle; however, only forty-six cattle were actually pastured. The testimony of respondent supports the appellant's contention regarding the unused prepaid fees. Respondent testified the lessor would rebate approximately $9,000 on demand. No contrary evidence appears in the record. The District Court did not include this asset in its findings and conclusions. This was error. On remand the District Court must add the prepaid fees to the valuation of the estate. The final omissions claimed as error are a $6,000 payment received by respondent for gravel taken from the home rancn and a $1,400 mineral lease payment. Receipt of these payments was admitted by the respondent. However, the record does not contain the time they were received. The respondent testified he applied all the proceeds to expenses of the ranch. Appellant contends she is entitled to a full accounting. In Lippert v. Lippert (1981), - Mont. , 627 P.2d 1206, 1209, 38 St.Rep. 625, 629, we held, "spouses possess mutual powers, obligations and interests which endure until lawfully modified or terminated. One of those powers is the power to freely contract with others regarding marital property. Section 40-2-301, MCA." Absent modification either spouse is free to act with marital property. In this case the marital power to freely contract was lawfully modified. On March 25, 1980, a temporary order was granted by the District Court prohibit- ing the respondent from "transferring, encumbering, con- cealing or otherwise disposing of any real or personal

p r o p e r t y of [ s i c ] any i n t e r e s t t h e r e i n d u r i n g t h e p e n d e n c y

of t h i s proceeding." T h i s r e l i e f was i n a c c o r d a n c e w i t h o u r

statutes. Section 40-4-106(2)(a), MCA. A subsequent order

m o d i f y i n g t h e t e m p o r a r y o r d e r was e n t e r e d J u n e 2 , 1 9 8 0 . The

modification removed the total prohibition against the

respondent but required t h e respondent t o "account f o r a l l

monies from this date to t h e d a t e of the hearing on the

P e t i t i o n for Dissolution." On remand the respondent must

d i s c l o s e when he r e c e i v e d t h e d i s p u t e d payments. If they

were received after March 25, 1980, or remained in the

m a r i t a l e s t a t e a f t e r t h a t d a t e , t h e r e s p o n d e n t must a c c o u n t

t o the appellant f o r t h e i r disbursement.

In addition to omissions, the appellant claims the

D i s t r i c t C o u r t e r r e d i n i t s v a l u a t i o n o f t h e home r a n c h , t h e

A l b e e Ranch, farm machinery, and t h e number o f h o r s e s owned

by t h e p a r t i e s .

At trial the p a r t i e s presented c o n f l i c t i n g evidence

regarding t h e v a l u e of t h e home r a n c h . Appellant offered

the testimony and appraisal report of a professional

certified appraiser who concluded the value of the home

r a n c h t o be $ 7 5 0 , 0 0 0 a s o f S e p t e m b e r 1 9 8 0 . The r e s p o n d e n t

offered the testimony of a local rancher and real estate

buyer. He valued the ranch at $402,500. The District

Court, without stated reasons, accepted the lower figure.

The District Court is free to follow one appraisal and

r e j e c t another. However, h e r e t h e r e i s a w i d e d i s p a r i t y i n

valuation, and we are unable to review for abuse of

discretion in the absence of f i n d i n g s by the trial court

supporting the valuation selected. Respondent cites Biegalke v. Biegalke (1977), 172

Mont. 3 1 1 , 564 P.2d 9 8 7 , f o r t h e r u l e t h a t " t h e t r i e r o f t h e

f a c t s h a s t h e d i s c r e t i o n t o g i v e whatever w e i g h t he s e e s f i t

t o t h e t e s t i m o n y of t h e e x p e r t from 0 t o l o o % . " 564 P.2d a t

990. W think Bieqalke e is d i s t i n g u i s h a b l e . In Biegalke,

the parties agreed to the court appointment of a single

appraiser, stipulated t o his qualifications, and g e n e r a l l y

accepted his appraisal without objection. On appeal, we

held the court properly exercised its discretion i n deter-

mining v a l u a t i o n . In the instant case the p a r t i e s secured

different appraisers, who presented widely conflicting

valuations. Upon r e v i e w of the record, we c a n n o t s a y t h e

District Court properly exercised its discretion in

selecting the value it did without some i n d i c a t i o n o f its reasons f o r doing s o .

Appellant next contends t h e D i s t r i c t Court e r r e d in

its valuation of t h e Albee Ranch. Appellant's appraiser

testified that a rejected offer of $2,600,000 from a pro-

s p e c t i v e b u y e r was a r e a s o n a b l e v a l u a t i o n . The r e s p o n d e n t ' s

appraiser testified the total market value of the Albee

Ranch was $ 2 , 0 0 5 , 5 5 0 . The D i s t r i c t C o u r t f o u n d " t h e m a r k e t

v a l u e o f t h a t r a n c h f r o m t h e t e s t i m o n y o f J a c k H i r s c h y t o be

i n t h e sum o f $2,003,000." It appears t h e D i s t r i c t Court

h a s made a c l e r i c a l error which s h o u l d be corrected. In

a d d i t i o n , t h e c o u r t should s t a t e its reasons f o r determining

valuation. A rejected offer of $2,600,000 might well

i n d i c a t e t h e t r i a l c o u r t abused i t s d i s c r e t i o n i n a s s i g n i n g

a value of only $2,003,000. However, we will uphold a

proper e x e r c i s e of d i s c r e t i o n by t h e t r i a l c o u r t and i f a

r e a s o n a b l e e x p l a n a t i o n e x i s t s f o r a d o p t i n g t h e lower v a l u e , i t s h o u l d be s t a t e d .

With r e g a r d t o a p p e l l a n t ' s challenge t o the c o u r t ' s

f i n d i n g s of v a l u a t i o n of farm machinery and t h e number of

horses, we once again find substantial disparity in the

e v i d e n c e p r e s e n t e d by t h e p a r t i e s b u t no r e a s o n i n g g i v e n by

t h e c o u r t f o r i t s a d o p t i o n of t h e lower v a l u e s . On remand

t n e c o u r t s h o u l d e x p l a i n t h e r e a s o n s employed.

A p p o r t i o n m e n t , M a i n t e n a n c e and C h i l d S u p p o r t

True net worth of the marital estate must be

a c c u r a t e l y d e t e r m i n e d b e f o r e t h e i s s u e s of e q u i t a b l e appor-

tionment, maintenance and child support can be resolved;

however, w e have i n c l u d e d a p p e l l a n t ' s c l a i m s r e g a r d i n g t h e s e

issues t o provide guidance t o the D i s t r i c t Court.

Appellant contends the D i s t r i c t Court f a i l e d t o apply

t h e m a n d a t e s of s e c t i o n 40-4-202, MCA, i n t h e d i v i s i o n of

the marital property. W agree. e The d e t e r m i n a t i o n s made

m u s t be m e a s u r e d a g a i n s t t h e s t a t u t e . I n apportioning the

m a r i t a l e s t a t e t h e D i s t r i c t C o u r t must f o l l o w t h e r e q u i r e -

m e n t s of s e c t i o n 40-4-202(1), MCA, and o u r c a s e l a w . Smith

v . Smith ( 1 9 8 1 ) , - Mont. , 622 P.2d 1 0 2 2 , 38 S t . R e p .

146; T e f f t v. Tefft (1981), - Mont . , 628 P.2d 1094,

38 S t . K e p . 837. I n deciding t h e i s s u e of maintenance, the

c o u r t m u s t f o l l o w t h e g u i d e l i n e s f o u n d i n s e c t i o n 40-4-203,

MCA. Bowman v . Bowman (1981), Mont. - P.2d , 38 S t . R e p . 1515. F i n a l l y , t h e i s s u e of c h i l d s u p p o r t

m u s t be d e t e r m i n e d i n a c c o r d a n c e w i t h s e c t i o n 40-4-204, MCA.

The District Court must, at the very least, consider and

apply the enumerated statutory factors which control the

e x e r c i s e of i t s d i s c r e t i o n . T h i s was n o t d o n e i n t h i s c a s e . Child Custody The final issue we can properly review at this time is the challenge to the custody award. In accordance with an agreement of the parties, the District Court interviewed the minor children to determine their custodial preferences. In awarding custody the District Court made no specific findings. Appellant contends the award should be reversed because of such failure, citing section 40-4-212, MCA; In Re Marriage of Kaasa (1979), - Mont . , 591 P.2d 1110, 36 St.Rep. 425; and In Re Marriage of Kramer (1978), 177 Mont. 61, 580 P.2d 439. We agree and hold the custody award was deficient for failure to make proper findings. In summary we hold the District Court did not find the true net worth of the marital estate and inadequately considered the statutes controlling apportionment, main- tenance, child support and child custody awards. This cause is reversed and remanded for further proceedings consistent

We concur:

d h i e f Justice