July 18, 2013
Helen Rebel, Plaintiff and Appellant
Rodney Allen Rebel, Defendant and Appellee
Appeal from the District Court of Stark County, Southwest Judicial District, the Honorable H. Patrick Weir, Judge.
Thomas M. Jackson, for plaintiff and appellant.
Dann E. Greenwood, 30 1st Avenue E., for defendant and appellee.
[¶ 1] Helen Rebel appeals from a district court judgment granting her a divorce from Rodney Rebel, primary residential responsibility and child support for their then minor child, and distributing their marital property. We affirm the child support award, but we reverse and remand the property distribution. The district court has not adequately articulated reasons justifying its calculated $356, 769.00 disparity in favor of Rodney Rebel. Moreover, the value of the property received by Helen Rebel is less than the value articulated by the district court. Under the circumstances, we are unable to determine that the resulting property distribution is equitable.
[¶ 2] Helen and Rodney Rebel married in 1989 and owned a farming and ranching operation in western North Dakota. Rodney Rebel has been engaged in farming and ranching his entire adult life. Helen Rebel worked on the farm as well, but in about 1993 she started working for various local businesses. The couple had two children, one of which was a minor at the time of the divorce. Rodney Rebel had leukemia during their marriage, but it was in remission at the time of trial. As a result of Rodney Rebel's health issues, he receives Social Security disability benefits for himself and the minor child.
[¶ 3] In 1993 and 2009, the couple purchased approximately 1, 200 acres of real property from Rodney Rebel's parents. The land had substantially been in the Rebel family for several generations. In the 1993 sale, Helen and Rodney Rebel purchased approximately 480 acres from his parents for $242 per acre. The contract included a twenty-five year option to purchase more land from Rodney Rebel's parents at the same rate of $242 per acre and allowed rents paid on the land to offset the purchase price. In 2009, Rodney Rebel's parents were financially struggling, and the couple exercised the option to purchase the land for $242 per acre, less rents paid. The court heard evidence the land was valued at over $900 per acre at the time of the divorce. Rodney Rebel acknowledged the transaction was "extremely favorable" and at a price "dramatically less than the fair market value." The transaction was complicated because a bank had a mortgage on the land that was recorded after Rodney and Helen Rebel's option contract. Ultimately, they purchased 720 acres from his parents with the payments going to the bank. Rodney Rebel's parents filed for bankruptcy.
[¶ 4] In 2010, Helen Rebel filed for divorce, citing irreconcilable differences. She revealed to Rodney Rebel she was romantically involved with her boss. The couple separated. During this time, the minor child lived with Helen Rebel in the couple's home in Richardton, and Rodney Rebel moved into a mobile home on the couple's farmstead. Helen Rebel did not seek an interim child support order, but Rodney Rebel provided monetary support for the child.
[¶ 5] At trial, Helen Rebel proposed that the court award her the property acquired in 1993, with Rodney Rebel receiving all the farm assets and the land purchased in 2009. To equalize the distribution, Helen Rebel sought a cash payment. In contrast, Rodney Rebel proposed to have the court award him all of the farmland, with Helen Rebel receiving the marital residence, certain financial assets, and a cash payment for a portion of the machinery, livestock, feed and farm supplies as necessary to equalize the distribution.
[¶ 6] The district court granted the divorce. Based on the parties' stipulation, it awarded Helen Rebel primary residential responsibility of the child. The court awarded $238.00 in monthly child support to begin April 1, 2012. In distributing their property, the court found the net marital estate to be worth $1, 609, 110.84, making one-half worth $804, 555.42. The district court awarded Rodney Rebel the farmland, subject to a mortgage; farm machinery, livestock, feed, and grain; and other various assets and debts equaling a total net value of $1, 018, 816.53. Helen Rebel received the marital home, subject to a mortgage; cash payments equal to the net value of the farm machinery, livestock, feed, and grain, valued at $512, 534.78; and other assets and debts equaling a total net value of $662, 047.52. The district court ordered Rodney Rebel to pay Helen Rebel twenty percent of the net value of farm machinery, livestock, feed, and grain, within ninety days and the remainder within three years. The distribution resulted in a difference of "$356, 769.00, " by the district court's calculation.
[¶ 7] Under N.D.C.C. § 140524(1), a district court must make an equitable division of the parties' marital estate in a divorce action. "In making an equitable distribution of marital property, a court must consider all of the parties' assets." Kosobud v. Kosobud, 2012 ND 122, ¶ 6, 817 N.W.2d 384 (quotation omitted). After including all of the parties' marital assets and debts in the marital estate, the court must consider the following factors emanating from Ruff v. Ruff, 78 N.D. 775, 52 N.W.2d 107 (1952), and Fischer v. Fischer, 139 N.W.2d 845 (N.D.1966), in its asset distribution:
[T]he respective ages of the parties, their earning ability, the duration of the marriage and conduct of the parties during the marriage, their station in life, the circumstances and necessities of each, their health and physical condition, their financial circumstances as shown by the property owned at the time, its value at the time, its income-producing capacity, if any, whether accumulated before or after the marriage, and such other matters as may be material. The trial court is not required to make specific findings, but it must specify a rationale for its determination.
Kosobud, at ¶ 6 (quotation omitted). Though a property division need not be equal to be equitable, the district court must explain a substantial disparity. Id.
[¶ 8] "We have upheld the distribution of farm assets to one spouse with an offsetting monetary award to the other spouse." Gibbon v. Gibbon, 1997 ND 210, ¶ 7, 569 N.W.2d 707 (citation omitted). But, "[w]e have consistently held that periodic cash payments without interest awarded as part of a property distribution must be discounted to present value in determining whether or not the distribution is equitable." Welder v. Welder, 520 N.W.2d 813, 816 (N.D. 1994) (quotation and citations omitted); see also Horner v. Horner, 2004 ND 165, ¶ 18, 686 N.W.2d 131; Steckler v. Steckler, 519 N.W.2d 23, 25 (N.D. 1994); Sateren v. Sateren, 488 N.W.2d 631, 633 (N.D. 1992); Lucy v. Lucy, 456 N.W.2d 539, 542 (N.D. 1990); Pankow v. Pankow, 371 N.W.2d 153, 157-58 (N.D. 1985). As we said in Welder:
The reason for the rule is obvious: if the payments are not discounted to present value, the court is relying upon an artificial value when it distributes the property. When one party receives property which is clearly worth less than the value ascribed to it by the trial court, a reviewing court cannot determine whether the resulting property distribution is equitable. Therefore, it is necessary to discount periodic payments to present value.
Welder, at 816 (quotation omitted).