Opinion
No. CX-98-25.
Filed September 8, 1998.
Appeal from the District Court, Stearns County, File No. F5-96-1504.
Roger C. Justin, Rinke-Noonan, (for appellant).
Robert E. Pottratz, Attorney at Law, (for respondent).
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. sec. 480A.08, subd. 3 (1996).
UNPUBLISHED OPINION
Appellant James Bierschbach challenges the district court's division of property in a dissolution proceeding. He disputes the district court's determination that he gave a farm designated as his nonmarital property in an antenuptial agreement as a gift to the marital estate, making the farm marital property at the dissolution. We affirm.
FACTS
In May 1983, appellant James Bierschbach purchased a farm. In the autumn of that year, respondent Rita Bierschbach moved in with appellant on the farm. In February 1984, they became engaged. On August 30, 1984, the parties executed an antenuptial agreement. Two days later, they married.
The antenuptial agreement specified at Article III, B. that, upon divorce, "[e]ach party shall retain his or her property free of any right or claim of the other, except that any assets acquired during the marriage, * * *." The agreement lists the farm real estate and personal property as assets of James Bierschbach. Article II, "Rights in Property," reads:
D. An irrevocable gift from one party to the other may, and a release or restoration of a right in accordance with this agreement shall, be evidenced by a writing which:
1. identifies the property or the right,
2. states that a gift, release, or restoration is intended,
3. is signed by the party making the gift or releasing or restoring the right, and
4. is dated and witnessed.
In Article V, "Construction of Agreement," the agreement reads:
E. Nothing in this agreement shall prevent one party from receiving an interest in the property of the other party, by will, gift, inheritance, or any kind of voluntary transfer.
In the dissolution proceeding, respondent contended that appellant had given the farm as a gift to the marital estate during the marriage. Respondent testified that six months to a year after their marriage, she and appellant engaged in a heated argument. Appellant told her that if she left him she would get nothing because of the agreement. She then announced that she would get a job. Appellant dissuaded her, telling her that, if she did not take an outside job, but instead stayed home and continued working on the farm, they would "become partners," and the agreement "didn't mean anything."
On August 28, 1985, appellant changed title in the farm property to both of the parties as joint tenants. Appellant added respondent's name to all of the financial accounts, put respondent's name on the title to the milk truck, and in 1990, when the business was incorporated, made respondent a shareholder.
Appellant testified that (1) the argument about respondent working off the farm did not happen; (2) he intended to make respondent a partner in whatever they accumulated after the marriage; and (3) he put respondent's name on the property to ensure she received it without going through probate if he died. The bank account was in both of their names even before their marriage. He made respondent a 20-percent shareholder in the corporation.
The district court did not reach the issue of whether the agreement was valid, holding that, in any event, appellant "evidenced an intent to abandon the agreement" during the marriage and transferred the farm as a gift to the marital estate and respondent. The court then stated:
The party seeking to claim that property is non-marital in nature has the burden of proof, and the Court specifically finds that [appellant]'s self-serving statements about the transfers being made only for estate tax purposes, and not because of an intent to gift the property to the [respondent], are insufficient to satisfy that burden.
This appeal followed.
DECISION
A district court's allocation of the burden of proof is subject to de novo review. See Snyder Elec. Co. v. Fleming , 305 N.W.2d 863, 867 (Minn. 1981); Engelby v. Engelby , 479 N.W.2d 424, 426-27 (Minn.App. 1992) (determining which party had burden of proof without deferring to trial court).
A party seeking to establish the nonmarital character of an asset has the burden to prove it is nonmarital by a preponderance of the evidence. Wopata v. Wopata , 498 N.W.2d 478, 484 (Minn.App. 1993). After a party establishes initially that an asset is nonmarital, another party asserting that the nonmarital asset was given by gift to the marital estate, so as to become marital property, has the burden of proof by clear and convincing evidence. McCulloch v. McCulloch , 435 N.W.2d 564, 568 (Minn.App. 1989); see also Montgomery v. Montgomery , 358 N.W.2d 169, 172 (Minn.App. 1984) (where appellant contended property that had been nonmarital became marital when it was put in joint tenancy, court stated form of ownership of property "is not dispositive of property's marital or nonmarital nature" and noted it was not required to decide additional question of whether nonmarital nature changed because of gift).
The parties did not dispute that appellant acquired the farm before the marriage. Additionally, in its findings of fact, the district court notes that the property appellant transferred into joint tenancy during the marriage had been "acquired by him prior to the marriage." Thus, the farm was initially nonmarital property. See Minn. Stat. § 518.54, subd 5(b) (1996) (nonmarital property means property acquired by either spouse before marriage).
Respondent alleged that appellant had given nonmarital property to the marital estate. After appellant satisfied his initial burden to show that the farm was nonmarital, as reflected in the district court's finding that he acquired it prior to the marriage, respondent bore the burden of proof that the marital character of the farm changed.
The district court, however, stated that appellant had the burden of proof, and that his testimony that the transfer was not made to gift the farm to the marital estate was insufficient to satisfy that burden. In effect, the district court held that appellant failed to prove that the farm was not "gifted" to respondent. This holding is inconsistent with the portions of McCulloch and Montgomery requiring a party alleging a gift to show a gift by clear and convincing evidence. Consequently, the district court improperly placed the burden of proof.
Application of an incorrect standard of proof only requires reversal if the error prejudices the other party. Kornberg v. Kornberg , 542 N.W.2d 379, 387 n. 3 (Minn. 1996); see Minn.R.Civ.P. 61 (harmless error to be disregarded). If the district court had placed the burden of proof on respondent, a proper application of the law would involve determining whether respondent met her burden to prove by clear and convincing evidence that appellant gave the farm as a gift to the marital estate.
Whether property is marital or nonmarital is a question of law, but a reviewing court must defer to the trial court's underlying findings of fact. Olsen v. Olsen , 562 N.W.2d 797, 800 (Minn. 1997). Assuming that the antenuptial agreement was valid, the agreement provides for parties to give property interests to the other party by gift. The agreement explicitly provides that gifts need not be in writing — in direct contrast to a release or restoration of a right, which must be in writing. Thus, the agreement did not provide a method for determining whether a party gives a valid gift different from the common law governing gifts.
Generally, a valid gift requires (1) donative intent, (2) delivery of the gift, and (3) absolute disposition of the property. McCulloch , 435 N.W.2d at 568. Additionally, merely transferring title from individual ownership to joint tenancy does not transform nonmarital property into marital property. Id.
After hearing conflicting evidence from appellant and respondent as to appellant's intent in transferring the farm into joint tenancy with respondent, the district court credited respondent's testimony, and found that the transfer was made in accordance with appellant's promise to become equal partners with her if she refrained from procuring employment off the farm. The district court judged the credibility of the witnesses and considered their testimony in light of the evidence of the appellant's actions in adding respondent's name to title on various properties and bank accounts. Following this, the district court determined that the transfer was a gift of the farm to the marital estate.
We hold that the district court's finding that the transfer of the farm was an effectuation of the parties' agreement to become equal partners established by clear and convincing evidence that appellant gave the farm by gift to the marital estate. Thus, the district court's erroneous placement of the burden of proof did not prejudice appellant, and we affirm the district court.