May not be cited except as provided by
Minn. Stat.ß 480A.08, subd. 3 (1998).
IN COURT OF APPEALS
In Re the Marriage of:
Neil D. Petrowske, petitioner,
Filed May 23, 2000
Reversed and remanded
Chisago County District Court
File No. F495642
Roger A. Christianson, John M.Gearin, Roger A. Christianson, P.A., 386 North Wabasha Street, Suite 600, St. Paul, MN† 55102-1308 (for appellant)
Patricia A. OíGorman, Patricia A. OíGorman, P.A., 8750 90th Street South, Suite 207, Cottage Grove, MN† 55016 (for respondent)
††††††††††† Considered and decided by Peterson, Presiding Judge, Schumacher, Judge, and Anderson, Judge.
U N P U B L I S H E D††† O P I N I O N
††††††††††† In this appeal from an amended judgment and decree following a remand by this court, appellant husband argues that the trial court improperly applied the law to the facts of the case and ignored this courtís instructions on remand.† We reverse and remand.††
††††††††††† In a previous appeal in this marital dissolution action, this court reversed the trial courtís determination of husbandís nonmarital property interest in the partiesí homestead.† This court concluded that:
†††† The trial court misapplied the law when it determined that the records shown by [husband] were satisfactory to trace the nonmarital property, but then determined the property lost its nonmarital status because it had been put into marital accounts.† The issue of the nonmarital property distribution is remanded to the trial court for a proper application of the law and a determination of the proper amount of nonmarital interest [husband] has in the homestead.††††
Petrowske v. Petrowske, No. C9-99-351, 1999 WL 410360, at *3 (Minn. App. June 22, 1999) (Petrowske I).
††††††††††† On remand, the trial court stated in its amended findings of fact, conclusions of law, order for judgment and judgment and decree:
†††† The Court of Appealsí reversal is based on a misunderstanding of unfortunately worded language in this Courtís Findings of Facts in the Amended Judgment and Decree.† In fact, the Court carefully reviewed the record and could find no evidence to support tracing of any funds other than as specifically found.† This Court therefore modified its initial award of nonmarital property on that basis.† This Court will therefore amend its Judgment and Decree to more accurately reflect its Findings.† However, it can not find tracing in the absence of any supporting evidence, and will not amend its conclusions.
††††††††††† The trial court determined that although husband had substantial nonmarital assets from real estate sales, the assets could not be traced because husband sold the property using contracts for deed and for many years payments on the contracts were deposited into the partiesí joint checking account.† The trial court also found, however, that 4.8% of the partiesí $320,000 marital homestead or $15,360 could be traced to husbandís nonmarital property.† Based on this figure, the trial court awarded husband $144,894.50, which was half of the marital equity in the homestead, plus $15,360.
D E C I S I O N
††††††††††† On remand, the trial court must strictly execute the appellate courtís mandate according to its terms.† Duffey v. Duffey, 432 N.W.2d 473, 476 (Minn. App. 1988); see also Halverson v. Village of Deerwood, 322 N.W.2d 761, 766 (Minn. 1982) (trial courtís duty on remand is to execute the mandate of the remanding court strictly according to its terms).† But the trial court has broad discretion to proceed in any manner consistent with the mandate if the instructions are not specific as to how the court should proceed.† Duffey, 432 N.W.2d at 476.† A trial court has no power to alter, amend, or modify a mandate from an appellate court.† Halverson, 322 N.W.2d at 766.
††††††††††† All property acquired by either spouse during the marriage is presumed to be marital property, regardless of the form of ownership.† Minn. Stat. ß 518.54, subd. 5 (1998).† This presumption may be overcome by showing that the property was acquired in exchange for or is the increase in value of nonmarital property.† Id.† Property acquired by a spouse before the marriage is nonmarital.† Id., subd. 5(b).†
††††††††††† The trial court has broad discretion in dividing marital property.† Rutten v. Rutten, 347 N.W.2d 47, 50 (Minn. 1984).† But whether property is classified as marital or nonmarital is a question of law, which this court reviews de novo.† Wopata v. Wopata, 498 N.W.2d 478, 484 (Minn. App. 1993).† While this court need not defer to a trial courtís legal conclusions about the marital or nonmarital nature of property, we must affirm the findings of fact supporting that conclusion unless they are clearly erroneous.† Freking v. Freking, 479 N.W.2d 736, 739 (Minn. App. 1992).
††††††††††† To maintain its nonmarital character, nonmarital property must be kept separate from marital property or, if commingled, must be readily traceable.† Wopata, 498 N.W.2d at 484.† A party seeking to establish the nonmarital character of an asset must do so by a preponderance of the evidence.† Freking, 479 N.W.2d at 738.† If a party claims that a nonmarital asset has been exchanged for another asset, he or she must be able to trace the exchange.† See Kottke v. Kottke, 353 N.W.2d 633, 636 (Minn. App. 1984) (tracing to nonmarital source is required when owner shows that asset was acquired in exchange for nonmarital property), review denied (Minn. Dec. 20, 1984).†
††††††††††† Transferring nonmarital property into a joint checking account does not erase the nonmarital nature of the funds.† Nash v. Nash, 388 N.W.2d 777, 781 (Minn. App. 1986), review denied (Minn. Aug. 20, 1986).† If the party claiming the funds are nonmarital can trace the funds in question, they retain their nonmarital status.† Id.† Furthermore, tracing does not require intricate detail.† Danielson v. Danielson, 392 N.W.2d 570, 572 (Minn. App. 1986); see also Nash, 388 N.W.2d at 781 (in tracing funds the party is not required to produce the serial numbers of the bills used).
††††††††††† Husband argues that the trial court ignored the reasoning of this court regarding the nonmarital property interest he demonstrated and ignored the instructions of this court on remand.† He contends that this court sent the matter back to the trial court to amend its order, and instead of following this courtís instruction, the trial court substituted its own reasoning to reach the same conclusion reached in the judgment that was reversed and remanded.
††††††††††† In its remand in Petrowske I, this court did not instruct the trial court to amend its order.† This court concluded in Petrowske I that the trial court misapplied the law when it concluded that husbandís nonmarital property lost its nonmarital character simply because it had been put into marital accounts.† 1999 WL 410360, at *3.† This court explained that even though nonmarital funds are commingled with marital funds, if the party claiming the funds are nonmarital can trace the funds, they remain nonmarital.† Id. at *2.† This courtís remand of the nonmarital property distribution issue instructed the trial court to properly apply the law and determine the proper amount of nonmarital interest husband has in the homestead.† Id. at *3.
††††††††††† That is what the trial court attempted to do on remand.† The trial court acknowledged that commingling marital and nonmarital property does not alone cause the nonmarital property to lose its nonmarital status.† But the trial court then went on to conclude that husbandís nonmarital funds lost their nonmarital status because there was no evidence to support tracing of any funds other than those the court found were nonmarital.
††††††††††† Husband concedes that he did not present any bank records, receipts, or other documentary evidence demonstrating how funds from the joint checking account were used, but he argues that his testimony demonstrates that a greater portion of the homestead was acquired in exchange for his nonmarital property than the trial court found.† We have reviewed husbandís testimony regarding the several real estate transactions that occurred before and during the partiesí marriage, and we conclude that the testimony could allow the trial court to trace additional nonmarital funds that husband claims were used to purchase the homestead.†
††††††††††† The trial courtís findings include a detailed analysis of the real estate transactions husband described.† Contracts for deed were used for some of these transactions, and the parties received payments pursuant to the contracts during the marriage.† The trial court found:
The payments on these contracts for deed were deposited monthly for many years into the partiesí joint checking account.† No evidence has been brought before the Court showing either that they were kept separate from general marital funds or that they were used to pay for any particular real or personal property.†
††††††††††† The trial court also found with respect to a particular transaction:
†††† In August 1984, the parties sold 1969 Main for $82,500.00, receiving $5,050.00 in cash and a 10-year contract for deed of $72,500.00.† Mr. Petrowskeís nonmarital share was $41,250.00.† Here also, the contract for deed payments were commingled with marital funds over many years and no portion of them is traceable.† Mr. Petrowskeís share of those payments lost its nonmarital character.† The parties immediately put the $5,050.00 cash toward the purchase of their new home.† This Court ascribes the full amount of the traceable $5,050.00 cash to being Mr. Petrowskeís nonmarital proceeds.
††††††††††† We understand this finding to mean that, as of August 1984, husbandís nonmarital property included one half of the $72,500, 10-year contract for deed.† We find no basis to disturb the trial courtís treatment of monthly payments received pursuant to this contract for deed.† The monthly payments were placed into a joint checking account, and the nonmarital portions of the payments lost their nonmarital character when funds from the checking account were used to pay unidentified, household expenses.† But we disagree with the trial courtís conclusion that there was no evidence that any contract for deed payments were used to pay for any particular real or personal property.
††††††††††† When asked where the parties got the money used to pay for the homestead, husband answered,
The $67,000 from lot 3 contract for deed being satisfied, a 13,500 contract for deed from lot 1 that was satisfied, and the remainder was cash from the sale of lot 4, along with the $42,000 mortgage from the bank.
††††††††††† The lot 3 to which husband referred was the lot at 1969 Main, and the contract for deed that was satisfied was the $72,500 contract for deed that the trial court had found was one-half husbandís nonmarital property.†
††††††††††† The trial court found that the parties paid $155,000 to build the homestead in 1990 using ď$13,550.00 cash from the sale of 1618 Peltier, $99,450.00 in marital cash, and a $42,000.00 mortgage.Ē† Husbandís testimony that the contracts for deed were satisfied and the proceeds were put into the homestead is evidence that the payments to satisfy the contracts were used to pay for particular real property.
††††††††††† Documentary evidence is not the only evidence that will meet the requirement for tracing nonmarital property.† Testimony is also sufficient for tracing funds.† See Doering v. Doering, 385 N.W.2d 387, 390-91 (Minn. App. 1986)(affirming finding that bonds could be traced to nonmarital source based on testimony of parties).† Because husbandís testimony is evidence that could allow tracing, and the trial courtís decision was based on a determination that there was no evidence that would allow tracing, we reverse the nonmarital property distribution and remand to permit the trial court to reconsider husbandís testimony regarding the real estate transactions.
† ††††††††† Husband also argues that he was precluded from strictly tracing the nonmarital property because he left his bank records in the homestead, and although he requested the records, wife destroyed them.† He contends that allowing the trial courtís order to stand will allow wife to benefit from her active participation in the obstruction of his proof.† But husband has not demonstrated that he did anything more than request the records.† He has not cited any motion he made to compel wife to produce the records.†
††††††††††† We recognize that there is a possibility that wife has benefited from denying husbandís requests for the records.† But because husband failed to take steps to compel wife to produce the records after his requests were denied, we cannot conclude that wifeís denial, by itself, demonstrates that the trial court erred when it determined that there is no evidence to support tracing.†
††††††††††† Reversed and remanded.