This opinion will be unpublished and
may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (2004).
STATE OF MINNESOTA
IN COURT OF APPEALS
Zelda M. Scheff, petitioner,
David A. Scheff,
Filed April 25, 2006
Toussaint, Chief Judge
James Perunovich, Law Office of James Perunovich, P.F., 402 East Howard Street, Suite 7, Hibbing, MN 55746 (for appellant)
U N P U B L I S H E D O P I N I O N
TOUSSAINT, Chief Judge
On appeal in this marital dissolution, appellant-husband David A. Scheff argues that the district court erred in ruling that certain stock was marital property and argues that respondent-wife Zelda M. Scheff’s delay of more than two years between serving husband with the dissolution petition and her filing of that petition was not “reasonable” under Minn. R. Civ. P. 5.04, and therefore husband should not be penalized for transferring assets during the period between service and filing when the parties tried to reconcile. We affirm.
On January 8, 2001, wife served husband with a summons and petition for dissolution of marriage. For the next two years, the parties attempted to reconcile and continued to live together. Husband and wife were not able to reconcile their marriage, and on June 24, 2003, husband filed an answer and counter petition for dissolution of marriage to wife’s January 2001 summons and petition. On June 26, 2003, wife filed the January 2001 summons and petition for dissolution of marriage with the court.
During the dissolution proceedings, the parties stipulated to all matters except one, the property status a of stock interest received by husband from his brother, James Scheff (Scheff). Prior to and during his marriage to wife, husband worked for his brother, who owned Scheff Logging and Trucking, Inc. Scheff incorporated his logging business in 1995 and owned all assets. After incorporating, Scheff transferred 20% of the stock in his logging business to his mother and 20% to husband. Scheff testified that he transferred the stock to husband in pre-dissolution planning to prevent the loss of property in Scheff’s marital dissolution. No consideration was paid to Scheff by husband for receipt of the stock, nor was a gift tax return ever filed by husband. Prior to husband’s marital dissolution, he transferred his 20% ownership in Scheff Logging back to Scheff without wife’s consent or knowledge. Husband testified he did so because of his marital problems.
Husband challenges the district court’s finding that his 20% ownership in Scheff Logging constitutes marital property. In addition, he argues that wife’s delay of more than two years between serving him with the dissolution petition and her filing of that petition was not reasonable under Minn. R. Civ. P. 5.04, and he should not be penalized for transferring assets during the period when the parties tried to reconcile.
Husband argues that the district court erred by finding that the 20% stock interest given to him by his brother was marital property. He argues the stock was given solely to him as a gift and therefore is nonmarital property.
Property acquired during a
marriage is presumed to be marital. Olsen v. Olsen, 562 N.W.2d 797, 800 (
Nonmarital property is
statutorily defined as “property real or personal, acquired by either spouse
before, during, or after the existence of their marriage, which (a) is acquired
as a gift, bequest, devise or inheritance made by a third party to one but not
to the other spouse; [or] (b) is acquired before the marriage[.]” Minn. Stat. § 518.54, subd. 5(a)(b). In order to determine whether property was
given as a gift, the district court must consider the (1) donative intent of
the giver, (2) the delivery of the gift, and (3) the absolute disposition of
the property. McCulloch v. McCulloch, 435 N.W.2d 564, 568 (
The district court’s findings of
fact support its decision that the stock is marital property. Husband did not bear his burden to establish
that the property was nonmarital.
Although it is undisputed that Scheff delivered the stock in the logging
business to husband, he argues that the property must be classified as a gift
because Scheff intended the transfer to be a gift. In Olsen,
the Minnesota Supreme Court held that
the “most important factor in determining whether a gift is marital or nonmarital
is the donor’s intent.”
There was conflicting testimony during trial. Scheff testified that the stock transfer was intended to be a gift solely to husband. But both Scheff and husband also testified that the stock transfer was part of Scheff’s pre-dissolution planning. Scheff testified that he transferred the stocks to “protect his assets from a pending marital dissolution and that the stock shares were never really [husband’s].” On direct examination, when asked, “Were you trying to protect some assets should there be a divorce?,” Scheff answered, “Yes.” Husband also testified that he understood that Scheff transferred the stock to him in order to protect assets while Scheff proceeded with his marital dissolution. Although both parties labeled the transfer of stock as a gift, they fully understood that the immediate and dominating purpose was to transfer Scheff’s ownership in order to protect Scheff during his dissolution proceedings. Most tellingly, Scheff testified the stock was “basically never [husband’s].”
Husband argues that his retention of the stock after Scheff’s wife died is proof that the stock transfer to him was a gift. He argues that after Scheff’s wife died, there was no need for him to keep the stock for Scheff’s pre-dissolution planning, but he nevertheless retained possession. We are not persuaded that this established a gift.
Although Scheff labels the transfer of stock to his mother and husband as gifts, he never intended the absolute disposition of the stock to them. There is no evidence to show that Scheff intended to surrender absolute control and dominion over the stock; the evidence shows that he intended to transfer the stock only temporarily for pre-dissolution planning.
Husband argues the transferred stock was intended as a gift because certain tax preparation forms identify him as the sole recipient of the stock. Although certain tax forms may show husband the sole holder of the stock, husband failed to file a gift tax return. The district court did not credit husband’s tax agent’s testimony that it was he who forgot to file the form.
Husband also points to the fact
that there was no consideration paid by husband for the receipt of the stock
and that this further supports the argument that the stocks were given as a
gift. Although there was no
consideration, a donor must have the requisite donative intent. “For a donor to have the requisite donative
intent, the gift must be voluntary and gratuitous.” Cooke
v. Belzer, 413 N.W.2d 623, 626 (
The record supports the district court’s findings, which indicate that the stock is marital property.
Husband argues that wife’s delay of more than two years between serving husband with the dissolution petition and her filing of that petition was unreasonable under Minn. R. Civ. P. 5.04. As a result, he argues that his transfer of assets during the two-year period did not violate Minn. Stat. § 518.58. Minn. Stat. § 518.58, subd. 1(a) provides:
During the pendency of a marriage dissolution, separation, or annulment proceeding, or in contemplation of commencing a marriage dissolution, separation, or annulment proceeding, each party owes a fiduciary duty to the other for any profit or loss derived by the party, without the consent of the other, from a transaction or from any use by the party of the marital assets. If the court finds that a party to a marriage, without consent of the other party, has in contemplation of commencing, or during the pendency of, the current dissolution, separation, or annulment proceeding, transferred, encumbered, concealed, or disposed of marital assets except in the usual course of business or for the necessities of life, the court shall compensate the other party by placing both parties in the same position that they would have been in had the transfer, encumbrance, concealment, or disposal not occurred.
He also argues that he was not effectively served with wife’s summons and petition for dissolution of marriage in 2001.
The determination of whether
service is proper is a question of law. Amdahl v. Stonewall Ins. Co., 484 N.W.2d
811, 814 (Minn. App. 1992), review denied
(Minn. July 16, 1992). The application
of law to stipulated facts is a question of law, which this court reviews de
novo. Morton Bldgs. v. Comm'r of Revenue, 488 N.W.2d 254, 257 (
Minn. R. Civ. P. 5.04 instructs
that “[a]ll papers after the complaint required to be served upon a party. . .
shall be filed with the court within a reasonable time after service.” The rule creates uniform requirements for the
filing of documents, requiring that all papers served on a party be filed with
Husband argues that he believed he and wife had reconciled and that any distribution of assets was not in violation of Minn. Stat. § 518.58. The record indicates that the parties attempted to reconcile their relationship, continued living together, and attended counseling. When these attempts failed, however, wife filed the summons and petition with the court. Service of the complaint put husband on notice that wife wanted to end the marriage. Under these facts, wife’s more than two-year delay between service and filing of the summons and petition was not unreasonable.
Husband transferred the stock back to Scheff while husband and wife attempted to reconcile. Husband owed a fiduciary duty to wife not to involve marital assets in any transactions without her consent. Minn. Stat. § 518.58, subd. 1(a) (2004). Because the district court correctly found that the stock was marital property, husband breached his fiduciary duty to wife when he transferred the stock back to Scheff.
Husband also argues that wife’s
service of the summons and petition was ineffective. The defense of ineffective
service is deemed waived if not raised as a defense, made by motion, or
included in a responsive pleading. Minn.
R. Civ. P. 12.08(a); see also Majestic,