This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480A.08, subd. 3 (2006).

 

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A06-290

 

 

In re the Marriage of:

Debora Kay Schnitker,

n/k/a Debora K. Peterson, petitioner,

Respondent,

 

vs.

 

Kenneth Robert Schnitker,

Appellant.

 

 

Filed ­­­April 10, 2007

Affirmed

Dietzen, Judge

 

Hennepin County District Court

File No. DW 299812

 

 

George G. Seltz, Seltz & Seltz, P.L.L.P., 6601 Lyndale Avenue South, Suite 320, Minneapolis, MN 55423 (for respondent)

 

Kenneth R. Schnitker, 3409 Quebec Avenue South, St. Louis Park, MN 55426 (pro se appellant)

 

            Considered and decided by Hudson, Presiding Judge; Randall, Judge; and Dietzen, Judge.

U N P U B L I S H E D   O P I N I O N

 

DIETZEN, Judge

 

            Appellant challenges the district court’s judgment and decree of divorce arguing that it failed to properly apply the terms of the parties’ antenuptial agreement and that its division of the property was inequitable.  Because the district court properly applied the law and did not abuse its discretion, we affirm.

FACTS

            Appellant-husband Kenneth Schnitker and respondent-wife Debora Schnitker were married in October 1998.  Prior to the marriage, the parties entered into an antenuptial agreement.  Under the agreement, all assets acquired by either party before the marriage, and income earned during the marriage but not placed into the “marital account,” constituted nonmarital property.  The parties also agreed to establish a joint account “which shall be marital property.”

During the marriage, appellant was the owner of KRS Computer and Business School.  Between 1998 and 1999, KRS’s annual revenues were over 8.4 million dollars, and appellant employed 120 people.  In 2000, the business began to deteriorate.  Because it was a subchapter S corporation, the losses generated by the business flowed through to the parties and created significant tax refunds on their jointly-filed income tax return.

            At trial, respondent testified that she was employed by Corinthian Schools and had net annual earnings of $44,591.  Appellant was employed as a contract online instructor and had earned $20,272 for calendar year 2005.  For the time period 1998 through 2002, appellant’s average annual income was $159,973, and he is eligible for social security benefits.  Respondent’s monthly expenses were $2,500, as compared to appellant’s expenses of $1,635. 

            The parties owned residential property in St. Louis Park.  The parties purchased the property with an initial down payment of $93,000 from an income tax refund.  The mortgage and title to the property were placed solely in the name of respondent due to appellant’s poor credit rating and to transfer his assets beyond the reach of creditors.  In October 2003, additional payments were made from tax refunds in the amounts of $12,000 and $68,000.  These amounts were first deposited into the parties’ joint checking/savings accounts and, thereafter, into respondent’s individual account. 

The parties resided in the homestead together from October 2003 until respondent moved out of the house in August 2005.  As of June 2004, its appraised fair market value was $231,000, subject to a mortgage of $37,000.   

            Following trial, the district court awarded each party an undivided one-half interest in the residence acquired during the marriage.  The property was to be sold and the net proceeds to be divided equally.  The district court divided the remaining personal property and automobiles based on the current possession of the property.  This appeal follows.

D E C I S I O N

Appellant argues that the district court erred in its division of the marital property.  District courts have broad discretion over the division of marital property and appellate courts will not alter a district court’s property division absent a clear abuse of discretion or an erroneous application of the law.  Chamberlain v. Chamberlain, 615 N.W.2d 405, 412 (Minn. App. 2000), review denied (Minn. Oct. 25, 2000); Ebnet v. Ebnet, 347 N.W.2d 840, 842 (Minn. App. 1984).  Appellate courts “will affirm the [district] court’s division of property if it had an acceptable basis in fact and principle even though [the appellate court] might have taken a different approach.”  Antone v. Antone, 645 N.W.2d 96, 100 (Minn. 2002).  “We defer to the [district] court’s findings of fact and will not set them aside unless they are clearly erroneous.”  Id.

Appellant argues that the district court erred in its application of the antenuptial agreement in two ways.  First, the antenuptial agreement provides that all revenues generated by his business, as well as the appreciation of those revenues, constitute nonmarital property.  Because the residence of the parties was purchased and subsequent payments were made with tax refund monies that were generated by his business, appellant argues that the residence is nonmarital property.  “Contract interpretation is a question of law which we review de novo.”  Travertine Corp. v. Lexington-Silverwood, 683 N.W.2d 267, 271 (Minn. 2004).  If the contract language is plain, clear, and unambiguous, there is no interpretation necessary and the court’s task is to enforce the agreement.  Minneapolis Pub. Hous. Auth. v. Lor, 591 N.W.2d 700, 704 (Minn. 1999).   We examine the contract as a whole and must try to harmonize all provisions if we can do so reasonably.  Chergosky v. Crosstown Bell, Inc., 463 N.W.2d 522, 525 (Minn. 1990).  “Because of the presumption that the parties intended the language used to have effect, we will attempt to avoid an interpretation of the contract that would render a provision meaningless.”  Id. at 526.

            The district court concluded that the tax refund money generated by appellant’s business was originally nonmarital property under the antenuptial agreement, but it was converted to marital property when it was deposited into the parties’ joint checking account.  We agree.  

Article V of the agreement provides that “[t]he parties agree that on or after the date of their marriage, a joint account shall be established which shall be marital property.”  The tax refunds may have originally been nonmarital property, but once they were deposited into the joint marital checking account, they became marital property.  See Lor, 591 N.W.2d at 704 (holding when a contract’s language is unambiguous, the court’s task is to enforce the agreement).  Thus, the joint tax refunds generated by the business were converted to a marital asset when deposited into the joint marital account.  And because the residence was purchased and mortgage payments were made with those marital assets, it is marital property.

Appellant nonetheless argues that all monies used to purchase the residence or make the mortgage payments can be “traced back” to his nonmarital business earnings.  But even assuming, arguendo, that the funds could be “traced back” to a nonmarital source, the antenuptial agreement converted those funds into marital property when they were deposited into the joint checking account.

Second, appellant argues that enforcement of the antenuptial agreement is unfair and unconscionable.  Section 3.3.3 of the antenuptial agreement provides that in the event of dissolution, the marital property be equally distributed.  We review the substantial fairness of an antenuptial agreement in light of the circumstances existing at the time of enforcement (dissolution).  See McKee-Johnson v. Johnson, 444 N.W.2d 259, 267 (Minn. 1989) (holding that courts are permitted to relieve parties from contract provisions that have become unfair due to unforeseen circumstances and that have become so one-sided as to be oppressive or unconscionable).  A change in circumstances is necessary to find substantive unfairness at the time of enforcement.  In re Estate of Aspenson, 470 N.W.2d 692, 696 (Minn. App. 1991).  

            Appellant argues that the failure of his business and his lack of credit are all changed circumstances rendering enforcement of the antenuptial provision unconscionable.  But at the time the parties executed the agreement, appellant was benefited by the designation of all his business assets and any appreciation of those assets as nonmarital property.  One small concession to respondent was that she would take half of the marital property in the event of dissolution.  Unfortunately for appellant, his business failed.  But the failure of appellant’s business does not create a situation where enforcing the antenuptial agreement, which was heavily in his favor, would be unconscionable.  See McKee-Johnson, 444 N.W.2d at 267.  

Finally, appellant argues that the property division was inequitable.  Essentially, appellant argues that it was unfair to award respondent one-half of the residence because she did not contribute financially to the purchase of the residence.  But the record shows that the residence and the mortgage were put in her name to avoid the reach of creditors.  On this record, we cannot conclude that the district court abused its discretion.

            Affirmed.