In re the Marriage of: Shirley Ann May, petitioner, Respondent, vs. David James May, Appellant.

This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. § 480 A. 08, subd. 3 (2002).

 

STATE OF MINNESOTA

IN COURT OF APPEALS

A04-438

 

In re the Marriage of:

 

Shirley Ann May, petitioner,

Respondent,

 

vs.

 

David James May,

Appellant.

 

Filed October 19, 2004

Affirmed as modified

Lansing, Judge

 

Hubbard County District Court

File No. F3-00-426

 

John E. Valen, Valen Law Office, Fifth & Michigan, P.O. Box 1105, Walker, MN 56484 (for respondent)

 

Mark Thomason, Suite One, 107 South Grove, P.O. Box 87, Park Rapids, MN 56470 (for appellant)

 

            Considered and decided by Toussaint, Chief Judge; Lansing, Judge; and Crippen, Judge.*

U N P U B L I S H E D   O P I N I O N

LANSING, Judge

            This appeal from a dissolution judgment raises the single issue of whether the district court erred in its valuation of a business in which David and Shirley May own an

undivided, one-half interest.  The district court's valuation of the business is supported by testimonial and documentary evidence, but the allocation of the equitable interest contains a mathematical error.  We therefore affirm as modified.

F A C T S

In the first half of a bifurcated marital-dissolution proceeding, the district court dissolved David and Shirley May's nineteen-year marriage and provided for the custody and support of the Mays' three minor children.  In the second half, the district court addressed the disputed property issues, valued the family business, and divided the real property and business assets.  It is the valuation of the family business, Northern Bait, that is at issue in this appeal. 

Together with David May's parents, Shirley and David May purchased Northern Bait and the accompanying real estate in 1992.  To finance the business, David May's grandmother, Dorothy Reese, transferred $20,000 to the Mays.  Shirley and David May agree that the transfer was initially a loan but dispute whether Reese and the Mays intended that the loan would be extinguished at Reese's death. 

David May's father, James May, testified that he also transferred money to Northern Bait.  James May worked in the store without direct compensation, but he routinely wrote business checks for personal purchases and later reimbursed the business.  The Mays dispute whether several of these transfers were loans to the business or reimbursements for personal expenses.

In anticipation of the valuation proceeding, the Mays agreed to obtain an appraisal of Northern Bait.  The appraiser spent roughly an hour in the shop and spoke briefly with James May.  In his report the appraiser stated that the business had a "going concern" value of zero and that the value of the fixtures and equipment was $6,000.  David May claimed that the value of the fixtures and equipment was $8,140 and Shirley May testified that their value was $47,850.  The appraiser's report provided no valuation for Northern Bait's inventory.  A balance sheet for the business showed that the inventory was valued at $74,237 on December 31, 2001; Shirley May estimated that the inventory was worth roughly $200,000.

The district court issued factual findings, legal conclusions, and an order for  judgment.  In posttrial motions David May requested a new trial or amended findings.  Following the issuance of amended findings of fact, David May brought this appeal, challenging the district court's (1) rejection of his argument that Reese's and James May's transfers of money to Northern Bait were loans, (2) valuation of Northern Bait's inventory, and (3) valuation and allocation of the Mays' equitable interest in Northern Bait's fixtures and equipment.

D E C I S I O N

A district court's valuation of an item of property is a finding of fact that will not be set aside unless it is clearly erroneous on the record as a whole.  Maurer v. Maurer, 623 N.W.2d 604, 606 (Minn. 2001); Hertz v. Hertz, 304 Minn. 144, 145, 229 N.W.2d 42, 44 (1975).  An appellate court does not require the district court to be exact in its valuation of assets; "it is only necessary that the value arrived at lies within a reasonable range of figures."  Johnson v. Johnson, 277 N.W.2d 208, 211 (Minn. 1979) (citing Hertz, 304 Minn. at 145, 229 N.W.2d at 44).  Although the district court has broad discretion in the valuation of an asset, its exercise of that discretion "should be supported by either clear documentary or testimonial evidence or by comprehensive findings."  Ronnkvist v. Ronnkvist, 331 N.W.2d 764, 766 (Minn. 1983).

I

            The district court provided four reasons for its finding that the financial transfer from Reese to Northern Bait was not a loan.  First, no writing memorialized a loan from Reese to the Mays.  Second, only nominal payments had been made to Reese and the last payment was made in 1996.  Third, no evidence was produced to show that the loan was listed as an asset in Reese's probate proceeding.  And fourth, Shirley May's testimony that it was intended that the loan would be forgiven upon Reese's death was consistent with the other evidence.  The district court's findings are supported by the record and are not clearly erroneous.

            Similarly, the evidence supports the district court's findings that the financial transfers from James May to Northern Bait were not loans.  The commingling of personal and business expenses was extensive, and nothing distinguished James May's claimed loans from multiple transfers that he made as reimbursements for personal expenses; no promissory note evidenced any of the claimed loans; and Northern Bait never made any payments on the claimed loan.  The district court found that James May's testimony was not credible, that he commingled the business's assets with his own, and that documentation was insufficient to establish a loan.  It is within the province of the district court to make independent credibility assessments of a witness.  The district court's findings and conclusions are reasonable, especially in light of the familial relationship between James and David May, their ongoing business relationship, and a past history of partisan actions.  We discern no error in the district court's rejection of David May's claim that the transfers were loans.

II

David May's challenge to the valuation of Northern Bait's inventory is that the district court erred in selecting December 31, 2001, as the valuation date instead of October 13, 2000, the date of the prehearing scheduling conference.  The district court selected the December 31, 2001 valuation date because that was the date agreed to by the parties.  David May does not contest this underlying agreement but simply asserts that October 13, 2000, is the proper date according to the statute. 

A district court has broad discretion in setting reasonable valuation dates.  Desrosier v. Desrosier, 551 N.W.2d 507, 510 (Minn. App. 1996).  Although the initially scheduled prehearing conference date is the presumptively appropriate date for valuing marital property, the presumption does not apply if "a different date is agreed upon by the parties."  Minn. Stat. § 518.58, subd. 1 (2002).  The district court had discretion under the statute to select the date to which the parties agreed and did not err in so doing.  Therefore its reliance on the December 31, 2001 balance sheet in valuing the inventory at $74,237 was proper.

III

David May's next challenge to the district court's valuation of Northern Bait is directed to the amount attributed to equipment and fixtures.  Parties are presumptively competent to testify to the value of their assets.  Bury v. Bury, 416 N.W.2d 133, 136 (Minn. App. 1987).  Because a district court has the opportunity to personally observe the testimony and demeanor of the witnesses, appellate courts defer to its credibility determinations.  Sefkow v. Sefkow, 427 N.W.2d 203, 210 (Minn. 1988).  "It is within the [district] court's discretion to choose one appraisal over another, and by taking one of two proffered appraisals, the [district] court cannot be said to have erred."  Mitterhauser v. Mitterhauser, 399 N.W.2d 664, 666-67 (Minn. App. 1987).  These principles are equally true when evaluating the testimony of an expert witness; an appellate court should not reassess the expert's opinion on appeal and should defer to the district court's determination.  DeSutter v. Township of Helena, 489 N.W.2d 236, 240 (Minn. App. 1992), review denied (Minn. Sept. 30, 1992).

In challenging the district court's refusal to adopt, unaltered, the valuation of the appraiser, David May correctly notes that the issue is one of credibility.  See Shymanski v. Nash, 312 Minn. 304, 308-09, 251 N.W.2d 854, 857 (1977) (recognizing that weight and credibility of expert testimony is for factfinder); Koch v. Mork Clinic, P.A., 540 N.W.2d 526, 530-31 (Minn. App. 1995) (observing that factfinder may use same factors to assess lay witness and expert witness credibility), review denied (Minn. Jan. 12, 1996).  And while he asserts multiple arguments of why the appraiser's assessment is more credible than Shirley May's testimony, the district court alone has the discretion to make that determination.  It found the appraisal was incomplete.  Even David May's valuation is higher than that offered by the appraiser, suggesting an acknowledgment that the report is inaccurate.  The court commented on the report's departure from recognized appraisal processes, the limited amount of time the appraiser spent in the store, and the brevity of the appraiser's discussion with James May. 

The court's explanation of its rationale presents a reasonable basis for doubting the report's credibility and selecting another value.  In so doing, the court was free to choose a value within a reasonable range of values.  A reasonable range, in this case, would be from the lowest estimate to the highest: between $6,000 and $47,850.  The district court's valuation of $25,000 is well within this reasonable range and is not clearly erroneous.

After valuing Northern Bait's fixtures and equipment at $25,000, the district court then allocated the entire value to David and Shirley May.  This allocation was a mathematical error because it did not account for the one-half interest of David May's parents.  The district court erred in failing to divide the figure in half.  The correct value of the parties' interest in the fixtures and equipment is $12,500.

Because the district court did not correctly divide the value in half to determine the parties' interest, we adjust the figures to correct this mathematical error.  After recalculation, the marital interest in all the properties is $130,657.26, or $65,328.63 each.  Adjusting this figure for the value of the property David May received and including his obligation to pay $18,000 to Shirley May in lost profits and income, David May is obligated to pay Shirley May $47,811.63.

            Affirmed as modified.

* Retired judge of the Minnesota Court of Appeals, serving by appointment pursuant to Minn. Const. art. VI, § 10.