Liebel v. Liebel

2024 S.D. 34

• Court: South Dakota Supreme Court
• Decided: June 26, 2024
• Docket: 30169
• Status: Published

Opinion

#30169-a-SRJ 2024 S.D. 34

IN THE SUPREME COURT OF THE STATE OF SOUTH DAKOTA

****

JULIE ANNE LIEBEL, Plaintiff and Appellant,

v.

GARY LEE LIEBEL, Defendant and Appellee.

APPEAL FROM THE CIRCUIT COURT OF THE THIRD JUDICIAL CIRCUIT CODINGTON COUNTY, SOUTH DAKOTA

THE HONORABLE CARMEN MEANS Judge

TIM HOGAN BRIAN ZIELINSKI of Ribstein & Hogan Law Firm Brookings, South Dakota Attorneys for plaintiff and appellant.

MELISSA E. NEVILLE of Bantz, Gosch & Cremer, LLC Aberdeen, South Dakota Attorney for defendant and appellee.

CONSIDERED ON BRIEFS AUGUST 29, 2023 OPINION FILED 06/26/24 #30169

JENSEN, Chief Justice

[¶1.] Julie and Gary Liebel married in 2010 and divorced in 2022. The

circuit court granted Gary a divorce from Julie on the grounds of adultery and

applied a premarital agreement (Agreement) signed by the parties to divide their

assets. Julie appeals, arguing the court erred in applying the Agreement to the

property division in the divorce and abused its discretion in classifying and

distributing the parties’ property. We affirm.

Factual and Procedural Background

[¶2.] The parties first met in 2004 at a bar and restaurant Gary owned in

Florence, South Dakota, and began dating in 2008. Both had been married and

divorced twice. Gary has two adult children, while Julie does not have children.

Julie resided in Watertown, South Dakota, where she owned and operated a travel

agency. She moved into Gary’s Florence home after they began dating.

[¶3.] Because of their prior marriages and the assets Gary had accumulated,

the parties discussed a premarital agreement before marrying. Each prepared

personal financial statements and met with attorney John Foley to draft the

Agreement. 1 The Agreement named the parties, identified their respective personal

financial statements, which were attached as exhibits, and indicated their plans to

marry. The Agreement stated that “it is mutually desired and agreed by the parties

that the assets of each of the parties shall remain separate and be subject to the

sole control and use of its owner as well after as previous to the solemnization of

said marriage,” and included the following terms:

1. Foley passed away before these proceedings commenced.

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1. That the estate of [Gary] shall remain and be his separate property, subject entirely to his individual control and use, the same as if he were unmarried; and that [Julie] shall not acquire by force of the contemplated marriage, for herself, her heirs, her assigns or creditors, any interest in his property or estate, or right to the control thereof, or any interest in the income, increase, rents, profits or dividends arising therefrom; and it is further agreed that any property that [Gary] may hereafter acquire or become entitled to shall be owned and held by him as though he had acquired it before the solemnization of said marriage; and [Julie] hereby agrees in consideration of the contemplated marriage and of the covenants of [Gary] herein set forth, that she will waive, release and relinquish unto [Gary] all right to the use and control of his separate property and estate and the income therefrom; and further agrees that [Gary] shall have the right at all times to dispose of any part or all of his separate property and estate by deed, will or otherwise, on his sole signature, hereby ratifying and consenting on her part to any and all such disposition of his said property or estate.

2. [This paragraph recites reciprocal terms as to Julie’s property.]

3. The parties hereto expressly further agree and covenant with each other that on the death of either, the survivor shall not have and will not assert any claims, interest, estate or title, under the laws of any state, because of such survivorship, in or to the property, real, personal or mixed, or life insurance, of which such deceased party may die seized or possessed, except as hereinafter provided[.] . . .

4. It is also understood that the parties may subsequently wish to place a portion of their property in joint tenancy with right of survivorship. In the event that any such property is placed in [the name of the parties,] as joint tenants with right of survivorship, it is understood and agreed that such joint tenancy property may vest in the survivor upon the death of one of the parties. In other words, this agreement is not intended to limit the right of either of the parties to place property in joint tenancy or to make gifts to one another if such actions are the result of the act of one or both of the named parties to this agreement; if this paragraph should be in conflict with any other provision in this agreement, this paragraph shall govern.

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...

6. The parties hereto have read the above agreement, and each of them knows the contents thereof and fully understands all of the terms and conditions contained herein.

9. That the parties have consulted and have been advised of their rights, under the laws of the State of South Dakota.

The parties signed the Agreement on April 7, 2010. They were married on April 20,

2010.

[¶4.] Around the time the parties married, they moved into a rental

property in Watertown. The following year, Gary deposited funds he had

accumulated prior to the marriage into a joint checking account. Gary also received

approximately $25,000 from the sale of a home he owned prior to the marriage that

was deposited into the joint account. The parties used these premarital funds to

purchase an undeveloped lot in Watertown in both their names as joint tenants

with rights of survivorship and began to build a home. Gary also paid some of the

contractors working on the construction of the home with premarital funds. Both

parties executed a construction loan and a ten-year mortgage in the amount of

$150,000 to finish the home. They moved into the home in 2011.

[¶5.] Gary testified that nearly all the monthly household expenses were

paid from the joint account and that he deposited all the funds into the joint account

from premarital funds or his wages during the marriage. He further testified that

he deposited funds each month to pay the home mortgage from monies received on a

contract for deed from the sale of a bar and restaurant he owned prior to the

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marriage. Julie maintained a separate account where she deposited her earnings.

She testified that she purchased groceries and paid some of the utilities from this

account.

[¶6.] In December 2013, Gary received the balance of $177,000 owed on the

contract for deed from the sale of his restaurant and bar he owned prior to the

marriage. From this amount, Gary paid the remaining balance owed on the home

mortgage in the amount of $125,000. He used the remaining funds to purchase one

or more vehicles. The parties executed a warranty deed on June 24, 2016, taking

the home out of joint tenancy and conveyed an undivided one-half interest to Julie

and the other one-half to a trust Gary created for his grandchildren.

[¶7.] Julie filed for divorce on August 11, 2021, on the grounds of extreme

cruelty. Shortly after filing for divorce, Julie traveled to the Sturgis Motorcycle

Rally with a former coworker she referred to as her friend. She had made a hotel

reservation but instead stayed with her friend in his cabin. Gary filed an answer

and counterclaim seeking a divorce on the grounds of extreme cruelty and adultery.

[¶8.] On March 15, 2022, Julie filed an action for a protection order against

Gary. She had been living at her parents’ residence, and claimed Gary entered the

attached garage of her parents’ home without permission and left a note on a

toolbox. Gary shared a video with police that appeared to show that the note had

already been on the toolbox when Julie was moving her belongings out of the

marital home. Julie withdrew her request for a protection order just before the

scheduled hearing; however, in the divorce proceeding, the court awarded Gary the

attorney fees he had incurred in the protection order proceeding.

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[¶9.] With respect to property division, Julie argued that the marital home

was marital property under the terms of the Agreement and that the Agreement

was unenforceable as to other property. Julie also claimed that she did not

voluntarily enter into the Agreement and that it was unconscionable.

Notwithstanding the extensive personal financial statements included with the

Agreement, she claimed to have met with Foley only one time. She contends that

during this meeting she was instructed to sign the Agreement and financial

statement without having had an opportunity to review them. She also claimed

that Gary told her he would not marry her if she did not sign. Julie further argued

that the parties did not intend for the Agreement to apply in the event of divorce

because it did not mention divorce. Julie did not seek alimony.

[¶10.] Gary argued that the Agreement was valid and enforceable. He

testified that they both met with Foley three times before executing the Agreement

and that Foley was Julie’s family attorney and represented them both with respect

to the Agreement. Gary also maintained that the parties intended the Agreement

to apply to the division of assets in the event of divorce and that it was because of

their prior marriages that they entered into a premarital agreement. He argued

that “[t]he fact that this marriage is ending in divorce should not make separate

property joint property” when the Agreement “does not explicitly mention divorce,

separation, alimony, or property settlement, but repeatedly references separate

property, the parties’ respective estates, and their marriage.” He alternatively

argued that even if the Agreement did not apply, the circuit court should exclude

the property that each party owned prior to the marriage.

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[¶11.] At the time of trial, Julie, age 57, continued to operate her travel

business part-time out of her home and worked at a bank. Gary, ten years Julie’s

senior, was receiving social security benefits and remained employed part-time as

an engineer. Gary testified that he planned to fully retire soon. The parties

stipulated to exhibits, including a joint property spreadsheet, the Agreement, the

deed conveying the marital home to the parties as joint tenants, the deed conveying

the marital home to Gary’s trust and Julie as tenants in common, the mortgage on

the marital home, the county assessment of the marital home, and their tax

returns.

[¶12.] Following the trial, the court issued a memorandum decision, findings

of fact and conclusions of law, and a judgment and decree of divorce. The court

granted a divorce to Gary on the grounds of adultery. The court found Gary more

credible than Julie on several issues, including their differing versions of the events

leading up to the execution of the Agreement. Based upon these findings, the court

determined that the Agreement was valid and enforceable in the context of divorce.

The court also found that the Agreement unambiguously governed the division of

property in the event of divorce. Relying on Ryken v. Ryken, 440 N.W.2d 300 (S.D.

1989), the court acknowledged that while “the [A]greement contain[ed] no express

language about divorce, separation, alimony, or property settlement . . . it may still

be regarded as applicable in a divorce action[.]”

[¶13.] Consistent with the terms of the Agreement, the court treated the

marital home, which was held jointly, as marital property. The court found that

both parties provided more than a de minimis contribution toward the home but

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determined that it was equitable for Gary to receive a greater share because he

contributed more financially and was ten years older than Julie.

[¶14.] Applying the Agreement, the court treated most of the remaining

property as nonmarital. Gary received the bulk of the nonmarital property valued

at $713,705. The court valued the net marital assets at $214,262. Upon division of

the net marital assets, Julie was awarded marital property valued at $35,482, while

Gary received marital property valued at $134,535. The court ordered Gary to

make a cash equalization payment to Julie in the amount of $49,526, less $2,062.80

in attorney fees awarded to Gary for defending the protection order that the court

determined Julie filed maliciously. The result of the order was a net payment from

Gary to Julie in the amount of $47,463.20. The court also ordered Julie to quitclaim

her interest in the marital home to Gary upon receipt of the payment.

[¶15.] Julie appeals and raises the following issues:

1. Whether the circuit court erred in concluding that the Agreement applied to the parties’ divorce.

2. Whether the circuit court abused its discretion in valuing and dividing the marital property.

Standard of Review

[¶16.] Premarital agreements are contracts, and “[o]ur standard of review for

contract interpretation is well-settled: ‘[c]ontract interpretation is a question of law

reviewed de novo.’” Charlson v. Charlson, 2017 S.D. 11, ¶ 16, 892 N.W.2d 903, 907–

08 (quoting Poeppel v. Lester, 2013 S.D. 17, ¶ 16, 827 N.W.2d 580, 584). The court

has broad discretion in classifying and dividing the property of the parties.

Dunham v. Sabers, 2022 S.D. 65, ¶ 39, 981 N.W.2d 620, 637 (quoting Ahrendt v.

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Chamberlain, 2018 S.D. 31, ¶ 10, 910 N.W.2d 913, 918). “We review findings of fact

‘under the clearly erroneous standard. This Court must be left with a definite and

firm conviction that a mistake has been made to overturn a circuit court’s findings.’”

Id. ¶ 27, 981 N.W.2d at 633 (quoting Roberts v. Roberts, 2003 S.D. 75, ¶ 8, 666

N.W.2d 477, 480).

Analysis

[¶17.] “When interpreting a contract, this Court looks to the language that

the parties used in the contract to determine their intention.” Charlson, 2017 S.D.

11, ¶ 16, 892 N.W.2d at 908 (quoting Detmers v. Costner, 2012 S.D. 35, ¶ 20, 814

N.W.2d 146, 151). “In order to ascertain the terms and conditions of a contract, we

examine the contract as a whole and give words their plain and ordinary meaning.”

Id. (quoting Nygaard v. Sioux Valley Hosps. & Health Sys., 2007 S.D. 34, ¶ 13, 731

N.W.2d 184, 191).

[¶18.] “South Dakota is an all property state, meaning all property of the

divorcing parties is subject to equitable division by the circuit court, regardless of

title or origin.” Dunham, 2022 S.D. 65, ¶ 39, 981 N.W.2d at 636 (quoting Osdoba v.

Kelley-Osdoba, 2018 S.D. 43, ¶ 18, 913 N.W.2d 496, 502). “Before dividing property,

the court must classify it as marital or nonmarital.” Id. (quoting Ahrendt, 2018 S.D.

31, ¶ 8, 910 N.W.2d at 918). “[T]he principal rule for analyzing a discrete claim of

separate property provides that ‘[o]nly where one spouse has made no or de minimis

contributions to the acquisition or maintenance of an item of property and has no

need for support, should a court set it aside as “non-marital” property.’” Id.

(alterations in original) (quoting Field v. Field, 2020 S.D. 51, ¶ 18, 949 N.W.2d 221,

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225). Additionally, we have said that the circuit court should consider the following

factors both when it classifies and divides property:

(1) the duration of the marriage; (2) the value of the property owned by the parties; (3) the ages of the parties; (4) the health of the parties; (5) the competency of the parties to earn a living; (6) the contribution of each party to the accumulation of the property; and (7) the income-producing capacity of the parties’ assets.

Id. ¶ 40, 981 N.W.2d at 637 (quoting Ahrendt, 2018 S.D. 31, ¶ 10, 910 N.W.2d at

918). “In ‘divid[ing] property in divorce proceedings, “there is no rigid formula that

must be followed, nor any fixed percentage to which either party is entitled.”’” Id.

¶ 40 (alteration in original) (quoting Osdoba, 2018 S.D. 43, ¶ 19, 913 N.W.2d at

502). “[T]he law does not require perfection that would approach mathematical

certainty.” Id. ¶ 40 (alteration in original) (quoting Osdoba, 2018 S.D. 43, ¶ 18, 913

N.W.2d at 502).

1. Premarital Agreement

[¶19.] Julie unsuccessfully argued below that the Agreement was

unenforceable under both voluntariness and unconscionability theories. The circuit

court also rejected her claim that the parties did not intend the Agreement to apply

in the event of divorce, reasoning that “[t]he Premarital Agreement does not

specifically say divorce but essentially says that each party will retain his or her

own separate property and shall gain nothing from the other due to the marriage

relationship.”

[¶20.] On appeal, Julie limits her argument to the interpretation of the

Agreement itself. She maintains that the plain language of the Agreement does not

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evidence a clear intent for it to apply to divorce. She contends, based upon this

Court’s prior decisions in Roth v. Roth, 1997 S.D. 75, 565 N.W.2d 782, and Smetana

v. Smetana, 2007 S.D. 5, 726 N.W.2d 887, that the circuit court should have divided

the property without any reference to the Agreement. She further argues that like

the agreements in Roth and Smetana, the general language of the Agreement does

not state that it is applicable to a divorce, nor does it reference the party’s rights in

the event of divorce. She, therefore, maintains it cannot control the division of

property in conjunction with a divorce.

[¶21.] Gary argues that the language of the Agreement shows a clear

intention to apply to the disposition of the assets in the event of a divorce and that a

premarital agreement need not contain the word “divorce” in order for its provisions

to apply to a divorce. He contends that the Uniform Premarital Agreement Act

(UPAA), adopted in South Dakota, 2 permits the parties to provide for the

2. SDCL 25-2-18 approves the use of premarital agreements and the ability of parties to contract with respect to the rights and obligations of property as between spouses, prior to their marriage:

(a) Parties to a premarital agreement may contract with respect to: (1) The rights and obligations of each of the parties in any of the property of either or both of them whenever and wherever acquired or located; (2) The right to buy, sell, use, transfer, exchange, abandon, lease, consume, expend, assign, create a security interest in, mortgage, encumber, dispose of, or otherwise manage and control property; (3) The disposition of property upon separation, marital dissolution, death, or the occurrence or nonoccurrence of any other event; (4) The making of a will, trust, or other arrangement to carry out the provisions of the agreement; (continued . . .) -10- #30169

“disposition of property” upon a “marital dissolution,” but it also allows the parties

to define the interests of each party in “any of the property” acquired before or after

the marriage irrespective of whether this language is specifically tied to divorce

proceedings. Gary argues that the Legislature could have created a requirement

that a premarital agreement must expressly refer to a divorce if it wanted to do so,

but it did not.

[¶22.] Gary also cites Ryken, a case decided before the UPAA, for the

proposition that using a phrase other than “divorce” could still result in a

premarital agreement applying to subsequent divorce proceedings. 440 N.W.2d at

304 (determining that the circuit court erred in finding a premarital agreement was

inapplicable to divorce when it referred to “legal proceedings”). Gary points to the

language giving a party “the right at all times to dispose of any part or all of [the

party’s] separate property.” Gary also asks the Court to revisit our prior decisions

in Roth and Smetana, and argues that the “settled law” from other jurisdictions

that these cases relied upon was not so settled. 3

________________________ (. . . continued) (5) The ownership rights in and disposition of the death benefit from a life insurance policy; (6) The choice of law governing the construction of the agreement; and (7) Any other matter, including their personal rights and obligations, not in violation of public policy or a statute imposing a criminal penalty.

(b) The right of a child to support may not be adversely affected by a premarital agreement.

3. Gary references cases relied upon in Roth, including: Parkhurst v. Gibson, 573 A.2d 454 (N.H. 1990); Foster v. Foster, 609 A.2d 1171 (Me. 1992); Levy v. (continued . . .) -11- #30169

[¶23.] In ascertaining whether the parties intended the Agreement to apply

in the event of divorce, we start with its language. In the introductory provisions of

the Agreement, the parties “mutually desired and agreed . . . that the assets of each

of the parties shall remain separate and be subject to the sole control and use of its

owner as well after as previous to the solemnization of said marriage[.]” The

parties also agreed that the separately owned property would be “subject entirely to

[the owner’s] individual control and use, the same as if [the owner] were unmarried;

and that [the other party] shall not acquire by force of the contemplated marriage

. . . any interest in [the owner’s property] . . . any interest in the income, increase,

rents, profits or dividends arising therefrom . . . [including any after acquired

property].”

[¶24.] The language of the Agreement is clear that neither party acquired

any interest in the other party’s separately owned property because of the marriage

________________________ (. . . continued) Levy, 388 N.W.2d 170 (Wis. 1986); and Devault v. Devault, 609 N.E.2d 214 (Ohio 1992). The Roth Court found it significant that these courts held that when a premarital agreement does not explicitly reference divorce, it may not apply to divorce proceedings. Roth, 1997 S.D. 75, ¶¶ 13–14, 565 N.W.2d at 785–86. Gary argues, however, that more recent decisions have not required an explicit reference to divorce as a condition to enforcing premarital agreements. See Fletcher v. Fletcher, 628 N.E.2d 1343, 1347 (Ohio 1994) (although the antenuptial agreement “never specifically mentioned divorce[,]” the court nevertheless found that “the parties intended the agreement to apply to divorce” because the agreement waived all “past, present and future support [or] division of property” that would accrue because of their marriage); Sabad v. Fessenden, 825 A.2d 682, 692–93 (Pa. Super. 2003) (despite the agreement’s “fail[ure] to mention what should happen in the event of a divorce” the court determined that it was still intended to apply to divorce proceedings because it addressed that the parties’ “property [was] to be separately owned . . . as if no marriage had been consummated between them.”).

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and separately owned property would be treated as if the parties had never

married. This includes any income or growth during the marriage and any separate

property acquired during the marriage. A plain and ordinary reading of these

words can only be understood to mean that the parties did not intend to create,

before, during, or upon termination of the marriage, any interest in the other

party’s separately owned property. However, Julie relies upon our decisions in

Ryken, Roth, and Smetana to support her claim that in the absence of specific

language addressing a divorce or legal proceedings, a premarital agreement should

be read to be inapplicable to divorce.

[¶25.] In Ryken, neither party argued that the premarital agreement was

ambiguous, and the Court relied solely upon the language of the premarital

agreement to discern the parties’ intentions. The Court reversed the circuit court’s

determination that the agreement was inapplicable to the divorce, relying

exclusively upon the language that, “[t]his contract limits the right of either party

to participate in the estate of the other, whether the marriage relation is

determined by death or legal proceedings.” Ryken, 440 N.W.2d at 304 (alteration in

original). Ryken explained that “[d]ivorce actions are legal proceedings. The

provision, although artlessly worded, indicates that the agreement could apply in a

divorce context.” Id. The Court remanded the case for the circuit court to consider

a separate challenge to the validity of the premarital agreement. Id.

[¶26.] Roth was decided after the Legislature enacted the UPAA, but the

Court did not reference the UPAA in considering whether the parties intended the

premarital agreement to apply to divorce proceedings. The premarital agreement in

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Roth “provide[d] that ‘it is desired by the parties that their marriage shall not in

any way change their legal right or that of their children and heirs in the property

of each of them.’ . . . However, there [was] no provision in the agreement in which

the words divorce, alimony, or property settlement [were] mentioned.” 1997 S.D.

75, ¶ 10, 565 N.W.2d at 784. A three-justice majority in Roth reversed the circuit

court’s application of the premarital agreement to the divorce and concluded that

the agreement unambiguously applied to the distribution of property upon death,

but “[a] review of the four corners of the document reveal[ed] the [premarital

agreement] fail[ed] to mention divorce or separation in any manner.” Id. ¶ 17, 565

N.W.2d at 786. Considering decisions from South Dakota and other jurisdictions,

the Court stated:

[T]here is no specific statement as to the effect of a divorce or separation or the like. There is also no general reference to “legal proceedings” as in Ryken, 440 N.W.2d at 304. As stated previously, such broad provisions stating the parties’ desire to have their property separate do not automatically encompass divorce, especially when there are specific clauses in the agreement which all fail to mention divorce.

Id. (citations omitted). The Court further observed that if the parties meant for the

premarital agreement to apply in the event of divorce, “it certainly would not have

been too onerous of a task for a lawyer to insert provisions concerning divorce . . . or

property settlement into the agreement.” Id.

[¶27.] The two dissenting justices in Roth determined the premarital

agreement’s language to be ambiguous. Id. ¶ 30, 565 N.W.2d at 788 (Miller, C.J.,

dissenting). In doing so, they relied on the provisions stating that the marriage

would “‘not in any way change their legal right’ in their respective property,” “‘all

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property’ ‘shall be and forever remain the personal estate of said party[,]’” and “each

party shall have at all times the full right and authority, in all respects the same as

each would have if not married, to use, enjoy, manage, convey, and encumber such

property as may belong to him or her.” Id. ¶ 30, 565 N.W.2d at 788 (Miller, C.J.,

dissenting).

[¶28.] Smetana, relying on the majority opinion in Roth, similarly concluded

a premarital agreement was inapplicable to a divorce when it failed to make any

provision for the spouse in the event of divorce and “did not even mention divorce.”

2007 S.D. 5, ¶ 14, 726 N.W.2d at 893. The Court also questioned the enforceability

of the agreement because of the failure to provide financial information to the

challenging spouse prior to the execution of the premarital agreement. Id. ¶ 13, 726

N.W.2d at 893. Seemingly premised upon both the pre-agreement financial

nondisclosure and the premarital agreement’s failure to provide for the challenging

spouse, the Smetana Court ultimately determined the agreement was unenforceable

in the divorce. Id. ¶ 17, 726 N.W.2d at 894.

[¶29.] Smetana relied on Roth in emphasizing that “settled law elsewhere

clearly indicates ‘an agreement that did not contain any reference to divorce, and

recited that it only affected the parties’ rights during marriage or upon death, could

not be employed by a divorce court as if it were the property settlement in the

dissolution proceedings.’” Id. ¶ 15, 726 N.W.2d at 893–94 (quoting Roth, 1997 S.D.

75, ¶ 13, 565 N.W.2d at 785). The Court rejected any effort to present parol

evidence, determining from “[a] review of the four corners of the document” the

agreement “fail[ed] to mention divorce or separation in any manner[,]” and

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“conclude[d] that the [prenuptial] agreement [was] unambiguous as a matter of law

as it clearly applie[d] to the distribution of property upon the death of one of the

parties, not to divorce.” Id. ¶ 16, 726 N.W.2d at 894.

[¶30.] The approach taken in Roth and Smetana, limiting the applicability of

a premarital agreement to divorce proceedings in the absence of an explicit

reference to the word divorce, is inconsistent with our established rules governing

the interpretation of contracts. See Charlson, 2017 S.D. 11, ¶ 16, 892 N.W.2d at 908

(“In order to ascertain the terms and conditions of a contract, we examine the

contract as a whole and give words their plain and ordinary meaning.”). In doing

so, Roth and Smetana focused less on the language of the agreement and more on

the imprecision in drafting and what the Court believed the agreement should have

said. Moreover, neither decision discussed the impact of South Dakota’s statutory

scheme addressing property rights as between married persons or the UPAA when

considering the applicability of a premarital agreement to divorce.

[¶31.] SDCL 25-2-4 addresses the effect of marriage on separately owned

property by providing that “[n]either husband nor wife has any interest in the

property of the other, excepting their respective rights for support as specifically

provided by law, and except that neither can be excluded from the other’s dwelling.”

Additionally, SDCL 25-2-7 establishes the rights of a married person in separately

owned property: “[e]ach spouse shall have and retain after marriage all the civil and

property rights of a single person. Each may buy and sell, receive and convey, or

dispose of by will, or otherwise dispose of any real or personal property belonging to

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him or her or in which he or she may have an interest, without joining the name of

the spouse except for the homestead.”

[¶32.] These statutes provide that a marriage generally does not create a

property interest in separately owned property. 4 This is true even in the absence of

a premarital agreement. Thus, a decision by a soon-to-be-married couple to enter

into a premarital agreement shows an intention to accomplish something more than

keeping ownership of property separate during the marriage.

[¶33.] In particular, the Legislature has authorized courts to equitably divide

all property, including separately owned property, in the event of divorce. “When a

divorce is granted, the courts may make an equitable division of the property

belonging to either or both, whether the title to such property is in the name of the

husband or the wife. In making such division of the property, the court shall have

regard for equity and the circumstances of the parties.” SDCL 25-4-44. 5 The

Legislature has also provided a surviving spouse a property interest in the property

of their deceased spouse, irrespective of the existence of a will. See SDCL 29A-2-102

(providing surviving spouse with an intestate share of decedent’s estate); SDCL

29A-2-202 (right of surviving spouse to elect against decedent’s will); SDCL 29A-2-

4. “[O]utside the context of divorce, support, and homestead, marriage does not vest in one spouse an interest in the other’s separate property.” Scherer v. Scherer, 2015 S.D. 32, ¶ 6, 864 N.W.2d 490, 493 (alteration and emphasis in original) (quoting Niesche v. Wilkinson, 2013 S.D. 90, ¶ 18, 841 N.W.2d 250, 255).

5. SDCL ch. 25-2 also provides for certain rights and limitations on a spouse’s use of separately owned property and earnings, including the right of support, and joint and several liability for certain necessary expenses. See SDCL 25-2-4, -11.

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301 (rights of spouse where there is a premarital will). A premarital agreement

may contractually limit these rights.

[¶34.] In 1989, the Legislature adopted the UPAA. As a part of the UPAA,

SDCL 25-2-18 authorizes premarital agreements and outlines the permissible

content of premarital agreements. See SDCL 25-2-18(a)(7) (allowing premarital

agreements respecting “[a]ny . . . matter . . . not in violation of public policy or a

statute imposing a criminal penalty.”). The statute permits the parties to generally

“contract with respect to . . . [t]he rights and obligations of each of the parties in any

of the property of either or both of them whenever and wherever acquired or

located[.]” SDCL 25-2-18(a)(1). Additionally, the statute permits the parties to

contract specifically regarding “[t]he disposition of property upon separation,

marital dissolution, death, or the occurrence or nonoccurrence of any other event[.]”

SDCL 25-2-18(a)(3) (emphasis added).

[¶35.] In adopting the UPAA, the Legislature authorized prospective spouses

to contract around the default rules for the disposition of assets in the event of

divorce or death. Parties to a premarital agreement may accomplish this in various

ways. Some may wish to specifically address “[t]he disposition of property upon . . .

marital dissolution” or some “other event[.]” SDCL 25-2-18(a)(3). But other parties

may wish, consistent with SDCL 25-2-18(a)(1), to contract more broadly as to “[t]he

rights and obligations of each of the parties in any of the property of either or both

of them whenever and wherever acquired or located[.]” By enacting the UPAA, the

Legislature created a public policy that favors a liberal construction of premarital

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agreements. 6 41 Am. Jur. 2d Husband and Wife § 103 (1964 & Supp. 2023)

(explaining that general contract interpretation principles apply to a premarital

agreement, including reading it as a whole and giving effect to all terms where

possible, and that it is liberally construed because it is favored by public policy); 5

Samuel Williston & Richard A. Lord, A Treatise on the Law of Contracts § 11:8 (4th

ed. 1993 & Supp. 2023) (same).

[¶36.] Here, the Agreement expresses an intent of each party to waive any

rights in the property of the other. The Agreement specifically provides that

property “shall remain and be his separate property . . . the same as if he were

unmarried” and waives any right to “acquire by force of the contemplated marriage”

any interest in the property of the other. The parties also agreed that the other

party “will waive, release and relinquish unto [the owner] all right to use and

control of [the] separate property” and the owner “shall have the right at all times

to dispose of” separately owned property. We presume the Agreement proclaims

their ultimate intention. Roth, 1997 S.D. 75, ¶ 17, 565 N.W.2d at 786 (citing Carr v.

Benike, Inc., 365 N.W.2d 4, 6 (S.D. 1985)). The absence of an explicit reference to

divorce does not defeat the obvious intent of the parties to waive the right to claim

any interest, at any time, in the separately owned property of the other.

[¶37.] Thus, the Agreement unambiguously provides that neither spouse may

claim an interest in the separate property of the other, whether it was acquired

6. However, the Legislature also recognized the unique nature of premarital agreements and created special rules concerning unconscionability and voluntariness when parties have entered into an agreement. See Matter of Est. of Eichstadt, 2022 S.D. 78, 983 N.W.2d 572.

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before or during the marriage. This could only be understood to mean that the

other spouse would not obtain any interest in separately owned property under any

circumstances, including divorce, unless mutually agreed to by creating a joint

tenancy in any property. The one exception under the Agreement is a decision by

the parties to create a joint interest in any property acquired by one or both parties.

[¶38.] Nothing in SDCL 25-2-18 requires the parties to specifically address

the division of property in the event of divorce or to explicitly waive a spouse’s right

to claim an equitable division of separate property in the event of divorce under

SDCL 25-4-44. The parties’ decision to enter into the Agreement, which specifically

provided that neither party would be entitled to receive or acquire any interest in

the other’s separate property at any time, demonstrates an intent to waive rights

that otherwise may have arisen in the event of a divorce proceeding.

2. Division of property

[¶39.] The circuit court determined that “[t]he marital home is a marital

asset to be divided equitably” because “[t]he Premarital Agreement specifically

states that the parties have the right to own property jointly if they choose to do

so[,]” and “[t]he marital home was held jointly.” The property spreadsheet shows

the court valued the marital home at $480,000 and awarded the home to Gary but

only considered $120,000 of the home’s value to be marital, with the remaining

$360,000 in value being nonmarital. Julie does not dispute the court’s valuation of

the home, or the award of the home to Gary but claims that the court abused its

discretion in treating $360,000 of the home’s value as nonmarital property.

[¶40.] The court explained its reasoning for its classification and distribution:

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The [c]ourt concludes that [Gary] is entitled to a greater share of the marital home based upon the facts in this case. As stated earlier, [Gary] is 10 years older than [Julie] and is soon to retire. The marriage lasted 12 years. The home is unlikely to be an income-producing asset. [Gary] will likely live in the home as long as practicable. [Gary] has made far greater contributions to the property than did [Julie].

[¶41.] Julie argues that the court abused its discretion by failing to consider

and weigh certain factors in distributing the home. In Julie’s view, the court put

too much emphasis on Gary’s financial contributions and overlooked her testimony

that while the marital home was being constructed, she helped in the general

contractor role and contributed some physical labor. Moreover, she claims that once

the home was built, she did most of the housekeeping and cooking, and contends the

court failed to consider her non-financial contributions over the course of the years

they were married. See Billion v. Billion, 1996 S.D. 101, ¶ 30, 553 N.W.2d 226, 233

(recognizing homemaking duties as a valuable contribution to marital property).

Additionally, Julie argues that Gary’s earning capacity is greater than hers because

his income, between benefits and working part-time, is about twice that of hers,

despite her working full-time. Further, unlike Julie, Gary also owns income-

producing assets, namely, his retirement accounts. 7

7. Julie also cites Endres v. Endres, 532 N.W.2d 65 (S.D. 1995), and argues that the circuit court’s failure to place a value on the home was reversible error. But Endres has no application to the court’s treatment of the marital home in this case. In Endres, the circuit court failed to place any value on items of marital property, and this Court determined the “[f]ailure to place a value on marital property [was] reversible error[.]” Id. at 70. Unlike Endres, the court valued the marital home and simply treated a large portion of the value received by Gary as nonmarital.

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[¶42.] Gary responds that the court properly awarded him a greater share of

the value of the home because he made substantially all the economic contributions

to the home from premarital funds he owned. According to Gary, the court found

that he was entitled to what he deems to be a “premarital credit” because he used

the proceeds from selling his premarital business and home to pay off the mortgage.

[¶43.] In awarding the home to Gary, the court found that Julie made more

than a de minimis contribution to the home and that it should be included as a

marital asset under the Agreement because it was jointly owned. However, after

making this determination, the court considered Gary’s age and significant

financial contributions to the home and treated only $120,000 as the value of the

marital property received by Gary. The court deemed the remaining $360,000,

approximately three quarters of the home’s total value, as nonmarital property. In

doing so, the court found that Gary used premarital funds to purchase the lot, paid

all the mortgage payments from premarital funds or his income, and paid off the

mortgage within three years from the sale proceeds of his business that he owned

prior to the marriage. In treating a portion of the value of the home as marital

property, the court found that Julie contributed her wages during the marriage to a

separate account that did not go to the regular household expenses but made other

noneconomic contributions to the home.

[¶44.] While the court did not make specific findings on each of the factors for

the division of property, the court referenced these factors in its decision, and placed

significant emphasis on Gary’s economic contributions to the home. We cannot say,

on this record, that the court abused its discretion by finding only a portion of the

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home’s value to be marital property and treating the remainder as nonmarital,

given Gary’s significantly larger contributions from his premarital assets toward

the value of the home.

[¶45.] Next, Julie argues that the court’s property division spreadsheet shows

that the court determined some of the vehicles to be nonmarital assets, but the

factual basis for its finding is not apparent from the record. She argues that all the

vehicles owned by the parties, except for the 1979 Chevy Corvette and 2002 Harley

Davidson VRSCA, are marital property because they were purchased during the

marriage, from their joint bank account, and Gary failed to rebut the presumption

that property acquired during marriage was marital property. See Dunham, 2022

S.D. 65, ¶ 39, 981 N.W.2d at 636 (quoting Ahrendt, 2018 S.D. 31, ¶ 8, 910 N.W.2d at

918). Julie further argues that when dividing the marital vehicles, the court erred

by awarding the 2013 Ford F-150, 2006 Sno Pro Trailer, 2008 Ranger Boat, and

2008 Ranger Trailer, with a total value of $44,000, to Gary without including their

corresponding values in calculating the total sum of marital property he received.

Julie argues this error resulted in Gary receiving substantially more than the 50/50

split the court appears to have intended for the marital assets, other than the

house. 8

8. According to the joint property spreadsheet used by the court, the net marital asset value was $214,262. This includes the $44,000 value the court placed on the four vehicles. However, when calculating the value of the marital property awarded to each party, the court calculated that Julie received $35,482 while Gary received $134,535. The court equalized this difference by requiring Gary to pay Julie $49,526, but Julie argues this did not include the $44,000 value of the four vehicles received by Gary, but not equalized by the court. (continued . . .) -23- #30169

[¶46.] Gary acknowledges that the court erred on the spreadsheet, but not in

the manner asserted by Julie. Instead, he argues that the undisputed proof shows

the four vehicles at issue were purchased with nonmarital assets, and the court

should not have listed them as marital property. Nonetheless, Gary contends that

in calculating the value of the marital assets received by Gary, the court properly

excluded them as nonmarital property. He argues that he was entitled to a

premarital credit for the four vehicles because they were purchased prior to the

marriage. 9

[¶47.] The spreadsheet shows that the parties owned several vehicles at the

time of the divorce. Julie agreed in her testimony that Gary owned a 1979 Corvette

and a Harley Davidson motorcycle at the time of the marriage and that he should

receive both vehicles as nonmarital. Julie testified, however, that the other vehicles

were purchased during the marriage and should be treated as marital assets. On

appeal, Julie challenges the circuit court’s failure to include the Polaris snowmobile

and trailer received by Gary, which were purchased during the marriage. 10

________________________ (. . . continued)

9. Gary also argues this issue was not preserved and should be deemed waived. S.D. State Cement Plant Comm’n v. Wausau Underwriters Ins. Co., 2000 S.D. 116, ¶ 27, 616 N.W.2d 397, 407–08. Julie objected to the court’s valuation to the extent that it was inconsistent with her proposed division and valuation set forth in her proposed property division spreadsheet. We deem that Julie’s objection sufficiently preserved the issue for appeal.

10. As a part of the property division, Julie received a 1998 Corvette, a travel trailer, and a Toyota 4Runner that the court valued as marital assets. The spreadsheet shows that the court deemed a portion of the value of two Ski Doo snowmobiles and another Harley Davidson motorcycle as marital assets (continued . . .) -24- #30169

However, the court consistently treated the snowmobile and trailer on the

spreadsheet as nonmarital. Additionally, this determination is supported by the

only evidence offered concerning these assets, as Gary testified that he purchased

the snowmobile and trailer during the marriage from the sale proceeds of two

snowmobiles he owned prior to the marriage.

[¶48.] There is an inconsistency in the court’s treatment of the 2013 F-150

pickup, a snowmobile trailer, and a 2008 Ranger boat and trailer which are

included in the marital asset column, but then not included in either party’s asset

column in the court’s property division. This suggests that the court ultimately

determined that these assets were nonmarital and this determination is supported

by the undisputed evidence. Gary testified he bought the F-150 during the

marriage by trading in a pickup he owned before the marriage. Upon receipt of the

final contract payoff from his premarital business, Gary testified that he used the

remaining funds to pay off the pickup. Gary also claimed that he purchased the

snowmobile trailer using the remaining contract proceeds. In addition, Gary

testified that he bought the Ranger boat and trailer during the marriage, using the

proceeds from the sale of an Indian Chief motorcycle that was listed on the

premarital agreement as an asset Gary owned before the marriage. Julie failed to

put on any evidence that she made any contributions to these vehicles. Given the

unrefuted evidence from Gary about the source of funding for these vehicles, we

cannot say the court abused its discretion in excluding these assets as nonmarital.

________________________ (. . . continued) and awarded these assets to Gary. Neither party has raised an issue with the court’s treatment of these vehicles.

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Any error by the court initially treating the assets as marital property or

erroneously placing them in the wrong column was harmless. See SDCL 15-6-61.

[¶49.] Finally, Julie challenges the court’s determination that Gary should

receive the entire value of his individually owned retirement accounts as

nonmarital property. The court’s findings of fact reflect that it applied the

Agreement in concluding that Gary’s retirement accounts were nonmarital

property. Based upon our determination that the Agreement applied to the divorce,

the court did not error in this conclusion.

[¶50.] Affirmed.

[¶51.] KERN, SALTER, DEVANEY, and MYREN, Justices, concur.

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