Burgardt v. Burgardt , 304 Neb. 356 ( 2019 )


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    12/20/2019 09:07 AM CST
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    BURGARDT v. BURGARDT
    Cite as 
    304 Neb. 356
    H arlan D. Burgardt, appellee and
    cross-appellant, v. Shirley L.
    Burgardt, appellant and
    cross-appellee.
    ___ N.W.2d ___
    Filed November 1, 2019.   No. S-17-1116.
    1. Divorce: Appeal and Error. Appeals in domestic relations matters are
    heard de novo on the record, and thus, an appellate court is empow-
    ered to enter the order which should have been made as reflected by
    the record.
    2. Divorce: Child Custody: Child Support: Property Division:
    Alimony: Attorney Fees: Appeal and Error. In a marital dissolution
    action, an appellate court reviews the case de novo on the record to
    determine whether there has been an abuse of discretion by the trial
    judge. This standard of review applies to the trial court’s determinations
    regarding custody, child support, division of property, alimony, and
    attorney fees.
    3. Evidence: Appeal and Error. In a review de novo on the record, an
    appellate court is required to make independent factual determinations
    based upon the record, and the court reaches its own independent con-
    clusions with respect to the matters at issue. However, when evidence is
    in conflict, the appellate court considers and may give weight to the fact
    that the trial court heard and observed the witnesses and accepted one
    version of the facts rather than another.
    4. Judges: Words and Phrases. A judicial abuse of discretion exists if the
    reasons or rulings of a trial judge are clearly untenable, unfairly depriv-
    ing a litigant of a substantial right and denying just results in matters
    submitted for disposition.
    5. Evidence: Proof. Unless an exception applies, the burden of proof in
    civil cases requires only the greater weight of the evidence.
    6. ____: ____. There is no general rule of evidence that a party must pro-
    duce the best evidence which the nature of the case permits.
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    BURGARDT v. BURGARDT
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    7. Evidence: Witnesses: Testimony. A witness’ testimony, like a docu-
    ment, is a kind of evidence.
    8. Divorce: Property Division. The first step in the equitable division of
    property is to classify the parties’ property as marital or nonmarital, set-
    ting aside the nonmarital property to the party who brought that property
    to the marriage.
    9. Divorce: Property Division: Pensions. Contributions to retirement
    accounts before marriage are not assets of the marital estate.
    10. Divorce: Property Division: Presumptions. Gifts and inheritances,
    even when received during the marriage, are presumed to be nonmarital.
    11. Divorce: Property Division: Proof. In a marital dissolution proceed-
    ing, the burden of proof rests with the party claiming that property is
    nonmarital.
    12. Divorce: Property Division: Proof: Testimony. A nonmarital interest
    in property may be established by credible testimony.
    13. Trial: Witnesses: Evidence. Triers of fact have the right to test the
    credibility of witnesses by their self-interest and to weigh it against the
    evidence, or the lack thereof.
    14. Divorce: Property Division: Evidence: Proof. The value of the non-
    marital portion of an asset must be established by the greater weight of
    the evidence.
    Petition for further review from the Court of Appeals,
    Moore, Chief Judge, and Pirtle and A rterburn, Judges, on
    appeal thereto from the District Court for Adams County, Terri
    S. H arder, Judge. Judgment of Court of Appeals reversed, and
    cause remanded with direction.
    Richard L. Alexander, of Richard Alexander Law Office, for
    appellant.
    Nicholas D. Valle, of Langvardt, Valle & James, P.C., L.L.O.,
    for appellee.
    Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke,
    Papik, and Freudenberg, JJ.
    Cassel, J.
    I. INTRODUCTION
    On appeal from a district court’s dissolution of marriage,
    the Nebraska Court of Appeals reversed the determinations
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    that a portion of the husband’s 401K and proceeds from an
    inheritance constituted nonmarital property.1 We disapprove of
    two imperatives articulated by the Court of Appeals: nonmari-
    tal property must be proved by documentary evidence and its
    value must be “definitively” established. Because we cannot
    say the district court abused its discretion in setting off prop-
    erty as nonmarital in accordance with the husband’s testimony,
    we reverse the decision of the Court of Appeals and remand
    the cause with direction.
    II. BACKGROUND
    1. Evidence at Trial
    Harlan D. Burgardt and Shirley L. Burgardt married in
    1992. The district court dissolved their marriage in 2017. On
    further review, we focus on two items of property: the por-
    tion of a 401K accumulated before marriage and the proceeds
    from an inheritance. At this stage, neither party otherwise
    contests the division of property. We limit our recitation of
    evidence accordingly.
    (a) 401K
    In 1978, Harlan began working for a natural gas distribu-
    tion company. Fourteen years later, he married Shirley. And 14
    years after that, Harlan retired. Through his employment, he
    had a 401K account.
    Harlan believed that he began contributing to the 401K in
    “about ’85.” He testified that on the date of his marriage in
    1992, his 401K was valued at $130,000. Upon questioning,
    he stated that the number “sticks out in my mind just plain as
    day.” Although Harlan tried to obtain documentation from his
    former employer to support the value, the company did not
    keep records dating back to 1992.
    Shirley testified that she was not aware of any 401K that
    Harlan had prior to marriage worth $130,000. Thus, she
    1
    Burgardt v. Burgardt, 
    27 Neb. App. 57
    , 
    926 N.W.2d 452
     (2019).
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    valued the premarital portion at $0 on the parties’ joint prop-
    erty statement. She had no evidence to dispute that Harlan
    contributed to the 401K prior to marriage.
    In 2010, Harlan withdrew the funds from the 401K and
    “moved it into an IRA into a cash fund” solely in his name.
    A bank statement shows a beginning balance for the IRA on
    January 1 to be $445,486.12. The money was later spent on
    four major purchases or projects. It was used to purchase the
    “other farm,” which was titled in both parties’ names. Money
    was used for improvements to the “home farm,” which con-
    tained a house where the parties once lived. Harlan also used
    money from the IRA to buy equipment. The equipment was
    “all auctioned off” and the proceeds put in the bank. Finally,
    the money was used to buy gold and silver coins. In 2013,
    Harlan purchased 1,000 silver coins for $53,120, followed
    shortly thereafter by a purchase of 1,859 coins for $99,735.35.
    In 2014, Harlan exchanged silver coins to acquire 71 gold
    coins for $29,962. He testified that he currently had 51 gold
    coins in his possession, but that there should be 71 (i.e., one
    sheet containing 20 coins was missing).
    (b) Inheritance
    Harlan testified that after his father died in 2006 (during the
    marriage), he received an inheritance from the estate. Harlan
    received a 25-percent share, which amounted to $60,000.
    Instead of receiving money, Harlan used his share as a credit
    toward the purchase of the home farm from his siblings. The
    additional money needed to purchase the farm—approximately
    $100,000—came from a bank account.
    Shirley testified that the funds to purchase the farm came
    from their joint bank account, which was funded by the sale of
    the parties’ house in Colorado. The parties later sold the home
    farm for $348,800. The sale proceeds were placed in the par-
    ties’ joint account at Great Western Bank, which had a balance
    of $358,000 in July 2015.
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    2. Property Division in Decree
    As part of the division of the marital estate, the decree
    awarded Harlan 71 gold coins valued at $19,330 (which placed
    the responsibility for the lost coins solely upon Harlan). In
    effect, the decree equally divided the proceeds from the 401K,
    but it separately set off to Harlan $130,000 for the value of the
    nonmarital proceeds from the 401K.
    The decree awarded each party $179,000 (one-half of the
    balance) of the Great Western Bank account. But it separately
    set off $60,000 to Harlan as “[l]and inheritance.”
    Including both marital and nonmarital property, the decree
    awarded Harlan assets totaling $399,730 and Shirley assets
    amounting to $205,300. After deducting amounts represent-
    ing nonmarital property ($190,000 at issue here, plus $4,000
    attributable to a truck which is not now disputed), the ultimate
    division of property was an award of $205,730 to Harlan and
    an award of $205,300 to Shirley.
    Shirley appealed, and Harlan filed a cross-appeal.
    3. Court of A ppeals’ Decision
    The Court of Appeals found that Harlan did not meet his
    burden of proving that his 401K had a value of $130,000 at
    the time of marriage and that he did not prove the amount he
    inherited from his father.
    [1] Appeals in domestic relations matters are heard de novo
    on the record, and thus, an appellate court is empowered to
    enter the order which should have been made as reflected by
    the record.2 But instead of affirming as modified, the Court of
    Appeals reversed in part and remanded to the trial court with
    directions. It directed the trial court to award Shirley half of the
    awards of $130,000 and $60,000 previously set off to Harlan
    as nonmarital property. It also found that the net tax liability
    of $27,494 should be divided evenly between the parties and
    deducted from the shares of each party’s marital property. The
    2
    Osantowski v. Osantowski, 
    298 Neb. 339
    , 
    904 N.W.2d 251
     (2017).
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    Court of Appeals’ effective modification of the decree regard-
    ing the tax liability is not contested on further review and,
    thus, shall be carried out in a modified decree.
    Harlan filed a petition for further review, which we granted.
    III. ASSIGNMENTS OF ERROR
    In his petition for further review, Harlan assigns two errors
    which we consolidate. He claims that the Court of Appeals
    erred in determining that because he offered no documentary
    evidence at trial to support his undisputed testimony, he failed
    to meet his burden of proof that he had $130,000 in a 401K
    at the time of marriage and that he received a $60,000 inher­
    itance during the marriage.
    IV. STANDARD OF REVIEW
    [2-4] In a marital dissolution action, an appellate court
    reviews the case de novo on the record to determine whether
    there has been an abuse of discretion by the trial judge. This
    standard of review applies to the trial court’s determinations
    regarding custody, child support, division of property, alimony,
    and attorney fees.3 In a review de novo on the record, an
    appellate court is required to make independent factual deter-
    minations based upon the record, and the court reaches its own
    independent conclusions with respect to the matters at issue.4
    However, when evidence is in conflict, the appellate court con-
    siders and may give weight to the fact that the trial court heard
    and observed the witnesses and accepted one version of the
    facts rather than another.5 A judicial abuse of discretion exists
    if the reasons or rulings of a trial judge are clearly untenable,
    unfairly depriving a litigant of a substantial right and denying
    just results in matters submitted for disposition.6
    3
    Dooling v. Dooling, 
    303 Neb. 494
    , 
    930 N.W.2d 481
     (2019).
    4
    
    Id.
    5
    
    Id.
    6
    
    Id.
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    V. ANALYSIS
    1. Foundational Principles
    We begin by recalling three foundational principles that,
    along with the standard of review, guide our decision.
    [5] The first principle is the burden of proof imposed in this
    case. In the realm of factfinding, the function of a standard
    of proof is to instruct the fact finder concerning the degree
    of confidence our society thinks he or she should have in the
    correctness of factual conclusions for a particular type of adju-
    dication.7 Unless an exception applies, the burden of proof in
    civil cases requires only the greater weight of the evidence.8
    The greater weight of the evidence means evidence sufficient
    to make a claim more likely true than not true.9 That burden of
    proof applies here.
    [6,7] Second, we are mindful that there is no hierarchy of
    evidence. “‘[T]here is no general rule of evidence that a party
    must produce the best evidence which the nature of the case
    permits.’”10 A witness’ testimony, like a document, is a kind of
    evidence.11 A trial court weighs the credibility of the witnesses
    and the evidence and determines what evidence should be
    given the greater weight in arriving at a factual determination
    on the merits.12 In doing so, a trial court may choose to accord
    greater weight to a document. Given the frailties of memo-
    ries, documentary evidence relating to a long past event and
    7
    See In re Interest of Christopher T., 
    281 Neb. 1008
    , 
    801 N.W.2d 243
    (2011).
    8
    See, In re Application No. OP-0003, 
    303 Neb. 872
    , 
    932 N.W.2d 653
    (2019); Flores v. Flores-Guerrero, 
    290 Neb. 248
    , 
    859 N.W.2d 578
     (2015).
    9
    Flores v. Flores-Guerrero, supra note 8.
    10
    Equitable Life v. Starr, 
    241 Neb. 609
    , 615, 
    489 N.W.2d 857
    , 862 (1992),
    quoting Michael H. Graham, Handbook of Federal Evidence § 1001.0 (3d
    ed. 1991).
    11
    See Columbia Nat. Bank v. German Nat. Bank, 
    56 Neb. 803
    , 
    77 N.W. 346
    (1898).
    12
    Lockwood v. Lockwood, 
    205 Neb. 818
    , 
    290 N.W.2d 636
     (1980).
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    prepared by one not affected by it may be entitled to greater
    consideration than oral testimony.13 Ordinarily, a contempora-
    neous memorandum of an event is entitled to greater eviden-
    tiary weight than another recollection of it.14 But it does not
    follow that where there is no documentary evidence, a party’s
    testimony alone cannot satisfy a burden of proof.
    [8-11] Third, it is well settled that the first step in the
    equitable division of property is to classify the parties’ prop-
    erty as marital or nonmarital, setting aside the nonmarital
    property to the party who brought that property to the mar-
    riage.15 Contributions to retirement accounts before marriage
    are not assets of the marital estate.16 Gifts and inheritances,
    even when received during the marriage, are presumed to
    be nonmarital.17 In a marital dissolution proceeding, the bur-
    den of proof rests with the party claiming that property is
    nonmarital.18
    With these principles in mind, we turn to the two impera-
    tives upon which the Court of Appeals relied.
    2. Necessity of Documentary Evidence
    Although the district court accepted Harlan’s testimony as
    sufficient to establish portions of the property as nonmarital,
    the Court of Appeals rejected Harlan’s claims solely on the
    basis that he lacked documentation. Regarding the 401K, the
    Court of Appeals stated:
    The problem with Harlan’s claim is that it is based
    solely on his own recol­lection. Harlan failed to adduce
    any documentation whatsoever regarding when the 401K
    came into existence, what contribu­tions were made to it
    13
    See 32A C.J.S. Evidence § 1286 (2008).
    14
    Id.
    15
    See Rohde v. Rohde, 
    303 Neb. 85
    , 
    927 N.W.2d 37
     (2019).
    16
    See Lorenzen v. Lorenzen, 
    294 Neb. 204
    , 
    883 N.W.2d 292
     (2016).
    17
    Westwood v. Darnell, 
    299 Neb. 612
    , 
    909 N.W.2d 645
     (2018).
    18
    Rohde v. Rohde, 
    supra note 15
    .
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    by him or his employer, and how it was invested or grew
    over the years.19
    The Court of Appeals recognized that Harlan tried to obtain
    records to demonstrate the value of his 401K in 1992, but
    could not do so because his former employer did not maintain
    those records. The Court of Appeals then suggested a number
    of other records that perhaps Harlan could have obtained. It
    found that the trial court erred in setting off $130,000 to Harlan
    “based solely on his testimony.”20 And with regard to the inher-
    itance, the Court of Appeals noted that Harlan presented docu-
    mentation to support his claim that he received an inheritance,
    but that he “presented no documentation which in any way
    establishes or corroborates the amount of that inheritance.”21
    In effect, the Court of Appeals held that Harlan’s testimony
    could not be accepted without documentary support. That goes
    too far.
    [12,13] A nonmarital interest in property may be established
    by credible testimony.22 In Brozek v. Brozek,23 we recognized
    that a spouse’s own testimony can establish a “‘tracing link,’”
    i.e., tracking an asset to a nonmarital source. Of course, triers
    of fact have the right to test the credibility of witnesses by their
    self-interest and to weigh it against the evidence, or the lack
    thereof.24 Evidence not directly contradicted is not necessarily
    binding on the triers of fact, and may be given no weight where
    it is inherently improbable, unreasonable, self-contradictory,
    or inconsistent with facts or circumstances in evidence.25 We
    19
    Burgardt v. Burgardt, 
    supra note 1
    , 27 Neb. App. at 65, 926 N.W.2d at
    460.
    20
    Id. at 67, 926 N.W.2d at 461.
    21
    Id. at 68, 926 N.W.2d at 462.
    22
    See Kerr v. Kerr, 
    770 N.W.2d 567
     (Minn. App. 2009).
    23
    Brozek v. Brozek, 
    292 Neb. 681
    , 701, 
    874 N.W.2d 17
    , 32 (2016).
    24
    State on behalf of Mariah B. & Renee B. v. Kyle B., 
    298 Neb. 759
    , 
    906 N.W.2d 17
     (2018).
    25
    Fredericks Peebles v. Assam, 
    300 Neb. 670
    , 
    915 N.W.2d 770
     (2018).
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    acknowledged in Brozek that the trial court was “entitled to
    discount [the husband’s] testimony about [an alleged premarital
    asset] because of his admitted uncertainty.”26
    While documentary evidence may be more persuasive, it is
    not absolutely required. In a case where the husband did not
    produce bank statements proving the premarital balance of his
    bank accounts but the wife did not contest the values he listed
    on a joint property statement, we found an abuse of discretion
    by the trial court in failing to set off the value of premarital
    bank accounts.27 In Onstot v. Onstot,28 we affirmed the trial
    court’s decision to not grant the husband credit for the value of
    a premarital house at the time of marriage, stating that “assum-
    ing [the husband’s] testimony established the value of the resi-
    dence at $100,000 at the time of the marriage, he did not testify
    or supply any documentation as to whether the residence was
    either encumbered or unencumbered at that time and, if encum-
    bered, to what extent.” This statement implies that premarital
    equity could have been established by testimony alone. In a
    case where undisputed testimony established items as premari-
    tal, the Court of Appeals determined that the trial court erred in
    classifying the items as marital property.29
    Of course, a party opting to rely upon his or her testimony
    alone does so at the risk of nonpersuasion. In a case where the
    trial court set aside the total amount of premarital funds that the
    husband claimed he used to purchase property, we reduced the
    amount of the set aside—even though the husband’s testimony
    was uncontradicted—because there was nothing in the record
    to show the source of certain funds.30 In Brozek, we affirmed
    the trial court’s decision declining to set off any amount to the
    26
    Brozek v. Brozek, 
    supra note 23
    , 
    292 Neb. at 701
    , 874 N.W.2d at 32.
    27
    See Osantowski v. Osantowski, 
    supra note 2
    .
    28
    Onstot v. Onstot, 
    298 Neb. 897
    , 904, 
    906 N.W.2d 300
    , 306 (2018)
    (emphasis supplied).
    29
    See Schmeidler v. Schmeidler, 
    25 Neb. App. 802
    , 
    912 N.W.2d 278
     (2018).
    30
    See Frost v. Frost, 
    227 Neb. 414
    , 
    418 N.W.2d 220
     (1988).
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    husband for the premarital portion of two checking accounts
    (he testified one account had about $79,000 at the time of mar-
    riage), crops from a 1993 harvest, and machinery owned at the
    time of marriage (but later sold or traded).31 A party seeking
    recognition of nonmarital property may find it easier to meet
    his or her burden of persuasion with documentary support. But
    its absence does not automatically defeat the claim.
    3. Definitively Proved
    The Court of Appeals also determined that Harlan “failed to
    meet his burden of proof to definitively identify the value of
    his claimed premarital asset.”32 “Definitively” means “[s]o as
    to decide or settle the matter; decisively, conclusively, finally,
    definitely.”33
    In doing so, the Court of Appeals misread our decision in
    Brozek. The Court of Appeals stated that we “reversed the trial
    court judgment, finding that the husband had not definitively
    identified the values of his premarital assets.”34 We did neither.
    Rather, we affirmed the trial court’s judgment, concluding, as
    did the trial court, that the husband failed to trace the value of
    property alleged to be premarital. We stated that he did “not
    identify the different permutations that his premarital property
    underwent during the marriage” and that “we cannot follow the
    threads in the hodgepodge of figures.”35
    [14] It is axiomatic that an item must be identified in
    order to be set off as nonmarital. But its value need not be
    definitively or conclusively proved; the greater weight of the
    31
    Brozek v. Brozek, 
    supra note 23
    .
    32
    Burgardt v. Burgardt, 
    supra note 1
    , 27 Neb. App. at 68, 926 N.W.2d at 462
    (emphasis supplied).
    33
    “Definitively,” Oxford English Dictionary Online, http://www.oed.com/
    view/Entry/4889 (last visited Sept. 24, 2019).
    34
    Burgardt v. Burgardt, 
    supra note 1
    , 27 Neb. App. at 66, 926 N.W.2d at
    461.
    35
    Brozek v. Brozek, 
    supra note 23
    , 
    292 Neb. at 699
    , 874 N.W.2d at 31.
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    evidence is sufficient. In other words, the value of the non-
    marital portion of an asset must be established by the greater
    weight of the evidence.
    4. R esolution
    In summary, we reject the Court of Appeals’ articulations
    that documentary evidence is necessary to establish a claim
    to nonmarital property and that a nonmarital value must be
    proved “definitively.” While Harlan had the burden of persuad-
    ing the district court of the nonmarital character of the property
    and its value, he succeeded in doing so. On appeal, our stan-
    dard of review governs. And here, it is important to recognize
    that the district court heard and observed the witnesses and
    accepted one version of the facts rather than another. As we
    have said, this court is not inclined to disturb the division of
    property made by the trial court unless it is patently unfair on
    the record.36
    The district court set off to Harlan $130,000 as the non-
    marital value of his 401K and $60,000 as the nonmarital value
    of his inherited share of the home farm. Evidence supports
    the court’s award. Harlan testified that his 401K was val-
    ued at $130,000 at the time of marriage. When asked, “Are
    you aware of any kind of 401-K Harlan had before marriage
    worth $130,000,” Shirley responded, “No.” But on cross-­
    examination, she admitted she had no evidence to dispute
    that Harlan contributed to the 401K prior to marriage. Harlan
    testified that his inherited share of his father’s farm was worth
    $60,000, and Shirley did not dispute this. This was not a situ-
    ation where the trial court rejected a party’s unsupported tes-
    timony and, in affirming, an appellate court noted the lack of
    documentary evidence. Here, the district court evidently found
    Harlan’s testimony to be credible and set off the amounts
    claimed as nonmarital. Upon our de novo review, we cannot
    say it abused its discretion in doing so.
    36
    Tavlin v. Tavlin, 
    194 Neb. 98
    , 
    230 N.W.2d 108
     (1975).
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    VI. CONCLUSION
    Upon our de novo review, we find no abuse of discretion by
    the district court in setting off to Harlan amounts representing
    nonmarital portions of his 401K and inheritance. We reverse
    the decision of the Court of Appeals as to those items and
    remand the cause to that court with direction to affirm the dis-
    trict court’s decree as modified to divide the net tax liability of
    $27,494 evenly between the parties.
    R eversed and remanded with direction.