Opinion
No. C3-01-1805.
Filed July 9, 2002.
Appeal from the District Court, St. Louis County, File No. C700601130.
James T. Prest, (for respondent)
John F. Hedtke, Attorney at Law, (for appellant)
Considered and decided by Lansing, Presiding Judge, Kalitowski, Judge, and Anderson, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (2000).
UNPUBLISHED OPINION
The district court awarded respondent approximately $19,000 after concluding she was entitled to the return of funds she transferred to appellant in contemplation of their marriage that did not occur. Appellant argues the district court did not have jurisdiction to hear respondent's claims and that the court erred when it concluded that the transferred funds were conditional gifts made in contemplation of marriage. Although the district court clearly erred in its findings of fact that the funds transferred were gifts rather than loans, we affirm on other grounds.
FACTS
The parties initially met during high school in Duluth, Minnesota, became re-acquainted in June 1997, and began to date shortly thereafter. The relationship became more serious and they eventually became sexually intimate. During that summer, appellant was arrested for a driving-while-impaired offense. In September 1997, respondent transferred $1,000 to appellant to pay the fine. According to respondent, appellant promised to repay her with the proceeds from his snowplowing job that winter.
According to respondent, the offense occurred the night the parties had scheduled their first date.
Respondent transferred another $400 to appellant in November 1997 to repair his truck, and $14,000 to appellant in February 1998 to reduce appellant's significant outstanding payment balances on his truck, snowmobile, and credit cards. Respondent also authorized appellant's use of her credit cards. Appellant charged approximately $1,000 on respondent's Sears credit card; but he paid only one or two monthly payments on the card. Appellant periodically stayed the night at respondent's apartment and appellant moved into respondent's apartment in October 1998. Appellant did not pay any monthly rent. In July 1999, respondent advanced $2,500 for a down payment on a boat, which she jointly purchased with appellant. Appellant continues to make the monthly payments on the boat; but the parties remain jointly liable on the installment contract.
In May 1999, respondent individually purchased a home in Duluth, Minnesota, and appellant moved into the home. The parties' relationship eventually deteriorated and appellant left respondent's home in December 1999. After attempts to reconcile with appellant failed, respondent brought a district court action to recover the funds transferred to appellant during their relationship. At trial, respondent testified that she transferred the funds to appellant as loans with the expectation that the advances would be repaid and that appellant promised to repay the advances. She also testified that she transferred the funds to appellant because she was his girlfriend and she anticipated that they would be married. Respondent admitted, however, that she and appellant were never formally engaged to be married.
Appellant testified that he never asked for any of the funds that respondent transferred to him during their relationship, and that he never agreed to repay her for the transfers. He also admitted that he has retained the boat which appellant advanced $2,500 to purchase. At the close of respondent's case in chief, appellant moved for a directed verdict claiming that Minn. Stat. §§ 513.075 and 513.076 (2000) divested the court of jurisdiction to hear the case. The district court reserved its ruling on appellant's motion for a directed verdict, heard additional testimony, and found that the funds transferred to appellant were not loans but rather were conditional gifts made in contemplation of marriage.
The district court also concluded that it had jurisdiction to hear the case because Minn. Stat. §§ 513.075 and 513.076 did not bar the action because respondent was not seeking an interest in appellant's separate property but only sought return of the funds she transferred to appellant on the condition of anticipated marriage. The court then stated that this court's decision in Benassi v. Back Neck Pain Clinic, Inc., 629 N.W.2d 475 (Minn.App. 2001), review denied (Minn. Sept. 11, 2001), supported its decision to treat the transfers of funds as conditional gifts made in contemplation of marriage and therefore ordered judgment in favor of respondent for approximately $19,000. The court also ordered appellant to refinance the remaining boat payments and remove respondent as an obligor from the installment contract. Appellant moved for a new trial or amended findings of fact and conclusions of law. The district court denied appellant's motion and this appeal followed.
DECISION I.
Appellate courts have the ultimate responsibility to decide cases in accordance with law, and that responsibility should not be diminished by the oversight of counsel, lack of adequate legal research, or the failure to specify, and appeal, crucial issues arising at trial. State v. Hannuksela, 452 N.W.2d 668, 673 n. 7 (Minn. 1990); see also Greenbush State Bank v. Stephens, 463 N.W.2d 303, 306 n. 1 (Minn.App. 1990) (stating that "an appellate court's obligation [is] to decide cases in a manner consistent with existing law when there is nothing `novel or questionable' about the relevant law" (citation omitted)), review denied (Minn. Feb. 4, 1991). Respondent did not file a notice of review to specifically challenge the district court's findings of fact as they relate to the transfers of funds between the parties and the lack of an agreement that the funds would be repaid by appellant. But this issue was, and apparently continues to be, disputed. Therefore, we will consider this threshold issue.
Findings of fact, whether based on oral or documentary evidence, shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge the credibility of the witnesses.
Minn.R.Civ.P. 52.01; see also Hollom v. Carey, 343 N.W.2d 701, 704 (Minn.App. 1984) (stating that a district court's "findings are a product of first hand observation [and] possess a certain integrity not contained in the written record alone" (citation omitted)). Where a district court's factual findings are reasonably supported by the record, they must be affirmed. See, e.g., Moore v. Sordahl, 389 N.W.2d 748, 749 (Minn.App. 1986); Tourville v. Kowarsch, 365 N.W.2d 298, 299 (Minn.App. 1985).
The district court concluded, after hearing the evidence at trial, that no agreement existed, either express or implied, written or oral, between the parties regarding the transfers of funds and repayment of those funds. The district court found that respondent has characterized her advances of funds to [appellant] as loans but the Court has concluded the transactions were not of that character. They were gifts by her to him in contemplation of the parties' marriage. [Appellant] himself characterizes them as having been gifts and the evidence supports this characterization. * * * At the time the monies were advanced the parties did not discuss repayment * * * .
We conclude the district court's determination that the transfers of funds were gifts rather than loans was not reasonably supported by the record.
A summary of the individual transfers is appropriate. First, respondent transferred $1,000 to appellant in September 1997 to pay a fine he incurred for a DWI offense in June 1997. Respondent unequivocally testified that appellant agreed to repay her with money he anticipated he would earn plowing snow that winter. Second, one month after respondent transferred the $1,000 to appellant, respondent transferred an additional $400 to appellant to repair the truck he would use for snowplowing in the winter. Without his truck, appellant could not generate any income to repay respondent the initial $1,000. It is extremely unlikely to the point of improbability that these transfers were intended as gifts made in contemplation of marriage as the district court found; the parties had only dated approximately three to five months and there were no other indications of impending marriage, let alone an engagement.
Next, a mere three months later, respondent transferred $14,000 to appellant to reduce significant outstanding payment balances on his truck, snowmobile, and credit cards. Respondent testified that appellant had lost his job and was in danger of having his truck and snowmobile repossessed. She testified that the $14,000 came from $35,000 in life-insurance proceeds paid to her as a beneficiary following her father's death, and that the money would be used "to get him out of a jam until he found a job." Again, it simply is not credible that respondent would transfer as a gift almost one-half of her father's life-insurance proceeds to a boyfriend of less than one year with no other objective evidence of any formal commitment between the parties.
Finally, appellant charged approximately $1,000 on respondent's Sears credit card, but paid only one or two monthly payments on the card. But the fact that appellant paid one or two monthly payments on the card indicates that he treated the line of credit as a loan and that he was obligated to repay respondent for the charges.
The district court did not err when it found that respondent loaned appellant $61 to defray his part of the cost for a Christmas present for his mother. Moreover, the district court had jurisdiction to order appellant to refinance the boat obligation and remove respondent as an obligor from the installment contract because respondent does have an interest in the boat and that interest is evidenced by an installment contract. Appellant does not challenge the part of the order that addresses the boat purchase.
II.
Appellant also argues the district court erred when it concluded that Minn. Stat. §§ 513.075 and 513.076 did not remove the court's jurisdiction to hear respondent's cause of action because the sole consideration for the transfers of funds was the parties' sexual relationship. Appellant argues that respondent's claims do not seek to recover her property but seek to recover appellant's property; consequently, according to appellant, these claims are exactly the type of claims the legislature intended Minn. Stat. §§ 513.075 and 513.076 to prohibit. Because we have already concluded that the district court erred by finding that the transfers were gifts in contemplation of marriage, and not discrete loans, we must also decide whether these statutes preclude recovery for respondent.
Minn. Stat. §§ 513.075 and 513.076, Minnesota's so-called "anti-palimony" statutes, collectively prohibit the enforcement of certain unwritten financial agreements between unmarried cohabitating parties, if sexual relations between the parties are contemplated. Minn. Stat. § 513.075 provides:
If sexual relations between the parties are contemplated, a contract between a man and a woman who are living together in this state out of wedlock, or who are about to commence living together in this state out of wedlock, is enforceable as to terms concerning the property and financial relations of the parties only if:
(1) the contract is written and signed by the parties, and
(2) enforcement is sought after termination of the relationship.
Thus, the existence of an express or implied agreement or contract between the parties is necessary for the statute to apply. See Moore, 389 N.W.2d at 750; Tourville, 365 N.W.2d at 300.
Minn. Stat. § 513.076 bars claims where the parties affected by Minn. Stat. § 513.075 have not complied with the statute's written-contract provisions:
Unless the individuals have executed a contract complying with the provisions of section 513.075, the courts of this state are without jurisdiction to hear and shall dismiss as contrary to public policy any claim by an individual to the earnings or property of another individual if the claim is based on the fact that the individuals lived together in contemplation of sexual relations and out of wedlock within or without this state.
The supreme court has excluded the application of this arguably broad statute to claims where an individual seeks "to recover, preserve, or protect his or her own property, which he or she acquired `independent of any service contract related to cohabitation.'" In re Estate of Palmen, 588 N.W.2d 493, 495 (Minn. 1999) (quoting In re Estate of Eriksen, 337 N.W.2d 671, 674 (Minn. 1983)). Consequently, Minn. Stat. §§ 513.075 and 513.076 only apply to bar claims "where the sole consideration for a contract between cohabitating parties is their `contemplation of sexual relations * * * out of wedlock.'" In re Estate of Eriksen, 337 N.W.2d at 674 (quotation omitted) (ellipsis in original).
Put simply, Minn. Stat. §§ 513.075 and 513.076 prevent an unmarried couple living together in "contemplation of sexual relations" from receiving the legal rights conferred upon married couples. In other words, by virtue of living together in contemplation of sexual relations, neither cohabitant obtains any ownership interest or legal right to the other individual's property or earnings.
In re Estate of Palmen, 588 N.W.2d at 496 (citation omitted).
Therefore, the statutes generally do not bar claims to recover specific contributions to the joint purchase of disputed property, id.at 496; In re Estate of Eriksen, 337 N.W.2d at 673-74; but the statutes will bar claims where the disputed property was not jointly purchased and "there was never a clear understanding between the parties that the property would be jointly owned." Hollom, 343 N.W.2d at 704; see also Roatch v. Puera, 534 N.W.2d 560, 564 (Minn.App. 1995); Mechura v. McQuillan, 419 N.W.2d 855, 858 (Minn.App. 1988) (stating that a claim for unjust enrichment cannot exist where a cohabitant provides the entire payment for a home).
We conclude that Minn. Stat. §§ 513.075 and 513.076 do not apply in this case to bar recovery by respondent because the sole consideration for the unwritten loan agreements was not the parties' sexual relations, but instead was appellant's promises to repay the transferred funds.
Minnesota law makes it clear that the statutes do not apply where a party seeks to recover her own property, which she acquired independent of any service contract related to cohabitation. In re Estate of Palmen, 588 N.W.2d at 495. Here, respondent acquired the transferred funds through insurance proceeds, not by dating and living with appellant. Moreover, the statutes only prevent unmarried persons living together in "contemplation of sexual relations" from receiving the legal rights conferred on married couples. Id. at 496. Respondent did not seek an equitable apportionment of appellant's assets after the parties terminated their relationship; rather, she only sought repayment of the funds she loaned appellant during the relationship. The sole consideration for respondent's loans to appellant was not their contemplation of sexual relations out of wedlock; the consideration was appellant's promises to repay the funds. See In re Estate of Eriksen, 337 N.W.2d at 674.
We therefore conclude that Minn. Stat. §§ 513.075 and 513.076 do not apply in this case to bar respondent's recovery. Because we conclude the district court clearly erred by finding that the funds transferred to appellant were gifts, and not loans, we need not decide whether this court's decision in Benassi should be extended to certain pre-engagement gifts made in contemplation of marriage.