Case Title: ORLANDO v PREWETT

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1985-09-09T00:00:00Z

Document:
No. 84-289 IN THE SUPREME COURT OF THE STATE OF MONTANA 1955 GEORGE ORLANDO, as Personal Representative of the Estate of FRANK A . DONNES, Deceased, Plaintiff and Appellant, LEE PREWETT and BARBARA PREWETT, husband and wife, Defendants and Respondents. APPEAL FROM: District Court of the Sixteenth Judicial District, In and for the County of Treasure, The Honorable Charles Luedke, Judge presiding. COUNSEL OF RECORD: For Appellant: Kelly & Halverson, P.C.; Sheehy, Prindle & Finn, Billings, Montana For Respondent: Dunaway & O'Connor; Vicki W. Dunaway, Billings, Montana Submitted on Briefs: April 25, 1985 Decided: September 9, 1985 Filed: St'P!i 1985 Clerk M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion o f t h e Court. This i s an appeal from a judgment o f t h e D i s t r i c t Court, T h i r t e e n t h J u d i c i a l District, Treasure County, Montana. The lower c o u r t ordered s p e c i f i c performance of two o r a l agreements e n t e r e d i n t o between Lee and Barbara Prewett, respondents ( h e r e a f t e r r e f e r r e d t o a s "Prewetts") , and Frank A. Donnes , deceased. George Orlando, a s personal r e p r e s e n t a t i v e of t h e E s t a t e o f Frank A. Donnes, a p p e a l s from t h a t o r d e r . This c a s e i s remanded t o comply w i t h t h i s opinion. Frank A. Donnes owned a ranch ("Donnes ranch") i n Treasure County. H e was r a i s e d on a p o r t i o n o f t h e p r o p e r t y contained i n t h e ranch and l i v e d most o f h i s a d u l t l i f e thereon. H e was once married b u t h i s w i f e d i e d young and without c h i l d r e n . Some y e a r s p r i o r t o h i s d e a t h , M r . Donnes ceased o p e r a t i n g t h e ranch himself and l e a s e d it under a c a s h r e n t a l agreement. H e continued t o l i v e on t h e ranch, however, and t o have t h e u s e of t h e b u i l d i n g s and t o run a few c a t t l e . This p a r t i c u l a r l e a s e arrangement terminated i n 1978 and from t h a t t i m e u n t i l 1980 M r . Donnes resumed sol-e r e s p o n s i b i l i t y f o r o p e r a t i n g t h e ranch. I n May of 1980 M r . Donnes, advancing i n y e a r s and having grown t i r e d o f working t h e ranch h i m s e l f , approached h i s n i e c e , Barbara Prewett, and asked i f she and h e r husband L e e would be i n t e r e s t e d i n moving t o t h e ranch and o p e r a t i n g it. T h e r e a f t e r t h e Prewetts m e t w i t h M r . Donnes and reached an o r a l agreement wherein it was agreed t h a t i f t h e Prewetts moved t o t h e Donnes ranch and l e a s e d t h e same f o r $18,000 p e r y e a r , M r . Donnes would leave t h e Prewetts an undivided one-half i n t e r e s t i n t h e ranch and g i v e them t h e option of purchasing the other half at an appraised value at the date of his death. As a result of this agreement the Prewetts bought a trailer-home and moved to the Donnes ranch in July of 1980. They testified that they would not have moved to the ranch and assumed the duties of running it if there had not been the agreement with Mr. Donnes described ahove. In May of 1982, Lee Prewett and Mr. Donnes made an oral agreement for the sale of certain items of Mr. Donnes' personal property. On or about September 9, 1982, Frank Donnes was murdered. No lease payment on the ranch or payment on the purchase price of the personal property had been made to him at the time of his death. A short period of time passed before the duly executed last will and testament of Frank A. Donnes was discovered in the home of one of his sisters in the State of Washington. Helen Carbone and Mabel Orlando, sisters of Mr. Donnes were qamed under the will as sole devisees of his entire estate. On November 16, 1982, appellant George Orlando filed this will with the Treasure County Clerk of Court along with a petition for formal probate. On January 8, 1983, the Prewetts filed creditor's claims wherein they demanded specific performance of the oral agreements made between them and Mr. Donnes. On January 19, 1983, the will of decedent was admitted to formal probate as the valid last will and testament of Frank A. Donnes. On January 24, 1983, George Orlando, appellant, having been appointed personal representative of the Frank A. Donnes estate, filed notice of disallowance of the creditor's claims and instituted an action to quiet title against the Prewetts in and to the Donnes ranch and certain persona1 property. The Prewetts counterclaimed for specific performance of the two o r a l agreements set f o r t h i n t h e i r c r e d i t o r ' s claims. A bench t r i a l was held beginning on November 7 , 1.983 and on A p r i l 17, 1 9 8 4 , t h e District Court r u l e d i n f a v o r o f t h e The d i s p o s i t i v e i s s u e presented by t h i s appeal is whether t h e o r a l agreements e n t e r e d i n t o between t h e Prewetts and M r . Donnes a r e enforceable? The p a r t i e s t o t h i s appeal d i s a g r e e over t h e n a t u r e of t h e o r a l agreement f o r t h e t r a n s f e r of r e a l property. Appellant contends t h a t t h e agreement c o n s t i t u t e d a c o n t r a c t t o make a w i l l o r d e v i s e ; t h e Prewetts argue t h a t t h e agreement was f o r t h e l e a s i n g , s a l e , and purchase o f t h e Donnes ranch. The lower c o u r t was i n accord with t h e Prewetts. Paragraphs 5 and 7 o f i t s Conclusions -- of Law read a s follows: 5. That t h e agreement between decedent and t h e P r e w e t t s , a s h e r e i n set f o r t h i n Conclusion No. 1, above, was an agreement f o r t h e l e a s i n g , s a l e and purchase of r e a l p r o p e r t y and, t h e r e f o r e , is s p e c i f i c a l l y covered by S e c t i o n s 30-11-111, 70-20-101, and 70-20-102, which a u t h o r i z e t h e Court t o compel t h e s p e c i f i c performance o f an o r a l agreement f o r t h e l e a s i n g , s a l e and purchase of r e a l p r o p e r t y i n c a s e o f p a r t performance t h e r e o f . 7. That S e c t i o n 72-2-105 r e q u i r e s a c o n t r a c t t o make a W i l l o r d e v i s e or n o t t o revoke a W i l l o r d e v i s e o r t o d i e i n t e s t a t e t o be i n w r i t i n g , and even assuming t h i s s t a t u t e t o be a p p l i c a b l e t o t h e i n s t a n t c a s e , which t h e Court concludes it i s n o t , it i s a s t a t u t e of frauds p r o v i s i o n , and p a r t performance t h e r e o f w i l l remove t h e same from t h e operation o f t h e s t a t u t e . W e d i s a g r e e with t h e s e conclusions and f i n d them i n e x p l i c a b l e i n l i g h t o f paragraph 13 o f t h e lower c o u r t ' s own f i n d i n g s o f f a c t . I n c r u c i a l p a r t t h a t paragraph r e a d s a s follows: . . . T h e r e a f t e r , i n May of 1380, decedent contacted h i s n i e c e , Barbara Prewett, one o f t h e defendants h e r e i n . . . and asked whether o r n o t she and h e r husband would be i n t e r e s t e d i n movinq t o t h e ranch and o p e r a t i n g it. A s a resklt o f t h e inquiry,- t h e defendant, Lee Prewett, husband o f Barbara Prewett, m e t with decedent and discussed t h e p o s s i b i l i t y o f working o u t an arrangement r e l a t i v e t o t h e Donnes Ranch. A few days l a t e r a second meeting occurred, - a t which t i m e t h e ~ a r t i e s reached an o r a l agreement whereby t h e p a r t i e s agreed t h a t i f t h e Prewetts moved t o t h e Donnes Ranch -- -- and leased --- t h e same f o r $18,000.00 per y e a r annually, . . . t h a t upon h i s d e a t h decedent would l e a v e -- unto t h e Prewetts an undivided one-ha l f i n t e r e s t i n - the Donnes Ranch and t h e Prewetts wouid have t h e r i g h t t o purchase t h e o t h e r one-half o f t h e ~ o n n e s Ranch a t an a ~ ~ r a i s e d v a l u e - - J . L -- a s o f t h e d a t e of-death. - _ - _ - - - (Emphasis added. 1 F u r t h e r , i n paragraph one of i t s conclusions o f law t h e lower c o u r t r e s t a t e s t h e t e r m s o f t h e agreement: 1. That i n May, 1980, decedent and t h e Prewetts e n t e r e d i n t o an o r a l agreement whereby t h e y agreed t o move t o t h e Donnes Ranch and l e a s e t h e Donnes Ranch from decedent f o r t h e remainder o f h i s l i f e t i m e f o r c o n s i d e r a t i o n , i n i t i a l l y , o f $18,000.00 a n n u a l l y , and decedent agreed t o g i v e an undivided one-half i n t e r e s t i n t h e ranch t o them a t t h e t i m e o f h i s d e a t h and provide them w i t h t h e r i g h t t o buy t h e o t h e r one-half i n t e r e s t i n t h e ranch a t t h e appraised v a l u e a s o f t h e d a t e of h i s death. Given t h e f i n d i n g s o f f a c t , which a r e amply supported by t h e record and n o t challenged by e i t h e r p a r t y t o t h i s appeal, it could n o t be more c l e a r t h a t t h e Prewetts and M r . Donnes e n t e r e d i n t o an o r a l agreement f o r t h e d i s p o s i t i o n o f c e r t a i n o f M r . Donnes' p r o p e r t y a t h i s d e a t h . The v e h i c l e f o r making t h i s d i s p o s i t i o n was t o be e i t h e r a w i l l o r a g r a n t o r t r u s t . But d e s p i t e t h e f o r m a l i t i e s t h a t were contemplated it is n o t challenged t h a t t h e i n t e n t o f t h e o r a l agreement was t h a t Frank Donnes should leave r e a l p r o p e r t y t o t h e Prewetts a t h i s death. The D i s t r i c t Court committed e r r o r , and c o n t r a d i c t e d i t s own f i n d i n g s o f f a c t , when it concluded t h a t t h e o r a l agreement was f o r t h e l e a s i n g , s a l e and purchase o f r e a l p r o p e r t y and t h e r e f o r e was covered by S$ 30-11-111, 70-20-101 and 70-20-102, MCA. Section 72-2-105, MCA, i s t h e c l e a r l y a p p l i c a b l e s t a t u t e t o t h e f a c t s of t h i s c a s e and provides i n p e r t i n e n t p a r t a s follows: C o n t r a c t s concerning succession. (1) A c o n t r a c t t o make a w i l l o r d e v i s e o r n o t t o revoke a w i l l o r d e v i s e o r t o d i e i n t e s t a t e , i f executed a f t e r J u l y 1, 1 9 7 5 , can be e s t a b l i s h e d only by: (a) p r o v i s i o n s o f a w i l l s t a t i n g m a t e r i a l p r o v i s i o n s o f t h e c o n t r a c t ; (b) an e x p r e s s r e f e r e n c e i n a w i l l t o a c o n t r a c t and e x t r i n s i c evidence proving t h e terms o f t h e c o n t r a c t ; o r ( c ) a w r i t i n g signed by t h e decedent evidencing t h e c o n t r a c t . In t h e p r e s e n t c a s e (1) t h e r e is no provision i n d e c e d e n t ' s w i l l s t a t i n g materia 1 p r o v i s i o n s o f t h e c o n t r a c t ; ( 2 ) t h e r e i s no r e f e r e n c e , e x p r e s s o r o t h e r w i s e , i n d e c e d e n t ' s w i l l t o a c o n t r a c t ; ( 3 ) t h e r e i s no w r i t i n g siqned by t h e decedent evidencing t h e c o n t r a c t . The agreement between t h e Prewetts and M r . Donnes by which t h e Prewetts w e r e t o receive h a l f t h e ranch and f i r s t o p t i o n t o purchase t h e o t h e r h a l f a t t h e d e a t h o f M r . Donnes does n o t conform i n a s i n g l e p a r t i c u l a r t o t h e requirements provided by s t a t u t e f o r t h e enforcement o f such an agreement. Therefore t h e agreement must f a i l . The Prewetts argue t h a t , even i f $ 72-2-105, MCA, i s a p p l i c a b l e i n t h e p r e s e n t c a s e , i t s requirement t h a t t h e r e be a w r i t i n g signed by t h e decedent i s a s t a t u t e o f f r a u d s p r o v i s i o n , and p a r t performance d e f e a t s t h e o p e r a t i o n of t h e s t a t u t e of frauds. Therefore, t h e Prewetts c o n t i n u e , s i n c e t h e y performed t h e i r p a r t o f t h e agreement by moving t o t h e ranch and assuming i t s o p e r a t i o n , t h e agreement should be enforced d e s p i t e t h e s t a t u t o r y requirement o f a w r i t i n g . W e reject t h i s argument f o r t h e following reasons. F i r s t , t h e wording o f 5 72-2-105, MCA, i s a b s o l u t e . A c o n t r a c t concerning succession can be e s t a b l i s h e d "only" by meeting c e r t a i n requirements. "Only" h a s a p l a i n and unambiguous meaning. W e w i l l n o t g r a f t an exception on t o a s t a t u t e when t h e language does n o t a l l o w f o r an exception. The Prewetts would have u s analogize $ 72-2-105, MCA, t o S 70-20-101, MCA, which r e q u i r e s a w r i t i n g f o r t h e t r a n s f e r of an i n t e r e s t i n r e a l p r o p e r t y , and S 30-11-111, MCA, which r e q u i r e s t h a t a c o n t r a c t f o r t h e s a l e o f r e a l p r o p ~ r t y be i n w r i t i n g . However, a p a r t performance exception t o t h e w r i t i n g requirement o f t h e s e two s t a t u t e s i s s p e c i f i c a l l y provided f o r i n t h e code. There i s no such exception s p e c i f i c a l l y provided t o S 72-2-105, MCA. Second, we have n o t been a b l e t o d i s c o v e r a u t h o r i t y from any j u r i s d i c t i o n t h a t h a s adopted t h e Uniform Probate Code w i t h a succession c o n t r a c t p r o v i s i o n i d e n t i c a l o r s i m i l a r t o S 72-2-105, MCA, holding t h a t an o r a l c o n t r a c t t o make a w i l l o r d e v i s e can be enforced on t h e b a s i s o f a p a r t performance exception t o t h e s t a t u t e o f frauds. The a u t h o r i t y and commentary we can f i n d provides t h e o p p o s i t e . I n F i r s t Gulf Beach Bank and T r u s t Co. v. Grubaugh (Fla.App. 1976), 330 So.2d 205, t h e D i s t r i c t Court o f Appeals of F l o r i d a i n t e r p r e t e d F l o r i d a S t a t u t e S731.051 (1971), which r e a d s i n p a r t a s follows: 731.051 Agreements t o make a w i l l , requirements. (1) N o agreement t o make a w i l l of r e a l o r personal p r o p e r t y o r t o g i v e a legacy o r make a d e v i s e s h a l l be binding o r e n f o r c e a b l e u n l e s s such agreement i s i n w r i t i n g signed i n t h e presence o f two s u b s c r i b i n g w i t n e s s e s by t h e person whose executor o r a d m i n i s t r a t o r i s sought t o be charged. I n r e b u t t i n g t h e argument t h a t p a r t performance s h a l l t a k e an o r a l agreement t o d e v i s e r e a l p r o p e r t y o u t o f t h e s t a t u t e o f f r a u d s , t h e F l o r i d a Court quoted approvingly from a previous case: " [ S e c t i o n 731.0511 i s p a r t o f t h e F l o r i d a Probate Law, and, a s i n t h e c a s e o f w i l l s where t h e s t a t u t o r y requirements f o r a v a l i d w i l l must be m e t i n o r d e r f o r it t o be admitted t o probate, t h e s t a t u t e i n question p r e s c r i b e s requirements which a r e necessary f o r an agreement t o make a w i l l , i n o r d e r f o r such an agreement t o be v a l i d and e n f o r c e a b l e i n F l o r i d a . To hold t h a t p a r t performance by t h e promisee o f an otherwise unenforceable agreement t o make a w i l l would make it e n f o r c e a b l e a g a i n s t t h e e x e c u t o r s o f t h e promisor would d e f e a t t h e purpose and i n t e n t o f t h e l e g i s l a t i o n . This is s o because i n most i n s t a n c e s where a person enters i n t o an agreement w i t h a n o t h e r t o make a w i l l c o n t a i n i n g d e v i s e s o r bequests t o t h e l a t t e r , it i s done i n r e t u r n f o r some c o n s i d e r a t i o n s u p p l i e d by, o r undertaking on t h e p a r t o f t h e o t h e r person, such a s t o c a r e f o r t h e promisor, and i n most such i n s t a n c e s t h e r e i s performance, o r some performance by t h e promisee. But it was f o r t h e purpose o f precluding t h e e n f o r c e a b i l i t y o f agreements o f t h a t k i n d , u n l e s s they w e r e i n w r i t i n g and w i t h s u b s c r i b i n g w i t n e s s e s , t h a t S731.051 was enacted." F i r s t Gulf Beach Bank and T r u s t Co. v. Grubaugh (Fla.App. Though t h e F l o r i d a s t a t u t e i n q u e s t i o n was adopted b e f o r e t h e d r a f t i n g o f s e c t i o n 2-701 (72-2-105, MCA) o f t h e Uniform Probate Code, we b e l i e v e t h a t t h e same reasoning animates both. O n e commentator h a s provided t h e following background and explanation of section 2-701, UPC (72-2-105, MCA) : One of the most common problems concerned with succession contract is whether oral succession contracts may be proved . . . Because the Statute of Wills is not applicable, in most states the basic question then has been the applicability of the Statute of Frauds. Unless the state has a specific provision dealing with succession contracts which adequately limits the proof of oral succession contracts, the Statute of Frauds has not constituted a significant limitation on the proof of these oral contracts. Even where the Statute of Fraud's provision concerned with the sale of real estate has been held to be applicable to succession contracts dealing with transfers of real estate, the courts have applied exceptions to the statute such as part performance and other presumptions to circumvent the Statute's proof restriction and permit the oral contracts to be proved. Depending upon one's viewpoint toward formality requirements, this circumvention of the Statute of Frauds may or may not be beneficial. Notwithstanding this value judgment, the ineffectiveness of the Statute of Frauds as a bar to proof of succession contract has significantly encouraged litigation over these matters. Clearly, this provision [2-701, UPC; 72-2-105, MCA] is intended to substantial-ly limit the proof of succession contracts and to wash away all of the authority and decisions dealing with the application of the Statute of Frauds and its exceptions. As with the adoption of any new formalistic requirement, the expectations of some persons will be destroyed. Considering that one of the parties to the contract is no longer available to testify, however, it would appear to be good public policy to require some form of written evidence that the contract actually exists. Lawrence H. Averill, Jr., Uniform Probate Code in a Nutshell, W e do n o t agree with t h e statement i n t h e P r e w e t t s ' b r i e f t h a t " [ t l h e r e i s no sound argument why t h e d o c t r i n e o f p a r t performance should apply any less t o Section 72-2-105, M.C.A., t h a n it would t o any o t h e r p r o v i s i o n s o f t h e S t a t u t e o f Frauds which a r e s c a t t e r e d throughout o u r Code a s Montana has always followed t h i s d o c t r i n e . " I n a d d i t i o n t o t h e sound argument provided by t h e F l o r i d a c o u r t and t h e learned commentator quoted above, we note t h i s a d d i t i o n a l r a t i o n a l e f o r n o t allowing a p a r t performance exception t o § 72-2-105, MCA . The many o p p o r t u n i t i e s f o r fraud and p e r j u r y i n e s t a b l i s h i n g an o r a l testament o f personal p r o p e r t y led t o t h e provision o f t h e s t a t u t e o f f r a u d s which r e g u l a t e s nuncupative testaments. Likewise, t h e many o p p o r t u n i t i e s which e x i s t f o r fraud and p e r j u r y i n e s t a b l i s h i n g an o r a l c o n t r a c t t o make a testament, have l e d some s t a t e s t o e n a c t s t a t u t e s which d e a l w i t h c o n t r a c t s t o make testaments; and t h e s e s t a t u t e s u s u a l l y provide t h a t c o n t r a c t s t o make t e s t a m e n t s must be i n w r i t i n g o r must b e proved by w r i t i n g . . . Written evidence i s more necessary i n c o n t r a c t s o f t h i s s o r t than i n t h e c l a s s e s o f c o n t r a c t s covered by t h e o r d i n a r y p r o v i s i o n s o f t h e s t a t u t e o f frauds. An unscrupulous c l a i m a n t , who can secure p e r j u r e d evidence, can set up and prove an o r a l c o n t r a c t . The d e a t h of t h e promisor makes it impossible t o c o n t r a d i c t t h e testimony t o t h e e f f e c t t h a t he made such promise; and t h e f a c t t h a t t h e t r a n s a c t i o n never happened makes it a l l t h e h a r d e r t o disprove it i f t h e g u i l t y p a r t i e s have been c a r e f u l t o make t h e i r s t o r y f i t t h e p o s s i b i l i t i e s o f t i m e and p l a c e . I n s p i t e of t h e f a c t t h a t it a l s o o p e r a t e s t o t h e d e t r i m e n t o f an i g n o r a n t o r c o n f i d i n g promisee, l e g i s l a t i o n o f t h i s s o r t should be adopted g e n e r a l l y . 1 Bowe-Parker, Paqe on W i l l s § 10.10. W e have recognized b e f o r e t h a t c o n t r a c t s t o make w i l l s a r e looked on w i t h d i s f a v o r because a t t h e t i m e of enforcement one of the parties is dead and obviously cannot confirm or deny the existence of the contract. Lazetich v. Miller (Mont. 1983), 671 P.2d 15, 40 St.Rep. 1626; Craddock TT. Berryman (1982), 198 Mont. 155, 645 P.2d 399. It was to tighten the methods by which such contracts could be proved that section 2-701, UPC was drafted and adopted in Montana as 72-2-105, MCA. To recognize a part performance exception to this statute would once again create the uncertainties and litigation that the statute was designed to reduce and eliminate. Accordingly, the appellant is entitled to a judgment quieting title to the real property involved in this action. The oral agreement between the Prewetts and Mr. Donnes for the making of a devise is without force and effect, and the judgment of the lower court on this issue is hereby remanded to comply with this opinion. The judgment of the District Court is reversed and the case is remanded to comply with this opinion. We concur: /