Title: BOATMAN v BERG

State: montana

Issuer: Montana Supreme Court

Document:

No. 13417 I N THE S U P R E M E COURT O F THE STATE O F MONTANA 1978 GLORIA LOIS C A R L S O N BOATMAN, P l a i n t i f f and Appellant, -vs- HOWARD BERG, Defendant and Respondent. Appeal from: D i s t r i c t Court of t h e Seventeenth Zudicial D i s t r i c t , Honorable Thomas Dignan, Judge presiding. Counsel of Record: For Appellant: Morrison and E t t i e n , Havre, Pilontana J. Chan E t t i e n argued., Havre, Montana For Respondent: McKeon and McKeon, Malta, Montana John C. McKeon argued, Malta, Montana Submitted: January 31, 1978 Filed: qf-'r( " 2 M r . J u s t i c e John Conway Harrison delivered the Opinion of the Court: P l a i n t i f f i n s t i t u t e d t h i s action i n the D i s t r i c t Court, P h i l l i p s County, seeking a declaration t h a t defendant i s a constructive t r u s t e e over c e r t a i n property transferred from p l a i n t i f f t o defendant. From a judgment of the D i s t r i c t Court denying such r e l i e f and quieting t i t l e t o the property i n defendant, p l a i n t i f f appeals. P l a i n t i f f i s Gloria Lois Carlson Boatman. Defendant is her older brother, Howard Berg. I n 1953, when p l a i n t i f f was sixteen years of age, she married Clyde Carlson, a farmer and rancher. P l a i n t i f f did not work during the marriage, but remained a t home and cared f o r t h e i r four children. Clyde Carlson died i n 1959. P l a i n t i f f retained Stephen Granat, a Malta attorney, t o handle Carlson's e s t a t e . The e s t a t e was debt ridden and consisted almost e n t i r e l y of r e a l property. P l a i n t i f f acted a s adminis- t r a t r i x and i n t h a t capacity leased the r e a l property i n the e s t a t e t o Morrell Tribby, her brother-in-law. The lease originally was f o r a three year term, but was modified by p l a i n t i f f t o cover only the year 1960. P l a i n t i f f t e s t i f i e d defendant warned her t h a t Tribby was trying t o cheat her out of her property, but de- fendant denied making such statements. Also i n her capacity a s administratrix and on t h e advice of neighbors, p l a i n t i f f had several calves which were property of the e s t a t e branded with her brand and sold. She used the proceeds of the s a l e p a r t i a l l y t o make a payment on the land, and p a r t i a l l y f o r her own personal purposes. She t e s t i f i e d she became frightened when her attorney informed her t h i s action amounted t o embezzlement of e s t a t e property. For t h i s reason she asked defendant t o help her with the administration of the e s t a t e . Defendant agreed t o help. H e moved onto the property and began farming it. He paid h i s own expenses but did not pay rent. Over a period of about f i v e years, p l a i n t i f f assigned her i n t e r e s t i n four separate t r a c t s of land t o defendant. These four t r a c t s are subject of the i n s t a n t action f o r a constructive t r u s t . 1. The "Mahlum" t r a c t . P l a i n t i f f and Carlson had purchased about 160 acres of land from Mabel Mahlum a s j o i n t tenants on a contract f o r deed dated April 22, 1957. This property i s referred t o a s the Mahlum t r a c t . The contract provided f o r payments i n the amount of one- fourth of the gross crop, with a minimum of $300 payable i n crop o r cash. Also, 5% i n t e r e s t was charged. O n June 2, 1961, p l a i n t i f f , defendant and Mabel Mahlum met i n the o f f i c e of attorney Granat and executed an assignment of the contract from p l a i n t i f f t o defendant. P l a i n t i f f admits t h a t her signature is on the assignment, but does not remember such a meeting and disclaims any knowledge of the l e g a l e f f e c t of the assignment. A t the time he drafted the assignment, attorney Granat v e r i f i e d with the escrow t h a t there remained due $5,500 of the $6,000 principal, and $275 back i n t e r e s t . The instrument s t a t e s the assignment i s f o r nominal consideration. It is not contested t h a t subsequent t o the assignment defendant paid the back i n t e r e s t , the remaining principal, and received the deed t o the property. Defendant introduced evidence of additional consideration for the assignment. The year 1961 was a drought year on the land and defendant, who had farmed the land a t h i s own expense, received a federal crop insurance payment of $832.72. Defendant paid t h i s amount i n t o the e s t a t e . The D i s t r i c t Court found t h i s payment, along with the payment of back i n t e r e s t when the contract was i n d e f a u l t , constituted s u f f i c i e n t consideration f o r the assignment. 2. The S t a t e Lease A t h i s death i n 1959, Carlson held a s t a t e lease covering about 320 acres of land. This lease expired i n 1961, and defendant renewed it i n p l a i n t i f f ' s name. I n 1963, p l a i n t i f f executed an assignment of the lease t o defendant. Again, she admits her signature but does not remember signing it. Defendant t e s t i f i e d t h a t both p a r t i e s agreed t o the assignment, and it was i n considera- tion f o r defendant's help with the e s t a t e . The periodic payments were t h e r e a f t e r made by defendant. The lease expired i n 1971, and defendant took out the new lease i n h i s own name. There is no evidence p l a i n t i f f made any e f f o r t t o acquire the 1971 lease. The D i s t r i c t Court took j u d i c i a l notice of the regulations o f the Commission of S t a t e Lands and Environment prohibiting the subleasing of s t a t e land f o r p r o f i t . The court found t h a t since the lease assigned t o defendant had expired, t h i s question is moot. W e agree and decline t o consider the " s t a t e lease" issue further. 3. The "Rueb t r a c t Prior t o h i s death, Carlson purchased about 320 acres of property on a contract f o r deed from Reinhold and Alice Rueb. This property i s referred t o a s the " ~ u e b " t r a c t . When Carlson died, p l a i n t i f f became the owner of a one-third i n t e r e s t with the children owning the other two-thirds i n t e r e s t . P l a i n t i f f expressed t o attorney Granat the desire t o s e l l the property t o defendant, but was told t h a t she could only dispose of her own one-third i n t e r e s t . In January 1965, defendant had a quitclaim deed prepared f o r the purpose , , of conveying p l a i n t i f f ' s one-third i n t e r e s t t o him. P l a i n t i f f had remarried by t h i s time and was living i n Indiana. Defendant mailed the deed t o her along with a cover l e t t e r re- questing her t o sign the deed and return it. The l e t t e r s t a t e d , i n pertinent part: "9: * * I a m enclosing a deed f o r you t o sign i f i t s agreeable with you. "I talked t o a guy from the Federal Land Bank l a s t f a l l , and he said the only way I possibly could borrow the money i s t o g e t a deed, so t h i s i s where 1 ' m s t a r t i n g -- I f I can get the money. "I w i l l pay off Rinhold and Alice the $3000.00 f o r the 113 i n t e r e s t t h a t i s i n your name. This would give m e 113 i n t e r e s t and 213 i n t e r e s t f o r the kids. I w i l l pay the back i n t e r e s t and keep up the taxes f o r the use of there share f o r 3 crop years, a f t e r t h a t I w i l l give them 114 of the crop s p l i t between them, on there 2/3 share -- l e s s 213 of the taxes. * * * "The main reason I would l i k e t o get it payed off i s t h a t actually Rinhold and Alice could s t e p i n and repossess it and the kids would end up with nothing. * * *" On March 1, 1965, p l a i n t i f f signed the quitclaim deed i n Indiana and returned it t o defendant. The o r i g i n a l contract price f o r the " ~ u e b " t r a c t was $5,500. A t the time of the transfer i n 1965, there was a $3,120 remaining balance on the principal. The contract was i n default and back i n t e r e s t and taxes were owing. Subsequent t o the quitclaim deed, which amounted t o a transfer of a 113 i n t e r e s t i n the property, defendant paid off the e n t i r e remaining balance, including the back taxes and i n t e r e s t . The D i s t r i c t Court found : " 9 ~ * >There has been no showing t h a t the price paid by the defendant a t the time of the purchase of s a i d 113 i n t e r e s t i n the ' ~ u e b ' t r a c t was l e s s than the market value f o r said 113 i n t e r e s t a t the time of the purchase and a s such,must be considered a s f a i r and adequate consideration f o r the ' ~ u e b ' t r a c t . I 1 4. The "Great Northern1' t r a c t This property consists of about 17.5 acres adjoining the Great Northern Railway. It was owned by Carlson a t h i s death. P l a i n t i f f quitclaimed her 113 i n t e r e s t i n t h i s property t o defendant August 10, 1966. Defendant t e s t i f i e d the consideration f o r t h i s t r a n s f e r was the cancellation of a preexisting debt of $500. Defendant advanced the money f o r a Buick automobile f o r p l a i n t i f f and Carlson and was never repaid. P l a i n t i f f admitted defendant paid for the automobile and had not been repaid, but she denied there was ever any bargain regarding cancellation of the debt f o r the t r a n s f e r of the "Great Northern" property. Defendant again does not r e c a l l signing the quitclaim deed. The D i s t r i c t Court held the cancellation of the indebtedness was f a i r and adequate consideration f o r the quitclaim deed. The theory of p l a i n t i f f ' s case is t h a t a constructive t r u s t should be imposed on a l l of the above described property f o r her benefit. The imposition of a constructive t r u s t i s governed by section 86-210, R.C.M.1947: 'IInvoluntary t r u s t resulting from fraud, e t c . One who gains a thing by fraud, accident, mistake, undue influence, the violation of t r u s t , o r other wrongful a c t , is, unless he has some other o r b e t t e r r i g h t thereto, an involuntary t r u s t e e of the thing gained, f o r the benefit of the person who would otherwise have had it." It i s well established i n Montana t h a t " i n order t o recover upon the theory of a resulting o r constructive t r u s t , the proof must be c l e a r , s a t i s f a c t o r y , convincing and p r a c t i c a l l y f r e e from doubt." Rdbuck v. Dennis, (1967), 149 Mont. 247, 251, 425 P.2d 327. Also see: Barrett v. Zenisek, (1957), 132 Mont. 229, 237, 238, 315 P.2d 1001. The D i s t r i c t Court, i n i t s finding No. 8, stated: " P l a i n t i f f has not offered any c l e a r , s a t i s f a c t o r y and convincing evidence of 'fraud, accident, mistake, undue influence, violation of a t r u s t , o r other wrongful a c t ' by the defendant i n the acquisition of these four t r a c t s * * *.'I However, p l a i n t i f f contends the D i s t r i c t Court erred i n f a i l i n g t o make a finding on the issue of whether a confidential relation- ship existed between p l a i n t i f f and defendant. It i s argued such a finding i s necessary because one who voluntarily assumes a r e l a t i o n of personal t r u s t and confidence is considered t o be a t r u s t e e . Section 86-205, R.C.M. 1947. Further, i f defendant was a t r u s t e e , he was bound t o a c t i n the highest good f a i t h i n dealing with the t r u s t property, and a l l transactions between defendant and h i s beneficiary t h a t benefit him a r e presumed t o be entered i n t o under undue influence and without consideration. Sections 86-301,86-308, R.C.M. 1947. W e do not agree a finding on t h i s issue was necessary because there i s i n s u f f i c i e n t proof t h a t defendant violated even the high standards imposed upon a trustee. The existence of a confidential relationship between a grantor and grantee i s i n s u f f i c i e n t , i n and of i t s e l f , t o support the imposition of a constructive t r u s t . Mahaffey v. DeLeeuw, (1975), 168 Mont. 274, 280, 542 P.2d 103. Clearly, some wrongful a c t must s t i l l be shown. I n Roecher v. Story, (1931), 91 Mont. 28, 45, 5 P.2d 205, the Court stated: "* * * I f the evidence which i s introduced t o prove a fiduciary relationship a t the same time shows t h a t the actions of the t r u s t e e were done i n good f a i t h and f o r the benefit of the c e s t u i q u e t r u s t , t h e r e is no room f o r a presumption of wrongdoing on the p a r t of the trustee." Here, the record f a i l s t o show defendant improperly used h i s influence o r took advantage of any t r u s t relationship. A l l of the transactions were handled through p l a i n t i f f ' s attorney. There is no proof of any broken promise on the p a r t of defendant t o reconvey any of the property. p l a i n t i f f ' s claim throughout is simply t h a t she signed the various instruments without knowledge of t h e i r contents o r l e g a l e f f e c t . I n the case of the "Rueb" property, however, there was evidence p l a i n t i f f expressed a d e s i r e t o s e l l the property t o defendant p r i o r t o the assignment. The l e t t e r defendant sent t o p l a i n t i f f accompanying the deed c l e a r l y explains: "This would give m e 113 i n t e r e s t and 2/3 i n t e r e s t f o r the kids." The "Mahlum" assignment was executed a t a meeting of a l l the p a r t i e s t o the transaction and p l a i n t i f f ' s attorney. With respect t o these transactions, attorney Granat t e s t i f i e d , on examination by the court: "THE COURT: And a s t o Mrs. Boatman here, when she came i n t o your o f f i c e did she discuss with you papers t h a t you had drawn f o r her or would she j u s t sign them outright? A . Like every other c l i e n t , I would t r y t o explain what the documents were, Your Honor. "THE COURT: Did she understand them? A. To the b e s t of m y knowledge, yes. "THE COURT: Did o r would you say t h a t t h e Defendant was being trusted by the P l a i n t i f f i n t h i s case, t h a t she trusted him? A. Far a s I can r e c a l l these con- versations were -- well matters were discussed and we t r i e d t o the best of our a b i l i t y t o make both p a r t i e s understand what they were getting i n t o and what the r e s u l t of the transactions would be. I was with them, and trying to explain what the l e g a l consequences would be of these transactions t h a t these two p a r t i e s were getting into, Your Honor." Considering a l l of the circumstances, w e find no showing defendant breached even the duties of a t r u s t e e or committed any other wrongful a c t i n the inducement of these transactions. W e further conclude the evidence supports the court's finding t h a t there was consideration f o r the transfers. The contracts on both the "Mahlum" t r a c t and the "Rueb" t r a c t were c l e a r l y i n de- f a u l t when they were assigned t o defendant. While the evidence i s conflicting regarding the amount of p l a i n t i f f ' s equity i n t h e "~ahlum" property, it was a t most $1,000, and there i s ample evi- dence t o support the D i s t r i c t Court finding t h a t it was $500. For t h i s defendant paid more than $800 i n federal crop insurance payments i n t o the e s t a t e , of which p l a i n t i f f was c l e a r l y a beneficiary. Additionally, he paid defendant's debt t o Mahlum of $275 i n back taxes and i n t e r e s t . For a 1/3 i n t e r e s t i n the ''~ueb" t r a c t , defendant paid the e n t i r e remaining principal of $3,120. Not only was t h i s more than adequate f o r a 113 i n t e r e s t , but p l a i n t i f f a l s o had a strong i n t e r e s t i n protecting the property r i g h t s of her children, which could have been l o s t had the default not been cured by defendant's payment. Nor is it disputed t h a t the cancellation of a $500 debt was more than adequate f o r the transfer of a 113 i n t e r e s t i n the "Great Northern" t r a c t . Plain- t i f f merely argues there was no such agreement. Defendant t e s t i f i e d such an agreement did take place, and t h i s Court w i l l not review determinations of weight and c r e d i b i l i t y of testimony of witnesses made by the t r i a l judge a s a t r i e r of f a c t . Kartes v. Kartes, (1977), Mont . , 573 P.2d 191, 195, 34 St.Rep. 1576; Miller v. Fox, (1977), Mont . , 571 P.2d 804,807, 34 St. (1973) , Rep. 1367; Hellickson v. Barrett Mobile Home Transport, Inc.,/l61 Mont. 455, 459, 507 P.2d 523. I n summary, t h i s Court w i l l sustain the findings of f a c t of the t r i a l court unless there i s a decided preponderance of evidence against them. Earrett v. Zenisek, supra. Here the findings of f a c t a r e c l e a r l y supported by the evidence. Nor a r e the conclusions of law inadequate. There was no need f o r a specific finding on the issue of the existence of a confidential o r fiduciary relation- ship, because there was i n s u f f i c i e n t proof of wrongdoing on the part of defendant even i f he i s considered t o be a voluntary t r u s t e e . The judgment of t h e D i s t r i c t Court is affirmed. W e Concur: - - Chief J u s t i c e