No. 84-505 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

IN RE MARRIAGE OF 

DELBERT HENRY WITBART , Petitioner, 

-vsLaVERNA IWE WITBART , 

Respondent/Appellant. ...................................... 

ALLEN B. HOUSTON, 

Plaintiff and Respondent, 

-vsDELBERT HENRY WITBART, aka 

DELBERT (DEL) H. WITBART & 

LaVERNA MAE WITBART, 

Defendants and appellants. ....................................... 

DEL H. WITBART, dba ACADEMY ENGINEERING 

CONSTRUCTION , Plaintiff, 

-vsHARLAND E. BAUER and MARGARET 

E. BAUER, 

Defendants and Respondents. 

CLARK BROTHERS CONTRACTORS, a Mont . corp . , Plaintiff and Respondent, 

-vsHAZAND E. BAUER, MARGARET E. BAUER 

and DEL E. WITBART dba ACADEMY 

ENGINEERING COTJSTRUCTION, 

Defendants. ....................................... 

WESTER14 EQUIPMENT COMPANY I 

Plaintiff and Respondent, 

-vsDELBEXT HENRY WITBART and LAVERNA 

MAE WITBART, 

Defendants and Appellants. 

APPEAL FROM: District Court of the Fourth Judicial District, 

In and for the County of Ravalli, 

The Honorable Douglas Harkin, Judge presiding. 

COUNSEL OF RECORD: 

For Appellants: 

Cannon & Sheehy, Helena, Montana 

For Respondents: 

Gail Goheen, Hamilton, Montana 

John Greef, Hamilton, Montana 

Richard Weber, Hamilton, Montana 

Larry R. Meyer, Stevensville, Montana 

Robert B. Brown, Hamilton, Montana 

Submitted on Briefs: Feb. 28, 1985 

Decided: May 22, 1985 

6. 

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Clerk 
Mr. Justice William E. Hunt, Sr. , delivered the Opinion of 

the Court. 

This case is before this Court a second time. In the 

first case, Witbart v. Witbart (Mont. 1983), 666 ~.2d 1217, 

40 St.Rep. 994, this Court remanded because of an erroneous 

determination by the District Court that the Witbarts, in 

settling property matters during dissolution of marriage, had 

made a fraudulent conveyance. This Court determined that no 

fraudulent conveyance could have been made under the 

circumstances and remanded with instruction that a new trial 

be had consistent with the principles of law contained within 

the opinion. One principle of law specifical-1.y contained 

within the opinion was the ability of a court to reopen a 

ludgment and revoke or modify settled property matters 

contained in a dissolution decree if fraud was present. On 

remand the District Court did find that the Witbarts had 

committed fraud. This appeal followed. 

We affirm. 

The circumstances which gave rise to this case are as 

follows: 

Delbert Witbart contracted with the Bauers in 1979. 

Pursuant to the contract Delbert Witbart was to construct a 

road for the Bauers. A dispute arose and the Bauers refused 

to pay. Delbert Witbart filed a mechanic's lien against, and 

ultimately obtained judgment from, the Bauers. For the 

purposes of this opinion the Delbert Witbart-Eauers' judgment 

will be referred to as the judgment fund. 

In the spring of 1980, prior to any judgment on the 

contract and lien, but while litigation on the contract and 

lien was pending, Delbert Witbart and his wife, LaVerna 
Witbart, entered into a dissolution of marriage. In the 

separation agreement Del-bert Witbart agreed to pay LaVerna 

Witbart $25,000. The agreement also required that any amount 

of this sum remaining due at the time that the judgment fund 

was satisfied would be payed from that judgment fund. 

The remaining various parties to this action, Houston, 

Clark Rrothers, and Western Equipment, are assignees of 

Delbert Witbart to the judgment fund. Houston became an 

assignee of $7,473.18 of the judgment fund on July 28, 1980. 

This assignment was made in relation to a debt that Delbert 

Witbart incurred when Houston loaned Delbert Witbart $10,000 

on August 24, 1978. Clark Brothers became an assignee of 

$9,275.82 of the judgment fund on September 22, 1980. This 

assignment was made in relation to a debt that Delbert 

Witbart incurred when Clark Brothers completed a sub-contract 

in the Delbert Witbart-Bauer construction contract in 1979. 

Clark Rrothers assigned its interest to Bauers. Western 

Equipment became a.n assignee of $5,616.35 of the judgment 

fund on April 27, 1981. This assignment was made in relation 

to a debt that Delbert Witbart incurred when Western 

Equipment repaired a piece of Delbert Witbart's equipment on 

June 13, 1980. 

After judgment the judgment fund was valued at 

$26,677.47. LaVerna Witbart, Houston, Bauers as assignees of 

Clark Brothers, and Western Equipment, all claimed portions 

of the judgment fund. Trial, on remand, at District Court 

resulted in LaVerna Witbart being precluded again from access 

to the judgment fund. This time the District Court denied 

her claim because her claim was based on a dissolution of 

marriage settlement agreement obtained through fraud. The 

remaining parties were awarded priority to the judgment fund 
as follows: Houston, Bauers as assignees of Clark Brothers, 

and Western Equipment. LaVerna Witbart appeals. 

The first issue is whether the District Court erred in 

setting aside the Witbart's property settlement agreement as 

a fraud. This Court has already decided that a finding of 

fra.ud would justify reopening the Witbarts' dissolution 

decree and setting aside the property settlement agreement 

contained therein. Witbart v. Witbart (Mont. 19831, 666 P.2d 

1217, 1220, 40 St.Rep. 994, 997. Absent fraud, LaVerna 

Witbart would be entitled to first priority to the judgment 

fund. Witbart, 666 P.2d at 1220. 

At the time that Delbert Witbart and LaVerna Withart 

entered into their separation agreement and at the time that 

the District Court issued the decree of dissolution the only 

significant asset in the Witbarts' marital estate was the 

potential recovery by Delbert Witbart in the judgment fund. 

However, in the Witbarts' separation agreement the parties 

agreed that Delbert Witbart would pay LaVerna Witbart $25,000 

and that such payment would be made from the potential 

judgment fund to the extent that such payment had not been 

made before the judgment fund came into existence. The 

parties also agreed that LaVerna VJitbart would transfer her 

interest in certain real property, jointly owned by the 

Witbarts, to Del-bert Witbart. This transfer was of no 

immediate monetary significance as neither of the Witbarts 

had any equity in the real property, that is, it was secured 

to its maximum value by a trust indenture. 

The appellant argues that there can be no fraud here 

because, at the time that the separation agreement was 

executed, March 27, 1980, Delbert Witbart anticipated that 

the judgment fund would be valued at $85,000. However, the 
record shows that the total contract price in the Delbert 

Witbart-Bauers' contract was only $79,200 and there had been 

an immediate payment of $17,000 and a $25,000 progress 

payment. Delbert Witbart included $12,935.65 for additional 

work and down time when he filed a lien against Bauers and at 

the time Delhert Witbart filed a complaint against Bauers, he 

asked for an additional $18,500 for down time. The total 

possible recovery, not including interest or costs, was then 

$68,715.65. However, the Bauers had filed a counterclaim 

prior to the F!itbartsl separation agreement. This 

counterclaim, if successful on all counts, would have 

required Delbert Witbart to pay $74,952.56 plus interest and 

costs. Furthermore, at the time of the Witbarts' execution 

of their separation agreement Delbert Witbart owed money to 

Houston on a promissory note dated August 24, 1979. The 

original sum payable on the note was $10,000 plus interest. 

In addition, at the time the separation agreement was 

executed, Delbert Witbart owed Clark Brothers $15,087.82 as 

subcontractors in the Delbert Witbart-Bauers' contract. 

The Witbarts' failure to disclose these debts misled the 

District Court as to the actual financial status of the 

FJitbarts and materially affected the actual value of their 

marital estate. This failure to disclose was fraud. 

The marital estate is sl-1 property and assets belonging 

to either or both, however and whenever acquired. Section 

40-4-202, MCA. Proper distribution of the marital estate 

cannot be made unless the parties to a dissolution proceeding 

have informed the court of al.1 the marital assets and 

liabilities. In re the Marriage of Madden (Mont. 1984) , 683 

P.2d 493, 495, 41 St.Rep. 1332, 1334. 
The second issue presented. for review is whether the 

District Court erred in concluding that Houston, Bauers as 

a.ssignees of Clark Brothers, and Western Equipment had 

standing to challenge the decree of dissolution and the 

incorporated property settlement agreement. The District 

Court did not err. 

We have already determined that the judgment obtained by 

the Witbarts in their decree of dissolution was obtained by 

fraud for failure to disclose to the District Court the 

existence of certain liabilities. This fraud imposed on the 

District Court and misled it into a false judgment--one that, 

in this instance, wrongfully insulated property from 

creditors. The fra-ud here resulted in a judgment that 

adversely affected persons not before the court. The fraud 

was collateral to the matters tried by the court. Such fraud. 

is extrinsic fraud. Hall v. Hall (1924), 70 Mont. 460, 467, 

226 P. 469, 471. Extrinsic fraud justifies invoking the 

inherent equitable power of a court to reopen and set aside a 

judgment. Selway v. Burns (1967), 150 Mont. 1, 8, 429 P.2d 

640, 644. Relief from a judgment obtained by extrinsic fraud 

may be granted on motion in the original action or in a 

separate suit in equity, that is, by independent action. 

Selway, 429 P.2d at 644. 

Houston and Bauers, as assignees of Clark Brothers, were 

both creditors of Delhert Witbart at the time the Witbarts 

executed their separation agreement. Houston's and Bauersq 

interest could have been adequately protected if the District 

Court had been properly informed. Houston, Bauers as 

assignees of Clark Brothers, and Western Equipment were all 

assignees to the judgment fund. A certain amount of that 

judgment fund had been "secured" by a judgment obtained by 
fraud. Houston, Bauers as assignees of Clark Brothers, and 

Western Equipment were adversely affected by the fraudulently 

obtained judgment. They were sufficiently affected by the 

judgment so as to warrant their "standing to sue" in equity. 

We affirm. 

We Concur: 

Justice