No. 13380 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977

KENNETH F. JOHNSON, Plaintiff and Appellant,

HOWARD R. JOHNSON and CARRIE M. JOHNSON, Defendants and Respondents.

Appeal from: District Court of the Fifteenth Judicial District Honorable L. C. Gulbrandson, Judge presiding Counsel of Record: For Appellants: Habedank, Cumming and Best, Sidney,Montana Otto T. Habedank argued, Sidney, Montana For Respondents: John M. McCarvel argued, Great Falls,Montana

Submitted: January 14, 1977

Filed: 

## BAR

## 56 

## 1gq

### Mr. Justice Frank 

### I. Haswelldelivered the Opinion of the Court. Plaintiff filed an action againsthis brother and his brother's wife seeking 

### (1) a reconveyance of a half sectionof farmland to him, (2) to quiet title to the land,and (3) an accounting of crop proceeds. The district court of Sheridan County, the Honorable L. 

### C,Gulbrandson,district judge,presiding, granted summary judgment to defendants. Plaintiff appeals. Plaintiff's complaint in essence alleges a conveyance by him to his brother in 1953by warranty deed absolute on its face; that the deed was given without considerationand upon an express oral agreement to reconvey;and a request for and refusal to reconvey on October 

### 2, 1974; The complaint seeks to impress

a trust on the land and compel a reconveyance to plaintiff. ~efendants'answer in substance denies the existence of an oral agreement to reconvey or any trust in the land and sets up the following affirmative defenses: 

### (1) Laches, 

### (2) estoppel, (3) statute of limitations, 

### (4) waiver, 

### (5) statute of frauds, and 

### (6) adverse possession. Pretrialdiscovery consisted of interrogatoriesby defendants and answersby plaintiff,depositions of plaintiff and both defendants,and documentary exhibits. Defendantsmoved for summary judgmentwhichwas granted by the district court, The single issue on appeal iswhether summary judgmentwas proper. The record before the district court disclosed that John P. Johnson, father ofplaintiff Kenneth Johnsonand defendant Howard Johnson,owned a farm in SheridanCounty,Montana. In

# $22 December -f 2, the father and hiswife deeded a half section of the farmland toKenneth and another half section toHoward. Atthat time Kenneth was a singleman with the United States AirForce inCalifornia. InMay 1953, the father traveled to California to secure

a conveyance from Kenneth of hishalf section of the farmland. Although a dispute exists concerning the reason for this, the record establishes itwas for one orboth of these reasons: (1) As an estateplanning precaution should Kenneth losehis lifeinthe Korean conflict, (2) for fear the land would be lost inpotential legal action arising out of Kenneth's involvement with a married woman. According to the record, the original idea was for Kenneth to transfer the land tohis married sister, Arlene Petersen, who lived inCalifornia. However, she indicated Howard would be better able to take care of the land ashe was living on the farm. By deed dated May 12, 1953, Kenneth conveyed the half section of land inquestion to Howard. This deed was absolute on itsface and made no mention of a trust. On the face of the deed appeared $8.80 in federal documentary stamps indicating a consideration of $8,000 for the transfer. The documentary stamps were dated and initialedwith Kenneth's initials. Kenneth denies receiving any money or consideration for the deed or transfer. Kenneth signed and fileda federal gift tax return covering the calendar year 1953. He stated inthis return that the transferwas a gift, that the value of the Land at the time of transferwas $8,000 and that no trustwas created. Kenneth was discharged from the military service and returned home to Sheridan County inDecember 1955.Thereafter Kenneth and Howard farmed the entire section of land. Kenneth, Howard and their father each received a share of the crops until the death of the father inNovember 1965. Following the father's death, Kenneth and Howard continued to farm the land with each receiving a share of the crop. The precise arrangement on sharing the crops, payment of taxes, and sharing of expenses 

### is a subject of dispute inthe record. Kenneth married in 1959. An exhibit toHoward's deposition is a letter from their father toHoward dated January 2, 1960, srating "Kenneth knows that he has not any title or right to any of the homestead orhalf sec. that I bought from Sparling" and that Kenneth toldhim it would not work "so he don't need totell himself.or anyone that that 112 sec. ishis1'. Kenneth denied knowledge% of this letter. InMarch 1965, conveyances were executed by Howard and hiswife vesting the half section of land in question inthemselves asjoint tenants. The deeds creating the joint tenancy were recorded inthe office of the clerk and recorder of Sheridan County on March 1, 1965. In 1968, Kenneth secured a loan from the Production Credit Association. In the loan applicationhe was asked to 

### list the land he owned. Kenneth admitted inhis deposition that he did not list the half section inquestion. In 1971, Howard mortgaged some land to theFederal Land Bank for $56,000. Included inthe mortgage was the half section of land inquestion. In 1973and 1974, Kenneth delivered 113 of the crop to Howard pursuant either to an agreement between Howard and Kenneth

or atHoward's request.

### During the years they farmed the section of land together Kenneth listed his income as a share of the crops sold. Kenneth's answers to defendants' interrogatories state therewas an oral agreement by Howard to reconvey the land made at the farm in Sheridan County inDecember 1952,and in San Mateo, California inMay 1953;thathehas no writing substantiating this; that the witnesses to the oral agreementwere himself, Howard, their father,and their sister, Arlene Petersen; that he deeded the property over to Howard at the request of his father and sister,Arlene Petersen;that he did not request recovery prior to October 2, 1974,because he had no reason to believe Howardwas holding the land other than as a trustee prior to that time; that he in effect paid taxes onhis half section by dividing the crops equally because his half sectionhad

more farmland than'-Howard's half section and Howard received the use of feed grown to offset the payment of taxes. Kenneth's deposition reflects similar testimony in considerably more detail. Additionally, it indicates that on June 30, 1964, hewent with Howard to Ludwig Tande's office in Plentywood,Montana, and signed an affidavit that he was single whenhe deeded the half section to Howard to enable Howard to mortgage the land in question. No depositionwas taken ofArlene Petersen, their sister. Thebasis of the summary judgment granted defendants as reflected in the district court's orderwas: (1) Therewas no genuine issue as to any material fact; 

### (2) Kennethwas guilty of laches; (3) he is estopped to allege ownership in the land;



### (4) his action isbarred by the statute of limitations;and (5) he haswaived any right, title or interest in the land.The law relating to summary judgments, Rule 56, M.R.Civ.P., has been construed indetail in a long line of Montana cases and recently was substantially summarized inHarland v. Anderson, Mont

# . , 548 P.2d 613, 615, 33 St.Rep. 363,365. In

essence summary judgment isnot a substitute for a trial; it can only be granted where the record discloses no genuine issue of material fact and the moving party 

### is entitled tojudgment as

a matter of law; and where the absence of any genuine issue of material fact isdisclosed by the record, the burden 

### is on the party opposing summary judgment to come forward with evidence creating a genuine issue of material fact tobe determined at trial. InHarland the Court said: "The primary policy and general purpose underlying Rule 56, M.R.Civ,P., is to encourage judicial economy through the prompt elimination of questions not deserving of resolution by trial." With these principles inmind, we direct our attention to the defense of laches which 

### is one basis on which the district court granted summary judgment todefendants. The doctrine of lacheswas set forth atsome length in Riley v. Blacker, 51Mont. 364, 370, 371, 152 P. 758, applied inHynes v. Silver Prince Mining Co., 86 Mont. 10, 281 P. 548 and Montgomery v. Bank of Dillon, 114Mont. 395, 136 P.2d 760; and cited inDavis v-Steingruber, 131Mont. 468, 311P.2d 784: "Laches, considered as a bar independent of the stateof limitations, is a concept of equity; it means negligence inthe assertion of a right; it is thepractical application of themaxim, 

## '~quity aids only thevigilant'; and it existswhen there has been unexplained delay of such duration or character as to render the enforcement of the asserted right inequitable. Therefore has it oftenbeen held by this court that: While a mere delay short of the period of the statuteof limitations does not of itself raise the presumption of laches [citingcases] yet 'good faithand

### reasonable diligence only can call into activity the powers of a court of equity, and, independently of the period fixed by the statute of limitations, stale demands will not be entertained or relief granted to one who has sleptupon his rights. Consideration of public policy and the difficulty of doing justicebetween the parties are sufficient to warrant a court of equity in refusing to institute an investigationwhere the lapse of time in the assertion of the claim is such as to show inexcusableneglect on the part of the plaintiff,no matter how apparently just his claimmay be; and this is particularly so where the relations of the parties have been materially altered in the meantime.' [Citing cases] What constitutes a material change of conditionhas been the subject ofmuch judicial discussion and some judicial dissention; but whatever doubt there may be as to other circumstances, it never has been questioned, to our knowledge, that the death of one of the parties to the transaction is such a change. 

### 'A specific application of the general rule just stated is in the refusal of the courts to afford relief to one who has lain idly by until the importantwitnesses to the transaction involved have died.* 

# * *I1' 

### In this case there is a genuine issue ofmaterial fact concerning the existence of an involuntary trust by operation of law in 1953,at the time the half section of landwas deeded by 

### Kenneth to Howard. The record is sufficient to establish

a 

### factual issue as to whether the transferwas without consideration (resulting trust) or a transfer based on an oral agreement to reconvey (constructive trust). Thereforewe must assume, arguendo, that the half section of landwas impressedwith a trust in favor of Kenneth by operation of law in 1953. Thereafter the record shows,without contradiction, the following facts actually knownby 

### Kenneth or ofwhichhe is chargeablewith knowledge: 1. 

### The deed of the half section of land from Kenneth to Howard, in 1953,was absolute on its face, indicated

a 

### consideration of 

### $8,000by federal documentary stamps on its face and was recorded in May 

### 1953.

### 2. Kenneth filed a federal gift tax return in 1954 covering the 1953 transfer inwhich he stated under penalties of perjury that the transferwas a gift to Howard and that no trust was created in 1953. 3. InJune 1964,Kenneth executed an affidavit that he

was a single man at the time of the 1953 deed to enable Howard to mortgage the land in question. 

### 4. InMarch 1965, the alleged trustee,Howard, executed and recorded conveyances vesting the land in question in Howard and his wife as joint tenants. 

### 5. InNovember 1965, the father died. 

### 6. In 1968,Kenneth applied for a loan inwhich he was asked to list the land he owned and he did not list the land in question. 7. 

### In 1973 and 1974,Kenneth delivered 113 of the crop to Howard. Additionally, Kenneth stated in his answers to interrogatories and inhis deposition that the first time he asked Howard to reconvey the land back to himwas on October 2, 1974,because he had no reason to believe Howard was holding the land other than as trustee and would refuse to reconvey. We hold that under these circumstances laches is established

as a matter of law. Kenneth's is a stale claimbased on a transaction that occurred more than 21years prior to his first request for reconveyanceand more than 23 years before suitwas filed. There was a material change in circumstances by 

### reason of the father's death some 9 years prior to Kenneth's first request for reconveyance and more than 

### 11 years before suitwas filed. The alleged trustee,Howard,was in the process of mortgaging the property in June 1964,a fact known to Kenneth.The alleged trustee, Howard, placed the property injoint tenancy with hiswife inMarch 1965, and recorded the conveyances, allinderogation of the powers and duties of a trustee. Kenneth cites Opp v. Boggs, 121Mont. 131, 193P.2d 379, for the rule that the statute of limitations does not begin to run with respect to a constructive trust until refusal' by the trustee tocarry out the trustby reconveyance. However, laches, unlike the statute of limitations, begbns.: torun when the trust 

### is created by operation of law. The rule 

### is stated

r~ inthis language in 76 Am Jur 2d, Trusts, 

### 5597, p. 804: "Laches constitutes a defense to a suit todeclare and enforce a constructive trust; and for the purpose of the rule, repudiation of the constructive trust 

### isnot required, and time runs from the moment that the law creates the trust, which 

### is the time the cause of action arises." See also: Stianson v. Stianson, 40 

### S.D. 322, 167

### N.W. 237, 

### 6 A.L.R. 280. Here, Kenneth has slept on the claim he now seeks to enforce for over 23 years. A materialwitness to the transaction died more than 10 years prior to suit. The alleged trustee committed an act inderogation of the trust some 12years prior to suit, viz. mortgaging the property. The alleged trustee committed another act inderogation of the alleged trust more than 

### 11years prior to suit of which Kenneth 

### ischargeable with knowledge, Qiz. placing the property injoint tenancy with his wife. Laches 

### is established as a matter of law, justice cannot

now be accomplished because of the lapse of time and the material change in the circumstances, and equitywillnot intercede 23 years later to aid Kenneth inestablishing a claimhe has failed to assert for over 20 years.As Kenneth's claim is barred by laches as a matter of Law under the undisputed facts set forth above, no useful purpose would be served by discussing the additional grounds

on which the district court predicated its summary judgment. The summary judgment is affirmed.

Justice

We Concur: 

### 7 I , 

### r: (457

### "7

# 7'

-.-- -. [+ 

# r--c;J >4&,&w Chief Jystice 

# "

a',