NO. 94-094

IN THE SUPREME COURT OF THE STATE OF MONTANA

1994

DONALD HABER and DONNA HABER,

Co-Conservators of the Estate of

THEODORE HABER, a Protected Person,

Plaintiffs and Appellants,

v.

HABER, INC., a Montana Corporation,

SEP 12 1994

Defendant and Respondent.

APPEAL FROM: District Court of the Seventh Judicial District,

In and for the County of McCone,

The Honorable Richard G. Phillips, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Arnie A. Hove, Attorney at Law, Circle, Montana

For Respondent:

Richard A.

Simonton,

Simonton and Lorraine A. Schneider,

Howe & Schneider, Glendive, Montana

Filed:

Submitted on Briefs: June 23, 1994

Decided: September 12, 1994
Justice William E. Hunt, ST., delivered the opinion of the Court.

On February 21, 1991, plaintiffs filed this action for the

collection of $46,999. The Seventh Judicial District Court, McCone

County, held a nonjury trial on December 20, 1993. On January 19,

1994, the District Court issued findings of fact, conclusions of

law, and entered judgment in favor of the defendant. Plaintiffs

appeal. We affirm.

The following issues are raised on appeal:

1 . Are the District Court's findings of fact and conclusions

of law finding a gift from Theodore (Theo) Haber to Larry Haber

erroneous, and does the preponderance of the evidence establish a

loan between Theo and Haber, Inc.?

2 . Did the District Court err in denying plaintiffs' motion

to file depositions and transcripts?

On December 31, 1987, Theo Haber and his son Larry Haber met

at the State Bank of Terry in Terry, Montana. As president and

majority shareholder of Haber, Inc., Larry disbursed to Theo the

sum of $50,382 in retirement funds. In the presence of bank

officer Gary Ryti, Theo endorsed the check and gave it back to

Larry. Larry endorsed the check, deposited it in the account of

Haber, Inc., and commented that it was a gift. Theo did not object

to or correct Larry's statement that the deposit was a gift.

After January 1, 1988, the corporation determined the tax

liability on the lump sum retirement distribution. It issued a

check to Theo in the amount of $10,382.71 so that he could pay

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taxes and other obligations on the lump sum. The corporation noted

"Retirement Fund" on the check.

In October 1989, Theo requested money from the corporation.

The corporation issued a check to Theo in the amount of $5000. On

previous occasions, Theo had received money from the corporation at

his request. The corporation noted "Interest" on the check, and

deducted the $5000 as an interest expense.

The corporation's fiscal year runs from November 1 through

October 31. The corporation's accountant completed the 1988-89

financial statement in November 1989. The financial statement

showed "loans" from shareholders in the amount of $46,999. Before

the corporation's tax return was due on January 15, 1990, Larry

notified the accountant that the amount listed as "loans" was not

a loan and should not have been reflected as such on the financial

statement. The accountant later reclassified the $46,999 as a

capital contribution.

Theo suffered an incapacitating stroke on February 17, 1990,

and was unable to appear and testify in this case. Donald Haber,

one of Theo's sons, and Donna Haber, Theo's current wife, are the

co-conservators of Theo's estate.

ISSUE 1

Are the District Court's findings of fact and conclusions of

law finding a gift from Theo to Larry erroneous, and does the

preponderance of the evidence establish a loan between Theo and

Haber, Inc.?

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We will affirm the district court's findings of fact and

conclusions of law unless they are clearly erroneous. Cowles v.

Sheeline (1993), 259 Mont. 1, 7, 855 P.Zd 93, 97. Although

conflicts may exist in the evidence presented at trial, it is the

district court's duty to resolve them, and we will give due regard

to the district court's ability to judge the credibility of

witnesses and will not substitute our judgment for that of the

trier of fact. Maloney v. Heer (1993), 257 Mont. 500, 508, 850

P.2d 957, 962; Williams v. DeVinney (1993), 259 Mont. 354,H

P.2d 546.

Plaintiffs argue that the District Court clearly erred in its

finding that no loan existed between Theo Haber and Haber, Inc. We

disagree. Plaintiffs' contention that "[t]he undisnuted facts are

the transfer was from Theo to Haber, Inc. and the transfer was

treated by Larry, President of Haber, Inc., as a loan to Haber,

Inc." is patently incorrect. (Emphasis added.) In fact, the

corporation argues on appeal, as it did below, that "[tlhere was

ample evidence presented that no loan existed and that the gifting

was consistent with Theo Haber's pattern of gifting to his son,

Larry Haber." (Emphasis added.) The District Court resolved the

conflicting evidence in favor of the corporation.

We conclude that the District Court's findings are supported

by substantial evidence. Section 31-l-101, MCA, defines a loan of

money as Ita contract by which one delivers a sum of money to

another and the latter agrees to return at a future time a sum

equivalent to that which he borrowed." Conversely, a gift is

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defined as a transfer of personal property made voluntarily and

without consideration. Section 70-3-101, MCA. Here, the

corporation established that Theo consistently gifted large shares

of stock to Larry and that Theo's will bequeathed most of his

estate to Larry. Larry, and Theo's two daughters, testified that

their father stated that he had given Larry the money in question

as a gift and did not intend that it be repaid. Likewise, bank

officer Gary Ryti, a disinterested party, testified that Theo did

not object to Larry's statement that the money was a gift.

Additionally, Larry testified that the 1988-89 financial

statement incorrectly reflected the $46,999 as a loan, and that

when he noticed the error, he telephoned the accountant who

prepared the statement to rectify the error. An examination of the

trial transcript shows that this testimony is consistent with the

testimony of the accountant who prepared the financial statement.

While the accountant testified that he never considered the $46,999

as a gift, he also testified that he changed the classification of

the sum from a loan to a capital contribution after Larry called

him to correct the 1988-89 financial statement.

While the foregoing testimony conflicts with the evidence set

forth by plaintiffs, it is the duty of the District Court to

resolve such conflicts. Maloney, 850 P.2d at 962. Because the

District Court was in the best position to observe the testimony of

the witnesses and judge their credibility, and because its findings

are supported by substantial evidence, we will not substitute our

judgment for that of the District Court. Maloney, 850 P.2d at 962.

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We affirm the District Court's findings of fact and

conclusions~ of law.

ISSUE 2

Did the District Court err by denying plaintiffs' motion to

file depositions and transcripts?

Plaintiffs argue that "[t]he District Court erred in denying

the Motion to File Depositions and Transcripts when they are full

of inconsistent statements" which *'provide evidence in support of

Plaintiffs' contention there was a loan . . . . " We disagree.

Plaintiffs filed their motion to submit additional depositions and

transcripts on January 6, 1994, after the conclusion of the trial

in this matter. Plaintiffs also filed their proposed findings of

fact and conclusions of law on January 6. The grounds for the

motion to submit additional evidence were that the depositions and

transcripts were referred to throughout the trial and were

necessary for a proper adjudication.

Rule 32(a), M.R.Civ.P., provides in part:

At the trial . . . any part or all of a deposition . . .

may be used against any party who was present or

represented at the taking of the deposition . . . in

accordance with any of the following provisions:

(1) Any deposition may be used by any party for the

purpose of contradicting or impeaching the testimony of

deponent as a witness . . . .

(Emphasis added.) Similarly, Rule 613, M.R.Evid., provides for

impeachment of witnesses at trial through the use of prior

statements made by the witness. Both Rule 32(a), M.R.Civ.P., and

Rule 613, M.R.Evid., contemplate impeachment during the course of

trial. Furthermore, Rule 613(b), M.R.Evid., states that extrinsic

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evidence of prior inconsistent statements is inadmissible "unless

the witness is afforded an opportunity to explain or deny the same

and the opposite party is afforded an opportunity to interrogate

Rule 613(b), M.R.Evid. This Court

has stated:

It is, of course,

of evidence that

not necessary under the new rules

impeachment evidence of prior

inconsistent statements be offered during the

cross-examination of the witness. Under Rule 613(b) it

can be done at any time during the trial . . . .

Rap ischke v. First Continental Corp. (1980), 187 Mont. 471, 511,

610 P.2d 668, 689 (emphasis added). Plaintiffs clearly failed to

introduce the depositions and transcripts during the course of the

trial. The District Court properly denied the post-trial motion to

include the extrinsic evidence in the record.

Affirmed.

the witness thereon . . .

Pursuant to Section I, Paragraph 3(c), Montana Supreme Court

1988 Internal Operating Rules, this decision shall not be cited as

precedent and shall be published by its filing as a public document

with the Clerk of the Supreme Court and by a report of its result

to Montana Law Week, State Reporter and West Publishing Company.

Justice

We concur: