No. 85-541 INTHE SUPREME COURT OF THE STATE OF MONTANA 3986

JAMES F. FLEMING, 111, Plaintiff and Appellant,

FLEMINGFARMS, INC., FLEMING LAND PARTNERSHIP,and.WILMA M. (FLEMING) WEST, Defendants and Respondents.

APPEAL FROM: District Court of the Twentieth ~udicial District, In and for the County of Lake, The HonorableC. B. McNeil,Judgepresiding.

COUNSEL OF RECORD:

ForAppellant: LarriveeLaw Offices; Noel Larrivee,Fissoula, Monta.na

For Respondent: McGarvey, Lence & Heberling;JohnA. Lence,Kalispell, Montana Yardley & Yardley; DanYardley, Livingston,Montana

Submitted on Briefs: Feb. 20, 1986 Decided: April 30, 1986

Filed. :

ClerkMr. Justice John C. Sheehy delivered the Opinion of the Court.

Appellant, James F. Fleming, 111, appeals from the judgment of the District Court, Twentieth Judicial District, County of Lake, entered fallowing the District Court's order granting the mot-ion for summary judgment of Wilma M.

(Fleming) West in favorof all defendants. We affirm. Fleming raises three issues for our review: 1. Ojrhether the District Court abused its discretion in granting summary judgment because numerous issues ofmaterial fact exist; 2. Whether there was actual or constructive fraud committed upon Fleming; 3. Whether there was extrinsic fraud committed in the probate of an estate inwhich Flemingwas an heir. The record of this case shows that in the early 1940's James F. Fleming, Jr., and his wife, Wilma M. Fleming, presently Wilma Ivl. Kest, began a ranch-farm operation near Pablo,Montana. Over the next 30 years the Flemings acquired approximately 800 acres of commercial farm land. During this period the Flemings had eleven children, five sons and six daughters, including appellant, JamesF. Fleming, 111. During 1975 James, Jr. retained Dan Yardley, an attorney, and David Green a certified public accountant to advise him with his estate planning. As part of this estate planning, it was decided to incorporate the familybusiness, excluding the land holdings. As a result, in 1975, Fleming Farm, Inc. was formed as a Montana corporation. A total of 2,000 sharesof class "A"voting stockwere issuedwith 1,500shares issued to James, Jr., and 500 shares to Wilma. In addition, 4,313 class "B" nonvoting shares were issued with James, Jr. receiving 3,225 shares and Wilma receiving 1,078 shares. Late in 1975 the Flemings gave to each of their five

sons 68 shares of the class "A" stock and 172 shares of the class "B" stock. As a further part of the estate planning, Fleming Land Partnership was formed and all of the commercial land was conveyed to the partnership. James, Jr. retained an 80.98% ownership interest, Wilma a 10% ownership interest and the eleven children each receiveda .82%ownership interest. The partnership leased its land to the family corporation. James, Jr. died on October 12, 1975. As specified in hisWill,Wilmawas appointed personal representative. Wilma retained Dan Yardley to represent her in that capacity. Under the terms of James, Jr.Is Will, one-fourth of his net estate was distributed equally to the eleven children. One-half of the net estate was placed in Trust "A" with income to Wilma, with the right of request for the corpus, thus qualifying for the estate tax marital deduction available at that time. The remaining one-fourth of the estate was placed in Trust "B"with income to be distributed either to thewife or children. In the fall of 1977, a distribution 'Yn kind" of the estate assets was completed. Once the distributionhad been made, pursuant to the terms of Trust "A",Wilma requested in writing that the corpus of that trust be conveyed to her, thus terminating the trust. At the request ofWilma, Trust "B" was terminated by court order and the property was distributed equally to the eleven children, thus in effect giving the children one-half of thenet estate.Wilma received James,Jr.'s corporate stock as the major portion of her distributive share, while the children received their father's partnership interest. The division of James, Jr.'s partnership interest among the eleven children equaled a 7.36% interest to each, which combined with the .82% interest earlier given to ea-chchild totaled an 8.18% interest in thepartnershipper child. In the spring of 1980, the Internal Revenue Service contested the valuation of certain assets of the estate. In 1981,an agreementwas reached with the I.R.S. increasing the valuation of some assets of the estate. A d.isputewith the Montana Department of Revenue was resolved on a similar basis. Under the terms of these agreements, the gross valuation of the estate of James, Jr. was increased from $659,109 to $805,203. All of the additional taxes paid by the revaluationwere paid by Wilma. Therewas no attempt to revise the in-kind distribution of assets made in 1977 or to recoupany of the additional costs from the children. During the winter and spring of 1976, James, I11 borrowed $42,500 from the family corporation for construction of a house for himself and his family. A promissory note datedAugust 2, 1976,evidenced the indebtedness. James, 111 made a fewpayments on the debt, reducing his unpaid balance to $42,196. On January 10, 1978, at ameeting with the other familymembers,James, 111 transferred his 240 share interest in the family corporation and 8.18% interest in the family partnership to the family corporation in exchange for the cancellation of thepromissory note. This action arises out of a promise made to James, I11 by his mother at the January 10, 1978,meeting. James, 111 testified regarding the promise as follows:Q. Let's go on. According to the Complaint,you alleged that you were promised the difference in value between the value of the stock and partnership interest and the amount of the note--the difference in those two values when the farm is sold. A. Yes, that's whatmy mother told me. Q. Do you knowwhen this happened? When did your mother tell you this? A. I was signing the corporation shares and out of the clear blue sky, she said, "If I ever sell the farm,Jim, I'll give you the restofyourmoney."

Q. Let's get back to the promise for a moment. It's my understanding from your testimony as you were signing the back of the corporate stock, signing it back to the corporation, your mother said to you, "If I ever sell the farm, I'll give you the rest of your money.

### " A. That's what she said. Q. And thatwas the only time she ever made sucha promise? A. Yep. (1. And that was not the reason that you were signing the corporate stock? A. Not really, I guess. Q. You were not being induced by that promise to sign the stock? A. No. I felt an obligation to, I guess,do it. Count IofJames,111's complaint alleged that the above promise made by Wilma induced him to convey his interest in the partnershipand corporationand constituted fraud, actual

or constructive,as well as,undue influence. In count I1of his complaint, James, I11 requested an accounting of the proceeds of the trusts created by the death of James, Jr. On July 15, 3.985, Wilma filed a motion for summary judgment. After considering the pleadings, interrogatories, request for admissions, the depositions of James, I11 and Wilma, the affidavit of attorney Yardley, Wilma's brief and James, 111's oral argument the District Court, having found no genuine issue as to any material fact granted summary judgmentto alldefendants.The general purpose of Rule 56, M.R.Civ.P., is to eliminate unnecessary trial, delay and expense. The purpose of the hearing and the motion is not to resolve factual issues, but to determine whether there is any genuine issue ofmaterial fact indispute. The opposing party's facts must be material and of a substantial nature, not fanciful, frivolous, gauzy nor merely suspicions. Westlake v. Osborne (Kont. 1986), 713 P.2d 548, 550, 43 St.Rep. 200, 203; Silloway v. Jorgenson (19651, 146 Mont. 307, 310, 406 P.2d 167, 169. The party moving for summary judgment has the initial burden of showing that there is no genuine issue as to any fact d.eemed material in light of the substantive principles that entitled the movant to judgment as a matter of law. Cereck v. Albertson's, Inc. (Mont. 1981), 637 P.2d 509, 511, 38 St.Rep. 1986, 1987-88. Once the movant has met this burden, the party opposing the motion must supply evidence supporting the existence of a genuine issue of fact. Pretty On Top v. Hardin (1979), 182Mont. 311, 315, 597 P.2d 58, 60; Harland v. Anderson (1976),169 Mont. 447, 451, 548 P.26 613, 615. As we will discuss in detail below,we find that Wilma met her burden and the District Court properly granted summary judgment for all defendants as there existed no genuine issue ofmaterial fact. Section 28-2-405,MCA,provides: Actual fraud, within the meaning of this part, consists in any of the following acts committedby aparty to the contract or with his connivancewith intent to deceive another party thereto or to inducehim to enter into the contract: (1) the suggestion as a fact of thatwhich is not true by one who does not believe it to be true;

(2) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;(3) the suppression of that which is true by one having knowledgeorbelief of the fact;

(4) A prom.ise made without any intention of performing it; or

(5) a.nyother act fitted to deceive. It is well settled that the mere making of a promise which the promisor fails to keep is not actionable fraud. Svennungsen v. Svennungsen (1974), 165 Mont. 161, 169, 527 P.2d 640, 644;GallatinTrust & SavingsBank v. Henke (1969), 154 Mont. 170, 175, 461 P.2d 448, 450. Rather, one must prove that the maker of the promise had no intention of performing it when he made it. Howe v. Messimer (1929), 84 Mont. 304, 313, 275 P. 281, 283. This Court has also stated that one mustmake aprima facie showing ofnine elements for

a fraud claim to survive. Van Ettingerv. PappFn (1978)

## , 180 Mont. 1, 9, 588 P.2d 988, 993-94. The nine elements are:

(1) a representation; (2) falsity of the representation; (3) ma-teriality of the representation; (4) speaker's knowledge of the falsity of the representation or ignorance of its truth; (5) speaker's intent it should be reliedupon;

(6) the hearer's ignorance of the falsity of the representation; (7

### 1 the hearer

### 's reliance on the representation; (8) the hearer's right to rely on the representation; and (9) consequent and proximate injury caused by the reliance upon the representation. Wright v. Blevins (Mont. 1985), 705 P.2d 113, 117, 42 St.Rep. 1311, 1315; Wortman v. Griff (Mont. 1982), 651 P.2d 998, 1000, 39 St.Rep. 1916, 1918; Cowan v. Westland Realty Company (1973), 162 Mont. 379, 383, 512 P.2d 714, 716; Cl-oughv. Jackson (1971), 156Mont. 272, 279-80, 479 P.2d 266, 270. In the instant case, James, 111 testified thathis fraud claimwas based upon the promise made by Wilma at the time heassigned his interest in the corporation and partnership to the corporation in exchange for cancellation of the $42,000 promissory note. James, I11also testified thatWilma.had no intent todeceivehim: Q. Iguess I askedyou this and thenyoudigressed or Ididn't get the finalanswer. When your mother made the promise, did she intend to deceive you? A. No, I don't think she made it in that way, no. I can't imagine--I can't think ofmy own mother trying to deceive me. That's just, you know, Idon't think of it thatway, really. I feel like I've been had, but. Let's--Can I say one thing? I have found out--found in the years gone by thatMom does tend to,a littlebit, tell people what they--what she thinks that they want to hear because of comparing notes, kind of you could say comparingnotes. We figure that she, you know, she used to come back. She would tell me one thing, she would tell John and Lyd another thing, she would tell sister Ruth another thing, you know, about the same thing. And finall-y,James, I11 testified that he did not rely uponWilma's promise in executing theassignment. James, 111's own testimony clearly establishes that his fraud claim was deficient in that the fourth and seventh elements of the prima facie case were lacking. This the District Court noted in its order granting defendants summary judgmentwhen itwrote: Plaintiff's claimof actual fraud.failsbecause, in his owndeposition,he admits thatonlyhis mother, the Defendant West, ever made any alleged promise to pay him additional money, and that he did not rely upon saidpromise in signingover his shareof the land partnership and stock in the family corporation. Plaintiff further admits that his mother did not intend to deceive him and defendants, therefore,have satisfied their burden of showingthat there isno genuine issue as to any material fact as to the issue of actual fraud. By his own admission, there was no intent to deceive and he did not act in reliance upon any representationofhismother. Section 28-2-406,MCA,provides: Constructive fraud consists in:

(1) any breach ofdutywhich,without any actually fraudulentintent,gainsanadvantage to the personin fault or anyone claiming under himbymisleading another to his prejudice or to the prejudice of anyone claiming underhim;or

(2) any such act or omission as the law especially declares to be fraudulent, without respect to actual fraud. In Mends v. Dykstra (1981),195 Mont. 440, 448, 637P.2d 502, 506,we saidbreach of a duty to disclose material facts constitutes constructive fraud. As the District Court noted, James, 111's claim of constructive fraud fails for essentially the same reason his actual fraud claim failed. That is the record isvoid ofany facts to establish any duty owed to James, I11 or that any such dutywas breached to his prejudice. Finally,Wilma contends the fraud claims are alsobarred by the two year statute of limitations. Section 27-2-203, MCA. The act of alleged fraud took place January 10, 1978, and the complaintwas filed on December 20, 1984. The only way James, 111's claims would notbe barred by the statute is to claim that the statute did not begin to run until discovery of the alleged fraud. See Turley v. Turley (~ont. 1982), 199 Mont. 265, 273-74, 649 P.2d 434, 438. James, I11 apparently made no such showing. Thus,the fraud claims fail for the reasons stated and because of the statute of limitations. With regard to the third claim of count I of James 111's complaint,undue influence, the District Court determined it

was barred by the statute of limitations. Section 27-2-215, bJCA. James, 111does not contest this aspect of the summary judgmenton appeal. Finally, count I1 of James, 111's complaint requests an accountingof theproceeds of the trusts createdby the death of his father. James, I11here contends that because thereexists questions of fact concerning: (1) the value of James, Jr.'s estate; (2) the value of James, 111's inherited share of the estate; (3) circumstances surrounding the transfer therefore; and (4) whether there

was fraud surrounding the probate of the estate, the summary judgment shouldbe setaside. The District Court, in granting all defendants summary judgmenton count I1 stated: Defendants are entitled to Summary Judgment upon Count Two of Plaintiff's complaint because none of said defendants have ever had any duty to account to any person for anything arising out of the trusts or estates of James F. Fleming, Jr. The Court has reviewed Lake County Probate file No. 4581 in the Matter of the Estate of James F. Fleming, Jr. and finds that the above-named defendants, Fleming Farms, Inc. and Fleming Land Partnership, have absolutely nothing to do with said estate. The above-named defendant Wilma M.

(Fleming)West isnamed individuallyand not as the Personal Representative of the Estate of James F. Fleming,Jr., and as such individualhas no duty or obligation to account to anyperson concerning said estate or trustwhich resulted therefrom. Summary judgment on the claim for an accounting was proper. We, therefore, affirm the grant of summary judgment by theDistrictCourt.We concur: