No. 14449 IN THE SUPREME COURT OF THE STATE OF MONTANA 1979

KENNETH G. NEILS and DOROTHY D. NEILS, Plaintiffs and Appellants,

RUSSELL K. DEIST, Defendantand Respondent.

Appeal from: District Court of the Eleventh Judicial District, Honorable Robert M. Holter, Judge presiding. Counsel of Record: For Appellants: Hash, Jellison,O'Brien and Bartlett, Kalispell,

Montana James C. Bartlett argued,Kalispell, Montana For Respondent: H. James Oleson argued,Kalispell, Montana

Submitted: January 31, 1979 Decided: 

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# - Filed: 

# bMft7-Mr. Chief Justice Frank I. Haswell delivered the Opinion of the Court. Plaintiffs appeal from a judgment in favor of defendant in an action to collect the balance of an alleged debt. The

case was tried in the District Court of Flathead County without

a jury. The District Court held plaintiffs' claim barred by the five year statute of limitations. Plaintiffs Ken and DorothyNeils and defendant Russell Deist had been friends formany years,both socially and through various business transactions. On April 20, 1970,plaintiffs executed a warranty deed conveying a tract of land to defendant. The deed did not specify the purchase price of the land,but only stated "forvalue received". On June 26 defendant gave plaintiffs a personal check for $15,000 and accepted delivery of the deed. On July 2 the deed was recorded. The only written instruments involved in the transactionwere the deed and check. Sevenyears later,onApril 18, 1977,plaintiffs filed

a complaint alleging an oral agreementbetween the parties that the $15,000was a down payment only and that $10,000was still owing. The complaint further alleged defendant's acknowledgement of the $10,000 remaining indebtedness to plaintiffs on numerous occasions in the intervening years; that itwas stilldue; but that defendant refused to pay. Defendant by answer specifically denied any oral agreement for consideration above the $15,000 already paid, and raised as affirmativedefenses the statute of limitationsand the statute of frauds. Defendant subsequently moved for summary judgment on those grounds,which motion was denied. On March 3, 1978 trialwas held before the court without

a jury. Plaintiffs introduced evidence that the agreed selling price of the propertywas $25,000,but that they had delivered the deed to defendant upon receipt of his $15,000 check because defendant requested that he be given clear title and the parties had done business in similar informal fashionover the years with noproblems. The 1970 tax return of plaintiff Ken Neils reflected that he had paid a capital gains tax on a $25,000 sale price. Defendant's 1972 income tax return indicated a $25,000 cost basis for theproperty when resold. Defendant's testimonywas the original agreed price was $15,000. Defendantdid admit to some confusion,however, in that in 1975 when plaintiffs first began making demands on him for payment, he thought they were claiming he had paid nothing at all. He conceded that he was not positive whether he had

or not, and searched through his old financial recordsuntil he found his cancelled $15,000 check. Thereafter,he was adamant that he owed plaintiffs nothing. He explained the reporting of $25,000 as his cost basis in 1972when he sold the property as having' been reached by capitalizationof survey costs,delinquent taxes he had paid, purchase of awater right, and interest. He contended that if the originalpurchase price had been $25,000, then his costbasis in 1972would have been much higher by the addition of those capitalized items. Following trial, findingsof fact,conclusions of law and judgment were entered. The District Court found that the original agreed price was $25,000,but ruled in favor of defendant on the grounds that the actionwas barred by section 93-2604(1), R.C.M. 1947,now section 27-2-202(2) MCA, the fiveyear statute of limitations applicable to actionsupon a contract not founded on an instrument in writing. Defendant subsequentlymoved to amend the findings of fact to show that the original agreed price was $15,000, and plaintiffsmoved for a new trial. Bothmotions were denied. This appeal followed. Plaintiffs and defendant both filed notice of appeal; plaintiffs from the judgment as awhole, and defendant from that portion concluding that the agreed price was $25,000 rather than $15,000. After initiation of the appeal,Russell Deist died andJoan Deist,his survivingwife and personal representativeof his estate, succeeded him as party defendant. On appeal,plaintiffs contend that the District Court erred in holding that their cause of action was barred by the fiveyear statute of limitations. They argue that a deed is an instrument inwriting for the purposes of invoking the 8year statute of limitations applicable to written contracts. Section 93-2603,R.C.M. 1947,now section 27-2-202(1) MCA. They further argue that the actual consideration for a deed may always be shown to be greater, less than, or different from, that recited in the deed. Their position is that the District Court correctly found the original agreed price to be $25,000 and erred only in applying the statute of limitations. They seek reversal and entry of judgment in their favor for the sum of $10,000with interest from the date of sale. Defendant agrees that a deed is an instrument inwriting for purposes of determining the applicable statute of limitations. It is his contention, however, that the District Court erroneously admitted the parol evidence of the alleged higher purchase price,

so that even though thewrong statute of limitationswas used the ruling in favor of defendant was nonetheless correct. The determinative issues can be framed as follows: I. What is the applicable statute of limitations? 11. Isparol evidence admissible to prove the actual consideration? The question of whether a deed constitutes a contract founded upon a written instrumentwithin themeaning sf the 8 year statute of limitationshas not been specifically settled in Montana. In general,deeds are seen as contracts in writing to which the longer statute of limitations applies. "It is established that the acceptance of a deed by the grantee named thereinmakes it a written contract,and the obligations created by the deedare therefore evidenced by a writing and are not governed by the limitation respecting verbal contracts." 51 Am Jur 2d Limitation of Actions 597. A summary of cases so holding appears inAnnot. 3ALR2d 809 526. We recently recognized this rule in dictum, S-W Co. v. John Wight, Mont

# . Inc. (1978), 

## , 587 P.2d 348, 357, 35 St.Rep. 1674, 1687,and we adopt it as the law in Montana. On the parol evidence question both the law of contracts generally and the law relating specifically to deeds allowparol evidence on the issue of consideration when the recital in the instrument is, as here,merely a receipt ("for value received"). "In a case in which the consideration for a written contract ismentioned merely by way of recital or as a receipt, the parol evidence rule does not preclude the admission of extrinsic evidence to show the true consideration

# ..."17Am Jur 2d Contracts 590; to the same effect, 30 Am Jur 2d Evidence 

### SS 1056 and 1057. "Thetendency of modern times has been to regard the consideration clause in a deedmerely in the light of a receipt and to allow parol evidence to explain the consideration for almost every purpose except to allow the grantor to avoid the deed where no fraud ormistake is shown." 23 Am Jur 2d Deeds S71. "Asa general rule,and in linewith the modern tendency

# . ..parol or extrinsic evidence

# ..

# . is admissible to show the actual consideration for the conveyance 

# . .." 23 Am Jur 2d Deeds 573. Where a deed is the only instrument involved in a controversy, the stated consideration ("onedollar and other considerations1')

can be explained by oral testimony. Warner v. Johns (1949), 122 Mont, 283, 201 P.2d 986. Accordingly,we hold that plaintiffs' claim is not barred by the 5 year statute of limitations and that they are entitled to

a judgment for the balance of the indebtedness. Since the evidence on the issue of the purchase price was conflicting and the trial judge chose to believe plaintiffs, defendant has no grounds for challenging the finding of fact that the agreed price was $25,000 rather than $15,000."The standard of review in a nonjury case is simply to determine if there is substantialevidence to support the findings of the trial court. This Court will not reverse such findings of fact unless there is a clear preponderance of evidence against the findings." Hayden v. Snowden (1978). Mont

# . , 576 P.2d 1115, 1117, 35 St.Rep. 367,369. "The credibility and weight given to the witness, especiallywhere the evidence is conflicting, is amatter for the district court's determination in a nonjury case." Olson v. Carter (1977), Mont

# . , 572 P.2d 1238, 1239, 34 St.Rep. 1539, 1541,citing Miller v. Fox (1977), Mont

# . I 571 P.2d 804, 34 St.Rep. 1367. Plaintiffs have asked us to assess interest on any judgment in their favor from April 20, 1970,the date of the sale. This we decline to do. During oral argument itwas established that there had been no agreement whatever between theparties

as to whether interest would accrue on the obligation if it were not promptly paid. The issue of interestdid not arise during the trial of this case and the District Court made no findings of fact in that regard. No interestwas demanded or paid on the first $15,000,although the deed was executed on April 20, 1970 and thepayment was notmade until June 26, 1970. Because the record is silent on thismatter,we hold that interest shall be assessed from a reasonable time after demand was made on defendant for payment of the outstanding $10,000, to be determined by the District Court on remand. The judgment of the District Court in favor defendant is reversed and the cause remanded with instructionsto enter judgment for plaintiffs in the sum of $10,000,together with interest asmay be determined in accordancewith this opinion. Costs to plaintiffs. We decline to award attorney fees for trial

or upon appeal.

Chief Justice