No. 81-527 IN THE SUPREME COURT OF THE STATE OF MONTANA 1982

SHERRIE HERRIG, KATHY HERRIG, and PATTI HERRIG, Plaintiffs and Respondents,

-vsHELEN M. HERRIG, Defendant and Appellant.

Appeal from: District Court of the First Judicial District, In and for the County of Lewis & Clark, The Honorable Peter G. Meloy, Judge presiding.

Counsel of Record: For Appellant: Skedd,Ashley, McCabe & Weingartner; J. C. Weingartner,Helena, Montana

For Respondents: Smith Law Firm, Helena, Montana

Submitted on Briefs: April 1, 1982 Decided: July 12, 1982

Filed:

### JuL

## 121982Mr. Justice Fred J. Weber delivered the Opinion of the Court. Defendant appeals from summary judgment in this action for enforcement of divorce decree in the FirstJudicial District Court, Lewis and Clark County. We affirm the District Court. Defendantpresents the following issues to this Court for review: 1. Whether the information contained in the deposition of the husband's attorney was inadmissible as violative of the attorney-clientprivilege. 2. Whether the provision in the divorce decree requiring the father tomaintain a life insurancepolicy for the benefit of his childrenwas valid and within the power of the District Court to order. Charles and Betty Herrig were divorced on February 24, 1972. The three minor children of themarriage remained with theirmother,who received $50per child per month in support, payable until each child reached her majority. The divorce decree also provided, inpertinent part: "The defendant [husband]shall retain Twentytwo Thousand Five Hundred Dollars ($22,500.00) life insurance on his own life,naming his children as beneficiaries thereof. 

# . ." Charles Herrig carried life insurance with Metropolitan Life InsuranceCompany, through his employer, Montana Power Company. The policy was worth $22,500 at the time of the divorce. Charles Herrig remarried, and on February 26, 1975, changed the beneficiary on his Metropolitan Life Insurance policy, designating his second wife, defendant Helen Herrig,

as sole beneficiary. On October 27, 1979, Charles Herrig died. At the time of his death, only one of the threechildren from his marriage to Betty Herrig was still under 18years of age. The value of his life insurancepolicy was $50,000. InNovember of 1979,defendant claimed, and received, the entire $50,000 from Metropolitan Life. Plaintiffs,Charles Herrig's three children from his first marriage, filed suit against defendant onAugust 4, 1980, seeking recovery of $22,500 from the proceeds of the insurance policy, plus interest. On November 3, 1981, following hearing on plaintiffs' motion for summary judgment, the District Court granted the motion. Defendantappeals to this Court.

During discovery,plaintiffs deposed the attorney (Sternhagen)who had represented Charles Herrig in the 1972 divorce action. Defendant objected to the use of the deposition and certain papers from the Herrig divorce file, arguing that the information therein was protected by the attorneyclientprivilege and could not be considered in this action. The DistrictCourt in its findings of fact and conclusions of law entered November 2, 1981, stated: "Becauseof Mr. Sternhagen's uncertainty regarding Mr. Herrig's intention, this deposition does not support either plaintiffs' contention that the daughters were to receive the insurance proceeds no matter what, or defendant's contention that Herrig wanted to retain the right to change the beneficiary on the policy. Therefore, this deposition has not been used by this Court to discernMr. Herrig's intent concerning the disposition of the insurance proceeds." However, the order included extensive reference to and relianceupon the divorce file submittedwith Sternhagen's deposition which leads us to conclude that the District Court did, in some degree, rely upon the challenged information. Thus, the question remainswhether evidence,which could be barred by the attorney-client privilege during the client'slifetimemay be disclosed after the client's death. The parties do not dispute that the pertinent information in Sternhagen's deposition as well as his file on the Herrig divorce could have been barred during Herrig's lifetime, as work product or privileged communication. But defendant argues that section 26-1-803,MCA, read together with section 37-61-401(2),MCA, indicates the intent of the legislature to extend the attorney-client privilege beyond the death of the client. Those sectionsprovide: "Anattorney cannot, without the consent of his client,be examined as to any communicationmade by the client to him or his advice given thereon in the course of professional employment." Section 26-1-803,MCA. "Thedeath of a party to an action or proceeding does not revoke the authority of his attorney of record in said action or proceedings but the authority of the attorney is continued in all respects the same and with like effect as itwas prior to the death of suchparty until such attorney shall withdraw his appearance in said action or proceeding or some other attorney shallbe substituted for him or his authority shall be otherwise terminated and entry thereof made to appear in the record of such action or proceeding." Section 37-61-401(2), MCA. Defendant further argues thatbecause the deceased client can no longer contradict his attorney's disclosures, it is crucial that the privilege be applied, to prevent the attorney from disclosing evidencewhich can be used against the client's estate. Plaintiffs argue that the action is not against the estate of CharlesHerrig,but against defendant as constructive trustee, to recovermoney from her which they claimwas equitably assigned to the children. Plaintiffs also point out that section 26-1-803,MCA, has never been construed by this Court where the client is deceased. They argue that defendants have misapplied section 37-61-401(2), MCA, which, according to plaintiffs, does nomore than continue the authority of an attorney to serve in

a pending action after the death of his client. Plaintiffs cite State ex rel. Ross v. DistrictCourt (1967),150Mont. 233, 433 P.2d 778, as supporting the same limited extension of an attorney's authority beyond the death of his client. Plaintiffs urge this Court to adopt the generally accepted exception to the privilege rule. In 81Am. Jur. 2d,WITNESSES 211, 8175, the general rule regarding duration of privilege is stated as follows: "Ordinarily,the protection given by the law to communicationsmade during the relationship of attorney and client is perpetual, and does not ceasewith the termination of the suit,nor is it affected by the party's ceasing to employ the attorney and retaining another,or by any other change of relation between them, or by the death of the client. The seal of the law once fixed upon them remains forever,unless removed by the party himself inwhose favor it is there placed. Some privileged communications,however,may lose their privileged character by the lapse of time. Thatwhichmay be confidential at one timemay not be so at an after time. Thus, directions to an attorney tomake a certain contractare a confidential communicationbefore but not after the contract ismade. And while an attorney cannotbe compelled to disclose the contentsof an answer in equity before it is filed,he may be afterward. "Theprivilege 

### -- does not apply in litigation, after the client's death,between parties, all -- of whom claim under the client, as where the 

### -- --- auestion is as to who shall take bv succession

-.

-- ----- - 

### ---- -A the property 

### -- of the decedent. And 

### -- so generally, where 

### --- both of the parties 

### - to 

### - a lawsuit claim under a deceased client,neither can assert theprrvilege against the other. 

### -- This rule has been appliedwhere the heirs of a grantor 

### -- 

### -- - sued the grantee of a deed for recovery of -- - theproperty conveyed by the decedent." (Emphasis added.) Plaintiffs refer us to McSpadden 

### v. Mahoney (1967), Okla. 

### , 431P.2d 432,where the Oklahoma Supreme Court held thatboth the physician and the attorney for deceased donor were competent to testify in an action by the deceased donor's heirs at law against the donee to set aside intervivos gifts of realproperty. The court made the following statement concerning the attorney-client privilege after death of client: "Therecan be no doubt that the testimony of an attorney concerning communicationswith his client is not admissible against the client where the privilege against such testimony is properly invoked. Jaynev. Bateman, 191Okl. 272, 129 P.2d 188. The same rule applies to the testimony of a physician. St. Louis-San Francisco Ry. Co. v. Kilgore,Okl., 366 P.2d 936. But the privilege to exclude such testimony is not applicable in the instantproceedings. Here both parties are claiming under the deceased, the plaintiff as an heir and devisee and the defendant as a grantee and assignee. In Gaines v. Gaines, 207 Okl. 619, 251 P.2d 1044,a case inwhich both parties were claiming property under an assignment from the deceased, this court held: "'The 

### --- rule of privilege between attorney and client 

### -- does not apply in litigation,after the client's death,between parties, 

### -- all of whom claim under the same client.' -- "Thisexception has often been applied in cases inwhich heirs or devisees of the grantor sued the grantee of a deed for recovery of the property conveyed. (citingcases)." 431 P.2d at 440. (Emphasisadded.) Plaintiffs also rely upon Bergsvik v. Bergsvik (1955), 205 Or. 670, 291 P.2d 724,which considered whether or not testimony of an attorney for the deceased client should be admittedwhere the conversationwith the deceased client and the attorney concerned the interpretation of a community property agreement. The communityproperty agreement conflicted with the will, and the testimony of the attorneywas necessary to clear up the conflict. The court, in response to the objections that such informationwas privileged between the attorney and client, responded: "[Allthough the conversationsmight have been privileged during the lives of the parties, after the death of both of them the privilege is removed. The rule is stated in Corpus Juris in this way:"'It is generally considered that the rule of privilege does not apply in litigation, after the client's death, between parties, all of whom claim under the client;and, so, where the controversy is to determine who shall takeby succession the property of a deceased person and both parties claim under him, neither can set up a claim of privilege against the other as regards the communications of deceased with his attorney.' 70 C.J. 438,Witnesses, 8587." 291 P.2d at 731. In Tanner v. Farmer (1966), 243 Or. 448, 414 P.2d 340, the Oregon Supreme Court allowed deceased wife's attorney to testify that the wife had intended to divorceher husband and cut him from her will. The court said: "TheUniform Rules of Evidence propose that the privilege shallnot extend 'to a communication relevant to an issuebetween parties all of whom claim through the client, regardless of whether the respective claims are by testate or intestate succession or by inter vivos transaction.' Rule 26(2)(b)Uniform Rules of Evidence [nowRule 502(d)(2)Uniform Rules of Evidencejnot included in Montana Rules of Evidence]. This is in keepingwith the Bergsvik decision and with the rule followed by the other courts. SeeMcCormick on Evidence (1954) 598,pages 199,200." 414 P.2d at 342. While the cases relied upon by plaintiffs are not identical factually to the present case,we find plaintiffs' argumentpersuasive. In the present case, all the parties

are next of kin to Charles Herrig and claim an interest in his life insurancepolicy. The provision in the divorce decree requiring that the insurancepolicy be maintained for the benefit of plaintiffs conflictswith the amended provision in the policy itself naming defendant as solebeneficiary. In order to determine whether the insurance provision in the divorce decreewas something desired or agreed to by Charles Herrig or was somethingwhich was imposed upon him by the court, it isnecessary to consider Sternhagen's deposition, which indicatesCharlesHerrig's intent. This Courthas not considered whether section 26-1-803,MCA, extends the attorney-client privilege beyond the client's death; we now hold that,under the facts of this case it does not; Sternhagen's deposition was admissible. We hereby adopt the above exception to the general attorney-client privilege rule;where both parties to a lawsuit claim under

a deceased client,neither can assert the attorney-client privilege against the other. The District Court did not err in considering Sternhagen's testimony and those papers which

were part of the Herrig divorce file. 11. Defendant argues that the DistrictCourt in 1972 was withoutpower to requireCharles Herrig to maintain his life insurance for the benefit of his children,particularly, where therewas no provision for the termination of the requirementas to each child when she reached her majority. Defendant relies upon the following rules for support: (1) A divorced parent has no greater obligation to his children than a non-divorced parent. Clavin v. Clavin

(1977),238 Ga. 421, 233 S.E.2d 151. (2) A parent's legal obligation to support his children ends with their emancipation--inMontana, at 18 years of age. Chrestensonv. Chrestenson (1979), 180Mont. 96, 589 P.2d 148. Defendant concedes that a mutual separation agreement

or property settlementagreementwhich "clearly and unmistakably" provided for insurance maintenance would be enforceable. But defendantpoints out that "noproperty settlement agreement

was ever signed or filed with the [~istrict] court," and argues that, even if ithad been, such an agreement should be enforceable as to each child only until that child reached majority. Finlay-Wheeler

### v. Rofinot (1976), 276 Or. 865, 556 P.2d 952.Defendantargues, too, that, apart from the question of the admissibility of the deposition of Charles Herrig's attorney, the attorney's speculations about Charles Herrig's intent a decade earlier are not very conclusive evidence. Defendanthas raised a number of questions which are not applicable here. In Chrestensen, supra, this Court did not hold that all legal obligations ceasewhen the child reaches majority, but that the legal obligation to provide child support ceases at that time. Justice Sheehy, in a special concurrence, recognized "that the parties could agree to an obligation to support a child beyond the age of eighteenyears." This is consistent with case law in other states, and is perfectly logical. Similarly, where there is no settlement agreement, a parent may, through his attorney, suggest to the court certainprovisions for the benefit of the childrenwhich are agreeable to that parent. When the court accepts the parent's suggestions,and incorporates them into the decree, they are enforceable. In Clavinv. Clavin, supra, the court stated: "There is, of course,no question that a father may agree to provide life insurance for the benefit of his child. Such an agreement, if valid and incorporated in the decree, will be enforced. (Citationsomitted.)" 233 S.E.2d at 152. Here, the DistrictCourt judge acted upon the husband's offer to maintain his life insurance for his childrens' benefit. The return on the order to show cause dated November 15, 1971, shows that the husband,whose take-homepay was approximately $425.00 per month declared himself incapable of paying $300.00 per month child support. He offered instead to pay $50.00 per child per month ($150.00),and further stated:"Thedefendant is also agreeable to keeping the group life insurancepolicy of the Montana Power Company,defendant's employer, in the amount of $22,000, but alleges that the beneficiary provision on suchpolicy should be changed to retain the children of the parties but to exclude the plaintiff." The attorney's records and testimony support plaintiffs' argument that the District Court did no more than incorporate into the divorcedecree a provision for the protection of the children, suggested to the courtby the husband. The DistrictCourt referred to those sections of the Herrig divorce file which indicated Charles Herrig's intent to keep up his life insurance for his children: "Evidenceof the existence of the oral property settlement agreement, is found throughout the court record of the Herrig divorce case, and in the file kept on that case by William Sternhagen. Documents in Sternhagen's file have become a part of the record in the instant action. "Innotes taken over the phone by William Sternhagen in a conversationwith Charles Herrig on aboutNovember 24, 1970, the following appears: "'5. MPC group life in. $22,000-beneficiary will be children' "The next document in Sternhagen's file is more notes. At the top of the singlepage, he has written, 'Maybe write to Kottas and make this offer as the terms for a separation agreement.' Written on thatpage is this notation: "'LifeIns--$22,500ben iswife-to be changed to children---will keep up payments---right reserved to changebeneficiaries after youngest child (12) becomes of legal age.' "Attachedto thatpage of notes is a letter to Leo Kottas dated December 2, 1971,which proposes terms for a separationagreement. Item number 3 reads: "'3. Mr. Herrig will keep up his life insurance changing the beneficiaries to his children reserving the right to changebeneficiaries if he so desires,but not until his youngest child becomes of legal age.' "Areturn on order to show cause was filed December 15, 1971by Mr. Sternhagen. The life insurance provision therein states: "'4. The defendant is also agreeable to keeping the group life insurancepolicy of the Montana Power Company defendant's employer, in theamount of $22,000.00, but alleges that the beneficiary provision on such policy should be changed to retain the children of the parties but to exclude the plaintiff.' [see above] "In a post-trial memorandum, filed February 14, 1972,and prepared by defendant's attorney, Mr. Sternhagen,he summarized Mr. Herrig's testimony:

11 1Mr. Herrig, in addition to the above, agreed that he would continue to pay about $14 per monthfor $22,500 insurance on his life and that the childrenwould remain beneficiaries of this.' (emphasis added) "In thatmemorandum was a section entitled 'Suggestionsand requests for property settlement.' Items 11. 

# . .read[s]:

"'11. Mr. Herrig continue the life insurance for his children in the total coverage of $22,500 which is at a cost to him of $14 per month.

### ' " These recordswere compiled during the 1972 divorce action. Defendant's objection to Sternhagen's evidence, as being unreliable due to the passage of years, iswithout merit. This Court must determine whether summary judgment was appropriate. The general rules governing summary judgment

were stated in Kronev. McCann (1982), Mont. 

## , 638

"UnderRule 56(c), M.R.Civ.P., a summary judgment is proper only if the record discloses no genuine issue ofmaterial fact and that the movant is entitled to judgment as a matter of law. (Citesomitted.) The party moving for summary judgmenthas the burden of showing the complete absence of any genuine issue as to all facts which are deemed material in light of those substantive principles which entitle him to a judgment as a matter of law. (Cites omitted.) Once themovant has established that no material issues of fact exist, the burden shifts to the opposing party to raise an issue of fact. As we stated in [Rumphv. Dale Edwards, Inc. (19791, Mont. I 600P.2d 163, 167, 36 St.Rep. 1022, 10261: "'While the initialburden of proof must attach to the moving party, that burden shiftswhere the record discloses no genuine issue of material fact. Under these circumstances, the party opposing the motion must come forward with substantial evidence raising the issue[Citationsomitted.] Once the burden has shifted, the party opposing the motion is held to a standard of proof which is as substantial as that initially imposed upon themoving party. [Citationomitted.1

### '" Respondents' brief in support of their motion for summary judgment is adequately supported by reference to the above rule and case law interpreting it. The brief sets forth copious facts supporting respondents'argument that Herrig's clear and continuing intentwas to maintain his life insurancepolicy for the benefit of his children. Itpoints out the offer in Herrig's return on order to show cause, November 15, 1971,which stated thatHerrig was agreeable to keeping the policy but that the beneficiary provision should be changed to retain the children. Appellant's brief in opposition failed to raise any issue of disputed fact,or to argue that therewas any genuine issue of material fact. We find nothing in the record of the divorce itself

or of this action to indicate that any property settlement agreement, oral or otherwise,had been reached between the Herrigs at the time of their divorce. But the record leaves

no doubt that Charles Herrig intended his children to be the beneficiaries of his life insurance,and that he offered that benefit to the court in return for the court's lowering the requested $300/mo. total child support to $50per child per month, or $150/mo. The District Court never directly addressed the question of whether Herrig effectively contracted with 

### -- the court to waive his right to change beneficiaries. But, the abundant evidence from the Sternhagen file,which is undisputed except for the question of its admissibility and the question of the duration of the waiver, adequately supports the DistrictCourt's conclusion that there is no genuine factual dispute over CharlesHerrig'sintent to maintain the policy for his children. Itwould be unreasonable for this Court to render invalid or unenforceable, the provisions of a divorce decree offered by one party and accepted by the trial court,although unsought by the other party, when those provisions involve benefits to the children. A parent who offers to put his children through college, for example, rather than pay the entire amount of support sought by the other parent should be held to that agreement once it is incorporated into the decree. Or a parentwho offers to pay medical/dental bills until his children are 21, rather than pay full support asked until theirmajority, should not be able to escape thatbargain, once his offer has been accepted by the court. Here, Herrig offered to the court the life insurance policy as trade for lower support. The court accepted the offer. The record is clear and reflects no factual dispute regarding that offer. We find there is no genuine issue of material fact as to Herrig's intent to maintain his life insurance for his childrens' benefit. The second factual questionwas whether Herrig intended to retain the right to changebeneficiaries (a) From the time of the divorce. (b) When his youngest reached majority. (c) As to each child when she reached her majority. (d) Never. There is absolutely no evidence to support (a) or (c)

# . The insurance provision in the decree ismeaningless if (a) is found applicable; and the only argument in support of (c) is thatwhat appellant presents as theminority view (that

a parent can be required to maintain his life insurance for his childrens' benefit), generally holds that the requirementterminates upon the child's reaching majority. Theminority view is not applicable here,where the decree is obviously not an imposition of the court'swill upon Herrig, but rather an incorporation of Herrig's offer into the decree. A parent's legal obligation to support his children ceaseswith their majority, but the parent can agree to extend their support or benefits beyond that time. See Chrestensen concurrence,above. That obviously is what happened here. If (b)and (d)are the only two legitimate offers, as indicated by the Sternhagen file, then the factual dispute is notmaterial, since in either case, the $22,500policy for all three childrenwould be in effect at least until the youngest reached her majority, which she had not, at the time of Herrig's death. Thus, although the District Courtwrongly relied upon

an apparently non-existent settlement agreement between husband and wife, the result was correct. There is no genuine issue of fact

as to whether Herrig intended to maintain the policy for his children, and no issue of material fact as to when his right to change beneficiaries came into effect. This Court has often held that if the result reached by the trial court is correct, itwill be upheld regardless of the reasons given for the conclusion. Steadmanv. Halland (1982), Mont

# . , 641 P.2d 448, 452, 39 St.Rep. 343, 347; Johnstonev. Sanborn (1960), 138Mont. 467, 471, 358 P.2d 399, 401. Here, Charles Herrig, through his attorney, clearly indicated to the trial court his willingness to keep up his life insurance policy in the amount of $22,500 for his children, at least until his youngest child reached her majority. The court incorporated that offer into the divorce decree; the provision is enforceable and may not be defeated by Herrig's subsequently naming his second wife sole beneficiary. We refer to Matter of Estate ofLemer (S.D. 1981), 306 N.W.2d 244, a case factually similar to the case at bar, wherein the South Dakota Supreme Court stated: "[Tlhough a beneficiary named in a policy which contains a provision reserving a right in the insured to change the beneficiary iswithout a so-calledvested right in the policy, he may nevertheless become investedwith equitable rights therein through a separate contractwith the insured, and. 

# . .such rightsmay prevail over the legal and equitable rights of one who has been subsequently substituted as the named beneficiary. (Citesomitted.) That such an equitable right in the policy may arise from a settlement of property rights in connection with a divorceproceeding is not questioned.

(Citesomitted.)" 306 N.W.2d at 245-246. Here, although plaintiffswere never actually named beneficiaries, and their interestwas created by agreement between the husband and the court, the incorporationof the husband's offer into the divorce decree created equitable rights in the policy, in the children. Those rightsprevail over the defendant's rights to the extent of the value of the insurancepolicy referred to in the divorcedecree. The District Court correctly granted judgment against defendant in the amount of $22,500. Affirmed

# .

We Concur: