No. 93-452 

### IN THE SUPREME COURT OF THE STATE OF MONTANA

JAMES FIEDLER, Plaintiff and Respondent,

- ..,. vs

# .
JOSEPH FIEDLER, Defendant and Appellant, 

### A% 

## 111994 and JOSEPH FIEDLER. plaintiff'on Counterclaim and Appellant,

JAMES FIEDLER AND JUDITH FIEDLER, Defendants on Counterclaim and Respondents.

APPEAL FROM: District Court of the Eighth Judicial District, In and for the County of Cascade, TheHonorableThomasM. McKittrick,Judgepresiding.

COUNSEL OF RECORD: For Appellant: Robert T. Cumins and James P. Greenan, Helena, Montana For Respondent: MichaelG. Barber and DonaldL. Ostrem,Great Falls, Montana

Filed: Submitted on Briefs: April 14, 1994 Decided: AU~US~ 11, 1994Justice Fred J. Weber delivered the Opinion of the Court.

James Fiedler brought this action in 1982 for dissolution of

a partnership and for an accounting for purposes of distribution. Joseph Fiedler appeals from the Order of the District Court of the Eighth Judicial District, Cascade County, which divided and apportioned real and personal partnership property between him and James Fiedler pursuant to the findings of a Special Master. We affirm. The issues presented for review are restated as follows: I. Did the District Court err in finding that real property located in Montana is a partnership asset? 11. Did the District Court err in finding that realproperty located in Wisconsin is a partnership asset? 111. Did the District Court comply with the requirements of Rule 53(e)(2),M.R.Civ.P.? IV. Did theDistrict Court err indetermining thatJosephand James Fiedler operated the Taylor Ranch Corporation as a part of the partnership?

Jamesand JosephFiedler are twinbrotherswho began a farming and ranching business in approximately 1950, operating as a family partnership under the name of "Fiedler Ranch Partnership." Testimony indicated that other family members were also involved, although all are now deceased. These family members were their older brother, William Frances Fiedler, and their parents, Frank and Katherine Fiedler.The partnership farmed and raised sheep and cattle on properties in Judith Basin County near Stanford,Montana known as the Home Place, the Campbell Ranch, theVann Ranch, SleepyHollow, 160 acres known as the "Isolated 160" and the Taylor Ranch. The Taylor Ranch was purchased with partnership funds in 1954 and was originally formed as a corporationwith shares issued toJames and Joseph Fiedler and their wives. The Taylor Ranch Corporation has since been dissolved by the Secretary of State and the Fiedler brothers have operated it as part of the partnership. Other property which thebrothers inherited from theirparents andwhich is located in Wisconsin has been leased with the income from the leases deposited inpartnership accounts and included as income on partnership tax returns. James and Joseph Fiedler operated the cattle operation together until 1968. Joseph Fiedlerhas since raised sheep on the Home Place and Sleepy Hollow while James has managed the cattle operation ontheremainingproperties. JosephFiedler testifiedat trial that he deposited income from the sheep operation in an account in a Lewistown bank under the name of Fiedler Ranch. He also testified that this was a joint account with access by both himself and James Fiedler. James Fiedler testified that he had no knowledge of this account and no documentation was provided relative to this account despite requests from the Special Master appointed by the court. James Fiedlerplaced funds derived from the cattle operation primarily in a joint account under the name of Fiedler RanchPartnership in the Basin State Bank in Stanford,Montana. James Fiedlerlscattle operationwas extremely successful and themoney deposited inthisaccountprimarily came fromthecattleoperation. Both brothers made draws from this account. Testimony provided that in the period from January 1978 up to the time of the trial, Joseph Fiedler withdrew $455,343 from this account, $289,189 more than James Fiedler withdrew. The relationship between the twin brothers became strainedas yearspassed. In 1982, James Fiedler filed a complaint asking for dissolution of the partnership and an accounting for distribution purposes. Joseph Fiedler filed an answer and a counterclaim also asking for an accounting for distribution purposes. The parties agreed to the appointment of a Special Master to determine the finaldispositionof thepartnership assets. On September 2, 1983, the District Court appointed Jack Stevens as Special Master. Mr. Stevens was recommended by the appellant Joseph Fiedler and approved by both Joseph and James Fiedler. In preparing his Special Master's Report, Mr. Stevens relied on George Campanella,

a Certified Public Accountant who had prepared partnership tax returns for over twenty years as the accountant for the partnership; James Volk, a certified real estate appraiser; and Bass Auction Company, which conducted the equipment appraisals. Mr. Stevens also considered the recommendations of Barry Dutton, a natural resource consultant hired by Joseph Fiedler after Joseph Fiedler disagreed with Mr. Stevens1preliminary findings. The Special Master was asked to determine equitabledistributions of partnership assets. Mr. Stevens proposed two methods fordistributingreal property and otherassets. The first method--preferred by the Special Master and chosenby the District Court--essentially maintained the operations of both brothers and provided additional cash to compensate Joseph Fiedler for the additional real estate apportioned to James Fiedler. The second proposal awarded equal land values to each brother with more cash awarded to James Fiedler. Mr. Stevenstestified that amonghis reasons for recommending the first proposal were the comparative stewardship abilities of the parties over the preceding twenty years, and he specifically noted James Fiedler's management of the property which created a large amount of assets for the partnership as contrasted to the relatively poor fiscal management of other assets by Joseph Fiedler. Other testimony, including that of a banker who had done business with James Fiedler concerning partnership business for

over twenty years, provided that James Fiedler was regarded as a sound financial manager and profitable rancher. Despiterequests, JosephFiedlerdidnot provide documentation to the Special Master to support his testimony about his sheep operation. Other evidencepresented at trial indicates that James Fiedler has successfully managed the vast majority of the real estate owned by the parties formore than twentyyears, that there was no mismanagement on thepart of James Fiedler involving any of the partnership assets and that there had been no commingling of partnership and personal assets by James Fiedler as had beenalleged by Joseph Fiedler. Testimony also indicated that Joseph Fiedler and his wife Olivia had not filed income tax returns since 1982 and that they might need additional cash to cover their tax liability. This was one of the reasons stated by the District Court to support the adoption of the Special Master's preferred proposal. Other facts will be provided as necessary throughout this opinion. STANDARD OF REVIEW This case involves a review of findings of fact and conclusionsof law. For conclusions of law,the standard of review iswhether the district court correctly interpreted the applicable law. Steer, Inc. 

### v. Department of Revenue (1990), 245 Mont. 470, 474, 803 P.2d 601, 603. This Court applies a clearly erroneous standard using a three-part test to review a district court's findingsof fact. The Court first reviews the record to determine if the findings are supported by substantial evidence; second, if the findings are supported by substantial evidence, we will determine if the trial court has misapprehended the effect of the evidence;and third, if substantial evidence exists and the effect of the evidence has not been misapprehended, the Court may still conclude that a finding is clearly erroneous when a review of the record leaves the Court with the definite and firm convictionthat

a mistake has been committed. Interstate Prod. Credit Ass'n v. DeSaye (lggl), 250 Mont. 320, 323, 820 P.2d 1285, 1287. Substantial evidence isdefined as "evidencethat a reasonablemind

### might accept as adequate to support a conclusion; it consists of

more than a mere scintilla of evidence but may be somewhat less than a preponderance." Barrett v. Asarco, Inc. (1990), 245 

### Mont. 196, 200, 799 P.2d 1078, 1080. 

### Issue I: Montana Real Prowerty Did the District Court err in finding that real property located in Montana is a partnership asset? Joseph Fiedler contends that the real property located in Montana is and has always been held as tenants in common. He further contends that all real properties owned by the parties-- with the exception of the Taylor Ranch--were acquired by various familymembersprior to 1950,thedate James Fiedler has allegedas the time the partnership was created between James and Joseph Fiedler. According to Joseph Fiedlerlsarguments on appeal, no real property is held in the name of the partnership, no written partnership agreement has ever existed between James and Joseph Fiedler, and the Fiedler brothers never intended to convey real property held as tenants in common to the partnership. Thus, Joseph Fiedlercontends thatthe DistrictCourt erred inrelying on In the Matter of the Estate of Palmer (1985), 218 Mont. 285, 708 P.2d 242, to determine that James and Joseph Fiedler intended to operate the ranch lands as part of a partnership and in distributing such as partnership property. James Fiedler counters that Joseph Fiedler has maintained since thebeginning of thisproceeding thatall realproperty owned and operated in Montana for farming and ranching purposes was partnership property and that he is barred by principles 

### of 7judicial estoppel from now contending otherwise on appeal. We agree. Clearly standing out among the numerous instances in which Joseph Fiedler has previously asserted or maintained that the property is partnership property are the following: 1. "Defendant JOSEPH FIEDLER has filed extensive counterclaims against Plaintiff JAMES FIEDLER alleging that JAMESFIEDLERhasmismanaged thepartnershipassets;



# . . . failed to maintain the buildings and lands of the partnership; breached his fiduciary duty by mismanaging partnership lands 

# . . .I1 (FromMotion of Defendant and Counter-Plaintiff JosephFiedlertoaddJudithFiedleras a Defendant to the Counterclaims) 2. "TheFiedlerRanchPartnership comprisesanumberof tracts of land totalling approximately 9254 acres."

(FromJosephFiedler's responseto the Preliminary Report of the Special Master) 3. "Plaintiff's motion envisions an eventual partition pursuant to MCA Title 70, Ch. 29. That chapter is irrelevant to partnership actions. By its own terms, section 70-29-101 applies only to situations 'when several cotenants hold or are in possession of real property as joint tenants or as tenants in common.' Plaintiff's complaint herein did not seek relief in partition. More accurately, it sought dissolution and winding up of apartnership, underMCA Title 35,Ch. 10. Section 35-10-502 makes it clear that partners hold partnershipproperty as 'tenantsinpartnership1, not as tenants in common or as joint tenants,and the statutory system for dissolving and winding up the affairs of a partnership is very different from that of an ordinary partition." (Joseph Fiedler's objection to James Fiedler's Motion for a Title Report, acquiesced in and relied on subsequentlyby James Fiedler) (Emphasis in original.) James Fiedler also stipulated--pursuant to Joseph Fiedler's argumentthat thepropertywasheld as a tenancy inpartnership--to withdraw his claim for partition and for payment for services provided to the partnership. At all times subsequent to James Fiedler'swithdrawal of these claims, James Fiedler has taken thepositionpreviously argued by Joseph Fiedler that the property was held as a tenancy in partnership. The doctrine of judicial estoppel binds a party to his or her judicialdeclarations,andprecludesaparty fromtakingaposition inconsistent with them in a subsequent action or proceeding. Trader's State Bank of Poplar v. Mann (1993), 258 Mont. 226, 242, 852 P.2d 604, 614. This Court has applied the doctrine to estop a party fromcontroverting admissions intheparty's pleadings and to estop a party from controverting admissions in an affidavit. Rowland v. Klies (1986), 223 Mont. 360, 368, 726 P.2d 310, 316

(citing Fey v. A.A. Oil Corp (1955), 129 Mont. 300, 323, 285 P.2d 578, 590)

# . Stated simply, it is a rule which "estops a party to play fast-and-loose with the courts." Rowland, 726 P.2d at 315

(citing 31 C.J.S. Estoppel, 6 117B (1964)). Just as surely, the doctrine is applicable in this case where a party cannot take the opposing viewpoint when he has induced another to stipulate tohis position and drop his arguments for that opposing position. The elements of judicial estoppel are: 1) the estoppedpartymust have knowledge of the factsat the time the original position is taken; 2) the party must have succeeded in maintaining the original position; 3) the position presently taken must be actually inconsistentwith the original position; and 4) the original position must have misled the adverse party so that allowing the estopped party to change its position would injuriously affect the adverse party. 

## m, 852 P.2d at 614. Throughout the lengthy duration of this litigation and until he presented evidence at trial to argue that 9theproperties were held as tenancies in common, JosephFiedlerhas consistentlymaintained thattheproperties involved inthisaction are partnership properties. There is nothing inthe record to indicatethat Joseph Fiedler did not have knowledge of all the facts at the time he took his original position and clearly he succeeded in maintaining that position. This position was taken early on in the litigation and James Fiedler stipulated to this position at that time. Clearly, all the elements for judicial estoppel are present and Joseph Fiedler cannot now argue that this shouldbe an action inpartition of real property and not a partnership dissolution proceeding. Further, JosephFiedlermaintained early on inthisproceeding that all five Fiedlers operated as a family partnership prior to their deaths. We conclude that Joseph Fiedler is judicially estopped from changing his position concerning this property. Further, he has made no cogent argument for not applying Palmer to the facts of this case to determine that the real property is held by James and Joseph Fiedler as tenancies in partnership. Palmer held that property acquired either before or after formation of a partnership may be considered partnership property despite the appearance of another form of ownership. Palmer, 708 P.2d at 249. We hold the District Court correctly determined that the real property located in Montana is a partnership asset. Issue 11: Wisconsin Real Propertv Did the District Court err in finding that real property located inWisconsin is 

### a partnership asset?Theparties own several tracts of realproperty inWisconsin (the Wisconsin properties). The District Court included the Wisconsin properties along with other assets as partnership property to be distributed to the parties. James Fiedler has managed theWisconsinproperties and deposited income from them in partnership bank accounts. This income has been included on partnership tax returns as well. George Campanella testified that copies of partnership tax returns were provided to Joseph Fiedler and presented evidence of that for several years. Joseph Fiedler did not challenge this during the yearsofJamesFiedler'smanagement of thisproperty nor hashemade apersuasive argumentthat theWisconsin properties are not partnership property. JosephFiedler contends that the Wisconsin properties are not subject to the jurisdiction of the District Court and that the deposit of funds from the rentals of the Wisconsin properties in theMontana bank accountandJamesFiedler's reportingof the lease income as partnership income does not constitute sufficient evidence to overcomeaprima facieassumptionthat the ownership is that of tenants in common. These arguments are inapposite. It is immaterial that the District Court does not have jurisdictionoverthereal property inWisconsin. InOctober 1988, the parties stipulated that the Special Master would associate counsel inWisconsin to concludetheprobate of theEstate of Frank Fiedler, list the property for sale after appraisal under the supervision of the Special Master, and then deposit the netproceeds of the sale of the Wisconsin properties in the Special Master Interest BearingAccount until a court-ordered division and disbursement of the proceeds was ordered. This stipulation to have the Special Master convert the property to cash fordistributionas directedby theDistrict Court

was agreed to in October 1988--more than four years before the trial. Joseph Fiedler did not object to including the Wisconsin properties as part of the trial. 

### He furtherdid not object to the District Court's inclusion of them in the Order Appointing the Special Master or the Preliminary or Final Special Master's Report's discussion of them. He in fact included the Wisconsin properties in his own Counterclaim and other motions. He waited until just before trial to mention that the Wisconsin properties

were improperly included in this proceeding and then agreed that the property should be included. He did not object until the Special Master's report was being consideredby the Court. As part of the Special Master's proposal adopted by the District Court, the proceeds of the sale of the Wisconsin properties are to be distributed to Joseph Fiedler. His argument relating to the fact that the property has not yet been sold is meritless. As noted above, Joseph Fiedler stipulated in 1988 to theprocedures tobe followed concerning thisproperty. Moreover, by stipulatingto thisprocedure, JosephFiedlerwaived any future argument to treat the matter differently absent allegations to support setting aside or relief from the stipulation. The purpose of a stipulation is to relieve the parties fromthe necessity of introducing evidence about the ultimate fact coveredby it. Webb v. Wolfe (1988), 230Mont. 322, 325, 749 P.2d 531, 532. If the stipulation is material, the parties and the court are bound by it. 

### Webb, 749 P.2d at 532. See also Myers 

### v. Department of Agriculture (1988), 232 Mont. 286, 289, 756 P.2d 1144, 1146. We conclude that Joseph Fiedler is bound by his stipulation made in 1988 concerning the Wisconsin properties. In addition to the stipulation that the Special Master would handle sale and distribution of the Wisconsin properties, substantial evidence was presented to support the District Court's finding that the Wisconsin properties were partnership assets. This included testimony that the income from the property was included inpartnership taxreturnsand that Joseph Fiedlerdid not object to this inclusion of income over a period of more than twentyyears. Thisproperty was managed by James Fiedler. Joseph Fiedler also testified thathewas advisedby his attorney handling

a 1976 IRS problem that he should leave the management of the partnership to James Fiedler. This and other evidence constitutes substantial evidence according to the DeSave test. We hold the District Court properly determined that real property located in Wisconsin is a partnership asset. Issue 111: The Special Master's Report Did the Special Master's Report comply with the requirements of Rule 53, M.R.Civ.P? JosephFiedler contendsthathewas deprived of rightsarising under Rule 53, M.R.Civ.P., because he was not allowed to examine and challenge the Special Master's report until it was accepted 13into evidence during the presentation of the plaintiff's case at trial. He now claims that the Special Master substantially exceeded the authority given to him by the District Court and that the report is based on incorrect conclusions that a partnership existed between the parties and that the real property owned by James andJosephFiedler was owned as tenancies inpartnership. He claims this distorts and invalidates the recommendations made by the Special Master concerning assignments of income and proposals for division of assets. Joseph Fiedler's argument on this issue is basically a reargument of the position he argued at the trial. In substance, it is an argument that the District Court erred in adopting the SpecialMaster's findings. Rule 53(e)(2), M.R.Civ.P., states that the trial court shall accept the master's findings of fact unless they are clearly erroneous. This contention is addressed in Issue IVbelow. As to the opportunity to be heard prior to trial concerning the Special Master's report, this too is a meritless argument. James Fiedler filed aMotion for Hearing inOctober 1992,themonth before the trial, to discuss the adoption of the Special Master's report. Joseph Fiedler objected to this motion, stating: [A] hearing on this matter before the trial setting is premature and would be duplicative of the matters to be presented at the trial which is scheduled to commence before this Court on the 16thday of November, 1992, for a period of one week at which time the Court will determine whether or not or how much, if any, of the Master's Report will be utilized. Moreover, Joseph Fiedler had ample opportunity to respond to theSpecialMaster's preliminary reportand in fact filedan Opposition to Plaintiff's Motion for Adoption of SpecialMaster's Preliminary Report as Final Report and later filed an Objection to the Special Master's Report following the conclusion of the trial. He also challenged specific findingsof the Special Master's Report several times before the trial and, as stated above, refused a hearing on the report in the weeks prior to the trial. To argue now that he

was prejudiced in light of this conduct is utterly without merit. We hold the District Court allowed Joseph Fiedler to respond to the Special Master's Report in accordance with the requirements of Rule 53(e)(2), M.R.Civ.P. Issue IV: Findinss Did the District Court err in determining that Joseph and James Fiedler operated the Taylor Ranch Corporation as a part of the partnership? JosephFiedler's lengthy argument onthis issue is essentially

anargumentthat theDistrictCourt erroneouslyconvertedthis from

an action inpartition to an action to dissolve a partnership. He has not identified any specific findings which he claims are incorrect, but he argues the District Court erred in determining therewas apartnership. We addressed the findingswhichdeal with the inclusion of real property as partnership assets in Issues I and I1 above. We also affirm the findingsof the District Court on this issue as discussed briefly below. Interestingly, in his response to the Preliminary Report of the Special Master, Joseph Fiedler stated: In approximately 1950, Joseph Fiedler, James Fiedler, their brother William 

# . . . and their parents 

# . . 

# .,commenced conducting a general ranching and farming partnership business on land jointlyownedby the family, hereinafter referred to as the Fiedler Ranch 

# . .. Upon the death of the brother and parents, Joseph and James became 50-50 partners with all profits to be split even1 y

# . This is but one of the numerous examples in the voluminous record of this action encompassing over ten years of litigation by which Joseph Fiedler has indicated his knowledge and belief that the Fiedler Ranch has been operated as a partnership. Not onlyhas he supported his arguments over theyears with information indicative of a partnership between James and Joseph Fiedler, he has also supportedthemwith information indicativeof apartnership between all five members of the Fiedler family going as far back as 1950. Substantial evidence supports a findingthat the TaylorRanch Corporation was purchased in 1954 by the partnership with partnership assetsderived from the sale of partnership livestock. Based on the Special Master's findings and conclusions, the evidence presented at trial and other contents of the record in this case, the District Court found specifically that James and Joseph Fiedler intended to operate the ranch they inherited, and all additions to it, as a partnership; that therewas no intention by them to have any of theproperty withheld from the partnership; and that the Special Master had relied upon qualified appraisers and sound techniques. Rule 53 (e)(2)

## , M.R.Civ. P., states that a trial court sitting without a jury "shall accept the master's findings of fact unless clearly erroneous." The District Court concludedthat the SpecialMaster's report contained nothing which

was clearly erroneous. We agree. 16

### After reviewing the record, we conclude that the findings above-noted and othersnot specified hereinare indeed supportedby substantial evidence. Further, after reviewing the record, we conclude that the District Courthasnotmisapprehended the effect of the evidence, and our review of the recordhas not left uswith

a definite and firm conviction that a mistake has been made. Wehold theDistrictCourt properlydeterminedthat Josephand James Fiedler operated the Taylor Ranch Corporation as a part of the partnership.