No. 11934 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1971 

DAN DAVIS and DONALD DAVIS, 

Plaintiff and Respondent, 

-vs - 

GEORGE V. DAVIS, 

Defendant and Appellant. 

Appeal from: District Court of the Third Judicial District, 

Honorable Sid G. Stewart, Judge presiding. 

Counsel of Record: 

For Appellant : 

William R. Taylor argued, Deer Lodge, Montana. 

Hughes, Bennett and Alan F. Cain, Helena, Montana. 

Alan F. Cain argued, Helena, Montana. 

For Respondent : 

C. W. Leaphart, Jr. argued, Helena, Montana. 

Submitted: December 2, 1971 

Decided : JAN 2 7 19n 

Filed : JAN 2 7 1972 
Mr. Justice Gene B. Daly delivered the Opinion of the Court. 

This cause involves two actions consolidated for trial 

purposes in the district court of the third judicial district, 

Powell County. The actions were brought by two brothers against 

their uncle for breach of oral contracts to manage ranch properties. The matter was tried to the court sitting with a jury. 

From a jury verdict and judgment in favor of the plaintiffs, 

the defendant appeals. 

The plaintiffs are Dan Davis and Donald Davis. The 

defendant is George V. Davis, their uncle. Each plaintiff's 

complaint was drawn in three counts. 

Count I alleged an oral contract running from the year 

1957 through 1964, whereby plaintiffs were to each receive a 

salary of $350 per month, plus free meat, milk, utilities, and 

housing. Plaintiffs were also to receive one-third of the profits 

of the ranches and as a further compensation each plaintiff was 

to be designated in a will, to be executed by defendant, to 

receive the ranch upon which he was living in the event of defendant's death. The respective complaints allege that the full 

share of profits was not paid to each plaintiff. Dan Davis prays 

for $71,310 damages and Donald Davis prays for $68,653 damages. 

Count I1 alleges a similar oral agreement running from 

1965 through 1966, under which each plaintiff was to receive the 

remuneration outlined in Count I, except that each plaintiff was 

to receive one-half of the profits of the ranches, less depreciation; and each was to hold the profits received for the purpose 

of paying inheritance taxes. Plaintiffs allege that for the years 

1965 and 1966, they received no profits. Donald Davis prays for 

$32,000 damages and Dan Davis prays for $38,000 damages. 
Count 111 alleges in substance that by his manner and 

actions defendant prevented plaintiffs from performing their 

contracts; that plaintiffs believe defendant has not provided for 

them in his will as agreed and they pray for relief in the nature 

of specific performance,foccing defendant to execute a will in 

the manner agreed upon. 

By way of answer defendant admitted that plaintiffs were 

employed by him for the years stated in the complaints but denied 

the existence of any such agreements as alleged in the complaints. 

The bonus payments which were paid to plaintiffs by defendant 

were admitted; defendant denied they were paid pursuant to 

any set contracts, but were paid in the discretion of defendant. 

Defendant further alleged that plaintiffs breached the terms of 

whatever agreements they considered existed between defendant 

and themselves by demanding $1,000 per month salary and threatening to quit defendant's employ if he failed to accede to their 

demands. 

Defendant additionally set up the defense that plaintiffs' 

claims through the year 1961, were barred by the statute of 

limitations, section 93-2604(1), R.C.M. 1947, which provides 

I I An action upon a contract * * * not founded on an instrument in 

writing" must be commenced within five years. Further, that the 

alleged oral contracts to make a will were void as in violation of 

the statute of frauds, section 13-606, R.C.M. 1947, and section 

93-1401-7(1) and (4), R.C.M. 1947. 

During the course of the trial the district judge granted 

defendant's motion for a directed verdict as to the claims of 

plaintiffs for wages and shares of profit for the years 1956 to 

1961, on the ground that such claims were barred by the applicable 
statute of limitations. The court also determined the defendant 

had performed that portion of the agreements regarding the drafting 

of a will, since defendant had drafted and executed a will naming 

plaintiffs Donald Davis and Dan Davis as devisees of certain 

properties in Powell County which plaintiffs had been managing 

for defendant. Consequently, at the close of the evidence, Count 

I11 in each complaint was dismissed, without objection. The matter was 

then submitted to the jury, which returned a verdict in favor of 

each plaintiff in the amount of $38,205.34. 

Defendant-appellant presents five issues for review: 

1. Whether the verdict and judgment in the district 

court are supported by substantial evidence. 

2. Whether plaintiffs must be held, as a matter of law, 

to have waived their right to insist on the performance they 

claim to be due from defendant under the alleged oral contracts. 

3. Whether plaintiffs are precluded from recovery on 

the alleged contracts in view of their own breach. 

4. Whether the district court erred in admitting evidence 

of the alleged oral contracts to make a will devising real property. 

5. Whether the alleged oral contracts to devise real 

property and to pay a certain share of profits from ranch operations are unenforceable as being in violation of the statute of 

frauds. 

Plaintiffs argue the appeal should be dismissed for failure 

of defendant to move for a new trial, and that defendant's issue 

2, waiver, and issue 3, breach, are not proper issues as they were 

not raised at the district court level. 

In the first instance, defendant has adequate procedural 

ground to support his appeal and a failure to move for a new trial 
is not fatal to his appeal, as urged by plaintiffs. Defendant 

did move the district court for .a directed verdict at the close 

of all the evidence based principally on the ground that the 

evidence presented at trial was insufficient to establish a basis 

upon which the jury could reasonably find that the contracts 

existed. This motion presented to the trial court the same question which plaintiffs urge can only be presented in a motion for 

a new trial following the verdict, if this Court is to review the 

evidence presented at trial on appeal. 

The question urged on appeal here --- that evidence to 

support a verdict in favor of plaintiffs was totally lacking--- 

was directly presented to and ruled on by the district court. 

This matter was treated" in Kuchinski v. Security Gen. Ins. Co., 

141 Mont. 515, 518, 380 P.2d 889, thusly: 

I1 I A motion for a judgment of non-suit, or a 

motion for a directed verdict, is in effect 

a demurrer to the evidence and presents to the 

trial court a question of law to be determined 

[Citing cases], and where either of such motions 

is made in the trial court and overruled, the 

question of the sufficiency of the evidence to 

support the verdict and judgment is before this 

court on appeal from the judgment. ' La Bonte v. 

Mutual Fire etc. Ins. Co., 75 Mont. 1 [lo], 241 

P. 631, 634. 

11 1 If a motion for a new trial has not been made, 

the court will review the evidence to determine 

whether there is any substantial evidence to 

justify the verdict. [Citing cases. ] ' Harrington 

v. H. D. Lee Mercantile Co., 97 Mont. 40, 55, 33 

P.2d 553, 556." 

Here, the two issues presented by defendant having to do 

with the alleged waiver and breach of plaintiffs, should be 

considered. 

Under the admitted employment agreements for the periods 

from 1957 to 1964, and from 1965 to 1966, and concurrently under 

the alleged contracts to share in the profits and to draw a will, 
defendant admitted an employment agreement terminable at will, 

but denied the existence of any alleged contracts to share in 

the profits or draw a will. In the pretrial order issued by the 

district court setting the triable issues of fact and law, 

defendant's position is consistently stated as a denial of any 

alleged contracts either to share in the profits or to fulfill 

any obligation to devise or bequeath to plaintiffs any property 

by will. 

Rule 16, Montana Rules of Civil Procedure, provides 

a pretrial conference will formulate the issues: 

"Jc * JcThe court shall make an order which recites 

the action taken at the conference, the amendments 

allowed to the pleadings, and the agreements made 

by the parties as to any of the matters considered, 

and which limits the issues for trial to those not 

disposed of by admissions or agreements of counsel; 

and such order when entered controls the subsequent 

course of the action, unless modified at the trial 

to prevent manifest injustice. * * *" 

The pretrial order setting forth defendant's contentions 

indicates that the contracts under which the plaintiffs were 

employed were terminable at will, and maintains a denial of any 

of plaintiffs' alleged contracts with defendant. This Court is 

compelled to agree with plaintiffs' argument that it stands to 

reason if there were no contracts there could be no breaches, 

and if the agreements were terminable at will, the plaintiffs were 

entitled to terminate at any time they saw fit. However, of more 

crucial weight is the procedural process which recognizes that 

the issues of waiver and breach were not made issues at the trial 

and thus may not be introduced on appeal. This Court has said 

on numerous occasions that it will consider for review only those 

questions raised in the trial court. Spencer v. Robertson, 151 

Mont. 307, 445 P.2d 48; Clark v. Worrall, 146 Mont. 374, 406 P.2d 
In reference to issue 4, we deem the admission of evidence 

of the alleged oral contracts to make a will devising real property 

to have no bearing on this appeal, in view 05 the district court's 

dismissal of Count I11 in each complaint at the close of the 

evidence. The issue of the alleged oral contracts to devise 

property under the will of defendant was removed from the jury 

without objection and thus is not a part of this appeal. 

In considering the principal question presented by defendant 

in this appeal, namely --- that evidence to support a verdict in 

favor of plaintiffs was totally lacking --- we will be guided by 

the long standing rule in Montana as stated in Bernhard v. Lincoln 

County, 150 Mont. 557, 560, 437 P.2d 377: 

"\hen such a question is before this court we will 

only review the evidence to decide if the verdict is 

supported by subs tantia 1 evidence. Breen v. Indus tria 1 

Accident Board (Mont. 1968), 436 P.2d 701. The fact 

that there were conflicts in the testimony does not 

mean there is not substantial evidence to support the 

verdict. We must accept the evidence believed by the 

I jury unless that evidence is so inherently impossible 

or improbable as not to be entitled to belief * *.' 

Wallace v. Wallace, 85 Mont. 492, 279 P. 374, 377, 66 

A.L.R. 587 (1929)." 

An examina'tion of the entire record reveals conflicting but 

substantial evidence to support the jury's finding of a contract 

as opposed to a voluntary bonus. 

Defendant makes a strong argument that the testimony of 

his two accountants, both C.P.A. 's, demonstrates the yearly payment was a bonus that was paid by defendant to the plaintiffs and 

understood to be paid only out of "net operating profitsf' of the 

ranching operations. At the trial one accountant defined the 

1 f net operating profitff as "that would include all ranch sales, 

except the sales of livestock upon which the Federal income tax 

people will give us capital gains treatment". The other described 
the operating profit as the gross sales of the cattle less 

expenses, and. that a schedule of capital gains was kept with 

such sums being treated differently for income tax purposes. 

A retired vice-president and trust officer of the First 

National Bank and Trust Company of Helena, testified as to his 

understanding in these matters as the result of an estate planning 

meeting in 1965 with George Davis, Donald Davis and the account - 

"A. Well, as I recall it, Mr. George Davis explained 

what his idea was of net operating income for the 

purpose of determining salary and bonuses--for a salary 

and bonus arrangement, and that was the gross operating 

income, excluding capita 1 gains, less ordinary operating 

expenses, and not including depreciation, and that 

would be the net--that would leave you the net profit 

from the operation." (Emphasis supplied) 

In contrast to the above statements supporting defendant's 

position, the testimony of the brothers, Donald and Dan Davis, 

stands in a different light from the outset. While the element 

of depreciation is not contested by the plaintiffs in determining 

the net operating profits, clearly different testimony was given 

in regard to the inclusion of the element of capital gains in 

the net operating income. Dan Davis testified: 

"Q. Now, if you know, when you made this original 

agreement or arrangement in 1965, was there any 

discussion had as to whether the capital gains income 

would be treated the same way that the other income 

was, Mr. Davis? [Objection sustained at this point.] 

"MR LEAPHART: Was there any discussion, let me put it 

that way? 

A. The discussion that took place, well, that was 

never discussed --- they never told me that it was 

to be deducted. It was just supposed to be net profit. 

11 Q. [Cross-examination] And when you say 'all of the 

profit' what do you mean by that? 

"A. The difference between total sales and total 

expenses, the profit. 
"Q. Now, in that claim that you make, were you 

contending that you were entitled to capital pain? 

"A. When he made the agreement with us, he never 

said anything about holding out capital gains. 11 

(Emphasis supplied) . 

Dan Davis went on to state that his statement applied to both 

of the alleged contracts. 

Donald Davis on cross-examination testified: 

"Q. Now, these years when he went over the income 

and the expense or the ranch with you, and showed 

his profit, you and he frequently didn't see the 

profit the same, or what the prorit was as you contend was to be shared, is that right? 

'A. I don't ever remember of having any discussion 

with him. At times when we were looking over these 

figures, no, he never indicated that capital gains 

ever entered into this deal at all, but only that 

the profit was the difference between the total sales 

and total expenses. He claimed that the monies that 

were treated as capital gains, as far as tax purposes 

were concerned, were included in the net profits, in his 

tax return. 

"Q. Do you believe he [defendant] was confused about it? 

"A. Well, at first, there were times that I thought 

that that was a possibility. 

"Q. That he was confused, and didn't understand it 

the way you did, is that right? I 

. Well, there was no doubt in my mind that there was 

a difference. Now. I don't know how he understood it. but 

he had been in the business long enough that it was certainly hard tor me to believe that he really understood 

it the way he was telling me he understood it--- he had 

been in the business too long to make me believe that. 1 ' 

(Emphasis supplied) 

While the evidence may stand in apparent conflict on the 

inclusion or exclusion of the capital gains in the net operating 

profit of the ranches, the jury was vested with the sole consideration of the factual issues and the credibility of witnesses and 

t es t imony . 
This Court finds nothing incompatible that might not 

be explained by the proposition that defendant was concerned 

with tax matters with his accountants, and treated Donald Davis 

and Dan Davis differently with regard to the contract of protit 

sharing. It would be wholly corsistent with the normal understanding and representations given to the Davis brothers that 

the prof its meant revenues minus expenses. The relative positions 

taken in the lawsuits and the introduction of testimony regarding 

tax matters is collateral to the issue of the understanding between George Davis and the brothers. This Court will not disturb 

the factual determinations of the jury and finds nothing that is 

incredible or insufficient in the evidence produced at trial, 

upon which the jury relied. 

In regard to defendant's tinal issue---the statute of 

frauds as a bar to oral contracts---it is sufficient to note 

that the oral contracts of profit sharing relied upon at trial, 

were fully executed on the part of the plaintiffs and as such 

represent a well recognized exception to the statute of frauds. 

Besse v. McHenry, 89 Mont. 520, 300 P. 199. 

The judgment of the trial 

/ Associate Justice 

Chief Just ice Ua*------- 

Associae Qstices.