No. 92-615 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1993 

SAM E. McDONALD, 

3 Plaintiff and Respondent, :,. 8 

& 

JACK ANDERSON (deceased), 

HELEN Y. ANDERSON, 

Defendant and Appellant. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable G. Todd Baugh, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

John J. Cavan, Cavan, Smith & Cavan, 

Billings, Montana 

For Respondent: 

W. Scott Green, Attorney at Law, 

Billings, Montana 

Filed: 

Submitted on Briefs: April 15, 1993 

Decided: October 29, 1993 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

Defendant Helen Anderson appeals from a decision of the 

District Court for the Thirteenth Judicial District, in Yellowstone 

County, which granced summary judgment to plaintiff Sam McDonald. 

The District Court concluded that defendant Jack Anderson 

fraudulently conveyed property to his spouse, Helen. The court 

issued an order to set aside the fraudulently transferred property 

and allow Sam McDonald to enforce a prior judgment. We affirm. 

The sole issue on appeal is whether the District Court erred 

when it granted summary judgment to McDonald. 

In June 1978, Jack and Helen Anderson purchased a residence in 

Billings by contract for deed. In November 1984, Jack Anderson 

(Anderson), Sam McDonald, and a third party formed a partnership 

named Airport Metra Inn Partnership. The purpose of the 

partnership was to own and operate a motel and restaurant complex 

known as the Airport Metra Inn. Each partner owned 33 and 1/3 

percent of the partnership. The partnership purchased the Airport 

Metra Inn on contract for deed from John Q. Hammond, and pursuant 

to the contract, the partners were obligated to make balloon 

payments to Hammond. 

On September 10, 1986, Anderson conveyed all of his personal 

property and his contract interest in his residence to his spouse, 

Helen. The value of the transferred property was $100,000; of that 

amount, $25,000 represented the value of his personal property. 

Anderson did not receive any consideration from his spouse in 
exchange for the property that he conveyed to her. Anderson did 

not transfer his partnership interest to Helen. 

In the months preceding September 1986, the partners were 

involved in discussions and negotiations for the sale of the 

Airport Metra Inn. At the time of Anderson's property conveyance, 

the partnership owed substantial back taxes which had been assessed 

to the Airport Metra Inn, and balloon payments on the Hammond 

contract were imminent. 

On December 15, 1986, approximately three months after 

Andersonis property conveyance to his wife, tine partnership sold 

the Airport Metra Inn to Terrence Liu for $1,525,000. On 

December 31, 1986, the partnership borrowed $580,000 from the First 

Security Bank of Livingston to pay the back taxes on the Airport 

Metra Inn and to make the balloon payments on the Hammond contract. 

The parties do not dispute that the back taxes and balloon payments 

had to be paid before the Liu contract could be performed. 

All three partners signed the Livingston Bank note which 

stated that they were jointly and severally liable on the note as 

partners and individual guarantors. Because the payments on the 

Liu contract were insufficient to service the underlying debt 

obligation of the partnership to the Livingston Bank, McDonald paid 

the deficiency with his own funds. 

Anderson did not make his share of the payments on the bank 

note and McDonald paid Anderson's share. In May 1988, McDonald 

filed a lawsuit against Anderson for contribution of his obligation 

under the $580,000 note. McDonald subsequently filed a motion for 

3 
summary judgment. On August 8, 1989, the District Court granted 

summary judgment in favor of McDonald and ordered Anderson to pay 

contribution to McDonald for those bank loan installments which 

were made by McDonald. 

On December 15, 1989, Jack and Helen Anderson executed a 

Declaration of Homestead on their residence. 

On January lo, 1990, the District Court entered a judgment in 

McDonald's favor for $15,081.81 at a rate of 10 percent per annum. 

In April 1990, pursuant to a writ of execution, $513.82 was 

collected from Anderson's bank account pursuant to the judgment. 

On August 14, 1990, Anderson appeared at a judgment debtor 

examination before the Honorable Pedro Hernandez, a Justice of the 

Peace. At the hearing, McDonald's attorney questioned Anderson 

about his financial situation to ascertain whether he had any 

assets from which McDonald could collect his judgment. Anderson 

testified that he transferred his assets to his wife on 

September 10, 1986. He explained that this transfer included all 

of his interest in his house, car, clothes, insurance policies, and 

other personal property. Anderson testified that every month he 

received a social security retirement check and an army retirement 

check and that he gifted this income to his spouse. He explained 

that his spouse used the gifted checks to pay for his health 

insurance, life insurance, and day-to-day living needs; and that 

his wife paid for these expenses as a gift to him. 

On September 25, 1990, McDonald filed this action. He alleged 

that Anderson conveyed his property to his spouse on September 10, 
1986, to avoid liabilities that he owed to his creditors. McDonald 

requested the court to set aside the property transfer in order to 

allow him to enforce his January 10, 1990, judgment. Both parties 

filed motions for summary judgment in which they contended that 

there were no issues of material fact. 

Anderson died on December 2, 1990, and Helen was substituted 

as a defendant. In April 1331, Helen sold the Anderson residence. 

On June 10, 1991, Helen and McDonald entered into a substitution of 

security agreement. They placed in escrow a contract for the sale 

of And~TSOn1S home from which McDonald's judgment could be 

collected. 

On September 23, 1992, the District Court granted summary 

judgment in favor of McDonald and ordered Anderson's property 

transfer to his spouse to be set aside as a fraudulent conveyance. 

The court relied on the Uniform Fraudulent Conveyance Act (UFCA), 

which was the law in effect at the time of Anderson's property 

transfer. The court determined that p§ 31-2-311, -313, -314, and 

-315, MCA, of the UFCA were applicable and that the elements of 

each statute were satisfied. The court concluded that 5 31-2-313, 

MCA, which pertains to a conveyance made by a person about to incur 

debts, was the most applicable statute based on several findings. 

The court found that Anderson was a partner and the hotel 

manager of the Airport Metra Inn at the time of the property 

transfer in September 1986; and therefore, he was aware of the 

partnership's financial status, its valuation, its outstanding 

contract obligations (with Hammond and Liu), its current 
liabilities (back taxes and balloon payments), and its potential 

liabilities (the bank loan with the Livingston Bank in December 

1986) . For the court, the timing of the property transfer, and the 

fact that Anderson had knowledge about the partnership's 

liabilities, cast doubt on a transfer already suspect because it 

was a conveyance to a spouse, made without consideration. 

Horeover, it involved property over which Anderson gave up no 

control, possession, or beneficial use. The court concluded that 

Anderson fraudulently transferred his property for the purpose of 

avoiding present and future creditors. From that decision, 

Anderson appeals. 

The purpose of summary judgment is to encourage judicial 

economy through the elimination of any unnecessary trial. However, 

summary judgment is never to be a substitute for trial if there is 

an issue of material fact. Reaves v. Reinbold (i980) , 189 Mont. 234, 

288, 615 P.2d 896, 898. Summary judgment is proper only when no 

genuine issues of material fact exist and the moving party is 

entitled to judgment as a matter of law. Rule 56(c), M.R.Civ.P. 

The party seeking summary judgment has the burden of 

demonstrating a complete absence of any genuine factual issues. 

D~Agos~itro b. Swansorz (1990), 240 Mont. 435, 442, 784 P.2d 919, 924; 

Ccreck v. illhertsorz~s, IJX. (1981) , 195 Mont. 409, 411, 637 P.2d 509, 511. 

The burden then shifts to the nonmoving party who must show the 

existence of a genuine issue in order to prevail. OfiBasy V. First 

Ittlentule Bcmk of Missoulu (1990) , 241 Mont. 44, 46, 785 P. 2d 190, 191. 
To meet this burden, the nonmoving party must offer substantial 

evidence, not mere speculation and conclusory statements. FirstSec. 

Bank oJ'Bozemun v. Jones (1990), 243 Mont. 301, 303, 794 P.2d 679, 681. 

All reasonable inferences that may be drawn from the offered proof 

must be resolved in favor of the party opposing summary judgment. 

Pq~rze Redly urzd Hou.si/~g, Itzc. v. First Sec~kriry Bank of Livirgston ( 1992 ) , 2 56 Mont . 

The Uniform Fraudulent Conveyance Act (UFCA) was the 

substantive law in effect in 1986, the time when Anderson 

transferred his assets. The Montana Legislature repealed the UFCA 

in 1991 and enacted the Uniform Fraudulent Transfer Act (UFTA). 

However, because the UFTA does not expressly state that it is 

retroactive, we will apply the UFCA, which was the law in effect at 

the time of the conveyance at issue. ToweAntique Ford Foundation v. I.R.S. 

(D. Mont. 1992) 791 F. Supp. 1450, 1457-58. 

We conclude that, at least with regard to § 31-2-315, MCA 

(1985), the District Court correctly concluded that plaintiff was 

entitled to judgment as a matter of law. That section of the UFCA 

provides that: 

certain transfers presumed fraudulent. Every transfer of 

personal property, other than a thing in action, and 

every lien thereon, other than a mortgage, when allowed 

by law, made by a person having at the time the 

possession or control of the property, not accompanied by 

an immediate delivery and followed by an actual and 

continued change of possession of the things transferred 

is conclusively presumed to be fraudulent and therefore 

void against: 

(1) those who are his creditors while he remains in 

possession; 
(2) the successors in interest of such creditors; 

(3) any persons on whom his estate devolves in 

trust for the benefit of others than himself; and 

(4) purchasers or encumbrancers in good faith 

suDsequent to the transfer. [Emphasis added]. 

According to § 31-2-315, MCA (1985), and the undisputed facts, 

at least some of Anderson's personal property was conveyed 

fraudulently. 

section 31-2-301(3), MCA, provides that a "creditorM is "a 

person having any claim, whether matured or unmatured, liquidated 

or unliquidated, absolute, fixed, or contingent." McDonald 

obtained a judgment against Anderson on January 10, 1990, for 

$15,081.81. At the time of the judgment debtor hearing in August 

1990, only $513.82 had been collected from Anderson's bank account 

pursuant to McDonald's judgment. Therefore, McDonald was a 

creditor of Anderson's at the time of the judgment debtor hearing. 

At the hearing, Anderson testified that he transferred all of 

his personal property to Helen, including his clothes, insurance 

policies, and income checks. However, the evidence is clear that 

despite the transfer, Anderson continued to retain possession or 

control of such property. Anderson testified that the clothes he 

wore at the judgment debtor hearing were owned by his wife. Yet 

despite her ownership of the clothes, he continued to wear them. 

Anderson testified that his health insurance and life 

insurance policies covered him, but that his wife owned them. He 

testified that he gifted his monthly income checks to his wife, and 

that she spent this income on his health insurance, life insurance, 
and day-to-day living expenses. It is clear that although Anderson 

transferred his insurance policies and money to Helen, he still 

held control and possession of these items of personal property. 

His wife used && income checks to pay for his living expenses and 

to make payments for him on insurance policies. 

The record reveals that after McDonald obtained a judgment 

against Anderson, Anderson remained in possession of the personal 

property he claimed he transferred. 

Based on the facts and the clear meaning of § 31-2-315, MCA, 

we conclude that tine District Court did not err when it datermineci, 

as a matter of law, that Anderson's transfer of his personal 

property to his wife was fraudulent regarding creditors, including 

McDonald. Therefore, the District Court did not err when it 

declared the transfer of these items of personal property invalid. 

Prior to the District Court's judgment, the parties stipulated 

that certain property owned by Helen Anderson could be set aside to 

satisfy any judgment obtained by McDonald. Therefore, we need not 

consider with greater particularity the items of personalty 

retained by Anderson, nor the value of the individual items. 

The judgment of the District Court is affirmed. 
we concur: 
October 29, 1993 

CERTIFICATE OF SERVICE 

I hereby certify that the following order was sent by United States mail, prepaid, to the following 

named: 

John J. Cavan, Esq. 

CAVAN, SMITH, GRUBBS, & CAVAN 

P.O. Box 1297 

Billings, MT 59103 

W. Scott Green, Esq. 

W. SCOTT GREEN, P.C. 

301 North 27th St. 

Billings, MT 59101 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OEMQN~ANA i ,,fi; , By: /! , ,j' ,"I 

D~PW J