No. 95-368

IN THE SUPREME COURT OF THE STATE OF MONTANA

1996 .

IN THE MATTER OF THE ESTATE

OF THE DERN FAMILY TRUST AND

CLIFFORD DERN, Deceased,

MARY R. DERN,

Plaintiff, Respondent,

and Cross-Appellant,

v.

DERRIL DERN, DARLENE ADAMS,

JANICE COPLEY, and BEVERLY TUBBS,

Defendants, Counterclaimants,

and Appellants.

APPEAL FROM: District Court of the Eleventh Judicial District,

In and for the County of Flathead,

The Honorable Ted 0. Lympus, Judge presiding.

COUNSEL OF RECORD:

For Appellant:

Roger M. Sullivan, McGarvey, Heberling, Sullivan &

McGarvey, Kalispell, Montana

For Respondent:

Steven E. Cummings, Donald R. Murray, Murphy,

Robinson, Heckathorn & Philips, Kalispell, Montana

Filed:

Submitted on Briefs: October 17, 1996

Decided: November 14, 1996
Justice James C. Nelson delivered the Opinion of the Court.

Appellants Derril Dern, Darlene Adams, Janice Copley, and

Beverly Tubbs (collectively, the Dern children) appeal from the

September 20, 1993 order denying their Motion for Summary Judgment,

from the May 17, 1994 Findings of Fact and Conclusions of Law, and

from the April 21, 1995 Supplemental Findings of Fact, Conclusions

of Law and Judgment of the District Court for the Eleventh Judicial

District, Flathead County. The Dern children appeal the District

court ' s conclusions that there was nothing in Clifford Dern's

Separate Trust Estate with which to fund the $10,000 bequests to

each of the Dern children; that the fourth Trust Minute constituted

a valid and enforceable amendment to the Dern Family Trust; and

that Mary Dern did not breach her fiduciary duties in the

administration of the Trust as trustee. The Dern children also

appeal the District Court's valuation of the respective interests

in the Family Bypass Trust.

Respondent Mary Dern cross-appeals from the May 17, 1994

Findings of Fact and Conclusions of Law and from the April 21, 1995

Supplemental Findings of Fact, Conclusions of Law and Judgment

denying her costs and attorney's fees. We affirm in part and

reverse in part.

We consider the following issues on appeal:

1 . Did the District Court err in characterizing Clifford and

Mary Dern's joint bank accounts and Certificates of Deposit as part

of the Marital Trust Estate of the Dern Family Trust?

2 . Did the District Court err in determining that the fourth

2
Trust Minute was a validly executed amendment to the Trust

document?

3 . Did the District Court err in determining the parties'

interests in the Family Bypass Trust?

We also consider the following issue on cross appeal:

4 . Did the District Court err in denying Mary Dern her costs

and attorney's fees?

Factual and Procedural Backcrround

This appeal involves the disposition of real and personal

.property from the Dern Family Trust (the Trust), a revocable living

trust, on the death of Clifford Dern (Clifford), a settlor. The

Dern children, are Clifford's adult children from a previous

marriage. Mary Dern (Mary), is Clifford's surviving spouse and cosettler and a trustee of the Trust.

At the time of Clifford's and Mary's marriage in 1976,

Clifford was 65 years of age and Mary'was 62 years of age. Each

had adult children from previous marriages.

In 1990, Clifford and Mary purchased the Trust documents from

William W. Thompson (Thompson), an agent of American Family Living

Trusts. American Family, a California corporation, had been

previously enjoined from selling trusts in the state of Washington

and Thompson's license to sell insurance had been revoked by the

state of Idaho due to his deceitful conduct in the sale of

revocable trusts. Clifford and Mary learned of American Family

through mail solicitation.

Clifford and Mary were the settlors and initial trustees of

3
the Trust. Clifford's son, Derril, was the first successor trustee

of Clifford Dern.

The Trust classified property as either "maritallU or

"separate." Marital property transferred to the Trust would become

'part of the Marital Trust Estate and would go to the surviving

spouse on the death of either settlor. Separate property of either

settlor transferred to the Trust would become part of the Separate

Trust Estate and would be distributed according to the Trust with

any residue going into the Family Bypass Trust. The Family Bypass

Trust named the surviving spouse as the income beneficiary and the

surviving spouse, together with the descendants of Clifford and

Mary as the principal beneficiaries.

Clifford's Separate Trust Estate provided that his real

property (which included two 160-acre parcels of timber, one-half

of a 360-acre parcel of timber, and the 120-acre farm on which he

and Mary lived) to be distributed among his four children if he

predeceased Mary. Mary owned property that was held in joint

tenancy with her two children that was never transferred to the

Trust. The Trust further provided that the trustee distribute from

Clifford's Separate Trust Estate, $10,000 to each of the Dern

children.

After the Trust was created, Clifford and Mary transferred

five bank accounts and Certificates of Deposit to the Trust. At

the time of Clifford's death, these accounts totaled $73,922.77.

On November 14, 1991, Clifford and Mary deeded five parcels of

real property to the Trust by means of a quitclaim deed, properly

4
executed and recorded November 15, 1991. In addition they amended

the Trust by use of four Trust Minutes, specifying the

beneficiaries of each of the parcels of property. These properties

included the. four parcels owned by Clifford and left to his

children by way of the Separate Trust Estate in the original Trust

document, and a farm acquired by Mary prior to her marriage to

Clifford.

The first three Trust Minutes left Mary's farm to her two

children, Clifford's two 160-acre parcels of timberland to his

daughters, and one-half of the 360-acre parcel to Clifford's son.

These parcels were necessarily removed from the assets of

Clifford's Separate Trust Estate as they were specifically

bequeathed through the Trust Minutes. These three Trust Minutes

are not in dispute. The fourth Trust Minute left the 120-acre

farm, then occupied by Clifford and Mary, to Mary. The fourth

Trust Minute was signed by Clifford alone as were the second and

third Trust Minutes leaving Clifford's other properties to his

children. The validity of this fourth Trust Minute is disputed.

By the time Clifford and Mary signed the Trust Minutes

Clifford had been suffering from several serious health problems

for several months. Clifford died on December 9, 1991, after

undergoing heart catheterization.

After Clifford died, Thompson went over the Trust with Mary

and Clifford's children. Mary signed deeds as trustee of the Trust

conveying the real estate in the manner provided for in the Trust.

At that time she had not consulted a lawyer and did not realize

5.
that the Trust provided that Derril would succeed Clifford as cotrustee of the Trust, and that, consequently, his signature was

required on the deeds. After she consulted an attorney, new deeds

were prepared for both Mary's and Derril's signatures. Derril

refused to sign the deeds and this litigation ensued.

The Dern children appeal the District Court's conclusion that

Clifford's one-half interest in various bank accounts constituted

part of the Marital Trust Estate and was therefore not available to

satisfy the $10,000 bequests. They also appeal the District

Court's conclusion that the fourth Trust Minute, leaving the farm

to Mary, was a validly executed amendment to the Trust.

Standard of Review

The standard of review of a district court's findings of fact

is whether they are clearly erroneous. Daines v. Knight (1995),

269 Mont. 320, 324, 888 P.2d 904, 906 (citing Columbia Grain

Intern. v. Cereck (1993), 258 Mont. 414, 417, 852 P.2d 676, 678).

This Court adopted a three-part test in Interstate Production

Credit v. DeSaye (1991), 250 Mont. 320, 820 P.2d 1285, to determine

whether the findings are clearly erroneous. This test provides:

First, the Court will review the record to see 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 evidence. [Citations omitted.1 Third, if

substantial evidence exists and the effect of the

evidence has not been misapprehended the Court may still

find that "[al finding is 'clearly erroneous' when,

although there is evidence to support it, a review of the

record leaves the court with the definite and firm

conviction that a mistake has been committed." [Citations

omitted.]

DeSave, 820 P.2d at 1287. - - See also Daines, 888 P.Zd at 906.

6
The standard of review of a district court's conclusions of

law is whether the court's interpretation of the law is correct.

Carbon County v. Union Reserve Coal Co., Inc. (1995), 271 Mont.

459, 469, 898 P.2d 680, 686. See also Kreger v. Francis (1995),

271 Mont. 444, 447, 898 P.2d 672, 674; Steer, Inc. v. Department of

Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603-4.

Issue 1

Did the District court err in characterizing

Clifford and Mary Dern's joint bank accounts and

Certificates of Deposit as part of the Marital Trust

Estate of the Dern Family Trust?

The Dern children contend that Clifford's share in the various

bank accounts and Certificates of Deposit (CDs) is a part of

Clifford's Separate Trust Estate and is thus available for partial

satisfaction of the $10,000 bequests to each of his children. The

Declaration of Trust distinguishes between the marital property and

the separate property of Clifford and Mary and provides in part:

Any marital property of Clifford Dern and Mary R. Dern

transferred to the trust shall remain marital property

after its transfer and shall be called the "marital trust

estate." . . . Either Clifford Dern's or Mary R. Dern's

separate property transferred to the trust shall be

called the "separate trust estate" with reference to the

contributing settler.

Trust, Article 1, page 1.

This definition is circular and not very helpful in

distinguishing between marital and separate property. The sentence

immediately following this definition is the only further direction

given by the Trust regarding whether property is to be

characterized as "marital" or "separate". The Trust provides:

"Any 'real property' held by Clifford Dern and Mary R. Dern as

7
'joint tenants' shall be considered 'transmutted' [sic1 to marital

property for purposes of trust establishment." Clifford and Mary

held no real property in joint tenancy. The Trust is silent as to

the treatment of jointly held personal property.

Because the Trust is ambiguous as to the terms "marital

property" and "separate property," extrinsic evidence is admissible

to aid in determining the settlers' meaning of the terms and their

intent in distributing their property through the Trust. "Where an

ambiguous term is used, the intent of the parties will govern its

construction and extrinsic evidence can be used to discover that

intent." Ellingson Agency, Inc. v. Baltrusch (1987), 228 Mont.

360, 365, 742 P.2d 1009, 1012 (quoting Adams v. Chilcott (1979),

182 Mont. 511, 517, 597 P.2d 1140, 1144). This principle applies

to the construction of both wills and trusts. Matter of Estate of

Flasted (1987), 228 Mont. 85, 90, 741 P.2d 750, 753; § 72-33-106

MCA.

In determining the settlers' intended meaning of "marital" and

"separate" property, the words should be taken in their ordinary

meaning. "The words of a will are to be taken in their ordinary

and grammatical sense, unless a clear intention to use them in

another sense can be collected and that other can be ascertained."

Section 72-11-302, MCA (repealed 1993). Although this statute was

repealed in 1993 it was controlling when Clifford and Mary executed

the Trust in 1990. The Trust provides some guidance to the

interpretation of the terms "marital" and "separate." The status

the property had before being transferred to the Trust dictated the

8
status it would have once it became part of the Trust. Hence

"marital property" transferred to the Trust would become part of

the Marital Trust Estate. Thus, the status of the bank accounts

before transfer to the Trust determines their status within the

Trust.

The parties agree that the four Norwest accounts were joint

tenancy accounts, with Clifford and Mary each having a one-half

interest in the funds in the accounts before the accounts were

transferred to the Trust. The dispute as to the Norwest accounts

.arises over whether Clifford's share in the accounts constituted

marital property or separate property. The fact that Clifford had

an equal share in the accounts does not necessarily result in

Clifford's share being characterized as separate property.

Because the Trust does not define what property constitutes

marital property or separate property, the intent of the parties to

the agreement must be discerned. In its May 17, 1994 Findings of

Fact and Conclusions of Law the District Court found that:

It was the intention of Clifford and Mary, settlers of

the Dern Family Trust, to allocate to "marital trust

property" all accounts and deposits which they held

jointly and to which they had both made contributions

during their fifteen and one-half year marriage.

The District Court found and the record indicates that the

Derns treated their checking and savings accounts as marital

property. Upon Clifford's request, Mary retired from nursing when

they were married and thereafter helped out on the farm. After

their marriage, Mary Dern's name was placed on a savings account

and a checking account that Clifford had maintained with his former

9
wife. At the time Mary's name was placed on the accounts the

savings account had an approximate balance of $30,000, and the

checking account had an approximate balance of $27,000. During the

marriage, Clifford and Mary placed funds generated from farming and

logging into the checking and savings accounts as well as into

jointly-held CDs. They combined the crops from both Mary's and

Clifford's farms, then sold the crops and placed the proceeds in

either a joint household checking account or a joint CD.

The record clearly supports the District Court's determination

that Clifford and Mary regarded the Norwest accounts as marital

property throughout their marriage, including the point at which

the accounts were transferred to the Trust. As such these accounts

became part of the Marital Trust Estate.

There is a dispute over whether Clifford's interest in the

Whitefish Credit Union account should be considered marital

property or separate property. The parties also disagree as to

whether that account was held in joint tenancy or as tenants in

common. However, since the Trust does not mandate that personal

property held in joint tenancy become part of the Marital Trust

Estate, or that personal property held as tenants in common become

part of the Separate Trust Estate, the type of cotenancy is not

dispositive as to the characterization of Clifford's interest in

the Whitefish account. Cf. Clark v. Clark (19631, 143 Mont. 183,

387 P.2d 907 (holding that a joint interest is not necessarily

limited to the estate of joint tenancy).

The District Court found that the circumstances surrounding

10
the opening and use of the Whitefish account indicated that it was

a joint account to be treated as marital trust property. The

source of the initial deposit was crop proceeds generated from both

Clifford's and Mary's farms. The bank issued the passbook and

monthly statements of account in both Clifford's and Mary's names.

The District Court's conclusion that this account was marital

property before transfer to the Trust, and thus part of the Marital

Trust Estate, is correct.

Accordingly, we affirm the District Court's conclusion that

Clifford's interest in both the Norwest accounts and the Whitefish

account was part of the Marital Trust Estate as opposed to the

Separate Trust Estate and therefore unavailable to fund the $10,000

bequests to the Dern children.

Issue 2

Did the District Court err in determining that the

fourth Trust Minute was a validly executed amendment to

the Trust document?

The fourth Trust Minute allocated the 120-acre farm and the

farm equipment to Mary upon Clifford's death. This Trust Minute

was signed by Clifford alone. The Dern children contend that this

fourth Trust Minute was not a validly executed amendment to the

Trust.

The provisions of the Trust pertinent to this issue are as

follows:

Major modifications of your trust should be

accomplished through formal amendments, many of the minor

actions you wish to take can be accomplished through your

Trust Minutes.

Trustee Instructions, page 2.
Amendment During Settlers' Lives: Clifford Dern and Mary

R. Dern actino toqether may at any time during their

joint lives amend any of the terms of this trust by a

written document delivered to the trustee or including

such amendment in the Minutes of Trust.

added.]

[Emphasis

Trust, Article

Attention

record of

Minutes.

successor

2, page 3.

Trustees and Successor

the Dern Family Trust,

These Trust Minutes

Trustees: This is a

referred to as Trust

are instructions to . ~. _

trustees on the distribution desires of

Clifford Dern and/or Mary R. Dern. Each item included

below, provided each is sisned and dated bv the Settlors,

constitutes an important element of this revocable livina

trust, established on December 22, 1989.

added.]

[Emphasis

Trust Minutes, page 1.

It is black-letter law that in the construction of an

instrument, "[wlhere there are several provisions or particulars,

such a construction is, if possible, to be adopted as will give

effect to all." Section l-4-101, MCA. Moreover, the provisions of

'the Trust control as to the requirements for modification. See §

72-33-403, MCA; Hauseman v. Koski (1993), 259 Mont. 498, 501, 857

P.2d 715, 717.

It is undisputed that the settlers are Clifford and Mary. We

assume, without necessarily agreeing, that the fourth Trust Minute

was a minor modification of the Trust and the Trust could, thus, be

amended, through the Trust Minutes. Reading all of the above

provisions together so as to give effect to all, as required by 5

l-4-101, MCA, it is clear from the Trustee Instructions that to

amend the Trust, the settlors, Clifford and Mary, were required to

act together & that, from the instructions to the Trust Minutes,

.both settlers were required to sign and date any such Trust Minute.

12
This is the only interpretation of the Trust language that will

give effect to all of the above provisions. To the contrary,

ignoring the requirement for both settlers' signatures set forth in

the instructions to the Trust Minutes, would violate 5 l-4-101,

MCA, by failing to give any effect to that provision in the Trust.

We conclude that the fourth Trust Minute was invalid and the

proposed amendment to the Trust was not accomplished on Clifford's

purported signature alone. Therefore, the 120-acre farm continued

as part of Clifford's Separate Trust Estate and at his death the

120-acre farm became the property of the Dern children as provided

in Article 3 of the Trust. Accordingly, we reverse the trial court

on this issue and remand for further proceedings.

In reaching this conclusion, we acknowledge that it is

inconsistent that Trust Minutes one, two and three, each of which

contain only one of the settler's signatures, have, likewise, not

also been invalidated. The short answer to this anomaly is that

the parties only chose to litigate the fourth Trust Minute and that

is the only Trust Minute at issue here. Moreover, we are not

inclined to speculate on why the other three Trust Minutes were not

challenged. The fact is they were not, and it would be improper

for us to address and decide matters not appealed.

Issue 3

Did the District Court err in determining the

parties' interests in the Family Bypass Trust?

The Trust contained a Family Bypass Trust. The income

beneficiary of the Family Bypass Trust is the surviving spouse and

the principal beneficiaries are the surviving spouse and Clifford's

13
and Mary's descendants. The District Court found that due to the

litigation between the parties the administration of the Family

Bypass Trust was "imminently impractical" and that the Family

'Bypass Trust should be terminated and properly allocated to the

Trust beneficiaries.

The Family Bypass Trust was to be funded by property allocated

to it by the settlors, by the remainder of the deceased spouse's

Separate Trust Estate, and by the remainder of the deceased

spouse's interest in the Marital Trust Estate. At the time of

Clifford's death the settlors had not allocated any property to the

Family Bypass Trust. In addition, Clifford specifically bequeathed

all of the property held in his Separate Trust Estate to his

children, thus there was nothing left in his Separate Trust Estate

to fund the Family Bypass Trust. Therefore, the remainder of

Clifford's interest in the Marital Trust Estate was the only source

of funds in the Family Bypass Trust.

The Dern children appeal the District Court's conclusion

that the funeral expenses should be deducted from Clifford's share

of the Marital Trust Estate and claim that the expenses should be

deducted from the entire Marital Trust Estate, thereby leaving more

funds to roll over to the Family Bypass Trust.

The Trust provides:

The trustee may, in the trustee's reasonable discretion,

pay from the trust estate the deceased spouse's debts,

last illness and funeral costs and expenses of

administration for this trustand'he deceased spouse's

probate estate. The trustee may allocate the payment of

the deceased spouse's debts to the deceased spouse's

interest in the marital trust estate and the deceased

spouse's separate trust estate as the trustee determines

14
the

itded.1

trustee's reasonable discretion. [Emphasis

Trust, Article 3, page 4.

The Trust clearly provides that .the trustee should pay the

funeral costs from the "trust estate." While the Trust provides

that the deceased spouse's debts may be allocated to the deceased

spouse's Marital Trust Estate or Separate Trust Estate, it does not

allow this option for funeral expenses. The Trust distinguishes

between debts and funeral expenses in the first sentence of the

above provision for deceased spouse's expenses. The next sentence

gives the trustee discretion to allocate only the deceased spouse's

debts, not funeral expenses, to the deceased spouse's Marital Trust

Estate or Separate Trust Estate. Contrary to the District Court's

finding that the second sentence is the more specific provision and

should therefore control, we hold that, as to funeral expenses, the

first sentence is the more specific and, thus, the controlling

provision. Therefore, the funeral expenses should be deducted from

the entire Trust estate. The only funds available in the Trust

estate are the funds in the Marital Trust Estate, and therefore the

funeral expenses must be deducted from the Marital Trust Estate.

,The funeral expenses must be deducted before allocation of the

Marital Trust Estate into Clifford's and Mary's separate interests.

The District Court correctly subtracted the funeral expenses

from the entire Marital Trust Estate rather than from Clifford's

interest in the Marital Trust Estate in its supplemental conclusion

of law no. 3. The District Court inexplicably deducted the funeral

expenses from Clifford's interest in the Marital Trust Estate in

15
its supplemental findings of fact no. 10. Supplemental finding of

fact no. 10 is inconsistent with supplemental conclusion of law no.

3, which is controlling on this question of interpretation.

In determining the amount of money in the Family Bypass Trust

it becomes necessary to determine Clifford's "interest" in the

Marital Trust Estate upon his death. As set out above, the Marital

Trust Estate, totalling $?3,922.77, consisted of both the Norwest

bank accounts and CDs and the Whitefish bank account. The funeral

expenses of $4,855 must be deducted from this amount leaving a

total of $69,067.77 in the Marital Trust Estate. Mary's costs of

bringing this suit and attorney's fees will be deducted from this

amount as explained below. After this deduction, the Marital Trust

Estate must be divided into the surviving spouse's interest and the

deceased spouse's interest.

The Trust fails to elaborate on how to determine respective

"interests" in the Marital Trust Estate upon the death of one of

the settlors. The District Court, finding that the Norwest

accounts were all held in joint tenancy, apportioned half of the

value in these accounts to Clifford's interest in the Marital Trust

Estate. This apportionment is correct because in Montana, joint

tenants are entitled to equal shares of joint property, absent

proof to the contrary. Section 70-l-307, MCA; Stapleton v. First

Sec. Bank (1983), 2.07 Mont. 248, 256, 675 P.2d 83, 88, appeal after

remand 711 P.2d 1364 (remanded to allow the District Court to

consider evidence of Stapleton's equitable interest in the proceeds

,of the sale of her home as part of the proof to rebut the

16
presumption that as joint payee on checks issued for the sale price

of the home she was entitled to one-half or more of the amount of

the checks).

The Dern children concede that Clifford's interest in the

Norwest accounts is a one-half interest. Because neither party

offered evidence to rebut the presumption of equal shares, the

District Court's holding that Clifford had a one-half interest in

the Norwest accounts is correct.

In its April 21, 1995 Supplemental Findings of Fact,

Conclusions of Law and Judgment, the District Court concluded that

Clifford and Mary held the Whitefish account as tenants in common

and consequently apportioned Clifford's interest in the account

according to contribution. The District Court had reached a

different conclusion in its May 17, 1994 Findings of Fact and

Conclusions of Law, wherein the court' concluded that all of the

bank accounts, including the Whitefish account, were held in joint

tenancy. Notwithstanding this discrepancy, the District Court

accurately apportioned the Whitefish account according to

contribution. The District Court's inconsistency in defining the

cotenancy status of the Whitefish account is irrelevant because the

cotenancy status of the Whitefish account does not dictate the

manner of apportionment of the Whitefish account into Clifford's

and Mary's respective interests.

It is presumed that shares of cotenants are equal, whether

they be tenants in common or joint tenants. 20 Am.Jur. 2d

&tenancy and Joint Ownership § 127 .(1995); Poepping v. Monson

17
(1960), 138 Mont. 38, 47, 353 P.2d 325, 330 (citing Ivins v. Hardy

(1947) I 120 Mont. 35, 40, 179 P.2d 745, 747-48 (overruled on other

grounds)). This presumption is not conclusive but is subject to

rebuttal and may be rebutted by parol evidence. 20 Am.Jur. 2d

Cotenancy and Joint Ownership § 127 (1995); D.M. v. D.A. (Alaska

1994), 885 P.2d 94, 96. See Lawrence v. Harvey (1980), 186 Mont.

314, 322-24, 607 P.2d 551, 556-57. Furthermore, our decision in

Stapleton (adhering to the presumption of equal shares in joint

tenancy property absent evidence to .the contrary), follows the

traditional approach to division of interests of all cotenancies

and is persuasive here.

Other states have applied the "equal share presumption rule"

to tenancies in common. In D.M. -, the plaintiffs rebutted the

general presumption of equal shares between tenants in common by

demonstrating unequal contribution to equity in real property.

There the court found that this evidence created a presumption that

they intended to share property in proportion to their respective

contributions and was enough to rebut the general presumption of

equal shares. ~,D.M 885 P.2d at 97-98. The court held that if the

parties intend to hold a tenancy in common in a particular

proportion or if an intent to determine proportion by a particular

method can be discovered, this intent controls over the equal share

presumption rule of cotenancy. D.M., 885 P.2d at 97. Nonetheless,

the court recognized that the common law presumptions concerning

the respective interests of tenants in common where one contributes

'unequally to the purchase price are not applicable where the

18
relationship between the parties indicates that one might have

intended to make a gift to the other. -,D.M. 885 P.2d at 97 (citing

People v. Varel (Ill. 1932), 184 N.E., 209, 211; Wood v. Collins

(Alaska 1991), 812 P.2d 951, 956). In Wood -t the court held that

where the parties cohabit and share an intimate relationship, it is

more likely than otherwise that one party may contribute more of

the acquisition or upkeep costs and still expect only an equal

share of the property. Wood -I 812 P.2d at 956. The court in wood

went on to state that the court must still find, however, that it

was in fact the intent of the party making the excess contribution

to confer it on the other party as a gift. -IWood 812 P.2d at 957.

Although the above cases involved division of real property

held as tenants in common, the same principles pertain to a bank

account held as tenants in common. This Court has held that while

joint bank accounts have special attributes not applicable to all

jointly held property, a joint bank account is otherwise subject to

the same rules as other joint tenancies. Casagranda v. Donahue

(19781, 178 Mont. 479, 483, 585 P.2d 1286, 1288. As the standard

rules of joint tenancies apply to jointly held bank accounts, by

analogy, the standard rules of tenancies in common should apply to

bank accounts held as tenants in common.

As the above decisions indicate, including the Montana

decision in Staoleton, the general rule of equal shares in

cotenancies may be rebutted by evidence such as unequal

contribution. The burden of proving that an account is owned other

than equally between cotenants rests with the party asserting such

19
claim. Purma v. Stark (Kan. 1978), 585 P.2d 991, 993. The Dern

children alleged that a greater amount of the funds in the

Whitefish account was attributable to the crop proceeds from

Clifford's land than from Mary's land. However, as the decisions

in D.M. and Woods indicate, unequal contribution will not always be

enough to rebut the presumption of equal shares. Where cotenants

are related or cohabit and intend to confer equal shares as a gift

to the other cotenant despite unequal contribution the property

must be divided in equal shares.

Here, the Dern children rebutted the general rule of equal

shares through evidence of unequal contribution. Although Clifford

and Mary were married and cohabited, Mary presented no evidence

that Clifford clearly intended to confer more than her interest in

the Whitefish account as a gift. Although the Whitefish account

was used as a joint account and the District Court held, and this

Court holds, that the Whitefish account was marital property, it

does not necessarily follow that Clifford intended to confer on

Mary any more than her contribution upon distribution of the

account through the Trust. In fact, as marital property, the

Whitefish account became part of the.Marital Trust Estate which

would be divided into Clifford's interest and Mary's interest upon

the death of Clifford. The transfer of the Whitefish account to

the Trust which became part of the Marital Trust Estate, indicates

that Clifford did not intend to confer his excess contributions

upon Mary as a gift, but rather intended his share of the Whitefish

account to fund the Marital Trust Estate, which would eventually be

20
divided between the surviving spouse's share and the Family Bypass

Trust.

Because the evidence does not c.learly prove that Clifford

intended to confer his excess contribution to the Whitefish account

on Mary as a gift, the exception to the unequal contribution rule

(relatives/spouses giving equal interest as gift), does not apply

in this situation. Therefore the Dern children successfully

rebutted the general rule of equal interests in a cotenancy and the

District Court did not abuse its discretion in apportioning the

Whitefish account according to contribution.

Before apportioning the Whitefish account between Clifford's

share and Mary's share, appropriate deductions from the account may

be necessary to satisfy the funeral expenses, costs, and attorney's

fees. After these deductions, if any, sixty percent of the

remainder of the account should be apportioned to Clifford's

interest in the Marital Trust Estate and forty percent of the

remainder should be apportioned to Mary's interest in the Marital

Trust Estate as held by the District Court.

Accordingly, we hold that the District Court's conclusions

regarding the specific monetary values of Clifford's and Mary's

interests in the Norwest and Whitefish accounts in its supplemental

findings of fact nos. 8 through 11 and supplemental conclusion of

law No. 3 must be amended to reflect the deductions to be taken

from the entire Marital Trust Estate for funeral expenses, costs,

and attorney's fees.

2 1
Issue 4

Did the District Court err in denying Mary Dern her

costs and attorney's fees?

Mary appeals the District Court's failure to award her costs

and attorney's fees. Generally each party to a lawsuit pays its

own costs and attorney's fees. Absent a contractual agreement or

statutory provision, the prevailing party in a civil action is not

entitled to recover attorney's fees. Thompkins v. Fuller (1983),

205 Mont. 168, 186, 667 P.2d 944, 954.

This is a case where contractual provisions govern the

awarding of costs and fees. The Trust provides in Article 3 that

the trustee may pay from the trust estate the "expenses of

administration for this trust . . . .'I Additionally, 5 72-33-631,

MCA, provides that '[al trustee is entitled to the repayment out of

the trust property for . (1) expenditures that were properly

incurred in the administration of the trust .'I

The Dern children and the District Court rely on 5 25-10-

103, MCA, for the proposition that imposition of costs is

discretionary with the court. However, 5 25-10-103, MCA, applies

only to situations in which costs are not otherwise provided for.

In the present situation, costs are 'provided for in the Trust.

Therefore, the District Court did not have discretion to apportion

the costs between the parties and the Court's order refusing costs

is incorrect. (May 17, 1994 Finding of Fact NO. 30 and Conclusion

of Law No. 7; April 21, 1995 Supplemental Finding of Fact No. 15

and Conclusion of Law No. 2.)

The costs of bringing this suit were a necessary expense of

22
administering the Trust. Derril Dern, as co-trustee, refused to

sign quitclaim deeds conveying the various properties left to the

beneficiaries through the Trust Minutes. As a result of Derril's

intransigence, Mary initiated this litigation.

Furthermore, attorney's fees should be included in the costs

of administering the Trust. Section 72-33-631, MCA, allows for

repayment of expenditures incurred by the trustee in the

administration of the Trust. Section 72-33-631was adopted in 1989

and patterned after California Probate Code § 15684 (1987). The

California decisions interpreting this code provision indicate that

reasonable attorney's fees are considered a necessary and

reasonable expense of administering a trust where they were

incurred in connection with defending or maintaining the Trust.

Metzenbaum v. Metzenbaum (Cal. 1953), 252 P.Zd 31, 34; In re

Spencer's Estate (Cal. 1937), 63 P.2d 875, 876. Additionally, a

trustee is entitled to reimbursement out of the trust estate.

Bixby v. Hotchkis (Cal. 1943), 136 P.2d 597, 601. The California

Court of Appeals recently held that it is proper to allow certain

ordinary attorney's fees as administrative expenses of a trust, but

not extraordinary fees associated with a professional trustee's

breach of fiduciary duties:

absent evidence of fraud or self-dealing, it seems

reasonable to allow compensation for services relating to

trust assets which were properly managed, denying

compensation only for those assets which were

administered negligently or in breach of trust.

Matter of Estate of Gump (Cal.Ct.App. 1991), 2 Cal.Rptr.2d 269,

279.

The District Court's conclusion that Mary did not breach her

23
fiduciary duties as trustee is supported by substantial evidence

and will not be overturned. The attorney's fees incurred by Mary

were necessary to fulfill the Trust purpose and as such constitute

expenses of administration.

Including attorney's fees as an expense of administering the

Trust is further buttressed by this Court's holding that "expenses"

as used in § 72-12-206, MCA (1979), (determining fees and expenses

of contested wills and probate), encompassed attorney's fees as

part of the expense of the proceedings.to confirm the probate of a

will. Matter of Estate of Weidner (L981), 192 Mont 421, 425, 628

P.2d 285, 287.

Finally, this Court must ascertain from which part of the

Trust to deduct the costs and attorney's fees. Article 3 of the

Trust indicates that the expenses of administration should be paid

out of the "trust estate" without further specification. Because

the Trust does not specify that these expenses should be deducted

from the deceased spouse's Marital Trust Estate or Separate Trust

Estate as it does for the debts of the deceased spouse, the "trust

estate" should be read to signify the entire Trust estate. Because

the individual properties have been specifically bequeathed, the

Marital Trust Estate is the only source of funding in the Trust

estate. The attorney's fees and costs should therefore be deducted

from the entire Marital Trust Estate before it is divided into

Clifford's and Mary's interests.

Accordingly, we remand to the District Court to redetermine

'the distribution of the Family Bypass Trust after the costs and

24
attorney's fees have been deducted from the total Marital Trust

Estate. The funeral expenses must also be deducted from the entire

Marital Trust Estate. After these deductions, the Marital Trust

Estate should be divided into Mary's interest and Clifford's

interest. Mary's interest in the Marital Trust Estate will consist

of one-half of the remaining interest in the Norwest accounts and

forty percent of the remaining interest in the Whitefish account.

Clifford's interest in the Marital Trust Estate, consisting of onehalf of the remaining interest in the Norwest accounts and sixty

percent of the remaining interest in the Whitefish account will

pass into the Family Bypass Trust. The Family Bypass Trust must be

revalued according to the above considerations.

Conclusion

W e affirm the District Court's holding that Clifford's

interest in the Norwest accounts and the Whitefish account

constituted "marital property" and was therefore unavailable to

fund the $10,000 bequests to the Dern children.

We reverser the District Court's holding that the fourth Trust

Minute, naming Mary as the Trust beneficiary of the 120-acre farm,

was a valid amendment to the Trust.

We reverse the District Court's determination that Mary was

not entitled to costs and attorney's fees and we remand for a

redetermination of the Family Bypass Trust after funeral expenses,

costs and attorney's fees have been deducted from the entire

Marital Trust Estate in conformity with this opinion.

Affirmed in part, reversed in part and remanded for further

25
proceedings consistent with this opinion.

Justices

26
Justice James C. Nelson specially concurs.

Given the facts of this case, it is appropriate to make a

further observation. If nothing else, our decision here should

serve as a warning of the pitfalls of the "canned," "fill in the

blanks," IIone size fits. all" trust instruments that are

increasingly being sold to unsuspecting members of the public,

particularly senior citizens, by salesmen, many of whom have no

professional qualifications whatsoever and some of whom are little

better than scam artists.

In this case, the salesman, William W. Thompson, was not

licensed to practice law; he had no legal training; and he was, in

all probability, unlawfully practicing law in this State in

violation of Title 37, Chapter 61 of the Montana Code. He was,

quite properly, ridden out of the states of Washington and Idaho on

a rail for deceitful, manipulative and unscrupulous conduct.

Unfortunately, he got off the train in Montana.

According to the record, over a five-year period, Thompson

sold approximately 200 living trusts in Idaho, Washington and

Montana. The price of the living trust sold to the Derns was over

$2,000. After Thompson sold the Derns their trust, his employer,

American Family Living Trust, was dissolved.

The Trustee Instructions, among other things, tout the trust

instrument sold to the Derns in the following glowing, folksy

terms:

Deciding to avoid probate, the costly process of

court supervised administration of your estate, and the

long delays and unwanted publicity associated with

27
Justice W. William Leaphart, dissenting.

I dissent from the conclusion reached in Issue 2 regarding the

validity of the bequest of the family farm via the fourth "Trust

Minute." I disagree that we should allow the narrow instructional

language found only in the Trust Minutes to control the method of

amendment of the Trust and defeat the settlers' intent where the

amendment provisions throughout the Trust are ambiguous.

Article 2 of the Trust provides for amendment to the Trust

through the Trust Minutes. The Trust Minutes, as noted in the

"Trust Summary," are an informal means of amending the Trust and

direct the settlors to "simply include in the minutes" the

settlors' desires so "successor trustee can give effect. . .'I

The instructions in the Trust Minutes indicate that the Minutes

should be signed by both settlors.

On the other hand, Article 2 of The Trust provides:

Clifford Dern and Mary R. Dern acting together may at any

time during their joint lives amend any of the terms of

this trust by a written document delivered to the trustee

or including such amendment in the Minutes of Trust.

(Emphasis added.)

While acknowledging that the Minute instructions employ

narrower language than the amendment directions in the Trust

document itself, the Trust must be construed as a whole to give

effect to the settlors' intent. When construction questions cannot

be resolved by reference to a clause alone, the court may examine

the entire trust instrument to determine the creator's intent and

purposes, and in some cases apply statutory or court rules of

29
construction. Bogert, Trusts and Trustees § 182 (2d ed. 1979).

Although statutory rules exist for the proposition that where

general and particular provisions of an instrument are

inconsistent, a particular intent will control, § l-4-103, MCA, the

conflicting provisions in this Trust are not inconsistent, but

merely ambiguous. In interpreting ambiguous terms of a contract to

determine the intent of the parties, particular clauses are

subordinate to its general intent. Section 28-3-307, MCA.

Therefore, the "acting together" language controls the method of

amendment.

From the handwriting on the Trust document and the Minutes it

is evident that Clifford and Mary were acting together when they

amended the Trust via the Minutes. On page 4 of the Trust, Article

3 , the paragraph allocating four parcels of land to Clifford's

children, including two 160-acre wooded parcels, one-half of the

360-acre parcel of timber land harvested by Clifford and his son,

and the 120-acre farm at issue, is crossed out with an "X." The

marginalia states, "See Minutes" and both Clifford's and Mary's

initials appear in the margin.

The first Trust Minute gives Mary's property to her two

children. It is signed by Mary and dated November 14, 1991. The

following two Minutes give each of Clifford's children a separate

parcel of property. These Minutes are signed by Clifford and dated

November 14, 1991. The last Minute gives the 120-acre farm, which

is in dispute, to Mary. It is signed by Clifford Dern and dated

November 14, 1991. All of the Minutes were signed by either Mary

30
or Clifford Dern on the same day. The marginalia in Article 3 of

the Trust is dated November 15, 1991, and initialed by both Mary

and Clifford Dern. These facts alone indicate that Clifford and

Mary were acting together when they amended the Trust.

Because the instructions in the Trust Minutes (requiring both

settlers' signatures) differ from the language in Article 2 of the

Trust (requiring that the settlors "act together"), there is an

ambiguity within the Trust document as to how the Trust may be

amended. Therefore, extrinsic evidence may be examined to

determine the intent of the parties to the Trust. Ellingson

Agency, Inc. v. Baltrusch (1987), 228 Mont. 360, 365, 742 P.2d

1009, 1012.

Thompson, who sold the Trust to the Derns, was asked to come

to the Dern Farm for the purpose of making the amendments to the

Trust. Be instructed the Derns to make the amendments via the

Minutes and assisted Clifford Dern in writing out the property

descriptions in the Minutes.

The Derns signed the Minutes one after the other in each

other's presence and in the presence of and upon the instruction of

their trust advisor, Thompson. The Derns deleted the original

allocation of properties in the Trust document the next day in

Thompson's presence. Both Clifford and Mary initialed and dated

the deletion and the marginalia which read "See Minutes." The

District Court was correct in holding that the Trust could be

modified by the settlers acting together through the use of the

Minutes as called for in Article 2 of the Trust. The above facts

31
indicate that the two settlers were, in fact, "acting together"

when they amended the Trust via the Minutes.

In conclusion, I find it extremely curious that the Court

turns a blind eye to the fact that, although all four Trust Minutes

were signed by only one settlor, the first three minutes were

honored. Nevertheless, this Court invalidates the fourth minute

for the reason that it does not contain both signatures.

Apparently the Court reads the Trust as requiring that every fourth

minute be signed by both settlors.

I would affirm the District Court's conclusion that the fourth

Trust Minute was validly executed.

Justices William E. Hunt, Sr. and Terry N. Trieweiler join in the

foregoing dissent.

32