No. 12269 

### INTHE SUPREME COURT OF THE STATE OF MONTANA 1972

OTTO CHRISTMAN, Plaintiff and Appellant,

LEONA STROMSTEDT, Formerly LEONA CHRISTMAN, Defendant and Respondent.

Appeal from: DistrictCourt of theFourth Judicial District, Honorable Jack L. Green, Judge presiding. Counsel of Record

### : For Appellant: Robert J. Campbell argued, Missoula

## ,Montana. For Respondent: Mulroney, Delaney and Dalby, Missoula, Montana, Dexter L. Delaney argued, Missoula, Montana.

Submitted: November 30, 1972 Decided:

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### Ikh171yljMr. Chief Justice James T. Harrisondelivered the Opinion of the Court. This is an appeal from a judgment of dismissal entered in the district court of Mineral County. Plaintiff brought the action to recover property held in joint tenancywith the defendant, his formerwife,prior to the time he was adjudged

an incompetent in 1946. The complaint contained two counts and the court granted a motion to dismiss the first countand

no question is raised thereon. This appeal involves only the second count of the complaint, the thrust of which is an accusationby the plaintiff that the defendant defrauded him of certain realproperty while acting in the capacity of plaintiff's guardian. The order of the district courtwas entered on December 22, 1971,and dismissed count 2 of the complaint on its merits and with prejudice for the reason that the plaintiff failed to offer prima facie evidence of liability of the defendant to the plaintiff. This appeal followed. From the record it appears that on November 4, 1946,plaintiff and defendant were husband and wife and purchased a home and 140 acres of land in Mineral County for $2,000. In December 1946 the plaintiff husband was struck by an intoxicatedmotorist and as a result of that injuryhe was taken to the Oregon State Hospital in January 1947 and declared to be incompetent. His incompetency continued until January 1966 when he received his Certificate of Competency and was released from the hospital. During the period of the plaintiff's incompetency,his wife, thepresent defendant in this suit,was appointed the plaintiff's guardian. On March 22, 1954,the defendantpetitioned the district court inMineral County for an order to sell the plaintiff's half interest in the Mineral County land. Theguardianship was devoid of funds, and the realproperty which the parties owned jointlywas rapidly deteriorating and, therefore, incapableof producing revenue either for taxes, repairs,

or for putting the land such condition as to allow the property to be rented or otherwise reasonably used. The defendant's testimony at the trialwas that it was her understanding from the plaintiff's physicians that his situationwas essentially hopeless and that the Ffuardianshipwould have gone on for years and years. We quote a portion of that Petition for Order of Sale of Real Property which states: "That it is necessary and for the advantage, benefit and best interests of said estate and those interested therein, including the said Incompetent, that said real estate and personal property be sold for the following reasons: "Thatthe cost of maintaininq said property and payment of taxes thereon is unjustified, as said Incompetent only owns an undivided one-half interest therein, and considerable costs of repairs and maintenance on the buildinqs upon said premises are now necessary to be done, and there is no cash or fundsbelonqing to said estate available for said purpose. "WHEREFORE, your petitioner prays that an order be made and entered by this Court granting him [her] license to sell said real estate at either public or private sale,as petitioner may deemmost beneficial for said estate." (Emphasissupplied.) On the basis of that statement, the district court on March 22, 1954,executed an order to show cause returnableon April 19, 1954, some three weeks thereafter. In addition, the defendant-guardian was required to publish a copy of the Order to Show Cause onApplication of Guardian for Order of Sale of Real Estate once a week for two successiveweeks in the Mineral County Independent,a newspaper of general circulation in that

area. That order to show cause was published on April 8 and April 15, 1954.Thereafter, the courtmade an Order of Sale of Real Property which was filed onApril 19, 1954,and ordered the clerk of the district court to post notices in three public places inMineral County giving public notice of the sale of plaintiff-incompetent'sundivided one-half interest in this property. OnApril 20, 1954,the clerk of the court certified that those notices wereposted and thereafter defendant-guardian caused a notice of sale to be published in the Mineral County IndependentonApril 22 and onApril 29, 1954,giving fullpublic notice of the fact thatplaintiff-incompetent's undivided onehalf interestwould be sold on or after May 1, 1954, in the law office of Walter T. Murphy in Superior,Montana. That sale took place and therewas but one bidder, one Edwin M. Johnson,who offered to purchase the property for $307.80, being 90% of the appraised value of $342. Therewas no evidence that the salewas conducted in any secretive manner, or that other bidders were discouraged,or that there were other bidders at all.Thereafter,a returnwas filed and a petition for order confirming sale of real and personal property was made to the district courtby the defendant-guardian,a portion of which petition, the same being filedMay 6,1954, states: "That it is to the best interestof the estate of said Incompetent and of all persons interested therein, to sell said property for the followinq reasons: that there is not money, funds or credit in the said estate with which to pay taxes and to pay for the cost of maintenance and protection of said property; that said land is arid and a dwelling is situated thereon,but that said dwellinq isuninhabitable by reason of needed repairsand by the further reason that no water is available for use at said dwellinq or upon said land without construction and maintenance of a pipe line to a spring on adjacent Government owned land. That said building isdeteriorating and requires expense forupkeep and care,and unless the same is repaired and protected, said property will deteriorate to such an extent that itwill have no market value. That said property is of smallvdlue. Tnat said property has been appraised at the sum of $342.u0 wlthin sixmonths prior to the date of such sale,and that 90% of said value is the fair market value of said property." (Emphasissupplied.)OnMay 17, 1954, the court,having recited the fact that lawful notice had been given, confirmed the sale of plaintiff-incompetent's interest in said property to Edwin M. Johnson for the sum of $307.80. On August 5, 1954, the defendant filed a final account and petition for discharge and was discharged fromher trust onAugust 16, 1954. Ten days after the approvalof the sale, theproperty was transferred again,and the defendant acquired the plaintiff's interest in the realproperty from the purchaser Johnson. The transfer from Johnson to the defendant was for the exact amount that Johnsonpaid for the property. The issuepresented to this Court for review iswhether

or not a guardian of an incompetent,acting as a trustee of his estate, can engage in a sale of estate property to a third party with the intent to transfer theproperty to the guardian after the salewithout violating the fiduciary relationship. We do not find any evidence of any intent to defraud the plaintiff in the connectionwith the sale of this property, and

we find no bad faith was present on the part of the defendant in this transaction; on the contrary the evidence is all of good faith, full disclosure and court supervision. Plaintiff'sposition is that 

### a fraud was committed because of the fact that the defendant acquired the plaintiff's interest in the realproperty from the purchaser Johnson. There can be no questionbut what transactions involving a guardian's acquisition of a ward's property should be carefully scrutinized because of the inherent possibilities of violations of fiduciary obligations. The district court, in its order of sale of realproperty, duly found the necessity for the sale of the fractional interest of the ward. Thereafter, the salewas conducted in the guardian's attorney's office to anyonewho would care tomake a bid, that is, at a publicrather than a private sale. It isnot surprising that there would be no person other than the other joint tenant or someone acting on her behalf who would be interested in purchasing the fractional interest. If the saledid not take place in that fashion it isdifficult to see, in the absence of any other bidders, how the sale could have occurred at all. Accordingly, the defendantwould then have been placed in theposition of either financing taxes, repairs and other expenditures in connection withmaintenance of the property fromher own funds or allowing the same ultimately to revert to the county for taxes. Our position here is that the action of the guardian in connection with the ultimate acquisition of title to the property was, in fact, in the nature of a partition of the property, a11 in good faith,on the advice of counsel. We hold that the district court was justified in dismissing the plaintiff's action on the basis that theplaintiff had failed tomake any showing of any kind of fraudulent motive, intent, or design on the part of the defendant. While the fiduciary has the positive duty of exercising all reasonablediligence in connectionwith the care and conservation of a beneficiary's estate,we hold that the fiduciary does not have the duty of individually contributing from his t!, own resources for indefiniteperiods for the repair,maintenance,

or upkeep of his ward's estate. If the ward, as in the case here, had no funds with which to pay those expenses which were necessary in order to keep the property, it should then follow that the only other alternative that the guardian had was to dispose of thepropert of the fiduciary uty existed 

# P in the conduct of this The judgment is a

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Mr. Justice Wesley Castles does not participate in this cause, deeming himself disqualified.