ZJo. 82-203 

IN THE SUPREPIE COULPT OF TIIE STATE OF IlO'iJTAPJA 

1983 

IN RE THE MARRIAGE OF DELBERT HENRY WITBART, 

Petitioner, 

-vsLaVERNA MAE WITBART , Respondent and Appellant. 

----------------- 

ALLEN B. HOUSTON, 

Plaintiff and Respondent, 

-vsDELBERT HENRY WITBART a/k/a DCLBERT (DEI,) 13. WITBART, & 

LaVERNA MAE WITBART, 

Defendants and. Appellants. 

------------------ 

DEL 11. WITBA3T, d/b/a ACADEMY ENGINEERL!.JG CONSTRUCTIOIJ, 

Plaintiff, 

-vsHARLAIi3 E. BAUER & MARGARET E. BAUEX, 

Defendants and Respondents. 

------------------ 

CLARK BROTHERS CONTRACTORS, a Mont . corp. , Plaintiff and Respondent, 

-vsEARLAND E. BAUER, MARGARET E. BAUER, & DEL 11. SJITBART, d/b/a 

ACADEMY ENGINEERING CONSTRUCTION, 

Defendants. ---" ---- - ----- - ---- 

WESTERN EQUIPMENT CO. , Plaintiff and Respondent, 

DELBERT HENRY WITEART & LaVERrJA MAE WITBART, 

Defendants and Appellants. 

Appeal from: District Court of the Fourth Judicial District, 

In and for the County of Ravalli, The Honorable 

James B. Wheelis, Judge presiding. 

Counsel of Record: 

For Appellant: 

Cannon & Sheehy; Edmund Sheehy, Jr. argued, Eelena, 

Montana (LaVerna 7Vitbart) 

For Respondents: 

Richard A. Weber argued, Hamilton, Montana (Western 

Equipment) 

Gail B. Goheen argued, Ranilton, Montana (Houston) 

John D. Greef argued, Hamilton, illontana (Bowers) 

Larry R. Meyer argued, Stevensville, Montana (Clark 

Brothers) 

- - Submitted: May 5, 1983 

Decided: June 27, 1983 

Filed: JUN271983 
Mr. Justice Frank B. Morrison, Jr. delivered the Opinion 

of the Court. 

This is an appeal of the January 14, 1982, judgment and 

February 17, 1982, amended judgment of the Fourth Judicial 

District Court distributing Del Witbart's award of $26,677.47 

and interest from his action to foreclose a mechanic's lien 

against Harland and Margaret Bauer. 

On April 10, 1979, Harland and Margaret Bauer, and 

Delbert Witbart entered into a written contract wherein 

Delbert agreed to construct a road for the Bauers. Del then 

entered into a contract with Clark Brothers Construction for 

heavy equipment to be used in buiiding the road. A dispute 

later arose between Bauers and Witbart. Bauers refused to 

pay Witbart for building the road. Therefore, Witbart filed 

a mechanic's lien against Bauers on June 29, 1979, Cause No. 

DV 79-385. Clark also filed a mechanic's lien against Bauers 

on July 2, 1979. Bauers subsequently posted a bond in lieu 

of Clark's lien. 

On July 9, 1981, judgment was entered against Bauers and 

in favor of Witbart in the amount of $26,677.47. Witbart had 

been assigning portions of his interest in the prospective 

judgment to several individuals (as discussed below). The 

$26,677.47 was ordered retained by the Clerk of the Court 

pending notification of the assignees. 

LaVerna and Delbert Witbart were divorced in the spring 

of 1980. The uncontested dissolution decree incorporated a 

separation agreement signed by the parties on March 27, 1980. 

The agreement included no provision for the maintenance or 

support of LaVerna. Rather, it stated that all family 

obligations incurred by the parties had been fully determined 

and discharged. 
The agreement further provided that LaVerna would convey 

to Delbert by contract for deed her one-half interest in the 

parties1 home. The home was purchased the same month the 

separation agreement was entered into, March 1980. LaVernals 

interest in the home at that time was negligible. 

Finally, the agreement provided under the heading "Real 

Property", that Delbert would pay LaVerna $25,000.00 and that 

if Delbert received sufficient money in the Bauer mechanic's 

lien foreclosure suit, he would remit to LaVerna the money 

received, to the extent necessary to pay any balance of the 

$25,000.00 remaining due. At that time, Delbert anticipated 

receiving at least $75,000.00 from the Bauers. Delbert 

testified that he was otherwise insolvent at the time he 

entered into the agreement. 

Allen Houston loaned Delbert approximately $10,000.00 on 

August 24, 1978, to be used as down payment for the house. On 

July 28, 1980, Delbert assigned $7,473.18 of his interest in 

the prospective Bauer mechanic's lien judgment to Houston for 

security. On September 22, 1980, Delbert assigned a part of 

his interest in the same prospective judgment to Clark 

Construction for $9,275.82 of the $15,087.82 owed Clark by 

Delbert and Bauers. Finally, on April 27, 1982, Delbert 

assigned $5,616.35 of his interest in the prospective 

judgment to Western Equipment Company. 

On July 20, 1981, LaVerna filed a motion for payment, 

out of the Witbart-Bauer judgment fund, of monies allegedly 

owed by Delbert to LaVerna pursuant to their separation 

agreement. Delbert's creditors contested LaVernals interest 

in the judgment fund, alleging that the agreement on which it 

is based is fraudulent. The District Court thereafter merged 

all the claims to the judgment fund into one action. 
A hearing was held August 13, 1982, to determine the 

proper distribution of the $26,677.47 actually received by 

Witbart from the Bauer judgment. An order was issued January 

1-4, 1982, completely annulling, as a fraudulent conveyance 

pursuant to section 31-2-311, MCA, Delbert's promise in the 

Witbart separation agreement to pay LaVerna $25,000.00. 

LaVerna's interest in the Bauer judgment fund was thereby 

rendered void. 

First priority to the fund was awarded Allen Houston in 

the amount of $7,473.18, plus interest at the rate of 163% 

per annum from July 25, 1980, and reasonable attorney's fees. 

Western Equipment Company was awarded $5,616.35, plus 10% 

interest per annum from the date of judgment and costs. 

Clark was awarded no interest in the judgment fund. Rather, 

Clark was required to resort to the $15,087.82 Bauer lien 

bond for payment. 

On motion by Bauers, the trial court amended the 

judgment on February 17, 1982, foreclosed Clark's lien 

against Bauers and permitted Clark to collect $9,275.82 from 

the judgment fund, plus interest at the rate of 10% per annum 

from the date of judgment. Clark was granted second priority 

to the fund, before Western Equipment Company. 

LaVerna Witbart now appeals the February 17, 1982, 

amended judgment and presents this Court with at least five 

issues for our review. Our disposition of this appeal 

renders consideration of all but one of those issues 

unnecessary. 

The trial judge considered the separation agreement to 

be a conveyance. He found no fair consideration for 

Delbert's obligation to pay LaVerna $25,000.00. Delbert's 

promise was therefore annulled, pursuant to section 31-2-311, 

MCA, a section of the Montana Uniform Fraudulent Conveyances 
Act. Any interest LaVerna might have had in the 

Witbart-Bauer judgment fund was extinguished. 

The agreement was not a conveyance. A separation 

agreement incorporated into a divorce decree is enforceable 

only as a judgment. Lawrence v. Lawrence (1982) , Mont. 

-I - , 642 P.2d 1043, 1049, 39 St.Rep. 548, 556. A 

judgment can not be attacked or reopened for lack of fair 

consideration. It can be reopened if obtained through fraud. 

See Rule 60(b), M.R.Civ.P., which lists the six reasons for 

reopening a judgment. 

Section 40-4-208(3), MCA, states in pertinent part: 

"(3) The provisions as to property disposition may 

not be revoked or modified by a court, except: 

(a) * * * 

(b) if the court finds the existence of conditions 

that justify the reopening of a judgment under the 

laws of this state." (emphasis supplied) 

We have construed this section as giving a trial court 

jurisdiction to determine whether fraud was committed in 

obtaining a property distribution agreement. Hopper v. 

Hopper (1979), 183 Mont. 543, 601 P.2d 29. Pilati v. Pilati 

(1979), 181 Mont. 182, 592 P.2d 1374. If fraud is found, the 

divorce decree may be reopened and a more equitable property 

distribution made. Pilati, 181 Mont. at p. 186, 592 P.2d at 

The trial judge improperly applied the Uniform 

Fraudulent Conveyances Act to this case. We therefore remand 

this case to District Court for a new trial on the issue of 

whether or not fraud was committed upon the court at the time 

the Witbart separation agreement was approved. "[Ilt has long 

been the rule in Montana that a court of equity has inherent 

power, independent of statute, to grant relief from judgments 

gained by fraud. " Selway v. Burns, Estate of Burles (1967) , 
150 Mont. 1, 8, 429 P.2d 640, 644. A finding of fraud would 

justify reopening the judgment granting LaVerna $25,000.00. 

Otherwise, LaVerna is entitled to the $25,000.00 and is 

entitled to first priority to the Witbart-Bauer judgment 

fund, per the separation agreement. 

One of the issues raised by LaVerna will become 

pertinent on remand if the trial judge finds fraud on the 

court and denies LaVernals claim to $25,000.00 of the 

Witbart-Bauer judgment fund: Did the District Court err by 

amending its judgment and allowing Clark Brothers 

Construction, Inc., to receive funds from the Witbart-Bauer 

judgment fund? We find no error. 

Clark Brothers Construction has continually been 

considered a party to this action. Delbert assigned a 

portion of his interest in the Witbart-Bauer judgment fund to 

Clark Brothers on September 22, 1980. The District Court 

order of August 6, 1981, states in part: 

"2. A hearing on the distribution of assets now 

held by the Clerk of Court in DV-79-385 [the 

Witbart-Bauer judgment fund] will be held at 1:30 

p.m. on August 13, 1981, and all parties in any of 

the above-entitled causes may and shall appear to 

present evidence at that time relating to the 

merits of their claims or tending to disprove the 

claims of other parties." 

One of the "above-entitled causes" was Clark Brothers 

Construction v. Harland E. Bauer, Margaret E. Bauer and 

Delbert Witbart, d/b/a Academy Engineering Construction. 

Clearly, the District Court considered Clark Brothers to be 

one of the parties with a potential interest in the 

Witbart-Bauer jugdment fund. LaVerna cannot now, for the 

first time on appeal, raise the issue of whether Clark 

Brothers was entitled to claim any of the judgment fund 

monies. Green v. Green (1978), 176 Mont. 532, 536, 579 P.2d 
Furthermore, the District Court did not abuse its 

discretion in allowing Clark Brothers to collect from the 

judgment fund rather than the Bauer bond fund. 

Section 31-2-105, MCA, states: 

"Relative rights of different creditors. Where a 

creditor is entitled to resort to each of several 

funds for the satisfaction of his claim and another 

person has an interest in or is entitled as a 

creditor to resort to some but not all of them, the 

latter may require the former to seek satisfaction 

from those funds to which the latter has no such 

claim, so far as it can be done without impairing 

the right of the former to complete satisfaction 

- and without doing injustice to third - persons." 

(emphasis supplied) 

The District Court found that to require Clark Brothers to 

resort to the Bauer bond fund for payment would do injustice 

to the Bauers. They would then be required to make double 

payment for the use of Clark Brother's equipment: first, to 

Delbert through the Witbart-Bauer judgment and second, to 

Clark Brothers through the Bauer bond fund. There is 

substantial credible evidence to support that finding of the 

trial court. 

Contrary to LaVerna's contentions, our decision in 

General Electric Supply Co. v. Montana Automobile Association 

(19801, Mont . , 617 P.2d 136, 37 St.Rep. 1715 does 

not permit a double payment in this instance. In that case, 

General Electric Supply did not have two or more funds from 

which to choose for satisfaction of its claim. It's 

immediate debtor, whose position would be similar to that of 

Delbert's in the instant case, was bankrupt. If General 

Electric Supply had not been allowed to seek satisfaction 

from the Montana Automobile Association, it would have gone 

unpaid. That is not the case here. Clark Brothers 

Construction will not go unpaid if it is not allowed to seek 

satisfaction from Bauers. They may still receive payment 

from Delbert Witbart. 
We remand this case for a new trial consistent with the 

We concur: 

Chief Justice 

Justices 

sitting in place of Mr. ~ustice 

John C. Sheehy 

Mr. Chief Justice Frank I. Haswell and Mr. Justice L. C. 

Gulbrandson dissent and will file a written dissent later.