No. 90-631 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

HAZEL HOWARD, 

Plaintiff and Respondent, 

v. 

MARIE DALIO, 

Defendant and Appellant 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Thomas A. Olson, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

J. David Penwell, Bozeman, Montana 

For Respondent: 

Mark A. Bryan, Bryan & Atkins, Bozeman, Montana 

submitted on Briefs: May 23, 1991 

AUf.? 13 1991 Decided: August 13, 1991 

Filed: Ed 3mitL 

CLERKOFSUPREMECOURT , 

STATE OF MONTANA 
Justice Terry N. Trieweiler delivered the opinion of the Court. 

Marie Dalio appeals the determination of the District Court 

of the Eighteenth Judicial District for Gallatin County, denying 

Daliots motion to set aside judgment entered in favor of Cecelia 

Prevost. We affirm the District Court. 

The issue on appeal is whether the District Court had 

jurisdiction to establish a constructive trust for the benefit of 

Cecelia Prevost. 

Hazel Howard, Cecelia Prevost, and Marie ~alio are sisters. 

Their oldest sister, May Ping Sellards, died on March 25, 1987. 

Prior to her death, Sellards purchased six certificates of deposit, 

on which all four sisters were named as joint depositors. In her 

will, she also stated that her residual estate, which included the 

majority of her assets, was to go to her sisters in equal shares. 

Sellards became ill in 1984. In June 1985 Marie Dalio and 

her husband moved to Montana to take care of Sellards and handle 

many of her affairs. Between September 30, 1985, and February 17, 

1987, Dalio cashed four of the six CDs created by Sellards. The 

day following Sellardsts death, Dalio cashed the other two CDs. 

While portions of the proceeds were put into Sellards and Daliots 

joint account, a significant amount of the proceeds was put into 

Daliots own account or was unaccounted for. None of the sisters 

were informed of Daliots actions involving the CDs. 

Hazel Howard spoke with bank officials after Sellardsts death 

and discovered that all six of the CDs, totalling $121,861.66, had 
been cashed. She then filed a complaint alleging fraud on the part 

of Marie Dalio. Howard also alleged a constructive trust had been 

created for the benefit of both Cecelia Prevost and herself, and 

that Marie Dalio had breached her duty as trustee by her actions. 

Cecelia Prevost was not joined as a plaintiff. However, the court 

was asked in both the complaint and in the final pretrial order to 

require that Dalio pay one-third of the trust corpus to plaintiff 

and one-third to Cecelia Prevost. In fact, Dalio framed as one of 

the issues: 

2. Are the other two surviving sisters, i. e. Howard and 

Prevost, entitled to any portion of the certificates of 

deposit on which their name appears . . . ? 

Following a bench trial, the District Court concluded that a 

constructive trust relating to the proceeds of the CDs was created 

with Marie Dalio as its trustee. The court found that Dalio owed 

one-third of the trust's proceeds, or $40,620.55, plus interest, 

to Hazel Howard. The court then stated that It[t]he other third 

shall be paid to the remaining sister, Cealia [sic] Prevost.It On 

July 23, 1990, judgment was entered against Dalio in favor of 

Cecelia Prevost in the amount of $40,620.55. Dalio thereafter 

moved to set aside the judgment on grounds that Prevost had never 

been a party to the action, and that the court therefore lacked 

jurisdiction and could not enter judgment in her favor. The motion 

was denied, and Dalio filed this appeal. Dalio does not here 

contest the judgment entered against her in favor of Howard. 
Dalio contends that the lower court erred by entering judgment 

in favor of Prevost because she was never a party to the action 

initiated by Howard. ~alio asserts that there was never a 

voluntary appearance by or legal service made upon Prevost. Dalio 

cites Holt v. Sather, 81 Mont. 442, 264 P. 108 (1928), and Deich 

v. ~eich, 136 Mont. 566, 323 P.2d 35 (1958) for the proposition 

that there must be either an appearance or legal service upon an 

individual for the court to acquire jurisdiction of that person, 

and that without jurisdiction there cannot be a valid judgment in 

favor of that individual. 

Both Holt and Deich relate to the absence of jurisdiction over 

a defendant in an action in law. Neither case stands for the 

proposition that a court may not impose a constructive trust in 

equity without having all of the trust's beneficiaries before it. 

section 72-33-219, MCA, states that I1[a] constructive trust 

arises when a person holding title to property is subject to an 

equitable duty to convey it to another on the ground that the 

person holding title would be unjustly enriched if he were 

permitted to retain it.'' This Court, in Eckart v. Hubbard, 184 

Mont. 320, 602 P.2d 988 (1979), held that creation of a 

constructive trust requires fraud, mistake, undue influence, 

violation of trust, or other wrongful acts. The District Court 

found Dalio guilty of fraud, undue influence and a breach of trust. 

Those acts were sufficient to create a constructive trust, and a 
constructive trust is subject to the provisions of Montana's Trust 

Code. 

For that reason, the District Court had subject matter 

jurisdiction over the corpus or assets of the trust. Section 

72-35-101, MCA, provides that: 

(1) The district court having jurisdiction over the 

trust pursuant to chapters 33 through 36 has exclusive 

jurisdiction of proceedings concerning the internal 

affairs of trusts. 

(2) The district court having jurisdiction over the 

trust pursuant to chapters 33 through 36 has concurrent 

jurisdiction of the following: 

(a) actions and proceedings to determine the existence 

of trusts; 

(b) actions and proceedings by or against creditors or 

debtors of trusts; and 

(c) other actions and proceedings involving trustees and 

third persons. 

Dalio was properly served and subject to the jurisdiction of 

the court, allowing the imposition of a constructive trust in favor 

of all its beneficiaries. Jurisdiction over the person upon whom 

the trust is imposed is pivotal, but all potential beneficiaries 

need not be parties. Instructive on this issue is 76 Am.Jur. Trusts 

§ 282. It states: 

A court of equity in the exercise of its jurisdiction 

and control of trusts and their administration may assume 

jurisdiction of a particular trust and direct that 

thereafter the trust is to be administered under its 

direction, and in many instances may make appropriate 

orders and decrees, without having all interested parties 

before it, so long as they are not prejudiced in any 

substantive rights. 
~ecelia Prevost was certainly not prejudiced by her absence 

as a party to this litigation. That is evident from the fact that 

she has appeared to oppose her sister's appeal from the judgment 

entered in her favor. 

Neither was ~alio prejudiced by her sister's absence as a 

plaintiff in this action. She was aware from the complaint and 

from the plaintiff's allegations in the pretrial order that 

plaintiff sought to impose a constructive trust for the benefit of 

both the plaintiff and Cecelia Prevost. She was aware that the 

plaintiff sought to have the corpus of the trust divided equally 

among the three surviving sisters. The same proof that established 

the trust for the benefit of Howard established a trust for the 

benefit of Prevost. 

Dalio contends that she was denied the opportunity to prove 

her defense that an action by Prevost would have been barred by the 

statute of limitations. However, the plaintiff's first cause of 

action was based upon fraud which did not accrue until the 

aggrieved party discovered the facts constituting the fraud. 

9 27-2-203, MCA. The District Court found, as a matter of fact, 

that there was no evidence or testimony that Dalio ever informed 

any of her sisters that she was cashing in the CDs. That evidence 

could have been offered without Prevostts presence. Furthermore, 

plaintiff's second cause of action sought to create a constructive 

trust. The statute of limitations applicable to that cause of 

action was 5 27-2-202(3), MCA, which allows commencement of the 
action within 3 years. The record in this case discloses that the 

first CD was converted to her own use by Dalio on September 30, 

1985, and that this action was commenced on May 12, 1988, which was 

less than 3 years later. Therefore, we conclude that Daliols 

ability to present her defense, based upon the statute of 

limitations, was not impaired by the fact that Prevost was not 

named as a plaintiff. Neither has there been any reason offered 

by Dalio why Prevostls deposition could not have been taken, had 

her testimony been necessary in order to support any of Daliols 

affirmative defenses. In fact, through much of the proceedings 

Prevost was listed by Dalio as a witness. 

The Ninth Circuit has had opportunity to rule on a matter 

similar to the instant case. In In re Allustiarte, 786 F.2d 910 

(9th Cir. 1986), the court ruled that the failure to join spouses 

of grantees of real property in an action to impose a constructive 

trust was not fatal to the action, even though that trust would 

have detracted from their interest in the property. The court 

stated: 

If the court determines that a judgment rendered in the 

personls absence will be adequate to protect his 

interests, the person is not indispensable. Joinder is 

not required where the absent parties1 interests are 

adequately protected by those who are present. The record 

demonstrates that the interests of the absent spouses 

were adequately protected by the Allustiartes who were 

at trial. The absent spouses were not prejudiced by the 

failure to join them as parties since their interests 

were identical to their spouses who were named in the 

action. 
In re Allustiarte, 786 F.2d 910, 919 (9th Cir. 1986) (citations 

omitted). 

We conclude that Prevost's rights as a beneficiary were 

identical to Howard's. Her interests were adequately protected, 

and Dalio's interests were not adversely affected by the fact that 

she was not personally named as a plaintiff. 

Accordingly, we affirm the judgment of the District Court. 

We Concur: A ,,I 

/-I 

Chief Justice