No. 86-52 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1986 

IN THE MATTER OF TFE ESTATE OF 

JIMMIF L. ROGERS, Deceased. 

APPEAL FROM: District Court of the Fifth. Judicial District, 

In and for the County of Jefferson, 

The Honorable Frank Davis, Judge presiding. 

For Appellant: 

Jackson & Rice; James A. Rice, Jr., Helena, Montana 

For Respondent: 

Jardine, McCarthy & Grauman; John H. Ja-rdine, 

Whitehall, Montana 

Submitted on Briefs: May 30, 1986 

Decided: August 26, 1986 
Mr. Justice John Conway Harrison delivered the Opinion of the 

Court. 

This is an appeal by the decedent's children from an 

order and judgment of the District Court of the Fifth 

Judicial District, Jefferson County, Montana. The court 

awarded certain estate property to the decedent's wife. We 

affirm. 

The facts of the case are basically undisputed by the 

parties. 

In October, 1982, Jimmie L. Rogers (decedent) had 

executed and delivered to his present wife, Patricia A. 

Rogers (wife) a legal and valid power of attorney which 

contained a so-called "durable power of attorney clause." 

This clause permitted the wife to act as Rogers' attorney in 

fact if he became incompetent. This power of attorney was 

used by the wife on one or more occasions with regard to the 

handling of Rogers' business affairs. 

Rogers and his wife jointly borrowed money necessary to 

construct a new home in Jefferson County. Construction began 

in March, 1983, and was completed in June, 1983, at a total 

cost of approximately $60,000. 

During the course of the construction of the home, 

Rogers discovered he was afflicted with a terminal illness. 

After he became aware of his illness, he began to make 

arrangements to have his interests in certain California 

notes and deeds of trust assigned to his wife t.o insure that 

she would be able to keep their new home. 

For a variety of reasons (none of which were the fault 

of Rogers, his wife, or their local counsel), the assignments 

of the notes and deeds of trust were not prepared until the 

latter part of June, 1983, after Rogers had been confined to 
a hospital just prior to his death. Rogers was mentally 

competent when he was presented with the assignments in the 

hospital, but, because of his weakened condition, could not 

physically affix his signature to the documents. The record 

shows that several witnesses in the hospital were aware of 

Rogers' desire to make the assignments to his wife. 

Faced with Rogers' inability to physically execute the 

assignments, the wife, two days before Rogers' death, 

executed the assignments to herself, pursuant to the 

above-described power of attorney. The assignments assigned 

all of Rogers' right, title and interest in the notes and 

deeds of trust to the wife. 

Rogers died in Silver Bow County, Montana, on June 22, 

1983. At the time of his death he was a bona fide resident 

of Jefferson County, Montana, where he had resided since 

July, 1979. 

The decedent left a last will and testament dated. 

February 16, 1983. This will was admitted to probate in the 

Jefferson County District Court and provided, in pertinent 

part, as follows: 

. . . I give, devise and bequeath in 

equal undivided shares to my three children per stirpes, Jimmie L. Rogers, Jr., 

Pamela K. Rice and Deborah A. Riccabuono, 

all property located in the state of 

California at the time of my death, real, 

personal or mixed, of which I may die 

possessed . . . 

The will further provided, in part, as follows: 

. . . I give, devise and bequeath all of 

the rest, residue and remainder of my 

property, real, personal or mixed, to my 

wife, Patricia A. Rogers . . . 

The children who were mentioned in the will were born 

of a prior marriage of the decedent. They have no blood 

relationship to the decedent's present wife. 
After the decedent's will was admitted to probate in 

Jefferson County, the children began a separate and 

non-ancillary probate proceeding in the state of California. 

They wished to establish that certain contested items of 

property from the decedent's estate had its situs in the 

state of California and therefore would pass to them under 

the terms of the decedent's will. The items of contested 

property consisted of four notes which were secured by deeds 

of trust on California real property. The appraised 

aggregate value of these notes was $82,590.82. 

Prior to any further action in the Montana probate 

proceeding, the California Probate Court ruled that the notes 

and deeds of trust were personal in character and therefore 

were under the exclusive jurisdiction of the Montana courts. 

Consequently, the California court refused to decide any 

issues relating to the distribution of the contested 

property. 

In June, 1985, the District Court held a hearing to 

determine which parties were entitled to Rogersf estate 

property. In September, 1985, the court issued its order and 

judgment that the assignment of the California notes and 

deeds of trust by the wife, pursuant to her power of 

attorney, was a valid transfer of all of Rogers' right, tit1.e 

and interest in such property. The District Court determined 

that the assignments were made to carry out Rogers' purpose 

and intent and did not constitute a violation of trust on the 

part of the wife. Further, the court reasoned that even if 

the assignments were not valid (which they were), the notes 

and deeds of trust would pass to the wife under the terms of 

Rogers' will. They were personal in nature with a situs in 

the state of Montana, the place of Rogers' residence at the 
time of his death. The District Court stated that California 

law and Montana law agree that contracts, such as the ones in 

the instant case, are personal property with a situs in the 

state where the decedent was domiciled at the time of his 

death. 

It is from this order and judgment of the District 

Court that the children, through Jimmie Rogers, Jr., appeal. 

They present the following issues for review by this Court: 

(1) Whether the District Court committed reversible 

error when it refused to allow the children to complete 

discovery; 

(2) whether the District Court erred in upholding the 

assignment of the California notes and deeds of trust made by 

the wife to herself, pursuant to a power of attorney given to 

her by the decedent; 

(3) whether the District Court erred in ruling that 

the California notes and deeds of trust were Montana property 

and, as such, pass to the wife under the will of the 

decedent. 

The children argue that following the June, 1985, 

hearing to determine which parties were entitled to estate 

property, their counsel discovered two witnesses not previously deposed. These witnesses had information relating to 

the matters raised during the hearing. After learning of 

this evidence, their counsel moved for additional time to 

cornplete discovery of these parties so that their testimony 

coilld be included in the court record and available for the 

coilrt's decision. The District Court Judge then contacted 

the children's counsel and asked him to submit a summary of 

the proposed testimony. Counsel complied with this request. 

Af-ter reviewing the summary, the District Court Judge issued 
an order denying counsel's request to complete discovery of 

these witnesses, ruling that the proposed testimony appeared 

to be inadmissible (i.e. hearsay). The children now argue 

that this decision by the District Court was prejudicial to 

th'em and was an abuse of the court's discretion. We 

disagree. 

The children readily admit that all trial courts in 

Mo:ntana have the inherent discretionary power to control 

discovery. State ex rel. Guarantee Insurance Co. v. District 

Court (Mont. 1981), 634 P.2d 648, 38 St.Rep. 1682. 

Therefore, based on this standard, we do not need to address 

the children's contention. 

It is necessary to note, however, there was no 

objection raised on this aspect of the case until the present 

appeal. We agree with the wife that the record contains no 

reference, directly or indirectly, regarding the children's 

claim of error that their discovery rights were prejudiced by 

the District Court's denial of their motion to extend 

discovery. The proposed findings of fact, conclusions of law 

and memorandum submitted by the children did not mention the 

District Court's denial of their motion. Further, no 

objection was made, nor was the District Court asked to amend 

its findings and conclusions. Now, for the first time, this 

issue is asserted by the children on appeal. Under these 

circumstances, this Court has made it clear that we will 

consider for review only those issues raised in the pleadings 

or otherwise before the District Court. Rustics of Lindbergh 

Lalce, Inc. v. Lease (Mont. 1984), 690 P.2d 440, 41 St.Rep. 

2092; and Huggans v. Weer (Mont. 1980), 615 P.2d 922. In the 

instant case, the children failed to follow this general rule 
and consequently their first issue must be disregarded by 

this Court. 

With regard to the second issue, the children claim 

that the assignment of the contracts by the wife, made to 

herself pursuant to a power of attorney, are invalid under 

Montana law. First, the children point out that the wife, as 

the attorney in fact for Rogers, was acting as his agent. 

A power of attorney is an instrument in 

writing by which one person, as principal, appoints another as his agent and 

confers upon him the authority to perform 

certain specified acts or kinds of acts 

on behalf of the principal . . . 3 Am.Jur.2df S 23, Agency. 

Next, the children point out that SS 28-10-401, et 

seq., MCA, outline the authority of an agent in Montana. 

Specifically, the children direct this Court's attention to 

S 28-10-407, which provides in pertinent part as follows: 

Statutory exceptions - to general 

authority. 

An authority expressed in general terms, 

however broad, does not authorize an 

agent to : 

(3) do any act which a trustee is forbidden to do by Title 72, Chapter 20, 

Part 2. 

Thus, the children argue, the restrictions upon the authority 

of an agent actually are contained in the statutes which 

outline the obligations of a trustee. 

Under this analysis, the children assert §§ 72-20-201, 

et seq., MCA, contain many provisions which would have prohibited the actions of the wife in assigning the contracts to 

herself. For example, S 72-20-201 obligates a trustee 

(agent) to act in the "highest good faith" toward his beneficiary (principal). Also, S 72-20-202 states that a trustee's 
influence may not be used to his advantage in his dealings 

with the beneficiary. Further, 5 72-20-203 states that a 

trilstee may not use or deal with trust property for his own 

benefit. But most important, the children argue, there is a 

statutory presumption that the assignments made by the wife 

to herself were done without sufficient consideration and 

under undue influence. The children direct our attention to 

§ 72-20-208 which reads as follows: 

All transactions between a trustee and 

his beneficiary during the existence of 

the trust or while the influence acquired 

by the trustee remains by which he obtains any advantage from his beneficiary 

are presumed to be entered into by the 

latter without sufficient consideration 

and under undue influence. 

Under this statute, the children argue it must be 

presumed that the transfers made by the wife were done 

without sufficient consideration and under undue influence. 

Considering the medical condition of Rogers and the expressed 

intentions found in his will, the children argue the presu~nption that the wife acted while Rogers was under undue 

influence is even greater. The children strongly assert that 

the wife did not show sufficient evidence to overcome this 

presumption against her, and the District Court must declare 

the assignments of property, made by the wife to herself, to 

be null and void. 

While the children's argument is legally correct and 

persuasively written, we find, as did the District Court, 

that there is sufficient evidence to uphold the transfer of 

the notes and deeds of trust to the wife. 

The child.ren correctly point out that as a general rule 

under 5 72-20-208, all transactions between an agent and his 

principal during the existence of an agency relationship are 
presumed to be null and void. However, there are some 

exceptions to this general rule. The recognized exception, 

stated by the Supreme Court of Washington, is as follows: 

And the agent has the burden of proving 

in every case that his principal not only 

had knowledge that the agent was to be 

the buyer or seller, but also the burden 

of showing that all information in possession of the agent had been communicated to his principal prior to the giving 

of consent. 

Moon v. Phipps (Wash. 19661, 411 P.2d 157, 161. 

An exception exists when there is an expressed and 

explicit understanding between the principal and his agent 

that a transaction between them is valid. This exception has 

been recognized in Montana. This Court stated: 

This principle is set forth in comment A 

to Restatement of Law, Agency 2d, Section 

390, in the following language: 

". . . Before dealing with the principal 

on his own account, however, an agent has 

a duty, not only to make no misstatements 

of fact, but also to disclose to the 

principal all relevant facts fully and 

completely . . . " 

First Trust Company of Montana v. McKenna (1980), 188 Mont. 

534, 539, 614 P.2d 1027, 1030. Cited with approval in Myer 

v. Miller (Wyo. 1981), 631 P.2d 441, 444. 

In the case at bar, the agent was the principal's wife. 

It is undisputed that the husband desired to make assignments 

of the notes and deeds of trust to his wife in order to 

inisure that she could remain in the home they had recently 

built and jointly mortgaged. For several months prior to his 

death, the husband had been trying to do precisely what was 

ultimately done--assign the notes and deeds of trust to his 

wife. In eventually performing this task, the wife was 

merely her husband's alter ego. We conclude that the wife 

acted in the highest good faith, without any concealment, and 
accomplished that which her husband originally had desired to 

accomplish. For these reasons, we affirm the District Court 

in its approval of the transfer of the notes and deeds of 

trust to the wife. 

In the third issue, the children claim the court erred 

in ruling that the notes and deeds of trust were Montana 

property and so passed under the will of the husband. We 

have affirmed the conclusion of the District Court that the 

assignment of the notes and deeds of trust to the wife was 

effective for all purposes. Consequently, nothing remained 

to pass under the will, and this issue need not be decided. 

The order and judgment of the District Court is 

affirmed.