Title: MAHAFFEY v DeLEEUW
Citation: N/A
Docket Number: 12995
State: Montana
Issuer: Montana Supreme Court
Date: November 5, 1975

No. 12995 I N THE S U P R E M E C O U R T OF T H E STATE O F M O N T A N A 1975 T H E L M A MAHAFFEY, a s Guardian of t h e Estates of VALARIE and VAUGHN DeLEEUIJ, M O N T E DeLEEAbJ and BEVERLY D e L E E U W , individually and a s Administratrix of t h e Estate of TIEMAN DeLEEVrd, Deceased, P l a i n t i f f s and Respondents, -vs - ANNIE DeLEEUW, Defendant and Appellant. Appeal from: D i s t r i c t Court of the Thirteenth J u d i c i a l D i s t r i c t , Honorable Charles Luedke, Judge presiding . Counsel of Record: For Appellant : Moses, Kampfe, Tolliver and Wright, Billings, Montana D. Frank Kampfe argued, B i l l i n g s , Montana For Respondents : James J. Palmersheim argued, B i l l i n g s , Montana Submitted: September 29, 1975 Decided : ' Filed: * , /' Clerk M r . Justice John Conway Harrison delivered the Opinion of the Court. This is an appeal from a judgment of the d i s t r i c t court, Yellowstone County, Hon. Charles Luedke, presiding. The issue here i s whether there was sufficient credible evidence t o support the d i s t r i c t court's findings of f a c t , con- clusions of law and judgment ordering defendant t o reconvey certain r e a l property t o her deceased son's estate and heirs a t law. She appeals. Defendant takes issue with the court's finding of f a c t No. 10 and conclusions of law Nos. 2, 3, and 4 , but the principal issue i s whether'there was sufficient evidence t o support the d i s t r i c t court's decision. Defendant Annie DeLeeuw i s the mother of Tieman DeLeeuw, deceased. Hereinafter he w i l l be referred t o as Tim. Tim married Thelma Jean Mahaffey i n 1946, they had three children, Montey, and twins Vala-rie and Vaughn. The marriage ended i n divorce i n November 1966. T i m was l a t e r married for a short time t o a woman named Ginger, which was terminated by an annulment paid for by Annie, h i s mother. O n February 18, 1970 he married Beverly, the administratrix of h i s e s t a t e and one of respondents here. This marriage terminated with ~ i m ' s death i n June 1971. During Thelma and ~ i m ' s marriage they developed several businesses and acquired both business and residential properties. Tim established and operated a private garbage hauling business for the Billings suburban area not having municipal services. Each year they operated a large Christmas t r e e business. Much of the financing of these businesses was through ~ i m ' s mother, Annie. Thelma worked in ~ i m ' s office answering the telephone and handling the books. From the very beginning of t h e i r business ventures they employed James Hoffman, a licensed public accountant, for t h e i r book- keeping and accounting records and tax matters. Sometime ,in 1965 Tim and Thelma separated and i n 1966 she f i l e d for a divorce requesting partition of a l l r e a l property and an equitable division of a l l property, both r e a l and personal that the parties had acquired during the marriage. Immediately a f t e r the divorce and partition action was f i l e d , Annie f i l e d a debt action against both of them alleging some $50,000 of preexisting indebtedness. Negotiations between the parties resulted i n an agreement i n November 1966, i n which Annie completely released and discharged the obligation of Thelma. She dismissed the debt action with prejudice, being f u l l y settled on the merits. Thelma and Tim settled t h e i r property differences by partitioning one of t h e i r properties, a 14 acre t r a c t called the "Rims" property, with Thelma receiving the family home and 8 acres and Tim receiving 6 acres. Thelma alleges that she withdrew her partition action on a l l the rest of the property and quitclaimed the same t o Tim with the understanding that it remain a s security for t h e i r children. There i s nothing i n writing t o t h i s effect. The divorce followed with Tim making support payments i n the amount of $160 per month for the three children. Plaintiffs' complaint originally requested that five separate parcels of land be reconveyed, but i n p r e t r i a l discovery it was learned that the "Cabin" property and the " ~ e i g h t s " o r I1 Shop" property had been settled between Tim and Annie and that only three properties were a t issue: #I. Lots 5,6 and 7, B1. 39, Orig.. .Town, Billings "Office property" $14,536 82. NE 114 NE 114, Sec. 29 R. 26E " ~ l u e Creek" 9,642 #3. Tract 1,Cert. Survey 1085 "Rims " The record clearly indicates that a s t o a l l five properties Annie gave either p a r t i a l or complete financial assistance t o Tim's efforts t o purchase the property. As t o the above three properties, for the purposes of t h i s opinion we w i l l note here that they were both pre and post 1966, the date of the property settlement heretofore referred to. The "Blue Creek" property involving 40 acres was purchased by Tim and Thelma i n 1960. Although it was i n Tim and ~ h e l m a ' s name, the p z ~ h a s e money of $4,000 was advanced by Annie. Tim was unable t o pay Annie and on August 9, 1968, by deed, Tim and Thelma transferred the property t o Annie. Since that date, she has paid the taxes on that property. The ' l ~ i m s " consisting of 14.6 acres, was purchased i n 1954. Although Thelma was vague on where the money came from t o purchase t h i s property, the record indicates that Annie sold an apartment house t o r a i s e the money for Tim t o make t h i s purchase. None of t h i s was repaid t o Annie, and Tim and Thelma transferred by warranty deed 5.67 acres of t h i s property t o Annie on August 9, 1968. The remainder of the 14.6 acres had been conveyed t o Thelma by the property settlement of 1966. The third piece of property i s what is referred t o a s the "Office Property". This property was purchased i n 1951 by T i m and the record indicates that over the period of purchasing t h i s property Tim became delinquent in h i s payments and had t o c a l l on h i s mother t o help make these payments. In 1966, Tim borrowed $6,500 from Annie with the "Office Property" a s collateral and a mortgage pursuant t o t h i s arrangement was filed. Neither the down payment, any interim payments, nor interest had been paid a t the time of ~ i m ' s death, except the s u m of $650. This property was conveyed t o Annie by warranty deed on August 9, 1968. With t h i s background as t o the three parcels of property i n question, we now return t o the November 1, 1966, out-of-court settlement between Annie, Tim and Thelma and how it affected T i m and Annie's f i s c a l operations a f t e r that date. By that agreement Thelma was relieved of any f i s c a l obligations, but Tim assumed the obligations t o his mother. Tim was required by the agreement t o 11 convey the Shop" property t o Annie; t o pay a l l the remaining mortgage obligations; and t o pay Annie $100 per month u n t i l the mortgage terminated. H e failed t o pay e i t h e r the mortgage or the $100 per month, resulting i n cash disbursements by Annie of over $10,000. O n November 29, 1966, Tim signed a promissory note along with the mortgage, and received $6,500 for the "Office" property. This sum never was repaid. Shortly thereafter i n 1967, Annie paid ~ i m ' s second wife, Ginger, the sum of $1,300 for what appears t o be a settlement i n an annulment of the second marriage. During the two years a f t e r the divorce from Thelma through 1968, it appears from checks introduced a t the t r i a l and other records introduced that Annie financed Tim in amounts alleged t o range from $30,000 t o $50,000. In l a t e 1968, an agreement was made between Tim and Annie, previously noted, where T i m i n an e f f o r t t o s e t t l e with h i s mother, conveyed over t o Annie the five parcels of land. This settlement was handled by Attorney Charles F. Moses and h i s testimony indicated that it was a business transaction, voluntary on the part of both parties, with no undue influence, fraud o r deceit involved by either party. M r . Moses, who drew up the agreement, made no reference t o any t r u s t agreement or any possible reconveyance of the property. It was a f i n a l agreement t o s e t t l e a debt situation between the parties and i n the record we can find no proof of any force, coercion o r undue influence on the part of Annie i n t h i s transaction. From that date on Annie paid a l l the property taxes, due and past due, and from that date t o the t i m e of ~ i m ' s death Annie continued t o help Tim i n his business. Defendant alleges the d i s t r i c t court erred i n i t s conclusion^ of law. W e agree. Conclusion No. 4 found that a "resultant trust" was created by the conveyances with the defendant as a constructive trustee. Section 86-210, R.C.M. 1947, provides: 11 Involuntary t r u s t resulting from fraud, etc. One who gains a thing by fraud, accident, mistake, undue influence, the violation of a t r u s t , or other wrongful a c t , i s , unless he has some other or b e t t e r right thereto, an involuntary trustee of the thing gained, for the benefit of the person who would other- wise have had it. 11 From the reading of section 86-210, it is obvious that i f we a r e t o sustain the d i s t r i c t court by imposing a constructive t r u s t on these properties, then fraud must be found. This the t r i a l court failed t o do and we note that neither the pleadings nor proof show a finding of an "accident", "mistake", "undue fluence", "violation of a t r u s t , o r other wrongful act" as t o come within the provisions of section 86-210. In McReynolds v. McReynolds, 147 Mont. 476, 482, 414 P.2d 531, a case involving transfers of property within a family, Justice Castles sa.id: "Just as the written statements of the defendants were not admissible t o vary the t e r m s of the deeds, neither a r e t h e i r o r a l statements. Where there is nothing ambiguous o r uncertain i n the terms of a deed it speaks for i t s e l f , and par01 evidence tending t o show a prior or contemporaneous o r a l agreement or t a c i t understanding with respect t o the terms of the conveyance is inadmissible. I I In Bodine v. Bodine, 149 Mont. 29, 39, 422 P.2d 650, t h i s Court said: "The deed here must be construed a s it is written. W e can neither put words into the deed which a r e not there, nor can we put a construction on words contrary t o their obvious meaning. 23 Am.Jur.2d Deeds, $161, pp. 209-210." In its findings of fact Nos. 5 and 10 and i t s conclusion of law No. 3, the court found that there existed between Annie and Tim, "a mutual relationship of confidence, t r u s t and financial transactions unique t o close, personal intra-family ties." A s a r e s u l t of t h i s t r u s t relationship, according t o the court, Annie induced Tim t o transfer certain properties t o her. The record does not support either the findings o r the conclusion of law. This Court i n McReynolds is i n accord with authority that a confidential relationship between grantor and grantee who a r e relatives i s not sufficient enough t o find undue influence on the part of the grantee. Mollendorf v. Derry, 95 Idaho 1, 501 P.2d 199; Dickey v. Clarke, 65 Idaho 247, 142 P.2d 597. Under Montana law and the facts here, w e hold the d i s t r i c t court erred i n its findings of fact and conclusions of law that defendant induced her son t o transfer certain properties t o her and that a resultant t r u s t was created making her a constructive trustee for said property. The cause i s returned to the d i s t r i c t court t o comply with t h i s opinion. P ' 2 , I , * * <- b? .. .... L ; . k . . >*- & - $. t % . . -. . Chief JustYce Justices. M r . Justice Frank I. Haswell, dissenting: I dissent, In m y view there i s substantial evidence supporting the d i s t r i c t court's findings of fact; its conclusions of law based on such facts a r e correct; and i t s resulting judgment should be affirmed . A s I see it, t h i s case turns primarily on the facts. Admittedly the evidence i s conflicting. The d i s t r i c t judge, a s t r i e r of the facts, resolved these conflicts i n favor of plaintiffs. The function of the Supreme Court on appeal i s t o review the record and determine whether there i s substantial credible evidence supporting the t r i a l court's findings of fact. Richardson v. Howard Motors, Inc,, 163 Mont. 347, 516 P.2d 1153 and cases cited therein. In an equity case t h i s Court must review a l l questions of f a c t and law, and must sustain the t r i a l court's findings of fact unless there i s a decided preponderance of evidence against them. Barrett v, Zenisek, 132 Mont. 229, 315 P.2d 1001. A summary of the principal findings of fact by the t r i a l court is: (1) That a mutual relationship of t r u s t and confidence existed between Tim and Annie. (2) That T i m was a heavy drinker who could not o r would not assert h i s own judgment i n the face of Annie's arguments and remonstrances concerning h i s personal l i f e and business a f f a i r s . (3) That i n August 1968, Annie induced Tim t o transfer t o her a l l r e a l e s t a t e standing i n h i s name by representing that it was for h i s own protection and led him t o believe that she would reconvey it back t o him a t t h e proper t i m e . ( 4 ) That conveyance was made without consideration and with the understanding that Annie would reconvey the property back t o Tim on request. (5) That between the date of T i m ' s third marriage i n 1970 and the date of h i s sudden and unexpected death i n 1971, Annie refused T i m ' s demand f o r reconveyance of the property. The evidence supporting these findings is: (1) The f i r s t finding i s undisputed. (2) The second finding is supported by the testimony of Thelma Mahaffey, ~ i m ' s f i r s t wife t o whom he was married for 20 years, and from the death c e r t i f i c a t e l i s t i n g acute alcoholism as a contributing cause of death. (3) The third finding is supported by the testimony of James A. Hoffman, the licensed public accountant who kept the books and records for Tim's businesses, including accounts between Annie and Tim, for about 20 years and who prepared both ~ i m ' s and Annie's income tax returns. Hoffman t e s t i f i e d that i n 1968 Annie told him that the F o p e r t y transfer "was only temporary, that it was going t o be transferred back t o [Tim]"; that so f a r as h i s books re- flected, there was "still a balance due from Annie t o Tim of $1,967.69"; and that a l l preexisting recorded indebtedness of Tim t o Annie had been completely paid and discharged. Beverly DeLeeuw Pulver, ~ i m ' s widow, t e s t i f i e d she asked Annie why "the property was i n her name, ~ i m ' s property was i n her name, and she said 'For h i s protection'; and I said 'why h i s protec- tion? You know he's a grown man' and she said he awed money and i f he had it i n h i s name then he would get a lien against him * Jc *.I1 Thelma Mahaffey, Tim's f i r s t wife, t e s t i f i e d to a conversa- tion she had with Annie during the time of Tim's marriage t o his second wife, when Annie said "there would be no one touch h i s property o r ever take anything away from him because she had it a l l tied up. 11 ( 4 ) The fourth finding is supported by the foregoing testimony of the accountant, Hoffman; h i s ledger and accounting sheets; the property valuation testimony of William F. Stevens, the appraiser; the 1966 agreement, release and satisfaction of judgment by Annie i n her debt action against both T i m and Thelma; and the corroborating testimony of Thelma Mahaffey. (5) The f i f t h finding i s supported by the testimony of Thelma Mahaffey t o the effect t h a t Tim so advised her shortly before h i s death. I would hold that the foregoing constitutes substantial > credible evidence supporting the d i s t r i c t court's findings of fact. Given these findings of f a c t , the d i s t r i c t court's con- clusions of law follow as night follows day. The pertinent s t a t u t e provides : "86-210. Involuntary t r u s t resulting from fraud, etc. One,who gains a thing by fraud, accident, mistake, undue influence, the violation of a t r u s t , o r other wrongful a c t , is, unless he has some other o r b e t t e r r i g h t thereto, an involuntary trustee of the thing gained, f o r the benefit of the person who would otherwise have had it." Whether the circumstances here a r e characterized a s constructive fraud, undue influence, o r violation of a t r u s t i s beside the point. Where, a s here, a transfer is made between two persons standing i n a confidential relationship without valuable consideration and induced by a promise t o reconvey, equity imposes a resulting t r u s t on the property, not because the parties agreed t h a t the property would be held i n t r u s t , but t o prevent unjust enrichment of the malefactor a t the expense of the injured party. Robuck v. Dennis, 149 Mont. 247, 425 P.2d 327; Bradbury v. Nagelhus, 132 Mont. 417, 319 P.2d 503. The abuse of the confidential rela- tionship by f a i l u r e t o f u l f i l l the promise t o reconvey is the sub- stance of the wrong f o r which equity w i l l impose a resulting t r u s t . Scott on Trusts, Third Edition, V. 1, 544.2. In m y view, the majority here has cut off the inheritance a r i g h t s of the widow and children by making/factual determination contrary t o that of the d i s t r i c t court. Therefore, I dissent. Justice.