Title: DAVIS v DAVIS
Citation: N/A
Docket Number: 11934
State: Montana
Issuer: Montana Supreme Court
Date: January 27, 1972

No. 11934 I N T H E S U P R E M E C O U R T O F THE STATE O F M O N T A N A 1971 DAN DAVIS and D O N A L D DAVIS, P l a i n t i f f and Respondent, -vs - GEORGE V. DAVIS, Defendant and Appellant. Appeal from: D i s t r i c t Court of t h e Third J u d i c i a l D i s t r i c t , Honorable Sid G. Stewart, Judge presiding. Counsel of Record: For Appellant : William R. Taylor argued, Deer Lodge, Montana. Hughes, Bennett and Alan F. Cain, Helena, Montana. Alan F. Cain argued, Helena, Montana. For Respondent : C. W. Leaphart, Jr. argued, Helena, Montana. Submitted: December 2, 1971 Decided : JAN 2 7 1 9 n F i l e d : JAN 2 7 1972 M r . J u s t i c e Gene B. Daly delivered t h e Opinion of t h e Court. This cause involves two a c t i o n s consolidated f o r t r i a l purposes i n t h e d i s t r i c t court of t h e t h i r d j u d i c i a l d i s t r i c t , Powell County. The a c t i o n s were brought by two brothers a g a i n s t t h e i r uncle f o r breach of o r a l contracts t o manage ranch proper- t i e s . The matter was t r i e d t o the court s i t t i n g with a jury. From a jury v e r d i c t and judgment i n favor of t h e p l a i n t i f f s , t h e defendant appeals. The p l a i n t i f f s a r e Dan Davis and Donald Davis. The defendant i s George V. Davis, t h e i r uncle. Each p l a i n t i f f ' s complaint was drawn i n t h r e e counts. Count I alleged an o r a l c o n t r a c t running from t h e year 1957 through 1964, whereby p l a i n t i f f s were t o each receive a s a l a r y of $350 per month, plus f r e e meat, milk, u t i l i t i e s , and housing. P l a i n t i f f s were a l s o t o receive one-third of the p r o f i t s of the ranches and a s a f u r t h e r compensation each p l a i n t i f f was t o be designated i n a w i l l , t o be executed by defendant, t o receive the ranch upon which he was l i v i n g i n t h e event of defen- dant's death. The respective complaints a l l e g e t h a t t h e f u l l share of p r o f i t s was not paid t o each p l a i n t i f f . Dan Davis prays f o r $71,310 damages and Donald Davis prays f o r $68,653 damages. Count I1 a l l e g e s a s i m i l a r o r a l agreement running from 1965 through 1966, under which each p l a i n t i f f was t o receive the remuneration outlined i n Count I, except t h a t each p l a i n t i f f was t o receive one-half of t h e p r o f i t s of t h e ranches, l e s s deprecia- t i o n ; and each was t o hold the p r o f i t s received f o r t h e purpose of paying inheritance taxes. P l a i n t i f f s a l l e g e t h a t f o r the years 1965 and 1966, they received no p r o f i t s . Donald Davis prays f o r $32,000 damages and Dan Davis prays f o r $38,000 damages. Count 111 a l l e g e s i n substance t h a t by h i s manner and a c t i o n s defendant prevented p l a i n t i f f s from performing t h e i r c o n t r a c t s ; t h a t p l a i n t i f f s believe defendant has n o t provided f o r them i n h i s w i l l a s agreed and they pray f o r r e l i e f i n t h e nature of s p e c i f i c performance,foccing defendant t o execute a w i l l i n the manner agreed upon. By way of answer defendant admitted t h a t p l a i n t i f f s were employed by him f o r the years s t a t e d i n the complaints but denied the existence of any such agreements a s alleged i n the complaints. The bonus payments which were paid t o p l a i n t i f f s by defendant were admitted; defendant denied they were paid pursuant t o any s e t c o n t r a c t s , but were paid i n t h e d i s c r e t i o n of defendant. Defendant f u r t h e r alleged t h a t p l a i n t i f f s breached t h e terms of whatever agreements they considered existed between defendant and themselves by demanding $1,000 per month s a l a r y and threaten- ing t o q u i t defendant's employ i f he f a i l e d t o accede t o t h e i r demands. Defendant a d d i t i o n a l l y s e t up t h e defense t h a t p l a i n t i f f s ' claims through the year 1961, were barred by t h e s t a t u t e of l i m i t a t i o n s , s e c t i o n 93-2604(1), R.C.M. 1947, which provides I I An a c t i o n upon a contract * * * not founded on an instrument i n writing" must be commenced within f i v e years. Further, t h a t t h e alleged o r a l c o n t r a c t s t o make a w i l l were void a s i n v i o l a t i o n of t h e s t a t u t e of frauds, s e c t i o n 13-606, R.C.M. 1947, and section 93-1401-7(1) and ( 4 ) , R.C.M. 1947. During the course of the t r i a l t h e d i s t r i c t judge granted defendant's motion f o r a d i r e c t e d v e r d i c t a s t o the claims of p l a i n t i f f s f o r wages and shares of p r o f i t f o r t h e years 1956 t o 1961, on t h e ground t h a t such claims were barred by the a p p l i c a b l e s t a t u t e of l i m i t a t i o n s . The court a l s o determined t h e defendant had performed t h a t portion of the agreements regarding the d r a f t i n g of a w i l l , s i n c e defendant had drafted and executed a w i l l naming p l a i n t i f f s Donald Davis and Dan Davis a s devisees of c e r t a i n properties i n Powell County which p l a i n t i f f s had been managing f o r defendant. Consequently, a t the c l o s e of the evidence, Count I11 i n each complaint was dismissed, without objection. The matter was then submitted t o the jury, which returned a v e r d i c t i n favor of each p l a i n t i f f i n the amount of $38,205.34. Defendant-appellant presents f i v e issues f o r review: 1. Whether the v e r d i c t and judgment i n the d i s t r i c t court a r e supported by s u b s t a n t i a l evidence. 2. Whether p l a i n t i f f s must be held, a s a matter of law, t o have waived t h e i r r i g h t t o i n s i s t on t h e performance they claim t o be due from defendant under the alleged o r a l c o n t r a c t s . 3. Whether p l a i n t i f f s a r e precluded from recovery on the alleged contracts i n view of t h e i r own breach. 4. Whether the d i s t r i c t court erred i n admitting evidence of the alleged o r a l contracts t o make a w i l l devising r e a l property. 5. Whether t h e alleged o r a l contracts t o devise r e a l property and t o pay a c e r t a i n share of p r o f i t s from ranch opera- t i o n s a r e unenforceable a s being i n v i o l a t i o n of the s t a t u t e of frauds. P l a i n t i f f s argue t h e appeal should be dismissed f o r f a i l u r e of defendant t o move f o r a new t r i a l , and t h a t defendant's i s s u e 2 , waiver, and i s s u e 3 , breach, a r e not proper issues a s they were not raised a t the d i s t r i c t court l e v e l . I n t h e f i r s t instance, defendant has adequate procedural ground t o support h i s appeal and a f a i l u r e t o move f o r a new t r i a l i s not f a t a l t o h i s appeal, a s urged by p l a i n t i f f s . Defendant did move the d i s t r i c t court f o r . a directed v e r d i c t a t t h e c l o s e of a l l the evidence based p r i n c i p a l l y on the ground t h a t t h e evidence presented a t t r i a l was i n s u f f i c i e n t t o e s t a b l i s h a b a s i s upon which t h e jury could reasonably find t h a t the c o n t r a c t s existed. This motion presented t o t h e t r i a l court t h e same ques- t i o n which p l a i n t i f f s urge can only be presented i n a motion f o r a new t r i a l following t h e v e r d i c t , i f t h i s Court i s t o review t h e evidence presented a t t r i a l on appeal. The question urged on appeal here --- t h a t evidence t o support a v e r d i c t i n favor of p l a i n t i f f s was t o t a l l y lacking--- was d i r e c t l y presented t o and ruled on by the d i s t r i c t c o u r t . This matter was treated" i n Kuchinski v. Security Gen. Ins. Co., 141 Mont. 515, 518, 380 P.2d 889, thusly: I 1 I A motion f o r a judgment of non-suit, o r a motion f o r a directed v e r d i c t , i s i n e f f e c t a demurrer t o t h e evidence and presents t o t h e t r i a l court a question of law t o be determined [Citing c a s e s ] , and where e i t h e r of such motions i s made i n t h e t r i a l court and overruled, t h e question of the sufficiency of the evidence t o support the v e r d i c t and judgment is before t h i s court on appeal from the judgment. ' La Bonte v. Mutual F i r e e t c . Ins. Co., 75 Mont. 1 [ l o ] , 241 P. 631, 634. 11 1 I f a motion f o r a new t r i a l has n o t been made, the court w i l l review the evidence t o determine whether t h e r e i s any s u b s t a n t i a l evidence t o j u s t i f y t h e v e r d i c t . [Citing cases. ] ' Harrington v. H. D. Lee Mercantile Co., 97 Mont. 40, 55, 33 P.2d 553, 556." Here, the two issues presented by defendant having t o do with t h e alleged waiver and breach of p l a i n t i f f s , should be considered. Under the admitted employment agreements f o r t h e periods from 1957 t o 1964, and from 1965 t o 1966, and concurrently under the alleged contracts t o share i n the p r o f i t s and t o draw a w i l l , defendant admitted an employment agreement terminable a t w i l l , but denied t h e existence of any alleged c o n t r a c t s t o s h a r e i n t h e p r o f i t s o r draw a w i l l . In t h e p r e t r i a l order issued by t h e d i s t r i c t court s e t t i n g t h e t r i a b l e issues of f a c t and law, defendant's position is c o n s i s t e n t l y s t a t e d a s a d e n i a l of any alleged contracts e i t h e r t o share i n the p r o f i t s o r t o f u l f i l l any obligation t o devise o r bequeath t o p l a i n t i f f s any property by w i l l . Rule 16, Montana Rules of C i v i l Procedure, provides a p r e t r i a l conference w i l l formulate t h e issues: "Jc * JcThe court s h a l l make an order which r e c i t e s t h e a c t i o n taken a t t h e conference, t h e amendments allowed t o the pleadings, and t h e agreements made by the p a r t i e s a s t o any of t h e matters considered, and which l i m i t s t h e issues f o r t r i a l t o those not disposed of by admissions o r agreements of counsel; and such order when entered controls t h e subsequent course of t h e a c t i o n , unless modified a t the t r i a l t o prevent manifest i n j u s t i c e . * * *" The p r e t r i a l order s e t t i n g f o r t h defendant's contentions indicates t h a t t h e contracts under which t h e p l a i n t i f f s were employed were terminable a t w i l l , and maintains a d e n i a l of any of p l a i n t i f f s ' alleged contracts with defendant. This Court is compelled t o agree w i t h p l a i n t i f f s ' argument t h a t i t stands t o reason i f t h e r e were no contracts t h e r e could be no breaches, and i f the agreements were terminable a t w i l l , the p l a i n t i f f s were e n t i t l e d t o terminate a t any time they saw f i t . However, of more c r u c i a l weight i s t h e procedural process which recognizes t h a t the issues of waiver and breach were not made issues a t t h e t r i a l and thus may not be introduced on appeal. This Court has s a i d on numerous occasions t h a t it w i l l consider f o r review only those questions raised i n t h e t r i a l court. Spencer v. Robertson, 151 Mont. 307, 445 P.2d 48; Clark v. Worrall, 146 Mont. 374, 406 P.2d I n reference t o i s s u e 4 , we deem t h e admission of evidence of the alleged o r a l contracts t o make a w i l l devising r e a l property t o have no bearing on t h i s appeal, i n view 05 the d i s t r i c t c o u r t ' s dismissal of Count I11 i n each complaint a t t h e c l o s e of the evidence. The i s s u e of t h e alleged o r a l c o n t r a c t s t o devise property under t h e w i l l of defendant was removed from t h e jury without objection and thus is not a p a r t of t h i s appeal. I n considering t h e principal question presented by defendant i n t h i s appeal, namely --- t h a t evidence t o support a v e r d i c t i n favor of p l a i n t i f f s was t o t a l l y lacking --- we w i l l be guided by t h e long standing r u l e i n Montana a s s t a t e d i n Bernhard v. Lincoln County, 150 Mont. 557, 560, 437 P.2d 377: "\hen such a question i s before t h i s court we w i l l only review t h e evidence t o decide i f the v e r d i c t is supported by subs t a n t i a 1 evidence. Breen v. Indus t r i a 1 Accident Board (Mont. 1968), 436 P.2d 701. The f a c t t h a t there were c o n f l i c t s i n t h e testimony does not mean t h e r e i s not s u b s t a n t i a l evidence t o support the v e r d i c t . W e must accept the evidence believed by the I jury unless t h a t evidence i s s o inherently impossible o r improbable a s not t o be e n t i t l e d t o b e l i e f * *.' Wallace v. Wallace, 85 Mont. 492, 279 P. 374, 377, 66 A.L.R. 587 (1929)." A n examina'tion of the e n t i r e record reveals c o n f l i c t i n g but s u b s t a n t i a l evidence t o support the j u r y ' s finding of a c o n t r a c t a s opposed t o a voluntary bonus. Defendant makes a strong argument t h a t t h e testimony of h i s two accountants, both C.P.A. 's, demonstrates t h e yearly pay- ment was a bonus t h a t was paid by defendant t o the p l a i n t i f f s and understood t o be paid only out of "net operating p r o f i t s f ' of t h e ranching operations. A t t h e t r i a l one accountant defined t h e 1 f n e t operating p r o f i t f f a s "that would include a l l ranch s a l e s , except the s a l e s of livestock upon which the Federal income t a x people w i l l give us c a p i t a l gains treatment". The other described t h e operating p r o f i t a s t h e gross s a l e s of t h e c a t t l e l e s s expenses, and. t h a t a schedule of c a p i t a l gains was kept with such sums being t r e a t e d d i f f e r e n t l y f o r income tax purposes. A r e t i r e d vice-president and t r u s t o f f i c e r of the F i r s t National Bank and Trust Company of Helena, t e s t i f i e d a s t o h i s understanding i n these matters a s the r e s u l t of an e s t a t e planning meeting i n 1965 with George Davis, Donald Davis and t h e account - "A. Well, a s I r e c a l l it, M r . George Davis explained what h i s idea was of n e t operating income f o r t h e purpose of determining s a l a r y and bonuses--for a s a l a r y and bonus arrangement, and t h a t was t h e gross operating income, excluding capita 1 gains, l e s s ordinary operating expenses, and not including depreciation, and t h a t would be t h e net--that would leave you t h e n e t p r o f i t from the operation." (Emphasis supplied) In c o n t r a s t t o t h e above statements supporting defendant's position, t h e testimony of t h e brothers, Donald and Dan Davis, stands i n a d i f f e r e n t l i g h t from t h e o u t s e t . While t h e element of depreciation is n o t contested by the p l a i n t i f f s i n determining t h e n e t operating p r o f i t s , c l e a r l y d i f f e r e n t testimony was given i n regard t o t h e inclusion of the element of c a p i t a l gains i n t h e n e t operating income. Dan Davis t e s t i f i e d : "Q. Now, i f you know, when you made t h i s o r i g i n a l agreement o r arrangement i n 1965, was there any discussion had a s t o whether t h e c a p i t a l gains income would be t r e a t e d t h e same way t h a t t h e other income was, M r . Davis? [Objection sustained a t t h i s point.] "MR LEAPHART: Was t h e r e any discussion, l e t m e put it t h a t way? A . The discussion t h a t took place, w e l l , t h a t was never discussed --- they never t o l d m e t h a t it was t o be deducted. It was j u s t supposed t o be n e t p r o f i t . 1 1 Q. [Cross-examination] And when you say ' a l l of t h e p r o f i t ' what do you mean by t h a t ? " A . The d i f f e r e n c e between t o t a l s a l e s and t o t a l expenses, t h e p r o f i t . "Q. Now, i n t h a t claim t h a t you make, were you contending t h a t you were e n t i t l e d t o c a p i t a l pain? "A. When he made t h e agreement with us, he never s a i d anything about holding out c a p i t a l gains. 11 (Emphasis supplied) . Dan Davis went on t o s t a t e t h a t h i s statement applied t o both of t h e alleged c o n t r a c t s . Donald Davis on cross-examination t e s t i f i e d : "Q. Now, these years when he went over t h e income and the expense or t h e ranch with you, and showed h i s p r o f i t , you and he frequently d i d n ' t s e e the p r o f i t the same, o r what t h e p r o r i t was a s you con- tend was t o be shared, is t h a t r i g h t ? ' A . I don't ever remember of having any discussion with him. A t times when we were looking over these f i g u r e s , no, he never indicated t h a t c a p i t a l gains ever entered i n t o t h i s deal a t a l l , but only t h a t t h e p r o f i t was t h e difference between the t o t a l s a l e s and t o t a l expenses. He claimed t h a t the monies t h a t were t r e a t e d a s c a p i t a l gains, a s f a r a s t a x purposes were concerned, were included i n t h e n e t p r o f i t s , i n h i s tax return. "Q. Do you believe he [defendant] was confused about i t ? "A. Well, a t f i r s t , t h e r e were times t h a t I thought t h a t t h a t was a p o s s i b i l i t y . "Q. That he was confused, and d i d n ' t understand it t h e way you d i d , i s t h a t r i g h t ? I . Well, t h e r e was no doubt i n m y mind t h a t t h e r e was a difference. Now. I don't know how he understood it. but he had been i n the business long enough t h a t i t was cer- t a i n l y hard t o r m e t o believe t h a t he r e a l l y understood it the way he was t e l l i n g m e he understood it--- he had been i n the business too long t o make me believe t h a t . 1 ' (Emphasis supplied) While t h e evidence may stand i n apparent c o n f l i c t on t h e inclusion o r exclusion of the c a p i t a l gains i n the n e t operating p r o f i t of the ranches, t h e jury was vested with t h e s o l e considera- t i o n of the f a c t u a l issues and the c r e d i b i l i t y of witnesses and t es t imony . This Court finds nothing incompatible t h a t might not be explained by t h e proposition t h a t defendant was concerned with tax matters with h i s accountants, and t r e a t e d Donald Davis and Dan Davis d i f f e r e n t l y with regard t o t h e contract of p r o t i t sharing. It would be wholly corsistent with the normal under- standing and representations given t o t h e Davis brothers t h a t the prof i t s meant revenues minus expenses. The r e l a t i v e positions taken i n t h e lawsuits and t h e introduction of testimony regarding tax matters i s c o l l a t e r a l t o the i s s u e of t h e understanding be- tween George Davis and t h e brothers. This Court w i l l not d i s t u r b t h e f a c t u a l determinations of the jury and finds nothing t h a t is incredible o r i n s u f f i c i e n t i n the evidence produced a t t r i a l , upon which the jury r e l i e d . In regard t o defendant's t i n a l issue---the s t a t u t e of frauds a s a bar t o o r a l c o n t r a c t s - - - i t i s s u f f i c i e n t t o note t h a t t h e o r a l contracts of p r o f i t sharing r e l i e d upon a t t r i a l , were f u l l y executed on the p a r t of t h e p l a i n t i f f s and a s such represent a well recognized exception t o the s t a t u t e of frauds. Besse v. McHenry, 89 Mont. 520, 300 P. 199. The judgment of t h e t r i a l / Associate J u s t i c e Chief J u s t i c e Ua*------- Associae Q s t i c e s .