Title: NORTHWESTERN UNION TRUST CO v WOR
Citation: N/A
Docket Number: 82-521
State: Montana
Issuer: Montana Supreme Court
Date: May 19, 1983

NO. 82-521 I N THE SUPREME C O U R T O F T H E STATE O F M O N T A N A 1983 NORTHWESTERN UNION TRUST CO., Personal Representative of t h e E s t a t e of CBRIST WORM, SR., Deceased, P l a i n t i f f and Appellant, BEN WORM AND DORIT WORhI, Defendants and Respondents. Appeal from: D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l D i s t r i c t , I n and f o r t h e County of Treasure, The Honorable William J. Speare, Judge p r e s i d i n g . Counsel of Record: For Appellant: Keefer, Roybal, Hanson, Stacey & J a r u s s i ; Gene R. J a r u s s i , B i l l i n g s , Montana Bruce E. Lee, co-counsel, B i l l i n g s , Montana For Respondents: William F. Fteisburqer, Forsyth, Montana I-I. D. Euelow, M i l e s C i t y , Pilontana Submitted on B r i e f s : March 25, 1983 Decided: May 1 9 , 1983 F i l e d : MAY 1 9 1983 Clerk Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e Opinion of t h e C o u r t . Northwestern Union T r u s t Company b r o u g h t t h i s a c t i o n t o set a s i d e a recorded deed which p l a c e d t i t l e t o r e a l p r o p e r t y l o c a t e d i n T r e a s u r e County i n t o d e f e n d a n t s ' names. Judgment was e n t e r e d upon a j u r y v e r d i c t i n f a v o r of d e f e n d a n t s and t h e T r u s t Company a p p e a l s . I n t h e l a t e 1 9 4 0 1 s , C h r i s t Worm purchased two p i e c e s of pro- p e r t y i n T r e a s u r e County known a s t h e "Home P l a c e " and t h e "South P l a c e . " On December 28, 1960, C h r i s t and Helen Worm, and t h e i r s o n and daughter-in-law, Ben and D o r i t Worm, executed a $12,000 n o t e p a y a b l e t o t h e F e d e r a l Land Bank of Spokane, a f t e r r e c e i v i n g a $12,000 l o a n . I n a d d i t i o n , t h e Worms executed a F e d e r a l Farm Loan A m o r t i z a t i o n Mortgage on t h e Home P l a c e and t h e S o u t h P l a c e . The n o t e was t o be p a i d i n twenty a n n u a l i n s t a l l m e n t s of $1,046.22. On March 31, 1961, Ben and D o r i t e n t e r e d i n t o a c o n t r a c t f o r deed w i t h C h r i s t and H e l e n , t o purchase t h e Home P l a c e and t h e S o u t h P l a c e . The p u r c h a s e p r i c e on t h e c o n t r a c t was $24,000. Ben and D o r i t agreed t o pay t h e $12,000 n o t e t o t h e F e d e r a l Land Bank and a n o t h e r $12,000 t o C h r i s t and Helen d i r e c t l y w i t h 1 p e r - c e n t annual i n t e r e s t . S i m u l t a n e o u s l y w i t h t h e e x e c u t i o n of t h e c o n t r a c t , C h r i s t and Helen executed a w a r r a n t y deed f o r t h e Home P l a c e and t h e South P l a c e t o Ben and D o r i t . C h r i s t k e p t p o s s e s s i o n of t h e w a r r a n t y deed t o be d e l i v e r e d t o Ben and D o r i t upon completion of t h e c o n t r a c t . Ben t e s t i f i e d beginning i n 1961 and e v e r y y e a r t h e r e a f t e r u n t i l 1973 he p a i d C h r i s t enough money t o cover t h e F e d e r a l Land Bank mortgage and p a i d C h r i s t a t l e a s t $1,000 a n n u a l l y due on t h e c o n t r a c t . Ben a l s o p a i d C h r i s t $5,000 i n 1974 and $7,000 i n 1975. Ben t e s t i f i e d he had t h e r e f o r e p a i d o f f t h e e n t i r e c o n t r a c t w i t h t h e f i n a l payment i n 1975. I n 1965, Ben and D o r i t f i l e d a p e t i t i o n f o r bankruptcy. The p e t i t i o n d i d n o t l i s t Ben's e q u i t y i n t h e farm as an asset, nor d i d t h e p e t i t i o n list t h e n o t e payable t o t h e Federal Land Bank a s a c l a i m a g a i n s t t h e bankruptcy e s t a t e . A f t e r t h e bankruptcy, Ben, D o r i t , and t h e i r c h i l d r e n continued t o l i v e and work on t h e farm. From 1967 through 1973 Ben and/or C h r i s t o b t a i n e d annual f i n a n c i n g from t h e Midland P r o d u c t i o n C r e d i t A s s o c i a t i o n (PCA). To o b t a i n f i n a n c i n g , t h e d e b t o r must complete and s i g n a finan- c i a l s t a t e m e n t , l o a n a p p l i c a t i o n s , and s e c u r i t y agreements. I n t h o s e y e a r s Ben o b t a i n e d t h e f i n a n c i n g , he s t a t e d on t h e s e c u r i t y agreements t h a t he was o p e r a t i n g t h e farm a s a lessee. I n those y e a r s C h r i s t o b t a i n e d t h e f i n a n c i n g , he s t a t e d on t h e s e c u r i t y agreements t h a t he was o p e r a t i n g t h e farm as t h e owner. Northwestern Union introduced i n t o evidence checks showing payments t o t h e F e d e r a l Land Bank f o r t h e y e a r s 1966, 1968, 1969, 1970, 1975, 1976, and 1977. Each check is drawn upon C h r i s t ' s a c c o u n t and signed by C h r i s t . Ben t e s t i f i e d he paid c a s h t o C h r i s t who would t h e n make t h e n e c e s s a r y payments t o t h e Land Bank. I n A p r i l 1975, Ben t e s t i f i e d C h r i s t gave him t h e warranty deed s t a t i n g Ben had f u l f i l l e d h i s o b l i g a t i o n on t h e c o n t r a c t . D o r i t Worm t e s t i f i e d she was p r e s e n t when t h e deed was exchanged. Two p e r s o n s , S h i r l y Cunningham and C h a r l e s B l y t h e , t e s t i f i e d Ben had p o s s e s s i o n of t h e deed i n 1975 and showed t h e deed t o them. I n February 1977, D o r i t Worm f i l e d a p e t i t i o n f o r d i s s o l u - t i o n of her marriage t o Ben Worm. Paragraph V I I I s t a t e s t h e par- t i e s , "have accumulated no p e r s o n a l o r r e a l p r o p e r t y . " I n 1978, C h r i s t l e a s e d t h e Home P l a c e and t h e South P l a c e t o Harold Zent Farms, I n c . I n March 1980, C h r i s t l e a s e d t h e Home P l a c e and t h e South P l a c e t o Robert DeCock and James DeCock. Ben Worm was n o t a p a r t y t o t h e l e a s e s . Dawn Worm, Ben's d a u g h t e r , t e s t i f i e d Ben gave h e r t h e deed f o r s a f e k e e p i n g and t h a t she r e t u r n e d t h e deed t o Ben near t h e end of 1980 o r t h e beginning of 1981. Helen Worm t e s t i f i e d Ben found what she thought was t h e deed i n 1981 w h i l e he was h e l p i n g h e r move a m a t t r e s s i n C h r i s t ' s home. Ben recorded t h e deed a t t h e T r e a s u r e County C l e r k and R e c o r d e r ' s O f f i c e i n November 1981. C h r i s t died on November 1 4 , 1981. I n a W i l l he executed J u n e 3 , 1975, C h r i s t d e v i s e d one-third of a l l h i s r e a l p r o p e r t y t o Helen Worm; t w o - t h i r d s of t h e Home P l a c e t o James J a c o b Worm; and t w o - t h i r d s of t h e South P l a c e to Ben's c h i l d r e n , Ben C h r i s t Worm and C h r i s t i a n Willie Worm. The W i l l s t a t e s , " I am l e a v i n g t h e 'South P l a c e ' t o my son BENJAMIN'S CHILDREN a t h i s r e q u e s t so t h a t he may n o t s e l l o r encumber t h e same by r e a s o n of h i s a d m i t t e d weaknesses." Northwestern Union T r u s t Company was a p p o i n t e d p e r s o n a l r e p r e s e n t a t i v e of C h r i s t ' s e s t a t e . Northwestern Union brought t h i s a c t i o n t o s e t a s i d e t h e deed t h a t Ben recorded p l a c i n g t i t l e t o t h e Home P l a c e and t h e South P l a c e i n h i s and D o r i t ' s name. A f t e r a j u r y t r i a l i n t h e D i s t r i c t Court of t h e T h i r t e e n t h J u d i c i a l District , T r e a s u r e County, t h e j u r y r e t u r n e d a v e r d i c t i n f a v o r of Ben and D o r i t Worm. Northwestern Union moved f o r a new t r i a l which t h e D i s t r i c t Court denied and t h i s appeal followed. The i s s u e s r a i s e d on appeal a r e a s f o l l o w s : 1. Whether t h e j u r y v e r d i c t was supported by s u b s t a n t i a l c r e d i b l e evidence; 2. Whether it was e r r o r t o exclude t h e video testimony of a t t o r n e y , Richard W. Anderson, who prepared t h e bankruptcy p e t i - t i o n f o r Ben and D o r i t i n 1965; 3 . Whether it was e r r o r t o i n s t r u c t t h e j u r y t h a t t h e y could f i n d t h a t C h r i s t and Helen Worm made a g i f t of t h e r e a l p r o p e r t y t o Ben and D o r i t Worm; 4 . Whether it was e r r o r t o r e f u s e t h e p l a i n t i f f ' s o f f e r e d i n s t r u c t i o n on mutual c a n c e l l a t i o n of a c o n t r a c t . W e w i l l f i r s t d e a l w i t h i s s u e number f o u r . P l a i n t i f f ' s o f f e r e d t h e f o l l o w i n g i n s t r u c t i o n on mutual c a n c e l l a t i o n of a c o n t r a c t : "You a r e i n s t r u c t e d t h a t t h e p a r t i e s t o a c o n t r a c t may t e r m i n a t e it a t any time by mutual c o n s e n t . The e f f e c t is t o r e l i e v e t h e p a r t i e s from going forward under t h e c o n t r a c t . T h i s t e r m i n a t i o n may be o r a l l y done, and t h e f a c t of its having been done may be e s t a b l i s h e d by e v i d e n c e of t h e a c t s and d e c l a r a t i o n of t h e p a r t i e s ." P l a i n t i f f ' s contend t h e District Court e r r e d i n r e f u s i n g t o g i v e t h i s i n s t r u c t i o n t o t h e jury. W e a g r e e . The r u l e of law s t a t e d i n t h e above i n s t r u c t i o n comes from Eggers v. General R e f r i g e r a t i o n Co. ( 1 9 4 9 ) , 1 2 3 Mont. 205, 219, 210 P.2d 636: "The p a r t i e s t o t h e e x e c u t o r y w r i t t e n agreement were p r i v i l e g e d t o t e r m i n a t e it a t any time by mutual c o n s e n t i n d e p e n d e n t l y of a n y e x p r e s s agreement so p r o v i d i n g and it is i m m a t e r i a l whether such t e r m i n a t i o n be charac- t e r i z e d an abandonment, c a n c e l l a t i o n , mutual r e s c i s s i o n o r waiver. The e f f e c t is t h e same -- t o r e l i e v e t h e p a r t i e s from going forward under t h e w r i t t e n i n s t r u m e n t , and t h i s may be accomplished by p a r o l , and t h e f a c t s of its having been done e s t a b l i s h e d by e v i d e n c e of t h e a c t s and d e c l a r a t i o n s of t h e p a r t i e s . " T h i s r u l e o r i g i n a t e s from K e s t e r v. Nelson ( 1 9 3 2 ) , 92 Mont. 69, 1 0 P.2d 379, and h a s s i n c e been s p e c i f i c a l l y c i t e d i n Small v. Coca-Cola B o t t l i n g Co. ( 1 9 5 8 ) , 134 Mont. 168, 328 P.2d 124, and West River Equipment Co. v. Holzworth C o n s t r u c t i o n Co. ( 1 9 5 9 ) , 134 Mont. 582, 335 P.2d 298. I n S t a n d a r d I n s u r a n c e Co. v. S t u r d e v a n t ( 1 9 7 7 ) , 1 7 3 Mont. 23, 27, 566 P.2d 52, t h i s Court s t a t e d : "Termination of a c o n t r a c t by mutual c o n s e n t is a q u e s t i o n of f a c t f o r t h e d i s t r i c t c o u r t . " And i n Murphy v. Redland, B e r t h e l s o n & S i d n e y L i v e s t o c k ( 1 9 7 8 ) , 178 Mont. 296, 306, 583 P.2d 1049, t h i s Court s t a t e d : "A c o n t r a c t may be ter- minated by t h e p a r t i e s , b u t o n l y by t h e mutual c o n s e n t of a l l t h e p a r t i e s . " P l a i n t i f f s p l e d i n t h e i r c o m p l a i n t , t h a t t h e c o n t r a c t had been t e r m i n a t e d and i n t h e i r t r i a l memorandum s t a t e d t h e c o n t r a c t w a s c a n c e l l e d by mutual c o n s e n t of t h e p a r t i e s . Helen Worm t e s t i f i e d t h e c o n t r a c t was t e r m i n a t e d by t h e mutual c o n s e n t of t h e p a r t i e s when Ben f i l e d a p e t i t i o n f o r bankruptcy i n 1965. P l a i n t i f f s i n t r o d u c e d e v i d e n c e which showed Ben d i d not claim ownership of t h e farm on t h e bankruptcy p e t i t i o n , l o a n a p p l i c a - t i o n s , l e a s e agreements and D o r i t ' s p e t i t i o n f o r d i s s o l u t i o n of m a r r i a g e . There is no q u e s t i o n p l a i n t i f f ' s c a s e r e s t e d upon t h e i s s u e of mutual c a n c e l l a t i o n of t h e c o n t r a c t . A p a r t y h a s a r i g h t t o have i n s t r u c t i o n s g i v e n which a r e a d a p t a b l e t o h i s t h e o r y of t h e c a s e . Williams v. Montana N a t i o n a l Bank of Bozeman ( 1 9 7 5 ) , 167 Mont. 24, 534 P.2d 1247, 1250. Here, r e f u s a l t o i n s t r u c t on mutual c a n c e l l a t i o n of t h e c o n t r a c t c o n s t i t u t e s r e v e r s i b l e e r r o r . D e f e n d a n t ' s argue s i n c e mutual c a n c e l l a t i o n of t h e c o n t r a c t was n o t l i s t e d a s an i s s u e i n t h e p r e t r i a l o r d e r , p l a i n t i f f s can- n o t r a i s e t h i s i s s u e on a p p e a l . Defendants r e l y on Rule 1 6 , M.R.Civ.P., claiming t h e p r e t r i a l o r d e r , "when e n t e r e d c o n t r o l s t h e subsequent c o u r s e of t h e a c t i o n , u n l e s s modified a t t h e t r i a l t o p r e v e n t m a n i f e s t i n j u s t i c e ." However, Rule 15 ( b ) , M.R.Civ. P., s t a t e s : "When i s s u e s n o t r a i s e d by t h e p l e a d i n g s a r e t r i e d by e x p r e s s o r implied c o n s e n t of t h e p a r t i e s , t h e y s h a l l be t r e a t e d i n a l l r e s p e c t s a s i f t h e y had been r a i s e d i n t h e p l e a d i n g s . Such amendment of t h e p l e a d i n g s a s may be n e c e s s a r y t o cause them t o conform t o t h e evi- dence and t o r a i s e t h e s e i s s u e s may be made upon motion of any p a r t y a t any time, even a f t e r judgment; b u t f a i l u r e t o so amend does n o t a f f e c t t h e r e s u l t of t h e t r i a l of t h e s e i s s u e s . " W e f i n d h e r e , t h e i s s u e of mutual c o n s e n t was r a i s e d a t t h e t r i a l and t h u s was an i s s u e f o r c o n s i d e r a t i o n by t h e jury. W e do n o t a g r e e w i t h d e f e n d a n t ' s p o s i t i o n t h a t t h i s i s s u e was waived a t t h e t r i a l and not reviewable by t h i s Court. I n summation, we w i l l b r i e f l y comment on i s s u e s number two and t h r e e . W e do n o t f i n d it n e c e s s a r y t o d e t e r m i n e whether it was e r r o r t o exclude t h e video testimony of Richard Anderson a s h e was i n t e n d e d a s a r e b u t t a l w i t n e s s , not l i s t e d on t h e pre- t r i a l o r d e r . On r e t r i a l , p l a i n t i f f s can t a k e t h e n e c e s s a r y a c t i o n t o p r e s e n t t h e i r evidence concerning t h e bankruptcy p e t i - t i o n and c a l l t h e proper w i t n e s s o r w i t n e s s e s . P l a i n t i f f s con- t e n d it was e r r o r f o r t h e D i s t r i c t Court t o i n s t r u c t t h e j u r y t h a t t h e y could f i n d C h r i s t had g i f t e d t h e p r o p e r t y t o Ben and D o r i t . Whether t h e r e was a g i f t was l i s t e d a s an i s s u e i n t h e p r e t r i a l o r d e r . A s s t a t e d above, a p a r t y h a s t h e r i g h t t o have i n s t r u c t i o n s given which a r e a d a p t a b l e t o h i s t h e o r y of t h e c a s e . W e f i n d no e r r o r i n t h e i n s t r u c t i o n . Judgment is r e v e r s e d and t h e c a s e is remanded f o r r e t r i a l . I J u s t i c e W e concur: 3d~A&hQq Chief J u s t i c e