HANSEN v KIERNAN

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No. 12077 I N THE SUPREME COURT O T E STATE OF M N A A F H OTN 1972 YENS HANSEN, P l a i n t i f f and Respondent, LEE KIERNAN, A d m i n i s t r a t o r o f t h e E s t a t e o f JOSEPH PATRICK KIERNAN, deceased, e t a l e , Defendants and Appellants. 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 S i d G. Stewart, Judge p r e s i d i n g . Counsel o f Record : For A p p e l l a n t s : Tipp, Haven and B r a u l t , Missoula, Montana. Raymond W e B r a u l t argued, Missoula, Montana. For Respondent : William R e Taylor argued, Deer Lodge, Montana. James J. Masar, Deer Lodge, Montana. Submitted: Decided: F i l e d : JUL 1.1 lm A p r i l 21, 1972 JUL f 1 1914 M r . 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 Court. This i s an a p p e a l from a judgment and d e c r e e of t h e d i s t r i c t c o u r c 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, s i t t i n g w i t h o u t a j u r y , o r d e r i n g s p e c i f i c performance of an o r a l agreement e n t e r e d i n t o by p l a i n t i f f Yens Hansen and decedent Joseph P a t r i c k Kiernan. The c o u r t f u r t h e r o r d e r e d a l l monies t h a t have accrued and w i l l become due t o t h e b e n e f i t of d e c e d e n t ' s e s t a t e a s a r e s u l t of t h e former p a r t n e r s h i p t o be p a i d t o p l a i n t i f f . By h i s amended c o m p l a i n t , p l a i n t i f f asked (1) f o r a dec l a r a t i o n and a d j u d i c a t i o n of t h e r i g h t s of p l a i n t i f f and t h e e s t a t e of Joseph Kiernan, deceased, t o monies due under a c o n t r a c t f o r deed agreement; ( 2 ) t h a t t h e d i s t r i c t c o u r t e n t e r judgment e s t a b l i s h i n g an o r a l c o n t r a c t between p l a i n t i f f and d e c e d e n t ; and ( 3 ) a d e c r e e t h a t a s a r e s u l t of t h e c o n t r a c t p l a i n t i f f i s e n t i t l e d t o a l l monies t h a t have accrued and w i l l become due under t h e con- t r a c t f o r deed. Defendant i n t h e i n s t a n t s u i t i s t h e a d m i n i s t r a t o r of t h e e s t a t e of Joseph P a t r i c k Kiernan, Lee Kiernan. It i s d e f e n d a n t ' s p o s i t i o n t h a t a p a r t n e r s h i p e x i s t e d between p l a i n t i f f and decedent b u t t h a t t h e p a r t n e r s h i p t e r m i n a t e d w i t h K i e r n a n ' s d e a t h and t h e r e i s now due h i s e s t a t e an a c c o u n t i n g of t h e p a r t n e r s h i p a f f a i r s . F u r t h e r , a l l testimony r e l a t i n g t o an a l l e g e d o r a l agreement between p l a i n t i f f and decedent t o e x e c u t e mutual w i l l s was i n a d m i s s i b l e under t h e s o - c a l l e d "dead man's" s t a t u t e , s e c t i o n 93-701-3, R.C.M. 1947. The u n c o n t e s t e d f a c t s i n d i c a t e t h a t i n 1932 Joseph Kiernan, a s i n g l e man 43 y e a r s of a g e , e n t e r e d i n t o an o r a l p a r t n e r s h i p agreement w i t h Yens Hansen, a s i n g l e man 28 y p a r s of age. The p a r t n e r s h i p agreement provided t h a t Hansen and Kiernan would purchase a 331 a c r e ranch known a s t h e " ~ a c k l i nPlace" n e a r E l l i s t o n , Montana, f o r t h e purpose of engaging i n t h e r a n c h i n g and c a t t l e r a i s i n g business. The p a r t n e r s h i p f l o u r i s h e d and i n 1940 t h e y purchased a d d i t i o n a l p r o p e r t y known a s t h e at Creek Place" c o n s i s t i n g of approximately 419 a c r e s . A t v a r i o u s times d u r i n g t h e p e r i o d 1932 - 1941, both Hansen and Kiernan s0ugh.t o u t s i d e employment t o e a r n c a s h and each contributed h i s earnings t o t h e partnership. While i t may seem unusual t h a t such an u n d e r t a k i n g was only supported by an o r a l agreement, i t should be noted. t h a t Hansen and Kiernan had known each o t h e r s i n c e 1914, and Kiernan had r e s i d e d a t ans sen's grandp a r e n t s ' ranch f o r a number of y e a r s p r e v i o u s t o 1932. There i s e v e r y i n d i c a t i o n t h a t t h e y were n o t only good f r i e n d s , b u t were a l s o amiable and d i l i g e n t b u s i n e s s p a r t n e r s . O January 23, 1941, t h e p a r t n e r s executed formal w r i t t e n n a r t i c l e s of c o p a r t n e r s h i p . The a r t i c l e s provided, among o t h e r t h i n g s , t h a t t h e y would: * 'I* become c o p a r t n e r s i n t h e r a n c h i n g and farming b u s i n e s s under and by t h e name, f i r m and s t y l e of 'Kiernan & Hansen. ' 9 : % * * "That t h e term of s a i d p a r t n e r s h i p 9 9 : : shall end whenever t h e p a r t i e s may t e r m i n a t e s a i d p a r t n e r s h i p by mutual consent w i t h o r w i t h o u t a w r i t t e n agreement of d i s s o l u t i o n . ;k * "At t h e t e r m i n a t i o n of t h i s p a r t n e r s h i p , by e x p i r a t i o n of t h e term o r by r e a s o n of any o t h e r c a u s e -L t h e d e b t s of t h e p a r t n e r s h i p s h a l l be d i s charged; and a l l money o r o t h e r a s s e t s of t h e p a r t n e r s h i p then remaining, s h a l l be d i v i d e d between t h e p a r t i e s , s h a r e and s h a r e a l i k e ik 9 9:. I ' : d. -1- I n 1942 Hansen was d r a f t e d i n t o t h e United S t a t e s army a t t h e age of 38. Before l e a v i n g f o r a c t i v e duty Hansen, r e - cognizing t h e u n c e r t a i n t i e s of wartime m i l i t a r y s e r v i c e , executed a w i l l whereby he bequeathed and d e v i s e d h i s p e r s o n a l and r e a l p r o p e r t y t o Joseph IGernan, l e a v i n g o n l y h i s "good w i l l 1 ' t o h i s heirs-at-law. The w i l l was mailed t o Kiernan and d e p o s i t e d by him i n h i s s a f e t y d e p o s i t box. A t a l l times a f t e r r e c e i v i n g an sen's w i l . 1 , Kiernan had access and control over the will. At trial, over the objection of defendant's counsel, Yens Yanseii testified that in 1942 due to his impending military service he and Kiernan entered into an oral agreement to execute mutual . ~ reciprocal wills whereby each of them would give, devise, and r bequeath to the other all of his right, title and interest in all of their real and personal property except a certain homestead be- longing to Kiernan. He testified that pursuant to such agreement h e executed the aforementioned will, thus fully performing his part oZ the agreement. Plaintiff further testified that during the 33 months he spent on active duty Kiernan continued to operate the partnership; that he sent home to Kiernan the sum of $800 to be expended for the ranching partnership; and, that upon his discharge he contributed an additional $800 to the partnership. In 1945 the partners purchased additional propercy known as the "~onovanPlace" consisting of approximately 360 acres. In 1960, they purchased another ranch consisting of approximately 800 acres. In 1960 Kiernan became afflicted with arthritis which re- quired him to use a cane and eventually crutches in order to get around. This so restricted Kiernan's activities that the partners agreed to sell their partnership and, in effect, retire. In 1966 the partners entered into an agreement with two prospective purchasers for the sale and purchase of all of the real and personal property of the partnership. The partnership was sold under a contract for deed agreement the terms of which provided for a down payment and a balance due of $85,200 to be paid in ten equal annual installments, the first due on November 15, 1967. An escrow agreement, warranty deed, abstract of title and insurance policies were held in escrow by the Deer Lodge Bank & Trust Company. An escrow receipt was issued to the parties which recited the escrow agent would: +i "Credit payments to Sellers, by escrow check made payable to both sellersf1. Hansen testified that in the fall of 1966 he and Kiernan made a "special trip down here to the bank in Deer Lodge on account ; of that" escrow receipt. ftik 9c 9 it didn't leave any provision for the survivor of us * *. " He testified he and Kiernan explained to the bank cashier (since deceased) that they wanted the wording of the escrow receipt changed: " * 9 so that if anything happened to either 2 ; one or the other of us, that the money would +. ;" automatically go to the other one * As a result of this meeting, the escrow receipt was modified by interlineation to read: "Credit payments to Sellers, checking account # 14-509f'. This change was signed by Hansen and initialed by Kiernan. Checking account #14-509 had been used by the partners during the existence of their partnership. right to draw on this account. Each partner had the After the sale of the partnership assets, Hansen and Kiernan continued to use this account for their personal use. Following the sale of the partnership assets Hansen and Kiernan continued their association and friendship. They took motor trips together to Alaska and California; they purchased a residence in Missoula in joint tenancy with the right of survivorship; they had two savings accounts,both in joint tenancy; and they purchased corporate stock also in joint tenancy. On April 8, 1968, Joseph Kiernan passed away. ever located. No will was Plaintiff brought the instant action for specific performance of the oral agreement entered into between himself and Kiernan in 1942 to execute mutual or reciprocal wills. Here, the problem is to determine who is entitled to the balance of the payments due under the contract for deed agreement paid after ~iernan'sdeath and those still to be paid---Hansen or ~iernan's heirs under the intestacy laws? The trial court held that there had existed an oral agreenent between Hansen and Kiernan to execute mutual wills; that Hansen had performed his part of the agreement; that Kiernan had failed and neglected to perform his part of the agreement; and, therefore, specific performance of the agreement by the administrator was ordered. Defendant raises eleven issues for review on appeal which we believe can be more succinctly stated as: 1. Whether the trial court erred in refusing to hear defendant's preliminary motion to strike because of a local court rule requiring the filing of briefs with such preliminary motions. 2. Whether testimony relating to conversations and agreements between the plaintiff and decedent were properly admitted under the "dead man 1 sI' statute, section 93-701-3, R.C.M. 1947. 3. Whether defendant's post-trial motion to dismiss should have been granted, due to the running of the statute of limitations. 4. Whether plaintiff was guilty of laches. 5. Whether the attempt to enforce the oral agreement varied the terms of the written articles of copartnership. 6. Whether the trial court ruled specifically on the objections raised at trial. Issue 1. We find that prior to trial defendant had properly filed and noticed a motion to strike certain portions of plaintiff's amended complaint. On the date set for hearing of the motion the trial judge summarily denied the motion, because of defendant's failure to file a brief in support of the motion in accordance with a local court rule. While defendant has raised this issue on appeal, it has not been argued either in defendant's brief or during oral argument before this Court. We can only surmise that this specification of error has been abandoned and we will not consider it further, except to say that such rules of practice may be adopted and enforced by the district courts in accordance with section 93-502, R.C.M. 1947, and Rule 83, M.R.Civ.P. Issue 2. Section 93-701-3, R.C.M. 1947, provides that the following persons cannot be witnesses: "3. () Parties or assignors of parties to an action or proceeding, or persons in whose behalf an action or proceeding is prosecuted against an executor or administrator upon a claim or demand against the estate of a deceased person, as to the facts of direct transactions or oral communications between the proposed witness and the deceased, excepting when the executor or administrator first The purpose of this statute is twofold: (1) it prevents the living party, by reason of the death of his adversary, from gaining an undue advantage over the administrator, and (2) it removes the temptation for the commission of perjury. Leffek v. Luedeman, 95 Mont. 457, 463, 27 P.2d 511; Johnson v. Mommoth Lode, 136 Mont. 420, 422, 423, 348 P.2d 267; Novak v. Novak, 141 Mont. 312, 316, 377 P.2d 368. The statute, section 93-701-3(3), allows two exceptions to the prohibition of a surviving party acting as a witness in an action for a claim or demand against an estate. The first is when the executor or administrator first introduces evidence of such a claim or demand. We are not concered here with this exception. However, the second exception provides that the surviving party may be a witness I Iwhen it appears to the court that, without the testimony of the witness, injustice will be done. I I We must now determine if the trial court abused its discretion under this second exception. In Johnson v. Mommoth Lode, 136 Mont. 420, 423, 348 P.2d 267, this Court said: ' I f : 9 : before a witness, who is declared to be incompetent by this statute, will be allowed to testify to prevent an injustice, a foundation must be laid by the introduction of other evidence, which shows that in all probability the proponent has a meritorious cause of action. It (Emphasis supplied) What then is the "other evidence" that tends to show that plaintiff's claim here is meritorious? (1) There is the will executed by Yens Hansen in 1942, which bequeaths and devises all of his real and personal property to Kiernan. (2) There is the testimony of Katie Hansen, plaintiff's sister, who stated that she had known Joseph Kiernan all of her life and that in the fall of 1966, I(iernan and plaintiff had had dinner with her after their trip to the Deer Lodge Bank & Trust Company to change the escrow receipt. She testified: - well, I remember that Joe [Kiernan] made the remark that everything was taken care of--I II -14b that they had been to the bank, and that the papers were all in order, so that if anything happened to either of them, why it was a right of survivorship, and that if one of them would pass away, the other one would get it 7k ik *. 11 (3) There are the two savings accounts in Hansen's and Kiernan's names as joint tenants with right of survivorship. ( ) There 4 are the shares of corporate stock also held in joint tenancy with right of survivorship.. (5) There was a purchase of a residence in Missoula, again with joint tenancy with right of survivorship. (6) There is the escrow receipt which shows that a change to the document was made. (7) There was an undisputed lifelong associa- tion between Hansen and Kiernan without any indication whatsoever that there was ever any discord or mistrust between them. is evidence that (8) There an sen's will was mailed to Kiernan in 1942, and held by Kiernan in his safety deposit box, (9) There is ample evidence of a successful partnership that existed between these two men under both an oral agreement and written articles of copartnership. Finally, after the sale of the partnership, Hansen and Kiernan continued their association by traveling together, living together and looking after each other until ~iernan'sdeath. Considering all of the "other evidence" as a whole, we cannot say that plaintiff failed to lay a sufficient foundation for the admission of his testimony relative to an oral agreement,. entered into between himself and Kiernan to execute mutual wills. Nor will we reverse without a positive showing that the district court abused its discretion. This Court said in Novak v. Novak, 141 Mont. 312, 316, 377 P.2d 368: it [the court] had the advantage of observing the witnesses during their testimony and was in a better position than this court to determine whether or not injustice would result if the plaintiff were not permitted to testify. " I -1, 4b ; k Issue 3. Defendant alleges his post-trial motion to dismiss should have been granted due to the running of the statute of limitations. He argues that if there ever was an agreement to execute mutual wills, that such an agreement was an oral agreement entered into in 1942, and is now barred by sections 93-2601 and 93-2604, R.C.M. 1947. In support defendant cites Pincus v. Davis, 95 Mont. 375, 26 P.2d 986. Rule 8 c , () M.R.Civ.P., provides that a defense of the running of the statute of limitations is an affirmative defense and can only be raised by answer. Grogan v. Valley Trading Co., 30 Mont. 229, 76 P. 211; State ex rel. IColbow v. District Court, 38 Mont. 415, 100 P. 207. Here, defendant failed to plead the statute of limitations in his answer and therefore waived such defense. However, defendant argues that Pincus holds that this Court may raise the statute of limitations on its own motion as a bar to a claim against an administrator under section 91-2710, R.C.M. 1947. Cocanougher v . Cocanougher, 1 4 1 Wont. 28, 375 P.2d 1014, Defendant i s c o r r e c t i n t h i s c o n t e n t i o n however b o t h Pincus and Cocanougher a p p l y t o c a s e s where t h e c l a i m a g a i n s t t h e decedent a r o s e many y e a r s p r i o r t o an a c t i o n b e i n g f i l e d . They i n v o l v e obvious cause of a c t i o n which t h e p l a i n t i f f s f a i l e d t o do a n y t h i n g about. Such i s n o t t h e c a s e h e r e . ldhile we may d i s p o s e of t h i s argument by s a y i n g t h a t def e n d a n t h a s waived h i s r i g h t t o r a i s e t h i s d e f e n s e under Rule 8 ( c ) , M.R.Civ.P., we go f u r t h e r and s a y t h a t t h e s t a t u t e of l i m i - t a t i o n s i s not a v a l i d defense. The c a u s e of a c t i o n d i d n o t a r i s e u n t i l t h e r e was a b r e a c h of t h e agreement t o e x e c u t e mutual w i l l s . P l a i n t i f f had no knowledge of t h i s breach u n t i l a f t e r t h e d e a t h of Joseph Kiernan. I s s u e 4. W f i n d i s s u e 3 t o be w i t h o u t m e r i t . e Whether p l a i n t i f f i s g u i l t y of l a c h e s even though n o t p l e a d by d e f e n d a n t ? Rule 8 ( c ) , M.R.Civ,P., be p l e a d t o be r e l i e d upon. c o n s i d e r d e f e n d a n t ' s i s s u e 4. r e q u i r e s t h a t such a d e f e n s e must F a i l i n g t o s o p l e a d , we w i l l n o t f u r t h e r United S t a t e s v . Eytcheson, 237 F. Supp. 371; Weir v. S i l v e r Bow County, 113 Mont. 237, 124 P.2d 1003; S t a t e e x r e l . Boorman v , S t a t e Board of Land Commrs., 109 Mont, 127, 94 P.2d 201, Issue 5. Whether t h e a t t e m p t t o e n f o r c e t h e o r a l agreement v a r i e d t h e terms of t h e w r i t t e n a r t i c l e s of c o p a r t n e r s h i p ? In a s s e r t i n g t h i s i s s u e , defendant contends t h e p a r t n e r s h i p remained i n e f f e c t u n t i l t h e d e a t h of Kiernan and t h e r e f o r e c o n t r o l s t h e d i v i s i o n of p a r t n e r s h i p a s s e t s a s between t h e p a r t n e r s . The t r i a l c o u r t found t h a t t h e s a l e of a l l p a r t n e r s h i p p r o p e r t y i n 1966 terminated t h e partnership. The p a r t i c u l a r u n d e r t a k i n g of t h e p a r t n e r s h i p was a "ranching and farming b u s i n e s s i ' . The termina- t i o n of t h a t u n d e r t a k i n g by t h e s a l e of t h e ranch "lock, s t o c k and b a r r e l " a s t e s t i f i e d by p l a i n t i f f , brought t h e p a r t n e r s h i p evidenced by t h e w r i t t e n agreement t o an end. S e c t i o n 63-503, R.C.M. 1947. Under the particular facts of this case, the trial court correctly concluded that the written partnership agreement was not a bar either to plaintiff's testimony or his claim. Issue 6. Whether the trial court properly ruled on evidentiary matters? We have carefully examined the record and find no merit to this issue. The judgment of the district court is affirmed. 1 Associate Justice / 1 Chief justice 1 Fon. Charles Luedke. District Judge, sitting for Mr. Justice Castles. Mr. Justice Haswell and Mr. Justice Daly dissenting: We dissent. plaintiff's claim for relief in the instant case is bottomed on establishing a valid and enforceable oral agreement between plaintiff and decedent in July 1942, whereby each agreed to make a will leaving his interest in the partnership property to the other. The existence of such an oral agreement rests entirely on the uncorroborated testimony of plaintiff, the survivor, concerning a conversation he had with decedent almost thirty years previously. In our view, plaintiff is an incompetent witness to so testify, such testimony is inadmissible in evidence under Montana's deadman statute [section 93-701-3(3), R.C.M. 19471, and plaintiff's claim fails. This statute provides in pertinent part: IIPersons who cannot be witnesses. The following persons cannot be witnesses: "3. Parties or assignors of parties to an action or proceeding, or persons in whose behalf an action or proceedings is prosecuted against an executor or administrator upon a claim or demand against the estate of a deceased person, as to the facts of direct transactions or oral communications between the proposed witness and the deceased, excepting when the executor or administrator first introduces evidence thereof, or when it appears to the court that, without the testimony of the witness, injustice will be done. >k f: 2" Previous decisions of this Court indicate that the purpose of the deadman's statute is twofold: (1) to prevent the survivor from gaining an undue advantage over the deceased's estate, and (2) to remove the temptation for the commission of perjury by the survivor giving testimony that in all probability cannot be denied by any living person. Novak v. Novak, 141 Mont. 312, 316, 377 P.2d 368; Johnson v. Mommoth Lode, 136 Mont. 420, 348 P.2d 267; Cox v. Williamson, 124 Bfont. 512, 227 P,2d 614; Leffek v. Luedeman, 95 Mont. 457, 27 P.2d 511. In conformity with such purpose, this Court has required that before a witness, who is declared to be incompetent by this statute, will be allowed to testify to prevent an injustice, a foundation must be laid by the introduction of other evidence which indicates that in all probability the proponent has a meritorious cause of action. Johnson v. Mommoth Lode, supra, and cases cited therein; Potlatch Oil & Refining Co. v. Ohio Oil Co., CCA 9, 199 F.2d 766, cert. den. 345 U.S. 926, 73 S.Ct. 786, 97 L ed 1357; Phelps v. Union Central Life Ins. Co., 105 Flont. 195, 71 Y.2d 887. I n our view, t h i s f o u n d a t i o n evidence must i n d i c a t e t h e p r o b a b i l i t y of t h e e x i s t e n c e of such o r a l agreement, and n o t simply e s t a b l i s h f a c t s equally consistent with i t s existence or explaina b l e on u n r e l a t e d grounds. This requirement i s p a r t i c u l a r l y important where, a s h e r e , t h e terms of t h e a l l e g e d o r a l agreement a r e d i r e c t l y c o n t r a r y t o t h e terms of t h e t h r e e p e r t i n e n t w r i t t e n agreements admitted i n evidence - - - t h e p a r t n e r s h i p agreement, t h e o r i g i n a l escrow agreement, and t h e modified escrow agreement. It h a s been s o h e l d by t h i s Court i n p r e v i o u s c a s e s i n v o l v i n g a l l e g e d o r a l agreements t o make a w i l l 3 Langston v . C u r r i e , 95 Mont. 57, 26 P , 2d 160; Cox v . Williamson, s u p r a , and p a r t i c u l a r l y i n c a s e s where t h e o r a l agreement m o d i f i e s o r c o n f l i c t s w i t h a w r i t t e n c o n t r a c t . Bauer v . Flonroe, 117 Mont. 306, 158 P.2d 485; Davison v . Casebol t , 154 Mont. 125, 461 P.2d 2, I n t h e i n s t a n t c a s e t h e r e i s simply no evidence of t h e e x i s t e n c e of an o r a l c o n t r a c t t o d e v i s e and bequeath e x c e p t f o r t h e testimony of p l a i n t i f f , t h e s u r v i v i n g p a r t n e r . The making of a w i l l by p l a i n t i f f no more proves t h e e x i s t e n c e of an o r a l cont r a c t by decedent t o e x e c u t e a w i l l i n p l a i n t i f f ' s f a v o r , t h a n t h e e x e c u t i o n of any c o n t r a c t o r document by one person c r e a t e s a r e c i p r i c o l o b l i g a t i o n on t h e p a r t of t h e o b l i g e e . Nor does any of t h e o t h e r evidence l i s t e d i n t h e m a j o r i t y opinion prove an o r a l c o n t r a c t by decedent t o d e v i s e and bequeath h i s p r o p e r t y t o p l a i n tiff. The l a p s e of some 24 y e a r s between 1942 and d e c e d e n t ' s d e a t h i n 1968, w i t h o u t enforcement o r mention of t h e a l l e g e d o r a l c o n t r a c t by p l a i n t i f f adds n o t h i n g t o t h e r e q u i r e d foundation. Absent any f o u n d a t i o n t h e r e f o r , we would h o l d t h a t t h e d i s t r i c t c o u r t abused i t s d i s c r e t i o n i n a d m i t t i n g t h e testimony of p l a i n t i f f under t h e deadman's s t a t u t e , and a c c o r d i n g l y t h a t la in tiff' s c l a i m must f a i l .

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