BOATMAN v BERG

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No. 13417 I N THE SUPREME COURT O THE STATE O MONTANA F F 1978 GLORIA LOIS CARLSON BOATMAN, P l a i n t i f f and A p p e l l a n t , -vsHOWARD BERG, Defendant and Respondent. D i s t r i c t Court of t h e Seventeenth Z u d i c i a l District, Honorable Thomas Dignan, Judge p r e s i d i n g . Appeal from: Counsel of Record: For A p p e l l a n t : Morrison and E t t i e n , Havre, Pilontana J. Chan E t t i e n argued., Havre, Montana For Respondent: McKeon and McKeon, M a l t a , Montana John C . McKeon a r g u e d , M a l t a , Montana Submitted: F i l e d : qf-'r( " 2 J a n u a r y 31, 1978 M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion of t h e Court: P l a i n t i f f i n s t i t u t e d t h i s a c t i o n i n t h e D i s t r i c t Court, P h i l l i p s County, seeking a d e c l a r a t i o n t h a t defendant i s a c o n s t r u c t i v e t r u s t e e over c e r t a i n p r o p e r t y t r a n s f e r r e d from p l a i n t i f f t o defendant. From a judgment of t h e D i s t r i c t Court denying such r e l i e f and q u i e t i n g t i t l e t o t h e p r o p e r t y i n defendant, p l a i n t i f f a p p e a l s . P l a i n t i f f i s G l o r i a Lois Carlson Boatman. o l d e r b r o t h e r , Howard Berg. Defendant i s h e r I n 1953, when p l a i n t i f f was s i x t e e n y e a r s of a g e , she married Clyde Carlson, a farmer and rancher. P l a i n t i f f d i d n o t work during t h e marriage, b u t remained a t home and cared f o r t h e i r f o u r c h i l d r e n . Clyde Carlson d i e d i n 1959. P l a i n t i f f r e t a i n e d Stephen Granat, a Malta a t t o r n e y , t o handle C a r l s o n ' s e s t a t e . The e s t a t e was d e b t r i d d e n and c o n s i s t e d almost e n t i r e l y of r e a l p r o p e r t y . P l a i n t i f f a c t e d a s adminis- t r a t r i x and i n t h a t c a p a c i t y l e a s e d t h e r e a l p r o p e r t y i n t h e e s t a t e t o M o r r e l l Tribby, h e r brother-in-law. The l e a s e o r i g i n a l l y was f o r a t h r e e y e a r term, b u t was modified by p l a i n t i f f t o cover only t h e y e a r 1960. P l a i n t i f f t e s t i f i e d defendant warned h e r t h a t Tribby was t r y i n g t o c h e a t h e r o u t of h e r p r o p e r t y , b u t defendant denied making such s t a t e m e n t s . Also i n h e r c a p a c i t y a s a d m i n i s t r a t r i x and on t h e a d v i c e of n e i g h b o r s , p l a i n t i f f had s e v e r a l c a l v e s which were p r o p e r t y of t h e e s t a t e branded w i t h h e r brand and s o l d . She used t h e proceeds of t h e s a l e p a r t i a l l y t o make a payment on t h e l a n d , and p a r t i a l l y f o r h e r own p e r s o n a l purposes. She t e s t i f i e d s h e became f r i g h t e n e d when h e r a t t o r n e y informed h e r t h i s a c t i o n amounted t o embezzlement of e s t a t e p r o p e r t y . For t h i s r e a s o n she asked defendant t o h e l p h e r w i t h t h e a d m i n i s t r a t i o n of t h e e s t a t e . Defendant agreed t o h e l p . began farming i t . He moved onto t h e p r o p e r t y and He p a i d h i s own expenses b u t d i d n o t pay r e n t . Over a p e r i o d of about f i v e y e a r s , p l a i n t i f f a s s i g n e d h e r i n t e r e s t i n f o u r s e p a r a t e t r a c t s of land t o d e f e n d a n t . These f o u r t r a c t s a r e s u b j e c t of t h e i n s t a n t a c t i o n f o r a c o n s t r u c t i v e t r u s t . 1. The "Mahlum" t r a c t . P l a i n t i f f and Carlson had purchased about 160 a c r e s of land from Mabel Mahlum a s j o i n t t e n a n t s on a c o n t r a c t f o r deed d a t e d A p r i l 2 2 , 1957. tract. T h i s p r o p e r t y i s r e f e r r e d t o a s t h e Mahlum The c o n t r a c t provided f o r payments i n t h e amount of one- f o u r t h of t h e g r o s s c r o p , w i t h a minimum of $300 payable i n c r o p o r cash. A l s o , 5% i n t e r e s t was charged. On June 2, 1961, p l a i n t i f f , defendant and Mabel Mahlum met i n t h e o f f i c e of a t t o r n e y Granat and executed an assignment of t h e c o n t r a c t from p l a i n t i f f t o d e f e n d a n t . P l a i n t i f f admits t h a t h e r s i g n a t u r e i s on t h e assignment, b u t does n o t remember such a meeting and d i s c l a i m s any knowledge of t h e l e g a l e f f e c t of t h e assignment. A t t h e time he d r a f t e d t h e assignment, a t t o r n e y Granat v e r i f i e d w i t h t h e escrow t h a t t h e r e remained due $5,500 of t h e $6,000 p r i n c i p a l , and $275 back i n t e r e s t . The i n s t r u m e n t s t a t e s t h e assignment i s f o r nominal c o n s i d e r a t i o n . It is not contested t h a t subsequent t o t h e assignment defendant p a i d t h e back i n t e r e s t , t h e remaining p r i n c i p a l , and r e c e i v e d t h e deed t o t h e p r o p e r t y . Defendant i n t r o d u c e d evidence of a d d i t i o n a l c o n s i d e r a t i o n f o r t h e assignment. The y e a r 1961 was a drought y e a r on t h e land and d e f e n d a n t , who had farmed t h e land a t h i s own expense, r e c e i v e d a f e d e r a l c r o p i n s u r a n c e payment of $832.72. paid t h i s amount i n t o t h e e s t a t e . Defendant The D i s t r i c t Court found t h i s payment, along w i t h t h e payment of back i n t e r e s t when t h e c o n t r a c t was i n d e f a u l t , c o n s t i t u t e d s u f f i c i e n t c o n s i d e r a t i o n f o r t h e assignment. 2. The S t a t e Lease At h i s d e a t h i n 1959, Carlson h e l d a s t a t e l e a s e c o v e r i n g about 320 a c r e s of l a n d . T h i s l e a s e e x p i r e d i n 1961, and defendant renewed i t i n p l a i n t i f f ' s name. I n 1963, p l a i n t i f f executed an assignment of t h e l e a s e t o defendant. Again, s h e admits h e r s i g n a t u r e b u t does n o t remember s i g n i n g i t . Defendant t e s t i f i e d t h a t b o t h p a r t i e s agreed t o t h e assignment, and i t was i n c o n s i d e r a t i o n f o r defendant's help with the e s t a t e . The p e r i o d i c payments were t h e r e a f t e r made by defendant. The l e a s e e x p i r e d i n 1 9 7 1 , and defendant took o u t t h e new l e a s e i n h i s own name. There i s no evidence p l a i n t i f f made any e f f o r t t o acquire the 1971 lease. The D i s t r i c t Court took j u d i c i a l n o t i c e of t h e r e g u l a t i o n s o f t h e Commission of S t a t e Lands and Environment p r o h i b i t i n g t h e s u b l e a s i n g of s t a t e land f o r p r o f i t . The c o u r t found t h a t s i n c e t h e l e a s e a s s i g n e d t o defendant had e x p i r e d , t h i s q u e s t i o n i s moot. W a g r e e and d e c l i n e t o c o n s i d e r t h e " s t a t e l e a s e " i s s u e f u r t h e r . e 3. The "Rueb t r a c t P r i o r t o h i s d e a t h , Carlson purchased about 320 a c r e s of p r o p e r t y on a c o n t r a c t f o r deed from Reinhold and A l i c e Rueb. property i s referred t o a s the " ~ u e b " t r a c t . This When C a r l s o n d i e d , p l a i n t i f f became t h e owner of a o n e - t h i r d i n t e r e s t w i t h t h e c h i l d r e n owning t h e o t h e r t w o - t h i r d s i n t e r e s t . P l a i n t i f f expressed t o a t t o r n e y Granat t h e d e s i r e t o s e l l t h e p r o p e r t y t o d e f e n d a n t , b u t was t o l d t h a t she could only d i s p o s e of h e r own o n e - t h i r d i n t e r e s t . I n January 1965, defendant had a q u i t c l a i m deed prepared f o r t h e purpose , , of conveying p l a i n t i f f ' s o n e - t h i r d i n t e r e s t t o him. P l a i n t i f f had remarried by t h i s time and was l i v i n g i n I n d i a n a . Defendant mailed t h e deed t o h e r a l o n g w i t h a cover l e t t e r r e q u e s t i n g h e r t o s i g n t h e deed and r e t u r n i t . The l e t t e r s t a t e d , i n pertinent part: ** I am e n c l o s i n g a deed f o r you t o s i g n i f i t s a g r e e a b l e w i t h you. "9: "I t a l k e d t o a guy from t h e F e d e r a l Land Bank l a s t f a l l , and h e s a i d t h e only way I p o s s i b l y could borrow t h e money i s t o g e t a deed, so t h i s i s where 1 ' m s t a r t i n g -- I f I can g e t t h e money. "I w i l l pay o f f Rinhold and A l i c e t h e $3000.00 f o r t h e 113 i n t e r e s t t h a t i s i n your name. T h i s would g i v e m 113 i n t e r e s t and 213 i n t e r e s t f o r t h e k i d s . I w i l l e pay t h e back i n t e r e s t and keep up t h e t a x e s f o r t h e use of t h e r e s h a r e f o r 3 c r o p y e a r s , a f t e r t h a t I w i l l g i v e them 114 of t h e c r o p s p l i t between them, on t h e r e 2/3 share l e s s 213 of t h e t a x e s . *** -- "The main reason I would l i k e t o g e t i t payed o f f i s t h a t a c t u a l l y Rinhold and A l i c e could s t e p i n and r e p o s s e s s i t and t h e k i d s would end up w i t h n o t h i n g . * * *" On March 1, 1965, p l a i n t i f f signed t h e q u i t c l a i m deed i n I n d i a n a and r e t u r n e d i t t o defendant. The o r i g i n a l c o n t r a c t p r i c e f o r t h e " ~ u e b " t r a c t was $5,500. A t t h e time of t h e t r a n s f e r i n 1965, t h e r e was a $3,120 remaining balance on t h e p r i n c i p a l . The c o n t r a c t was i n d e f a u l t and back i n t e r e s t and t a x e s were owing. Subsequent t o t h e q u i t c l a i m deed, which amounted t o a t r a n s f e r of a 113 i n t e r e s t i n t h e p r o p e r t y , defendant p a i d o f f t h e e n t i r e remaining b a l a n c e , i n c l u d i n g t h e back t a x e s and i n t e r e s t . The D i s t r i c t Court found : * > T h e r e has been no showing t h a t t h e p r i c e p a i d by t h e defendant a t t h e time of t h e purchase of s a i d 113 i n t e r e s t i n t h e ' ~ u e b ' t r a c t was l e s s t h a n t h e market v a l u e f o r s a i d 113 i n t e r e s t a t t h e time of t h e purchase and a s such,must be c o n s i d e r e d a s f a i r and adequate c o n s i d e r a t i o n f o r t h e ' ~ u e b ' t r a c t . I 1 " 9 ~ 4. The "Great Northern1' t r a c t T h i s p r o p e r t y c o n s i s t s of about 17.5 a c r e s a d j o i n i n g t h e Great Northern Railway. I t was owned by Carlson a t h i s d e a t h . P l a i n t i f f q u i t c l a i m e d h e r 113 i n t e r e s t i n t h i s p r o p e r t y t o defendant August 1 0 , 1966. Defendant t e s t i f i e d t h e c o n s i d e r a t i o n f o r t h i s t r a n s f e r was t h e c a n c e l l a t i o n of a p r e e x i s t i n g d e b t of $500. Defendant advanced t h e money f o r a Buick automobile f o r p l a i n t i f f and Carlson and was never r e p a i d . P l a i n t i f f a d m i t t e d defendant p a i d f o r t h e automobile and had n o t been r e p a i d , b u t s h e denied t h e r e was e v e r any b a r g a i n r e g a r d i n g c a n c e l l a t i o n of t h e d e b t f o r t h e t r a n s f e r of t h e "Great Northern" p r o p e r t y . Defendant a g a i n does n o t r e c a l l s i g n i n g t h e q u i t c l a i m deed. The D i s t r i c t Court h e l d t h e c a n c e l l a t i o n of t h e i n d e b t e d n e s s was f a i r and adequate c o n s i d e r a t i o n f o r t h e q u i t c l a i m deed. The t h e o r y of p l a i n t i f f ' s c a s e i s t h a t a c o n s t r u c t i v e t r u s t should be imposed on a l l of t h e above d e s c r i b e d p r o p e r t y f o r h e r benefit. The i m p o s i t i o n of a c o n s t r u c t i v e t r u s t i s governed by s e c t i o n 86-210, R.C.M.1947: 'IInvoluntary t r u s t r e s u l t i n g from f r a u d , e t c . One who g a i n s a t h i n g by f r a u d , a c c i d e n t , m i s t a k e , undue i n f l u e n c e , t h e v i o l a t i o n of t r u s t , o r o t h e r wrongful a c t , i s , u n l e s s he has some o t h e r o r b e t t e r r i g h t t h e r e t o , an i n v o l u n t a r y t r u s t e e of t h e t h i n g g a i n e d , f o r t h e b e n e f i t of t h e person who would o t h e r w i s e have had i t . " I t i s w e l l e s t a b l i s h e d i n Montana t h a t " i n o r d e r t o recover upon t h e t h e o r y of a r e s u l t i n g o r c o n s t r u c t i v e t r u s t , t h e proof must b e c l e a r , s a t i s f a c t o r y , convincing and p r a c t i c a l l y f r e e from doubt." 327. Rdbuck v. Dennis, (1967), 149 Mont. 247, 251, 425 P.2d Also s e e : B a r r e t t v. Zenisek, (1957), 132 Mont. 229, 237, 238, 315 P.2d 1001. The D i s t r i c t Court, i n i t s f i n d i n g No. 8 , s t a t e d : " P l a i n t i f f h a s n o t o f f e r e d any c l e a r , s a t i s f a c t o r y and convincing evidence of ' f r a u d , a c c i d e n t , mistake, undue i n f l u e n c e , v i o l a t i o n of a t r u s t , o r o t h e r wrongful a c t ' by t h e defendant i n t h e a c q u i s i t i o n o f t h e s e f o u r *.'I tracts ** However, p l a i n t i f f contends t h e D i s t r i c t Court e r r e d i n f a i l i n g t o make a f i n d i n g on t h e i s s u e of whether a c o n f i d e n t i a l r e l a t i o n s h i p e x i s t e d between p l a i n t i f f and defendant. I t i s argued such a f i n d i n g i s necessary because one who v o l u n t a r i l y assumes a r e l a t i o n of p e r s o n a l t r u s t and confidence i s considered t o be a t r u s t e e . S e c t i o n 86-205, R.C.M. 1947. F u r t h e r , i f defendant was a t r u s t e e , he was bound t o a c t i n t h e h i g h e s t good f a i t h i n d e a l i n g w i t h t h e t r u s t p r o p e r t y , and a l l t r a n s a c t i o n s between defendant and h i s b e n e f i c i a r y t h a t b e n e f i t him a r e presumed t o be e n t e r e d i n t o under undue i n f l u e n c e and without c o n s i d e r a t i o n . R.C.M. S e c t i o n s 86-301,86-308, 1947. W do n o t a g r e e a f i n d i n g on t h i s i s s u e was necessary because e t h e r e i s i n s u f f i c i e n t proof t h a t defendant v i o l a t e d even t h e high s t a n d a r d s imposed upon a t r u s t e e . The e x i s t e n c e of a c o n f i d e n t i a l r e l a t i o n s h i p between a g r a n t o r and g r a n t e e i s i n s u f f i c i e n t , i n and of i t s e l f , t o support t h e imposition of a c o n s t r u c t i v e t r u s t . Mahaffey v. DeLeeuw, (1975), 168 Mont. 274, 280, 542 P.2d 103. C l e a r l y , some wrongful a c t must s t i l l be shown. I n Roecher v. S t o r y , (1931), 91 Mont. 28, 45, 5 P.2d 205, t h e Court s t a t e d : "* ** I f t h e evidence which i s i n t r o d u c e d t o prove a f i d u c i a r y r e l a t i o n s h i p a t t h e same time shows t h a t t h e a c t i o n s of t h e t r u s t e e were done i n good f a i t h and f o r t h e b e n e f i t of t h e c e s t u i q u e t r u s t , t h e r e i s no room f o r a presumption of wrongdoing on t h e p a r t of t h e t r u s t e e . " Here, t h e r e c o r d f a i l s t o show d e f e n d a n t improperly used h i s i n f l u e n c e o r took advantage of any t r u s t r e l a t i o n s h i p . A l l of t h e t r a n s a c t i o n s were handled through p l a i n t i f f ' s a t t o r n e y . There i s no proof of any broken promise on t h e p a r t of defendant t o reconvey any of t h e p r o p e r t y . p l a i n t i f f ' s c l a i m throughout i s simply t h a t she signed t h e v a r i o u s i n s t r u m e n t s w i t h o u t knowledge of t h e i r contents o r l e g a l e f f e c t . I n t h e c a s e of t h e "Rueb" p r o p e r t y , however, t h e r e was evidence p l a i n t i f f expressed a d e s i r e t o s e l l t h e p r o p e r t y t o defendant p r i o r t o t h e assignment. The l e t t e r defendant s e n t t o p l a i n t i f f accompanying t h e deed c l e a r l y e x p l a i n s : i n t e r e s t and 2/3 i n t e r e s t f o r t h e k i d s . " "This would g i v e m 113 e The "Mahlum" assignment was executed a t a meeting of a l l t h e p a r t i e s t o t h e t r a n s a c t i o n and p l a i n t i f f ' s attorney. With r e s p e c t t o t h e s e t r a n s a c t i o n s , a t t o r n e y Granat t e s t i f i e d , on examination by t h e c o u r t : "THE COURT: And a s t o Mrs. Boatman h e r e , when s h e came i n t o your o f f i c e d i d she d i s c u s s w i t h you p a p e r s t h a t you had drawn f o r h e r o r would she j u s t s i g n them o u t r i g h t ? A . Like every o t h e r c l i e n t , I would t r y t o e x p l a i n what t h e documents were, Your Honor. "THE COURT: Did s h e understand them? of m knowledge, y e s . y A. To t h e b e s t Did o r would you say t h a t t h e Defendant "THE COURT: was b e i n g t r u s t e d by t h e P l a i n t i f f i n t h i s c a s e , t h a t she t r u s t e d him? A. F a r a s I can r e c a l l t h e s e conv e r s a t i o n s were -- w e l l m a t t e r s were d i s c u s s e d and we t r i e d t o t h e b e s t of o u r a b i l i t y t o make b o t h p a r t i e s u n d e r s t a n d what t h e y were g e t t i n g i n t o and what t h e r e s u l t of t h e t r a n s a c t i o n s would b e . I was w i t h them, and t r y i n g t o e x p l a i n what t h e l e g a l consequences would be of t h e s e t r a n s a c t i o n s t h a t t h e s e two p a r t i e s were g e t t i n g i n t o , Your Honor." Considering a l l of t h e circumstances, we f i n d no showing defendant breached even t h e d u t i e s of a t r u s t e e o r committed any o t h e r wrongful a c t i n t h e inducement of t h e s e t r a n s a c t i o n s . W f u r t h e r conclude t h e evidence s u p p o r t s t h e c o u r t ' s f i n d i n g e t h a t t h e r e was c o n s i d e r a t i o n f o r t h e t r a n s f e r s . The c o n t r a c t s on both t h e "Mahlum" t r a c t and t h e "Rueb" t r a c t were c l e a r l y i n def a u l t when they were assigned t o defendant. While t h e evidence i s c o n f l i c t i n g regarding t h e amount of p l a i n t i f f ' s e q u i t y i n t h e " ~ a h l u m " p r o p e r t y , i t was a t most $1,000, and t h e r e i s ample e v i dence t o s u p p o r t t h e D i s t r i c t Court f i n d i n g t h a t i t was $500. For t h i s defendant p a i d more than $800 i n f e d e r a l c r o p i n s u r a n c e payments i n t o t h e e s t a t e , of which p l a i n t i f f was c l e a r l y a beneficiary. A d d i t i o n a l l y , he p a i d d e f e n d a n t ' s d e b t t o Mahlum of $275 i n back t a x e s and i n t e r e s t . For a 1 / 3 i n t e r e s t i n t h e ' ' ~ u e b " t r a c t , defendant paid t h e e n t i r e remaining p r i n c i p a l of $3,120. Not only was t h i s more than adequate f o r a 113 i n t e r e s t , b u t p l a i n t i f f a l s o had a s t r o n g i n t e r e s t i n p r o t e c t i n g t h e p r o p e r t y r i g h t s of h e r c h i l d r e n , which could have been l o s t had t h e d e f a u l t n o t been cured by d e f e n d a n t ' s payment. Nor i s i t d i s p u t e d t h a t t h e c a n c e l l a t i o n of a $500 d e b t was more than adequate f o r t h e t r a n s f e r of a 113 i n t e r e s t i n t h e "Great Northern" t r a c t . t i f f merely argues t h e r e was no such agreement. Plain- Defendant t e s t i f i e d such a n agreement d i d t a k e p l a c e , and t h i s Court w i l l n o t review d e t e r m i n a t i o n s of weight and c r e d i b i l i t y of testimony of w i t n e s s e s made by t h e t r i a l judge a s a t r i e r of f a c t . (1977), Mont . M i l l e r v. Fox, (1977), , 573 Kartes v. K a r t e s , P.2d 191, 195, 34 St.Rep. Mont . , 1576; 571 P.2d 804,807, 34 S t . (1973) , Rep. 1367; Hellickson v. B a r r e t t Mobile Home T r a n s p o r t , I n c . , / l 6 1 Mont. 455, 459, 507 P.2d 523. I n summary, t h i s Court w i l l s u s t a i n t h e f i n d i n g s of f a c t of t h e t r i a l c o u r t u n l e s s t h e r e i s a decided preponderance of evidence a g a i n s t them. Earrett v. Zenisek, s u p r a . f a c t a r e c l e a r l y supported by t h e evidence. o f law inadequate. Here t h e f i n d i n g s of Nor a r e t h e c o n c l u s i o n s There was no need f o r a s p e c i f i c f i n d i n g on t h e i s s u e of t h e e x i s t e n c e of a c o n f i d e n t i a l o r f i d u c i a r y r e l a t i o n s h i p , because t h e r e was i n s u f f i c i e n t proof of wrongdoing on t h e p a r t of defendant even i f he i s c o n s i d e r e d t o be a v o l u n t a r y t r u s t e e . The judgment of t h e D i s t r i c t Court i s a f f i r m e d . W Concur: e -- Chief J u s t i c e

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