NORTHWESTERN UNION TRUST CO v WOR
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NO. 82-521 I N THE SUPREME COURT O THE STATE O M N A A F F O T N 1983 NORTHWESTERN U N I O N TRUST C O . , P e r s o n a l R e p r e s e n t a t i v e o f t h e E s t a t e o f CBRIST WORM, SR., D e c e a s e d , P l a i n t i f f and A p p e l l a n t , BEN WORM AND DORIT WORhI, Defendants and Respondents. A p p e a l 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 a n d f o r t h e County o f T r e a s u r e , The H o n o r a b l e W i l l i a m J . S p e a r e , J u d g e p r e s i d i n g . C o u n s e l o f Record: For Appellant: K e e f e r , R o y b a l , Hanson, S t a c e y & 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 B r u c e E . L e e , c o - c o u n s e l , B i l l i n g s , Montana For Respondents: W i l l i a m F. F t e i s b u r q e r , F o r s y t h , Montana I-I. D. Euelow, M i l e s C i t y , Pilontana S u b m i t t e d on B r i e f s : Decided: Filed: MAY 19 1983 Clerk March 2 5 , 1983 May 1 9 , 1983 Mr. J u s t i c e J o h n Court . Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n of the N o r t h w e s t e r n U n i o n 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 s e t a s i d e a r e c o r d e d 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 C o u n t y i n t o d e f e n d a n t s ' names. J u d g m e n t 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 appeals . I n t h e l a t e 1 9 4 0 1 s , C h r i s t Worm p u r c h a s e d two p i e c e s of p r o p e r t y i n T r e a s u r e C o u n t y known a s t h e "Home P l a c e " and t h e " S o u t h Place." On December 2 8 , 1 9 6 0 , C h r i s t and H e l e n Worm, s o n and d a u g h t e r - i n - l a w , Ben and D o r i t Worm, and t h e i r 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 S p o k a n e , 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 e x e c u t e d a F e d e r a l Farm Loan A m o r t i z a t i o n M o r t g a g e 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 note was to be paid in twenty annual installments of $1,046.22. On March 3 1 , 1 9 6 1 , 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 d e e d w i t h C h r i s t and H e l e n , t o purchase South Place. p r i c e on t h e The p u r c h a s e t h e Home P l a c e and the c o n t r a c t was $ 2 4 , 0 0 0 . Ben and D o r i t a g r e e d t o p a y t h e $ 1 2 , 0 0 0 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 $ 1 2 , 0 0 0 t o C h r i s t and H e l e n 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 the c o n t r a c t , C h r i s t and H e l e n e x e c u t e d a w a r r a n t y d e e d f o r t h e Home Place and the South Place to Ben and Dorit. Christ kept p o s s e s s i o n of t h e w a r r a n t y d e e d t o be d e l i v e r e d t o Ben and D o r i t upon c o m p l e t i o n of t h e c o n t r a c t . Ben testified beginning i n 1961 and every year thereafter u n t i l 1 9 7 3 h e p a i d C h r i s t enough money t o c o v e r t h e F e d e r a l Land Bank m o r t g a g e and p a i d C h r i s t a t l e a s t $ 1 , 0 0 0 a n n u a l l y d u e o n t h e contract. 1975. Ben Ben also paid testified he C h r i s t $5,000 had therefore i n 1974 and paid off $7,000 the in entire 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 1 9 6 5 , Ben and D o r i t f i l e d a p e t i t i o n f o r b a n k r u p t c y . p e t i t i o n d i d n o t l i s t Ben's The e q u i t y i n t h e f a r m as a n a s s e t , n o r d i d t h e p e t i t i o n l i s t t h e 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 a s a claim a g a i n s t t h e bankruptcy e s t a t e . A f t e r the bankruptcy, B e n , D o r i t , and t h e i r c h i l d r e n c o n t i n u e d t o l i v e and work on t h e farm. From 1 9 6 7 t h r o u g h 1 9 7 3 Ben a n d / o r C h r i s t obtained annual f i n a n c i n g f r o m 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 To o b t a i n f i n a n c i n g , c i a l statement, (PCA). t h e d e b t o r m u s t c o m p l e t e and s i g n a f i n a n - loan applications, and s e c u r i t y a g r e e m e n t s . In 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 a g r e e m e n t s t h a t he was o p e r a t i n g t h e f a r m a s a l e s s e e . years Christ obtained the financing, In those he s t a t e d on t h e s e c u r i t y a g r e e m e n t s t h a t he was o p e r a t i n g t h e f a r m as t h e owner. N o r t h w e s t e r n Union introduced into evidence checks showing p a y m e n t s 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 1 9 6 6 , 1 9 6 8 , 1 9 6 9 , Each c h e c k is drawn upon C h r i s t ' s 1 9 7 0 , 1 9 7 5 , 1 9 7 6 , and 1 9 7 7 . account and signed C h r i s t who would by C h r i s t . t h e n make Ben t e s t i f i e d the he p a i d n e c e s s a r y payments to cash to t h e Land Bank. In April 1975, Ben d e e d s t a t i n g Ben had t e s t i f i e d C h r i s t g a v e him t h e w a r r a n t y 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 s h e was p r e s e n t when t h e deed was e x c h a n g e d . 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 possession them. of the deed in 1 9 7 5 and showed the deed to I n F e b r u a r y 1 9 7 7 , 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 h e r m a r r i a g e t o Ben Worm. P a r a g r a p h V I I I s t a t e s t h e par- t i e s , " h a v e a c c u m u l a t e d 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 1 9 7 8 , 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 S o u t h P l a c e t o H a r o l d Z e n t Farms, Inc. I n March 1 9 8 0 , 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 S o u t h P l a c e t o R o b e r t DeCock and J a m e s 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, for Ben's daughter, t e s t i f i e d Ben g a v e h e r t h e deed s a f e k e e p i n g and t h a t s h e r e t u r n e d t h e deed t o Ben n e a r t h e e n d of 1980 o r t h e b e g i n n i n g of 1 9 8 1 . H e l e n Worm t e s t i f i e d Ben f o u n d w h a t s h e t h o u g h t was t h e deed i n 1 9 8 1 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 r e c o r d e d t h e deed a t t h e T r e a s u r e C o u n t y C l e r k and R e c o r d e r ' s O f f i c e i n November 1 9 8 1 . C h r i s t d i e d on November 1 4 , 1 9 8 1 . 3, I n a W i l l he e x e c u t e d J u n e 1975, all C h r i s t devised one-third of his real property to H e l e n Worm; t w o - t h i r d s o f t h e Home P l a c e t o J a m e s J a c o b Worm; and two-thirds o f t h e S o u t h P l a c e t o B e n ' 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 W i l l i e Worm. 'South that may admitted " I am l e a v i n g t h e t o my s o n BENJAMIN'S CHILDREN a t h i s r e q u e s t s o Place' he The W i l l s t a t e s , sell not or weaknesses." encumber the Northwestern same Union by reason his Company Trust of 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 . N o r t h w e s t e r n U n i o n b r o u g h t 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 r e c o r d e d 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 S o u t h Place in his District Dorit's and Court of jury the County, the Worm. Northwestern name. After a Thirteenth Judicial returned a verdict Union moved jury District i n f a v o r of for a trial new , in the Treasure Ben and D o r i t trial which the D i s t r i c t C o u r t d e n i e d and t h i s a p p e a l f o l l o w e d . The i s s u e s r a i s e d on a p p e a l a r e a s f o l l o w s : 1. Whether the jury verdict was supported by substantial c r e d i b l e evidence; 2. Whether i t was e r r o r a t t o r n e y , R i c h a r d W. t o e x c l u d e t h e v i d e o t e s t i m o n y of A n d e r s o n , who p r e p a r e d t h e b a n k r u p t c y p e t i - t i o n f o r Ben and D o r i t i n 1 9 6 5 ; 3. Whether i t 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 c o u l d f i n d t h a t C h r i s t and H e l e n 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 i t was error to refuse the plaintiff's offered i n s t r u c t i o n on m u t u a l c a n c e l l a t i o n of a c o n t r a c t . We will offered the first deal following with issue number i n s t r u c t i o n on m u t u a l four. Plaintiff's c a n c e l l a t i o n of contract: "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 i t a t a n y time by mutual consent. The e f f e c t i s t o r e l i e v e t h e p a r t i e s from g o i n g f o r w a r d u n d e r 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 d o n e , and t h e fact of its having been done may be a e s t a b l i s h e d by e v i d e n c e d e c l a r a t i o n of t h e p a r t i e s of the ." acts P l a i n t i f f ' s contend t h e District Court e r r e d g i v e t h i s i n s t r u c t i o n t o the jury. stated in the above R e f r i g e r a t i o n Co. W agree. e instruction comes and in refusing to law The r u l e of v. from Eggers General ( 1 9 4 9 ) , 1 2 3 Mont. 2 0 5 , 2 1 9 , 210 P.2d 6 3 6 : "The parties to the executory written 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 a n y t i m e b y m u t u a l 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 a g r e e m e n t s o p r o v i d i n g and it is i m m a t e r i a l w h e t h e r s u c h t e r m i n a t i o n be c h a r a c t e r i z e d an abandonment, c a n c e l l a t i o n , m u t u a l r e s c i s s i o n or waiver. The e f f e c t i s t h e same -- t o r e l i e v e t h e p a r t i e s from g o i n g f o r w a r d u n d e r 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 a c c o m p l i s h e d by p a r o l , and t h e f a c t s of i t s h a v i n g b e e n d o n e 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. 6 9 , 1 0 P.2d v. and 379, Coca-Cola and h a s s i n c e b e e n s p e c i f i c a l l y c i t e d i n S m a l l B o t t l i n g Co. River West ( 1 9 5 8 ) , 1 3 4 Mont. Equipment v. Co. ( 1 9 5 9 ) , 1 3 4 Mont. 5 8 2 , 3 3 5 P.2d v. N e l s o n ( 1 9 3 2 ) , 9 2 Mont. 1 6 8 , 328 P.2d Holzworth 298. Construction "Termination question of fact Redland, Berthelson 3 0 6 , 583 P.2d for & of a the Co. I n S t a n d a r d I n s u r a n c e Co. S t u r d e v a n t ( 1 9 7 7 ) , 1 7 3 Mont. 2 3 , 2 7 , 5 6 6 P.2d stated: 124, contract district by mutual court." Sidney Livestock 52, t h i s Court is consent And i n Murphy a v. 296, "A c o n t r a c t may be 1049, t h i s Court s t a t e d : ( 1 9 7 8 ) , 1 7 8 Mont. ter- m i n a t e d by t h e p a r t i e s , b u t o n l y by t h e m u t u a l c o n s e n t of a l l t h e parties." P l a i n t i f f s pled in their complaint, that the contract had b e e n 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 was cancelled testified by mutual consent introduced o w n e r s h i p of tions, a petition e v i d e n c e which i s s u e of H e l e n Worm for showed c o n s e n t of bankruptcy i n 1965. Ben did not claim t h e f a r m on t h e b a n k r u p t c y p e t i t i o n , l o a n a p p l i c a - l e a s e a g r e e m e n t s and D o r i t ' s marriage. parties. t h e c o n t r a c t was t e r m i n a t e d b y t h e m u t u a l t h e p a r t i e s when Ben f i l e d Plaintiffs the of p e t i t i o n f o r d i s s o l u t i o n of T h e r e i s 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 mutual cancellation of the contract. A party has a right to have instructions t h e o r y of t h e c a s e . ( 1 9 7 5 ) , 1 6 7 Mont. instruct on given which are adaptable to his W i l l i a m s v. Montana N a t i o n a l Bank of Bozeman 24, mutual 534 P.2d 1247, cancellation of 1250. the Here, contract refusal to constitutes reversible error. Defendant's a r g u e s i n c e m u t u a l c a n c e l l a t i o n of the contract was n o t l i s t e d a s a n 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 cannot raise this M.R.Civ.P., issue claiming on appeal. D e f e n d a n t s r e l y on R u l e 1 6 , 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 s u b s e q u e n t c o u r s e of t h e a c t i o n , u n l e s s m o d i f i e d a t t h e t r i a l t o prevent manifest i n j u s t i c e ." However, R u l e 1 5 ( b ) , M.R.Civ. P . , states: "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 b y e x p r e s s o r i m p l i e d 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 b e e n r a i s e d i n t h e p l e a d i n g s . S u c h 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 c a u s e them t o c o n f o r m t o t h e e v i d e n c e and t o r a i s e t h e s e i s s u e s may be made upon m o t i o n o f a n y p a r t y a t a n y t i m e , e v e n a f t e r j u d g m e n t ; b u t f a i l u r e t o s o amend d o e s 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 issues." W f i n d h e r e , t h e i s s u e of m u t u a l c o n s e n t was r a i s e d a t t h e e t r i a l and t h u s was a n 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 j u r y . W do e 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 n o t r e v i e w a b l e by t h i s C o u r t . I n s u m m a t i o n , we w i l l b r i e f l y comment on i s s u e s number and three. W do n o t f i n d i t n e c e s s a r y t o d e t e r m i n e w h e t h e r e two it was e r r o r t o e x c l u d e t h e v i d e o t e s t i m o n y of R i c h a r d A n d e r s o n a s h e was trial intended a s a rebuttal order. On retrial, witness, plaintiffs not can l i s t e d on t h e p r e take the necessary a c t i o n t o p r e s e n t t h e i r evidence concerning the bankruptcy p e t i t i o n and c a l l t h e p r o p e r w i t n e s s o r w i t n e s s e s . tend i t was error for t h e D i s t r i c t Court to P l a i n t i f f s coninstruct the jury t h a t t h e y c o u l d 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 Dorit. Whether p r e t r i a l order. t h e r e was a g i f t was l i s t e d a s a n i s s u e i n t h e A s stated 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 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 . 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 . J u d g m e n t i s 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 Justice W e concur: 3d~A&hQq Chief J u s t i c e
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