JOHNSON v JOHNSON
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No. 13380 IN THE SUPREME COURT OF THE STATE OF MONTANA 1977 KENNETH F. JOHNSON, Plaintiff and Appellant, HOWARD R. JOHNSON and CARRIE M. JOHNSON, Defendants and Respondents. Appeal from: District Court of the Fifteenth Judicial District Honorable L. C. Gulbrandson, Judge presiding Counsel of Record: For Appellants: Habedank, Cumming and Best, Sidney, Montana Otto T. Habedank argued, Sidney, Montana For Respondents: John M. McCarvel argued, Great Falls, Montana Submitted: Filed: BAR 5 6 1 g q January 14, 1977 Mr. Justice Frank I. Haswell delivered the Opinion of the Court. Plaintiff filed an action against his brother and his brother's wife seeking (1) a reconveyance of a half section of farmland to him, (2) to quiet title to the land, and (3) an accounting of crop proceeds. The district court of Sheridan County, the Honorable L. C, Gulbrandson, district judge, presiding, granted summary judgment to defendants. Plaintiff appeals. Plaintiff's complaint in essence alleges a conveyance by him to his brother in 1953 by warranty deed absolute on its face; that the deed was given without consideration and upon an express oral agreement to reconvey; and a request for and refusal to reconvey on October 2, 1974; The complaint seeks to impress a trust on the land and compel a reconveyance to plaintiff. ~efendants' answer in substance denies the existence of an oral agreement to reconvey or any trust in the land and sets 1 up the following affirmative defenses: ( ) Laches, (2) estoppel, ( ) statute of limitations, ( ) waiver, (5) statute of frauds, 3 4 and (6) adverse possession. Pretrial discovery consisted of interrogatories by defendants and answers by plaintiff, depositions of plaintiff and both defendants, and documentary exhibits. Defendants moved for summary judgment which was granted by the district court, The single issue on appeal is whether summary judgment was proper. The record before the district court disclosed that John P. Johnson, father of plaintiff Kenneth Johnson and defendant Howard Johnson, owned a farm in Sheridan County, Montana. In $22 t h e 2, December -f f a t h e r and h i s wife deeded a h a l f s e c t i o n of t h e farmland t o Kenneth and a n o t h e r h a l f s e c t i o n t o Howard. A t t h a t time Kenneth was a s i n g l e man w i t h t h e United S t a t e s A i r Force i n C a l i f o r n i a . I n May 1953, t h e f a t h e r t r a v e l e d t o C a l i f o r n i a t o s e c u r e a conveyance from Kenneth of h i s h a l f s e c t i o n of t h e farmland. Although a d i s p u t e e x i s t s concerning t h e reason f o r t h i s , t h e record e s t a b l i s h e s i t was f o r one o r both of t h e s e r e a s o n s : (1) A s a n e s t a t e planning p r e c a u t i o n should Kenneth l o s e h i s l i f e i n t h e Korean c o n f l i c t , (2) f o r f e a r t h e land would be l o s t i n p o t e n t i a l l e g a l a c t i o n a r i s i n g o u t of Kenneth's i n volvement w i t h a married woman. According t o t h e r e c o r d , t h e o r i g i n a l i d e a was f o r Kenneth t o t r a n s f e r t h e land t o h i s married s i s t e r , Arlene P e t e r s e n , who l i v e d i n C a l i f o r n i a . How- e v e r , she i n d i c a t e d Howard would be b e t t e r a b l e t o t a k e c a r e of t h e land a s he was l i v i n g on t h e farm. By deed d a t e d May 1 2 , 1953, Kenneth conveyed t h e h a l f s e c t i o n of land i n q u e s t i o n t o Howard. T h i s deed was a b s o l u t e on i t s f a c e and made no mention of a t r u s t . On t h e f a c e of t h e deed appeared $8.80 i n f e d e r a l documentary stamps i n d i c a t i n g a c o n s i d e r a t i o n of $8,000 f o r t h e transfer. The documentary stamps were d a t e d and i n i t i a l e d w i t h Kenneth's i n i t i a l s . Kenneth d e n i e s r e c e i v i n g any money o r c o n s i d e r a t i o n f o r t h e deed o r t r a n s f e r . Kenneth signed and f i l e d a f e d e r a l gift t a x r e t u r n covering t h e c a l e n d a r y e a r 1953. He stated i n t h i s return t h a t t h e t r a n s f e r was a g i f t , t h a t t h e v a l u e o f t h e Land a t t h e time of t r a n s f e r was $8,000 and t h a t no t r u s t was c r e a t e d . Kenneth was discharged from t h e m i l i t a r y s e r v i c e and r e t u r n e d home t o Sheridan County i n December 1955. T h e r e a f t e r Kenneth and Howard farmed t h e e n t i r e s e c t i o n of land. Kenneth, Howard and t h e i r f a t h e r each r e c e i v e d a s h a r e o f t h e c r o p s u n t i l t h e d e a t h of t h e f a t h e r i n November 1965. Following t h e f a t h e r ' s d e a t h , Kenneth and Howard continued t o farm t h e land w i t h each r e c e i v i n g a s h a r e of t h e crop. The p r e c i s e arrangement on s h a r i n g t h e c r o p s , payment of t a x e s , and s h a r i n g of expenses i s a s u b j e c t of d i s p u t e i n t h e r e c o r d . Kenneth married i n 1959. An e x h i b i t t o Howard's d e p o s i t i o n i s a l e t t e r from t h e i r f a t h e r t o Howard d a t e d January 2 , 1960, s r a t i n g "Kenneth knows t h a t he has n o t any t i t l e o r r i g h t t o any o f t h e homestead o r h a l f s e c . t h a t I bought from Sparling" and t h a t Kenneth t o l d him i t would n o t work "so he d o n ' t need t o t e l l h i m s e l f . o r anyone t h a t t h a t 112 s e c . i s h i s 1 ' . knowledge% t h i s l e t t e r . of Kenneth denied I n March 1965, conveyances were executed b y Howard and h i s w i f e v e s t i n g t h e h a l f s e c t i o n of land i n q u e s t i o n i n themselves a s j o i n t t e n a n t s . The deeds c r e a t i n g t h e j o i n t tenancy were recorded i n t h e o f f i c e of t h e c l e r k and r e c o r d e r of Sheridan County on March 1, 1965. I n 1968, Kenneth secured a loan from t h e Production C r e d i t Association. land he owned. I n t h e loan a p p l i c a t i o n he was asked t o l i s t t h e Kenneth admitted i n h i s d e p o s i t i o n t h a t he d i d not l i s t t h e half section i n question. I n 1971, Howard mortgaged some land t o t h e F e d e r a l Land Bank f o r $56,000. Included i n t h e mortgage was t h e h a l f s e c t i o n of land i n q u e s t i o n . I n 1973 and 1974, Kenneth d e l i v e r e d 113 of t h e crop t o Howard pursuant e i t h e r t o an agreement between Howard and Kenneth o r a t Howard's r e q u e s t . During the years they farmed the section of land together Kenneth listed his income as a share of the crops sold. Kenneth's answers to defendants' interrogatories state there was an oral agreement by Howard to reconvey the land made at the farm in Sheridan County in December 1952,and in San Mateo, California in May 1953; that he has no writing substantiating this; that the witnesses to the oral agreement were himself, Howard, their father, and their sister, Arlene Petersen; that he deeded the property over to Howard at the request of his father and sister, Arlene Petersen; that he did not request recovery prior to October 2, 1974, because he had no reason to believe Howard was holding the land other than as a trustee prior to that time; that he in effect paid taxes on his half section by dividing the crops equally because his half section had more farmland than'-Howard's half section and Howard received the use of feed grown to offset the payment of taxes. Kenneth's deposition reflects similar testimony in considerably more detail. Additionally, it indicates that on June 30, 1964, he went with Howard to Ludwig Tande's office in Plentywood, Montana, and signed an affidavit that he was single when he deeded the half section to Howard to enable Howard to mortgage the land in question. No deposition was taken of Arlene Petersen, their sister. The basis of the summary judgment granted defendants as reflected in the district court's order was: (1) There was no genuine issue as to any material fact; (2) Kenneth was guilty of laches; (3) he is estopped to allege ownership in the land; ( ) his action is barred by the statute of limitations; and (5) 4 he has waived any right, title or interest in the land. The law r e l a t i n g t o summary judgments, Rule 56, M.R.Civ.P., has been construed i n d e t a i l i n a long l i n e of Montana c a s e s and r e c e n t l y was s u b s t a n t i a l l y summarized i n Harland v. Anderson, Mont . , 548 P.2d 613, 615, 33 St.Rep. 363,365. In essence summary judgment i s n o t a s u b s t i t u t e f o r a t r i a l ; i t can only be granted where t h e record d i s c l o s e s no genuine i s s u e of m a t e r i a l f a c t and t h e moving p a r t y i s e n t i t l e d t o judgment a s a m a t t e r of law; and where t h e absence of any genuine i s s u e of m a t e r i a l f a c t i s d i s c l o s e d by t h e r e c o r d , t h e burden i s on t h e p a r t y opposing summary judgment t o come forward w i t h evidence c r e a t i n g a genuine i s s u e of m a t e r i a l f a c t t o be determined a t trial. I n Harland t h e Court s a i d : "The primary p o l i c y and g e n e r a l purpose underlying i s t o encourage j u d i c i a l economy Rule 56, M.R.Civ,P., through t h e prompt e l i m i n a t i o n of q u e s t i o n s n o t deserving of r e s o l u t i o n by t r i a l . " With t h e s e p r i n c i p l e s i n mind, we d i r e c t our a t t e n t i o n t o t h e defense of l a c h e s which i s one b a s i s on which t h e d i s t r i c t c o u r t g r a n t e d summary judgment t o defendants. The d o c t r i n e o f l a c h e s was s e t f o r t h a t some l e n g t h i n R i l e y v. Blacker, 51Mont. 364, 370, 371, 152 P. 758, a p p l i e d i n Hynes v. S i l v e r P r i n c e Mining Co., 86 Mont. 10, 281 P. 548 and Montgomery v . Bank of D i l l o n , 114 Mont. 395, 136 P.2d 760; and c i t e d i n Davis v - S t e i n g r u b e r , 131 Mont. 468, 311 P.2d 784: "Laches, considered a s a b a r independent of t h e s t a t e of l i m i t a t i o n s , i s a concept of e q u i t y ; i t means negligence i n t h e a s s e r t i o n of a r i g h t ; it i s t h e p r a c t i c a l a p p l i c a t i o n of t h e maxim, ' ~ q u i t y a i d s only t h e v i g i l a n t ' ; and i t e x i s t s when t h e r e h a s been unexplained delay of such d u r a t i o n o r c h a r a c t e r a s t o render t h e enforcement of t h e a s s e r t e d r i g h t i n e q u i t a b l e . Therefore has i t o f t e n been h e l d by t h i s c o u r t t h a t : While a mere d e l a y s h o r t of t h e p e r i o d o f t h e s t a t u t e of l i m i t a t i o n s does n o t of i t s e l f r a i s e t h e presumption of l a c h e s [ c i t i n g c a s e s ] y e t 'good f a i t h and reasonable diligence only can call into activity the powers of a court of equity, and, independently of the period fixed by the statute of limitations, stale demands will not be entertained or relief granted to one who has slept upon his rights. Consideration of public policy and the difficulty of doing justice between the parties are sufficient to warrant a court of equity in refusing to institute an investigation where the lapse of time in the assertion of the claim is such as to show inexcusable neglect on the part of the plaintiff, no matter how apparently just his claim may be; and this is particularly so where the relations of the parties have been materially altered in the meantime.' [Citing cases] What constitutes a material change of condition has been the subject of much judicial discussion and some judicial dissention; but whatever doubt there may be as to other circumstances, it never has been questioned, to our knowledge, that the death of one of the parties to the transaction is such a change. 'A specific application of the general rule just stated is in the refusal of the courts to afford relief to one who has lain idly by until the important witnesses to the transaction involved have died.* *I1' * In this case there is a genuine issue of material fact concerning the existence of an involuntary trust by operation of law in 1953, at the time the half section of land was deeded by Kenneth to Howard. The record is sufficient to establish a factual issue as to whether the transfer was without con- sideration (resulting trust) or a transfer based on an oral agreement to reconvey (constructive trust). Therefore we must assume, arguendo, that the half section of land was impressed with a trust in favor of Kenneth by operation of law in 1953. Thereafter the record shows, without contradiction, the following facts actually known by Kenneth or of which he is chargeable with knowledge: 1 The deed of the half section of land from . Kenneth to Howard, in 1953, was absolute on its face, indicated a consideration of $8,000 by federal documentary stamps on its face and was recorded in May 1953. 2. Kenneth filed a federal gift tax return in 1954 covering the 1953 transfer in which he stated under penalties of perjury that the transfer was a gift to Howard and that no trust was created in 1953. 3. In June 1964, Kenneth executed an affidavit that he was a single man at the time of the 1953 deed to enable Howard to mortgage the land in question. 4. In March 1965, the alleged trustee, Howard, executed and recorded conveyances vesting the land in question in Howard and his wife as joint tenants. 5. In November 1965, the father died. 6. In 1968, Kenneth applied for a loan in which he was asked to list the land he owned and he did not list the land in question. 7. Howard. In 1973 and 1974, Kenneth delivered 113 of the crop to Additionally, Kenneth stated in his answers to interroga- tories and in his deposition that the first time he asked Howard to reconvey the land back to him was on October 2, 1974, because he had no reason to believe Howard was holding the land other than as trustee and would refuse to reconvey. We hold that under these circumstances laches is established as a matter of law. Kenneth's is a stale claim based on a transaction that occurred more than 21 years prior to his first request for reconveyance and more than 23 years before suit was filed. There was a material change in circumstances by reason of the father's death some 9 years prior to Kenneth's first request for reconveyance and more than 11 years before suit was filed. The alleged trustee, Howard, was in the process of mortgaging the property in June 1964, a fact known to Kenneth. The a l l e g e d t r u s t e e , Howard, placed t h e property i n j o i n t tenancy with h i s wife i n March 1965, and recorded t h e conveyances, a l l i n derogation of t h e powers and d u t i e s of a t r u s t e e . Kenneth c i t e s Opp v. Boggs, 121 Mont. 131, 193 P.2d 379, f o r t h e r u l e 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 does n o t begin t o run with r e s p e c t t o a c o n s t r u c t i v e t r u s t u n t i l r e f u s a l ' by t h e t r u s t e e t o c a r r y o u t t h e t r u s t by reconveyance. However, l a c h e s , u n l i k e t h e s t a t u t e of l i m i t a t i o n s , begbns.: t o run when t h e t r u s t i s c r e a t e d by operation of law. r~ The r u l e i s s t a t e d i n t h i s language i n 76 Am J u r 2d, T r u s t s , 5597, p. 804: "Laches c o n s t i t u t e s a defense t o a s u i t t o d e c l a r e and enforce a c o n s t r u c t i v e t r u s t ; and f o r t h e purpose of t h e r u l e , repudiation of t h e c o n s t r u c t i v e t r u s t i s not r e q u i r e d , and time runs from t h e moment t h a t t h e law c r e a t e s t h e t r u s t , which i s t h e time t h e cause of a c t i o n a r i s e s . " See a l s o : Stianson v. Stianson, 40 S.D. 322, 167 N.W. 6 A.L.R. 237, 280. Here, Kenneth has s l e p t on t h e claim he now seeks t o enforce f o r over 23 years. A m a t e r i a l witness t o t h e t r a n s a c t i o n died more than 10 years p r i o r t o s u i t . The a l l e g e d t r u s t e e committed an a c t i n derogation of t h e t r u s t some 12 years p r i o r t o s u i t , v i z . mortgaging t h e property. The a l l e g e d t r u s t e e committed another a c t i n derogation of t h e a l l e g e d t r u s t more than 1 years p r i o r t o s u i t of which Kenneth i s chargeable with 1 knowledge, Q i z . wife. placing t h e property i n j o i n t tenancy with h i s Laches i s e s t a b l i s h e d a s a matter of law, j u s t i c e cannot now be accomplished because of t h e l a p s e of time and t h e m a t e r i a l change i n t h e circumstances, and e q u i t y w i l l not i n t e r c e d e 23 years l a t e r t o a i d Kenneth i n e s t a b l i s h i n g a claim he has f a i l e d t o a s s e r t f o r over 20 years. As Kenneth's claim is barred by laches as a matter of Law under the undisputed facts set forth above, no useful purpose would be served by discussing the additional grounds on which the district court predicated its summary judgment. The summary judgment is affirmed. Justice We Concur: -.--. I (457 +[ r: 7 , Chief Jystice r--c;J >4&,&w " 7' 7 " a ' ,
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