No. 14449
IN THE SUPREME COURT OF THE STATE OF MONTANA
1979
KENNETH G. NEILS and
DOROTHY D. NEILS,
Plaintiffs and Appellants,
RUSSELL K. DEIST,
Defendant and Respondent.
Appeal from: District Court of the Eleventh Judicial District,
Honorable Robert M. Holter, Judge presiding.
Counsel of Record:
For Appellants:
Hash, Jellison, O'Brien and Bartlett, Kalispell,
Montana
James C. Bartlett argued, Kalispell, Montana
For Respondent:
H. James Oleson argued, Kalispell, Montana
Submitted: January 31, 1979
Decided: 7-
Filed: bf 7 -
Mt
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the
Court.
Plaintiffs appeal from a judgment in favor of defendant
in an action to collect the balance of an alleged debt. The
case was tried in the District Court of Flathead County without
a jury. The District Court held plaintiffs' claim barred by
the five year statute of limitations.
Plaintiffs Ken and Dorothy Neils and defendant Russell
Deist had been friends for many years, both socially and through
various business transactions. On April 20, 1970, plaintiffs
executed a warranty deed conveying a tract of land to defendant.
The deed did not specify the purchase price of the land, but
only stated "for value received". On June 26 defendant gave plain-
tiffs a personal check for $15,000 and accepted delivery of the
deed. On July 2 the deed was recorded. The only written instru-
ments involved in the transaction were the deed and check.
Seven years later, on April 18, 1977, plaintiffs filed
a complaint alleging an oral agreement between the parties that
the $15,000 was a down payment only and that $10,000 was still
owing. The complaint further alleged defendant's acknowledgement
of the $10,000 remaining indebtedness to plaintiffs on numerous
occasions in the intervening years; that it was still due; but
that defendant refused to pay. Defendant by answer specifically
denied any oral agreement for consideration above the $15,000
already paid, and raised as affirmative defenses the statute of
limitations and the statute of frauds. Defendant subsequently
moved for summary judgment on those grounds, which motion was denied.
On March 3, 1978 trial was held before the court without
a jury. Plaintiffs introduced evidence that the agreed selling
price of the property was $25,000, but that they had delivered the
deed to defendant upon receipt of his $15,000 check because defen-
dant requested that he be given clear title and the parties had
done business in similar informal fashion over the years with no
problems. The 1970 tax return of plaintiff Ken Neils reflected
that he had paid a capital gains tax on a $25,000 sale price.
Defendant's 1972 income tax return indicated a $25,000 cost basis
for the property when resold.
Defendant's testimony was the original agreed price was
$15,000. Defendant did admit to some confusion, however, in
that in 1975 when plaintiffs first began making demands on him
for payment, he thought they were claiming he had paid nothing
at all. He conceded that he was not positive whether he had
or not, and searched through his old financial records until he
found his cancelled $15,000 check. Thereafter, he was adamant
that he owed plaintiffs nothing. He explained the reporting of
$25,000 as his cost basis in 1972 when he sold the property as
having'been reached by capitalization of survey costs, delinquent
taxes he had paid, purchase of a water right, and interest. He
contended that if the original purchase price had been $25,000,
then his cost basis in 1972 would have been much higher by the
addition of those capitalized items.
Following trial, findings of fact, conclusions of law and
judgment were entered. The District Court found that the original
agreed price was $25,000, but ruled in favor of defendant on the
grounds that the action was barred by section 93-2604(1), R.C.M.
1947, now section 27-2-202(2) MCA, the five year statute of limi-
tations applicable to actions upon a contract not founded on an
instrument in writing. Defendant subsequently moved to amend the
findings of fact to show that the original agreed price was $15,000,
and plaintiffs moved for a new trial. Both motions were denied.
This appeal followed.
Plaintiffs and defendant both filed notice of appeal;
plaintiffs from the judgment as a whole, and defendant from that
portion concluding that the agreed price was $25,000 rather than
$15,000. After initiation of the appeal, Russell Deist died and
Joan Deist, his surviving wife and personal representative of
his estate, succeeded him as party defendant.
On appeal, plaintiffs contend that the District Court
erred in holding that their cause of action was barred by the
five year statute of limitations. They argue that a deed is an
instrument in writing for the purposes of invoking the 8 year
statute of limitations applicable to written contracts. Section
93-2603, R.C.M. 1947, now section 27-2-202(1) MCA. They further
argue that the actual consideration for a deed may always be
shown to be greater, less than, or different from, that recited
in the deed. Their position is that the District Court correctly
found the original agreed price to be $25,000 and erred only in
applying the statute of limitations. They seek reversal and entry
of judgment in their favor for the sum of $10,000 with interest
from the date of sale.
Defendant agrees that a deed is an instrument in writing
for purposes of determining the applicable statute of limitations.
It is his contention, however, that the District Court erroneously
admitted the parol evidence of the alleged higher purchase price,
so that even though the wrong statute of limitations was used the
ruling in favor of defendant was nonetheless correct.
The determinative issues can be framed as follows:
I. What is the applicable statute of limitations?
11. Is parol evidence admissible to prove the actual
consideration?
The question of whether a deed constitutes a contract
founded upon a written instrument within the meaning sf the 8
year statute of limitations has not been specifically settled
in Montana. In general, deeds are seen as contracts in writing
to which the longer statute of limitations applies.
"It is established that the acceptance of a deed
by the grantee named therein makes it a written
contract, and the obligations created by the deed
are therefore evidenced by a writing and are
not governed by the limitation respecting verbal
contracts." 51 Am Jur 2d Limitation of Actions
597.
A summary of cases so holding appears in Annot. 3 ALR2d 809 526.
We recently recognized this rule in dictum, S-W Co. v. John Wight,
Inc. (1978), Mont . , 587 P.2d 348, 357, 35 St.Rep. 1674,
1687, and we adopt it as the law in Montana.
On the parol evidence question both the law of contracts
generally and the law relating specifically to deeds allow parol
evidence on the issue of consideration when the recital in the
instrument is, as here, merely a receipt ("for value received").
"In a case in which the consideration for a written
contract is mentioned merely by way of recital or
as a receipt, the parol evidence rule does not pre-
clude the admission of extrinsic evidence to show
the true consideration . . ."
17 Am Jur 2d Contracts
590; to the same effect, 30 Am Jur 2d Evidence SS
1056 and 1057.
"The tendency of modern times has been to regard the
consideration clause in a deed merely in the light
of a receipt and to allow parol evidence to explain
the consideration for almost every purpose except
to allow the grantor to avoid the deed where no fraud
or mistake is shown." 23 Am Jur 2d Deeds S71.
"As a general rule, and in line with the modern ten-
dency ... parol or extrinsic evidence ...is
admissible to show the actual consideration for the
conveyance . . ." 23 Am Jur 2d Deeds 573.
Where a deed is the only instrument involved in a controversy,
the stated consideration ("one dollar and other considerations1')
can be explained by oral testimony. Warner v. Johns (1949), 122
Mont, 283, 201 P.2d 986.
Accordingly, we hold that plaintiffs' claim is not barred
by the 5 year statute of limitations and that they are entitled to
a judgment for the balance of the indebtedness. Since the evi-
dence on the issue of the purchase price was conflicting and the
trial judge chose to believe plaintiffs, defendant has no grounds
for challenging the finding of fact that the agreed price was
$25,000 rather than $15,000.
"The standard of review in a nonjury case is simply
to determine if there is substantial evidence to
support the findings of the trial court. This
Court will not reverse such findings of fact unless
there is a clear preponderance of evidence against
the findings." Hayden v. Snowden (1978). Mont .
, 576 P.2d 1115, 1117, 35 St.Rep. 367,369.
"The credibility and weight given to the witness,
especially where the evidence is conflicting, is
a matter for the district court's determination
in a nonjury case." Olson v. Carter (1977),
Mont. , 572 P.2d 1238, 1239, 34 St.Rep. 1539,
1541, citing Miller v. Fox (1977), Mont . I
571 P.2d 804, 34 St.Rep. 1367.
Plaintiffs have asked us to assess interest on any judg-
ment in their favor from April 20, 1970, the date of the sale.
This we decline to do. During oral argument it was established
that there had been no agreement whatever between the parties
as to whether interest would accrue on the obligation if it were
not promptly paid. The issue of interest did not arise during
the trial of this case and the District Court made no findings
of fact in that regard. No interest was demanded or paid on the
first $15,000, although the deed was executed on April 20, 1970
and the payment was not made until June 26, 1970. Because the
record is silent on this matter, we hold that interest shall be
assessed from a reasonable time after demand was made on defendant
for payment of the outstanding $10,000, to be determined by the
District Court on remand.
The judgment of the District Court in favor defendant
is reversed and the cause remanded with instructions to enter
judgment for plaintiffs in the sum of $10,000, together with
interest as may be determined in accordance with this opinion.
Costs to plaintiffs. We decline to award attorney fees for trial
or upon appeal.
Chief Justice