No. 85-541
IN THE SUPREME COURT OF THE STATE OF MONTANA
3 986
JAMES F. FLEMING, 111,
Plaintiff and Appellant,
FLEMING FARMS, INC., FLEMING LAND
PARTNERSHIP, and. WILMA M. (FLEMING)
WEST,
Defendants and Respondents.
APPEAL FROM: District Court of the Twentieth ~udicialDistrict,
In and for the County of Lake,
The Honorable C. B. McNeil, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Larrivee Law Offices; Noel Larrivee, Fissoula,
Monta.na
For Respondent:
McGarvey, Lence & Heberling; John A. Lence, Kalispell,
Montana
Yardley & Yardley; Dan Yardley, Livingston, Montana
Submitted on Briefs: Feb. 20, 1986
Decided: April 30, 1986
Filed.
:
Clerk
Mr. Justice John C. Sheehy delivered the Opinion of the
Court.
Appellant, James F. Fleming, 111, appeals from the
judgment of the District Court, Twentieth Judicial District,
County of Lake, entered fallowing the District Court's order
granting the mot-ion for summary judgment of Wilma M.
(Fleming) West in favor of all defendants. We affirm.
Fleming raises three issues for our review:
1. Ojrhether the District Court abused its discretion in
granting summary judgment because numerous issues of material
fact exist;
2. Whether there was actual or constructive fraud
committed upon Fleming;
3. Whether there was extrinsic fraud committed in the
probate of an estate in which Fleming was an heir.
The record of this case shows that in the early 1940's
James F. Fleming, Jr., and his wife, Wilma M. Fleming,
presently Wilma Ivl. Kest, began a ranch-farm operation near
Pablo, Montana. Over the next 30 years the Flemings acquired
approximately 800 acres of commercial farm land. During this
period the Flemings had eleven children, five sons and six
daughters, including appellant, James F. Fleming, 111.
During 1975 James, Jr. retained Dan Yardley, an
attorney, and David Green a certified public accountant to
advise him with his estate planning. As part of this estate
planning, it was decided to incorporate the family business,
excluding the land holdings. As a result, in 1975, Fleming
Farm, Inc. was formed as a Montana corporation. A total of
2,000 shares of class "A" voting stock were issued with 1,500
shares issued to James, Jr., and 500 shares to Wilma. In
addition, 4,313 class "B" nonvoting shares were issued with
James, Jr. receiving 3,225 shares and Wilma receiving 1,078
shares. Late in 1975 the Flemings gave to each of their five
sons 68 shares of the class "A" stock and 172 shares of the
class "B" stock.
As a further part of the estate planning, Fleming Land
Partnership was formed and all of the commercial land was
conveyed to the partnership. James, Jr. retained an 80.98%
ownership interest, Wilma a 10% ownership interest and the
eleven children each received a .82% ownership interest. The
partnership leased its land to the family corporation.
James, Jr. died on October 12, 1975. As specified in
his Will, Wilma was appointed personal representative. Wilma
retained Dan Yardley to represent her in that capacity.
Under the terms of James, Jr. Is Will, one-fourth of his net
estate was distributed equally to the eleven children.
One-half of the net estate was placed in Trust "A" with
income to Wilma, with the right of request for the corpus,
thus qualifying for the estate tax marital deduction
available at that time. The remaining one-fourth of the
estate was placed in Trust "B" with income to be distributed
either to the wife or children.
In the fall of 1977, a distribution 'Yn kind" of the
estate assets was completed. Once the distribution had been
made, pursuant to the terms of Trust "A", Wilma requested in
writing that the corpus of that trust be conveyed to her,
thus terminating the trust. At the request of Wilma, Trust
"B" was terminated by court order and the property was
distributed equally to the eleven children, thus in effect
giving the children one-half of the net estate.
Wilma received James, Jr.'s corporate stock as the major
portion of her distributive share, while the children
received their father's partnership interest. The division
of James, Jr.'s partnership interest among the eleven
children equaled a 7.36% interest to each, which combined
with the .82% interest earlier given to ea-ch child totaled an
8.18% interest in the partnership per child.
In the spring of 1980, the Internal Revenue Service
contested the valuation of certain assets of the estate. In
1981, an agreement was reached with the I.R.S. increasing the
valuation of some assets of the estate. A d.ispute with the
Montana Department of Revenue was resolved on a similar
basis. Under the terms of these agreements, the gross
valuation of the estate of James, Jr. was increased from
$659,109 to $805,203. All of the additional taxes paid by
the revaluation were paid by Wilma. There was no attempt to
revise the in-kind distribution of assets made in 1977 or to
recoup any of the additional costs from the children.
During the winter and spring of 1976, James, I11
borrowed $42,500 from the family corporation for construction
of a house for himself and his family. A promissory note
dated August 2, 1976, evidenced the indebtedness. James, 111
made a few payments on the debt, reducing his unpaid balance
to $42,196. On January 10, 1978, at a meeting with the other
family members, James, 111 transferred his 240 share interest
in the family corporation and 8.18% interest in the family
partnership to the family corporation in exchange for the
cancellation of the promissory note.
This action arises out of a promise made to James, I11
by his mother at the January 10, 1978, meeting. James, 111
testified regarding the promise as follows:
Q. Let's go on. According to the Complaint, you
alleged that you were promised the difference in
value between the value of the stock and
partnership interest and the amount of the
note--the difference in those two values when the
farm is sold. A. Yes, that's what my mother told
me.
Q. Do you know when this happened? When did your
mother tell you this? A. I was signing the
corporation shares and out of the clear blue sky,
she said, "If I ever sell the farm, Jim, I'll give
you the rest of your money."
Q. Let's get back to the promise for a moment.
It's my understanding from your testimony as you
were signing the back of the corporate stock,
signing it back to the corporation, your mother
said to you, "If I ever sell the farm, I'll give
you the rest of your money. " A. That's what she
said.
Q. And that was the only time she ever made such a
promise? A. Yep.
(1. And that was not the reason that you were
signing the corporate stock? A. Not really, I
guess.
Q. You were not being induced by that promise to
sign the stock? A. No. I felt an obligation to,
I guess, do it.
Count I of James, 111's complaint alleged that the above
promise made by Wilma induced him to convey his interest in
the partnership and corporation and constituted fraud, actual
or constructive, as well as, undue influence. In count I1 of
his complaint, James, I11 requested an accounting of the
proceeds of the trusts created by the death of James, Jr.
On July 15, 3.985, Wilma filed a motion for summary
judgment. After considering the pleadings, interrogatories,
request for admissions, the depositions of James, I11 and
Wilma, the affidavit of attorney Yardley, Wilma's brief and
James, 111's oral argument the District Court, having found
no genuine issue as to any material fact granted summary
judgment to all defendants.
The general purpose of Rule 56, M.R.Civ.P., is to
eliminate unnecessary trial, delay and expense. The purpose
of the hearing and the motion is not to resolve factual
issues, but to determine whether there is any genuine issue
of material fact in dispute. The opposing party's facts must
be material and of a substantial nature, not fanciful,
frivolous, gauzy nor merely suspicions. Westlake v. Osborne
(Kont. 1986), 713 P.2d 548, 550, 43 St.Rep. 200, 203;
Silloway v. Jorgenson (19651, 146 Mont. 307, 310, 406 P.2d
167, 169. The party moving for summary judgment has the
initial burden of showing that there is no genuine issue as
to any fact d.eemed material in light of the substantive
principles that entitled the movant to judgment as a matter
of law. Cereck v. Albertson's, Inc. (Mont. 1981), 637 P.2d
509, 511, 38 St.Rep. 1986, 1987-88. Once the movant has met
this burden, the party opposing the motion must supply
evidence supporting the existence of a genuine issue of fact.
Pretty On Top v. Hardin (1979), 182 Mont. 311, 315, 597 P.2d
58, 60; Harland v. Anderson (1976), 169 Mont. 447, 451, 548
P.26 613, 615. As we will discuss in detail below, we find
that Wilma met her burden and the District Court properly
granted summary judgment for all defendants as there existed
no genuine issue of material fact.
Section 28-2-405, MCA, provides:
Actual fraud, within the meaning of this part,
consists in any of the following acts committed by
a party to the contract or with his connivance with
intent to deceive another party thereto or to
induce him to enter into the contract:
(1) the suggestion as a fact of that which is not
true by one who does not believe it to be true;
(2) the positive assertion, in a manner not
warranted by the information of the person making
it, of that which is not true, though he believes
it to be true;
(3) the suppression of that which is true by one
having knowledge or belief of the fact;
(4) A prom.ise made without any intention of
performing it; or
(5) a.ny other act fitted to deceive.
It is well settled that the mere making of a promise
which the promisor fails to keep is not actionable fraud.
Svennungsen v. Svennungsen (1974), 165 Mont. 161, 169, 527
P.2d 640, 644; Gallatin Trust & Savings Bank v. Henke (1969),
154 Mont. 170, 175, 461 P.2d 448, 450. Rather, one must
prove that the maker of the promise had no intention of
performing it when he made it. Howe v. Messimer (1929), 84
Mont. 304, 313, 275 P. 281, 283. This Court has also stated
that one must make a prima facie showing of nine elements for
a fraud claim to survive. Van Ettinger v. PappFn (1978), 180
Mont. 1, 9, 588 P.2d 988, 993-94. The nine elements are:
(1) a representation; (2) falsity of the representation;
(3) ma-teriality of the representation; (4) speaker's
knowledge of the falsity of the representation or ignorance
of its truth; (5) speaker's intent it should be relied upon;
(6) the hearer's ignorance of the falsity of the
representation; ( 71 the hearer ' s reliance on the
representation; (8) the hearer's right to rely on the
representation; and (9) consequent and proximate injury
caused by the reliance upon the representation. Wright v.
Blevins (Mont. 1985), 705 P.2d 113, 117, 42 St.Rep. 1311,
1315; Wortman v. Griff (Mont. 1982), 651 P.2d 998, 1000, 39
St.Rep. 1916, 1918; Cowan v. Westland Realty Company (1973),
162 Mont. 379, 383, 512 P.2d 714, 716; Cl-ough v. Jackson
(1971), 156 Mont. 272, 279-80, 479 P.2d 266, 270.
In the instant case, James, 111 testified that his fraud
claim was based upon the promise made by Wilma at the time he
assigned his interest in the corporation and partnership to
the corporation in exchange for cancellation of the $42,000
promissory note. James, I11 also testified that Wilma. had no
intent to deceive him:
Q. I guess I asked you this and then you digressed
or I didn't get the final answer. When your mother
made the promise, did she intend to deceive
you? A. No, I don't think she made it in that
way, no. I can't imagine--I can't think of my own
mother trying to deceive me. That's just, you
know, I don't think of it that way, really. I feel
like I've been had, but. Let's--Can I say one
thing? I have found out--found in the years gone
by that Mom does tend to, a little bit, tell people
what they--what she thinks that they want to hear
because of comparing notes, kind of you could say
comparing notes. We figure that she, you know, she
used to come back. She would tell me one thing,
she would tell John and Lyd another thing, she
would tell sister Ruth another thing, you know,
about the same thing.
And finall-y, James, I11 testified that he did not rely
upon Wilma's promise in executing the assignment.
James, 111's own testimony clearly establishes that his
fraud claim was deficient in that the fourth and seventh
elements of the prima facie case were lacking. This the
District Court noted in its order granting defendants summary
judgment when it wrote:
Plaintiff's claim of actual fraud. fails because, in
his own deposition, he admits that only his mother,
the Defendant West, ever made any alleged promise
to pay him additional money, and that he did not
rely upon said promise in signing over his share of
the land partnership and stock in the family
corporation. Plaintiff further admits that his
mother did not intend to deceive him and
defendants, therefore, have satisfied their burden
of showing that there is no genuine issue as to any
material fact as to the issue of actual fraud. By
his own admission, there was no intent to deceive
and he did not act in reliance upon any
representation of his mother.
Section 28-2-406, MCA, provides:
Constructive fraud consists in:
(1) any breach of duty which, without any actually
fraudulent intent, gains an advantage to the person
in fault or anyone claiming under him by misleading
another to his prejudice or to the prejudice of
anyone claiming under him; or
(2) any such act or omission as the law especially
declares to be fraudulent, without respect to
actual fraud.
In Mends v. Dykstra (1981), 195 Mont. 440, 448, 637 P.2d
502, 506, we said breach of a duty to disclose material facts
constitutes constructive fraud. As the District Court noted,
James, 111's claim of constructive fraud fails for
essentially the same reason his actual fraud claim failed.
That is the record is void of any facts to establish any duty
owed to James, I11 or that any such duty was breached to his
prejudice.
Finally, Wilma contends the fraud claims are also barred
by the two year statute of limitations. Section 27-2-203,
MCA. The act of alleged fraud took place January 10, 1978,
and the complaint was filed on December 20, 1984. The only
way James, 111's claims would not be barred by the statute is
to claim that the statute did not begin to run until
discovery of the alleged fraud. See Turley v. Turley (~ont.
1982), 199 Mont. 265, 273-74, 649 P.2d 434, 438. James, I11
apparently made no such showing. Thus, the fraud claims fail
for the reasons stated and because of the statute of
limitations.
With regard to the third claim of count I of James 111's
complaint, undue influence, the District Court determined it
was barred by the statute of limitations. Section 27-2-215,
bJCA. James, 111 does not contest this aspect of the summary
judgment on appeal.
Finally, count I1 of James, 111's complaint requests an
accounting of the proceeds of the trusts created by the death
of his father. James, I11 here contends that because there
exists questions of fact concerning: (1) the value of
James, Jr.'s estate; (2) the value of James, 111's
inherited share of the estate; (3) circumstances
surrounding the transfer therefore; and (4) whether there
was fraud surrounding the probate of the estate, the summary
judgment should be set aside.
The District Court, in granting all defendants summary
judgment on count I1 stated:
Defendants are entitled to Summary Judgment upon
Count Two of Plaintiff's complaint because none of
said defendants have ever had any duty to account
to any person for anything arising out of the
trusts or estates of James F. Fleming, Jr. The
Court has reviewed Lake County Probate file No.
4581 in the Matter of the Estate of James F.
Fleming, Jr. and finds that the above-named
defendants, Fleming Farms, Inc. and Fleming Land
Partnership, have absolutely nothing to do with
said estate. The above-named defendant Wilma M.
(Fleming) West is named individually and not as the
Personal Representative of the Estate of James F.
Fleming, Jr., and as such individual has no duty or
obligation to account to any person concerning said
estate or trust which resulted therefrom.
Summary judgment on the claim for an accounting was
proper.
We, therefore, affirm the grant of summary judgment by
the District Court.
We c o n c u r :