No. 88-2.53
IN THE SUPREME COURT OF THE STATE OF MONTANA
1988
E. J. NIEMEN and L. E. NIEMEN,
Plaintiffs and Respondents,
LOY B. HOWELL, as Personal Representative
of the Estate of Thomas H. Howell, Deceased,
Defendant and Appellant.
APPEAL FROM: District Court of the Tenth Judicial District,
In and for the County of Judith Basin,
The Honorable Peter T. Rapkoch, Judge presiding.
,
COUNSEL OF RECORD:
For Appellant:
Kenneth R. Olson; Raiz & Olson, Great Falls, Montana
For Respondent:
Joseph Mudd; Jardine, Stephenson, Rlewett. & Weaver,
Great Falls, Montana
Submitted on Briefs: Sept. 73, 1988
Decided: November 3, 1988
Mr. Justice John Conway Harrison delivered the Opinion of the
Court.
This appeal comes from findings of fact, conclusions of
law and order of the District Court of the Tenth Judicial-
District, Judith Basin County, Montana. After a bench trial,
the District Court held certain payments made to the deceased
by the respondents, evidenced by promissory notes and checks,
were loans, not gifts, and were payable from the estate. We
affirm.
Appellant Loy R . Howell is the personal representative
of the estate of her late husband, Thomas H. Howell (Tom).
The respondents, L.E. Niemen and E. J. Niemen, are the mother
and the stepfather of Tom Howell. After Tom's death in 1985,
the Niemens filed creditor claims against the estate. When
these claims were neither approved nor denied, the Niemens
each filed separate lawsuits seeking repayment of alleged
loans made to Tom Howell.
The first suit, filed my Mrs. Niemen, sought payment on
two promissory notes which were transferred to her by Mr.
Niemen. These notes were in the amounts of $25,000 (dated
October 7, 1976) and $37,000 (dated May 12, 1977). The
second suit, filed by Mr. Niemen, sought judgment for
payments to Tom as represented by two checks drawn on the
joint account of the Niemens, made payable to and endorsed by
Tom, and upon each of which was written the memo "on
account." The checks were in the amounts of $22,000 (dated
January 7, 1982) and $100,000 (dated July 23, 1984). The
cases were consolidated for trial and were heard by the
District Court without a jury.
The appellant claims these payments were not loans, but
were very generous gifts to Tom to enable him to purchase and
maintain the ranch which belonged to his mother's family. In
support of this theory, appellant maintains the Ni.emens were
typically very generous, and that no repayment was ever made
to the Niemens nor was any ever requested. Additionally,
appellant presented testimony from N.H. Browning, Jr.,
President of the Belt Valley Bank. Browning stated none of
Tom Howell's financial statements filed with the bank listed
these debts, and further, it was his impression the $100,000
payment was a gift. Mr. Browning had written in Tom Howell's
loan file that the $100,000 pavment was a gift from Mr.
Niemen. However, Browning stated this was only his
impression which he gathered from those present in the bank
when Mr. Niemen drafted the check. The District Court heard
this testimony but excluded. the bank file memo as hearsay.
The District Court concluded that the one claiming a
gift had the burden to establish such was the case by clear,
convincing, strong and satisfactory evidence. It further
held appellant had not satisfied that burden and found for
the respondents.
The following issues are raised for review:
1. Did the District Court err in finding no
presumption of gift, thereby placing the burden of proof on
appellant rather than respondents?
2. Was it error for the District Court to refuse to
admit into evidence the bank's loan file?
The appellant bases her argument on the numerous and
substantial gifts which she and Tom received from the Niemens
over the past several years. She states it was her
impression the payments in dispute here were simply
additional acts of generosity which allowed Tom to preserve
the family farm. She points to the following list of gifts
from the Niemens:
1. November 18, 1971 - check to Tom in
the amount of $8,890.
2. December 28, 1974 - check to Tom in
the amount of $1,635.75.
3. January 22, 1975 - check to Tom in
the amount of $5,000.
4. Christmas present of 100 shares
AT&T stock - allegedly worth
several thousand dollars.
5. Trip to Finland after the Howells'
marriage - allegedly worth several
thousand dollars.
6. April 1, 1985 - check to Tom in the
amount of $4,000.
The primary issue raised by appellant is whether the
District Court should have presumed the payments to be gifts,
thereby shifting the burden of proof to the appellant to show
by evidence which is "clear, convincing and practically free
from doubt" that these payments were loans, not gifts.
Appellant stresses these payments were made from the joint
account of Tom's mother and stepfather and the promissory
notes were made payable to both Mr. and Mrs. Niemen. The
legal result, she argues, is the presumption that all of
these payments were gifts because they came from a close
relative. We disagree.
On appeal, the standard of review requires us to affirm
the judgment of the District Court in a civil action tried
without a jury, unless the findings of fact are clearly
erroneous. Rule 52 (a), M.R.Civ.P. Bollinger v.
Hollingsworth (Mont. 1987), 739 P.2d 962, 963, 44 St.Rep.
1228, 1230. The record before us reveals the testimony of
E.J. Niemen, L.E. Niemen, N.H. Browning and Loy Howell as it
was heard by the District Judge. Additionally, the lower
court viewed and considered the exhibits presented by the
parties, ten in number, which included the checks and
promissory notes which formed the basis of this action. Also
included were those checks given as gifts, and the Howells'
financial statements which were prepared for the Belt Valley
Bank. We hold the iudgment of the District. Court was not
clearly erroneous.
It is the general rule in Montana that the person
claiming the fact of a gift has the burden of proving it, and
a gift will not be presumed unless the parties stand in close
relation to one another. This exception is limited to
relations such as parent and child, or husband and wife. We
have refused to extend the presumption to more distant
relationships. Peterson v. Kabrich (Mont. 1984), 691 P.2d
1360, 1364, 41 St.Rep. 2196, 2200; and Detra v. Bartoletti
(1967), 150 Mont. 210, 217, 433 P.2d 485, 488.
In regard to the promissory notes sought to he enforced
by the decedent's mother, we find appellant's argument
specious. Under Montana's UCC statutes, when signatures to
an instrument are admitted or established, production of the
instrument entitles the holder to recover on it unless the
defendant establishes a defense. Section 30-3-307 (2), MCA.
Appellant has not raised any real or personal defenses to the
promissory notes, but only claims the true understanding and
intent was that the payments were gifts. However, parol
evidence will not be allowed to contradict, alter or vary a
contract which has been reduced to a writing. Section
28-2-905, MCA. See, Perez-Lizano v. Ayers (Mont. 1985), 695
P.2d 467, 470, 42 St.Rep. 208, 213; and West River Equipment
Co. v. Holzworth Const. Co. (1959), 134 Mont. 582, 588, 335
P.2d 298, 302. Respondent L.E. Niemen is entitled to recover
on the notes.
The other instruments at issue are two personal bank
checks drafted by Tom's stepfather, E.J. Niemen, and made
payable to Tom. On the face of each check is written "on
account." Appellant does not claim Mr. Niemen owed money tc
Tom, as this language might ordinarily suggest. Nor does
appellant claim this memo was added later. These checks were
written nearly two and one-hal-f years apart. Each memo was
evidently written by the same hand and with the same pen as
its respective check.
While these checks do not themselves conclusively
establish the debt, they are supportive evidence that these
payments were not intended to be gifts. Additional evidence
included testimony from both Mr. and Mrs. Niemen. They
stated these payments were loans, that Mr. Niemen had to
borrow the $100,000 from another source, and that he
consulted an attorney regarding the minimum amount of
interest to attach to each loan. We find there is
substantial evidence to support the lower court's findinq
that these payments were loans.
Appellant next argues Mr. Niemen stood in loco parentis
to Tom because he "accepted responsibilities and obligations
incident to the parental relationship." However, there is no
evidence in the record which establishes this fact. It m 1 a7
be true Mr. Niemen had a "close and loving" relationship with
Tom, which in turn led him to advance the payments, both
gifts and loans. However, this does not establish that Mr.
Neimen assumed the role of Tom's father. The District Court
properly rejected this argument.
Finally, appellant claims it was error for the District
Court to refuse to admit into evidence the bank's loan file.
During the trial, Mr. Browning testified it was his
impression the $100,000 check was a gift. Appellant offered
as further evidence a portion of the bank loan file in which
Mr. Browning had written "July 23rd, received gift of
$100,000 from father-in-law [sic!, E.J. Niemen, and all
applied to notes." Upon voir dire, Mr. Browning testified
nothing was said either to him dj-rectly or in his presence
which indicated whether this was a loan or a gift. It was
merely his impression that Tom thought the payment was a
gift. Respondentsi attorney obiected to the introduction of
the memorandum on the basis it was hearsay and the District
Judge sustained the objection.
Appellant claims it was error to exclude this evidence
and as a result "her case was diminished." Respondents argue
the memorandum was properly excluded because it was not Mr.
Browning's impression, but was a reflection of statements
made by Tom to Mr. Browning. Respondents further argue that
even if the memorandum was improperly excluded, it would have
added nothing to the evidence because Mr. Browning testified,
apart from the memorandum, that it was his impression the
money was given as a gift.
We find no prejudice from the exclusion was shown. The
evidence which appellant sought to present was admitted
through the testimony of Mr. Browning and therefore the
substantial rights of the appellant were not adversely
affected. State v. Daniels (1984), 210 Mont. 1, 18, 682 P.2d
173, 182; and State v. Romero (1973), 161 Mont. 333, 341-342,
505 P.2d 1207, 1211-1212.
The judgment of the District Court is affirmed.
A
We concur: