No. 91-162
IN THE SUPREME COURT OF THE STATE OF MONTANA
1991
FRANK DeHAAN, INC., FRANK DeHAAN and VERA DeHAAN,
Plaintiff and Respondent,
-vs-
GALLATIN-MADISON RANCH CO., MAE DeHAAN and HENRY DeHAAN,
Defendants and Appellants.
APPEAL FROM: District Court of the Eighteenth Judicial District,
In and for the County of Gallatin,
The Honorable Larry W. Moran, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
H. A. Bolinger, Bolinger & Quist, Bozeman, Montana.
For Respondent:
Edmund P. Sedivy, Jr., Morrow, Sedivy & Bennett,
Bozeman, Montana.
Submitted on briefs: September 19, 1991
Decided: November 5 , 1991
Filed:
Justice R. C. McDonough delivered the Opinion of the Court.
Gallatin Madison Ranch Company, Inc., Henry DeHaan and Mae
DeHaan appeal the judgment of the Eighteenth Judicial District of
Gallatin County in a suit for partition. The court found the
subject property capable of partition, adopted the report of
appointed referees and divided the DeHaan ranch. We affirm.
The appellant -raises eleven issues for review. For the
purpose of our discussion we have consolidated the issues as
follows.
I. Did the District Court err in finding that the property
could be equitably divided without great prejudice to the owners?
11. Did the District Court err by adopting the report of the
referees?
111. Did the District Court err by allocating property to Mae
DeHaan and Gallatin Madison Ranch Company, Inc. as tenants in
common rather than providing each an individual share?
IV. Did the District Court err by denying a motion to order an
accounting and distribution of partnership property?
Frank DeHaan, Inc. (plaintiff/respondent) initiated an action
to partition property basically controlled jointly by Frank DeHaan
and his brother Henry DeHaan, by virtue of respective family
corporations. The property consists of approximately 17,575 deeded
acres acquired by the brothers in eight separate purchases over a
period of years. The majority of the land was purchased in the name
of Henry DeHaan and Frank DeHaan. Several sections (known as Lower
Big Pasture and White Place) were purchased in the names of Mae
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DeHaan and Vera DeHaan (Henry's and Frank's wives).
In 1973, Henry and Mae DeHaan deeded their undivided interests
in the 'DeHaan Ranch' to a family corporation known as Gallatin
Madison Ranch Company, Inc. (G.M.R.C.). Mae's interest in Lower Big
Pasture and White Place were omitted from the corporation. In 1981,
Frank and Vera DeHaantransferred all of their individual interests
into a family corporation known as "Frank DeHaan, Inc.". The court
determined that Frank DeHaan, Inc., Frank DeHaan and his family
(hereinafter Frank) were owners and entitled to one-half of the
subject property. G.M.R.C., Henry DeHaan, his family and Mae DeHaan
(hereinafter Henry) were found to be owners of the other half. No
separate distinction was granted Lower Big Pasture or White Place.
Frank, with Henry's approval, hired N. Clark Wheeler to
prepare an appraisal. Frank made an offer to Henry for partition
but an argument ensued over whether the land was in fact divisible
or should be sold in its entirety with the proceeds divided. Frank
then initiated this action.
An evidentiary hearing was held and the court determined that
the property was subject to equitable division between the parties
and ordered that the property be partitioned. Three referees were
appointed: one nominated by Frank, one nominated by Henry, and the
third nominated by the first two. The court gave the referees
instructions designed to aide them in fulfilling the mandates of
the partition statutes. The propriety of several instructions is
in dispute. After some difficulty, relating to the referees'
attempt to appease both parties, the referees produced a report and
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recommendation for partition that was adopted by the court. Henry
appeals.
L.
Section 70- 29- 202, MCA, provides the basis for a court's
determination of whether property is suitable for partition or must
be sold.
[If] property or any part is so situated that the
partition cannot be made without great prejudice to the
owners, the court may order a sale thereof; otherwise,
upon the requisite proofs being made, it must order a
partition ...
In February, 1990,. the court ordered partition, finding the
property subject to partition pursuant to g 70- 29- 202, MCA. In the
court's findings of fact dated December 11, 1990, the court found
that "all expert witnesses felt then the properties could be
equitably divided without great prejudice to the owners."
Henry contends that a review of the record demonstrates that
the expert testimony is contrary to the court's finding that the
ranch can withstand partition without great prejudice. Henry
specifically cites the testimony of the appraiser, Wheeler, who
stated that it was his belief that the land could be divided on a
value basis but maybe not on a use basis. It is Henry's content.ion
throughout that if property cannot be divided on a use basis it
cannot be divided without great prejudice. Henry's prayer for
relief is to have this Court order the ranch sold and profits
divided. He suggests that the sale and division of the property
(which we note would be entirely value based) would not be
prejudicial, while simultaneously he suggests that partition on a
4
value basis is prejudicial. We find Henry's argument to be
inherently contradictory and not reflective of the law.
The applicable standard of review of the trial court's
findings in determining whether to sell or partition is the clearly
erroneous standard of Rule 52(a), M.R.Civ.P. Kravik v. Lewis,
(1984), 213 Mont 448, 691 P.2d 1373. "[A] finding is 'clearly
erroneous' when, although there is evidence to support it, a review
of the record leaves the court with the definite and firm
conviction that a mistake has been committed." U.S. v. U.S. Gypsum
Co. (1948), 68 S.Ct. 525, 3 3 3 U . S . 364, 92 L.Ed. 746. The evidence
is undisputed that the ranch was purchased in many separate parcels
over a period of many years. Furthermore, it is Wheeler's
testimony that the property is likely to have greater market value
if sold piecemeal rather than as a single ranch. A second expert,
a realtor, also testified that the property could be divided on an
equitable basis. We conclude the District Court's findings were
not clearly erroneous. The order of the District Court to
partition the subject property is affirmed.
11.
A presumption exists that the referees' conclusions are
arrived at in a fair and honest manner. Lawrence v. Donovan
(1983), 207 Mont. 130, 673 P.2d 130. The report of the referees is
to be rejected only for reasons that would justify the reversal of
a jury's verdict. Ivins v. Hardy, et.al. (1950), 123 Mont. 513,
217 P.2d 204. In other words, if there is substantial evidence to
support the referees' report, it is to be confirmed by the court.
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Henry argues that the property was not partitioned under the
principles established by the legislature. Specifically, he
alleges that the referees used a "needs and wishes" standard rather
than the requisite quality and quantity standard required by 5 70-
29- 205, MCA. Furthermore, Henry alleges that the referees failed
to consider improvements in reaching their conclusion. Lastly, he
contends that the referees' meetings with the parties were
improper.
Section 7 0 - 2 9 - 2 0 5 , MCA, provides the basis for which referees
are to partition property. They are to
...divide the property and allot the several portions
thereof to the respective parties, quality and quantity
relatively considered, according to the respective rights
of the parties as determined by the court, ...
In its instructions to the referees the court elaborated as
follows:
2 . In allotting the portions of property to the parties
in accordance to their respective interests, you should
consider the quantity and quality of the property
allocated according to the rights of the parties. This
does not mean that you must give each of the parties the
same amount of each kind of property. However, both the
plaintiff and the defendants are entitled to receive
properties of a value equivalent to the respective rights
of each.
Substantial evidence exists that the referees followed the
instruction as provided above. The appraisal on which the referees
relied heavily was based on a breakdown of the land according to
quality and quantity. Testimony of the referees indicates an
adherence to the instruction as provided.
The record indicates that the referees initially attempted to
meet the needs and wishes of the parties but found it impossible.
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That they attempted is not error. We have said that "partitions
should be fashioned to cause the least degree of harm to the co-
tenants and to confer no unfair advantage on any one cotenant."
Kravik v. Lewis at 454. Interviewing the parties was a viable
approach to fashioning a partition 'least harmful' to the parties,
and interviewing the parties was included as an option in the
court's instructions and is not precluded by law.
Section 70-29-207, MCA, provides that in partition suits, the
court is to direct the referees to include "as far as practicable"
the improvements on the property sought to be partitioned. The
referees were instructed by the court to consider improvements but
not to consider whether any of the improvements were made by a
specific party.
The referees relied on the Wheeler appraisal which the record
indicates incorporated the value of improvements into the value
attributed to the various sections of land. The court found that
the referees did consider the value of the improvements by using
the Wheeler appraisal and offered a remedy (a motion to hear
evidence) to any party who felt that individual improvements
required further consideration. No motion was filed. We find that
the value of improvements was properly considered by the referees
and reviewed by the District Court.
Henry raises two additional issues in regards to the
improvements. First, Henry finds error in the court's failure to
inform the referees that a steel building erected by Frank, which
by request had been omitted from the Wheeler appraisal, was not
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jointly held. The court provided adequate procedure for the
consideration of individual improvements as discussed above and
there was no error.
Second, a list of all improvements allegedly made by Frank
was offered and denied admission into evidence. Despite that
denial, it appears the referees had opportunity to review the
document by its having been included with other documents. Henry
argues that this constituted prejudicial error. Assuming that the
referees did see the document, we find that the-subStZritTST'&Lghts
of the parties were not affected and therefore hold the error
harmless. Rule 61, M.R.Civ.P. The referees did not consider the
improvements separately, instead they.were incorporated--iktoa
section by section analysis and divided,equally.
"
The decision of the District Court to adopt and confirm the
report of the referees is affirmed.
111.
The law mandates that every person having an undivided share
in the property must be a party in an action for partition. 5 70-
29-104, MCA. A party with an undivided interest has a right to
have that part set off in severalty. Lawrence v. Donovan, (1980),
190 Mont. 150, 619 P.2d 1183. We do not find the court to have
interfered with the right to set off in this case.
The court utilized !
j 70-29-204, MCA, which provides:
Whenever from any cause it is in the opinion of the court
impracticable or highly inconvenient to make a complete
partition in the first instance among all the parties in
interest, the court may first ascertain and determine the
shares or interests respectively held by the original
cotenants and thereupon adjudge and cause a partition to
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be made as if such original cotenants were the parties
and sole parties in interest and the only parties to the
action and thereafter may proceed in like manner to
adjudge and make partition separately of each share or
portion so ascertained and allotted, as between those
claiming under the original tenant to whom the same shall
have been so set apart, or may allow them to remain
tenants in common thereof, as they may desire.
Henry contends that this section is inapplicable because his
corporation, Gallatin Madison Ranch Company, and Mae, Henry's wife,
were never cotenants of Lower Big Pasture or White Place. It is
Frank DeHaan, Inc. and Mae who were cotenants while G.M.R.C. owned
no interest at all. Henry alleges that the court abused its
discretion when it allocated Lower Big Pasture and White Place to
Mae DeHaan and his corporation as tenants in common.
We understand Henry's argument to suggest that 5 70-29-204,
MCA, applies only when there is actually joint ownership between
the parties whose interests are considered collectively. Because
Mae DeHaan and G.M.R.C. do not have joint ownership of Lower Big
Pasture and White Place, the court allegedly abused its discretion
by invoking 5 70-29-204, MCA. The inference drawn from this
interpretation is that because Frank DeHaan, Inc. and Mae DeHaan
are cotenants, 5 70-29-204, MCA, could only be properly invoked by
considering their interests collectively and not by considering
Henry's corporation, G.M.R.C. and Mae DeHaan interests
collectively.
We find technical merit in Henry's argument; however, it would
have been highly impracticable for the referees and the court to
have partitioned in the fashion that Henry's reading of the statute
prescribes. Lower Big Pasture and White Place are included in
9
Henry's share. The court clearly included Mae's individually held
interests collectively with Henry's corporation. The result is
that Lower Big Pasture and White Place are owned as tenants in
common by Henry and Mae. Mae maintains her one-half interest in
these parcels and no inequity arises.
The court, consistent with § 70-29-204, MCA., provided
opportunity to have shares, considered collectively, set apart.
Conclusion of Law #2 states that:
The Defendants shall have the opportunity to allocate the
various assets as between themselves and report back to
the Court within fifteen (15) days from date hereof.
Otherwise, this Court will allocate the properties as
tenants in common.
Henry did not seek to allocate his and Mae's assets separately.
Furthermore, both remain free to bring an action in partition to
set apart their respective shares. We find the District Court's
application of 5 70-29-204, MCA, to be appropriate and thereby
affirm.
IV.
The District Court refused a motion to provide an accounting
and distribution of the partnership personal property. Henry
designated as an affirmative defense, "That in addition to the real
property the parties are equally the owners of cattle, irrigation
and farming equipment, grain storing facilities which should
likewise be ordered sold and the monies equally divided between the
parties hereto." Henry argues that if the request was improperly
pleaded, the court still should have construed it as proper under
Rule S(c), M.R.Civ.P. Furthermore, Henry contends that partnership
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accounting is prerequisite and essential to the partition of real
estate.
We find it unnecessary to review the proper application of
Rule 8(c), M.R.Civ.P. We find no authority demanding its
application nor do we find that prejudice incurred as a result of
the District court refusing to combine the actions. Both parties
remain free to bring an action for accounting and distribution of
partnership assets. The decision of the District Court to deny
combining the actions is affirmed.
Affirmed.
We Concur: /
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November 5 , 1991
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
H. A. BOLINGER
Bolinger & Quist
302 First Bank Building
P.O. Box 1047
Bozeman, MT 59715
Edmund P. Sedivy, Jr.
MORROW, S E D I W & BENNETT, P.C.
P.O. Box 1168
Bozeman, MT 59715
ED SMITH
CLERK OF THE SUPREME COURT
STA-MONTANA
BY [&!
De uty