No. 91-372
IN THE SUPREME COURT OF THE STATE OF MONTANA
1992
AUDREY FLIKKEMA, WINONA VANDER
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:
Douglas Ritter, Nash, Guenther, Zimmer & Screnar,
Bozeman, Montana
For Respondent:
J. David Penwell, Attorney at Law, Bozeman, Montana
Submitted on Briefs: July 2, 1 9 9 2
Decided: October 1 4 , 1 9 9 2
Filed:
Justice William E. Hunt, Sr., delivered the opinion of the Court.
Plaintiffs brought suit in the District Court of the
Eighteenth Judicial District, Gallatin County, alleging, among
other things, undue influence and actual fraud. The court, sitting
without a jury, found for plaintiffs and entered judgment in the
amount of $104,190.96. We affirm.
The following issues are presented for review by this Court:
1. Was respondentsv action barred by the applicable statute
of limitations?
2. Was the District Court's finding that there was undue
influence clearly erroneous?
3. Did the District Court err in the award of punitive
damages?
4. Did the District Court err in disallowing personal
representative fees and attorney fees paid by the estate of the
decedent?
This matter involves a dispute over the distribution of the
estate of Alice K i m . Alice Kimm, a widow, died on February 8,
1987, at the age of 85. The respondents in this case, Audrey
Flikkema, Winona Vander Molen, and Willemina Van Egmond are all
daughters of the decedent. The appellant, Clarence J. Kimm, is the
son of the decedent. Decedent had another daughter who is not a
party to this action.
The decedent's will, dated June 23, 1976, provided that her
residuary estate should be divided equally between the parties to
this action. Further, the will designated respondent Willemina
2
Van Egmond as personal representative. In September 1980, the
decedent suffered the first in a series of debilitating strokes.
From the time of her first stroke until her death, the decedent was
considerably disabled. The District Court found that decedent had
fluctuating periods when she could be considered generally mentally
competent, but her physical abilities were always limited. During
this time period it is uncontroverted that decedent and appellant
shared a close and confidential relationship. Shortly after her
first stroke, the decedent added a codicil to her will. The
codicil changed the personal representative from Willemina to
appellant. During this same time period, the District Court found
that assets owned solely by the decedent were systematically
transferred to the decedent and appellant as joint tenants. At
trial, appellant alleged that at the time of these transfers he had
no knowledge of the effect of joint tenancy, i.e., that upon the
death of one joint tenant, property so owned would pass by
operation of law to the surviving joint tenant.
Appellant initiated a probate proceeding following the
decedent's death. Decedent's will was filed on March 24, 1987, and
appellant was appointed and issued letters as personal
representative on May 22, 1987. In July 1987, one of the
respondents requested from appellant an itemized list of the
residual monies left in the decedent's estate. Appellant then sent
a note setting forth the various assets which remained and
indicating that all three of the respondents would share equally
with him in the distribution of these assets. Appellant alleges
3
that at some point after he had sent this note to respondents he
learned that as the surviving joint tenant he was not obligated to
distribute any of the property. On September 19, 1988, appellant
filed the inventory and appraisement listing all the assets held
jointly by himself and the decedent. Appellant then filed the
final accounting, which respondents objected to.
On April 2, 1990, respondents filed suit alleging that the
appellant had used undue influence and fraud to obtain the bulk of
their mother's estate. Following a nonjury trial, the District
Court found in favor of respondents. The court found that
appellant had exercised undue influence in obtaining control over
the decedent's assets. As a result of this unjust enrichment, the
assets were subject to a constructive trust for the benefit of all
four parties equally. Additionally, the court found appellant
acted with actual malice and that the acts in question constituted
actual fraud. Following a separate hearing on the matter, the
court awarded punitive damages. The final judgment was for
$lO4,190.96, which was to be divided between the three respondents.
From the entry of this judgment appellant brought this appeal.
I
Was respondents' action barred by the applicable statute of
limitations?
The District Court in this case decided both factual and legal
questions. Prior to addressing appellant's first issue concerning
the statute of limitations it is necessary to set out the
appropriate standard of review in this case. On appeal, this Court
will not disturb the district court's findings of fact in a nonjury
trial unless they are clearly erroneous. In the Matter of the
Mental Health of E.P. (1990), 241 Mont. 316, 787 P.2d 322; Rule
52(a), M.R.Civ.P. Our standard of review of questions of law is
simply whether the district court's interpretation of the law is
correct. Schaub v. Vita Rich Dairy (1989), 236 Mont. 389, 770 P.2d
522. The basis for this standard of review is that no discretion
is involved when a tribunal arrives at a conclusion of law. The
tribunal either correctly or incorrectly applies the law. Steer,
Inc. v. Department of Revenue (1990), 245 Mont. 470, 803 P.2d 601.
This Court will also give due regard to the opportunity of the
district court to judge the credibility of the witnesses. In the
Matter of the Mental Health of R.J.W. (1987), 226 Mont. 419, 736
P.2d 110.
Appellant alleges the action brought by respondents should
have been barred for failing to commence the action within the
applicable statute of limitations, which both parties agree was two
years, with the cause of action not to be deemed to have accrued
until discovery by respondents of the facts constitutingthe claim.
Section 27-2-203, MCA. Additionally, 5 27-2-102, MCA, provides in
part that:
When action commenced. (1) For the purposes of
statutes relating to the time within which an action must
be commenced:
(a) a claim or cause of action accrues when all
elements of the claim or cause exist or have occurred,
the right to maintain an action on the claim or cause is
complete, and a court or other agency is authorized to
accept jurisdiction of the action;
(b) an action is commenced when the complaint is
filed.
(2) Unless otherwise provided by statute, the
period of limitation begins when the claim or cause of
action accrues. Lack of knowledge of the claim or cause
of action, or of its accrual, by the party to whom it has
accrued does not postpone the beginning of the period of
limitation.
(3) The period of limitation does not beqin on anv
claim or cause of action for an iniurv to person or
property until the facts constitutinq the claim have been
discovered or, in the exercise of due diliqence, should
have been discovered bv the iniured partv if:
fa) the facts constitutinq the claim are bv their
nature concealed or self-concealinq; or
(b) before, durinq, or after the act causinq the
iniurv, the defendant has taken action which prevents the
iniured party from discoverins the iniurv or its cause.
[Emphasis added.]
Respondents filed their action on April 2, 1990. Appellant
alleges that respondents either discovered the facts constituting
their claim, or in the exercise of due diligence should have
discovered the facts constituting their claim, well before April
1988. Therefore, appellant argues that respondents' filing in
April 1990 is untimely pursuant to the two-year statute of
limitations.
At trial, appellant elicited testimony from a friend of the
respondents in an attempt to show that respondents, through the
exercise of due diligence, should have discovered the facts
constituting their claim. This witness testified that even prior
to the death of their mother, respondents were concerned about the
possibility that appellant was exercising undue influence over
their mother's assets. Also introduced at trial was a letter from
6
an attorney advising respondents to "take such steps that might be
necessary to protect your interests in your mother's property."
This letter was dated May 15, 1987, several months after their
mother's death. While this letter clearly did not put respondents
on notice of any of the particular facts which constitute their
present claim, it might be considered sufficient to require further
inquiry on their part.
Respondents testified that prior to receiving the letter from
the attorney on May 15, 1987, appellant had refused to communicate
any information to them regarding their mother's estate. In July
1987, approximately two months after receiving the letter, one of
the respondents requested from appellant an itemized list
describing the residual monies left in her mother's estate.
Appellant sent a note setting forth the various assets which
remained and specifically indicated that these assets would be
shared equally between appellant and the three respondents. At
trial, all three respondents indicated that they relied upon this
representation. When appellant was asked if there was any reason
why respondents should not have relied on this representation, he
replied, "probably not."
On September 19, 1988, appellant filed the inventory and
appraisal listing all of the assets of the decedent and indicating
that most of the assets were held in joint tenancy with him.
Respondents allege that it was not until September 1988, when
appellant filedthe inventory and appraisal, that they become aware
of the facts constituting their claim, and that by filing in
April 1990 they were well within the two-year statute of
limitations. Appellant argues reliance must be reasonable and
that respondents' reliance on his representation that they would
all share equally in their mother's estate was not reasonable.
Turley v. Turley (1982), 199 Mont. 265, 649 P.2d 434. Further,
appellant contends that at the time he made the representation he
did not understand that as a joint tenant he alone was entitled to
all of the assets jointly held. The District Court specifically
found appellant's testimony in this regard to not be credible.
Respondents point out that as personal representative of the
estate appellant had a fiduciary duty to them which included the
duty of full disclosure. Skierka v. Skierka Bros., Inc. (1981),
192 Mont. 505, 629 P.2d 214. Not only did appellant not comply
with this duty of full disclosure, but he took affirmative steps to
conceal from respondents the information necessary to bring their
suit. The District Court found that appellant "continuously
misrepresentedthe overall situation to [respondents], leading them
to believe each would share equally with [appellant] in settling
their mother's 'estate'."
There was conflicting evidence presented at trial as to when
respondents either discovered or should have discovered the facts
constituting their claim. The District Court Judge, after hearing
all of this evidence and weighing the credibility of the witnesses,
determined that the action had been timely filed. We hold that the
District Court's finding that respondents1 action was brought
within the applicable statute of limitations was not clearly
erroneous.
I1
Was the District Court's finding that there was undue
influence clearly erroneous?
Appellant argues that respondents did not meet their burden of
proof concerning the alleged undue influence and that the District
Court's finding of undue influence is clearly erroneous. This
Court, in Christensen v. Britton (1989), 240 Mont. 393, 784 P.2d
908, set out the criteria which must be satisfied in order to find
undue influence. The five criteria are:
(1) Confidential relationship of the person
attempting to influence the testator;
(2) The physical condition of the testator as it
affects his ability to withstand influence;
(3) The mental condition of the testator as it
affects his ability to withstand the influence;
(4) The unnaturalness of the disposition as it
relates to showing an unbalanced mind or a mind easily
susceptible to undue influence, and
(5) The demands and importunities as they may
affect the particular donor taking into consideration the
time, the place, and all the surrounding circumstances.
Christensen, 784 P.2d at 911. Each one of these criteria must be
satisfied in order to prove an assertion of undue influence. We
must, therefore, apply the evidence in this case to each of the
criteria.
There appears to be agreement between the parties that
appellant had a confidential relationship with the decedent. The
second and third criteria relate to the decedent's physical and
mental condition and whether her condition affected her ability to
withstand influence. The District Court, after hearing testimony
concerning both the decedent's physical and mental condition,
determined that decedent's mental condition fluctuated during the
time period in question, while her physical condition was
continuously limited. The decedent was a widow, elderly, and by
all accounts in very poor physical health. Clearly, decedent's
mental and physical condition made her susceptible to influence.
The fourth criteria is the unnaturalness of the disposition as
it relates to showing either an unbalanced mind or a mind easily
susceptible to undue influence. Decedent's will provided that
appellant and respondents would share equally in her estate. The
distribution provided for in the decedent's will was never changed
and is an indication of her intent that the parties to this action
would share equally in her estate.
Respondents argue that in this situation the transfer of most
of the decedent's assets to appellant was unnatural. The fact that
a parent might leave the majority of his or her assets to only one
child, while excluding others, is not in and of itself unnatural.
In fact, decedent's will did specifically exclude one of her
daughters who is not a party to this action. However, considering
the transfers in question in light of the fifth criteria clarifies
why the transfers were unnatural. The fifth criteria requires an
examination of the time, the place, and all the circumstances
surrounding the transfers. In this case, there is a clear intent
that the parties to this action were to share equally in the
estate. However, several years before the decedent's death most of
her assets were transferred into joint tenancy with appellant.
These transfers occurred at a time when appellant was clearly in a
position to exercise influence over the decedent. Additionally,
all of this occurred at a time, when due to her advanced age and
illness, decedent was susceptible to such influence. The District
Court's finding that appellant was unjustly enriched by exercising
undue influence is not clearly erroneous. The District Court was
correct in concluding that all of the assets coming under the
control of appellant as a result of this undue influence were
properly the subject of a constructive trust for the benefit of
himself and respondents equally.
I11
Did the District Court err in the award of punitive damages?
Section 27-1-221, MCA, provides that "reasonable punitive
damages may be awarded when the defendant has been found guilty of
actual fraud or actual malice." The District Court in this case
found that appellant was guilty of both actual fraud and actual
malice, and in a separate hearing on the matter awarded punitive
damages in the amount of $30,000. Appellant argues that there was
no basis for a finding of actual fraud, and therefore, the award of
punitive damages was inappropriate. This matter need not be
addressed by this Court, as the finding of actual malice, which is
uncontested on appeal, is sufficient basis for the award of
punitive damages.
Section 27-1-220, MCA, provides that punitive damages may be
awarded for the sake of example and for the purpose of punishing a
defendant. Section 27-1-221, MCA, sets forth the criteria to be
followed by the district court in determining a punitive damage
award and requires that the court clearly state the reasons for
making the award. The District Court clearly followed the
requisite criteria in determiningthe amount ofthe punitive damage
award. In light of the statutory criteria and the circumstances of
this case, we hold the District Court did not err in awarding
$30,000 in punitive damages.
IV
Did the District Court err in disallowing personal
representative fees and attorney fees paid by the estate of the
decedent?
The District Court determined that appellant should be charged
with repayment of personal representative fees and attorney fees
previously paid by the estate. Apparently this decision was not
based on a dispute over the calculation of the fees, but rather
based on the court's conclusion that appellant had breached his
trust. The review of fees paid or taken by a personal
representative is left to the sound discretion of the District
Court. The District Court's determination concerning fees will not
be overturned absent a showing of an abuse of discretion. Estate
of Stone (1989), 236 Mont. 1, 768 P.2d 334. The reasonableness of
any challenged fee is determined in part by whether the services
rendered were beneficial to the estate. Stone, 768 P.2d at 336.
In this case the services rendered were not beneficial to the
estate. The District Court's determination concerning the fees was
not an abuse of discretion.
Affirmed.
We concur:
/
/ <
/ Chief Justice
October 14, 1992
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States mail, prepaid, to the
following named:
Douglas Ritter
Nash, Guenther, Zimmer & Screnar
P.O. Box 1330
Bozeman, MT 59771-1330
J. David Penwell
Attorney at Law
125 W. Mendenhall
Bozeman, MT 59715
ED SMITH
CLERK OF THE SUPREME COURT