NO. 92-526
IN THE SUPREME COURT OF THE STATE OF MONTANA
1993
BILL D. TISHER and GAYLE SCHLEVE,
as personal representatives for
VIOLA J. HEATH, Deceased,
Plaintiffs and Appellants,
NORWEST CAPITAL MANAGEMENT & TRUST
CO., INC., Montana,
Defendant and Respondent.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable William J. Speare, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Robert L . Johnson, Attorney at Law, Lewistown,
Montana
5 . Douglas Alexander, Attorney at Law, Sidney,
Montana
For Respondent:
Earl Hanson; Hanson & Todd, Billings, Montana
Walter S. Murfitt; Luxan & Murfitt, Helena,
Montana
Justice Karla M. Gray delivered the Opinion of the Court.
Bill Tisher and Gayle Schleve (Tisher and Schleve) appeal from
an order of the Thirteenth Judicial District Court, Yellowstone
county, granting summary judgment to Norwest Capital Management and
Trust Co. (Norwest) and denying their motion for summary judgment.
We affirm.
The sole issue on appeal is whether the District Court erred
in concluding that res judicata barred the claims asserted by
Tisher and Schleve.
The facts surrounding this litigation are voluminous but
relatively undisputed. Caleb and Viola Heath, longtime residents
of Glendive, Montana, worked hard, were frugal, and accumulated
considerable wealth during their lifetimes. They had no children,
few intimate friends and were not particularly close to their
relatives. On March 17, 1976, after consulting with their
attorney, Kenneth Haag, Caleb and Viola each executed revocable
living trusts leaving the bulk of their respective estates to
charitable organizations, including the John Birch Society and the
Twentieth Century Reformation Hour. Both trusts named Norwest as
sole trustee. On the same date, Caleb and Viola executed "pour-
over" wills that named the trusts as the beneficiaries of their
residuary estates.
In 1977, Carol and Richard Schleve, Calebfs niece and her
husband, moved in with Caleb and Viola. On December 6, 1977,
attorney Haag received a letter from attorney Jerome Cate which, on
apparent authorization of Caleb and Viola, terminated Haag's
services as Caleb and Viola's attorney. On January 5, 1978, Caleb
and Viola executed documents entitled "Amendment of Trust
Agreement," which benefitted their heirs instead of the charities
mentioned above. On that date, Caleb and Viola also executed new
wills which benefitted their heirs.
To assist Caleb and Viola in managing their property, they
were advised to seek the appointment of First Trust Company of
Montana (First Trust) as their conservator. On February 3, 1978,
Caleb and Viola filed petitions in the District Court nominating
First Trust as their conservator. Two weeks later, Caleb and Viola
both executed documents entitled "Revocation of Trust," which
purported to entirely revoke the trusts with Norwest.
On February 24, 1978, Norwest, as trustee for Caleb and
Viola's trusts, filed an appearance in both of the conservatorship
actions. Norwest asserted that Caleb and Viola were legally
incompetent to execute either the amendments or the revocations to
their trusts. Norwest also sought a protective order restraining
all parties from interfering with the trusts until a court had
determined the validity of the amendments and revocations.
Following a hearing, the District Court appointed First Trust
as conservator of both Caleb and Viola's assets and issued the
protective order requested by Norwest. The court reserved for
later judicial determination the issues of validity of the
purported amendments and revocations.
On April 5, 1978, First Trust, as Caleb and Viola's
conservator, filed a complaint against Norwest. Denominated Cause
No. 10488A, the complaint alleged that Norwest had improperly
3
converted the assets of Caleb and Viola when it refused to comply
with the amendments and revocations of the trusts, and had
mismanaged the trusts in violation of Montana statutes. The
complaint was later amended, and damages were stated to be
On July 10, 1978, the District Court granted partial summary
judgment for Norwest on the issue of conversion. Regarding the
mismanagement claim, the court ordered:
It is further ordered that such remaining part of the
Plaintiff's cause as may relate to the issues raised in
their petitions filed in Probate Causes No. 10621 and No.
10622 relating to Caleb C. Heath and Viola J. Heath, are
hereby dismissed without prejudice, for the purpose of
determining those issues in the appropriate
conservatorship forms [sic].
On August 17, 1978, Caleb died. Both his March 17, 1976 will
and his January 5, 1978 will were filed for probate. The District
Court, pursuant to Rule 42, M.R.Civ.P., consolidated the following
actions:
.Cause No. 10621 Conservatorship of Caleb
.Cause No. 10622 Conservatorship of Viola
.Cause No. 10650 Petition for Probate of Caleb's 3-17-76
will
-Cause No. 10652 Petition for Probate of Caleb's 1-5-78
will
On December 15, 1980, in the consolidated action, a Joint
Petition for Settlement was filed to settle all pending litigation
between First Trust, Norwest and Caleb and Viola's heirs. The
District Court issued findings of fact, conclusions of law and
order approving the settlement on December 30, 1980. Under the
settlement, Caleb and Viola's 1976 trusts and wills were
acknowledged to be valid and operative. In exchange, the heirs
would receive $1,000,000 from the trust monies.
When the settlement was final, Norwest was appointed as
Viola's conservator at First Trust's request. Norwest also was
named special administrator for Caleb's estate. On April 3, 1981,
Norwest filed a combined final accounting as special administrator
of Caleb's estate and as trustee for Caleb's trust. No objections
were filed. The District Court approved the final accounting and
dismissed with prejudice all pending litigation in the consolidated
action on May 18, 1981. The final accounting provided that Caleb
and Viola's 1976 wills and trusts were valid and operative and
distributed Caleb's assets pursuant to the 1976 will and trust.
Norwest continued to manage Viola's trust and filed periodic
accountings.
Viola died on December 13, 1987. Pursuant to Viola's March
17, 1976, will, Norwest was appointed co-personal representative
with Mr. Donald noucnard. On March 1, 1988, Norwest, as Viola's
conservator, filed its final accounting of the conservatorship with
the District Court. On March 15, 1988, the court held a hearing on
the conservatorship and issued an order approving the final
accounting, including leave to distribute the assets of the
conservatorship into Viola's probate estate. Viola's co-personal
representatives subsequently filed the closing statement in the
probate proceeding of Viola's 1976 will on September 14, 1988.
Approximately six months after the closing statement was
filed, Tisher and Schleve sought probate of Viola's January 5, 1978
will. Schleve is Caleb's niece and Tisher is Viola's nephew.
Norwest contested the 1978 will and the matter was set for trial.
5
As part of a settlement, the parties agreed to admit Viola's 1978
wxll to probate. At that time, less than $100,000 in assets, those
not previously placed in the trust, remained for distribution under
Viola's will. Pursuant to Viola's 1978 will, Tisher and Schleve
were appointed co-personal representatives of Viola's estate.
Tisher and Schleve, as co-personal representatives of Viola,
filed the present action against Norwest on October 10, 1990, The
complaint alleged that Norwest failed to distribute the trust
assets as provided for in the amended trust or, alternatively,
failed to return Viola's assets after receiving her revocation of
the trust. They also claimed that Norwest, as Viola's conservator
from December 30, 1980, to her death, had breached its fiduciary
duty to Viola by mismanaging her estate to its own benefit.
Norwest moved for, and was granted, a change of venue to
Yellowstone County.
Norwest then moved for summary judgment on the complaint;
Tisher and Schleve responded by moving for summary judgment on
their claims relating to Viola" amendment and revocation of her
trust. The Thirteenth Judicial District Court, Yellowstone County,
granted Norwest's motion, denied Tisher and Schleve's motion, and
dismissed their complaint in its entirety. This appeal follows
Did the District Court err in concluding that res judicata
barred the claims asserted by Tisher and Schleve?
The District Court initially applied the doctrine of res
judicata to Tisher and Schleve's claims concerning the purported
amendment and/or revocation of Viola's trust. The court found that
Viola was a party to her conservatorship action, Cause No. 10622 in
Dawson County, and that Norwest had raised the issue of her
competency to execute the amendment and the revocation in that
action. The court concluded that the settlement and dismissal with
prejudice of Cause No. 10622 in the consolidated action barred
relitigation of the validity of the purported amendment and
revocation.
The court also determined that Norwestls accountings of its
actions regarding the trust estate precluded further litigation
regarding Norwest's management of the trust estate. Thus, the
court concluded that res judicata barred the breach of fiduciary
duty claim as well. We will examine each of the court's
conclusions regarding res judicata in turn.
Our standard in reviewing a grant of summary judgment is the
same as that initially used by the trial court. McCracken v. City
of Chinook (lggO), 242 Mont. 21, 24, 788 P.2d 892, 894. Summary
judgment is appropriate wnen tne pleadings, deposltlons, and other
documents on file demonstrate that no genuine issue of material
fact exists and that the moving party is entitled to judgment as a
matter of law. Rule 56(c), M.R.Civ.P. Here, the District Court's
summary judgment decisions turned on its legal conclusion that res
judicata barred Tisher and Schlevets claims. Our review of legal
conclusions is plenary. Steer, Inc. v. Depft of Revenue (1990),
245 Mont. 470, 475, 803 P.2d 601, 603.
Validity of Viola's Amendment and Revocation of her Trust
The doctrine of res judicata is grounded in the idea that
litigation must at some point come to an end. Orlando v. Prewett
(l989), 236 Mont. 478, 481, 771 P.2d 111, 113. Thus, a party is
7
prohibited from relitigating a matter that the party has already
had an opportunity to litigate. Trader's State Bank v. Mann Farms,
Inc. (Mont. 1993), 852 P.2d 604, 611, 50 St.Rep. 509, 513; Whirry
v. Swanson (1992)' 254 Mont. 248, 250, 836 P.2d 1227, 1228. The
four criteria for res judicata are:
1) the parties or their privies must be the same;
2) the subject matter of the action must be the same;
3) the issues must be the same and relate to the same
subject matter; and
4) the capacities o f the persons must he the same in
reference to the subject matter and to the issues.
Trader's State Bank, 852 P.2d at 611.
Looking to the first factor, we have defined privies as those
who are so connected with the parties in estate or in blood or in
law as to be identified with them in interest and, consequently, to
be affected with them by litigation; examples are lessor and
lessee, heir and ancestor, executor and testator. In re Smith's
Estate (1921)' 60 Mont. 276, 299, 199 P. 696, 703. Viola was an
original party to Cause No. 10622, the conservatorship action in
Dawson County; Tisher and Schleve, the personal representatives
under Viola's will, are her privies in this action. In addition,
the parties agree that Northwestern Union Trust Company, named in
early pleadings in the previous litigation, is the same entity as
Norwest.
Tisher and Schleve argue that Viola was neither a party to,
nor represented by counsel in, the final settlement of the Dawson
County consolidated action. We find no evidence of record to
support this contention. As explained, Viola was a party to her
conservatorship proceeding, Cause No. 10622, which was later
consolidated and settled in Dawson County. First Trust was
appointed as Violaps conservator on February 27, 1978, and
continued to act on her behalf until the settlement in the
consolidated action was final. The Joint Petition for Settlement
indicates:
Thereafter, a conference was held by the undersigned
attorneys with one of the trust officers for First Trust
Company of Billings, Montana, who acts as Conservator for
Viola J. Heath. A complete and full disclosure and
discussion of the proposed settlement matter was made to
First Trust Company as Conservator for Viola J. Heath. .
.. After a payment of settlement proceeds, if approved,
there will be substantial assets remaining in Trust and
outside of the Trust to support Viola J. Heath during her
lifetime . . ..
Concerning her legal representation, Jerome Cate represented
Viola individually until June of 1978, at which time Robert Stevens
appeared on behalf of Viola and her conservator, First Trust.
Stevens signed the Joint Petition for Settlement as "Robert L.
Stevens, Jr., Attorney for all of the heirs at law indicated on
Exhibit t*A'8
hereto and A
f
as Conservator for Viola J. Heath" (emphasis added). Section 72-5-
427(3) (s), MCA, provides that conservators have the power to settle
a claim by or against the estate or the protected person by
compromise, arbitration or otherwise. We agree with the District
Court's conclusion that Viola was adequately represented and
appeared as a party throughout the litigation. As such, we
conclude that the first requirement of res judicata is satisfied
here.
The second criterion is also met, as the subject matter of
both the previous litigation in Dawson County and the present case
concerns the various wills and trusts executed by Viola Heath.
Regarding the fourth criterion, the capacities of the parties
involved have not changed in the way they relate to the subject
matter and issues between them: Viola, either personally,
represented by her conservator or through her personal
representatives, has asserted a position contrary to that of
Norwest regarding the purported amendments and revocations in both
actions. See First Bank Missoula N.A. v. District Court ( 1 9 8 7 ) ,
226 Mont. 515, 521, 737 P.2d 1132, 1135.
The third criterion necessary for application of res judicata,
identity of issues, is also met here. In the present complaint,
Tisher and Schieve allege that Viola amended and revoked the 1976
trust in 1978 and that Norwest wrongfully refused to honor the
amendment and revocation. It is also apparent that the validity of
Viola's amendment and revocation of her trust was directly at issue
in the conservatorship actlon and, later, the consolidated action
in Dawson County; the record is replete with references to that
precise issue.
For example, in Cause No. 10488A, First Trust, as Viola's
conservator, made allegations against Norwest nearly identical to
those contained in Tisher and Schleve's present complaint. The
Dawson County District Court directed that those issues be
addressed in the "appropriate" conservatorship action.
Then, in Viola's conservatorship action, Norwest alleged:
That according to the information, belief and knowledge
of petitioner, Viola J. Heath at all times material
hereto was mentally incompetent to execute the purported
AMENDMENT OF TRUST AGREEMENT
REVOCATION OF TRUST ....
...
and the purported
That petitioner alleges upon information and belief, at
all times material hereto, in addition to her inability
to manage her property by reason of mental deficiency,
physical illness or disability and advanced age, Viola J.
Heath was and is subject to undue influence or [sic]
persons unknown to petitioner at this time and that undue
influence was exercised against said Viola J. Heath in
securing her signature on both the purported AMENDKENT OF
TRUST and the purported REVOCATION OF TRUST.
On May 22, 1978, at a preliminary hearing in the consolidated case,
the District Court stated:
[hlopefully we can get this issue of competency litigated
in the conservatorship in such a way that everybody ought
to know where they stand. . .. I want to let 12 good
people decide this question as to what the Heaths have
done in the past, what, if what they have, and if what
they've done is valid, fine, so be it. And if it isn't,
then let's find out where we're at. Do we have a trust
or don't we have a trust? Are the amendments good? Are
the revocations good?
The Joint Petition for Settlement in the consolidated action itself
characterizes the dispute as a "determination of the validity of
the Caleb C. Heath and Viola J. Heath Revocable Living Trusts dated
March 17, 1976, and their respective wills dated the same date."
The settlement petition also explained that Norwest's position was
that the amendment and revocation were void due to undue influence
and mental incompetence, while Caleb and Viola's heirs defended the
1978 amendment, revocation and new will.
It is clear that the issue of the validity of the amendment
and revocation of Viola's trust, as referenced in the consolidated
action in Dawson County, is the same issue contained in Tisher and
Schlevelsamendment/revocation claims. Therefore, we conclude that
all four elements of res judicata are met with regard to the
validity of Viola's 1978 amendment and revocation of her trust.
Tisher and Schleve argue strenuously that Viola's claims
concerning revocation and amendment of the trust have never been
heard or tried before a court. However, even if true, application
of res judicata is not precluded. As we have previously held, res
judicata stands for the proposition that a party should not be able
to relitigate a mateer that the party has already had the
o~~ortunitv litiaate.
to First Bank, 737 P.2d at 1134. In First
Bank, after a default on a loan and a sale of collateral, First
Bank filed a complaint seeking a deficiency judgment against the
borrowers. In their answer, the borrowers asserted several
affirmative defenses. The parties settled the matter and a
stipulation and order of dismissal were filed. Ten months later,
the borrowers filed an action against First Bank, alleging fraud
and misrepresentation in the making of the loan. First Bank, 737
P.2d at 1133.
This Court concluded that res judicata barred the borrowers
from bringing their action against First Bank. Although the
borrowers were given the opportunity to litigate the issues raised
in their complaint, they instead agreed to stipulate to a
dismissal. The effect of a stipulation for dismissal is the same
as a judgment on the merits; accordingly, a dismissal is res
judicata as to every issue raised in the action. First Bank, 737
P.2d at 1135.
As in First Bank, Viola had the opportunity to litigate the
issues surrounding the amendment and revocation of her trust in the
consolidated action in Dawson County; she agreed, through her
conservator, to settle the matter. The District Court's findings
of fact and conclusions of law and order approving the settlement
12
explicitly provided that the 1976 will and trust of Viola C. Heath
were "acknowledged to be valid and operative." Tisher and Schleve
cannot now complain that "there has been no trial in any court* of
Viola's amendment and revocation claim. First Bank, as Viola's
conservator, signed the settlement petition and the District
Court's Order and Decree became a final judgment. We emphasize
that:
[a] judgment is binding and conclusive between all
parties to the suit and their privies and successors in
interest, as to all matters adjudicated therein and as to
all issues which could have been properly raised
irrespective of whether the particular matter was in fact
litigated.
Orlando, 771 P.2d at 113. The issues of the validity of the
amendment and revocation were, therefore, resolved in the
consolidated action, without regard to whether the issues actually
proceeded to trial.
Tisher and Schleve also assert that on April 5, 1978, less
than two months after Viola's attempted revocation of her trust,
First Trust, as her conservator, also revoked her trust and sent a
copy of the revocation to Norwest. They characterize First Trust's
action as a rtconfirmation Viola's revocation of her trustw and
of
maintain that First Trust's revocation somehow survived the
settlement in the consolidated action. We disagree.
Without regard to whether First Trust's action is construed as
an independent revocation by First Trust or a confirmation of
Viola's revocation, it too is barred by res judicata. First
Trust's action occurred & to the Joint Petition for Settlement,
which First Trust signed and which confirmed the validity of
Viola's 1976 trust without amendment or revocation. Res judicata
applies equally to First Trust's alleged revocation of Viola's
trust.
We conclude that the District Court did not err in granting
summary judgment for Norwest on Tisher and Schleve's claims
concerning revocation and amendment of Viola's trust on the basis
of res judicata. For that reason, we need not address Tisher and
Schleve's arguments concerning their entitlement to summary
judgment on those claims.
Breach of Fiduciary Duty
We now turn to the District Court's conclusion that res
judicata barred Tisher and Schleve's claim that Norwest breached
its fiduciary duty to Viola. The District Court determined that,
because Norwest's final accounting regarding Viola's trust had been
approved, all issues regarding the management of the trust were
conclusively decided. Tisher and Schleve contend that the District
Court's analysis is flawed because it analyzed their claim as a
breach of a trustee's fiduciary duty instead of a breach of a
conservator's fiduciary duty, as alleged in their complaint.
We agree that the District Court incorrectly characterized
Tisher and Schleve's claim, but conclude that the result reached
was correct. We have previously affirmed a trial court's result
even though it may have been arrived at for the wrong reason.
Wolfe v. Webb (1992)' 251 Mont. 217, 234, 824 P.2d 240, 250.
Norwest filed its final accounting as Viola's conservator with
the Seventh Judicial District Court, Dawson County, on March 1,
1988. No objections were filed. After a hearing on March 15,
1988, that court issued an order and decree approving the final
accounting and discharging Norwest from its role as Viola's
conservator. It expressly provided that the decree was final,
conclusive and binding upon all interested parties. No appeal was
taken from the order approving the final accounting.
Norwest's final accounting as Viola's conservator is governed
72-5-438, MCA (1987), (emphasis added), which provides:
A~XQU~~S -finaL anc].intermediate. (1) Unless waived by
the court, every conservator must account to the court
for his administration of the trust annually for the
preceding year and also upon his resignation or removal.
A copy of the account must be served upon the protected
person's parent, guardian, child, or sibling if that
person has made an effective request under 72-5-404. On
termination of the protected person's minority or
disability, a conservator may account to the court or he
may account to the former protected person or his
personal representative.
(2) Subject to appeal or vacation within the time
permitted, an order made upon notice and hearing allowing
an intermediate account of a conservator adjudicates as
to his liabilities concerning the matters considered in
connection therewith; and an order made upon notice and
hearing allowina a final account adiudicates as to all
previouslv unsettled liabilities of the conservator to
the protected person or his successors relatina to the
~on~ematorshi~.
Under this statute, the court's order and decree approving the
conservator's final accounting adjudicated all previously unsettled
liabilities of Norwest to Viola or her successors.
The general rule is that a final settlement of the accounts of
a guardian, executor, administrator, conservator, or other trustee
judicially determined at a formal hearing of which all interested
parties have notice is considered to be a judgment which becomes
res judicata. In re Guardianship of Bremer (Neb. l98l), 307 N.W.2d
15
504, 508: In re Conservatorship of Estate of Lindauer (Neb. 1985),
376 N.W.2d 1, 2: see also In re Estate of Counts (1985), 217 Mont.
350, 354, 704 P.2d 1052, 1055. In Bremer, a district court
approved the final accounting of a conservator, Mr. Weir, and then
appointed Mr. Weir as guardian of the same protected person. After
the protected person died, Mr. Weir filed his final accounting as
guardian and, at the hearing on that accounting, the heirs claimed
that Mr. Weir had breached his fiduciary duty during the period of
conservatorship. The Nebraska Supreme Court concluded that res
judicata barred the heirs' claim; their failure to object to the
conservator's final accounting prohibited them from raising the
claim for breach of fiduciary duty at a later date. Bremer, 397
N.W.2d at 508-9.
We reach the same conclusion here. The District Court
approved of Norwest's final accounting as conservator on March 15,
1988. This order was neither appealed nor objected to on any
grounds. Absent such action, res judicata prohibits Tisher and
Schleve from now alleging that Norwest breached its fiduciary duty
during the conservatorship.
Tisher and Schleve argue that because only Norwest received
notice of the hearing on the final accounting, the District Court's
order approving the final accounting cannot be considered a final
judgment. We disagree. Section 72-5-438, MCA (1987), requires
notice only to "the protected person's parent, guardian, child, or
sibling if that person has made an effective request under 72-5-
404." Tisher and Schleve are not among those listed in the
statute. Nor did they request notice as required by the statute,
16
notwithstanding their knowledge that Norwest had served as Viola's
conservator since 1980 and the likelihood that they knew of her
death in December, 1987.
Furthermore, as a practical matter, Norwest had no way of
ascertaining the identities or addresses of those persons who might
wish to receive notice of the conservator's final accounting,
absent a request for notice as provided in 6 72-5-404, MCA (1987).
We conclude that the District Court's order and decree approving
the final accounting is a final judgment on all matters concerning
the conservatorship.
Tisher and Schleve next assert that Norwest, during the period
it served as Viola's co-personal representative, had an obligation
to appeal or contest the final accounting, and that its failure to
do so gives rise to a claim of breach of fiduciary duty. No such
claim was asserted in Tisher and Schleve's complaint; their third
claim rested entirely on their allegations that Norwest, as Viola's
conservator, breached its fiduciary duty to Viola.
Finally, Tisher and Schleve contend that the District Court's
application of res judicata deprived them of their constitutional
right to due process. It is well settled that this Court will not
address on appeal an issue not presented to the district court.
Duensing v. Travelers Co. (Mont. 1993), 849 P.2d 203, 209, 50
St.Rep. 316, 320. This constitutional argument was not presented
to the District Court and, therefore, will not be entertained by
this Court.
Once there has been a full opportunity to present an issue for
judicial decision, the judgment must be accorded finality "else
17
judgments may be attacked piecemeal and without end." First Bank,
737 P.2d at 1135. The order approving the settlement of the
consolidated action in Dawson County and the final approval of the
conservator's accounting must be accorded finality here. We
conclude that the District Court did not err in concluding that res
judicata barred Tisher and Schleve's claims against Norwest.
Affirmed .
We concur:
August 24, 1993
CERTIFICATE OF SERVICE
I hereby certify that the following order was sent by United States maif, prepaid, to the following
named:
Robert L. Johnson
Attorney at Law
507 Montana Bfdg.
Lewistown, MT 59457
3. Douglas Alexander
Attorney at Law
P.O. Box 1270
Sidney, MT 59270
Earl J. Hanson
Hanson & Todd
Ste. 215, Transwestern I
404 No. 31st St.
Billings, MT 59101
Walter S. Murfltt
Luxan & Murfitt
P.O. Box 1144
Helena. MT 59624
ED SMITH
CLERK OF THE SUPREME COURT
S T A m O F MOWTANA