No. 93-452
IN THE SUPREME COURT OF THE STATE OF MONTANA
JAMES FIEDLER,
Plaintiff and Respondent,
- ..,.
vs .
JOSEPH FIEDLER,
Defendant and Appellant, A% 1 1 1994
and
JOSEPH FIEDLER.
plaintiff ' on Counterclaim and Appellant,
JAMES FIEDLER AND JUDITH FIEDLER,
Defendants on Counterclaim and Respondents.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas M. McKittrick, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Robert T. Cumins and James P. Greenan, Helena,
Montana
For Respondent:
Michael G. Barber and Donald L. Ostrem, Great Falls,
Montana
Submitted on Briefs: April 14, 1994
Decided: A U ~ U S ~ 1994
11,
Filed:
Justice Fred J. Weber delivered the Opinion of the Court.
James Fiedler brought this action in 1982 for dissolution of
a partnership and for an accounting for purposes of distribution.
Joseph Fiedler appeals from the Order of the District Court of the
Eighth Judicial District, Cascade County, which divided and
apportioned real and personal partnership property between him and
James Fiedler pursuant to the findings of a Special Master. We
affirm.
The issues presented for review are restated as follows:
I. Did the District Court err in finding that real property
located in Montana is a partnership asset?
11. Did the District Court err in finding that real property
located in Wisconsin is a partnership asset?
111. Did the District Court comply with the requirements of
Rule 53 (e)(2), M.R.Civ.P.?
IV. Did the District Court err in determining that Joseph and
James Fiedler operated the Taylor Ranch Corporation as a part of
the partnership?
James and Joseph Fiedler are twin brothers who began a farming
and ranching business in approximately 1950, operating as a family
partnership under the name of "Fiedler Ranch Partnership."
Testimony indicated that other family members were also involved,
although all are now deceased. These family members were their
older brother, William Frances Fiedler, and their parents, Frank
and Katherine Fiedler.
The partnership farmed and raised sheep and cattle on
properties in Judith Basin County near Stanford, Montana known as
the Home Place, the Campbell Ranch, the Vann Ranch, Sleepy Hollow,
160 acres known as the "Isolated 160" and the Taylor Ranch. The
Taylor Ranch was purchased with partnership funds in 1954 and was
originally formed as a corporation with shares issued to James and
Joseph Fiedler and their wives. The Taylor Ranch Corporation has
since been dissolved by the Secretary of State and the Fiedler
brothers have operated it as part of the partnership. Other
property which the brothers inherited from their parents and which
is located in Wisconsin has been leased with the income from the
leases deposited in partnership accounts and included as income on
partnership tax returns.
James and Joseph Fiedler operated the cattle operation
together until 1968. Joseph Fiedler has since raised sheep on the
Home Place and Sleepy Hollow while James has managed the cattle
operation on the remaining properties. Joseph Fiedler testified at
trial that he deposited income from the sheep operation in an
account in a Lewistown bank under the name of Fiedler Ranch. He
also testified that this was a joint account with access by both
himself and James Fiedler. James Fiedler testified that he had no
knowledge of this account and no documentation was provided
relative to this account despite requests from the Special Master
appointed by the court.
James Fiedler placed funds derived from the cattle operation
primarily in a joint account under the name of Fiedler Ranch
Partnership in the Basin State Bank in Stanford, Montana. James
Fiedlerls cattle operation was extremely successful and the money
deposited in this account primarily came fromthe cattle operation.
Both brothers made draws from this account. Testimony provided
that in the period from January 1978 up to the time of the trial,
Joseph Fiedler withdrew $455,343 from this account, $289,189 more
than James Fiedler withdrew.
The relationship between the twin brothers became strained as
years passed. In 1982, James Fiedler filed a complaint asking for
dissolution of the partnership and an accounting for distribution
purposes. Joseph Fiedler filed an answer and a counterclaim also
asking for an accounting for distribution purposes. The parties
agreed to the appointment of a Special Master to determine the
final disposition of the partnership assets. On September 2, 1983,
the District Court appointed Jack Stevens as Special Master.
Mr. Stevens was recommended by the appellant Joseph Fiedler
and approved by both Joseph and James Fiedler. In preparing his
Special Master's Report, Mr. Stevens relied on George Campanella,
a Certified Public Accountant who had prepared partnership tax
returns for over twenty years as the accountant for the
partnership; James Volk, a certified real estate appraiser; and
Bass Auction Company, which conducted the equipment appraisals.
Mr. Stevens also considered the recommendations of Barry Dutton, a
natural resource consultant hired by Joseph Fiedler after Joseph
Fiedler disagreed with Mr. Stevens1 preliminary findings.
The Special Master was asked to determine equitable
distributions of partnership assets. Mr. Stevens proposed two
methods for distributing real property and other assets. The first
method--preferred by the Special Master and chosen by the District
Court--essentially maintained the operations of both brothers and
provided additional cash to compensate Joseph Fiedler for the
additional real estate apportioned to James Fiedler. The second
proposal awarded equal land values to each brother with more cash
awarded to James Fiedler.
Mr. Stevens testified that among his reasons for recommending
the first proposal were the comparative stewardship abilities of
the parties over the preceding twenty years, and he specifically
noted James Fiedler's management of the property which created a
large amount of assets for the partnership as contrasted to the
relatively poor fiscal management of other assets by Joseph
Fiedler. Other testimony, including that of a banker who had done
business with James Fiedler concerning partnership business for
over twenty years, provided that James Fiedler was regarded as a
sound financial manager and profitable rancher.
Despite requests, Joseph Fiedler did not provide documentation
to the Special Master to support his testimony about his sheep
operation. Other evidence presented at trial indicates that James
Fiedler has successfully managed the vast majority of the real
estate owned by the parties for more than twenty years, that there
was no mismanagement on the part of James Fiedler involving any of
the partnership assets and that there had been no commingling of
partnership and personal assets by James Fiedler as had been
alleged by Joseph Fiedler. Testimony also indicated that Joseph
Fiedler and his wife Olivia had not filed income tax returns since
1982 and that they might need additional cash to cover their tax
liability. This was one of the reasons stated by the District
Court to support the adoption of the Special Master's preferred
proposal.
Other facts will be provided as necessary throughout this
opinion.
STANDARD OF REVIEW
This case involves a review of findings of fact and
conclusions of law. For conclusions of law, the standard of review
is whether the district court correctly interpreted the applicable
law. Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470,
474, 803 P.2d 601, 603. This Court applies a clearly erroneous
standard using a three-part test to review a district court's
findings of fact. The Court first reviews the record to determine
if the findings are supported by substantial evidence; second, if
the findings are supported by substantial evidence, we will
determine if the trial court has misapprehended the effect of the
evidence; and third, if substantial evidence exists and the effect
of the evidence has not been misapprehended, the Court may still
conclude that a finding is clearly erroneous when a review of the
record leaves the Court with the definite and firm conviction that
a mistake has been committed. Interstate Prod. Credit Ass'n v.
DeSaye (lggl), 250 Mont. 320, 323, 820 P.2d 1285, 1287.
Substantial evidence is defined as "evidence that a reasonable mind
might accept as adequate to support a conclusion; it consists of
more than a mere scintilla of evidence but may be somewhat less
than a preponderance." Barrett v. Asarco, Inc. (1990), 245 Mont.
196, 200, 799 P.2d 1078, 1080.
Issue I: Montana Real Prowerty
Did the District Court err in finding that real property
located in Montana is a partnership asset?
Joseph Fiedler contends that the real property located in
Montana is and has always been held as tenants in common. He
further contends that all real properties owned by the parties--
with the exception of the Taylor Ranch--were acquired by various
family members prior to 1950, the date James Fiedler has alleged as
the time the partnership was created between James and Joseph
Fiedler. According to Joseph Fiedlerls arguments on appeal, no
real property is held in the name of the partnership, no written
partnership agreement has ever existed between James and Joseph
Fiedler, and the Fiedler brothers never intended to convey real
property held as tenants in common to the partnership. Thus,
Joseph Fiedler contends that the District Court erred in relying on
In the Matter of the Estate of Palmer (1985), 218 Mont. 285, 708
P.2d 242, to determine that James and Joseph Fiedler intended to
operate the ranch lands as part of a partnership and in
distributing such as partnership property.
James Fiedler counters that Joseph Fiedler has maintained
since the beginning of this proceeding that all real property owned
and operated in Montana for farming and ranching purposes was
partnership property and that he is barred by principles of
7
judicial estoppel from now contending otherwise on appeal. We
agree.
Clearly standing out among the numerous instances in which
Joseph Fiedler has previously asserted or maintained that the
property is partnership property are the following:
1. "Defendant JOSEPH FIEDLER has filed extensive
counterclaims against Plaintiff JAMES FIEDLER alleging
that JAMES FIEDLER has mismanaged the partnership assets;
... failed to maintain the buildings and lands of the
partnership; breached his fiduciary duty by mismanaging
partnership lands ...I1 (From Motion of Defendant and
Counter-Plaintiff Joseph Fiedlerto add Judith Fiedler as
a Defendant to the Counterclaims)
2. "The Fiedler Ranch Partnership comprises a number of
tracts of land totalling approximately 9254 acres."
(From Joseph Fiedler's response to the Preliminary Report
of the Special Master)
3. "Plaintiff's motion envisions an eventual partition
pursuant to MCA Title 70, Ch. 29. That chapter is
irrelevant to partnership actions. By its own terms,
section 70-29-101 applies only to situations 'when
several cotenants hold or are in possession of real
property as joint tenants or as tenants in common.'
Plaintiff's complaint herein did not seek relief in
partition. More accurately, it sought dissolution and
winding up of a partnership, under MCA Title 35, Ch. 10.
Section 35-10-502 makes it clear that partners hold
partnership property as 'tenants in partnership1,not as
tenants in common or as joint tenants, and the statutory
system for dissolving and winding up the affairs of a
partnership is very different from that of an ordinary
partition. " (Joseph Fiedler's objection to James
Fiedler's Motion for a Title Report, acquiesced in and
relied on subsequently by James Fiedler) (Emphasis in
original.)
James Fiedler also stipulated--pursuant to Joseph Fiedler's
argument that the property was held as a tenancy in partnership--to
withdraw his claim for partition and for payment for services
provided to the partnership. At all times subsequent to James
Fiedler's withdrawal of these claims, James Fiedler has taken the
position previously argued by Joseph Fiedler that the property was
held as a tenancy in partnership.
The doctrine of judicial estoppel binds a party to his or her
judicial declarations, and precludes a party fromtaking a position
inconsistent with them in a subsequent action or proceeding.
Trader's State Bank of Poplar v. Mann (1993), 258 Mont. 226, 242,
852 P.2d 604, 614. This Court has applied the doctrine to estop a
party from controverting admissions in the party's pleadings and to
estop a party from controverting admissions in an affidavit.
Rowland v. Klies (1986), 223 Mont. 360, 368, 726 P.2d 310, 316
(citing Fey v. A.A. Oil Corp (1955), 129 Mont. 300, 323, 285 P.2d
578, 590) . Stated simply, it is a rule which "estops a party to
play fast-and-loose with the courts." Rowland, 726 P.2d at 315
(citing 31 C.J.S. Estoppel, 6 117B (1964)). Just as surely, the
doctrine is applicable in this case where a party cannot take the
opposing viewpoint when he has induced another to stipulate to his
position and drop his arguments for that opposing position.
The elements of judicial estoppel are:
1) the estopped party must have knowledge of the facts at
the time the original position is taken;
2) the party must have succeeded in maintaining the
original position;
3) the position presently taken must be actually
inconsistent with the original position; and
4) the original position must have misled the adverse
party so that allowing the estopped party to change its
position would injuriously affect the adverse party.
m, 852 P.2d at 614. Throughout the lengthy duration of this
litigation and until he presented evidence at trial to argue that
9
the properties were held as tenancies in common, Joseph Fiedler has
consistently maintained that the properties involved in this action
are partnership properties.
There is nothing in the record to indicate that Joseph Fiedler
did not have knowledge of all the facts at the time he took his
original position and clearly he succeeded in maintaining that
position. This position was taken early on in the litigation and
James Fiedler stipulated to this position at that time. Clearly,
all the elements for judicial estoppel are present and Joseph
Fiedler cannot now argue that this should be an action in partition
of real property and not a partnership dissolution proceeding.
Further, Joseph Fiedler maintained early on in this proceeding that
all five Fiedlers operated as a family partnership prior to their
deaths. We conclude that Joseph Fiedler is judicially estopped
from changing his position concerning this property.
Further, he has made no cogent argument for not applying
Palmer to the facts of this case to determine that the real
property is held by James and Joseph Fiedler as tenancies in
partnership. Palmer held that property acquired either before or
after formation of a partnership may be considered partnership
property despite the appearance of another form of ownership.
Palmer, 708 P.2d at 249.
We hold the District Court correctly determined that the real
property located in Montana is a partnership asset.
Issue 11: Wisconsin Real Propertv
Did the District Court err in finding that real property
located in Wisconsin is a partnership asset?
The parties own several tracts of real property in Wisconsin
(the Wisconsin properties). The District Court included the
Wisconsin properties along with other assets as partnership
property to be distributed to the parties. James Fiedler has
managed the Wisconsin properties and deposited income from them in
partnership bank accounts.
This income has been included on partnership tax returns as
well. George Campanella testified that copies of partnership tax
returns were provided to Joseph Fiedler and presented evidence of
that for several years. Joseph Fiedler did not challenge this
during the years of James Fiedler's management of this property nor
has he made a persuasive argument that the Wisconsin properties are
not partnership property.
Joseph Fiedler contends that the Wisconsin properties are not
subject to the jurisdiction of the District Court and that the
deposit of funds from the rentals of the Wisconsin properties in
the Montana bank account and James Fiedler's reporting of the lease
income as partnership income does not constitute sufficient
evidence to overcome a prima facie assumption that the ownership is
that of tenants in common. These arguments are inapposite.
It is immaterial that the District Court does not have
jurisdiction overthe real property in Wisconsin. In October 1988,
the parties stipulated that the Special Master would associate
counsel in Wisconsin to conclude the probate of the Estate of Frank
Fiedler, list the property for sale after appraisal under the
supervision of the Special Master, and then deposit the net
proceeds of the sale of the Wisconsin properties in the Special
Master Interest Bearing Account until a court-ordered division and
disbursement of the proceeds was ordered.
This stipulation to have the Special Master convert the
property to cash for distribution as directed by the District Court
was agreed to in October 1988--more than four years before the
trial. Joseph Fiedler did not object to including the Wisconsin
properties as part of the trial. He further did not object to the
District Court's inclusion of them in the Order Appointing the
Special Master or the Preliminary or Final Special Master's
Report's discussion of them. He in fact included the Wisconsin
properties in his own Counterclaim and other motions. He waited
until just before trial to mention that the Wisconsin properties
were improperly included in this proceeding and then agreed that
the property should be included. He did not object until the
Special Master's report was being considered by the Court.
As part of the Special Master's proposal adopted by the
District Court, the proceeds of the sale of the Wisconsin
properties are to be distributed to Joseph Fiedler. His argument
relating to the fact that the property has not yet been sold is
meritless. As noted above, Joseph Fiedler stipulated in 1988 to
the procedures to be followed concerning this property. Moreover,
by stipulating to this procedure, Joseph Fiedler waived any future
argument to treat the matter differently absent allegations to
support setting aside or relief from the stipulation.
The purpose of a stipulation is to relieve the parties from
the necessity of introducing evidence about the ultimate fact
covered by it. Webb v. Wolfe (1988), 230 Mont. 322, 325, 749 P.2d
531, 532. If the stipulation is material, the parties and the
court are bound by it. Webb, 749 P.2d at 532. See also Myers v.
Department of Agriculture (1988), 232 Mont. 286, 289, 756 P.2d
1144, 1146. We conclude that Joseph Fiedler is bound by his
stipulation made in 1988 concerning the Wisconsin properties.
In addition to the stipulation that the Special Master would
handle sale and distribution of the Wisconsin properties,
substantial evidence was presented to support the District Court's
finding that the Wisconsin properties were partnership assets.
This included testimony that the income from the property was
included in partnership tax returns and that Joseph Fiedler did not
object to this inclusion of income over a period of more than
twenty years. This property was managed by James Fiedler. Joseph
Fiedler also testified that he was advised by his attorney handling
a 1976 IRS problem that he should leave the management of the
partnership to James Fiedler. This and other evidence constitutes
substantial evidence according to the DeSave test.
We hold the District Court properly determined that real
property located in Wisconsin is a partnership asset.
Issue 111: The Special Master's Report
Did the Special Master's Report comply with the requirements
of Rule 53, M.R.Civ.P?
Joseph Fiedler contends that he was deprived of rights arising
under Rule 53, M.R.Civ.P., because he was not allowed to examine
and challenge the Special Master's report until it was accepted
13
into evidence during the presentation of the plaintiff's case at
trial. He now claims that the Special Master substantially
exceeded the authority given to him by the District Court and that
the report is based on incorrect conclusions that a partnership
existed between the parties and that the real property owned by
James and Joseph Fiedler was owned as tenancies in partnership. He
claims this distorts and invalidates the recommendations made by
the Special Master concerning assignments of income and proposals
for division of assets.
Joseph Fiedler's argument on this issue is basically a
reargument of the position he argued at the trial. In substance,
it is an argument that the District Court erred in adopting the
Special Master's findings. Rule 53(e)(2), M.R.Civ.P., states that
the trial court shall accept the master's findings of fact unless
they are clearly erroneous. This contention is addressed in Issue
IV below.
As to the opportunity to be heard prior to trial concerning
the Special Master's report, this too is a meritless argument.
James Fiedler filed a Motion for Hearing in October 1992, the month
before the trial, to discuss the adoption of the Special Master's
report. Joseph Fiedler objected to this motion, stating:
[A] hearing on this matter before the trial setting is
premature and would be duplicative of the matters to be
presented at the trial which is scheduled to commence
before this Court on the 16th day of November, 1992, for
a period of one week at which time the Court will
determine whether or not or how much, if any, of the
Master's Report will be utilized.
Moreover, Joseph Fiedler had ample opportunity to respond to the
Special Master's preliminary report and in fact filed an Opposition
to Plaintiff's Motion for Adoption of Special Master's Preliminary
Report as Final Report and later filed an Objection to the Special
Master's Report following the conclusion of the trial. He also
challenged specific findings of the Special Master's Report several
times before the trial and, as stated above, refused a hearing on
the report in the weeks prior to the trial. To argue now that he
was prejudiced in light of this conduct is utterly without merit.
We hold the District Court allowed Joseph Fiedler to respond
to the Special Master's Report in accordance with the requirements
of Rule 53 (e) (2), M.R.Civ.P.
Issue IV: Findinss
Did the District Court err in determining that Joseph and
James Fiedler operated the Taylor Ranch Corporation as a part of
the partnership?
Joseph Fiedler's lengthy argument on this issue is essentially
an argument that the District Court erroneously converted this from
an action in partition to an action to dissolve a partnership. He
has not identified any specific findings which he claims are
incorrect, but he argues the District Court erred in determining
there was a partnership. We addressed the findings which deal with
the inclusion of real property as partnership assets in Issues I
and I1 above. We also affirm the findings of the District Court on
this issue as discussed briefly below.
Interestingly, in his response to the Preliminary Report of
the Special Master, Joseph Fiedler stated:
In approximately 1950, Joseph Fiedler, James Fiedler,
their brother William . . .
and their parents . ..
,
commenced conducting a general ranching and farming
partnership business on land jointly owned by the family,
hereinafter referred to as the Fiedler Ranch ... Upon
the death of the brother and parents, Joseph and James
became 50-50 partners with all profits to be split
even1y.
This is but one of the numerous examples in the voluminous record
of this action encompassing over ten years of litigation by which
Joseph Fiedler has indicated his knowledge and belief that the
Fiedler Ranch has been operated as a partnership. Not only has he
supported his arguments over the years with information indicative
of a partnership between James and Joseph Fiedler, he has also
supportedthem with information indicative of a partnership between
all five members of the Fiedler family going as far back as 1950.
Substantial evidence supports a finding that the Taylor Ranch
Corporation was purchased in 1954 by the partnership with
partnership assets derived from the sale of partnership livestock.
Based on the Special Master's findings and conclusions, the
evidence presented at trial and other contents of the record in
this case, the District Court found specifically that James and
Joseph Fiedler intended to operate the ranch they inherited, and
all additions to it, as a partnership; that there was no intention
by them to have any of the property withheld from the partnership;
and that the Special Master had relied upon qualified appraisers
and sound techniques. Rule 53 (e)(2), M.R.Civ. P., states that a
trial court sitting without a jury "shall accept the master's
findings of fact unless clearly erroneous." The District Court
concluded that the Special Master's report contained nothing which
was clearly erroneous. We agree.
16
After reviewing the record, we conclude that the findings
above-noted and others not specified herein are indeed supported by
substantial evidence. Further, after reviewing the record, we
conclude that the District Court has not misapprehended the effect
of the evidence, and our review of the record has not left us with
a definite and firm conviction that a mistake has been made.
We hold the District Court properly determined that Joseph and
James Fiedler operated the Taylor Ranch Corporation as a part of
the partnership.