No. 94-379
IN THE SUPREME COURT OF THE STATE OF MONTANA
1995
IN THE MATTER OF
THE CONSERVATORSHIP OF:
ANDREW J. KOVATCH,
A Protected Person.
APPEAL FROM: District Court of the Ninth Judicial District,
In and for the County of Pondera,
The Honorable Marc G. Buyske, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Maxon R. Davis, Cure, Borer & Davis, Great Falls,
Montana
For Respondent:
Chris Christensen, Keil & Christensen, Conrad,
Montana
Submitted on Briefs: February 9, 1995
Decided: June 1, 1995
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
The appellant, Ann Cogswell, appeals from an order of the
District Court for the Ninth Judicial District, Pondera County,
denying her petition to be appointed conservator for her father,
Andrew Kovatch. We affirm.
The sole issue on appeal is whether the District Court erred
in finding that Andrew's property is not being wasted or dissipated
and that appointment of a conservator for Andrew's estate is
unnecessary.
Ann Cogswell and Merrill Kovatch are the only children of
Andrew Kovatch, aged 88. Andrew, who has been widowed since 1990,
resides in a nursing home and is unable to manage his affairs and
property due to mental deficiency and physical illness or
disability. Andrew's principal asset is 1,480 acres of farmland in
Toole County of which 1,371 acres are enrolled in the Conservation
Reserve Program (CRP). The acreage was put into the program in
1988 and the income is split between Andrew as owner and Merrill as
operator with Andrew receiving $27,580.00 per year and Merrill
receiving $27,500.00 per year.
On February 1, 1991, Andrew granted Merrill a Power of
Attorney to handle all of Andrew's business affairs. Under the
authority of this Power of Attorney, Merrill pays Andrew's real
estate taxes and living and care expenses at the nursing home from
Andrew's checking account. In addition, Merrill has transferred
all certificates of deposit and stocks and bonds into joint tenancy
between Andrew, Ann and himself. Merrill has also made gifts on
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Andrew's behalf to Ann and himself.
On January 4, 1994, Ann filed a petition in District Court in
Pondera County to be appointed conservator for her father. The
petition specifically noted that the income from Andrew's cropland
in Toole County was being improperly diverted to Merrill by virtue
of Merrill having wrongfully listed himself as the operator of the
farm when it was enrolled in the CRP. Merrill filed an Answer and
Counter-Petition denying that the appointment of a conservator was
necessary and asserting his right to be appointed conservator for
his father.
At a hearing on June 6, 1994, an attorney appointed to
represent Andrew concluded that Andrew lacked the mental capacity
to handle his own affairs. Ann testified that she has not been
satisfied with the way her brother has been handling Andrew's
financial affairs. She contended that Merrill was not entitled to
half of the CRP income because he was not the operator of the farm
for the three years prior to the enrollment of the farm in the CRP
as required by the federal regulations governing the program.
At the hearing, Merrill testified that he is the operator of
the farm because he seeded the land with his own machinery, capital
and labor and he reports to the soil conservation service on an
annual basis. Merrill testified that the appointment of a
conservator was unnecessary because he has been managing his
father's property and handling his father's financial affairs under
the authority of the Power of Attorney since 1991. Merrill also
testified that he has kept his sister informed of the various
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transactions regarding their father's estate.
on June 9, 1994, the District Court issued its order denying
the appointment of a conservator. The court concluded that while
Andrew could not manage his own affairs (satisfying the
requirements of 5 72-5-409(2) (a), MCA), there was not sufficient
persuasive evidence to meet subsection (2) (b) of the statute which
requires a showing that Andrew has property "which will be wasted
or dissipated unless proper management is provided. . . .'I
Did the District Court err in finding that Andrew's property
is not being wasted or dissipated and that appointment of a
conservator for Andrew's estate is unnecessary?
The appointment of a conservator is controlled by statute in
Montana. Sections 72-5-409(2) (a) and (b), MCA provide:
(2) Appointment of a conservator or other
protective order may be made in relation to
the estate and affairs of a person if the
court determines that:
(a) the person is unable to manage his property
and affairs effectively for reasons such as
mental illness, mental deficiency, physical
illness or disability, advanced age, chronic
use of drugs, chronic intoxication,
confinement, detention by a foreign power, or
disappearance; and
(b) the person has property which will be wasted
or dissipated unless proper management is
provided or that funds are needed for the
support, care, and welfare of the person or
those entitled to be supported by him and that
protection is necessary or desirable to obtain
or provide funds.
There is no dispute that Andrew lacks the capacity to manage
his property and affairs. However, this Court has previously ruled
that even though the person can be shown to be incapacitated,
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subsection (b) also requires a showing that the "person has
property which will be wasted or dissipated unless proper
management'1 is provided. See In the Matter of the Guardianship and
Conservatorship of Swandal (1984), 210 Mont. 167, 171, 681 P.2d
701, 703.
The District Court noted, that while Ann has no argument with
how Merrill has been handling Andrew's investment assets, questions
may have been raised concerning the competency of Andrew at the
time he entered into the agreement with Merrill and the legality of
the participation in the CRP under such an agreement. The court
concluded, however, that these questions did not rise to the level
of persuasive proof of mismanagement, waste or dissipation of
assets. Therefore, the court ruled that the second prerequisite
necessary to the appointment of a conservator had not been
satisfied.
In a non-jury trial, this Court will not disturb the district
court's findings of fact unless they are clearly erroneous. Rule
52(a), M.R.Civ.P.; Columbia Grain International v. Cereck (1993),
258 Mont. 414, 417, 852 P.2d 676, 678. Our standard of review for
questions of law is to determine whether the district court has
correctly interpreted the law. Steer, Inc. v. Department of
Revenue (1990), 245 Mont. 470, 474-75, 803 P.2d 601, 603.
The District Court correctly concluded that there was
insufficient evidence presented by Ann at the hearing for a showing
that Andrew's estate is being wasted or dissipated. We therefore
affirm the order of the District Court denying the appointment of
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a conservator for the estate of Andrew Kovatch.
Justice W. William Leaphart, dissenting.
I dissent. The parties do not dispute that Andrew lacks the
capacity to manage his property and affairs. It is also undisputed
that Andrew has property. Nonetheless, the Court, citing In the
Matter of the Guardianship and Conservatorship of Swandal (1984),
210 Mont. 167, 171, 681 P.2d 701, 703, has upheld the District
Court's refusal to appoint a conservator because there was
insufficient evidence presented for a showing that Andrew's estate
is being wasted or dissipated.
It seems to me to be self evident that:
(a) property which is not properly managed will dissipate,
and
(b) an owner of property who is adjudged incapable, cannot
properly manage that property: therefore,
(c) property left in the management of an incapacitated person
will dissipate.
In other words, once a property owner is incapacitated what
more proof is needed in order to warrant appointment of a
conservator? In the present case, the District Court found that
Ann, the petitioner, had not produced persuasive proof of
mismanagement, waste or dissipation of her father's assets. The
law, however, does not impose such a burden. For obvious reasons,
the law does not require the court to wait until there has been
actual dissipation or waste. Rather, the law is prospective in
nature. The statute allows appointment of a conservator when the
person has property "which will be wasted or dissipated . . .I1
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Section 72-5-409(2) (b), MCA (emphasis added). The fact that the
property, with the help of friends or relatives, is not presently
being mismanaged, is not the issue. Rather, once a property owner
is shown to be incompetent to manage his/her property, it is
incumbent upon the court to appoint a conservator who is
accountable to the court rather than sit back and wait to see how
things develop under the watchful (and perhaps acquisitive) eye of
an unsupervised friend or relative. To the extent that it requires
proof of past or present waste or dissipation of assets, I would
reverse our holding in Matter of Swandal and reverse the lower
court herein for having incorrectly interpreted the law, i.e., §
72-5-409(2), MCA.
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