NO. 95-293
IN THE SUPREME COURT OF THE STATE OF MONTANA
1996
IN RE THE ESTATE OF MARGARET DECOCK,
JOYCE HERT,
Appellant and Cross-Appellee,
v.
JAMES DECOCK and ROBERT DECOCK,
Respondents and CrOsS-Appellants.
APPEAL FROM: District Court of the Sixteenth Judicial District,
In and for the County of Treasure,
The Honorable Joe L. Hegel, Judge pres'iding.
COUNSEL OF RECORD:
For Appellant:
Robert L. Stephens, Jr., Billings, Montana; George
Radovich, Radovich Law Firm, Billings, Montana
For Respondent:
James A. Hubble, Hubble & Ridgeway, Stanford,
Montana
Submitted on Briefs: March 14, 1996
Decided: October 22, 1996
Filed:
Justice James C. Nelson delivered the Opinion of the Court.
Appellant Joyce Hert, appeals the decision of the Sixteenth
Judicial District Court, Treasure County, finding that Joyce's
mother, Margaret DeCock, had testamentary capacity to execute her
1984 will and that Joyce exerted undue influence over Margaret in
the transactions surrounding several Certificates of Deposit (CDs).
Joyce's brothers, Robert and James DeCock, cross-appeal as to the
District Court granting Joyce's motion for a new trial with respect
to the validity of the Instrument of Revocation. We affirm in
part, reverse in part and remand for further proceedings consistent
with this opinion.
Joyce presents the following issues for review:
1. Whether the District Court erred in not amending the
judgment and setting aside the jury's finding that certain
transactions regarding Margaret's CDs were the result of undue
influence by Joyce.
2. Whether the District Court erred in granting a new trial
only as to the validity of Margaret's attempted revocation of her
1984 will.
3. Whether the District Court erred in limiting cross-
examination regarding the settlement agreement.
Robert and James cross-appeal on the following issue:
Whether the District Court erred in granting a new trial with
respect to the validity of the Instrument of Revocation.
FACTUAL AND PROCEDURAL BACKGROUND
Oscar and Margaret DeCock operated a farm and ranch near
2
Hysham, Montana for many years. They had five children: Gary,
Marlene, Joyce, Robert and James. In 1962, Oscar and Margaret made
identical wills wherein all of their holdings were left to the
surviving spouse. In the event that no spouse survived, all of
their estate would pass to their five children in equal shares.
In 1968, Oscar wrote a new will in which he left a little over
nine sections of farm and ranch land to his oldest son, Gary,
subject to the condition that Gary pay one-fifth of the appraised
value of the land to each of the other four children. The payment
was to be secured by a mortgage and note to the other four and was
payable over a ten-year period, without interest. The balance of
the estate was given one-half to Margaret and one-half to the five
children. Gary, Robert and James were given the option to purchase
all of the interest in land that was given to Joyce and Marlene.
Oscar died in 1970, and his 1968 will was admitted to probate.
After Oscar's death, Margaret repeatedly promised the four other
children that she would make up for the perceived disparity in
treatment under their father's will. To that end, Margaret created
a number of CDs and savings accounts in her name and the names of
some or all of her children.
By early 1980, Margaret's health was declining. During one
hospitalization in 1982, her attending physician noted the presence
of symptoms indicative of early dementia. In January 1983,
Margaret was again hospitalized and both attending physicians
identified symptoms of mild senility, senile dementia or organic
brain syndrome. After Margaret's release from the hospital, Joyce
3
began assisting Margaret in picking up her mail and taking Margaret
to her doctor's appointments, to the grocery store and to the bank.
In April 1984, unbeknownst to the other three children, Robert
and James took Margaret to an attorney in Miles City for the
purpose of preparing a new will. This will, dated April 23, 1984,
disinherited Gary entirely and gave Joyce and Marlene a bequest of
only $40,000 each. Robert and James were to receive all of
Margaret's real estate along with all livestock, motor vehicles,
tools, and farm machinery. The real estate alone had an appraised
value of more than $570,000. The remainder of Margaret's estate
was to be divided equally among Robert, James, Marlene and Joyce.
A few days after signing this will, Margaret phoned Joyce
claiming that she could not remember what she had signed. At
Joyce's insistence, Margaret asked the attorney who prepared the
will to send her the original by registered mail. However, within
a day or two of Margaret's receiving the will in the mail, Robert
and James took possession of it to prevent it from being destroyed.
As a result of Margaret's increasing agitation over this will,
Joyce contacted an attorney in Billings who prepared an Instrument
of Revocation for Margaret's signature. During a visit to
Margaret's doctor on May 18, 1984, Margaret again became agitated
over the provisions of the will. Joyce, who had accompanied her
mother to the doctor's office, produced the Instrument of
Revocation, which Margaret signed in the presence of her doctor and
his nurse.
Margaret was placed in.a nursing home in Forsyth, Montana in
4
October 1985. The doctors concluded that she was no longer able to
live independently due to the continuing advance of Alzheimer's
disease. Joyce visited Margaret at the nursing home once or twice
each week and helped Margaret make out checks to pay her bills.
After Joyce moved to Billings in August 1986, she visited Margaret
about once a month. In 1988, a conservatorship was established for
Margaret wherein all of her assets were administered by Norwest
Capital Management.
Margaret died on May 1, 1993, at the age of 83. On May 10,
1993, Robert and James filed an Application for Informal Probate
under the terms of the April 23, 1984 will. They were appointed
co-personal representatives. On June 11, 1993, Gary filed a
petition for the adjudication of the other will asserting that
Margaret was either incompetent to make a will in April 1984 or was
subject to undue influence and duress at the time she made the 1984
will. On November 19, 1993, Joyce filed a separate response to the
petitions for adjudication of the wills. Robert and James filed an
amended objection and answer on March 15, 1994, which included
counterclaims against Joyce for the return of assets belonging to
the estate.
After extensive written discovery and numerous depositions,
Robert, James, Gary, and Marlene entered into a settlement
agreement on April 8, 1994. Joyce did not participate in the
settlement agreement and the dispute between Joyce, Robert and
James proceeded to trial with Joyce as plaintiff and Robert and
James as defendants. A few days prior to trial, Robert and James
5
filed a motion to prevent admission of the settlement agreement.
The District Court ordered that the agreement would only be
admissible to attack the credibility of a witness by showing motive
for bias or prejudice. ,
Trial commenced before a twelve-person jury on September 26,
1994. After several days of testimony, the jury determined that
Margaret was competent at the time she executed her April 23, 1984
will and that she was not under the influence of Robert and James
at the time she executed the will. The jury also determined that
Joyce had exerted undue influence over Margaret in the transactions
surrounding several of Margaret's CDs.
After the jury returned its verdict, the District Court held
a hearing on the proper form of judgment to be entered as a result
of the jury's answers on the verdict form. The issue of attorney
fees was also addressed at this hearing. After taking the matter
under advisement, the District Court filed its judgment on December
12, 1994, wherein the court upheld the jury's verdict and ordered
that Joyce pay the face value of each of the CDs at issue along
with interest. The court also awarded Robert and James attorney
fees in the amount of $55,653.57.
Following the Notice of Entry of Judgment, Joyce entered a
motion for a temporary stay which was subsequently granted by the
District Court. On December 20, 1994, Joyce filed a Motion for a
New Trial or to Alter or Amend Judgment on the grounds that there
was insufficient evidence presented at trial to support a finding
that she exerted undue influence over Margaret in connection with
6
the CDs and that the monies the court ordered Joyce to repay had in
actuality been disbursed and received by others. Joyce also
objected to the award of attorney fees.
On February 2, 1995, the District Court entered its Memorandum
and Order denying Joyce any relief in connection with the issue of
undue influence concerning the CDs. The court also concluded that
the jury's finding of competency as to the April 23, 1984 will and
the issue of undue influence as to that will could not be
relitigated. Nevertheless, the court granted Joyce's motion for a
new trial with respect to the validity of the Instrument of
Revocation and reserved her objection to attorney fees pending
resolution of the new trial.
Joyce appeals from the jury verdict and judgment, as well as
the District Court's rulings on her post-trial motions. James and
Robert cross-appeal from the District Court's granting a new trial
to determine the validity of the Instrument of Revocation.
Issue 1
Whether the District Court erred in not amending the
judgment and setting aside the jury's finding that
certain transactions regarding Margaret's CDs were the
result of undue influence by Joyce.
Joyce contends that the District Court erred in not amending
the judgment and setting aside the jury verdict on the grounds that
there was insufficient evidence presented at trial to support a
finding that Joyce exerted undue influence over Margaret in
connection with the CDs and that the monies from the CDs that the
District Court ordered Joyce to repay had, in actuality, been
7
disbursed and received by others. There are four instances where
the jury determined that Joyce exerted undue influence over
Margaret.
First, Margaret purchased a CD at First National Bank of
Hysham on February 5, 1982, for $50,000. The names on that CD were
Margaret, Robert, Marlene, James and Joyce. On February 10, 1983,
Joyce accompanied Margaret to First National Bank where Margaret
cashed this CD. Joyce then drove Margaret to Security Bank in
Billings where Margaret purchased a new CD for $52,895.55 in the
names of Margaret or Marlene or Joyce. On September 5, 1989, while
Margaret was incompetent, Joyce transferred that CD into her own
name and that of Marlene. On September 16, 1993, Joyce cashed this
CD, distributing half to Marlene and half to herself.
Second, on May 18, 1984, Joyce accompanied Margaret to First
State Bank of Forsyth where Margaret purchased a Time Savings
Certificate in the names of Margaret or Joyce or Marlene. The
funds for that purchase came from two checks for the sale of
livestock and a savings account held in the names of Margaret or
Robert. The value of the certificate at the time of purchase was
$19,650.05.
Third, Margaret purchased five $4000 CDs in 1974 and placed
her name and one of her children's names as joint owner on each of
the CDs. She held these until 1983 when she redeemed them and
purchased four $10,000 CDs from First National Bank in Hysham,
placing her name along with one of her children's names, with the
exception of Gary, on each of the CDs. On July 2, 1984, Margaret,
8
accompanied by Joyce, visited First National Bank and cashed the
1983 CDs. Margaret purchased four new CDs in the amount of
$10,451.26 each. She placed her own name on each CD and named
Joyce, Robert and Marlene as a joint owner on three of them, but
did not name James as joint owner on the fourth CD.
Finally, on May 12, 1986, Joyce accompanied her mother to
First National Bank in Hysham where Margaret cashed a CD for
$10,000 held in the names of Margaret and Robert. After hearing
all the evidence, the jury determined that Joyce had exerted undue
influence over Margaret at the times that Margaret completed each
of these transactions
The standard of review of a jury's verdict is whether there is
substantial credible evidence in the record to support it.
Barthule v. Karman (1994), 268 Mont. 477, 485, 886 P.2d 971, 976
(citing Interstate Production Credit v. DeSaye (1991), 250 Mont.
320, 322-23, 820 P.2d 1285, 1287).
Undue influence is defined at 5 28-2-407, MCA, as follows:
(1) the use by one in whom a confidence is reposed
by another or who holds a real or apparent authority over
him of such confidence or authority for the purpose of
obtaining an unfair advantage over him;
(2) taking an unfair advantage of another's
weakness of mind; or
(3) taking a grossly oppressive and unfair
advantage of another's necessities or distress.
In construing this statute, Montana courts consider the same
criteria in determining whether a donor making a gift or a testator
executing a will was subject to undue influence at the time the
gift was made or the will was executed. Taylor v. Koslosky (1991),
249 Mont. 215, 218, 814 P.2d 985, 987 (citing Cameron v. Cameron
9
(1978), 179 Mont. 219, 229, 587 P.2d 939, 945).
The criteria used to determine if undue influence has been
exerted upon a donor or a testator are: (1) confidential
relationship of the person-attempting to influence the donor or
testator; (2) the physical condition of the donor or testator as it
affects their ability to withstand influence; (3) the mental
condition of the donor or testator as it affects their ability to
withstand 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 a particular donor or testator taking into consideration
the time, the place, and all the surrounding circumstances. Matter
of Estate of Lien (1995), 270 Mont. 295, 303-4, 892 P.2d 530, 535
(citing In re Maricich's Estate (1965), 145 Mont. 146, 161, 400
P.2d 873, 881). Each of these criteria must be satisfied to prove
a claim of undue influence. LienI 892 P.2d at 535 (citing Flikkema
-
v. Kimm (1992), 255 Mont. 34, 40, 839 P.2d 1293, 1297).
Applying these criteria to the facts in the case before us,
clearly the first criteria has been satisfied as there was a
confidential relationship between Joyce and Margaret. Until the
conservatorship was established in 1988, Joyce assisted Margaret by
picking up her mail and taking Margaret to the bank, to the grocery
store and to her doctor's appointments. Additionally, after
Margaret was confined to a nursing home, Joyce assisted Margaret in
writing out checks to pay Margaret's bills.
The second and third criteria, the physical and mental
10
condition of the donor or testator as may affect their ability to
withstand influence, have been satisfied as well. There was
sufficient evidence presented at trial by various doctors to
establish Margaret's failing physical and mental condition as it
affected Margaret's ability to withstand influence. Nevertheless,
Joyce does not dispute the sufficiency of the evidence on the first
three criteria. Instead, she argues that the evidence on the
fourth and fifth criteria was insufficient to support a finding
that she exerted undue influence over Margaret.
As to the fourth criteria, unnaturalness of the disposition,
Margaret had consistently purchased during her lifetime, CDs in her
own name along with those of each of her children, with the
exception of Gary. Although, 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, ~, 892 P.2d
Lien
at 536, there was sufficient evidence presented at trial to show
that the transactions in question were contrary to Margaret's prior
dispositions and were thus "unnatural." It was not until Joyce
began accompanying Margaret to the bank that Margaret removed
James' and Roberts' names from the CDs and created new CDs without
their names or cashed CDs heid jointly with Robert and James rather
than those held jointly with Joyce and Marlene.
The fifth criteria, demands and importunities as they may
affect the donor or testator, was satisfied in that Joyce was with
Margaret at the time Margaret conducted each of these transactions.
It was reasonable for the jury to conclude from the evidence and by
11
taking into consideration the time, the pl.Xe and all the
surrounding circumstances, that Joyce's demands and importunities
affected Margaret and allowed Joyce to unduly influence her.
Joyce contends that it.is immaterial whether she exerted undue
influence over Margaret in connection with the CDs, since under the
Uniform Commercial Code, Joyce, as an alternative designee on the
CDs, had the legal authority to negotiate and renew the CDs in
whatever fashion she chose. We will not address this argument as
it was not raised before the District Court and was raised for the
first time on appeal. Marsh v. Overland (1995), 274 Mont. 21, 29,
905 P.2d 1088, 1093 (citing Lane v. Smith (19921, 255 Mont. 218,
221, 841 P.2d 1143, 1145).
Joyce also argues that the District Court should not have
ordered that she repay the face value of each of the CDs along with
interest as the majority of the funds from these CDs was disbursed
and received by others. The evidence does indicate that Joyce did
not receive all of the funds involved in these four transactions.
In the first transaction, Joyce received $28,079.71, half of the
Security Bank CD and Marlene received the other half. In the
second transaction involving the Time Savings Certificate purchased
on May 18, 1984, the certificate was transferred to the
conservatorship on May 13, 1988. After Margaret's death, it was
transferred to her estate. In the third transaction, involving the
July 2, 1984 CD for $10,451.26, this CD was transferred to the
conservatorship where it was eventually cashed and the money used
for Margaret's benefit. In the fourth transaction involving the CD
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held in the names of Margaret and Robert that was cashed on day 12,
1986, a portion of the money from that CD was used to pay the
property taxes on the DeCock ranch, including that part of the
ranch leased by Robert and James. The balance was placed in an
interest-bearing savings account in Margaret's name. That savings
account was eventually transferred to the conservatorship and used
for Margaret's benefit.
With the exception of the funds from the Security Bank CD, the
funds from these transactions were used for Margaret's benefit.
Joyce will not be held responsible for repaying any funds from
which she did not derive a benefit.
Accordingly, we hold that there was substantial evidence for
a jury to find that Joyce exerted undue influence over Margaret in
the transactions surrounding Margaret's CDs and we affirm the
District Court on this issue. However, we reverse the District
Court's order concerning the amount Joyce must repay on these CDs
and we remand to the District Court for a redetermination on this
issue.
Issue 2 and Cross-Appeal
Whether the District Court erred in granting a new
trial only as to the validity of Margaret's attempted
revocation of her 1984.will.
Whether the District Court erred in granting a new
trial with respect to the validity of the Instrument of
Revocation.
In its Memorandum and Order filed February 2, 1995, the
District Court concluded that it had erred in refusing to instruct
the jury with respect to the validity of the Instrument of
Revocation. Hence, the court granted Joyce's motion for a new
13
trial on the issue of the validity of the Instrument of Revocation
and on the subissues of whether Margaret was competent at the time
the document was executed and whether the document was executed
under undue influence.
On appeal, Joyce contends that the District Court should also
have granted a new trial as to the validity of the 1984 will. In
their cross-appeal, Robert and James contend that the court erred
in granting a new trial at all.
The standard of review of a district court's ruling on a
motion for a new trial is whether the court abused its discretion.
Hando v. PPG Industries, Inc. (1995), 272 Mont. 146, 149, 900 P.2d
281, 283. See also Estate of Spicher v. Miller (1993), 260 Mont.
504, 506, 861 P.2d 183, 184.
The District Court erred in failing to instruct the jury on
the Instrument of Revocation, thus we find no abuse of discretion
in the District Court's grant of a new trial regarding this
document and we affirm on this issue. Furthermore, we find merit
in Joyce's contention that the District Court should have granted
a new trial on the validity of the 1984 will along with its grant
of a new trial on the Instrument of Revocation. The will and the
Instrument of Revocation were executed so close in time, within 25
days, that the validity of both documents is inextricably
intertwined. Moreover, the medical testimony at trial dealt with
Margaret's competence at the time she executed both documents.
Under the circumstances of this case, it is necessary that the same
fact finder adjudicate the validity of both the will and the
14
Instrument of Revocation, taking into consideration al.1 of the
evidence.
Accordingly, we hold that the District Court erred in failing
to grant a new trial on the validity of the 1984 will and we
reverse and remand on this issue.
In its judgment filed December 12, 1994, the District Court
awarded Robert and James attorney fees in the amount of $55,653.57.
In her Motion for New Trial or to Alter or Amend Judgment, Joyce
objected to the award of attorney fees on the grounds that there
were originally three parti&s as plaintiffs in this action, all of
whom were asserting the same challenge to the 1984 will. In
addition Joyce claimed that the personal representatives were not
entitled to an award of attorney fees for their work in connection
with the recovery of the CDs.
In its February 2, 1995 Memorandum and Order, the District
Court reserved Joyce's objection to the award of attorney fees
pending resolution of the new trial on the validity of the
Instrument of Revocation. In light of our decision to grant a new
trial on the validity of the 1984 will as well as the Instrument of
Revocation, we reverse the award of attorney fees to Robert and
James and we remand to the District Court.
Issue 3
Whether the District Court erred in limiting cross-
examination regarding the settlement agreement.
On April 8, 1994, Robert, James, Gary and Marlene entered into
a settlement agreement. Joyce was not a party to this agreement.
Prior to trial, James and Robert filed a motion to prevent Joyce
15
from admitting the settlement agreement into evidence at trial.
The District Court granted the motion and ruled that the contents
of the settlement agreement would not be admissible. However, the
court ordered that any witness that was a party to the agreement
could be questioned as to the existence of the agreement and as to
the fact that the witness might receive a greater share of the
estate if one party prevailed over the other in order to attack the
credibility of the witness by showing a motive for bias or
prejudice. On appeal, Joyce contends that the District Court erred
in limiting cross-examination regarding the settlement agreement.
This Court will review the evidentiary decisions of a trial
court to determine whether the trial court abused its discretion
and will not overrule a trial court's decisions as to admissibility
of evidence unless there was manifest abuse. Jim's Excavating
Service v. HKM Assoc. (1994), 265 Mont. 494, 506, 878 P.2d 248, 255
(citing Mason v. Ditzel (1992), 255 Mont. 364, 370-71, 842 P.Zd
707, 712).
Rule 408, M.R.Evid., forbids the introduction at trial of
offers to compromise and settlement agreements. However, the Rule
does permit the use of settlement agreements for limited purposes,
such as proving bias or prejudice of a witness in accordance with
Rule 607, M.R.Evid.
At trial, Joyce's counsel questioned Gary, one of the settling
parties, extensively regarding the settlement agreement and whether
Gary would gain under the agreement if Robert and James prevailed
at trial. Gary admitted that he would gain. From this cross-
16
examination, Gary's bias was adequately brought out and the jury
had sufficient evidence of the nature and effect of the settlement
agreement to judge the credibility of Gary's testimony.
Accordingly, we hold that the District Court did not abuse its
discretion in limiting the admission of the settlement agreement to
show bias or prejudice of a witness.
Affirmed in part, reversed in part and remanded for further
proceedings consistent with this opinion.
We Concur:
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October 22, 1996
CERTIFICATE OF SERVICE
I hereby certify that the following certified order was sent by United States mail, prepaid, to the
following named:
ROBERT L. STEPHENS, P.C:
P.O. Box 1438
Billings MT 59103-1438
GEORGE RADOVICH, ESQ.
mOVICH LAW FIRM
926 Main, Suite 9
Billings MT 59105
James A. Hubble
HUBBLE & RIDGEWAY
P.O. Box 556
Stanford MT 59479
ED SMITH
CLERK OF THE SUPREME COURT
STATE OF MONTANA