Baltrusch v. Baltrusch

• Decision Date: 18 December 2003
• Docket Number: No. 01-503.,01-503.
• Citation: 2003 MT 357,319 Mont. 23,83 P.3d 256
• Parties: William BALTRUSCH, Respondent and Cross-Appellant, v. Otto BALTRUSCH, Jr., Appellant and Cross-Respondent.
• Court: Montana Supreme Court

83 P.3d 256

2003 MT 357

319 Mont. 23

William BALTRUSCH, Respondent and Cross-Appellant, v. Otto BALTRUSCH, Jr., Appellant and Cross-Respondent.

No. 01-503.

Supreme Court of Montana.

Submitted on Briefs April 25, 2002.

Decided December 18, 2003.

Rehearing Denied January 27, 2004.

For Appellant and Cross-Respondent: James A. Patten, West Patten Bekkedahl & Green, Billings, Montana.

For Respondent and Cross-Appellant: K. Dale Schwanke, Jardine Stephenson Blewett & Weaver, Great Falls, Montana.

Justice JAMES C. NELSON delivered the Opinion of the Court.

¶ 1 Otto Baltrusch, Jr. (Otto) appeals the judgment entered by the Twelfth Judicial District Court, Hill County, finding that all of the partnership property jointly owned by Otto and William Baltrusch (William) be liquidated, with the proceeds distributed equally between them.

¶ 2 We address the following issues on appeal and affirm:

¶ 3 1. Did the District Court err in determining that Otto received a benefit from the payment of life insurance premiums when that issue was not included in the District Court's final pretrial order?

¶ 4 2. Did the District Court err in determining that substantial credible evidence existed to find that William appropriately created and operated the business he established with his wife?

¶ 5 We address the following issues on cross appeal and affirm ¶ 6 3. Did the District Court err in not finding Otto liable for his unauthorized release of specific leases to his sons?

¶ 7 4. Did the District Court err in not finding Otto liable for (1) his conversion of Farm Partnership equipment; (2) his failure to charge rent for his sons' use of Farm Partnership equipment; and (3) personal credit card expenses for which the Farm Partnership paid?

¶ 8 5. Did the District Court err in not requiring Otto to reimburse the Farm Partnership for the cost of two vehicles both Otto and his wife used?

¶ 9 6. Did the District Court err in finding that it did not have jurisdiction to determine the liability between William and Otto regarding the amounts claimed due by Otto's sons?

¶ 10 7. Did the District Court err in not awarding William prejudgment interest on the $94,607 judgment and on the excess compensation taken by Otto from the various businesses both William and Otto owned?

¶ 11 8. Did the District Court err in not considering the tax implications on William regarding his withdrawals from the Farm Partnership when the District Court determined how both William and Otto's interests should be equalized?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 12 Otto and William are brothers who formed Baltrusch Land and Cattle Company around 1940. They expanded their company into several other businesses as the years progressed (all of which are hereinafter collectively referred to as "the Farm Partnership").

¶ 13 William devoted his time to managing the construction companies of the Farm Partnership, while Otto devoted his time to managing the farming enterprises of the Farm Partnership.

¶ 14 Obtaining bonding contracts was important to the success of the Farm Partnership's construction companies. In order to obtain these contracts, both Otto and William signed personal indemnities throughout the years for the Farm Partnership. However, starting in 1990, Otto refused to sign a personal indemnity. As a result, William had difficulties obtaining bonding contracts, and, ultimately, formed B & B Corporation (B & B) with his wife. Through the creation of B & B, William was able to obtain more bonding contracts. However, William still deposited the profits from certain bonding jobs within the Havre service area and all other jobs that did not require a bond to Baltrusch Construction (one of the construction companies of the Farm Partnership).

¶ 15 Also over the years, the Farm Partnership obtained the Connolly and Graham Leases (the Leases). These farm plots were small in comparison to the Farm Partnership's remaining acres. Otto's sons, Gary Baltrush (Gary) and Greg Baltrush (Greg) helped farm the Leases and knew the land well.

¶ 16 However, as years past, Otto realized that his leasing options on the Leases were no longer economically advantageous, so Otto asked Gary whether he and Greg would be interested in acquiring the Leases.

¶ 17 At that point, Gary asked the owner of one of the Leases about his prospects for acquiring the Leases. This owner testified that she was "satisfied to have Gary and Greg" farm the Leases.

¶ 18 Before transferring the Leases to Gary and Greg, Otto contacted his attorney and inquired into his options. His attorney advised him that he could not establish a ficticious entity to realize more Agricultural Stabilization and Conservation Services' (ASCS) payments, as Otto was concerned about the new ASCS payment limit and how that limit would affect the economic viability of the Leases. After consulting with his attorney, Otto transferred the Leases to Gary and Greg, who formed G & G Corporation.

¶ 19 In forming G & G, Gary and Greg needed a tractor, amongst other equipment. Otto transferred a tractor owned by the Farm Partnership to G & G with the agreement that G & G would pay for it by paying Otto's hired hand's wages. G & G did so. In addition to running their business, both Gary and Greg continued to work on the farming enterprises of the Farm Partnership. ¶ 20 As William and Otto's relationship began to deteriorate, the Farm Partnership did as well and this litigation ensued. During this litigation, William and Otto entered into a Partial Settlement Agreement, whereby both agreed that the Farm Partnership properties would be divided equally between them, subject to their respective claims.

¶ 21 The District Court made many findings, ultimately ordering that the Farm Partnership properties, both real and personal, owned jointly by William and Otto be sold, with the proceeds divided equally.

¶ 22 Both Otto and William raised several issues and cross-issues on appeal based on the District Court's judgment. As they become applicable, additional facts will be discussed in accordance with each issue raised.

STANDARD OF REVIEW

¶ 23 We review a district court's findings of fact to determine whether the findings are clearly erroneous. State v. Perry (1997), 283 Mont. 34, 36, 938 P.2d 1325, 1327. In determining whether the findings are clearly erroneous, we review whether the findings in the record are supported by substantial evidence. Ace Leasing, Inc. v. Boustead, 2002 MT 213, ¶ 16, 311 Mont. 285, ¶ 16, 55 P.3d 371, ¶ 16. If the findings are supported by substantial evidence, we then determine if the district court misapprehended the effect of the evidence. Ace Leasing, Inc., ¶ 16. If the findings are supported by substantial evidence and the district court did not misapprehend the effect of the evidence, we determine whether the record shows a mistake has been committed. Ace Leasing, Inc., ¶ 16. We review a district court's conclusions of law for correctness. Kingston v. Ameritrade, Inc., 2000 MT 269, ¶ 9, 302 Mont. 90, ¶ 9, 12 P.3d 929, ¶ 9.

DISCUSSION

¶ 24 1. Did the District Court err in determining that Otto received a benefit from the payment of life insurance premiums when that issue was not included in the District Court's final pretrial order?

¶ 25 Otto argues that the issue of whether personal life insurance premiums paid by the Farm Partnership were chargeable to him was not an issue raised in the final pretrial order. As such, he contends that the District Court erred in finding that Otto owed the Farm Partnership $73,254.

¶ 26 William argues that the life insurance premiums chargeable to Otto himself were addressed in various components of the pretrial order. Regardless, he contends that the District Court received evidence from Otto and his wife without objection about the life insurance premiums, and that the stipulated exhibits also contained such evidence. Therefore, William argues that Otto waived his right to claim error now on appeal. We agree.

¶ 27 We have repeatedly held that we will only consider on appeal objections made at trial which are timely and specific. Kizer v. Semitool, Inc. (1991), 251 Mont. 199, 207, 824 P.2d 229, 234. Indeed, Montana's Rules of Evidence state that error may not be predicated on the admission of evidence unless the objection to such admission was timely and states the grounds for the objection. Rule 103(a)(1), M.R.Evid. Objections which are not timely are not heard on appeal, as the time has passed to avoid or correct the error. State v. Vandersloot, 2003 MT 179, ¶ 23, 316 Mont. 405, ¶ 23, 73 P.3d 174, ¶ 23. An objection is timely when it is made as soon as the grounds for the objection become apparent. Kizer, 251 Mont. at 207, 824 P.2d at 234.

¶ 28 The District Court heard testimony regarding the life insurance premiums paid by the Farm Partnership for Otto and his wife. The District Court also reviewed numerous exhibits upon which it determined the amount Otto owed in life insurance premiums. Otto did not object to any of the testimony received, and, in fact, stipulated to the admission of the exhibits upon which the District Court determined the amount. Thus, Otto waived his right to claim error now on appeal, and the District Court did not err in finding that the insurance premiums were chargeable to Otto. ¶ 29 2. Did the District Court err in determining that substantial credible evidence existed to find that William appropriately created and operated the business he established with his wife?

¶ 30 Otto argues that B & B should be considered an asset which William and he jointly own, since B & B used Baltrusch Construction personnel and equipment in its operations. Otto further contends that the level of bonding contracts obtained by B & B did not change after Otto refused to sign additional indemnity agreements. Also, Otto contends that William breached his fiduciary duty when he created and operated B & B, which he argues actually prospered at the...