Estate of Clark, Matter of, 88-380

• Decision Date: 26 April 1989
• Docket Number: No. 88-380,88-380
• Citation: 772 P.2d 299,237 Mont. 179
• Parties: In the Matter of the ESTATE OF Anna Margaret CLARK, and Estate of Wallace Bradley Clark, Sr., Protected Persons.
• Court: Montana Supreme Court

Page 299

772 P.2d 299

237 Mont. 179

In the Matter of the ESTATE OF Anna Margaret CLARK, and Estate of Wallace Bradley Clark, Sr., Protected Persons.

No. 88-380.

Supreme Court of Montana.

Submitted on Briefs Dec. 16, 1988.

Decided April 26, 1989.

Don A. Labar and Margaret M. Joyce Johnson, Church, Harris, Johnson and Williams, Great Falls, for appellant.

Allin H. Cheetham, Fort Benton, Gary W. Bjelland, Great Falls, for respondent.

HUNT, Justice.

Appellants, George Clark, Bertha Novelli and Marian Molnar, three of the five adult children of Anna Margaret and Wallace Bradley Clark, Sr. (Seniors), appeal from a decree of the District Court of the Twelfth Judicial District, Chouteau County, which, with exceptions, approved the accounting of the conservator of their parents' estates. We reverse and remand for further proceedings.

The issues raised are as follows:

1. Did the District Court err in substantially approving the conservator's first annual accounting?

2. Did the District Court properly scrutinize the conservator's transactions with the protected persons?

3. Did the District Court err in determining that the protected persons were mentally competent?

In the 1970's, Wallace Bradley Clark, Jr. (Brad), the youngest son of the Seniors, moved from Alaska to Montana to operate his parents' 1,760-acre farm located near Geraldine. In 1977, the Seniors entered into a contract for deed with Brad whereby Brad agreed to purchase 800 acres of the farm for $160,000 at 6 percent interest. The contract provided for annual payments to be made from the net proceeds of one-third of the grain grown on the land.

At about the same time, Brad and the Seniors entered into a ten-year lease for the remaining 960 acres of the farm. The contract provided for the annual payment of a one-fourth share of all crop produced on the acreage under lease.

None of the other Clark children resided near the Seniors. The oldest son, George, had farmed in the Geraldine area until 1981, when he retired and moved to West Yellowstone. The remaining children, Bertha Novelli, Marian Molnar and Josephine Wilson, all resided in Alaska. Although the daughters and George did not live in the vicinity of the Seniors, the record indicates that they each visited their parents yearly.

During his visits, George became concerned that his parents were no longer capable of managing their financial affairs. In 1984, he discovered that his mother had overdrawn her checking account by writing checks to the grandchildren. In 1985, his father told him that he had signed some papers but didn't know what they were. Upon investigation, George found that the Seniors had deeded one-half of the 960 acres of farmland to the five children. Further investigation revealed that the Seniors had given Brad full power of attorney over their affairs.

On April 25, 1985, George petitioned the District Court for the appointment of a conservator for the Seniors, both in their early 90s at the time. Concerned that Brad might be exercising undue influence over his parents, George nominated one L.C. Siebenaler, a disinterested party, as conservator. A hearing was held on the matter, during which the District Court interviewed the elderly couple. The court found that due to their advanced age and occasional forgetfulness, both parties were unable to manage their property and affairs effectively without assistance. Over George's objection, the court appointed Brad as conservator, finding that it would be in the best interest of the Seniors if a family member held the position rather than someone they did not know. On June 11, 1985, Brad posted two bonds in the amount of $25,000 each. Letters of conservatorship issued.

On September 18, 1985, Brad filed an inventory and appraisement of the fair market value of the assets of the Seniors as of July 8, 1985. He failed to file his first annual accounting, however, until January 8, 1987. Shortly after filing the accounting, Brad filed an amended inventory and appraisement of assets. The amended inventory reflected a decrease of approximately $30,600 of the balance receivable from the 1977 contract for deed between Brad and the Seniors. Brad later testified that the original inventory showed both the principal and interest due and owing on the contract for deed; the amended version reflected only the principal. No reference to the $30,600 in interest Brad admittedly owed on the contract as of July 8, 1985, can be found on the amended inventory.

A hearing on the accounting was held on January 19, 1987, during which George filed written objections. Shortly thereafter, George filed additional exceptions, seeking to void certain transactions made by Brad, as well as a more detailed accounting, an audit of the estates and the removal of Brad as conservator.

A hearing to consider the objections was held on March 2, 1987. The court took testimony at that time but also granted Brad's motion for a continuance to April 6, 1987, to allow Josephine Wilson, one of the Clark daughters, to appear and testify. After the hearing, the District Court issued an order that accepted and approved the first annual accounting.

George, Bertha and Marian moved the court to re-open the hearing on the accounting and to remove Brad as conservator. The District Court granted the motion and trial was held on August 17 and 19, 1987.

During the trial, Brad testified that in 1985 and 1986 he exchanged a series of checks with the Seniors, resulting in the forgiveness of approximately $70,566 in indebtedness Brad had accumulated under the contract for deed, including $30,600 in interest. In its order issued after the trial, the District Court voided these transactions, finding that they were of such magnitude as to endanger the Seniors' welfare and that they violated Sec. 72-20-203, MCA, the statute prohibiting a fiduciary from dealing with trust property for his own benefit. Appellants do not appeal from this part of the District Court order.

Brad also testified that his father had given him other gifts that were not reflected on the accounting, including $720 for grasshopper poison and the Seniors' share of the 1985 crop, which amounted to approximately 700 bushels of winter wheat and 375 bushels of barley. Brad stated that his father had given him the Seniors' share of the crop every year since 1981. According to Brad, his father intended to give him the farm. The contract for deed was executed only to avoid gift taxes. Therefore, Brad contended, when farming became less lucrative, his father no longer required him to pay under the contract. Brad also testified that he had taken out a $3,900 loan on the 1985 crop, putting all of the proceeds in his personal account and none in the Seniors, even though the Seniors owned a share of the crop under the contract and lease.

With the exception of the avoidance of the $70,566 in forgiven indebtedness mentioned above, the District Court once again approved the first annual accounting. The court found that the Seniors' promised to give Brad the farm and gave him their share of the crop and other gifts in honor of that promise. The court also found that the Seniors were mentally competent and capable of handling their own affairs, though they had difficulty remembering their actions afterward. The court refused to remove Brad as conservator, continuing the question to the hearing on the second annual accounting, which Brad had not yet filed.

On April 18, 1988, George, Bertha and Marian filed a motion asking the District Court to either withdraw or amend its findings and conclusions. The movants sought a new trial in the alternative. The ...