Estate of Markley, WD

• Decision Date: 21 May 1996
• Docket Number: No. WD,WD
• Citation: 922 S.W.2d 87
• Parties: In the Estate of Jerry D. MARKLEY, Deceased. Don and Heath MARKLEY, Appellants, v. John H. EDMISTON, Adm. d/b/n, and Donna Markley, Respondents. 50542.
• Court: Missouri Court of Appeals

Page 87

922 S.W.2d 87

In the Estate of Jerry D. MARKLEY, Deceased Don and Heath MARKLEY, Appellants, v. John H. EDMISTON, Adm. d/b/n, and Donna Markley, Respondents.

No. WD 50542.

Missouri Court of Appeals Western District.

May 21, 1996.

Donald P. Herron, Belleview, for appellants.

John Henry Edmiston, James E. Baker, Warrensburg, for respondents.

Before HANNA, P.J., and SMART and ELLIS, JJ.

HANNA, Presiding Judge.

Appellants, Don and Heath Markley, appeal from the trial court's judgment denying Don Markley's claims concerning monies that he alleged were owed to him by the estate of his son, Jerry Markley, for partnership debts and loans made, as well as a claim for improvements made to a horse trailer, which was sold at the estate sale. Also at issue is the court's judgment finding that all of the estate cattle and horses had been properly accounted for, and that certain cattle equipment was the separate property of Donna Markley.

Jerry Markley died on July 7, 1992. He was survived by his minor son, Heath; his wife, Donna; and his mother and father, Bertha and Don Markley. Donna was originally appointed as administrator of the estate. She resigned in November 1993, and the court appointed John H. Edmiston as Administrator D.B.N.

Jerry Markley and his father, Don Markley, were business partners in Markley Construction from 1969 until Jerry's death. There was no written partnership agreement, but they were equal partners and shared the partnership profits equally. The partnership's financial records consisted of a checkbook partnership tax returns, and other information prepared for insurance purposes. At the time of Jerry's death, the partnership's assets were valued at $66,537.66. Among the partnership assets was a certificate of deposit.

Other partnership property included a tractor and a baler. Shortly before Jerry's death, Don and Jerry temporarily stored this equipment in one of the barns on Don's farm while they were out of town. The tractor and baler were destroyed during a fire. Don had a homeowners insurance policy covering buildings on the farm, as well as the personal property in these buildings. He paid the premiums for this policy with his own funds. Don received a settlement pursuant to his policy in the amount of $12,000 for the tractor and baler, which Don did not disclose.

Don testified that he made two loans to Jerry. The first was made in 1969, for $35,000 for the purpose of allowing Jerry to buy into the partnership. The second loan was for $20,000 made in 1980 or 1981, for the purchase of a home. There was no written agreement between the parties concerning these alleged loans.

Jerry also owned a Hart horse trailer, which Don claimed that Jerry gave to him before he died. However, the title to this trailer was not transferred to Don until he purchased the trailer at the estate sale. While Don claimed that he spent over $900 improving the trailer, he could only account for $455.40 of his expenditures.

At the time of Jerry's death there were 15 cows, 13 calves, and one bull pastured on his land. Of the 15 cows, 10 were owned by Donna prior to the marriage, two were owned by Jerry prior to the marriage, two were purchased by Donna and Jerry during the marriage, and one cow was owned by Heath. Of the 13 calves, 10 were from Donna's calves, two were from Jerry's calves, and one calf belonged to Heath. The bull was purchased during the marriage by Jerry and Donna.

Shortly after Jerry's death, Donna moved all of the cattle off the Markley farm for safekeeping. In 1993, Donna sold Jerry's two calves and paid the proceeds to the estate. Thereafter, she turned over Jerry's two cows and two calves, born after Jerry's death, to John Edmiston, Administrator, D.B.N. At the time of trial, Donna had possession of one cow, one yearling, and one calf, born after Jerry's death, which were owned by Heath.

There were also three horses pastured on the land at the time of Jerry's death. Two were purchased prior to the marriage by Jerry. He gave one of these horses to Donna for her birthday. Donna purchased the third horse from her separate account.

Donna and Jerry also owned cattle equipment used in their livestock operation. This equipment included a cattle chute, a cattle guard, and an automatic cattle waterer, which were located on Jerry's farm. All of these items were purchased jointly by Donna and Jerry.

Don Markley filed a claim against the estate for money owed him from the partnership and for personal loans made to his son. He also filed a claim against the estate for improvements made to the horse trailer. Additionally, Don and Heath filed a Petition for Damages, to Discover Assets and for Accounting. Edmiston, as Administrator D.B.N., also filed a Petition to Discover Assets and for Accounting.

After hearings, the court found certain property to be that of the partnership and not the sole property of Don, including the $12,000 that Don received from his insurance company for the loss of the tractor and baler. The court further ordered Don to file an accounting of the partnership estate within thirty days. The court also found that all estate cattle and horses had been properly accounted for and that the cattle equipment at issue was the separate property of Donna. The court denied Don's claim for improvements to the trailer and for the monies he alleged that he was owed for partnership debts and loans made to his son. Don and Heath appeal. The first nine points are against Edmiston, as Administrator, D.B.N., and the final three counts are against Donna Markley. Don's third point is nothing more than a reiteration of his first two points and need not be discussed separately.

In a court tried case, our standard of review is governed by Murphy v. Carron, 536 S.W.2d 30 (Mo. banc 1976), and we must uphold the trial court's judgment unless there is no substantial evidence to support it, it is against the weight of the evidence, or the court has erroneously declared or applied the law. Id. at 32.

In their first point, the appellants contend that the court erred in admitting Respondent's Exhibit B as "the only credible evidence" of the value of the partnership shares. Exhibit B appears to be a balance sheet for the partnership, containing the value of each partner's capital account in 1990. It was found in the partnership's tax file kept by its accountant, Gary Parmley.

The appellants argue that there was no foundation for the document in that Parmley testified that he did not recall the document, did not know why it was prepared, and that he had never prepared any workups for the capital accounts of the partnership.

In reviewing the admissibility of evidence in a court-tried case, we are mindful that the trial court is allowed wide latitude in the admission of evidence because it is presumed that it will not give weight to evidence that is incompetent. Blackburn v. Richardson, 849 S.W.2d 281, 291 (Mo.App.1993). Because of this, it is difficult to base reversible error on the erroneous admission of evidence in a court-tried case. Id. Except when a trial court relies on inadmissible evidence in arriving at its findings, such evidence is ordinarily held to be nonprejudicial. In re Marriage of Clark, 801 S.W.2d 496, 499 (Mo.App.1990). However, incompetent evidence on a material issue is presumed to be prejudicial unless clearly shown to be otherwise. Farris v. Mitchell, 745 S.W.2d 262, 265 (Mo.App.1988).

The value of each partner's capital account was a material issue. The court's findings here show that it did rely on Exhibit B as the "only credible evidence as to the values of the respective partnership capital accounts". Using this evidence the court determined that Don's capital account had a balance that was $15,702.65 greater than the balance in Jerry's capital account. The court then instructed Don to equalize these capital accounts, which would reduce the total partnership capital by $15,702.65, from $82,874.96 to $67,172.31. The court ordered that this remaining capital, $67,172.31, be divided equally between Don and the estate. Thus, each party was entitled to $33,586.15 from the remaining partnership capital.

We note, however, that, contrary to Don's argument, the court's reliance on Exhibit B did not form the basis of its denial of Don's claim concerning salary draws and personal loans. Rather, the document's sole purpose was to determine how much money each partner was entitled to from the remaining partnership capital. Therefore, if Exhibit B was inadmissible, it necessitates reversal for the sole purpose of dividing the partnership capital.

Section 490.680, RSMo 1994, which sets forth the foundational requirements that must be met before a document will be admitted under the business record exception to the hearsay rule, provides:

A record of an act, condition or event, shall, insofar as relevant, be competent evidence if the custodian or other qualified witness testifies to its identity and the mode of its preparation, and if it was made in the course of business, at or near the time of the act, condition or event, and if, in the opinion of the court, the sources of information, method and time of preparation were such as to justify its admission.

The trial court has broad discretion in determining whether a party properly complied with this provision. Waldron v. Ragland, 716 S.W.2d 861, 862 (Mo.App.1986).

During his testimony, Parmley testified that he did not remember preparing the document, although it was in his handwriting and it came out of the Markley tax file, of which he was the keeper. He speculated that it was probably for an insurance bonding. When asked if he remembered what the balance of the capital accounts were in 1990, Parmley replied that he "would have no reason to work up the capital accounts because they were not a required part of the tax return." Parmley stated that the only work sheet that would have reflected the balance of the...