Frank DeHaan, Inc. v. Gallatin-Madison Ranch Co.

• Decision Date: 05 November 1991
• Docket Number: GALLATIN-MADISON,No. 91-162,91-162
• Parties: FRANK DeHAAN, INC., Frank DeHaan and Vera DeHaan, Plaintiff and Respondent, v.RANCH CO., Mae DeHaan and Henry DeHaan, Defendants and Appellants.
• Court: Montana Supreme Court

Page 423

820 P.2d 423

250 Mont. 304

FRANK DeHAAN, INC., Frank DeHaan and Vera DeHaan, Plaintiff and Respondent, v. GALLATIN-MADISON RANCH CO., Mae DeHaan and Henry DeHaan,

Defendants and Appellants.

No. 91-162.

Supreme Court of Montana.

Submitted on Briefs Sept. 19, 1991.

Decided Nov. 5, 1991.

H.A. Bolinger, Bolinger & Quist, Bozeman, for defendants and appellants.

Edmund P. Sedivy, Jr., Morrow, Sedivy & Bennett, Bozeman, for plaintiff and respondent.

McDONOUGH, Justice.

Gallatin Madison Ranch Company, Inc., Henry DeHaan and Mae DeHaan appeal the judgment of the Eighteenth Judicial District of Gallatin County in a suit for partition. The court found the subject property capable of partition, adopted the report of appointed referees and divided the DeHaan ranch. We affirm.

The appellant raises eleven issues for review. For the purpose of our discussion we have consolidated the issues as follows.

I. Did the District Court err in finding that the property could be equitably divided without great prejudice to the owners?

II. Did the District Court err by adopting the report of the referees?

III. Did the District Court err by allocating property to Mae DeHaan and Gallatin Madison Ranch Company, Inc. as tenants in common rather than providing each an individual share?

IV. Did the District Court err by denying a motion to order an accounting and distribution of partnership property?

Frank DeHaan, Inc. (plaintiff/respondent) initiated an action to partition property basically controlled jointly by Frank DeHaan and his brother Henry DeHaan, by virtue of respective family corporations. The property consists of approximately 17,575 deeded acres acquired by the brothers in eight separate purchases over a period of years. The majority of the land was purchased in the name of Henry DeHaan and Frank DeHaan. Several sections (known as Lower Big Pasture and White Place) were purchased in the names of Mae DeHaan and Vera DeHaan (Henry's and Frank's wives).

In 1973, Henry and Mae DeHaan deeded their undivided interests in the 'DeHaan Ranch' to a family corporation known as Gallatin Madison Ranch Company, Inc. (G.M.R.C.). Mae's interest in Lower Big Pasture and White Place were omitted from the corporation. In 1981, Frank and Vera DeHaan transferred all of their individual interests into a family corporation known as "Frank DeHaan, Inc.". The court determined that Frank DeHaan, Inc., Frank DeHaan and his family (hereinafter Frank) were owners and entitled to one-half of the subject property. G.M.R.C., Henry DeHaan, his family and Mae DeHaan (hereinafter Henry) were found to be owners of the other half. No separate distinction was granted Lower Big Pasture or White Place.

Frank, with Henry's approval, hired N. Clark Wheeler to prepare an appraisal. Frank made an offer to Henry for partition but an argument ensued over whether the land was in fact divisible or should be sold in its entirety with the proceeds divided. Frank then initiated this action.

An evidentiary hearing was held and the court determined that the property was subject to equitable division between the parties and ordered that the property be partitioned. Three referees were appointed: one nominated by Frank, one nominated by Henry, and the third nominated by the first two. The court gave the referees instructions designed to aide them in fulfilling the mandates of the partition statutes. The propriety of several instructions is in dispute. After some difficulty, relating to the referees' attempt to appease both parties, the referees produced a report and recommendation for partition that was adopted by the court. Henry appeals.

I.

Section 70-29-202, MCA, provides the basis for a court's determination of whether property is suitable for partition or must be sold.

[If] property or any part is so situated that the partition cannot be made without great prejudice to the owners, the court may order a sale thereof; otherwise, upon the requisite proofs being made, it must order a partition ...

In February, 1990, the court ordered partition, finding the property subject to partition pursuant to Sec. 70-29-202, MCA. In the court's findings of fact dated December 11, 1990, the court found that "all expert witnesses felt then the properties could be equitably divided without great prejudice to the owners."

Henry contends that a review of the record demonstrates that the expert testimony is contrary to the court's finding that the ranch can withstand partition without great prejudice. Henry specifically cites the testimony of the appraiser, Wheeler, who stated that it was his belief that the land could be divided on a value basis but maybe not on a use basis. It is Henry's contention throughout that if property cannot be divided on a use basis it cannot be divided without great prejudice. Henry's prayer for relief is to have this Court order the ranch sold and profits divided. He suggests that the sale and division of the property (which we note would be entirely value based) would not be prejudicial, while simultaneously he suggests that partition on a value basis is prejudicial. We find Henry's argument to be inherently contradictory and not reflective of the law.

The applicable standard of review of the trial court's findings in determining whether to sell or partition is the clearly erroneous standard of Rule 52(a), M.R.Civ.P. Kravik v. Lewis, (1984), 213 Mont. 448, 691 P.2d 1373. "[A] finding is 'clearly erroneous' when, although there is evidence to support it, a review of the record leaves the court with the definite and firm conviction that a mistake has been committed." U.S. v. U.S. Gypsum Co. (1948), 333 U.S. 364, 68 S.Ct. 525, 92 L.Ed. 746. The evidence is undisputed that the ranch was purchased in many separate parcels over a period of many years. Furthermore, it is Wheeler's testimony that the property is likely to have greater market value if sold piecemeal rather than as a single ranch. A second expert, a realtor, also testified that the property could be divided on an equitable basis. We conclude the District Court's findings were not clearly erroneous. The order of the District Court to partition the subject property is affirmed.

II.

A presumption exists that the referees' conclusions are arrived at in a fair and honest manner. Lawrence v. Donovan (1983), 207 Mont. 130, 673 P.2d 130. The report of the referees is to be rejected only for reasons that would justify the reversal of a jury's verdict. Ivins v. Hardy (1950), 123 Mont. 513, 217 P.2d 204. In other words, if there is substantial evidence to support the referees' report, it is to be confirmed by the court.

Henry argues that the property was not partitioned under the principles established by the legislature. Specifically, he alleges that the referees used a "needs and wishes" standard rather than the requisite quality and quantity standard required by Sec. 70-29-205, MCA. Furthermore, Henry alleges that the referees failed to consider improvements in reaching their conclusion. Lastly, he contends that the referees' meetings with the parties were improper.

Section 70-29-205, MCA, provides the basis for which referees are to partition property. They are to

... divide the property and allot the several portions thereof to the respective parties, quality and quantity relatively considered, according to the respective rights of the parties as determined by the court, ...

In its instructions to the referees the court elaborated as follows:

2. In allotting the portions of property to the parties in accordance to their respective interests, you should consider the quantity and quality of the property allocated according to the rights of the parties. This does not mean that you must give each of the parties the same amount of each kind of property. However, both the plaintiff and the defendants are entitled to receive properties of a value equivalent to the respective rights of each.

Substantial evidence exists that the referees followed the instruction as provided above. The appraisal on which the referees relied heavily was based on a breakdown of the land according to quality and quantity. Testimony of the referees indicates an adherence to the instruction as provided.

The record indicates that the referees initially attempted to meet the needs and wishes of the parties but found it impossible. That they attempted is not error. We have said that "partitions should be fashioned to cause the least degree of harm to the cotenants and to confer no unfair advantage on any one cotenant." Kravik v. Lewis, 213 Mont. at 454, 691 P.2d 1373. Interviewing the parties was a viable approach to fashioning a partition 'least harmful' to the parties, and interviewing the parties was included as an option in the court's instructions and is not...