Harbaugh v. Myron Harbaugh Motor, Inc.

• Decision Date: 28 June 1979
• Docket Number: No. 12892,12892
• Citation: 100 Idaho 295,597 P.2d 18
• Parties: Myron Edward HARBAUGH and Bert D. Harbaugh, Plaintiffs-Appellants, v. MYRON HARBAUGH MOTOR, INC., dba Harbaugh Motor Company, a corporation, Manuelita Harbaugh, Individually, and Manuelita Harbaugh, as Personal Representative of the Estate of Myron Harbaugh, Deceased, Defendants-Respondents.
• Court: Idaho Supreme Court

Page 18

597 P.2d 18

100 Idaho 295

Myron Edward HARBAUGH and Bert D. Harbaugh, Plaintiffs-Appellants, v. MYRON HARBAUGH MOTOR, INC., dba Harbaugh Motor Company, a corporation, Manuelita Harbaugh, Individually, and Manuelita Harbaugh, as Personal Representative of the Estate of Myron Harbaugh, Deceased, Defendants-Respondents.

No. 12892.

Supreme Court of Idaho.

June 28, 1979.

Rehearing Denied July 20, 1979.

Lloyd J. Webb, Webb, Burton, Carlson, Pedersen & Paine, Twin Falls, for plaintiffs-appellants.

Bert Larson, Parry, Robertson, Daly & Larson, Twin Falls, for defendants-respondents.

McFADDEN, Justice.

This is an appeal from a summary judgment entered in favor of respondents Harbaugh Motor, Inc., an Idaho corporation, and Manuelita Harbaugh, as an individual and as personal representative of the estate of her deceased husband, Myron Harbaugh. Plaintiffs-appellants are the sons of Myron Harbaugh, deceased, and his first wife, Della May Harbaugh, also deceased.

Appellants seek relief on two completely unrelated claims. The first claim is against their father's estate for an accounting and recovery of the value of property allegedly held by Myron Harbaugh in trust for appellants' benefit. The second claim is against Harbaugh Motors and Manuelita Harbaugh, individually and as personal representative of her deceased husband, for specific performance or damages arising from an alleged contract between appellants and their father to sell them the family business. The district court granted summary judgment to respondents on both claims. We reverse.

As to appellants' first claim, the existence of a trust relationship, the following facts may be gleaned from the pleadings, exhibits and affidavits. Myron Harbaugh and Della May Harbaugh were divorced in 1944. Custody of appellants, then aged 9 and 4, was awarded to their mother, Della May Harbaugh. One month after the divorce decree was entered, Della May died intestate. Myron Harbaugh was appointed as administrator of his ex-wife's estate and guardian of the persons and estates of his minor sons.

Della May's estate consisted of both real and personal property which descended in equal shares to her daughter by a previous marriage (who is not a party to this action) and to appellants. On May 17, 1945, a decree of final account and distribution was entered in the probate court in the estate of Della May.

On May 18, 1947, Myron Harbaugh married Manuelita Harbaugh, and two children were born of this marriage. Appellants meanwhile were in attendance at a boarding school in Blackfoot, Idaho.

On September 15, 1947, in guardianship proceedings, the probate court confirmed Myron Harbaugh's sale of the property appellants had inherited from their mother. Appellants' two-thirds interest in the property was sold for the sum of $6,094.32.

Apart from these facts, the record is silent. There is no evidence as to what became of the sale proceeds. There is no evidence as to any final accounting or formal termination of the guardianship. There is no evidence as to a repudiation or renunciation of the guardianship by Myron Harbaugh. There is no evidence that the appellants knew of the guardianship until after their father's death.

Appellants in their affidavits state that they had no knowledge of any inheritance until the death of their father in 1976. They contend that the proceeds were intermingled with their father's separate and community property, and that a trust relationship was thereby created for the benefit of appellants. They seek an accounting from the estate and they claim an equitable lien for the appreciated value of the inheritance administered by their father.

The district court apparently concluded that, as a matter of law, appellants' first claim was barred by the statute of limitations. The court granted respondents' motion for summary judgment and denied a subsequent motion by appellants to reconsider the decision and to amend the judgment.

Appellants challenge the summary judgment on this claim on two grounds. First, that the statute of limitations does not begin to run against a ward until the guardianship has terminated and the ward knows or should know of such termination. And second, that summary judgment is improper here because there remain genuine issues of material fact to be determined. We find merit in both contentions and we reverse this portion of the summary judgment.

The question of when the statute of limitations commences to run in the guardian-ward relationship is one of first impression in Idaho. But this court has had occasion to decide the issue in analogous fiduciary contexts.

In an action by a beneficiary against his trustee, the rule has long been that the period of limitation begins when the trust is terminated, disavowed or repudiated by the trustee, and such conduct is unequivocably made known to the beneficiary. Shepherd v. Dougan, 58 Idaho 543, 76 P.2d 442 (1937); Brasch v. Brasch, 55 Idaho 777, 47 P.2d 676 (1935); Davenport v. Bird, 45 Idaho 280, 261 P. 769 (1927); Olympic Mining & Milling Co. v. Kerns, 24 Idaho 481, 135 P. 255 (1913).

In an action by the heirs of two deceased legatees of an Idaho testator against the testator's executor, the court said that the statute of limitations "has never begun to run because the position of the administrator is that of a fiduciary and the statute does not become operative until he repudiates the trust." Barthel v. Johnston, 92 Idaho 94, 97, 437 P.2d 366, 369 (1968).

In comparing the guardian to the trustee, Professor Bogert states that

"There is no doubt that the guardian is in one of those intimate relations usually called 'fiduciary' and that he therefore is in the same class with the trustee. Both alike are required to work for their beneficiaries with single-minded loyalty, to exclude all private gain, and to exhibit high candor and good faith in direct dealings with the one represented, and to perform personally the important functions of their positions. Both are held to the standard of reasonable skill and prudence.

Usually the principal ground for contrasting the guardian and trustee is said to be that the former has no 'title' whereas the latter has legal title."

G. Bogert, Trusts and Trustees § 13 (2d ed. 1965). We are of the opinion that the guardian-ward relationship is subject to the same rule with regard to the statute of limitations as is the trustee-beneficiary relationship. The statute does not begin to run against the ward so long as the fiduciary relationship is acknowledged, or until the guardian accounts and is discharged, or in some way repudiates the trust. Young v. Young, 201 Ark. 984, 147 S.W.2d 736 (1941); In re Walls' Guardianship, 179 Misc. 924, 38 N.Y.S.2d 879 (Sur.Ct.1942); Bagwell v. Hinton, 205 S.C. 377, 32 S.E.2d 147 (1944); G. Bogert, Supra at § 951; 54 C.J.S. Limitations of Actions § 179(d)(5) (1948). This result is consistent with the provisions of I.C. § 15-5-210:

"A guardian's authority and responsibility terminates upon the death, resignation or removal of the guardian or upon the minor's death, adoption, marriage or attainment of majority, But termination does not affect his liability for prior acts, nor his obligation to account for funds and assets of his ward. Resignation of a guardian does not terminate the guardianship until it has been approved by the court."

(Emphasis added.) Although the guardian may no longer be responsible for his ward after the ward reaches the age of majority, the guardian's statutory duty to account for the ward's property continues. I.C. § 15-5-210; In re Walls' Guardianship, supra.

Appellants next contend that genuine issues of material fact remain on both claims and that the district court erred in granting summary judgment. We have reviewed the pleadings, interrogatories, affidavits and transcript of the show cause hearing and we agree that summary judgment was improper on these claims. Under the oft quoted rule, summary judgment can be granted only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. I.R.C.P. 56(c); Schaefer v. Elswood Trailer Sales, 95 Idaho 654, 516 P.2d 1168 (1973). In ruling on a motion for summary judgment, it is well recognized that the facts are to be liberally construed in favor of the party opposing the motion and he is given the benefit of all favorable inferences which might be reasonably drawn from the evidence. Farmer's Ins. Co. of Idaho v. Brown, 97 Idaho 380, 544 P.2d 1150 (1976); Straley v. Idaho Nuclear Corp., 94 Idaho 917, 500 P.2d 218 (1972). As set forth above, material issues of fact remain to be determined on appellants' first claim.

Appellants' second claim alleges the existence of contracts between themselves and their deceased father for the sale and conveyance of Harbaugh Motor Company. The corporation's primary assets consist of a truck and car stop at Bliss, Idaho, an automobile dealership and garage in Gooding, Idaho, and a retail petroleum business in Shoshone, Idaho. Appellants' father was the president and managing officer of the corporation.

Appellants allege in pleadings and affidavits that they left promising careers in other fields to return to Idaho and take control of their father's business upon the promise that the business would ultimately be transferred to them. Appellants Myron Edward Harbaugh and Bert D. Harbaugh contend that in addition to their salary, they were to receive a credit of 25 per cent and 30 per cent respectively of the net profits of the business which would accrue towards the eventual purchase of the business. A copy of an unexecuted handwritten "Proposed Sale Agreement" was attached to the affidavit of Bert D. Harbaugh explaining in more detail the terms of the transaction.

Respondent Manuelita Harbaugh denied that such a contract existed, and filed copies of the corporate minutes which stated that the parties could never reach a satisfactory conclusion to...