LeFeber v. Johnson

• Decision Date: 27 May 2009
• Docket Number: No. DA 08-0374.,DA 08-0374.
• Citation: 2009 MT 188,351 Mont. 75,209 P.3d 254
• Parties: James A. LeFEBER, Petitioner and Appellant, v. Maggie R. JOHNSON, a/k/a Margaret Rose Johnson, Respondent, Appellee, and Cross-Appellant.
• Court: Montana Supreme Court

209 P.3d 254

2009 MT 188

351 Mont. 75

James A. LeFEBER, Petitioner and Appellant, v. Maggie R. JOHNSON, a/k/a Margaret Rose Johnson, Respondent, Appellee, and Cross-Appellant.

No. DA 08-0374.

Supreme Court of Montana.

Submitted on Briefs April 22, 2009.

Decided May 27, 2009.

For Appellant: Torrance L. Coburn and Raymond P. Tipp, Tipp & Buley, Missoula, Montana.

For Appellee: Ronald A. Thuesen and P. Mars Scott, P. Mars Scott Law Offices, Missoula, Montana.

Justice BRIAN MORRIS delivered the Opinion of the Court.

¶ 1 James A. LeFeber (LeFeber) appeals the judgment and order of the Twenty-first Judicial District Court, Ravalli County. The District Court applied equitable principles to settle the unmarried couple's interests in real property. Margaret Rose Johnson (Johnson) cross-appeals.

¶ 2 We review the following issues on appeal:

¶ 3 Did the District Court properly apply equitable doctrines to the division of property held by LeFeber and Johnson?

¶ 4 Did the District Court correctly determine that LeFeber and Johnson owned the St. Joseph property as tenants in common?

¶ 5 Did the District Court correctly partition the St. Joseph property by granting LeFeber and Johnson each an undivided one-half interest in the property?

FACTUAL AND PROCEDURAL BACKGROUND

¶ 6 LeFeber and Johnson dispute the ownership of property located at 297 St. Joseph Lane (St. Joseph property) in Stevensville, Montana. LeFeber and Johnson began living together in October of 1984 in Sandpoint, Idaho. LeFeber and Johnson maintained an intimate and exclusive relationship for over twenty years until their relationship ended in 2005. Neither party asserts common-law marriage. LeFeber and Johnson moved to Richland, Washington, in 1987, and to Walla Walla, Washington, in 1991. They jointly rented houses in each location, but did not purchase a house.

¶ 7 LeFeber and Johnson initialed a Full Durable Power of Attorney (POA) on December 1, 1991. LeFeber drafted the POA using a form that he had received from a friend. The POA provided that Johnson, as attorney-in-fact for LeFeber in his stead, could do any and all acts that he could do if personally present. The POA enumerated several of Johnson's powers, including the right to act as a personal nominee, to manage real estate, and to manage hydrocarbon interests. The POA provided that the enumeration of powers did not limit or reduce Johnson's powers as attorney-in-fact. The POA did not specifically address future acquired, assigned, or conveyed property. The POA provided that LeFeber could revoke the POA by a writing to Johnson. The POA also provided that by signing the document Johnson accepted the attorney-in-fact appointment and agreed to return any and all possessions to LeFeber's name if he revoked Johnson's powers.

¶ 8 LeFeber conveyed and assigned to Johnson interests in several of his hydrocarbon/oil and gas properties four days after he signed the POA. Johnson understood that she took title of the properties pursuant to the POA. The oil and gas companies then issued production checks to Johnson in her name. Johnson deposited the checks in a joint bank account accessible to both parties. Interest from the account provided Johnson with her spending money. Johnson later would transfer to LeFeber the principal amounts that the companies paid to her. Johnson also would issue, under the advice of LeFeber's accountant, a federal tax form 1099 to LeFeber at the end of the year for the miscellaneous income paid by the oil and gas companies. The parties followed this procedure until they separated in September of 2005. Johnson then reconveyed and reassigned the hydrocarbon properties to LeFeber as she understood the POA required her to do because LeFeber owned the properties outright before the 1991 assignment to Johnson.

¶ 9 LeFeber had the POA witnessed in Montana in the fall of 1994 after the IRS questioned pass-throughs of oil and gas interests from Johnson to LeFeber. LeFeber's accountant believed that the IRS more likely would accept as legitimate a witnessed POA. LeFeber never filed the POA in the public record. LeFeber testified that he prepared the POA primarily to boost Johnson's self-esteem by providing her with her own source of income.

¶ 10 LeFeber and Johnson began to search for a house to buy in 1992. They looked in Washington, Idaho, and Montana. LeFeber did not particularly want to move to Montana, but he told Johnson that she could pick out the house that she wanted and he would "buy her a home." LeFeber testified that he meant that he would provide the funds for the purchase. Johnson understood LeFeber to mean that he would gift and convey to her a house and real property.

¶ 11 Johnson found the house that she wanted in the summer of 1994 in Stevensville, Montana. LeFeber and Johnson both signed the Final Agreement to Buy and Purchase the St. Joseph property for a purchase price of $111,750. The agreement contemplated that the "TITLE HOLDER MAY BE FINALIZED IN TRUST, CORPORATION, TRUSTEE OR NOMINEE, CLOSING AGENT WILL BE NOTIFIED PRIOR TO CLOSING." The District Court determined that "no other intention is or was expressed."

¶ 12 The title company issued its title insurance policy upon the St. Joseph property in the name of "MAGGIE JOHNSON, a single woman as nominee." The Warranty Deed also granted the St. Joseph property to "Maggie R. Johnson, a single woman as nominee." LeFeber had inserted the "single woman as nominee" language before the closing. Johnson testified that LeFeber had inserted the "as nominee" language without her knowledge. Johnson testified that she asked LeFeber several times after the closing about the meaning of the language. LeFeber refused to explain his interpretation of the words "as nominee." LeFeber also would not agree to change the deed to eliminate the words "as nominee." LeFeber testified that he interpreted the terms "nominee" and "agent" as "essentially one and the same." The District Court found that Johnson never had agreed to act as LeFeber's nominee related to the property.

¶ 13 LeFeber paid for the purchase and all the costs of purchase of the St. Joseph property by a lump sum with a cashier's check. The check identified Johnson as the purchaser of the property. Neither LeFeber nor Johnson ever filed a Gift Tax Return with the IRS.

¶ 14 LeFeber and Johnson moved into the newly constructed house on the St. Joseph property. The house had an unfinished basement and very little landscaping. Johnson helped with many of the improvements to the house, including finishing the basement, building a deck and a roof on the deck, installing tile flooring, constructing a greenhouse, installing a stove pipe outside and on the roof, and fencing the yard. Johnson also purchased and laid railroad ties, installed a fountain and a pond, and installed and maintained almost all of the landscaping on the property. Johnson planted approximately 50 trees, 200 shrubs, and over 1,000 perennial bulbs and plants. The District Court determined that Johnson's efforts had increased the value of the St. Joseph property. A September 2005 Competitive Market Analysis estimated the sale price of the St. Joseph property as between $214,900 and $219,900.

¶ 15 LeFeber paid all of the property taxes on the St. Joseph property from 1994 to 2006. LeFeber insisted that Johnson apply for property tax assistance from 1998 to 2005 pursuant to § 15-6-134, MCA. LeFeber obtained the applications from Ravalli County. LeFeber then prepared the applications and had Johnson sign them. LeFeber signed Johnson's name on the application on at least one occasion. Each signed application represented that Johnson was the sole legal owner of the St. Joseph property. Johnson's acceptance for property tax assistance lowered the property taxes considerably. LeFeber claimed real estate deductions of $1,487 and $1,396 in 2004 and 2005, despite the fact that the property tax bills for those years were $698 and $694 respectively. LeFeber signed a letter to Johnson on December 28, 1999, stating that "[Johnson] has rights to stay at 297 St. Joseph Lane." The letter followed one of the couple's separations.

¶ 16 LeFeber revoked the POA in 2005 after the relationship ended. Johnson refused LeFeber's request that she sign a quitclaim deed for the St. Joseph property because she believed that LeFeber had gifted her the property. LeFeber filed a petition for a constructive trust pursuant to § 72-33-219, MCA. LeFeber requested that the court declare a constructive trust in favor of LeFeber and order Johnson to convey the St. Joseph property to LeFeber. Johnson filed a verified response alleging, among other defenses, failure of constructive trust and completed gift.

¶ 17 The District Court denied LeFeber's claims for a constructive trust and resulting trust. The court also denied Johnson's claim that LeFeber had gifted her the entire St. Joseph property. The court determined that LeFeber and Johnson each had an equitable right as tenants in common to the St. Joseph property and ordered the deed to the property amended accordingly. The court ordered the St. Joseph property partitioned by sale and granted each party an undivided one-half interest as tenants in common. LeFeber appeals and Johnson cross-appeals.

STANDARD OF REVIEW

¶ 18 We review a district court's findings of fact in an equitable action to determine whether the findings are clearly erroneous. In re Estate of McDermott, 2002 MT 164, ¶ 22, 310 Mont. 435, 51 P.3d 486 (citing § 3-2-204(5), MCA); see also M.R. Civ. P. 52(a). A finding is clearly erroneous if it is not supported by substantial credible evidence, if the trial court misapprehended the effect of the evidence, or if our review of the record convinces us that a mistake has been committed. In re McDermott, ¶ 22. Substantial credible evidence is that which a reasonable mind could accept as adequate to support a conclusion. We may consider evidence to be substantial even if...