Shupe v. Ham

• Decision Date: 28 January 1982
• Docket Number: No. 12324,12324
• Citation: 639 P.2d 540,98 Nev. 61
• Parties: Lewis H. SHUPE, Executor of the Estate of Doris Ham Shupe, Appellant, v. A. W. HAM, Jr., Respondent.
• Court: Nevada Supreme Court

Page 540

639 P.2d 540

98 Nev. 61

Lewis H. SHUPE, Executor of the Estate of Doris Ham Shupe, Appellant, v. A. W. HAM, Jr., Respondent.

No. 12324.

Supreme Court of Nevada.

Jan. 28, 1982.

Lionel, Sawyer & Collins and Charles McCrea, Las Vegas, for appellant.

Dickerson, Miles, Pico, Mitchell & Wagner, Las Vegas, for respondent.

OPINION

McKIBBEN, District Judge. ¹

Appellant Doris Ham Shupe brought suit against the respondent, her former husband, A. W. Ham, Jr., contending that Ham breached his fiduciary duty to Shupe by purchasing real property which he held in trust for her. After a trial before an advisory jury, the district court entered judgment for respondent, which judgment was consistent with the advisory verdicts. This appeal followed.

The parties' twenty year marriage ended in divorce on August 9, 1962. Under a property settlement agreement, appellant received an interest in the following property which is relevant to this action:

A. One-third of the net profits from the sale or lease of Lots 1-5, Block 19, Clark's Las Vegas Town Site in the City of Las Vegas (hereafter the "Four Queens" property);

B. An undivided one-half interest in Lots 1 and 2, Block 14, Clark's Las Vegas Town Site (hereafter the "California Club" property); and

C. An undivided one-half interest in thirty percent of the proceeds from approximately 70 acres of property located on the corner of Maryland Parkway and Sahara Avenue (hereafter the "Maryland-Sahara" property).

Under the settlement agreement, Ham retained legal title to the above properties.

On December 4, 1962, appellant executed a general power of attorney appointing respondent as her attorney-in-fact and granting him broad powers over her properties. This power of attorney was revoked June 14, 1973. On January 1, 1963, appellant executed a private trust agreement into which the above described properties and others were placed. Respondent was named as sole trustee of the trust. The present dispute involves two transactions between Shupe and Ham. The first occurred on December 4, 1962, when Ham purchased Shupe's interest in the Four Queens property for $5,000.00, and an agreement to serve as trustee under the January 1, 1963, trust without compensation. The second transaction occurred on August 12, 1969, when Shupe entered into a lease option agreement with Ham on the California Club and Maryland-Sahara properties. The lease was for a term of 99 years with rental of $7,500.00 per month and an option to purchase Shupe's interest for $1,000,000.00. In June 1973, Ham executed a trust for the benefit of his children into which he conveyed his interest in the California Club and Maryland-Sahara properties. During July 1973, appellant filed her complaint against respondent to set aside the conveyance of the Four Queens property. Appellant amended her complaint on July 12, 1974, and sought to set aside the lease option agreement on the California Club and Maryland-Sahara properties. That portion of the complaint relating to the lease option agreement was dismissed in November 1975 for failure to join indispensable parties (the parties' children, who were beneficiaries under the Ham trust). Thereafter, on March 16, 1976, in a separate action, appellant filed a cross-claim against Ham seeking money damages arising from the lease option agreement. On November 22, 1976, appellant's amended complaint and cross-claim were consolidated for trial. On February 16, 1977, the district court granted summary judgment in favor of Ham on his counter-motion for partial summary judgment and against Shupe on her claim that she was entitled to receive either rental or interest on the California Club and Maryland-Sahara properties under the terms of the lease option agreement between the time Ham exercised his right to purchase the property and the time Shupe tendered the deed to the property to Ham.

The district court found that appellant's complaint and cross-claim were barred by the statute of limitations. That finding is supported by substantial evidence and is dispositive of the principal issues on appeal.

A breach of fiduciary duty is a fraud giving rise to the application of the three year statute of limitations. NRS 11.190(3)(d). ²

Respondent cites Davidson v. Streeter, 68 Nev. 427, 234 P.2d 793 (1951), and Levy v. Ryland, 32 Nev. 460, 109 P. 905 (1910) for the proposition that the statute of limitations does not commence running until the trust is expressly and unequivocally terminated by the trustee. Both Davidson and Levy are inapposite as they involved resulting trusts. In those cases, the trustee held the property at all times for the benefit of the beneficiary, consistent with the trust and the intendments of the parties. Here, as distinguished from Davidson and Levy, the fiduciary (Ham) acquired title to the trust property from his beneficiary (Shupe) with her knowledge and consent and for consideration. ³

In 1962 and in 1969, Ham acquired his interest in the properties under documents which were signed by Shupe. The conveyance of the Four Queens property and the execution of the lease option agreement on the California Club and Maryland-Sahara properties by Shupe were inconsistent with the continuation of any trust and terminated any trust as to the property conveyed. Nevertheless, appellant argues that the statute of limitations does not commence running until appellant learned of any breach of trust by Ham. However, the district court correctly held that the statute of limitations began to run when the appellant knew or reasonably should have known facts giving rise to respondent's alleged breach of fiduciary duty. This is consistent with this court's holdings in Millspaugh v. Millspaugh, 96 Nev. 446, 611 P.2d 201 (1980), and Allen v. Webb, 87 Nev. 261, 485 P.2d 677 (1971); see also Hobart v. Hobart Estate Co., 26 Cal.2d 412, 159 P.2d 958 (1945).

On the issue of knowledge, the trial court, with an advisory jury, heard the conflicting evidence and made its findings and determination that the appellant had knowledge or that a reasonable person should have had knowledge of any alleged fraud of respondent in connection with respondent Ham's interest in and the value of the Four Queens property no later than January 1, 1966, and on August 12, 1969, as to the California Club and Maryland-Sahara properties. Where there is substantial evidence to support the trial court's rulings, even if there is a conflict in the evidence, the trial court's conclusions will not be disturbed on appeal. Alrich v. Bailey, 97 Nev. 342, 630 P.2d 262 (1981); Blanchard v. Nevada State Welfare Dep't., 91 Nev. 749, 542 P.2d 737 (1975); Sala & Ruthe Realty, Inc. v. Deneen, 89 Nev. 98, 507 P.2d 140 (1973). Here, the record reflects that during or prior to 1965, Shupe told one of her children that Ham was the landlord of the Four Queens property. At that time, she had sufficient knowledge to know that Ham was collecting rent on the property and that she would have been entitled to one-third of that rent if she had not conveyed the Four Queens property to Ham on December 4, 1962. However, she waited for almost eight years, until July 17, 1973, to file her lawsuit. The evidence also shows that Shupe did not enter into the lease option agreement on the California Club and Maryland-Sahara properties until after she had been advised by Ham that even though the California Club property was in bankruptcy she should retain her interest in the property and until after she had received independent legal advice from the attorney who represented her at that time and independent business advice from a banker. Therefore, the evidence supports the conclusion of the trial court that Shupe, on August 12, 1969, had sufficient facts to cause a reasonable person to inquire, and, in fact, she did inquire, as to the...