text:
    IN RE THE MARRIAGE OF LINDA B. MEEKS, Petitioner and Appellant, and ALAN R. MEEKS, Respondent and Respondent.
    No. 95-154.
    Submitted on Briefs August 17, 1995.
    Rehearing Denied May 16, 1996.
    Decided April 23, 1996.
    53 St.Rep. 365.
    915 P.2d 831.
    276 Mont. 237.

      For Appellant: Don A. LaBar, Church, Harris, Johnson & Williams, Great Falls.
    For Respondent: J. Kim Schulke, Linnell, Newhall & Martin, Great Falls.
   JUSTICE HUNT

delivered the Opinion of the Court.

Appellant Linda B. Meeks (Linda) appeals the order of the Eighth Judicial District Court, Cascade County, which dissolved her marriage to Respondent Alan R. Meeks (Alan) and divided the marital property between the two parties.

Affirmed in part, reversed in part and remanded.

ISSUES

Linda alleged twenty-five separate errors in the District Court’s division of the marital estate. The following restated issues are dispositive of this appeal:

1. Did the District Court err in granting Alan’s motion for partial summary judgment, which excluded from the marital estate Alan’s interest in a testamentary trust established by his father?

2. Did the District Court err in excluding from the marital estate the value of Alan’s accrued vacation and sick leave?

3. Did the District Court err in adopting the farm appraisal offered by Alan’s expert?

4. Did the District Court abuse its discretion by refusing to allow the record to remain open for the testimony of a rebuttal witness?

5. Did the District Court err by not including in the marital estate an additional thrift plan contribution made by Alan between September 30, 1994, and November 17, 1994, the date of trial?

6. Did the District Court err in ordering that the parties’ legal fees and costs be paid out of the marital estate before division?

7. Did the District Court err in allocating the Meeks’ farm to Alan, rather than dividing the farm between the parties?

8. Was the District Court’s distribution of the marital property in this case clearly erroneous?

FACTS

Linda and Alan were married in 1968 and have one adult son. For the past 22 years, Alan has worked as a farm appraiser, while Linda has worked as a legal secretary, bookkeeper, tax preparer, and in several banks. Over the course of their 26-year marriage, the parties generated a marital estate worth approximately $1,000,000.

In 1994, Linda filed a petition to dissolve the marriage. Alan moved for partial summary judgment, asking the District Court to exclude from the marital estate his interest in a testamentary trust established by his father. This motion was granted.

After a further hearing in late 1994, the District Court issued its findings of fact, conclusions of law, and order dissolving the marriage and dividing the marital estate. Linda appealed the District Court’s grant of summary judgment on the issue of the testamentary trust, as well as its division of the marital estate. Other facts will be provided as necessary.

STANDARD OF REVIEW

The distribution of marital property in a dissolution action is governed by § 40-4-202, MCA, which provides in part:

In a proceeding for dissolution of a marriage, legal separation, or division of property following a decree of dissolution ... the court [shall], without regard to marital misconduct, finally equitably apportion between the parties the property and assets belonging to either or both, however and whenever acquired and whether the title thereto is in the name of husband or wife or both. ...

Section 40-4-202(1), MCA.

A district court’s findings of fact regarding the division of marital property will be upheld unless the findings on which the division are based are clearly erroneous. In re Marriage of DeWitt (1995), 273 Mont. 513, _, 905 P.2d 1084, 1087. If a district court’s judgment is supported by substantial credible evidence, it will not be disturbed absent an abuse of discretion. In re Marriage of Griffin (1996), [275 Mont. 37], 909 P.2d 707, 708 (citing In re Marriage of Maedje (1994), 263 Mont. 262, 868 P.2d 580).

The test for abuse of discretion is “whether the trial court acted arbitrarily without employment of conscientious judgment or exceeded the bounds of reason resulting in substantial injustice.” In re Marriage of Tonne (1987), 226 Mont. 1, 3, 733 P.2d 1280, 1282 (quoting In re Marriage of Rolfe (1985), 216 Mont. 39, 45, 699 P.2d 79, 83). Moreover,

A District Court has broad discretion in determining the value of property in a dissolution. Its valuation can be premised on expert testimony, lay testimony, documentary evidence, or any combination thereof. The court is free to adopt any reasonable valuation of marital property which is supported by the record. As long as the valuation of property in a dissolution is reasonable in light of the evidence submitted, we will not disturb the finding on appeal.

In re Marriage of Robinson (1994), 269 Mont. 293, 296, 888 P.2d 895, 897 (citations omitted).

While the above is the general standard of review in marital estate division cases, other standards of review will be set out as is necessary to address the issues raised.

DISCUSSION

1. Did the District Court err in granting Alan’s motion for partial summary judgment, which excluded from the marital estate Alan’s interest in a testamentary trust established by his father?

Alan’s father William A. Meeks, Sr. died in 1986, leaving a will which established a testamentary trust for the benefit of his wife (Alan’s mother), and which named Alan and his brother as co-trustees. According to the terms of the will, the trustees have the power to invade the corpus only “if there are no other sources of funds reasonably available” for the maintenance of Alan’s mother, and then only to the extent necessary “for her care, maintenance and support.” Upon the death of Alan’s mother, the trust will terminate and will be distributed in equal shares to Alan, his brother, and his sister.

The will also contains a spendthrift clause regarding the trust, which provides:

No title in the trust or trusts created in and by this will, or in the income therefrom, shall vest in any beneficiary, and neither the principal nor the income of any such trust estate shall be liable for the debts of any beneficiary, and no beneficiary shall have any power to sell, assign, transfer, encumber or in any other manner to anticipate or dispose of his or her interest in any such trust estate created by the terms of this will or the income produced thereby by the Co-Trustees to said beneficiary.

Based on the foregoing language, Alan moved for partial summary judgment, claiming that he has only a contingent remainder in the trust, and his interest therefore should not be considered part of the marital estate. The District Court agreed and granted the motion, excluding Alan’s remainder interest in the trust from the marital estate.

Summary judgment is proper if no genuine issues of material fact exist and the moving party is entitled to summary judgment as a matter of law. Rule 56(c), M.R.Civ.P.; Vincelette v. Metropolitan Life Ins. Co. (1995), 273 Mont. 408, 903 P.2d 1374. In reviewing a grant of summary judgment, this Court’s standard of review is identical to that of the trial court and, in determining whether summary judgment was appropriate, we will use the same criteria employed by the trial court. Vincelette, 903 P.2d at 1376 (citations omitted).

Linda contends the grant of partial summary judgment in this case was in error. While she does not argue that a genuine issue of material fact exists, she contends the District Court erred as a matter of law in concluding that Aan’s remainder in the trust is contingent. Linda maintains that Aan has a vested remainder in the testamentary trust which should be considered part of the marital estate and divided accordingly.

A contingent remainder is a right to property which may or may not vest in possession at some future date. Generally, a remainder will be considered contingent if the recipient is unknown or if the interest will only vest upon the occurrence of an event which is not certain to happen. A remainder will not be considered contingent if it can fairly be construed to be vested. 23 Thompson on Real Property, Thomas Edition (David A. Thomas, ed., 1994), 314 (citations omitted).

[A] vested remainder is one which is limited to an ascertained person in being, whose right to the estate is fixed and certain, and does not depend on the happening of any future event, but whose enjoyment and possession is postponed to some future time.... [A] vested remainder is not rendered contingent by the fact that it may never vest in possession.

23 Thompson on Real Property, 325-26 (citations omitted).

Aan is an ascertainable person in being whose right to a share of the remainder of the testamentary trust is not dependent upon the occurrence of some future event. Rather, he is sure to inherit so long as two given events do not occur. Aan will lose his remainder interest if he dies before his mother, or if the entire trust corpus is used for his mother’s maintenance and care before her death. Only these events will serve to divest him of his remainder interest.

It therefore follows that, absent additional conditions, Aan’s interest in the testamentary trust would be classified as a vested remainder, subject to divestment. Such classifications, however, are not necessarily controlling regarding how a remainder interest should be treated. When such interests are created by a will, the testator’s intent also must be considered.

When construing a will, the cardinal rule is that the intent of the testator must be effected if it is not contrary to the law or to public policy. Matter of Estate of Bennett (Colo.App. 1989), 789 P.2d 446. See also Allen v. Shea (Idaho 1983), 665 P.2d 1041; In re Estate of Larsen (Utah 1982), 649 P.2d 31; In re Question Submitted by U.S. Ct. of App., Tenth Cir. (Colo. 1976), 553 P.2d 382; McGinley v. McGinley (Pa.Super. 1989), 565 A.2d 1220. The testator’s intent, if clearly articulated, can preserve as contingent a remainder which otherwise would be deemed to have vested. McGinley, 565 A.2d at 1225.

[W]hether a remainder is vested or contingent depends entirely upon the testator’s intention, and where the testator has indicated with reasonable certainty the intention that it shall not vest until a particular time, it will not vest until that time arrives, and then only in those who are in esse and capable of taking at that time.

23 Thompson on Real Property, 341 (citations omitted).

Appellant cites several cases in support of her position that an interest in a testamentary trust is vested and should be included in the marital estate. In re Marriage of Kis (1982), 196 Mont. 296, 639 P.2d 1151; In re Marriage of Buxbaum (1984), 214 Mont. 1, 692 P.2d 411; In re Marriage of Hill (1982), 197 Mont. 451, 643 P.2d 582; Rolfe, 699 P.2d 79. These cases are easily distinguished, however.

Rolfe and Kis address the valuation of a party’s interest in a pension fund, not a testamentary devise. Accordingly, there is no “testator” in these cases whose intent might contravene the general classifications. While Hill and Buxbaum deal with testamentary devises, in neither case was the intent of the testator inconsistent with a finding that the interest in question was vested and properly included in the marital estate.

In the case at bar, Alan’s father by his will declared that “[n]o title in the trust... or in the income therefrom shall vest... prior to actual distribution.” In so doing, he unequivocally expressed his intent that his children’s interests in the trust remain contingent until such time as the corpus of the trust is in fact distributed. In Montana,

a decree of distribution is conclusive upon the rights of devisees under a will, subject only to be reversed, set aside or modified on appeal. A decree of distribution has the same force and effect as does a final judgment.

Hill, 643 P.2d at 586.

Since Alan’s father’s will provided that Alan’s interest in the testamentary trust remain contingent until actual distribution, the District Court did not err in refusing to classify the interest in a manner contrary to the testator’s express intent. Alan has a contingent remainder in his family testamentary trust, which was properly excluded from the marital estate. Therefore, the District Court did not err in granting Alan’s motion for partial summary judgment.

2. Did the District Court err in excluding from the marital estate the value of Alan’s accrued vacation and sick leave?

In the 22 years Alan has worked at his present job, he has accrued over 1,900 hours of sick leave and vacation. Upon his retirement, these hours will be added to his term of service for purposes of calculating his pension. Alan may use the leave as necessary before retirement, but it cannot be cashed out at any time. Its only value after retirement is to extend his term of service and consequently increase his pension.

The District Court provided that Alan’s pension would be divided according to the “time rule formula,” which is set out in In re Marriage of Rolfe (1988), 234 Mont. 294, 298, 766 P.2d 223, 226. See also In re Marriage of Truax (1995), 271 Mont. 122, 894 P.2d 936. The time rule formula provides for the division of a pension as follows:

Years of servide during marriage monthly
_ x benefit x 1/2%
Total years of service (after taxes)

Linda alleges that the time rule formula in this case “should be amended to include not only the number of months [actually] worked by Alan but also the number of accrued hours of sick leave.” Because, as we have noted above, any unused sick leave will be added to Alan’s total months of service upon retirement, that amount will be taken into account in computing the pension in which Linda will share.

Any sick leave or vacation time which remains unused at Alan’s retirement is to be added to his total term of service when his pension is computed. Moreover, any sick leave or vacation which Alan uses between the time of the divorce and his retirement should be debited against vacation or sick leave earned after the divorce. This will prevent unnecessary “drawing down” of the vacation and sick leave which was earned during the marriage and in which Linda has a legitimate, if contingent, interest.

However, adding the vacation and sick leave only to the denominator of the equation would serve to lessen Linda’s proportionate share by reducing the fraction. For this reason, the sick leave and vacation which accrued during the marriage should also be added to the numerator of the fraction so that the fraction remains proportionately the same. Accordingly, the fraction in this case should consist of the years worked during the marriage plus the vacation and sick leave accrued during the marriage as the numerator, and the total years worked plus the total vacation and sick leave accrued as the denominator.

The District Court, in specifying that Alan’s leave is to be used in computing his pension, considered it to be part of the marital estate, not “the same as” a pension but rather as part o^the pension. Linda fails to raise any cogent argument that the inclusion of the leave in the pension itself is erroneous; instead, she alleges only that the manner of inclusion is unclear, and we have rectified that problem. We therefore do not address the issue of whether vacation and sick leave may, under certain circumstances, be considered a distinct marital asset. That question is beyond the scope of this appeal.

Since Linda will receive her proportionate share of the benefit of Alan’s leave, and since Alan cannot convert his sick leave or vacation to cash at any time, we find no abuse of discretion in the District Court’s refusal to classify Alan’s sick leave and vacation as a separate marital asset.

3. Did the District Court err in adopting the farm appraisal of Alan’s expert?

In order to assist the District Court in the valuation of the Meeks’ farm, Alan presented testimony from an appraiser, John E. Wicks. Linda too called upon an appraiser, Dave Anderson, who also testified to the value of the farm. The District Court rejected Anderson’s appraisal but adopted Wicks’, using Wicks’ valuation when allocating the farm.

Linda alleges several errors in Wicks’ appraisal, including his evaluation of bushel capacity, his valuation of a land option, and his valuation of the farm itself. She also alleges that the District Court ignored assumptions underlying Wicks’ appraisal while adopting contrary assumptions underlying Anderson’s appraisal “out of context.” In light of these alleged errors, Linda asserts that the District Court erred in accepting and using Wicks’ appraisal in its findings of fact.

This Court will not substitute its judgment for that of the trial court regarding the credibility of witnesses or the weight to be given to their testimony. In re the Seizure of $23,691 in U.S. Currency (1995), 273 Mont. 474, _, 905 P.2d 148, 155 (citing Matter of B.T.B. (1992), 254 Mont. 449, 840 P.2d 558). Moreover,

the determination of property valuation is a factual issue which is within the province of the trial court to decide. When reviewing findings of fact, this Court is precluded from substituting its judgment for that of the trier of fact, and cannot set aside the findings of a court sitting without a jury unless the findings are ‘clearly erroneous.’ Rule 52(a), M.R.Civ.P.

Trustees of Washington-Idaho-Montana Carpenters-Employers Retirement Trust Fund v. Galleria Partnership (1991), 250 Mont. 175, 184, 819 P.2d 158, 163.

Linda quarrels with the methodology employed by Wicks in his evaluation as well as with the conclusions he reached regarding the value of the farm. But the District Court set out specific reasons why Wicks’ appraisal was adopted and Anderson’s rejected, including Wicks’ expertise and thoroughness. Every argument Linda raises and every flaw she alleges was also heard by the District Court, which nevertheless found Wicks’ testimony to be more persuasive than Anderson’s. Linda makes no new argument on appeal which might persuade this Court that the District Court’s adoption of the appraisal was erroneous. Because Linda has failed to show that the District Court’s adoption of Wicks’ appraisal was clearly erroneous, the findings of fact which are based upon the Wicks’ appraisal are affirmed.

4. Did the District Court abuse its discretion by refusing to allow the record to remain open for the testimony of a rebuttal witness?

In arguing for a higher valuation for the farm, Linda sought to compare the appraisals given by Anderson and Wicks to the price paid by a neighbor who had purchased a “comparable” farm. Wicks testified, however, that the neighbor’s farm was not comparable because it included a pond and land for grazing as well as cropland — advantages the Meeks’ farm did not have. Therefore, Wicks asserted, this farm naturally would have a higher value and could not be compared to the Meeks’ farm.

To rebut Wicks’ testimony, Linda sought to present testimony from the owner of the neighboring farm. Linda claimed the owner would have testified that he bought his farm without consideration of the pond or the grazing land, and that, in his opinion, the farm still retained its higher value even if those assets were factored out. This owner, however, was not present in court and had not been served with a subpoena to appear; Linda therefore moved the District Court to hold the record open until the neighbor could testify.

The District Court denied her motion, finding that the witness could have been subpoenaed earlier if Linda wanted to assure his presence. Linda, however, claimed that she had not secured the neighbor’s appearance because she had not anticipated Wicks’ testimony and was “surprised” by his declaration that the two farms were not comparable. Therefore, Linda asserted that she should have been afforded the opportunity to hold the record open until the neighbor could testify.

The standard of review of evidentiary rulings is whether the district court abused its discretion. A district court has broad discretion to determine if evidence will be admitted and, absent an abuse of discretion, this Court will not overturn a district court’s determination. Seizure of $23,691 in U.S. Currency, 905 P.2d at 153.

Even if Linda was in fact surprised by Wicks’ refusal to compare the Meeks’ farm to the neighbor’s farm, we fail to see the probative value of the neighbor’s testimony. Wicks was hired to do a professional appraisal of the Meeks’ farm; in so doing, he looked at several comparable sales. The neighbor, on the other hand, is a farmer who even Linda admits could only have testified to his own willingness to pay a high price for his own farm, even if, hypothetically, it did not have some of the advantages which it does in fact have.

This opinion testimony, even if allowable, could not prove that Wicks was incorrect in his declaration that the farms are not comparable for appraisal purposes. The testimony of an expert, whose opinion is based on fact, could not be adequately rebutted by the testimony of a layman whose opinion is based on a hypothetical scenario which does not exist. The District Court did not abuse its discretion by refusing to allow the record to remain open for the addition of testimony which could not substantively assist it in its fact-finding task.

5. Did the District Court err by not including in the marital estate an additional thrift plan contribution made by Alan between September 30, 1994, and November 17, 1994, the date of trial?

In valuing Alan’s thrift plan, the District Court used the valuation provided in the plan’s last quarterly statement, dated September 30, 1994. Linda alleges that the District Court should have valued the thrift plan as of the time of trial, six weeks later, and that its failure to do so was reversible error.

Generally, marital assets should be valued at or near the time of the dissolution hearing, unless the district court, at its discretion, decides a different date is necessary to achieve an equitable result. In re Marriage of Lopez (1992), 255 Mont. 238, 244, 841 P.2d 1122, 1125. Apparently, Linda wants this Court to declare that, in this case, six weeks previously is not “near” enough. We decline to do so. The District Court used the most recent quarterly report available in valuing this asset, giving it a value commensurate with the latest documented evidence. Linda’s allegation of error is without merit.

6. Did the District Court err in ordering that the parties’ legal fees and costs be paid out of the marital estate before division?

The District Court found the amount of attorney fees and costs incurred by the parties to be “roughly equal.” It therefore ordered that the fees and costs of the divorce should be paid out of the marital estate before it was divided. Linda alleged that such an arrangement constituted an abuse of the District Court’s discretion because it did not comply with the applicable statute governing the awarding of attorney fees.

Section 40-4-110, MCA, provides in part:

The court from time to time, after considering the financial resources of both parties, may order a party to pay a reasonable amount for the cost of the other party in maintaining or defending any proceeding under chapters 1 and 4 of this title and for attorney’s fees, including sums for legal services rendered and costs incurred prior to the commencement of the proceeding or after entry of judgment.

“An award of attorney fees under this statute must be based on necessity, must be reasonable, and must be based on competent evidence.” In re Marriage of Barnard (1994), 264 Mont. 103, 109, 870 P.2d 91, 95 (quoting In re Marriage of Zander (1993), 262 Mont. 215, 227, 864 P.2d 1225, 1233).

Alan argues that the District Court’s order that the attorney fees and costs be paid from the marital estate before division means that such fees were not “awarded” to one party over another, but, rather, that the fees are merely a marital “liability” which is properly charged to the estate. He notes that such an arrangement has been approved by this Court in In re Marriage of Cole (1986), 224 Mont. 207, 729 P.2d 1276.

In Cole, however, we recognized that an arrangement where all fees are lumped together and the debt then equally divided is to the benefit of the party with the most expenses, and translates into the other party being charged with a disproportionate share of the fees. Such an arrangement amounts to one party paying part of the other party’s costs. Therefore, the statutory requirements of § 40-4-110, MCA, must be met by the District Court. We specifically noted in Cole that the District Court had found “that Wife was without means to pay her attorney’s fees,” which is precisely the type of finding of financial need that is a prerequisite for an award of attorney fees under § 40-4-110, MCA. Cole, 729 P.2d at 1276.

Alan incurred fees of over $11,000 and Linda incurred fees of less than $8,000. If these amounts were consolidated and then divided, each party would be required to pay approximately $9,500. Linda would therefore have to pay all her own fees as well as $1,500 of Alan’s fees. This obviously translates into an award of fees to Alan.

The District Court did not find that Alan was without means to pay the entirety of his own fees, and we note again, in passing, that the parties are dividing an estate valued at roughly a million dollars. Since such a finding is a statutorily mandated prerequisite for the awarding of fees and costs, the District Court abused its discretion in allowing Alan to recover any part of his fees from Linda’s share of the marital estate. On this issue, we reverse the District Court and remand for entry of judgment on attorney fees in accordance with this opinion.

7. Did the District Court err in allocating the Meeks’ farm to Alan, rather than dividing the farm between the parties?

Linda alleges that the District Court erred in allocating the entire farm to Alan, rather than dividing it and giving each party half. Specifically, she contends that the District Court’s finding that “[i]t [was] not economically prudent to split the farm” is erroneous.

As noted above, the District Court’s findings of fact will not be set aside unless clearly erroneous. DeWitt, 905 P.2d at 1087. Moreover, this Court has repeatedly recognized the long-standing public policy in Montana of keeping farms intact, if possible. Tonne, 733 P.2d 1280; In re Marriage of Glass (1985), 215 Mont. 248, 697 P.2d 96.

Alan expressed a desire to farm full-time after he retires from his job and, someday, to leave the farm to his son. Linda does not require the farm for her continued financial security, nor does the District Court’s refusal to partition this asset prevent her from receiving an equitable portion of the marital estate. The District Court did not abuse its discretion in refusing to divide the farm.

8. Was the District Court’s division of the marital property in this case clearly erroneous?

Linda alleges numerous other errors in the District Court’s division of the marital estate. She disputes the allocation of innumerable items of personal property, from art to farm and lawn equipment, from a $25 “shop vac” to $500 worth of canned, dried, and frozen food. We find nothing in the record that indicates that the District Court abused its discretion. “District courts working in equity, must seek a fair distribution of marital property using reasonable judgment and relying on common sense.” Ira re Marriage of Kimm (1993), 260 Mont. 479, 483, 861 P.2d 165, 168 (citing In re Marriage of Danelson (1992), 253 Mont. 310, 833 P.2d 215). While Linda may not agree with how the District Court allotted the marital estate, she has not shown that the allocation was erroneous.

As noted above, the District Court’s provision for the payment of attorney fees did not comply with § 40-4-110, MCA, the statute which controls such awards. Accordingly, that portion of the order is reversed. In all other respects, the order of the District Court is affirmed.

Affirmed in part, reversed in part and remanded for entry of judgment in accordance with this opinion.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY, NELSON and LEAPHART concur.


source: Caselaw Access Project

author: JUSTICE ERDMANN JUSTICE LEAPHART,

license: Public Domain

text:
    STATE OF MONTANA, Plaintiff and Respondent, v. DAVID GIRARD KELMAN, Defendant and Appellant.
    No. 95-176.
    Submitted on Briefs February 29, 1996.
    Decided April 23, 1996.
    53 St.Rep. 372.
    915 P.2d 854.
    276 Mont. 253.

      For Appellant: Stephen J. Nardi, Sherlock & Nardi, Kalispell.
    For Respondent: Hon. Joseph P. Mazurek, Attorney General, Kathy Seeley, Assistant Attorney General, Helena; David G. Rice, Hill County Attorney, Havre.
   JUSTICE ERDMANN

delivered the Opinion of the Court.

David Girard Kelman appeals from the judgment and sentence entered by the Twelfth Judicial District Court, Hill County, on a jury verdict finding him guilty of the felony offense of tampering with public records or information. We affirm.

The issues on appeal are as follows:

1. Was there sufficient evidence to support the jury verdict?

2. Did the District Court err when it denied Kelman’s motion for a new trial based on alleged juror misconduct?

FACTS

Kelman is a principal owner of Big Ten Electronics (BTE), a corporation that manufactures and distributes video gambling equipment. He is also the managing partner of American Music, a business which places gambling machines, jukeboxes, and pinball machines in various establishments throughout Montana. In the fall of 1991, after discovering an opportunity to purchase and remodel a gambling casino located in Havre, Kelman purchased the property and obtained a liquor license for the establishment which was named Boxcars Casino.

A1 Ransome, a Louisiana resident, and his partner, Joe Terrell, formed a Louisiana corporation called Gaming Management, Inc. (GMI) in 1991 to become involved in the video gambling business in Louisiana. They intended to file an application for a Louisiana video gambling license and hoped to become a distributor in Louisiana for video poker machines. Ransome hired two individuals, Dick Odom and John Marley, to assist him in the business venture, and in 1991 Odom and Marley contacted Kelman to discuss opportunities for distributing BTE video gambling machines in Louisiana.

Sometime between September and November 1991, Marley and Odom informed Ransome of the opportunity to become involved in the Boxcars business venture. The proposal was that Ransome’s corporation would put up half the cost of purchasing and remodeling the building and securing the liquor license and in return Kelman and GMI would become 50/50 partners in Boxcars. The conditions to finalizing the partnership were payment of GMI’s share of the capital contribution, the signing of a partnership agreement, and approval by the State of Montana of GMI’s involvement in the project.

In November 1991 Kelman’s attorney, Matt Robinson, presented Ransome with a written partnership agreement. Ransome made two amendments to the agreement, reran it on his computer, and signed it. Ransome testified that when he inquired of Robinson when Kelman would sign the agreement he was told that in order to avoid delay in obtaining the gambling license, the agreement would be signed after the business was open and GMI’s share of the money had been paid. Nevertheless, Ransome testified that “the agreement was there between us, and I trusted the agreement.”

Kelman would periodically send Ransome a list of expenditures related to Boxcars and Ransome would send money covering half of the expenses. On December 24,1991, Ransome sent Kelman a check for $25,000 with a notation stating “reimbursement for Boxcar’s [sic], Havre, Montana Gaming Mgt.” Ransome wire transferred $25,000 to Kelman on January21,1992, $20,000 on March 20,1992, and $20,000 on April 15, 1992, for a total of $90,000. Ransome made no further advances after April 15, 1992. The funds were deposited into a bank account in Kelman’s name at the First Bank in Great Falls. The account was used primarily for the Boxcars venture and Kelman testified that “every penny” sent by Ransome had been spent at Boxcars.

On January 31, 1992, the Gambling Control Division of the Montana Department of Justice (the Division) received an application from Kelman for a gambling operator’s license. The application was prepared and signed by Robinson as Kelman’s attorney. John Flynn, a revenue agent with the Division, reviewed the application and determined that the information provided was incomplete. Flynn was specifically concerned about where the money to finance the business was coming from and whether Kelman was receiving funds from noninstitutional sources.

On March 18, 1992, Flynn and his supervisor met with Kelman and Robinson to discuss the application and the Division’s concern over noninstitutional lenders. On March 23, 1992, the Division received an NIL (noninstitutional loan) report form in which Kelman reported two noninstitutional loans — one from American Music for $60,000 and one from BTE for $75,900. By March 20, 1992, Kelman had received $70,000 from Ransome for the Boxcars project.

At the time the NIL reporting form was submitted, Kelman resubmitted his application for a gambling operator’s license since the original four-page application had been revised into a longer six-page form. The new application was signed by Robinson on Kelman’s behalf. Section E of the application indicated that no other person or entity had any financial interest or derived income from the business. Section N of the application required Kelman to provide creditor information for each outstanding loan and/or financial obligation (institutional/personal/other) obtained or used for operating the business. Kelman reported two loans from the First Bank in Great Falls, one for $60,000 and one for $80,000. No information was provided concerning the $70,000 financial obligation to Ransome.

Flynn sent the application to Rick Losleben, an investigator with the Gambling Investigations Bureau of the Montana Department of Justice, to verify the information. On April 27, 1992, Losleben and Kelman met to discuss the application. By this time, Kelman had received $90,000 from Ransome. Losleben asked Kelman for additional information about the loans to Boxcars from American Music and BTE. After Losleben and Kelman reviewed the application and Kelman made some changes to the document, Kelman signed the application.

During the course of the meeting, Losleben filled out a standard investigation report which Kelman also signed. In Section C of that report, Kelman was asked who had invested in Boxcars. Kelman listed loans from First Bank of Great Falls, American Music, and himself. In Section D Kelman indicated no one had any right to share in the profits or had an obligation for business liabilities relating to the gambling or liquor operations of the business. Section K required Kelman to list the amount and sources of all financing for the business and list all loan agreements. Kelman listed loans received from BTE, American Music, and First Bank of Great Falls. He did not list the $90,000 which by then he had received from Ransome and spent on the Boxcars project. After the meeting Losleben forwarded the information to the Division and a gambling license was issued to Kelman. Boxcars Casino opened for business on June 24', 1992.

During a trip to Montana in August 1992, Ransome discovered that Montana law would prevent a nonresident from becoming a 50/50 partner in the Boxcars operation. Ransome testified that at that point in time he considered the money he had sent to Kelman to be a loan which he expected Kelman to repay once the business was up and running.

In May 1992 Ransome had applied for a video gambling operator’s license in Louisiana and informed Louisiana authorities he had an interest in the Boxcars operation. In September 1992 Losleben received material from a Louisiana state trooper regarding Ransome’s application for the Louisiana license and his stated involvement with Boxcars. In the summer of 1993, Losleben met with Ransome in Baton Rouge to discuss the situation and, as a result, Losleben identified the bank account into which the funds from Ransome to Kelman had been deposited. This was the first information Montana authorities received concerning the funds provided by Ransome for the Boxcars project.

On May 25,1994, Kelman was charged with two counts of tampering with public records or information pursuant to § 45-7-208, MCA, based upon his failure to disclose the funds received from Ransome on his application to the Division. Kelman entered pleas of not guilty to both counts. On November 18, 1994, the District Court granted Kelman’s motion to merge the two counts into one count. On November 28 through 30, 1994, Kelman was tried before a jury which returned a guilty verdict. On December 22, 1994, Kelman filed a motion for a new trial based on alleged juror misconduct. On January 4, 1995, the District Court denied the motion and sentenced Kelman to one year and one day in the Montana State Prison together with a fine of $35,000 plus a ten percent surcharge. The District Court suspended the entire prison sentence. This appeal followed.

ISSUE 1

Was there sufficient evidence to support the jury verdict?

When the issue on appeal in a criminal case is whether there was sufficient evidence to support a jury verdict, the standard of review is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. State v. Licht (1994), 266 Mont. 123, 131, 879 P.2d 670, 675 (citing State v. Lyons (1992), 254 Mont. 360, 363, 838 P.2d 397, 399).

Section 45-7-208, MCA, defines the offense of tampering with public records or information as follows:

(1) A person commits the offense of tampering with public records or information if he:
(a) knowingly makes a false entry in or false alteration of any record, document, legislative bill or enactment, or thing belonging to or received, issued, or kept by the government for information or record or required by law to be kept by others for information of the government;
(b) makes, presents, or uses any record, document, or thing knowing it to be false and with purpose that it be taken as a genuine part of information or records referred to in subsection (1)(a); or
(c) purposely destroys, conceals, removes, or otherwise impairs the verity or availability of any such record, document, or thing.
(2) A person convicted of the offense of tampering with public records or information shall be imprisoned in the state prison for any term not to exceed 10 years or be fined an amount not to exceed $50,000, or both.

Kelman argues that he acted in good faith and on the advice of his counsel. He maintains that Robinson completed the application form and Losleben completed the investigation report. Thus, Kelman claims he did not knowingly falsify the information contained in the application documents. He claims he made an honest effort to comply with the requirements of the application which he contends were confusing and ambiguous.

Kelman goes on to argue that the funds sent by Ransome were personal in nature and that Flynn and Losleben indicated they were not interested in knowing the source of the funds he was personally investing in the business. Kelman further claims that at the time the application forms were submitted neither his partnership with Ran-some nor a loan agreement had been consummated. Thus, he claims he was put into a “Catch-22” situation in that the funds could not properly be characterized as either an investment in the business or a loan obligation.

The State argues that there was sufficient evidence presented at trial of every element of the crime, including the requisite mental state necessary to convict Kelman. The State contends that the $90,000 Kelman received from Ransome was either an investment in Boxcars or a financial obligation of the business, which in either case should have been reported on the application and investigation report. The State maintains that Kelman’s contention that the loan was “personal” rather than a loan of money for the Boxcars business venture is not credible and raises the inference that he was not telling the truth about how the $90,000 was omitted from the application materials.

The jury was instructed that the existence of a mental state may be inferred from the acts of the accused and the facts and circumstances connected with the offense. Section 45-2-103(3), MCA. The jury was presented with evidence concerning Kelman’s acts and the circumstances surrounding the case.

Although Robinson initially signed the gambling operator application form, he testified that at that point in time he was not aware that Kelman had received money from Ransome for the Boxcars project. When Flynn and his supervisor met with Kelman and Robinson in March 1992, Flynn explained the definition of a noninstitutional source of funding. Flynn sent Kelman a follow-up letter after the meeting emphasizing the importance of disclosing noninstitutional funding. When Kelman completed the NIL form later that month he indicated he had received two noninstitutional loans, one from American Music and one from BTE. He failed to disclose the $70,000 he had already received from Ransome.

By the time Kelman met with Losleben, Kelman had received $90,000 from Ransome. Losleben and Kelman together reviewed the pending application and the investigation report. Losleben filled out the report but Kelman acknowledged he was present at the time and read through the document before he signed it. Both forms clearly indicated above the signature lines that the information was true and correct and that false information could result in denial of the license and criminal prosecution. Nowhere on either the application form or the investigation report did Kelman disclose the funds received from Ransome. At no point during his conversations with Flynn or Losleben did Kelman mention the Louisiana funding for the project.

Kelman claims he did not list the Ransome money because he and Ransome had not yet executed a formal partnership or loan agreement. However, the record indicates that Ransome sent the money to Kelman specifically for the Boxcars project and that the money went directly into an account used to pay for Boxcars’ expenses. Kelman nevertheless made a conscious choice not to disclose to the Division the funds sent by Ransome when disclosure of such noninstitutional funding sources was required.

The jury did not find credible Kelman’s contention that Ransome’s money was neither an investment in Boxcars nor a loan for the business venture. We have stated that the credibility of witnesses and the weight to be assigned to their testimony are to be determined by the trier of fact and disputed questions of fact and credibility will not be disturbed on appeal. State v. Graves (1995), 272 Mont. 451, 457, 901 P.2d 549, 553. The jury decides the facts and who to believe. Graves, 901 P.2d at 553.

We conclude, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. We hold that sufficient evidence existed to support the jury verdict, and therefore, affirm the District Court on this issue.

ISSUE 2

Did the District Court err when it denied Kelman’s motion for a new trial based on alleged juror misconduct?

We review a district court’s denial of a motion for a new trial to determine whether the district court abused its discretion. State v. Mummey (1994), 264 Mont. 272, 276, 871 P.2d 868, 870. Absent an abuse of discretion the district court’s decision concerning whether or not to grant a motion for a new trial will be affirmed. State v. Hatfield (1995), 269 Mont. 307, 310, 888 P.2d 899, 901.

Kelman moved for a new trial on the ground that the jury was exposed to extraneous prejudicial information. Kelman attached to his motion an affidavit from one of the jurors stating that during deliberations another juror stated that “she believed that David Kelman owned the Playground Bar in Great Falls, Montana.” Kelman alleges that the Playground Bar is a strip bar with a bad reputation. The affiant stated that it appeared the comment was made to make Kelman look bad. The District Court considered the juror affidavit but denied the motion for new trial reasoning that the juror statement was not material to Kelman’s guilt or innocence and that insufficient evidence existed to show that the conviction was related to the alleged remark.

Rule 606(b), M.R.Evid., provides that a juror may not testify as to what occurred during the jury’s deliberations except when the information pertains to: (1) whether extraneous prejudicial information was improperly brought to the jury’s attention; (2) whether any outside influence was brought to bear on any juror; or (3) whether any juror was induced to assent to any verdict or finding by resort to the determination of chance. Kelman argues that the juror statement was extraneous prejudicial information properly received under Rule 606(b)(1), M.R.Evid.

Kelman contends that the initial jury panel vote was 6-6 but that sometime after the comment was made the panel vote was 9-3 in favor of a guilty verdict. He maintains that the statement was inherently prejudicial given the “generally sleazy image” of strip clubs and concludes that “many jurors would assume that a strip club owner is likely to be a person who would intentionally mislead governmental regulatory authorities.” He argues that “the jury herein was comprised almost exclusively of women, likely to have an unfavorable opinion of strip clubs no matter how honest or lawful their operation.” Kelman argues that the jury statement amounted to juror misconduct sufficient to require a new trial.

The State counters that the alleged statement was an internal influence and therefore does not fall within one of the three exceptions set forth in Rule 606(b), M.R.Evid. The State further argues that even if the statement was extraneous information, the information was not prejudicial to Kelman and the District Court did not abuse its discretion in denying the motion for new trial.

In State v. Brogan (1995), 272 Mont. 156, 900 P.2d 284, we held that juror affidavits may not be used to impeach a verdict based upon internal influences on the jury such as a mistake of evidence or misapprehension of the law. Brogan, 900 P.2d at 287 (citing Harry v. Elderkin (1981), 196 Mont. 1, 8, 637 P.2d 809, 813). Where external influence is exerted or external prejudicial information is brought to the jury’s attention, juror affidavits can be the basis of overturning the judgment. Brogan, 900 P.2d at 287. Examples of external influence include a juror’s telephone call obtaining information with regard to previous litigation by the plaintiff, visiting the scene of an accident, or bringing a newspaper article about the trial into the jury room for the jurors to see. Brogan, 900 P.2d at 287 (citing Geiger v. Sherrodd (1993), 262 Mont. 505, 510-11, 866 P.2d 1106, 1109).

We must therefore determine whether the statement was an external or internal influence on the jury. In State v. Hage (1993), 258 Mont. 498, 853 P.2d 1251, among other claims of juror misconduct was the allegation that one juror had informed other jurors that he had personal knowledge that a telephone log was kept of all telephone calls made from the jail. Hage, 853 P.2d at 1256. Citing State v. DeMers (1988), 234 Mont. 273, 762 P.2d 860, we concluded that knowledge and information shared from one juror to another or others is not an extraneous influence. Hage, 853 P.2d at 1257.

Moreover, one of the purposes behind Rule 606(b), M.R.Evid., is to ensure that jurors are able to deliberate free from the frivolous and recurrent invasions of their privacy by disappointed litigants. State v. Maxwell (1982), 198 Mont. 498, 505, 647 P.2d 348, 353. Jurors are expected to bring to the courtroom their own knowledge and experience to aid in their resolution of the case. DeMers, 762 P.2d at 863.

The statement at issue in the present case is a juror’s belief that Kelman owned the Playground Bar. Like the juror’s belief as to the jailhouse telephone log at issue in Hage, we conclude that the statement made in the present case, whether mistaken or not, was an internal influence and within the prohibition of Rule 606(b), M.R.Evid. Even though we hold that the District Court erred in considering the juror affidavit in ruling on Kelman’s motion for a new trial, we conclude the court did not abuse its discretion when it denied the motion. In affirming the District Court on this issue, we rely on our determination that the juror statement was not an external influence subject to the exceptions of Rule 606(b), M.R.Evid.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES GRAY and NELSON concur.

JUSTICE LEAPHART,

specially concurring.

Although I concur in the result reached by the Court, I do not agree with the Court’s conclusion that the juror’s statement as to her belief that Kelman owned the Playground Bar in Great Falls was an internal influence on the jury and, thus, outside the scope of Rule 606(b), M.R.Evid. Relying on State v. Brogan (1995), 272 Mont. 156, 161, 900 P.2d 284, 287, the Court takes the approach that Rule 606(b), M.R.Evid., only encompasses situations in which information is brought to the jury’s attention through external sources; e.g., telephone calls, visits to the scene of an accident or a newspaper being brought into the jury room. The Court makes the mistake of focusing on the non-jury source of the information to the exclusion of the substance of the information. Under the Court’s rationale, if a juror brought a newspaper into the jury room which had an article about Kelman’s owning the Playground Bar, that would be considered an external source and, thus, could be the subject of an affidavit under Rule 606(b), M.R.Evid. However, since that same information was brought before the jury through an oral representation by a juror, we are left powerless to take any remedial action. I disagree.

Rule 606(b), M.R.Evid., provides that a juror may testify as to what occurred during deliberations when extraneous prejudicial information is improperly brought to the jury’s attention. The focus of the rule is upon the “extraneous prejudicial” nature of the information. Application of Rule 606(b), M.R.Evid., does not hinge upon whether or not the information was introduced by a source from outside the jury room. Thus, in the present instance, the question is not how the information about the Playground Bar got to the jury but, rather, whether that information was extraneous (outside the record) and prejudicial.

In my view, when facts about a party, other than those deemed relevant and admissible at trial, are brought to the jury’s attention, those facts are extraneous. It is one thing for jurors to apply their common sense or knowledge to the facts of the case, as developed at trial. That is the very sort of internal deliberation envisioned by our system of justice. It is entirely another matter if a juror, rather than merely applying his/her common sense and knowledge to the facts of the case, injects new facts about the defendant into the deliberations. In a criminal case such as this, juror reliance on anything other than facts of record violates the right of confrontation and cross-examination.

In United States v. Perkins (11th Cir. 1984), 748 F.2d 1519, the defendant was convicted of conspiracy and obstruction of justice. On appeal, Perkins alleged juror misconduct based upon the testimony of one juror to the effect that another juror was “especially committed” to a guilty verdict and that he stated he knew Perkins and had previously served on a committee with him. The Eleventh Circuit ordered a new trial finding that the juror’s conduct violated Perkins’ right under the Sixth Amendment to a jury verdict based on the evidence at trial.

Extrinsic evidence, evidence that has not been subject to the procedural safeguards of a fair trial, threatens such constitutional safeguards as the defendant’s right of confrontation, of cross-examination, and of counsel. [Citation omitted.] In addition, since such evidence has not been subject to the rules of evidence, it may confuse the jurors ....

Perkins, 748 F.2d at 1533.

The Eleventh Circuit then held that the injection of extrinsic evidence through a juror created a rebuttable presumption of prejudice that the government could overcome by demonstrating that the consideration of this evidence was harmless.

[The juror’s] remarks that he knew Perkins and/or had served on a committee with him were heard by eight of [the juror’s] eleven co-jurors. These comments were made before a jury which for many hours had remained hopelessly deadlocked, and were made by a juror who was outspoken in his belief that Perkins should be convicted. The likelihood of prejudice on a jury is obvious.

Perkins, 748 F.2d at 1534. In Perkins, the government was unable to overcome the presumption of prejudice.

United States ex rel. Owen v. McMann (2nd Cir. 1970), 435 F.2d 813, cert. denied, 402 U.S. 906, 91 S.Ct. 1373, 28 L.Ed.2d 646 (1971), was a habeas corpus proceeding in which the defendant alleged that three jurors had considered extraneous statements about him, that is, statements which were not in the record. The district court, after conducting a hearing, found:

In substance, the jurors or some of them were told by other jurors during the trial and the deliberations: that the defendant had been in trouble all his life; that he had been suspended from the police force in connection with the unauthorized use of a prowl car; that he had been involved in a fight in a tavern; that one of the juror’s husband was an investigator and that he knew all about plaintiff’s background and character, which was bad; and that petitioner’s father was always getting him out of trouble.

McMann, 435 F.2d at 815.

The Second Circuit, in affirming, concluded that McMann had been denied his Sixth Amendment right of confrontation.

The invocation of the confrontation clause in Parker was entirely appropriate to shield the defendant from comments to the jury by one whose statements, if admissible at all, could have properly been received only from the witness stand, subject to the procedural safeguards which the Sixth Amendment requires. But, so far as we know, the Court has never suggested that jurors, whose duty it is to consider and discuss the factual material properly before them, become “unsworn witnesses” within the scope of the confrontation clause simply because they have considered any factual matters going beyond those of record. To resort to the metaphor that the moment a juror passes a fraction of an inch beyond the record evidence, he becomes “an unsworn witness” is to ignore centuries of history and assume an answer rather than to provide the basis for one.
Although accurate knowledge of what goes on in the jury room is unhappily limited, see Kalven and Zeisel, The American Jury vi-vii (1966), we suspect there are many cases where jurors make statements concerning the general credibility or incredibility of the police, the need of backing them up even when there is reasonable doubt of guilt or putting brakes upon them even when there is none, the desirability of overcoming reasonable doubt because of the repugnance of particular crimes or of yielding to less than reasonable doubt because of their insignificance, and concerning other matters that would invalidate a judgment if uttered by a judge, see Id. at 131-32. Yet this is the very stuff of the jury system, and we have recognized, in a not unrelated context, that the standards for judges and juries are not the same, United States v. Maybury, 274 F.2d 899, 902-903 (2 Cir. 1960). The touchstone of decision in a case such as we have here is thus not the mere fact of infiltration of some molecules of extra-record matter, with the supposed consequences that the infiltrator becomes a “witness” and the confrontation clause automatically applies, but the nature of what has been infiltrated and the probability of prejudice.

McMann, 435 F.2d at 817-18. The Court, relying on the Fifth Circuit holding in United States v. McKinney (5th Cir. 1970), 429 F.2d 1019, cert. denied, 401 U.S. 922, 91 S.Ct. 910, 27 L.Ed.2d 825, concluded:

In short, the inquiry is not whether the jurors “became witnesses” in the sense that they discussed any matters not of record but whether they discussed specific extra-record facts relating to the defendant, and if they did, whether there was a significant possibility that the defendant was prejudiced thereby.

McMann, 435 F.2d at 818 n.5.

By way of further illustration, the Fifth Amendment to the United States Constitution and Article II, Sec. 25 of the Montana Constitution both protect an accused from having to testify against himself. If, despite this constitutional protection, a juror advises her fellow jurors that she heard that the defendant admitted to having committed the offense in question, that comment would be extraneous, prejudicial and a violation of the defendant’s constitutional right to remain silent.

Despite the above examples of situations in which extraneous (outside the record) and highly prejudicial material is introduced into the jury room by jurors themselves, this Court would apparently hold that these are strictly “internal” influences and, thus, beyond the reach of Rule 606(b), M.R.Evid. I cannot agree with the majority’s proposition that Rule 606(b), M.R.Evid., only encompasses prejudicial materials introduced into the jury room through non-juror sources; that it does not pertain to a juror’s reliance on personal knowledge of additional “facts” about the defendant which have not been subject to the procedural safeguards of a fair trial. To the extent that State v. Hage (1993), 258 Mont. 498, 853 P.2d 1251 or State v. Brogan (1995), 272 Mont. 156, 900 P.2d 284, express a contrary view, I would vote to overrule or limit their holdings.

In the present case, although I believe that the statement about Kelman’s ownership of a strip bar in Great Falls was extraneous and thus an “external” influence, the statement does not satisfy the other prong of the Rule 606(b)(1), M.R.Evid., test. That is, it was not prejudicial. See Lacy v. Gabriel (D. Mass. 1983), 567 F. Supp. 467, 470-71, aff’d, 732 F.2d 7 (1st Cir. 1984), cert. denied, 469 U.S. 861, 105 S.Ct. 195, 83 L.Ed.2d 128 (in habeas corpus proceeding arising out of murder conviction, where one juror had uncovered masked portions of photographs, the appellate court found that it was a violation of the defendant’s right of confrontation. The error, however, was harmless where other evidence of the defendant’s guilt was copious). The issue at hand was not whether Kelman was engaged in unsavory business ventures but whether he had tampered with public records. The alleged ownership of the Playground Bar was not relevant to any of the elements of the crime charged and, therefore, the juror’s statement had no bearing on a material fact in the case. Accordingly, despite the Court’s misreading of Rule 606(b), M.R.Evid., I concur with the result.


author: JUSTICE NELSON

text:
    BIG SKY HIDDEN VILLAGE OWNERS ASSOCIATION, INC., Plaintiff and Appellant, v. HIDDEN VILLAGE, INC., Defendant and Respondent and CARLISLE NEITHOLD, et al., Defendants and Respondents. HIDDEN VILLAGE, INC., Third Party Plaintiff and Respondent, v. CALVIN JEROME HANAN, et al., Third Party Defendants and Appellants.
    No. 95-224.
    Submitted on Briefs January 4, 1996.
    Decided April 23, 1996.
    53 St.Rep. 379.
    915 P.2d 845.
    276 Mont. 268.

      For Appellant: Gregory O. Morgan, Robert Cameron, Bozeman; K. Kent Koolen, Moulton Law Firm (Big Sky Hidden Village Owners Association, Calvin Hanan, et al.)
    For Respondent: James H. Goetz, Robert K. Baldwin, Goetz, Madden & Dunn, Bozeman (Hidden Village, Inc.); Calvin J. Stacey, Billings (Hidden Village, Inc., Carlisle, Neithold, et al.)
   JUSTICE NELSON

delivered the Opinion of the Court.

Big Sky Hidden Village Owners Association (Big Sky) appeals from a judgment and memorandum and order entered by the Eighteenth Judicial District Court, Gallatin County granting Hidden Village, Inc.’s (HVI) motion for partial summary judgment, denying Big Sky’s motion for partial summary judgment, and denying HVI’s motion to strike. We affirm.

ISSUES

1. Whether real property adjacent to a condominium development, which was never submitted to Montana’s Unit Ownership Act by description on the condominium declaration or amendment thereto, is subject to the act and the declaration.

2. Whether the owner of real property adjacent to a condominium development may use the roads running through the condominium property to access the adjacent land.

3. Whether the owner of real property adjacent to a condominium development may use the water and sewer mains running through the condominium property to serve the adjacent land.

BACKGROUND

On December 15, 1980, the Gallatin Comity Board of County Commissioners approved Big Sky Camper Village Inc.’s preliminary application for a planned unit development (PUD) located on the site of the existing Big Sky Camper Village for the construction of a maximum of 198 condominium units. The proposed development consisted of 37.8 acres located approximately one and one-half miles west of Meadow Village. Those 37.8 acres encompass the Big Sky Hidden Village Condominium and HVI’s remaining property. The findings of fact and order approving the PUD did not restrict where on the 37.8 acres the 198 units were to be placed. The findings of fact and order approving the PUD stated that “adequate acceés to all units should be provided even though the roads will be private ones,” and ordered that “the roads are the responsibility of the developer until they are turned over to the Property Owner’s Association and that the roads will be private roads, for which the County will have no responsibility.” The Gallatin County Board of County Commissioners’ order further stated that “water supply and sewage disposal will be handled by existing central systems.” The rural improvement district agreed to provide sewage collection and disposal to the 198 condominium units. Additionally, Lone Mountain Springs, Inc., agreed to provide domestic water to the 198 condominium units.

Pursuant to § 70-23-103, MCA, Big Sky Camper Village, Inc., filed the declaration and by-laws for the Big Sky Hidden Village Condominium. The declaration provides in pertinent part:

Declarant reserves the right from time to time (but on or before 10 years from the date of the initial recording of this Declaration) to expand the number of units to be included in this condominium by subjecting the condominium site plan as shown in Exhibit “C” to the construction of additional units, and to provide for up to 198 additional units for an over-all total of 198 units of one, two, or three bedroom units.

The declaration submitted Tract I-A to the Condominium Act and has at various times submitted additional lands contained within certificate of survey 1605 (COS 1605). Specifically, the original declaration describes the real property submitted by the declaration and subject to the Montana Unit Ownership Act as

Tract I-A of the Condominium Subdivision known as Hidden Village Condominium recorded on _, 1980, in Book _ of Plats at Page _, Gallatin County, Montana and situated within the SW 1/4 of Section 35, Township 6 South, Range 3 East, M.P.M., Gallatin County, Montana.

Tract I-A does not include the entire area covered by COS 1605. Although the land in dispute in the instant case is neither part of Tract I-Anor has been submitted as an amendment to the declaration, it is included within the description of the PUD.

HVI is the successor in interest to Camper Village, the original declarant/developer. Of the approved 198 units, 141 have been constructed as Big Sky Hidden Village Condominiums. When HVI conveyed the condominium units, it did not reserve any easement, right of access, or right of use for the roads, water lines, or sewer lines. However, the roads and the sewer and water lines cross HVI’s property in order to reach the Big Sky Hidden Village Condominium. The land included in COS 1605 but not included in the declaration belongs to HVI. This remaining land surrounds the Big Sky Hidden Village Condominium on three sides. See diagram.

On April 2, 1991, HVI applied to the Department of Health and Environmental Sciences, Lone Mountain Springs, and Rural Improvement District #305 for approval of 57 additional units. Big Sky then filed suit in the Eighteenth Judicial District Court, Gallatin County, seeking a declaratory judgment that the land within COS 1605 is subject to the declaration, that the roads within the Condominium are private and not available for public use, and that the water and sewer systems are the property of the unit owners and cannot be expanded without their permission. HVI moved for partial summary judgment, seeking a declaratory judgment that the real property owned by HVI within COS 1605 is not subject to the Big Sky Hidden Village Condominium declaration or bylaws. On June 15, 1994, the District Court granted HVTs motion, stating that HVTs property within COS 1605 is not subject to the Big Sky Hidden Village Condominium declaration or bylaws.

On June 30, 1994, Big Sky moved for partial summary judgment on the remaining issues. In its March 31, 1995 memorandum and order, the District Court denied Big Sky’s motion ruling that the roads, while private, are not the exclusive property of Big Sky or its members; that the roads are a public right-of-way for all purposes other than maintenance; that HVI has the right to use the roads for ingress and egress to its property because it has acquired easements by implication and necessity; and that HVI has the right to use the water and sewer systems. On April 14, 1995, Big Sky filed its notice of appeal from the District Court’s judgment and memorandum and order granting HVI’s cross motion for partial summary judgment.

HVI filed in this Court a motion to dismiss the appeal arguing that neither District Court order is reviewable because there were multiple claims and because the orders were not final. Citing Hennen v. Omega Enterprises, Inc. (1994), 264 Mont. 505, 507-08, 872 P.2d 797, 799, we held in a June 1, 1995 order that the District Court’s March 1995 order is appealable under Rule 1(b)(2), M.R.App.P., because it was a denial of injunctive relief and that the June 15,1994 judgment is appealable because it is an intermediate order or decision.

STANDARD OF REVIEW

We review a grant of summary judgment de novo using the same criteria initially used by the District Court under Rule 56, M.R.Civ.P. Mead v. M.S.B., Inc. (1994), 264 Mont. 465, 470, 872 P.2d 782, 785. Therefore, we determine whether there is an absence of genuine issues of material fact and whether the moving party is entitled to judgment as a matter of law. Mead, 872 P.2d at 785.

DISCUSSION

1. Whether real property adjacent to a condominium development, which was never submitted to Montana’s Unit Ownership Act by description on the condominium declaration or amendment thereto, is subject to the act and the declaration.

Big Sky claims that the District Court erred in finding that the land owned by HVI is not subject to the Big Sky Hidden Village Condominium declaration or bylaws, and thus is not subject to Montana’s Unit Ownership Act, Title 70, chapter 23, MCA. HVI argues that the District Court correctly determined that the ten-year time limit in the declaration only applies to land included in that declaration or added by amendment thereto and does not limit HVI's right to develop its remaining land.

Section 70-23-103, MCA, sets forth the applicability of the Unit Ownership Act establishing a condominium as follows:

Applicability — submission by declaration required. In order to submit any property to the provisions of this chapter, the sole owner or sole lessee or all of the owners or all of the lessees thereof shall execute, acknowledge, and record a declaration in the office of the recording officer of the county in which the property is located. The declaration shall be executed in accordance with 70-23-301.

Section 70-23-102(6), MCA, provides that a declaration is the instrument by which property is submitted to the provisions of the Unit Ownership Act. Actual filing of the declaration is the action “which subjects the property in question to the provisions of the act.” Jordan v. Elizabethan Manor (1979), 181 Mont. 424, 430, 593 P.2d 1049, 1053. A declaration shall contain among other things “a description of the land, whether leased or in fee simple, on which the building is or is to be located.” Section 70-23-301, MCA. A certificate of survey, on the other hand, is not a declaration and does not submit land to the Unit Ownership Act.

Accordingly, the declaration for the Big Sky Hidden Village Condominium and not COS 1605 determines the land subject to the provisions of the Unit Ownership Act. Specifically, the original declaration included only Tract I-A. Subsequent amendments to the declaration included Tracts I-XI and the Recreation Tract. Big Sky concedes that if the property in question is not on Big Sky Hidden Village Condominium land, then it is not subject to the declaration.

However, Big Sky argues that the description of property in the original declaration is incomplete and therefore COS 1605 properly determines the property included in the Big Sky Hidden Village Condominium. While section II of the declaration broadly states that the property included in the Condominium is located in “the SW 1/4 of Section 35, Township 6 South, Range 3 East, M.P.M, Gallatin County, Montana,” the original site plan (Exhibit B), incorporated within the original declaration and recorded with it, specifically includes a metes and bounds description of the property submitted to the act. Similar site plans were submitted with each amendment to the declaration. Therefore, the declaration contained a complete and specific description of the property.

HVI argues that the ten-year limitation contained in the declaration only governs the addition of units to the Big Sky Hidden Village Condominium, not development of land outside the Condominium. HVI further argues that the term “expansion” in the declaration refers to the addition of units or land to the Condominium and not to other property owned by HVI. Moreover, HVI notes that the ownership and voting section of the declaration states that “[t]he Hidden Village Condominium consists of the real property described above ....” Exhibit C to the declaration shows “the proposed or projected location of the additional buildings and lands which may be added by the declarant.” Therefore, for other land to be included within the Condominium, it would have to be added by amendment. Because the amendments to the declaration do not include HVI’s land in question, HVI argues that the land is not part of the Condominium.

There are no provisions within the declaration that purport to prevent HVI from developing land not placed within the Big Sky Hidden Village Condominium. The ten-year limitation in the declaration only governs the addition to units to the Big Sky Hidden Village Condominium, not the separate development of HVI’s land outside the Condominium. Thus the term “expansion” and the limitation thereof, applies only to additional units to the Big Sky Hidden Village Condominium, not the separate construction of separate improvements on land owned by HVI outside the Condominium. The Gallatin Board of County Commissioners approved 198 units; Lone Mountain Springs agreed to provide service for 198 units, and RID 305 agreed to provide service for 198 units. The Gallatin County Clerk and Recorder has the declaration on file to give notice to any interested party exactly what land is included in the Big Sky Hidden Village Condominium. Accordingly, we hold that the District Court correctly found that HVI’s real property adj acent to the Big Sky Hidden Village Condominium was never submitted to Montana’s Unit Ownership Act by description on the Condominium declaration or amendment thereto.

2. Whether the owner of real property adjacent to a condominium development may use the roads running through the condominium property to access the adjacent land.

Big Sky contends that the roads going through the Condominium are private and therefore HVI may not use them. HVI argues that the roads are public and in the alternative that HVI has an easement by implication and an easement by necessity to use the roads.

As early as 1973, what is now Big Sky Hidden Village Condominium and HVI’s remaining property was laced with a system of roads accommodating vehicles for use as an R.V. park. Therefore, in 1980, when Camper Village sought approval of the PUD, a series of roads already existed on the land to be developed. The roads extended through what is now HVI’s remaining property and what is now the Big Sky Hidden Village Condominium. Those roads which predated the PUD approval, the filing of the declaration, and the construction of the first condominium unit, are the same roads that continue to serve the Condominium and HVI’s land today. Additionally, in approving the PUD, the Gallatin County Board of County Commissioners found that “to preserve to the maximum extent possible the natural characteristics of the land .... adequate access to all units should be provided even though the roads will be private ones.”

Camper Village, Inc., and HVI developed the Big Sky Hidden Village Condominium in phases. Camper Village, Inc., initially submitted to the declaration Tract I-A comprised of a few acres and 14 units. Camper Village Inc., and HVI continued to develop the Condominium in phases, adding small parcels of land to the declaration. During this phased development, unit owners had to cross property owned by Camper Village or HVI to obtain access to their condominiums. Similarly, to obtain access to the remaining land to construct additional units, Camper Village and HVI used the existing roads that cross the property that is already part of the Condominium. Thus HVI claims that it had an easement by necessity allowing it to use the existing road system.

An easement by necessity is a subspecies of an easement by implication that arises through strict necessity for exit and access to a parcel of property. Graham v. Mack (1984), 216 Mont. 165, 175, 699 P.2d 590, 596; see also Schmid v. McDowell (1982), 199 Mont. 233, 237, 649 P.2d 431, 432. In Schmid, a property owner brought action against a neighboring property owner seeking a declaration of an easement by necessity. We defined an easement by necessity as follows:

[w]here an owner of land conveys a parcel thereof which has no outlet to a highway except over the remaining lands of the grantor or over the land of strangers, a way of necessity exists over the remaining lands of the grantor. Similarly, a way of necessity is found when the owner of lands retains the inner portion conveying to another the balance, across which he must go for exit and access.

Schmid, 649 P.2d at 433 (citations omitted); see also Peters v. Johnson (1983), 203 Mont. 120, 661 P.2d 24. Further, we distinguished an easement by necessity from other implied easements in noting an easement by necessity need not be in existence at the time of conveyance, but rather the conveyance gives rise to the easement. However, the tracts over which the easement is claimed must have had a common ownership or unity of title immediately prior to the severance giving rise to the necessity. Schmid, 649 P.2d at 433.

Subsequently in Graham, we set forth two basic elements of an easement by necessity: 1) unity of ownership, and 2) strict necessity at the time the unified tracts are separated. Graham, 699 P.2d at 596. In Graham, we held that no implied easement existed absent unified title of the property involved. We reiterated the strong public policy against shutting off a tract of land and thus rendering it unusable. “Where an owner of land conveys a parcel which has no outlet to a highway except over the remaining lands of the grantor or over the lands of strangers, a way of necessity exists over the remaining lands of the grantor.” Graham, 699 P.2d at 596 (quoting Schmid, 649 P.2d at 433). However, the way granted may not be over the land of a third party or stranger to the title. Graham, 699 P.2d at 596-97; see also Woods v. Houle (1988), 235 Mont. 158, 163, 766 P.2d 250, 253.

In Woods, the district court granted an easement by necessity. In reversing the district court, we held that the respondent was not able to meet the requirements of an easement by necessity as set forth in Graham. The easement by necessity did not give the respondent access to a public road but only to a third party’s land, and as we held in Graham, a way granted may not be on the land of a third party. Moreover, the respondent had an easement by prescription which is incompatible with an easement by necessity. Woods, 766 P.2d at 253.

In Smith v. Moran (1985), 215 Mont. 31, 38, 693 P.2d 1246, 1251, we considered the Gallatin County Subdivision Regulation 4.4.2, which provides that:

[w]hen a new subdivision adjoins unsubdivided land and reasonable access thereto must pass through the new subdivision, streets and rights of way shall be provided to allow suitable access to the unsubdivided land.

In Smith, there was evidence that plaintiffs had ample alternative access to their property, and there was no evidence to suggest that access across the subdivision was essential. We further noted that “any unique property interest in abutting landowners is limited to the right only to adequate access necessary to connect the landowner to the general street system.” Smith, 693 P.2d at 1251 (citing Wynia v. City of Great Falls (1979), 183 Mont. 458, 600 P.2d 802).

In the instant case, HVI meets both the unity of title requirement and the requirement of strict necessity at the time the unified tracts were separated. Camper Village, HVI’s predecessor, owned all of COS 1605 and conveyed part of that tract to the Big Sky unit owners. At the time Camper Village conveyed Tract I-Ato the Big Sky unit owners, submitting Tract I-Ato the declaration, the strict necessity of access and exit to the public roads arose. In his affidavit, Jack Schunke, an engineer, stated that if not afforded access across the existing roads, HVI will have great difficulty developing additional property, if it may do so at all. Moreover, he stated that the road some of the unit owners use to enter the Condominium crosses HVI’s land. Carlisle Neithold, president of HVI stated in his affidavit that HVI does not own abutting land outside COS 1605, and cannot obtain access to its remaining land without using the existing roadways. Thus there is evidence that HVI does not have ample alternative access to its property.

Big Sky’s argument that the ten-year limitation in the declaration precludes an easement by implication and by necessity because it negates the presumed intent to reserve easements and the necessity for those easements does not persuade us. As stated above, the ten-year limitation in the declaration only addresses HVI’s right to continue to add land or units to the Big Sky Hidden Village Condominium and does not address HVI’s right to use the roads.

Accordingly, the District Court correctly granted summary judgment in favor of HVI, determining that HVI has an easement by necessity. Because we hold that the District Court correctly granted summary judgment on the easement by necessity, we need not reach the issue of HVI’s alleged easement by implication.

3. Whether the owner of real property adjacent to a condominium development may use the water and sewer mains running through the condominium property to serve the adjacent land.

Big Sky contends that the sewer and water systems are common elements and therefore HVI has no right to use them. HVI concedes that the water and sewer systems may be common elements held by the condominium unit owners as tenants in common, but contends that Big Sky does not have exclusive ownership of the water and sewer systems. In fact, HVI argues that public utilities own the water and sewer systems, have the responsibility for maintaining the systems, and therefore have the exclusive right and duty to determine who hooks up to the systems.

In its definition section, the declaration includes water and sewer lines as general common elements. Section 70-23-102(8)(d), MCA, also includes water and waste disposal as general common elements. Section 70-23-404, MCA, explains the nature of the ownership interest in general common elements as follows:

The undivided interest in the common elements shall not be separated from the unit to which it appertains and shall be conveyed or encumbered with the unit even though such interest is not expressly mentioned or described in the conveyance or other instrument.

Consequently, each unit owner may use the common elements for their intended purposes. See § 70-23-503, MCA. The bylaws of a condominium provide for the maintenance, repair, and replacement of the common elements or the additions and improvements thereto. Section 70-23-504, MCA.

HVI argues that while the Condominium members may own the water and sewer lines, they do so as tenants in common and cannot preclude another party from a right to an easement to use the same common elements. In fact, HVI argues that Big Sky’s claim to exclusive use and ownership of the water and sewer lines contradicts the fact that Lone Mountain Springs and Water and Sewer District (WSD) #363 exercise the right to determine who hooks up to the respective systems and contradicts the approval of the PUD allowing HVI to obtain water and sewer service through the existing systems.

Prior to 1973, a developer installed the water distribution mains located within what is now Big Sky Hidden Village Condominium. When the Gallatin County Board of County Commissioners approved the PUD in 1980, the water distribution system consisting of a storage tank on the hill above the development and numerous water distribution mains and loops therefore already existed. Additionally, prior to 1972, a developer installed a series of sewer collection mains on the development. Rural Improvement District #305 obtained ownership of the sewer collection mains that transported waste water from the development to a treatment facility that it owned and operated.

After the PUD was approved, Camper Village, Inc. and HVI developed the Big Sky Hidden Village Condominium in phases. During the phased development, the unit owners had to use the water distribution mains and sewer collection mains passing underneath Camper Village, Inc. property. Similarly, when Camper Village, Inc. and HVI constructed units for inclusion into the Condominium, they hooked those units up to the existing water distribution and sewer collection mains running, in part, under the Condominium property.

Lone Mountain Springs owns the water tank and wells serving Big Sky Hidden Village Condominium and has repaired and maintained the lines servicing the Condominium. Two water sources serve the Big Sky Hidden Village Condominium, a well not far from the condominiums and a well that serves the Sweetgrass Hills Subdivision. Therefore, two water distribution mains enter the Condominium, one from the nearby well and one from the water system that serves the Sweetgrass Hills Subdivision. These mains intersect and travel to the water storage tank on Big Sky Lumber Company’s property. The Condominium derives water pressure and capacity from the water storage tank. That tank is crucial to Big Sky Hidden Village Condominium’s continued service. The water distribution mains that transport water through HVI’s property to the Condominium and on to a third party’s property existed before Camper Village bought the property it then conveyed to HVI and to the Condominium. Those same mains now transport water from a third party’s property, through HVI’s property, through the Condominium through HVI’s property and to the water storage tank.

Lone Mountain Springs has maintained and repaired the water system serving the Condominium. Big Sky does not pay for the repair and maintenance expenses to the water system. Lone Mountain Springs installed a telemetry system to regulate the flow of water into the storage tank to prevent the tank from overflowing or becoming empty. After a well had become contaminated, Lone Mountain Springs connected the water distribution pipes in the Big Sky Hidden Village condominium to the Sweetgrass Hills Subdivision water system.

Section 69-4-511(1), MCA, provides for the financial responsibility and liability for water service as follows:

A property owner is responsible for the costs of constructing privately supplied water service pipelines from the main to his premises and for maintaining service pipelines from his property line to his premises.

Big Sky Hidden Village Condominium did not construct the water lines on its premises or the lines from its premises to the main water lines, nor has it paid for the maintenance or repair of the water lines from its property line to its premises.

The sewer collection mains also pass through property owned by HVI, the Condominium and on to property owned by third parties. Originally, Rural Improvement District #305 serviced Camper Village Inc.’s property and then serviced both HVI’s and the Condominium’s property. Rural Improvement District #305 transferred its assets, debts, and liabilities to WSD #363; it included in the assets transferred existing sewer collection pipes serving the Big Sky Hidden Village Condominium. WSD #363 was organized by vote of the citizens of the Big Sky area. All of the sewer and waste water generated by the Big Sky Hidden Village Condominium flows into the sewer collection mains and sewage treatment facility owned by WSD #363.

RID #305 maintained the sewer collection system servicing the condominium. RID #305 hired a firm to conduct a video inspection of the sewer mains and hired an irrigation company to dig up and repair portions of the sewer mains serving the Condominium. WSD #363 has also maintained the lines within the Condominium and has given approvals and disapprovals for hook up of additional users within the Condominium. Therefore, WSD #363 clearly exercises indicia of ownership of the sewer lines in the Big Sky Hidden Village Condominium. WSD #363 agreed to provide service to all 198 units in the PUD. Consequently, the annual assessment HVI pays to Gallatin County includes payment to WSD #363.

The undisputed evidence contained in the affidavits indicates that Lone Mountain Springs and WSD #363 claim ownership of the systems they operate and maintain. The evidence of maintenance and repair substantiates that claim. To the contrary, although Big Sky Hidden Village Condominium claims ownership of the systems, it provides no evidence to support its claim. The Condominium failed to present a persuasive argument in its brief to support ownership of the water and sewer systems. Therefore, because WSD #363 owns the sewer system that services the Big Sky Hidden Village Condominium and Lone Mountain Springs owns the water system that services the Big Sky Hidden Village Condominium, the District Court correctly determined that Big Sky may not interfere with or control Lone Mountain Springs’ or WSD #363’s service and hook ups.

Affirmed.

CHIEF JUSTICE TURNAGE, JUSTICES ERDMANN, GRAY and HUNT concur.