author:
JUSTICE SHEEHY
      JUSTICE WEBER,
      JUSTICE HARRISON,

text:
    In the Matter of the PARENTAL PLACEMENT OF M.R.D.B., a minor child.
    No. 88-605.
    Submitted Sept. 25, 1989.
    Decided Feb. 14, 1990.
    Rehearing Denied March 29, 1990.
    787 P.2d 1219.

      Claudeen Bates Arthur argued, Gen. Counsel, White Mountain Apache Tribe, Whiteriver Ariz. (D. Michael Eakin, Montana Legal Services, of counsel), Billings, for appellant.
    Mark A. Bryan argued, Bryan & Atkins, Bozeman, for respondent.
   JUSTICE SHEEHY

delivered the Opinion of the Court.

The appellant, White Mountain Apache Tribe, filed a motion to dismiss the pending adoption proceedings in the District Court, Eighteenth Judicial District, Gallatin County, for lack of jurisdiction under 25 U.S.C. § 1911(a) of the Indian Child Welfare Act (ICWA). The appellant contended in District Court that the minor child Michelle Rae Dawn Baier (Michelle) is a ward of the White Mountain Apache Tribal Council and pursuant to 25 U.S.C. § 1911(a), the Tribal Court had exclusive jurisdiction over proceedings involving the child. The District Court denied the Tribe’s motion to dismiss holding that the Tribal Court maintained continuing but not exclusive jurisdiction and therefore, the Montana court had concurrent jurisdiction. It is from this order the White Mountain Apache Tribe appeals. We reverse.

Oliviane Marie Baier (Oliviane), the natural mother of the child, is a full-blooded White Mountain Apache and an enrolled member of the Tribe. Oliviane was adopted by Harold and Betty Baier, non-Indians, and raised in Gallatin County, Montana, from 1972 to 1982.

Prior to her pregnancy, in August of 1982, Oliviane moved from Montana to the White Mountain Apache Reservation. Oliviane traveled to the reservation to become acquainted with her biological family. In January of 1983, she returned to Montana. On March 5, 1984, in Billings, Montana, Oliviane gave birth to Michelle, a one-half blood White Mountain Apache. The father is unknown.

Shortly after Michelle’s birth, on March 18, 1984, Oliviane placed Michelle with Dr. James and Judith Collins (the Collins) of Fort Collins, Colorado, for adoption. In August of 1984, after placing the child with the Collins, Oliviane returned to the reservation and completed her high school education. She remained on the reservation until 1988.

After waiting the time required by Colorado law, on March 13, 1985, Collins filed a petition for adoption. However, on May 22, 1985, with the assistance of the White Mountain Apache Tribe, Oliviane withdrew her consent to the Colorado adoption.

On May 29, 1985, Oliviane and the White Mountain Apache Tribe jointly petitioned the White Mountain Apache Tribal Court to accept jurisdiction pursuant to the ICWA. The following day the Tribal Court held a hearing on the petition. After the hearing, the Tribal Court issued an order accepting jurisdiction over the care and custody of the child. It provided that unless otherwise ordered by the Tribal Court, the care and custody of the child would be with her natural mother, that the White Mountain Apache Tribal Social Services was to keep the court informed on a weekly basis regarding the care of the child; and that the court would set the case for review.

Prior to Michelle being brought to the reservation, proceedings had been filed in Colorado alleging that Oliviane had neglected and abandoned Michelle. In view of the seriousness of these allegations against Oliviane, the Tribal Court set the matter for review on July 3, 1985. After hearing testimony and examining the psychological evaluation and personality assessment of Oliviane, the Tribal Court ordered that it would retain jurisdiction of Michelle; that Michelle shall remain a ward of the court; that the Tribal Social Services shall provide the court with reports on Oliviane’s visitations of Michelle and assessments thereof; and further provide the court with a rehabilitative plan to reunite the family.

On July 25, 1985; the Colorado court, recognizing and giving full faith and credit to the Tribal Court orders, dismissed the adoption proceedings and ordered Michelle to be turned over to the Tribal Court Social Services. Michelle was brought to the reservation on July 26, 1985. Although Michelle was a ward of the Tribal Court, and under the supervision of the Tribal Social Services, Oliviane was given physical custody of Michelle.

On May 27, 1986, the Tribal Court ordered Michelle removed from Oliviane’s physical custody for Michelle’s own protection. The Tribal Court again affirmed the wardship and Michelle was placed with an Indian foster family on the reservation. On December 2, 1986, Oliviane filed a motion for return of custody. Finally, on October 23, 1987, the Tribal Court heard Oliviane’s motion for return of custody. The Tribal Court allowed Oliviane to regain physical custody of the child, indicating its expectation that Oliviane would raise the child in her home. Furthermore, the court ordered Oliviane to participate in a home study and evaluation to be accomplished before December 8, 1987.

On November 15, 1987, Michelle was taken to Bozeman, Montana, with her grandparents. Later, on December 18, 1987, the Tribal Court issued an order requiring Oliviane to complete psychological evaluations as ordered on October 26, 1987, and to file them with the Tribal Court.

In January of 1988, Oliviane returned to Bozeman and enrolled as a student at Montana State University. Since January, 1988, Oliviane has remained in Montana and has not returned to the reservation. On February 22, 1988, The Collins filed a notice of parental placement with the District Court of the Eighteenth Judicial District. On February 25, 1988, Oliviane placed Michelle with the Collins pursuant to the Montana Private Placement Adoption Law. Finally, on March 31, 1989, Oliviane complied with the Tribal Court order of October 26, 1987, and December 18, 1987, by submitting an evaluation by Dr. Straynham to the Tribal Court.

On April 20, 1988, a hearing was held in Montana District Court where Oliviane confirmed her consent to the adoption and the court ordered an investigation. On May 3, 1988, after receiving notice of the Montana proceedings, the Tribe filed a motion to dismiss for lack of jurisdiction with the District Court. The Tribe also filed a petition in the Tribal Court for an order directing Oliviane to show cause why the custody order of the Tribal Court should not be modified.

On May 13, a hearing was held in Montana District Court. A stipulation was entered into between the Tribal Court, the Collins, and Oliviane leaving temporary custody of Michelle with the Collins pending further proceedings of the District Court.

On May 27,1988, the Tribal Court issued an order finding Oliviane in contempt of. the October 26, 1987 order. Furthermore, the court stated that Michelle was a ward of the court, and ordered Michelle be returned to the custody of the Tribal Social Services.

On June 1, 1988, the Tribe filed a motion for emergency modification of the District Court’s order of temporary placement of the child with the Collins, and requested that the court order all parties to comply with the May 27, 1988 Tribal Court order.

On October 13, 1988, the Montana District Court order denied the Tribe’s motion to dismiss and motion for change of temporary custody and set a date for the final hearing of the adoption. The District Court in its order found that Michelle was not a ward of the Tribal Court, thus the Tribal Court lacked exclusive jurisdiction over Michelle. Furthermore, the District Court asserted it held concurrent jurisdiction over the adoption proceeding pursuant to 25 U.S.C. 1911(b) of the ICWA.

The Tribe raises a number of challenges to the District Court’s rulings, but the pivotal issue is whether the District Court properly decided that it had jurisdiction. Because it did not, this appeal may be resolved without reaching the remaining issues.

The Indian Child Welfare Act of 1978, 25 U.S.C. §§ 1901-1963 was the product of rising concern in the mid-1970’s over the consequences to Indian children, Indian families, and Indian tribes of abusive child welfare practices that resulted in the separation of large numbers of Indian children from their families and tribes through adoption or foster care placement, usually in non-Indian homes. Mississippi Choctaw v. Holyfield (1989),_U.S._, 109 S.Ct. 1597, 1599-1600, 104 L.Ed.2d 29, 36. Studies undertaken by the Association on American Indian Affairs in 1969 and 1974, and presented in ICWA Senate hearings, showed that 25 to 35 percent of all Indian children had been separated from their families and placed in adoptive families, foster care or institutions. Mississippi Choctaw, _U.S._, 109 S.Ct. at 1600, 104 L.Ed.2d at 36. H.R. Rep. No. 95-1386 at 9 (1978).

The Senate and House Hearings not only focused on the devastating impact to Indian families separated by abusive foster care practices, but also on the harm to the tribes themselves by the wholesale removal of their children. Mississippi Choctaw, _U.S.__ ,109 S.Ct. at 1600, 104 L.Ed.2d at 37. For example, Calvin Isaac, Tribal Chief of the Mississippi Band of Choctaw Indians and representative of the National Tribal Chairmen’s Association testified as follows:

“Culturally, the chances of Indian survival are significantly reduced if our children, the only real means for the transmission of the tribal heritage, are to be raised in non-Indian homes and denied exposure to the ways of their People. Furthermore, these practices seriously undercut the tribes’ ability to continue as self-governing communities. Probably in no area is it more important that tribal sovereignty be respected than in an area as socially and culturally determinative as family relationships.”

Mississippi Choctaw, _U.S. at_, 109 S.Ct. at 1597, 104 L.Ed.2d at 37; 95th Cong., 2d Sess. (1978) at 193.

The Congressional findings that were incorporated into the ICWA reflect these sentiments. The following Congressional findings are set forth at 25 U.S.C. § 1901:

“(3) that there is no resource that is more vital to the continued existence and integrity of Indian tribes than their children . .
“(4) that an alarming high percentage of Indian families are broken up by the removal, often unwarranted, of their children from them by nontribal public and private agencies and that an alarming high percentage of such children are placed in non-Indian foster and adoptive homes and institutions; and
“(5) that the States, exercising their recognized jurisdiction over Indian child custody proceedings through administrative and judicial bodies, have often failed to recognize the essential tribal relations of Indian people and the culture and social standards prevailing in Indian communities and families.”

At the heart of the ICWA are its provisions concerning jurisdiction over Indian child custody proceedings. Mississippi Choctaw, _U.S.__, 109 S.Ct. at 1601, 104 L.Ed.2d at 38. The ICWA provides for exclusive jurisdiction in the Tribal Court pursuant to 25 U.S.C. § 1911(a), which states in pertinent part:

“. . . Where an Indian child is a ward of the tribal court, the Indian tribe shall retain exclusive jurisdiction, notwithstanding the residence or domicile of the child.”

The tribe contends that Michelle is a ward of the Tribal Court, thus giving exclusive jurisdiction to the Tribal Court under § 1911(a). The Collins urge this Court to affirm the District Court’s order granting the District Court concurrent jurisdiction under 25 U.S.C. § 1911(b). The Collins argue that the Tribal Court lost its wardship status over Michelle when it granted physical custody to Oliviane on October 26, 1987. Furthermore, the Collins contend the Tribal Court violated its own juvenile code which set a one year time limit on orders. To resolve the issue of jurisdiction, a review of Tribal Court orders and the District Court order is necessary.

In May of 1985, Oliviane requested the Tribe to assist her in petitioning the Tribal Court to take jurisdiction over the care and custody of her child and in revoking her consent to the Colorado adoption. On May 29, 1985, Oliviane and the Tribe jointly petitioned the Tribal Court to accept jurisdiction pursuant to the ICWA. The next day, after a hearing before the Tribal Court on the petition, the Tribal Court accepted jurisdiction over Michelle. The Tribe argues that the Tribal Court’s order of May 30, 1985, placed jurisdiction over the care and custody of Michelle in the Tribal Court, thereby making the child a ward of the Tribal Court. Although the Tribal Court order accepting jurisdiction did not specifically state that Michelle is “a ward of the Tribal Court,” this Court has long held that an infant becomes a ward of the court when its parents submit themselves to the jurisdiction of the court. Barbour v. Barbour (1958), 134 Mont. 317, 327, 330 P.2d 1093, 1098; Lay v. District Court (1948), 122 Mont. 61, 72, 198 P.2d 761, 767; Wolz v. Wolz (1940), 110 Mont. 458, 463, 102 P.2d 22, 24. Oliviane submitted herself to the jurisdiction of the Tribal Court when she withdrew her consent to the Colorado adoption, and subsequently petitioned the Tribal Court to accept jurisdiction pursuant to 25 U.S.C. § 1911, et seq. Thus, Michelle became a ward of the Tribal Court on May 30, 1985.

Subsequent orders by the Tribal Court firmly establish exclusive jurisdiction of the Tribal Court under § 1911(a). On July 3, 1985, prior to Michelle arriving at the reservation, the Tribal Court reaffirmed the wardship status of Michelle when it ordered that “Michelle remain a ward of the Tribal Court as previously ordered on May 30, 1985.”

On May 27, 1986, the Tribal Court ordered Michelle removed from Oliviane’s physical custody for Michelle’s own protection. The Tribal Court again specifically addressed the wardship and reasserted that “Michelle is a ward of the Tribal Court unless otherwise ordered by the Tribal Court.” Subsequently, the Tribal Social Services placed Michelle with an Indian foster family on the reservation.

On October 24, 1987, the Tribal Court, in response to Oliviane’s petition to regain custody of Michelle, dissolved the foster care of Michelle, and granted Oliviane physical custody of Michelle. The Collins contend that Michelle ceased to be a ward of the Tribal Court when the court granted physical custody to the mother. The District Court in its order agreed with respondents’ contention that the Tribal Court lost exclusive jurisdiction under § 1911(a). Both the Collins and the District Court are incorrect in their assertions that the Tribal Court’s order terminated the wardship status and exclusive jurisdiction over Michelle. When the Tribal Court returned physical custody of Michelle to her mother, it specifically ordered her to raise the child in her home and complete a home study and evaluation so that:

“. . . the Court will be fully advised in making any further orders it deems necessary.”

The language of the order clearly shows the Tribal Court sought to maintain exclusive jurisdiction over the welfare of Michelle notwithstanding the residence or domicile of the child. Although the Tribal Court granted physical custody to Oliviane, Michelle continued to remain a ward of the Tribal Court. There is no other reasonable explanation for the words “so that the Court will be fully advised in making any further orders . . .” Such a judicial award of custody of a child is not final, but is subject to the continuing control and jurisdiction of the court. Matter of B.T. (1986), 223 Mont. 287, 289, 725 P.2d 230, 231.

The Tribal Court has exclusive jurisdiction pursuant to 25 U.S.C. § 1911(a) because the minor child is a ward of the Tribal Court. Nevertheless, the District Court found that it could accept jurisdiction pursuant to 25 U.S.C. § 1911(b) of ICWA, as follows:

“In any State court proceeding for the foster care placement of, or termination of parental rights to, an Indian child not domiciled or residing within the reservation of the Indian child’s tribe, the court, in absence of good cause to the contrary, shall transfer such proceeding to the jurisdiction of the tribe, absent objection by either parent, upon the petition of either parent or the Indian custodian or the Indian child’s tribe: Provided, That such transfer shall be subject to declination by the tribal court of such Tribe.” (Emphasis by the District Court.)

Section 1911(b) is not applicable in this case because § 1911(a) provides that the Tribal Court shall retain exclusive jurisdiction. It was error on the part of the District Court to determine that Montana had concurrent jurisdiction over Michelle. The Tribal Court found her a ward of the Tribal Court and this wardship has not been terminated by any judicial proceedings in the Tribal Court.

Further support for vesting exclusive jurisdiction in the Tribal Court can be found in the Tribal Juvenile Code. Jurisdiction of the Tribal Court is found at § 42.1 of the Tribal Juvenile Code, which states:

“The Juvenile Court shall have exclusive original jurisdiction over proceedings in which the child is to be adjudicated to be neglected, in need of supervision, or delinquent, proceedings for the termination of parental rights, and proceedings for the adoption of a child.” Furthermore, § 42-4 of the Juvenile Code provides the following:
“Jurisdiction obtained by the Juvenile Court shall be retained by the Juvenile Court until a child becomes 18 years of age, unless terminated prior thereto.”

The very word “retained” in the statute connotes continuation of jurisdiction. Continuing jurisdiction results in continuing wardship “until the child becomes 18 years of age, unless terminated prior thereto.” Thus, as long as the court has continuing authority over the child, the child continues to be a ward of the court. The ICWA, 25 U.S.C. 1911(a), dictates exclusive jurisdiction where a child is a ward of the Tribal Court. Michelle became a ward of the Tribal Court when Oliviane came before the Tribal Court on her petition to revoke the Colorado adoption. Therefore, the Montana District Court erroneously concluded that it has concurrent jurisdiction.

The Tribal Court order of October 23, 1987 was issued pursuant to a hearing on a motion by Oliviane to return custody to her. She did not request the Tribal Court, pursuant to § 42.4 of the Tribal Juvenile Code, to terminate its jurisdiction or request that the wardship status be ended. The exclusive jurisdiction under § 1911(a) by the Tribal Court over the child continued while the Tribal Court granted custody to the mother. The only issue addressed at the October, 1987 hearing was whether custody of the child should remain with Tribal Social Services or be returned to the natural mother.

Respondent argues that wardship terminated pursuant to § 47.5 of the Tribe’s Juvenile Code. This section, however, merely addresses custody orders, and not Tribal Court jurisdiction. While the Tribal Court may have violated the custody provisions as set forth in § 47.5 of the Tribal Juvenile Code, jurisdiction still remains exclusively with the Tribal Court.

The Collins argue that we should consider the bonding between themselves and Michelle in reaching this decision. The Collins are correct in their assertions that a family bond has developed, and a separation at this point would cause considerable pain. However, the best interest of Michelle is not a question for this Court to decide. The sole issue under consideration by this Court is whether the Tribal Court has exclusive jurisdiction under 25 U.S.C. § 1911(a) of the ICWA. Clearly the evidence dictates granting exclusive jurisdiction to the Tribal Court. The White Mountain Apache Tribal Court has the exclusive right to determine the fate of Michelle. We are fully confident the Tribal Court will consider the best interest of all parties in making its adoption determination.

We reverse the order of the District Court asserting concurrent jurisdiction over the Indian child, and remand this case for further proceedings consistent with this Opinion.

CHIEF JUSTICE TURNAGE and JUSTICES HUNT and Mc-DONOUGH concur.

JUSTICE WEBER,

specially concurring:

I join in the holding of the majority opinion in view of the recent Choctaw holding of the United States Supreme Court. Although I have strong reservations about the majority’s analysis, and tend to join the dissent on the wardship theory, I conclude we must concede jurisdiction to the tribal court under Choctaw. I express two concerns.

First, I am shocked at the Tribe’s apparent disregard of the due process rights of the parent in the early stages of the controversy. The majority concludes that the child became a ward of the tribal court on May 30,1985. This was accomplished with virtually no recognition of the due process rights of the mother. The Tribe’s wardship appears to have been based on nothing more than its own stated claim. In Montana, any comparable restriction of parental rights can be done only with careful regard for the due process rights of the parents. Also shocking to me is the apparent ease with which the Tribe now argues against the desire of the mother, one of its own tribal members. It is ironic that the attorneys for the Tribe who have fought for many years for the protection of the interests of tribal members, now come all the way to Montana to argue so eloquently in direct opposition to this Indian mother. Who is left to represent the rights of the individual Indian mother when she is so abandoned by her Tribe?

Second, I am concerned with the effect of the Choctaw holding. In Choctaw, a father and mother went 200 miles off the reservation in order to give birth to twins, and promptly made adoption arrangements for the twins with a non-Indian couple. The Supreme Court concluded that the tribal court had exclusive jurisdiction to determine the custody of these children. Noting the policy furthered by the ICWA, which is in part to protect the interests of the Indian community in retaining its children within its society, the court concluded that tribal jurisdiction could not be defeated by the parents’ deliberate attempt to make a decision regarding their own children’s custody. This holding indicates the interests of the Tribe now are superior to the interests of the parents. The dissenting judges in Choctaw pointed out that it was questionable whether Congress intended to deprive Indian parents of their wishes in regard to the placement of their children. Parental rights are among the most significant rights granted to any human being. The Choctaw decision is incredible in light of its apparent elimination of certain parental rights in favor of tribal rights.

JUSTICE HARRISON,

dissenting:

I dissent from the result of the majority opinion. This cause should be affirmed in accordance with the order of District Court Judge Joseph Gary, dated October 13,1988. In endeavoring to do justice to this four-and-one-half-year-old child born in the State of Montana, Judge Gary noted in his memorandum that she is entitled to protection of the laws of Montana. Those protections through statutory and case law of this State are carefully directed to the ultimate “welfare of the child in adoption proceedings.” This Court has noted in a number of cases where Indian children are involved that we consider the welfare of the child even though Congress, in its passage of the Indian Child Welfare Act of 1978, has put the welfare of the tribe over the best interest of a child.

Judge Gary carefully directed his decision considering the multiple bodies of crisscrossing law including Montana statutes, the Uniform Child Custody Jurisdiction Act (UCCJA), the Federal Indian Child Welfare Act (ICWA), the White Mountain Apache Tribe Jurisdiction Code, and the United States Constitution. He noted that in the four-and-one-half-years of her short lifetime, this child has lived one year and several months with the Collins family in Colorado, the family trying to adopt her; part of one year with her natural mother on the Apache Indian Reservation; one year and several months with a tribal foster family; six months with her natural mother and her mother’s adoptive parents in Montana; and then back to the Collins family in Colorado. He further noted that “surely such an undesirable situation would be viewed by any court or any culture as intolerable.” For that reason, it was the District Court’s paramount desire to provide some stability in the child’s life once and for all.

In an over twenty page written order, which accompanied his opinion, the District Court carefully considered both the question of “retained jurisdiction” by the tribe and the question of whether Michelle shall remain a “ward” of the Apache court. The District Court noted that from tribal laws and procedures, the most revealing information gleaned from the orders of that court is that it put an emphasis on the certified order lodging “exclusive jurisdiction under the ICWA on the basis of domicile on the reservation.” He further noted that the juvenile court stated that there is exclusive jurisdiction “[a]s the mother is domiciled on the reservation and therefore her child is likewise considered by this court to be domiciled therein.” In addition the court noted that under the federal law “concurrent jurisdiction is a concept that is embraced in the Indian Child Welfare Act. That Act is replete with references to State courts and procedures required by the same for the adoption of Indian children.” Further the court noted that the Supreme Court of Kansas, in In re Matter of Adoption of Baby Boy L (1982), 231 Kan. 199, 643 P.2d 168, exhaustively studied the ICWA. While the facts of Baby Boy L are different than those in the case before Judge Gary the principles are applicable. The purpose of the ICWA set forth in 25 U.S.C. § 1902, provides that the purpose is to:

“promote the stability and the security of Indian tribes and families by the establishment of minimum Federal standards for the removal of Indian children from their families and the placement of such children in foster or adoptive homes which will reflect the unique values of Indian culture, and by providing for assistance to Indian tribes in the operation of child and family services programs.”

In Baby Boy L, the Kansas court held that since the child was never a member of the Indian family on the reservation, the ICWA was not applicable.

Baby Boy L was then considered by the Tenth Circuit Court of Appeals in the Kiowa Tribe of Oklahoma v. Lewis (1985), 777 F.2d 587 at 592, where the Court of Appeals, in interpreting 25 U.S.C. § 1914, said as follows:

“Congress intended the ICWA to set minimum standards and procedural safeguards for state child custody proceedings. [Citations omitted.] In setting such standards, Congress evidently believed that an Indian child’s tribe should be involved in the process even when the proceedings are in state courts rather than tribal courts. [Citations omitted.] Thus Congress clearly realized that state courts would continue to resolve some cases of Indian child custody. Section 1911(c) expressly gives the child’s Indian tribe the right to intervene in state court proceedings involving the child’s custody. We cannot read § 1914’s reference to ‘any court of competent jurisdiction’ as the type of clear and manifest authorization that federal courts need before they upset the ordinary principles of federal-state comity embodied in 28 U.S.C. § 1738 and the Full Faith and Credit Clause. It seems rather to state simply where such actions may initially be brought. Regardless of whether we agree with the Kansas Supreme Court’s construction of the ICWA, here we must honor the judgment it has rendered on the subject.”

Judge Gary goes further in his memorandum and adopts the Kansas court’s position that since the child in question is not domiciled within the reservation, it is not necessary to transfer the proceedings to the jurisdiction of the tribe if opposed by either parent. In this case, the mother of the child is objecting to the transfer of the custody to the Indian tribe.

Exclusive jurisdiction is mandated only when the Indian child resides on or is domiciled within the reservation, or when an Indian child is a ward of the court. I would agree with Judge Gary and give full faith and credit to the declaration of the White Mountain Apache court of their continuing jurisdiction, but would agree with his finding that Michelle is neither a ward nor a resident of the tribe at the time of the order and that the adoption proceedings should proceed and be approved for the Collins family.

JUSTICE BARZ joins in the foregoing dissent of JUSTICE HARRISON.


source: Caselaw Access Project

author: JUSTICE McDONOUGH JUSTICE SHEEHY,

license: Public Domain

text:
    RONALD L. STANHOPE, Plaintiff and Appellant, v. JOHN D. LAWRENCE, JR., Farmers State Bank of Worden, Montana, H. Richard Hansen, Lamonte W. Wagner, Hansen-Lawrence Agency, Inc., Defendants, Respondents and Cross-Appellants.
    No. 88-616.
    Submitted Dec. 14, 1989.
    Decided Feb. 28, 1990.
    787 P.2d 1226.

      Stephen M. Barrett argued and Holly B. Brown, Kirwan and Barrett, Bozeman, for plaintiff and appellant.
    Michael G. Moses argued, Moses Law Firm and Calvin J. Stacy argued, Keefer, Roybal, Hanson, Stacey & Walen, Billings, for defendants, respondents and cross-appellants.
   JUSTICE McDONOUGH

delivered the Opinion of the Court.

This appeal involves causes of action that arose within the context of a closely-held corporation and alleged several claims including breach of fiduciary duty, breach of contract, negligent misrepresentation, fraud, conversion and bad faith. Plaintiff Ronald L. Stan-hope appeals the order of the Thirteenth Judicial District, Yellowstone County, granting the individual defendants’, John D. Lawrence, Jr., H. Richard Hansen, Lamonte W. Wagner, and Hansen-Lawrence Agency, Inc., and the separate defendant Farmer’s State Bank of Worden, motion for new trial. We affirm.

Among the issues raised by appellant Stanhope is the following: Did the District Court err in granting the defendants’ motion for new trial on the ground that the damages awarded by the jury were based on a prohibited quotient verdict?

Stanhope is the former president of S&L Energy, Inc., a corporation organized in 1973 under the Montana Close Corporation Act and involved in purchasing and developing various oil properties. The defendants are various business entities and individual owners, shareholders and directors that transacted with both Stanhope and S&L Energy, Inc.

Stanhope brought suit against the defendants and the case was eventually submitted to the jury on two theories of liability: negligence and bad faith. The jury returned a verdict of $1 million in compensatory damages and later determined that the defendants’ conduct warranted punitive damages in the amount of $1,396,000.00. The jury was polled after returning the compensatory damage verdict. During this polling, one of the jurors indicated that the jury had agreed to use a quotient method — where the several amounts thought by the individual juror’s to be proper are added up and divided by 12 — as a means of reaching the final verdict.

Affidavits from all the jurors regarding the manner used in reaching the verdict were submitted to the court. Also, on September 8, 1988, after the jury hearing and verdict on the amount of punitive damages to be awarded, the Court conducted its own examination of the jury regarding the manner used in reaching the compensatory damage verdict. The defendants then moved for a new trial or judgment n.o.v. on the grounds that the verdict was a result of the prohibited quotient method as well as on several other grounds.

The Court also reviewed both the compensatory verdict and the punitive damage award. On October 28, 1988, the Court reduced the medical expenses portion of the compensatory verdict from $200,000.00 to $35,000.00 based on a lack of evidence. Stanhope has not appealed this reduction. The District Court also reduced the punitive damage award from $1,396,000.00 to $224,000.00 pursuant to § 27-1-221, MCA. The total verdict was thus reduced by the trial judge from $2,396,000.00 to $1,059,000.00.

On November 2, 1988, after consideration of the juror poll, its own examination, and juror affidavits supplied by both sides, the District Court granted defendants’ motion for new trial based on § 25-11-102(2), MCA, finding that the jury had reached a prohibited quotient verdict. The court did not rule on the defendants’ other motions. Stanhope’s subsequent motion for reconsideration was then denied. Stanhope now appeals the order granting new trial and raises, among others, the quotient verdict issue. The defendants also cross appealed on all issues not reached by the District Court to preserve those issues should this Court reverse the order granting new trial.

I.

It is essential to our determination in this case for us to set forth a clear and concise statement of the scope of our review regarding the grant of a new trial. The decision to grant a new trial is within the sound discretion of the trial judge and will not be overturned absent a showing of manifest abuse of discretion. Zeke’s Distributing Co. v. Brown-Forman Corp. (Mont. 1989), [239 Mont. 272,] 779 P.2d 908, 913, 46 St.Rep. 1678, 1682; Tope v. Taylor (Mont. 1988), [235 Mont. 124,] 768 P.2d 845, 849-850, 45 St.Rep. 2242, 2248; Walter v. Evans Products Co. (1983), 207 Mont. 26, 30-31, 672 P.2d 613, 616. Black’s Law Dictionary defines manifest as:

“evident to the senses, especially to the sight, obvious to the understanding, evident to the mind, not obscure or hidden, and is synonymous with open, clear, visible, unmistakable, indubitable, indisputable, evident, and self-evident.”

Black’s Law Dictionary 867 (5th ed. 1979). The question of whether or not the jury agreed to be bound by a quotient verdict process is a question of fact. We may not set aside the trial judge’s findings unless such findings are clearly erroneous. Rule 52(a), M.R.Civ.P. Findings of fact are not clearly erroneous if they are supported by substantial credible evidence. In re Marriage of Obergfell (1985), 218 Mont. 83, 87-88, 708 P.2d 561, 563-564. Substantial evidence is that evidence that a reasonable mind might accept as adequate to support a conclusion, and consists of more than a mere scintilla of evidence but may be somewhat less than a preponderance. Black’s Law Dictionary 1281 (5th ed. 1979). The evidence may be inherently weak and still deemed substantial; and although conflicts may exist in the evidence presented, it is the duty and function of the trial judge to weigh such conflicts. His findings will not be disturbed on appeal where they are based on substantial though conflicting evidence. Olson v. Westfork Properties, Inc. (1976), 171 Mont. 154, 157-158, 557 P.2d 821, 823. Thus, for us to reverse the trial court in this case we must find either that the trial court’s findings of fact are not supported by substantial evidence and thus are clearly erroneous, or that in applying the law to the facts there is a manifest abuse of discretion.

II.

We now turn to a discussion of the applicable law regarding quotient verdicts. The trial court’s grant of a new trial in this case was based on § 25-11-102, MCA. The statute provides:

“Grounds for new trial. The former verdict or other decision may be vacated and a new trial granted on the application of the party aggrieved for any of the following causes materially affecting the substantial rights of such party:
“(2) misconduct of the jury. Whenever any one or more of the jurors have been induced to assent to any general or special verdict or to a finding on any question submitted to them by the court by a resort to the determination of chance, such misconduct may be proved by the affidavit of any one of the jurors.”

Section 25-11-102(2), MCA. Utilization of the quotient method to reach a verdict, where the jurors agree to be bound by that verdict before the quotient is calculated, is such a resort to the determination of chance constituting grounds for a new trial under the statute. Haynes v. County of Missoula (1973), 163 Mont. 270, 517 P.2d 370; Bracy v. Great Northern Ry. Co. (1959), 136 Mont. 65, 343 P.2d 848; Benjamin v. Helena Light & Ry. Co. (1927), 79 Mont. 144, 255 P. 20; Gordon v. Trevarthan (1893), 13 Mont. 387, 34 P. 185. We note that a quotient verdict instruction was not requested by any party nor was one given in this case.

Plaintiff contends that the verdict is not objectionable even though the quotient process was used because there was no previous agreement to be bound by the quotient process. Plaintiffs argument is based on evidence showing that the jurors deliberated further after reaching an initial sum of between $830,000.00 and $880,000 through the quotient process and then later agreed to raise the amount to $1 million. Thus, plaintiff contends that the quotient process employed by the jurors was merely a mechanism for arriving at a starting point in determining damages; it was merely a part of the discussion and compromise used by all juries in arriving at a final agreement. The trial court disagreed with this contention.

In his argument, plaintiff correctly points out that the vice of a quotient verdict is an agreement in advance to be bound by the quotient process; the verdict is not objectionable where there is no previous agreement to be bound by the quotient process. Haynes, 517 P.2d at 382; Bracy, 343 P.2d at 854. Thus, the distinction between good verdicts and bad verdicts wherein the quotient process was used is dependent upon the prior agreement to be bound:

“If the jurors previously agree to a particular mode of arriving at a verdict, and to abide by the contingent result at all events, without reserving to themselves the liberty of dissenting, such a proceeding would be improper; but if the means is adopted merely for the sake of arriving at a reasonable measure of damages, without binding the jurors by the result, it is not objection [sic] to the verdict.”

Gordon, 34 P. at 186. However, this does not mean that a final verdict is valid simply because it is not exactly equal to the original verdict sum arrived at by the quotient process. “It is generally held that, if the amount of the verdict is not exactly the quotient sum but is adopted as a result of the quotient process and grows out of the latter, the verdict is invalid.” Benjamin, 255 P. at 24. Generally, a slight discrepancy between the quotient sum and the verdict does not affect the invalidity of a verdict; on the other hand, there is no well-defined rule governing how large the discrepancy between the quotient sum and the final verdict must be before the verdict will be considered to be valid. Benjamin, 255 P. at 24. In determining the cause of such a discrepancy and its effect on the validity of the verdict, the trial judge has considerable discretion:

“Much seems to rest on the basic facts that mathematical calculation was resorted to and led up to the fixing of the amount of the verdict, even though not the same as the quotient. Each case seems to depend on its own facts and their relation to each other. Motives of jurors, as disclosed, are given much weight. Frequently the motive in agreeing upon a sum different than the quotient sum is to make it ‘even money,’ but that is held not a good reason.” (Emphasis added.)

Benjamin, 255 P. at 24. Thus, the mere fact that the amount of the quotient and the amount of the final verdict differ is not conclusive of whether the jurors were in fact bound by a prior agreement.

III.

Was the evidence sufficiently substantial to support the trial judge’s findings? We conclude that the record contains substantial evidence to support the trial court’s finding that the the jurors acted under an agreement to be bound and were induced to assent to the verdict. The trial judge had the following substantial evidence to rely on in making his determination: the statements of the jurors — particularly Juror Sandberg — during polling, the statement of each of the jurors after the punitive damages verdict, and affidavits of the jurors supplied by both sides.

The record indicates that eight jurors voted that the defendants had negligently injured Stanhope; four jurors voted against recovery. During polling of the jury regarding the specific amount of the compensatory verdict, there was some confusion among the eight jurors favoring the plaintiff as to the amount of their verdict and whether they individually concurred in that verdict. Jurors Bushman, Arnold, Kline, Yanchisin, and Scribner all stated that their verdict was for $1 million. Juror Allen stated: “I forgot what I put. I would say a total of one million, but I’m not sure.” Juror Sandberg: “10,000, I think.” Juror Scharnowske: “Total of three million.” The clerk repeated the question and broke the verdict down into its individual categories: medical expenses, past, $200,000, physical injuries but limited to pain, $205,000, emotional distress, $115,000, economic and financial loss, $480,000. Juror Sandberg then stated:

“Could I clarify this whole mess? We don’t agree on any of this. I will explain how we did this.
“What we did was — There were four with none. What we did on each category was then take the monetary damage that each person awarded, added it all up, including the four nones, zeros, and divided then by 12 to receive the amount of damages for each item.” Plaintiff’s counsel then asked if the eight jurors in the majority all agreed on the process used. Juror Sandberg replied:
“We all agreed — Yeah, we all agreed on the process and we did it unanimously. We used the same process through all four individual categories. We didn’t use — you know, if there was — We just didn’t change the process.” (Emphasis added.)

As the trier of fact on the quotient verdict issue, the trial judge had discretion to assign a significant amount of weight to Juror Sandberg’s statement. Section 26-1-302, MCA; Emick v. Koch (1987), 227 Mont. 365, 368, 739 P.2d 947, 949. A finding that the jury had agreed to be bound by the quotient process based on this statement would not be clearly erroneous, particularly due to the immediacy of the statement with the rendering of the verdict.

Subsequent to the hearing to determine the punitive damage award and verdict the court conducted its own examination of the jurors regarding the amount of the compensatory verdict. Again Juror Sandberg described the process:

MS. SANDBERG: Okay. There were eight of us that decided there should be actual damages. The question was then divided into four subcategories, I guess: medical, physical, emotional, and economic. Some of us — and I see there was maybe another way around of deciding it, but some of us didn’t feel that medical and physical warranted damages.

“So what we did then was, we put in a dollar figure, whether it was zero — everybody did, whether it was zero or whatever you wanted. We put it into the pool and then we divided by the number of jurors and came up with our — came up with a dollar amount for each category that way.

“THE COURT: And that came out to a million dollars?

“MS. SANDBERG: And then we came up with the end number, it was a little under and we just rounded it and agreed to that.

“THE COURT: And how did you all come to hit upon this way of doing it?

“MS. SANDBERG: Yeah, we — Well, like even today [in determining punitive damages], just working other ways and what not, like instead of picking a figure out of the blue and all trying to decide on that, that was pretty hard, pretty difficult. So we just decided that if everybody had their own input and then just divided it equally, that everybody then had their say in what should be awarded.

“THE COURT: So you just went with whatever number — or is that how you did it the other night?

“MS. SANDBERG: Today?

“THE COURT: Not so much —

“MS. SANDBERG: Today we did it differently because it didn’t — we couldn’t agree today on that.”

It would not be clearly erroneous for the trial judge to infer from the above statement of Juror Sandberg that the jurors couldn’t agree on how to arrive at an amount for a punitive damage award, whereas they had agreed in advance on how to arrive at the compensatory verdict, by resorting to the quotient method.

Juror Arnold’s testimony also indicates that the jurors agreed in advance to be bound by the quotient method:

“THE COURT: ... if you have some comments with regard to how . . . you arrived at those numbers ....

“MS. ARNOLD: We took a vote on how we were going to do it. And then we took a vote on the percentages of what — what amount we should have and what percentage each person was responsible for.

“THE COURT: The manner of dividing it by 12, how did that come to be?

“MS. ARNOLD: It was all in our — how we felt that the person was responsible, and we took a vote on that and divided it up. And some of them didn’t you know, agree to any of it. But we did divide it by twelve because they didn’t agree on any number at all . . . .” Juror Allen’s testimony is similar regarding whether the juror’s had agreed in advance to be bound by the quotient sum:

“THE COURT: And we want to get everybody’s comments on the record with regard to how it was that you came to that method of arriving at the verdict.

“MS. ALLEN: Okay.

“THE COURT: So it’s your turn to speak.

“MS. ALLEN: Well, it was just — we kind of threw different ideas around. And we just — you know, everybody took votes on ideas and we just came up with that one and it seemed to work out best for us.

“Actually, what I should say is, I had been up all that night and all that day, so some things I remember clearly and other things I’m a little foggy on, as you can remember from my answer.”

During the same subject examination by the Court on the subject of the verdict, Juror Scharnowske commented on whether there was further deliberation after calculation of the initial quotient sum:

“MS. SCHARNOWSKE: None of us were happy, that is why we came down to the point of getting a figure and dividing it by 12, because everybody had an equal say that way.

“THE COURT: Was that the end of it, or did the discussion go on from that point?

“MS. SCHARNOWSKE: Well, I don’t know. There was a lot of discussion prior to that point.

“THE COURT: Oh, yes, I’m sure.

“MS. SCHARNOWSKE: I think everybody had a different amount in their mind.

“THE COURT: But once you divided by 12 and got a number, approximately the number that you — Was that the number that you put on the verdict?

“MS. SCHARNOWSKE: Mm-hmm.

“THE COURT: Was there further discussion concerning those numbers?

“MS. SCHARNOWSKE: Not really.”

With respect to further discussions of the verdict after the quotient sum was reached, Juror Yanchisin’s testimony is similar to Scharnowske’s:

“MR. YANCHISIN: So we came up with the idea that if everybody would go along with voting on what they thought would be a proper amount and then total those up and divide by 12, that would get the — and then we did that, came up with that amount then. And we voted on it and everybody agreed that was a reasonable amount.

“THE COURT: Okay. And was there any further discussions on it, or that was the end of it?

“MR. YANCHISIN: That was it.”

Juror Scribner’s testimony indicates that there may have been some further discussion after the quotient sum was calculated:

“No, we discussed it. You know, we looked at it different ways and everything.”

On the other hand, Juror Kline’s testimony indicates that there was little further discussion of the verdict amount after it was reached other than rounding off of the verdict. Also, one of the dissenting jurors expressed dismay with the quotient process used by the majority, indicating that she felt that there was a high degree of chance involved:

“MS. KRUEGER: Because what — It boiled down to the point of what the damages were. Okay, for me to vote zero someone else would vote more, because we divided by twelve. That is my feeling. Maybe they didn’t, but that was my feeling.”

Clearly, the testimony of the individual jurors upon the Court’s own examination constitutes substantial evidence supporting the court’s finding that the jury agreed to be bound in advance by the quotient method. In its order granting new trial, the District Court thoroughly discussed the applicable law, also noting that the quotient sum was between 83% and 88% of the total verdict. Even though the evidence could indicate there may have been some further deliberation after the initial quotient sum was determined, it was not clearly erroneous for the trial judge to find that the jury was merely rounding off the sum, “to make it ‘even money.’ ” See Benjamin, 255 P. at 24. Regardless of the evidence in the record to the contrary, there is substantial evidence in the jurors’ testimony to support such a finding.

This finding is further supported by the trial court’s reduction of the medical expenses portion of the verdict from $200,000.00 to $35,000.00 based on a lack of evidence. Use of the quotient method and a subsequent rounding up of the initial sum could have led to inflated figures in various damage categories, as happened here on medical expenses. The trial court specifically found that only one or two of the four categories of damages was adjusted during the rounding off process. Not only does this indicate that the verdict was determined by chance because it was arbitrarily rounded off, it also indicates that two or possibly three of the damage categories were determined by chance as they must have been entered at the quotient amount. Finally, though some of the jurors may have believed that they were not bound by the quotient process, jury misconduct as a grounds for a new trial only requires that any one or more of the jurors are induced to assent to a chance determination. Section 25-11-102(2), MCA. It would not have been clearly erroneous for the trial judge to find that Juror Sandberg, for example, was induced to assent to the verdict, as well as several of the other jurors.

IV.

The affidavits of the juror’s collected from the attorneys for both sides are conflicting as to whether the jurors in fact agreed in advance to be bound by the quotient method and whether the jurors deliberated further after the initial quotient sum was reached. There appears to be substantial evidence in the affidavits to support either proposition.

Plaintiff maintains that the juror affidavits submitted by him, which are either written by each individual juror or were transcribed in handwriting during the interview and immediately initialed, clearly indicate that the juror’s were not bound by a prior agreement in the quotient process. Plaintiff argues that the affidavits submitted by the defendants, are somehow tainted because they were prepared by defendants’ attorneys and later submitted to the jurors for signatures. Specifically, plaintiff points to the three affidavits of Juror Hert. The first, taken on September 9 by the plaintiff’s attorney, is unclear but seems to indicate that the jurors were not bound by the quotient process and deliberated further on the amount of damages. The second affidavit, taken by defendants’ attorneys on September 23, clearly states that the jurors agreed in advance to be bound by the quotient process. The third affidavit, taken by plaintiff’s attorney on November 10 and written in Juror Hert’s own hand, clearly states that the jurors were not bound by the quotient and that they deliberated further after the quotient was calculated. Juror Hert also states in this final affidavit that she must have erred when she gave the testimony contained in her second affidavit.

Admittedly, the same reasons do not exist why there should be a strong presumption in favor of the trial court’s ruling as exist in cases in which facts are determined upon conflicting oral testimony; however, we will not ignore the discretion of the trial court in granting a new trial upon affidavits of misconduct of the jury, although the presumption in favor of the court’s discretion is less strong than in matters determined upon conflicting oral testimony. Benjamin, 255 P. at 21. Thus, it was within the discretion of the trial court as the trier of fact to weigh and choose between the conflicting testimony contained in the affidavits. Benjamin, 255 P. at 21; see also § 26-1-302, MCA; Emick, 739 P.2d 949; Olson, 557 P.2d at 823. More importantly, the trial judge’s exercise of discretion in this case involved assigning weight to conflicting oral testimony. The trial judge was in a far better position than a reviewing court to determine the credibility of the witnesses and to weigh the evidence as to whether or not the jurors had agreed to be bound by the quotient process. “Findings of fact shall not be set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial court to judge of the credibility of the witnesses.” Rule 52(a), M.R.CÍV.P. Here, the trial judge was present to directly observe the demeanor of the jurors while they gave testimony regarding the verdict. Such testimony was unquestionably given in the jurors’ own words. It was given nearer in time to the deliberations in question and therefore is less susceptible to the inherent faults of human recollection. When the affidavits are considered in conjunction with this testimony as a whole the evidence is clearly substantial to support the trial judge’s finding that the jurors were bound by a prior agreement. Because there is substantial evidence in this testimony as well as the affidavits to support the District Court’s findings that the jurors were bound by prior agreement, such findings cannot be held clearly erroneous. Nor can we find any manifest abuse of discretion in this case to warrant reversing the District Court’s grant of a new trial.

V.

The plaintiff raises other issues on appeal and the defendants also raise several issues on cross-appeal. We need not address these issues. A grant of a new trial by the trial court is a re-examination of issues of fact, § 25-11-101, MCA; it must be commenced fresh or anew. Zeke’s Distributing Co. v. Brown-Forman Corp. (Mont. 1989), [239 Mont. 272,] 779 P.2d 908, 913, 46 St.Rep. 1678, 1683; Town Pump v. Dist. Ct. (1979), 180 Mont. 358, 361-362, 590 P.2d 1126, 1128-1129. Inasmuch as the case will be tried de novo, the parties will have an opportunity to raise their appeal and cross appeal issues, should they come up at the new trial, at the appropriate time.

The District Court’s grant of a new trial is AFFIRMED.

CHIEF JUSTICE TURNAGE and JUSTICES HARRISON, WEBER and GULBRANDSON concur.

JUSTICE SHEEHY,

dissenting:

In Thomas v. Whiteside (1966), 148 Mont. 394, 399-400, 421 P.2d 449, 452, this Court affirmed the propriety of giving to the jury the long form verdict instruction from the then extant “Montana Jury Instruction Guide.” That instruction read as follows:

“The law forbids you to determine any issue of this case by resort to chance. You will understand this principle of law better, perhaps, if I give you an illustration; suppose that you jurors, or at least eight of you, agree that the plaintiff in this case is entitled to recover damages and you then each set down an amount which each juror thinks plaintiff should be awarded and that you further agree that the average so found will be the amount of your verdict. Such a method would be resorting to chance and if you do this I would have to set your verdict aside as being unlawful.
“The error of this method of arriving at a verdict is in your agreeing in advance to use the average figure as your verdict. In this connection, however, you are advised that it is not error or unlawful for you to each set down a figure and find the average as a basis for further discussion of what your ultimate verdict might or will be so long as you do not agree in advance to be bound by that average figure. Also, you are advised that if you should follow a procedure along the lines just mentioned it is not necessary that all twelve of your number join in working out some basis for discussion as any eight of you may agree upon a verdict in this case.”

In approving the giving of the foregoing instruction, this Court explained its decision:

“This long form of instruction appears to be a correct statement of the rule covering quotient verdicts as developed by the opinions in this Court. Section 93-5603(2) R.C.M. 1947, provides that a new trial may be granted upon a showing that a finding was made ‘by a resort to the determination of chance, such misconduct may be proved by the affidavit of any one of the jurors.’ This provision was interpreted in Great Northern Ry. Co. v. Benjamin, 51 Mont. 167, 172, 149 P.2d 968, 969, where it was said: ‘It is only when the jurors agree in advance that the quotient thus obtained shall constitute the amount of the verdict, and such agreement is carried into effect, that the proceeding constitutes a resort to the determination of chance and is condemned by the statute above.’ This rule has been reaffirmed in [citing cases]. See also Annotation in 8 A.L.R.3d 335”. (Emphasis added.)

Thomas, 421 P.2d at 452.

Under the foregoing discussion by this Court, there are two elements necessary to create an invalid quotient verdict: (1) the jurors must agree in advance that the result of the quotient shall be their verdict and (2) they must carry the agreement into effect.

In this case there is an absolute lack of evidence that the jurors agreed in advance to be bound by the result of the quotient and an absolute lack of evidence that they carried such agreement into effect. Because thereof, the District Court, in setting aside the jury verdict and granting a new trial because of the purported quotient committed a manifest abuse of its discretion.

In order for the reader to perceive this, and in fairness, it is necessary to set out in totidem verbis what the jurors related respecting the manner in which they arrived at the verdict.

Taking the foreperson, Maxine E. Kline, first:

“We had a lengthy discussion, and came to an agreement to put a bid in and divide it by 12. Then we had more discussion and would come to an agreement. We went through all four categories like this, medical, lost wages, economics and emotional distress. When all four categories were finished, it totaled a little over a million dollars, and it was discussed and agreed on that we would change it to a million. We all 12 voted on paper, with results of eight yes and four no, so we took that amount and were satisfied with it.”

Juror J. Philip Yanchisin:

“After determining liability, all 12 jurors wrote a total amount of damages which they wanted to award to Mr. Stanhope for actual damages. Each juror wrote an amount of damages on a piece of paper. The 12 amounts were totaled and divided by 12. The total amount divided by 12 was approximately $880,000. Then there was a discussion about this amount. Several jurors objected to this amount because they felt it was not enough damages.
“After more discussion, one juror recommended $1,000,000 in damages. We all considered that amount. Several jurors reduced the amount they wanted to award and several jurors raised the amount they wanted to award. All 12 jurors then voted on the proposed amount, and 8 jurors voted yes, and 4 jurors voted no.”

Juror Randall Martinson:

“On voting on the damages being a no voter, voted in all actual damages — I voted on the system used to get the total, and voting on the results of total. Everybody writing a damage amount on a piece of paper then adding all damage amounts together and dividing them by 12. This amount came through by 4 votes on 4 different categories. This number was approximately $833,000. Some jurors didn’t agree with some of the damage prices. Another vote was taken to change to a higher amount. A discussion was held for a higher amount. All votes were agreed upon for $1,000,000 — all 12 jurors voted on this amount with 8 for and 4 against this amount. Juror Nancy Scharnowske:
“Because we were so greatly separated on our ideas of settlement money, we decided for each person to put in the amount they felt was just. We talked at great lengths about the spread and amounts. To come to a definite amount we decided to add the amounts up and divide by 12. We argued further and finally admitted the amount to $1,000,000 settlement.”

Juror Chester B. Scribner:

“We had a general discussion of amounts and couldn’t reach a number. To get things started we all wrote down a number and averaged them. The amount was about $880,000. We then had more discussion because some thought it was too high and some thought it was too low. After that we argued and finally we voted on a $1,000,000 amount. Everyone voted. After that we talked about breaking it down and we had a separate vote on each category. Everyone voted on each category and all the votes were 8 to 4.”

Juror Janice M. Krueger:

“To help reach a consensus on the amount of damages to award to Mr. Stanhope, each member of the jury wrote an amount on a piece of paper. These amounts were totaled and divided by 12.
“This total amount was discussed. As a result of those discussions, the amount was then changed to One Million Dollars. This amount was voted on by each juror, either yes or no. Eight jurors voted yes and four jurors voted no. This process was done for each category of damages.”

Juror Ellen K. Sandberg:

“For the actual damages the jury finally decided all 12 individuals should write down the amount he/she believed Mr. Stanhope should receive. We then tallied up a total dollar amount and divided this by 12 to obtain the average. After discussion and agreement by all, the average was adjusted to one million dollars.”

Juror Jean H. Bushman:

“On determining the amount of damages, all 12 voted on a dollar amount. We then added them up and divided by 12. We had discussion on this number and took a final vote. We used the same process for each category after the division we discussed this thoroughly and finally agreed upon an amended amount.”

Juror Alice Marie Allen:

“We discussed what damage Stanhope was entitled to. We all entered a figure and we discussed the amount and divided by 12. We talked and voted on every question.”

Juror Myrtle P. Arnold:

“The jury had many discussions concerning the damages to be awarded to Mr. Stanhope, and used an average method to arrive at a working figure from which an amount of damages could be discussed.
“We used this method for each of the four categories of damages, and there was discussion after each process. The total amount of the award was also discussed, and we decided on a total damage award of One Million Dollars after those discussions.
“Each juror voted on the final amount of each item of damages, with the result being eight in favor of the amounts and four against the amounts on each category, as well as the grand total of One Million Dollars.”

Juror Mary Parrish was unwilling to submit an affidavit. She was interviewed by counsel for the plaintiff, Stephen M. Barrett, who supplied an affidavit in her place, concerning their interview. Although no one disputes the veracity of Stephen M. Barrett’s affidavit, I will not include it here, because it is not directly an affidavit of a juror. The general tenor of the affidavit, however, is in accord with the other jurors.

There were three different affidavits from Juror Clarice Hert. In the first affidavit on September 9, 1988, she stated:

“Every juror wrote out the amount of damages for each category separately and one person read them out loud. The numbers were totaled and put on a board and then divided by 12.
“For each category, after the number was averaged, all 12 jurors voted on the total amount awarded to each category.
“The jurors went through this process four separate times.
“After discussion all 12 jurors then voted on the grand total of One Million Dollars. I always had the option to vote and did vote on each decision.”

The affidavit of Clarice Hert dated September 23, 1988, obtained by a representative of one of the counsel for one of the defendants, stated:

“I take this opportunity to provide a complete and full explanation of the workings of the jury in the Stanhope verdict.
“That as a member of the jury, I was present during the deliberations. That there was a disparity of agreement between all of the jurors as to each and every category with respect to the issues of damages in Question #3. None of the jurors could agree upon the amount of damages. As a result of this disagreement among the jurors, it was decided and agreed that everyone would write down on a piece of paper what they thought should be awarded in each and every category and those figures would be totaled and divided by 12 and rounded off to the nearest $100,000 or $1,000. It was my understanding that this figure, that would be rounded off, would be the figure that would be put down on the verdict slip and no one could or would dissent to this process. For instance, if I would have been one of the eight people and under the first category of the past and future medical expenses I wanted to award $400,000 and after the numbers were tabulated and divided by 12, it came out to be $200,000, I did not have the opportunity or right to dissent and say that, no, I wanted $400,000. Everyone had agreed in advance to live with the figure that was averaged out by the total divided by 12 with no dissents. This agreement was made before the figure was ever even divided out. After each category had been gone through and rounded off and adjusted to add up to $1,000,000 the total figure was voted on by all of the jurors and the jurors agreed 8 to 4 that total $1,000,000 figure.”

On November 10,1988, Clarice Hert gave a handwritten statement “clarifying” her earlier affidavits:

I have read the Judge’s Order of November 2, 1988, and wish to clarify my previous affidavits.

“I would like to clarify the sentence that did not have opportunity or right to dissent and say no, I did have that right. I did vote no on each category as three others. We all agreed on the change in all of the figures on each category. Each time there was a total we voted on it. I voted zero or no. I was not bound by the number agreed on. This was written up when I spoke to John Lindsey. Then he put it all down on tape. When I read the written statement I must have missed the (not) in the sentence. I did have the opportunity to dissent. This process took several hours until we finally came up with the way of reaching a figure to start from. Each number was discussed and voted on time and time again until we came up with this way of reaching a figure. Everyone wrote a figure down. We added up and divided by twelve. We discussed it and decided to make it an even $1,000,000. We all voted and it'was agreed on. This was not a total we came up with. We all decided to make it an even $1,000,000.”

In deciding to grant a new trial, the District Court relied upon the September 23, 1988 affidavit of Clarice Hert, and the affidavits of Scharnowske, Krueger, Sandberg and Kline. Based on these and other affidavits, the court found that the jurors had “agreed in advance to be bound by a quotient verdict.” There is absolutely nothing in the affidavits which would warrant the conclusion of fact that the jurors had agreed in advance to be bound. The conclusion of fact is clearly erroneous. On that point alone, without more, the District Court erred, and this Court compounds the error by disregarding the manifest abuse of discretion by the District Court and by clinging instead to the argument that the District Court’s findings are not clearly erroneous.

The District Court made a further pertinent finding that has no basis of fact:

“The court finds that the additional damages were not the result of further evaluation and discussion based on the evidence, but rather on an arbitrary adjustment to the quotient . . . .”

Again, the affidavits reveal nothing on which that finding can be based. Rather the opposite is true from the tenor of the affidavits.

I therefore dissent from the majority opinion. I would reverse the order of the District Court granting a new trial, and proceed to a determination of the other issues which should have been decided in this appeal.

JUSTICE HUNT joins in the dissent of JUSTICE SHEEHY.


author: JUSTICE HUNT

text:
    ED FRANCK, Claimant and Respondent, v. NATIONAL LOG CONSTRUCTION CO., Employer, and State Compensation Insurance Fund, Defendant and Appellant.
    No. 89-345.
    Submitted on Briefs Oct. 25, 1989.
    Decided March 2, 1990.
    787 P.2d 1238.
    Nancy Butler and Elizabeth A. Horsman, State Comp. Ins. Fund, Helena for defendant and appellant.
    Edward K. Duckworth, Ronan, for claimant and respondent.
   JUSTICE HUNT

delivered the Opinion of the Court.

The State Compensation Insurance Fund (State Fund) appeals from a declaratory ruling issued by the Workers’ Compensation Court, holding that the statutory discount to present value provided for in § 39-71-741, MCA (1985), does not apply to permanent partial disability benefits. We affirm.

The sole issue raised on appeal is whether a claimant who is deemed permanently totally disabled and who seeks a lump-sum conversion of future benefits under § 39-71-741, MCA (1985), is subject to a discount of all benefits, including future partial permanent disability benefits paid as a result of the receipt of retirement social security benefits.

In March, 1986, claimant, Edward Franck, suffered an industrial injury while employed with National Log Construction Company. At that time, the employer was enrolled under Compensation Plan No. 3 of the Workers’ Compensation Act and was insured by State Fund.

Claimant was deemed permanently totally disabled. State Fund accepted liability for his injuries and paid medical and disability benefits.

Claimant, who is currently 62 years old, sought a lump-sum conversion of his disability benefits pursuant to § 39-71-741, MCA (1985). Negotiations over the lump-sum conversion reached an impasse when the parties disagreed over which payments were subject to the statutory discount to present value. State Fund contended that the discount applied to claimant’s permanent total disability payments as well as the 500 weeks of permanent partial benefits claimant would be paid once he attained the age of 65 and began receiving retirement social security benefits. Claimant maintained that the discount applied only to the permanent total disability payments, not to the permanent partial benefits.

Seeking to resolve the dispute, claimant filed a petition with the Workers’ Compensation Court. Following briefing, the Court issued a declaratory ruling in favor of claimant, holding that the statutory discount did not apply to claimant’s permanent partial disability benefits. The State Fund appealed to this Court.

At issue in the present case is the interplay of § 39-71-741, MCA (1985), which governs the conversion of future disability benefits into a lump-sum payment, and § 39-71-710, MCA (1985), which governs the disposition of total disability benefits upon retirement. The former statute provides as follows:

“(1) The biweekly payments provided for in this chapter may be converted, in whole or in part, into a lump-sum payment. Regardless of the date of the injury or of a prior lump-sum payment, a lump-sum conversion of permanent total biweekly payments awarded or paid after April 15, 1985, must equal the estimated present value of the total unpaid permanent total biweekly payments, assuming interest at 7% per year, compounded annually, unless the conversion improves the financial condition of the worker or his beneficiary, as provided in subsection (2)(b). If the estimated duration of the compensation period is the remaining life expectancy of the claimant or the claimant’s beneficiary, the remaining life expectancy must be determined by using the most recent table of life expectancy in years as published by the United States national center for health statistics.” (Emphasis added.)

Section 39-71-741, MCA (1985). The latter statute reads:

“If a claimant is receiving total disability compensation benefits and the claimant receives retirement social security benefits or disability social security benefits paid to the claimant are converted by law to retirement benefits, the claimant is considered to be retired and no longer in the open labor market. When the claimant is considered retired, the liability of the insurer is ended for payment of such compensation benefits. This section does not apply to permanent partial disability benefits. Medical benefits are expressly reserved to the claimant.”

Section 39-71-710, MCA (1985).

In Hunter v. Gibson Products of Billings Heights, Inc. (1986), 224 Mont. 481, 730 P.2d 1139, we examined the effect of § 39-71-710, MCA (1985), upon the disability benefits of a permanently totally disabled claimant who turned 65 and began receiving social security retirement benefits. We held that, upon retirement, the totally disabled claimant’s benefits were converted to permanent partial benefits and the insurer, although no longer liable for total disability payments, remained liable for partial disability payments.

The difficulty in the present case arises from the fact that a permanently totally disabled claimant wishes to receive a lump-sum conversion of future benefits under § 39-71-741, MCA (1985). In such a situation, does the statutory discount to present value apply to both the claimant’s permanent total disability benefits and the claimant’s permanent partial benefits?

The question is easily resolved. The statute is unambiguous and clear on its face. While the language applicable to discounting specifically refers to permanent total biweekly payments, it makes no mention of permanent partial benefits.

“[A] lump sum conversion of permanent total biweekly payments . . . must equal the éstimated present value of the total unpaid permanent total biweekly payments . . .” (Emphasis added.)

Section 39-71-741, MCA (1985).

As the discounting language of the statute makes no reference to permanent partial benefits, we will not insert such a provision into the statute. Section 1-2-101, MCA. We hold that the discount to present value provided for in § 39-71-741, MCA (1985), applies only to permanent total disability payments. The discount does not apply to permanent partial disability payments even though the claimant is eligible for permanent partial payments because of his status as a permanently totally disabled claimant who has reached the age of 65 and has retired.

Affirmed.

JUSTICES SHEEHY, McDONOUGH, WEBER and BARZ concur.


author: JUSTICE BARZ

text:
    CLARENCE A. WIBERG, Plaintiff and Appellant, v. 17 BAR, INC., H&H Enterprises, Inc., a/k/a M&M Enterprises, Inc., Thomas J. Morrow and Violet L. Morrow, husband & wife, the sole stockholders of said corporations, Defendants and Respondents.
    No. 89-451.
    Submitted on Briefs Jan. 4, 1990.
    Decided Feb. 23, 1990.
    788 P.2d. 292.

      Robert E. LaFountain, Billings,, for plaintiff and appellant.
    Fred E. Work, Jr., Billings, for defendants and respondents.
   JUSTICE BARZ

delivered the Opinion of the Court.

This appeal arises from an order of the District Court for the Thirteenth Judicial District, Yellowstone County, granting respondents’ motion for a directed verdict following presentation of appellant’s case in chief. We affirm.

Appellant Clarence Wiberg filed suit on April 24, 1986, seeking rescission of contract, damages for breach of the implied covenant of good faith and fair dealing, punitive damages and specific performance of an alleged oral partnership agreement. Prior to trial, the District Court granted respondents’ motion in limine excluding evidence of respondent Violet Morrow’s forged endorsement of a check made payable to appellant. Following presentation of appellant’s case in chief, the District Court granted respondents’ motion for directed verdict.

Appellant’s first contention on appeal is that the District Court erroneously granted respondents’ motion for directed verdict in light of the existence of factual disputes. District courts properly direct verdicts when the non-moving party fails to establish a prima facie case. Rookhuizen v. Blain’s Mobile Home Court, Inc. (Mont. 1989), [236 Mont. 7,] 767 P.2d 1331, 1334, 46 St.Rep. 139, 143. Nonetheless, in so doing, trial courts must review the evidence in the light most favorable to the non-moving party. Phillip R. Morrow, Inc. v. FBS Insurance Montana-Hoiness LaBar, Inc. (Mont. 1989), [236 Mont. 394,] 770 P.2d 859, 864, 46 St.Rep. 455, 462.

Appellant Clarence Wiberg read an advertisement in the Billings Gazette seeking a purchaser for the 17 Bar in Billings. The sellers were represented by a realtor. Appellant had previously owned and operated a restaurant in Billings. After operating other businesses and working in other fields, appellant wanted to return to the restaurant business. Respondents Violet and Tom Morrow owned 100% of the stock in the 17 Bar, Inc. Corporate assets included real and personal property and a liquor license. Both the property and the liquor license were encumbered by an underlying contract between Morrows and Kenneth Hannen from whom Morrows had purchased the 17 Bar stock. The terms of this agreement required that Morrows obtain Hannen’s permission prior to assignment either of the contract or the corporate assets, including the liquor license.

In an agreement executed June 3, 1985, appellant and respondents agreed upon a $1,000,000 selling price for the 17 Bar and its assets allocated as follows:

Land $ 100,000
Building and Leasehold Improvements 475.000
Liquor License 165.000
Covenant not to compete 15.000
Goodwill 45.000
Furniture, fixtures and equipment 200.000
$1,000,000

Appellant agreed to the following terms regarding payment of the purchase price:

1. $100,000 to be paid by closing, including $25,000 earnest money, $25,000 cash on closing date and a $50,000 promissory note secured by a trust indenture on appellant’s home;

2. Appellant to assume respondents’ $195,582.98 obligation to Hannen at 7% interest, subject to possible increase in interest to at least 9%;

3. The remaining balance of $704,417.02 represented by a promissory note secured by a trust indenture on appellant’s home, $10,500 of which was payable within 60 days of closing with the balance payable in graduated monthly installments over a 20-year period.

The agreement further allowed for an increase in the interest rate on the Hannen contract from 7% to 9% or more to facilitate Hannen’s consent to the sale. The agreement contained a provision requiring that respondents obtain Hannen’s written consent to appellant’s assumption of the obligation owed to Hannen. Although the clause operated as a condition precedent to appellant’s performance of his duties under the agreement, the parties deleted this provision by crossing it out and initialing the deletion. The closing took place on June 3, 1985.

Appellant began operating the 17 Bar on June 4, 1985. On June 10, 1985, the parties executed an addendum to their previous agreement providing that both would share equally the cost of increased interest on the Hannen contract in excess of 9% and that, through no fault of the respondents, Hannen’s consent to the transfer had not yet been obtained. Appellant apparently paid only $52,000 of the one million dollars required by the parties’ contract. Appellant paid $25,000 earnest money, $25,000 at closing and $2,000 of the first $10,500 payment due pursuant to the promissory note appellant executed in favor of respondents to Violet Morrow. Although appellant gave respondents a $50,000 trust indenture on his home, the realtors handling the sale had previously attempted to foreclose on a $50,000 trust indenture given them by appellant. However, appellant testified the equity in his home was worth only $50,000 and there were two prior encumbrances as well.

Appellant filed his completed liquor license application along with respondents’ assignment of the 17 Bar license with the Department of Revenue in June of 1985. Appellant testified that the DOR denied his application based upon Hannen’s continuing security interest in the license. At trial, appellant offered no documentation of DOR’s refusal to transfer the license.

Appellant and respondents executed a release of escrow documents on August 16, 1985. The escrow documents released included a quitclaim deed and a check. Appellant executed the deed at the June 3, 1985, closing and, by authorizing its transfer to respondents transferred all his right, title and interest in the 17 Bar back to respondents. Respondents recorded the quitclaim deed shortly thereafter. A check in the amount of $527.21 was payable to Clarence Wiberg.

The parties gave divergent reasons for, in effect, canceling their purchase agreement. Appellant alternatively contends the absence of an escrow account prevented him from making payments required by the contract and that respondents’ non-performance made him hesitant to fulfill his own obligations. Respondents testified that appellant requested the cancellation because he felt incapable of operating the business successfully.

Respondents permitted appellant to operate the 17 Bar through September 1, 1985, so that he could benefit from the additional income generated at fair time. Appellant’s records show the 17 Bar’s gross income for June, July and August of 1985 was $89,590.08. Nonetheless, during the period of appellant’s management, the 17 Bar suffered a net loss. After September 1, appellant discontinued his operation of the 17 Bar.

Appellant contends he and respondents entered into an oral partnership agreement to operate the 17 Bar until they found a buyer for the business at which time the parties agreed they would split any sale proceeds. Respondents claim that whatever oral agreement the parties may have made, such was barred by the Statute of Frauds because it involved the sale of real property. Appellant testified he advertised the 17 Bar for sale in USA Today and received several responses. These inquiries, introduced into evidence by appellant, were mailed to him in late September. Appellant claims he continued to work at the 17 Bar until ejected from the premises by Violet Morrow in December. Both Morrows testified appellant quit coming into the business in approximately October.

From the vast and murky swamp of pleadings and testimony in this case, we dredge the following contentions. We cast the facts related to appellant’s claims in the light most favorable to him. Appellant makes two allegations that permeate the remaining issues. For purposes of brevity, we address these assertions first.

Appellant first contends respondents committed fraud and cites numerous instances of allegedly fraudulent conduct. Respondents misrepresented the availability of Hannen’s consent to the transfer of the liquor license and assignment of the obligation owing to him. Respondents led appellant to believe that Hannen’s consent was forthcoming. Counsel for respondents advised appellant to use a letter from Hannen’s attorney as evidence of Hannen’s consent to transfer of the liquor license in appellant’s application for the liquor license. Respondents failed to show a copy of their Stock Purchase Agreement with Hannen to appellant. Respondents led appellant to believe the parties had entered into an oral partnership. Although provided for in the contract, no escrow account was ever established at First Interstate Bank. Notwithstanding a contract provision requiring that respondents obtain title insurance in the amount of one million dollars, the actual policy provided coverage only up to $575,000.00.

“Actual fraud, within the meaning of this part, consists in any of the following acts committed by a party to the contract or with his connivance with intent to deceive another party thereto or to induce him to enter into the contract:
“(1) the suggestion as a fact of that which is not true by one who does not believe it to be true;
“(2) the positive assertion, in a manner not warranted by the information of the person making it, of that which is not true, though he believes it to be true;
“(3) the suppression of that which is true by one having knowledge or belief of the fact;
“(4) a promise made without any intention of performing it; or
“(5) any other act fitted to deceive.”

Section 28-2-405, MCA.

“Constructive fraud consists in:
“(1) any breach of duty which, without an actually fraudulent intent, gains an advantage to the person in fault or anyone claiming under him by misreading another to his prejudice or to the prejudice of anyone claiming under him; or
“(2) any such act or omission as the law especially declares to be fraudulent, without respect to actual fraud.”

Section 28-2-406, MCA.

Furthermore, to recover damages for fraud, plaintiffs must plead and prove the existence of:

1. A representation;

2. Falsity of the representation;

3. Materiality of the representation;

4. Speaker’s knowledge of the falsity of the representation or ignorance of its truth;

5. Speaker’s intent that it be relied upon;

6. The hearer’s ignorance of the falsity of the representation;

7. The hearer’s reliance on the representation;

8. The hearer’s right to rely on the representation; and

9. Consequent and proximate injury caused by the reliance on the representation.

McGregor v. Mommer (1986), 220 Mont. 98, 105, 714 P.2d 536, 540.

Appellant failed to allege or prove the existence of any duty on the part of respondents or any act or omission considered fraudulent by law. Therefore, appellant failed to establish a prima facie case of constructive fraud.

Although we must view the evidence in the light most favorable to appellant, we are not required to ignore uncontradicted evidence damaging to his case. Appellant first testified that he read none of the documents executed in connection with his purchase of the 17 Bar, then later conceded he had read each document but understood none of them. Appellant does not allege respondents made any assertions which they knew or should have known were untrue. The agreement quite clearly demonstrates the existence of respondents’ Stock Purchase Agreement with Hannen. It stated in unequivocal terms that Hannen’s consent was necessary prior to assignment of the obligation owed him and transfer of the liquor license. Appellant agreed to the deletion of a provision requiring respondents to obtain Hannen’s consent as a condition precedent to any requirement that appellant perform. The addendum executed by all parties on June 10, 1985, clearly set forth the absence of Hannen’s consent. Appellant does not allege either a denial of his request to review the Stock Purchase Agreement or that he was misled as to its existence or material terms contained therein.

Appellant alleges no facts showing misconduct by respondents in relation to creation of the escrow account. Appellant offers only the release language in support of his contention that the escrow account was not created thus leading us to conclude his only knowledge of any defect came upon cancellation of the entire transaction. Appellant has further failed to show his right to rely on the representations of respondents. Appellant is a businessman. He owned and operated several businesses prior to the transaction with respondents and has been in the work force for a number of years. The alleged misstatements made to appellant were easily verified and rectified by him. Appellant testified that respondents had not misled him in regard to his purchase of the 17 Bar. Appellant failed to establish a prima facie case of fraud.

The second pervasive issue concerns the failure of respondents’ consideration. Appellant appears to contend respondents’ consideration failed because the liquor license was never transferred to appellant. However, appellant does not claim the liquor license would never have been his. There is ample evidence that negotiations between the parties pertinent to obtaining Hannen’s consent continued even after closing. Appellant had every reason to believe acquiring Hannen’s authorization would be a somewhat lengthy process. Consideration does not fail merely because of delay. Appellant’s contention in this regard lacks merit.

At trial, appellant contended that no contract existed between the parties due to the existence of numerous contingencies. The only contingency we ascertain is Hannen’s consent to transfer of the liquor license and assignment of the obligation due him, and the related transfer of the liquor license from respondents to appellant. Both parties agree the liquor license transfer did not take place and that Hannen’s authorization was not immediately forthcoming. Section 28-2-102, MCA, sets forth the essential elements of a contract:

“(1) identifiable parties capable of contracting;
“(2) their consent;
“(3) a lawful object; and
“(4) a sufficient cause or consideration.”

The contract between appellant and respondents contains these crucial features. Appellant disputes the existence of consent freely given and sufficient cause or consideration, however, as set forth above, we found these contentions lacked merit. Appellant failed to adequately attack the validity of the contract.

Appellant next maintains respondents breached the contract by their failure to facilitate transfer of the liquor license to him. We disagree. Testimony of both parties shows respondents were negotiating said transfer up until cancellation of the transaction. Respondents at no time indicated the transfer would not take place. The District Court correctly determined that appellants did not set forth facts proving respondents’ breach.

Appellant asserts the District Court erroneously refused to rescind the agreement. Pursuant to § 28-2-1711, MCA:

“A party to a contract may rescind the same in the following cases only:
“(1) if the consent of the party rescinding or of any party jointly contracting with him was given by mistake or obtained through duress, menace, fraud, or undue influence exercised by or with the connivance of the party as to whom he rescinds or of any other party to the contract jointly interested with such party;
“(2) if, through the fault of the party as to whom he rescinds, the consideration for his obligation fails in whole or in part;
“(3) if such consideration becomes entirely void from any cause;
“(4) if such consideration, before it is rendered to him, fails in a material respect from any cause; or
“(5) if all the other parties consent.”

The only allegations made by appellant that would entitle him to rescission are those of fraud and failure of consideration. As elucidated above, these claims are simply not supported by the facts of this case. The District Court did not err in concluding appellant was not entitled to rescission.

Appellant’s next specification of error centers around the District Court’s failure to find the parties entered into an oral partnership agreement. “A partnership is an association of two or more persons to carry on as co-owners a business for profit.” Section 35-10-201, MCA. Appellant asserts the parties agreed to jointly operate the 17 Bar until they located a buyer for the business. Upon sale of the bar, appellant would recover funds he expended while attempting to purchase the business himself.

We previously held that where purported partners did not hold property jointly, had unequal control over assets, held no joint bank accounts and did not file partnership tax returns, no partnership existed. Matter of Estate of Smith (Mont. 1988), [230 Mont. 140,] 749 P.2d 512, 516-17, 45 St.Rep. 93, 100. Appellant relinquished his interest in the real and personal property by quitclaim deed, he discontinued use of a checking account opened for 17 Bar purposes and testified that his status at the 17 Bar was more akin to that of an employee than a partner. Appellant had the burden of proving the existence of a partnership between himself and Morrows. Smith, 749 P.2d at 515. We hold the evidence of a partnership is insufficient and that the District Court did not err in ruling that no partnership existed.

Appellant next contends the District Court failed to address the issue of respondents’ bad faith. Although respondents may well have owed appellant a duty to deal with him fairly and in good faith, in light of our discussion above regarding appellant’s allegations of fraud, we find the District Court did not err in directing a verdict denying appellant recovery for respondents’ bad faith based on the absence of any breach of duty.

Appellant’s final specification of error concerns the exclusion of certain evidence. Respondent Violet Morrow forged appellant’s endorsement on a check made payable to him. Respondents contend the proceeds of this check were used to pay 17 Bar bills remaining from appellant’s tenure as owner/manager. Violet Morrow received a deferred imposition of sentence contingent upon reimbursement of appellant for the amount of the check. We surmise from the record that reimbursement did in fact take place. Appellant sought to introduce the forged check as evidence of respondents’ scheme to defraud him. The District Court granted respondents’ motion in limine excluding testimony regarding the forgery as prejudicial. We agree.

We will not reverse the District Court’s grant of a motion in limine absent an abuse of discretion. Wacker v. Park Rural Electric Co-Operative, Inc. (Mont. 1989), [239 Mont. 500,] 783 P.2d 360, 361, 46 St.Rep. 1864, 1865. Appellant claims respondents schemed to defraud him by misrepresenting the transferability of certain assets of the 17 Bar. The probative value of evidence regarding Violet Morrow’s forgery of appellant’s endorsement is outweighed by its prejudicial nature. Introduction of such evidence would not tend to prove or disprove that respondents knowingly misrepresented the truth regarding the transferability of the 17 Bar liquor license. The District Court properly excluded such evidence.

The District Court captured the flavor and essence of this case in dismissing the jury:

“I believe the jury is entitled to some explanation. The Court has taken this case away from you, and I have directed a verdict in favor of the [respondents], and I am going to now excuse you.
“And someday, if you ever have any questions, I will be glad to answer them, but at this time I think it best that the jury is now excused, with our thanks.
“I don’t know. I do know the weather and I do know the type of case and I do know that you must have had a hard time following some of it and, in any event, I certainly do appreciate the fact that you are all here and all timely and all attentive. It is unusual and, in any event, you are free to go.”

Affirmed.

JUSTICES HARRISON, HUNT, SHEEHY and McDONOUGH concur.