Dew v. Dower

No. 94-232
IN THE SUPREME COURT OF THE STATE OF MONTANA
1994
ROBERT DEW,
Plaintiff and Appellant,
DOUGLAS C. DOWER and ALICE S. DOWER
a/k/a ALICE S. DOWER,
Defendants and Respondents.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Michael Keedy, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Patricia O'Brien Cotter; Cotter & Cotter,
Great Falls, Montana
For Respondents:
Joseph Sullivan, Emmons & Sullivan, Great
Falls, Montana
Submitted on Briefs: September 22, 1994
Decided: December 16, 1994
Filed:
Justice Karla M. Gray delivered the Opinion of the Court.
Robert Dew appeals from the findings of fact, conclusions of
law, and final judgment of the Eighth Judicial District Court,
Cascade County, concluding that he was entitled to fifty percent of
the personal damages arising from Alice Dower's fraud and
determining the amount of his damages to be approximately $36,000.
We affirm the District Court's conclusion regarding the percentage
of damages to which Robert Dew is entitled, but reverse and remand
for recalculation of the amount of those damages.
Prior to August 1983, Robert and Sally Dew acquired six tracts
of land in a subdivision south of Great Falls, Montana, from the
Dowers under six individual contracts for deed. Each tract,
consisting of slightly more than twenty acres, sold for
$l,OOO/acre. The Dews entered into a contract for deed for a
seventh tract in February 1984. Alice Dower, a licensed real
estate broker, represented to Robert Dew that the purchase price
was based on plans to upgrade two access roads to "county grade"
standards.
When the Dowers failed to improve the access roads to county
grade standards, the Dews and other purchasers brought suit against
the Dowers alleging, among other things, fraud. Their allegations
of fraud were based on Alice Dower's representations concerning
improvements to be made to the roads. The Dowers moved for a
directed verdict at the close of the Dews' case-in-chief and, at
that point, the Dews' attorney asked the District Court to dismiss
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Sally Dew's claims. The court dismissed her claims with prejudice
and entered a directed verdict in favor of the Dowers. Robert Dew
appealed. We reversed the directed verdict and remanded the case
for a new trial, holding that a jury question existed on the issue
of whether Alice Dower fraudulently induced Robert Dew into
purchasing the tracts. Dew v. Dower (1989), 237 Mont. 476, 480,
774 P.2d 989, 991.
In 1990, between the first appeal and the second trial, Sally
Dew quitclaimed her one-half interest as co-tenant in the seven
tracts to Robert Dew, resulting in his one hundred percent
ownership of the tracts. On remand, the District Court found that
Alice Dower had defrauded Robert Dew and awarded him one hundred
percent of the damages. The Dowers appealed, arguing that Dew was
not entitled to one hundred percent of the damages because he had
owned only a one-half interest in the total fraud claims before the
District Court. We reversed the District Court and remanded for
recalculation of damages for plaintiffs who were before the court.
Dew v. Dower (1993), 258 Mont. 114, 128, 852 P.2d 549, 558 (Dew
L.D .
On remand, the District Court concluded as a matter of law
that Robert Dew, by virtue of his one-half interest in the
property, was entitled to one-half of the damages resulting from
Alice Dower's fraud. The District Court offset the balances owing
on the individual contracts for deed by the corresponding damages
and prejudgment interest. Robert Dew appeals.
Robert Dew's first assertion of error relates to the District
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Court's conclusion of law that Robert, the sole owner of the
property at the time of judgment against the Dowers, was entitled
to only fifty percent of the damage award. Dew argues that, as the
sole owner of the property at the time of judgment, he is entitled
to one hundred percent of the damages resulting from Dower's fraud.
We disagree.
The District Court's conclusion that Robert Dew was not
entitled to one hundred percent of the total damages was premised
on two bases. First, because Sally Dew had withdrawn her claims
against the Dowers and the court had dismissed those claims with
prejudice during the first trial, she retained no right to damages
and, thus, the quitclaim deeds did not result in Robert Dew
acquiring Sally's right to claim damages. Second, the court relied
on our decision in Van Ettinger v. Pappin (1978), 180 Mont. 1, 588
P.2d 988, in concluding that Robert had acquired Sally's interest
in the property knowing of the claimed fraud and, as a result, had
waived the right to bring an action for damages based on that
interest. We review a district court's conclusion of law to
determine whether it is correct. Pacificorp v. Dep't of Revenue
(1992), 254 Mont. 387, 397, 838 P.2d 914, 920.
Regarding the first basis for the District Court's conclusion,
Robert Dew argues that although Sally Dew was not defrauded, she
had not relinquished her right to transfer ownership interest in
the property to Robert Dew. Therefore, when Sally Dew quitclaimed
her interest in the property to Robert Dew, he obtained the right
to recover one hundred percent of the property damages arising from
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the fraud. Robert Dew misunderstands our holding in Dew II.
Our decision in Dew II included the implied, if not direct,
holding that this was an action for personal damages, not property
damages, arising from Alice Dower's fraud. We specifically stated
that "[wlithout deciding whether a single co-tenant may sue for
tort damages for injury to the property itself and recover the
entire amount, we hold that the court in this case erred in
awarding damages for injury to the personal interests of persons
who were not olaintiffs at the time of judgment." Dew II, 852 P.2d
at 557 (emphasis added).
Sally Dew's fraud claims were the same as those brought by
Robert Dew and were in the nature of a personal action. See Dew
_-
LL, 852 P.2d at 557. On dismissal of Sally Dew's claims with
prejudice, however, the District Court lost jurisdiction over her
interest in the property. Dew II, 852 P.2d at 557; citing Rule
41(a), M.R.Civ.P., and Miller v. Northern Pac. Ry. (1904), 30 Mont.
289, 296, 76 P. 691, 694. That dismissal had the same effect as if
the District Court had rendered a judgment against Sally Dew on the
merits of her fraud claim. & Higham v. City of Red Lodge (1991),
247 Mont. 400, 403, 807 P.2d 195, 197. Accordingly, any interest
that Sally Dew had for personal damages as a co-tenant ceased to
exist at that point.
Furthermore, Sally Dew's lack of an interest in personal
damages effectively prevents her from transferring such an interest
to Robert Dew via quitclaim deeds. It is axiomatic that a
"quitclaim deed transfers and is designed to transfer only such
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title and interest as the grantor had when [the grantor] delivered
the title." Lodge v. Thorpe (1947), 120 Mont. 226, 229, 181 P.2d
598, 599-600. When Sally Dew quitclaimed her interest in the seven
parcels to Robert Dew, she possessed a fifty percent ownership
interest in the property, but no longer possessed any right to sue
for personal damages arising from Alice Dower's fraud. We conclude
that while Robert Dew succeeded to Sally Dew's fifty percent
ownership interest in the tracts, he did not, and could not,
succeed to her nonexistent right to sue for personal damages.
Robert Dew also asserts error in the District Court's
alternative reason for denying him one hundred percent of the
damages, namely, that he had acquired Sally Dew's interest in the
property with the knowledge that it was tainted by fraud. Because
of our resolution of Robert Dew's first asserted error, we need not
address this argument.
Dew also argues that the District Court's determination that
he is entitled to one-half of the damages arising from Alice
Dower's fraud is inequitable. His argument is based on our
decision in Dew II, wherein we stated that the District Court may
act as a court of equity and authorize the setting-off of the
purchase price of the individual land contracts in an amount equal
to the damages sustained. Dew II, 852 P.2d at 588. Dew again
misinterprets that case.
A review of Dew II clarifies that our discussion regarding the
equity power of the District Court was confined solely to its
ability to set-off the principal balances on the contracts for deed
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against the damages Robert Dew sustained. Indeed, we specifically
stated that "[tlhe power to allow a set-off of debts by a court of
equity exists independent of statute where grounds for equitable
interposition are shown, such as fraud or insolvency." Dew II, 852
P.2d at 588. Contrary to Robert Dew's assertion, this language--
limited as it is to the use of set-offs--does not invest the
District Court with broad equitable power to award him one hundred
percent of the personal damages attributable to Alice Dower's fraud
when he is not entitled by law to such an award. We hold,
therefore, that the District Court did not err as a matter of law
in concluding that Robert Dew is entitled to fifty percent of the
damages arising from Alice Dower's fraud.
Dew's final argument regarding the District Court‘s judgment
relates to the manner in which the District Court calculated his
damages. On remand following Dew II, the District Court set off
the principal balances due on each contract for deed, including
interest accrued from March 27, 1992, to the date of its order, by
the $5,000 damage award and prejudgment interest from August 1,
1983 to the date of its order. Dew argues that this calculation
ignored the fact that judgment was entered on March 27, 1992, and
that any recalculations should have been made as of that date. We
agree.
In Dew II, we stated that 'I [tlhe District Court acted within
its equitable authority when it offset the principal amounts due
under the contracts with the iudqment in this case." Dew II, 852
P.2d at 558 (emphasis added). "The judgment in this case" refers
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to the District Court's judgment entered on March 27, 1992, and
clearly obligated the District Court to offset the damage award,
complete with prejudgment interest, against the principal balances
owing on the contracts on March 27, 1992.
Accordingly, the District Court should have calculated damages
in the following manner. First, the District Court should have
determined the principal balance due on each contract for deed as
of March 27, 1992. Next, the District Court should have determined
Robert Dew's damages as of March 27, 1992. According to the
District Court's judgment of March 27, 1992, Robert Dew's damages
would amount to one-half of the $10,000 damage per tract. Dew II,
852 P.2d at 555. The District Court would add to that per tract
damage amount prejudgment simple interest at ten percent per annum
for the period from August 1983--the time when Alice Dower's fraud
became certain--to March 1992, for six of the contracts and from
February 1984, to March 1992, for the remaining contract. Dew II,
852 P.2d at 557. The District Court would then set-off Robert
Dew's damages for each tract against the principal balance owing on
the corresponding contract as of March 27, 1992.
Finally, the Dowers request an award of costs and attorney's
fees against Robert Dew as a sanction for bringing a frivolous
appeal. "If [this Court] is satisfied from the record and the
presentation of the appeal . . that the same was taken without
substantial or reasonable grounds, such damages may be assessed on
determination thereof as under the circumstances are deemed
proper." Rule 32, M.R.App.P. After reviewing the record and the
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parties' arguments and given the necessity of the remand, we cannot
conclude that Robert Dew's appeal was unreasonable. Therefore, we
decline to award costs and attorney's fees on appeal to the Dowers.
Affirmed in part, reversed in part, and remanded to the
District Court for recalculation of damages.
Justice Terry N. Trieweiler dissenting in part and specially
concurring in part.
For the reasons set forth in my dissent to the majority's
decision in Dewv.Dower (1993), 258 Mont. 114, 852 P.2d 549 (Dewll),
I dissent from the majority's holding that Robert Dew was entitled
to recover only one-half of the damages caused by defendants'
fraudulent conduct.
However, I concur with that part of the majority opinion which
reverses the District Court's application of the offset to which
Robert Dew is entitled against the contract purchase price.
Justice William E. Hunt, Sr., joins in the foregoing dissenting and
concurring opinion.
Justice
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