Campbell v. Campbell

No. 8 6 - 1 5 6
IN THE SUPREME COURT OF THE STATE OF MONTANA
1986
LOIS A. CAMPBELL,
Plaintiff and Appellant,
MYRON CAMPBELL, CAROL CAMPBELL,
and STANLEY J. CAMPBELL,
Defendants and Respondents.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable Charles Luedke, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Cate Law Firm; Jerome J. Cate, Billings, Montana
For Respondents:
Jon A. Oldenburg, Lewistown, Montana
H. Elwood. English, Billings, Montana
Submitted on Briefs: July 10, 1 9 8 6
Decided: September 4, 1986
Filed:
Clerk
Mr. Justice Frank B. Morrison, Jr. delivered the Opinion of
the Court.
Plaintiff Lois Campbell appeals the January 30, 1986,
order of the Thirteenth Judicial District Court granting
summary judgment in favor of defendants. We affirm.
At all times relevant to this case, Stanley and Lois
Campbell were husband and wife. In 1972, Stanley and Lois
had a home built on property located at 1716 Westwood Drive
in Billings, Montana. The purchase price of the home was
$34,000. To finance the purchase, $14,000 was borrowed from
Hazel Rustuen, Lois's grandmother, who took a mortgage
against the property in that amount.
Stanley and Lois experienced financial difficulties in
the ensuing years. The Internal Revenue Service (IRS) filed
a lien against the property for $18,098.88 for non-payment of
taxes. The Montana Department of Revenue filed a lien
against the property for $919.17, as did the Montana
Employment Security Division in the amount of $1,494.05. In
addition, Stanley and Lois owed property taxes in the amount
of $5,739.06, and $673.74 for Special District Improvement
assessments.
The bills went unpaid, and on November 6, 1978, the IRS
filed a notice of seizure and noticed the Campbell's property
for sale. A few days prior to the sale date, Myron Campbell,
Stanley's brother, and other members of Stanley's family
loaned $20,000 to Stanley and Lois for the purpose of
satisfying the IRS lien. On the same date, Stanley and Lois
signed a second mortgage and note payable to Myron in the
amount of $20,000. These documents were never delivered nor
recorded.
Stanley and Lois continued to have financial problems.
They failed to clear the liens against their property, and
did not make any mortgage payments to Lois' grandmother, who
filed suit to foreclose on her mortgage. Stanley and Lois
were unable to refinance, so they decided to sell their
property to Myron and Carol Campbell. The buy-sell agreement
was executed June 26, 1979, in the amount of $34,500. The
parties agreed that Stanley and Lois would remain in the home
but would be required to pay $475 monthly rental. The
parties further agreed that Stanley and Lois would be
permitted to buy back the home for $34,500 if they were ever
in a financial position to do so.
Stanley and Lois never made any rental payments, and
began to have marital difficulties. Lois filed a dissolution
action, and Stanley was removed from the home by court order
in May of 1983. Thereafter, Lois filed suit against Stanley,
Myron and Carol on February 8, 1984. Lois' complaint alleged
that the sale of the home was made by the parties with the
understanding that it would be immediately reconveyed to
Stanley and Lois subject to the amount of financing obtained
by Myron and Carol. Lois claimed that Myron and Carol had
received the property for far less than its actual value and
prayed that the conveyance be set aside as fraudulent.
Myron and Carol also filed suit on February 8, 1984, to
have Lois evicted from the home for failure to pay rent, to
quiet title, and to collect damages. The two actions were
consolidated. On February 6, 1985, the district judge
granted summary judgment in favor of Myron and Carol on the
issue of title and right to possession. Lois' complaint was
dismissed with prejudice. Lois appeals and raises the
following issue: Whether the District Court erred in
granting summary judgment?
Lois contends the District Court overlooked material
issues of fact in granting summary judgment, including the
following: that the sale of the home was made for the
purpose of paying off the $20,000 loan to the Campbell family
and the balance due on the mortgage held by Lois'
grandmother; that the conveyance of the home to Myron and
Carol was a method to protect it from creditors and that the
agreement provided for reconveyance of the home to Stanley
and Lois; that there was an agreement between Stanley and
Myron whereby Myron would make the house payments in exchange
for Stanley's interest in the family farm.
The depositions of the parties show Stanley and Lois
sold their home because they were unable to refinance and
wanted to avoid foreclosure. The buyer's closing statement
reveals that Stanley and Lois had unpaid obligations of
$28,881.02 on the date of sale, irrespective of the $20,000
owed to the Campbell family. Lois' claim that the home was
transferred in exchange for Stanley's interest in the family
farm has no support in the record.
Lois contends the transaction was a mortgage and not a
sale under the case law of Montana. In Murray v. Butte
Monitor Tunnel Mining Company (1910), 41 Mont. 449, 110 P.
497, this Court listed the four factors to be considered in
determining whether a transaction was a mortgage and not a
sale:
1. The transaction in its inception had for its
purpose a loan, not a sale.
2. The grantor was in financial distress at the
time of the transaction.
3. The price which the grantee claims he paid for
the property appears to be grossly inadequate.
4. According to grantee's own theory, the
transaction did not amount to an absolute sale, but
to a conditional sale; that is, a sale with an
option to grantor to repurchase.
Contrary to Lois' assertions, the value of the home was
estimated by Lomas and Nettleton Company to be $58,900 on the
date of closing. Although the purchase price was $34,500,
Stanley and Lois had already received a $20,000 loan from
Myron and other family members. Further, Myron testified
that $34,500 was the maximum amount that an agency would lend
for the purchase of the property. Thus, the price paid for
the home was not grossly inadequate. Clearly, Myron and
Carol were trying to protect their investment by purchasing
the home rather than allow foreclosure.
Myron and Carol admit that Stanley and Lois had an
option to repurchase under their agreement. The evidence
shows Stanley and Lois were not financially able to do so.
No rent was ever paid to Myron and Carol, who have been
making payments on the house since 1979. Whether the option
to repurchase still exists was not determined by the District
Court. There is substantial evidence in the record that the
June 26, 1979, transaction was a sale and not a mortgage.
Lois contends she was fraudulently induced to
participate in the transaction with the false promise that
the home would be deeded back to her. This contention is not
supported by the facts. Stanley and Lois were in deep
financial trouble. Myron and Carol were not willing to lend
them any more money. Under such circumstances, Myron and
Carol certainly would not assume the responsibility of making
the payments on the home while surrendering the title to
Stanley and Lois. Section 28-2-404, MCA, states: "Fraud is
either actual. or constructive. Actual fraud is always a
question of fact." This statute does not preclude summary
judgment where there is no evidence supporting a claim of
fraud. Van Ettinger v. Pappin (1978), 180 Mont. 1, 588 P.2d
988. Under Rule 56 (c), Mont .R.Civ. P. summary judgment was
appropriate in this case.
The District Court is affirmed.
We concur: / /
Justices