UNITED STATES TAX COURT

CORDED

T.C. Memo. 2001-14

UNITED STATES TAX COURT

ESTATE OF THEODORE C. CHEMODUROW, DECEASED,

GAIL C. WILLIAMS, EXECUTOR, Petitioner v.

COMMISSIONER OF INTERNAL REVENUE, Respondent

Docket No. 1451-00.

Filed January 23, 2001.

R has moved for a partial summary adjudication

that the value of certain real and personal property is

includable in the gross estate. . P avers that the

property is not so includable because the decedent sold

it to his daughter prior to his death. Relying on two

State court actions finding no sale to the daughter, R

argues that the doctrine of collateral estoppel, or

issue preclusion, precludes such a finding. We agree

with R that P is estopped from litigating ownership of

the property. P having set forth no other basis for

P' s assignments of errors, partial summary adjudication

in R's favor is appropriate.

Held: R' s motion for partial summary judgment

shall be granted, and the value of the property is

includable in the gross estate.

BERVED JAN 2 3 200

Dudley M. Lang and R. Wicks Stephens II, for petitioner.

Frederick J. Lockhart, Jr., for respondent.

MEMORANDUM OPINION

HALPERN, Judge:

This case involves the Federal estate tax.

The decedent is Theodore C. Chemodurow (sometimes, Theodore).

By

notice of deficiency dated December 1, 1999 (the notice),

respondent determined a deficiency in Federal estate tax of

$2,648,640, an addition to tax for failure to file tax return of

$132,432 under section 6651(a)(1), and an accuracy-related

penalty of $529,728 under section 6662(a).

The case is before us

on respondent's motion for partial summary judgment (the motion).

Petitioner objects.

Unless otherwise noted, all section references are to the

Internal Revenue Code in effect at the time of decedent's death,

and all Rule references are to the Tax Court Rules of Practice

and Procedure.

Background

Motion for Summary Judgment

A summary judgment is appropriate "if the pleadings, answers

to interrogatories, depositions, admissions, and any other

acceptable materials, together with the affidavits, if any, show

that there is no genuine issue as to any material fact and that a

decision may be rendered as a matter of law."

Rule 121(b).

A

- 3 summary judgment may be made upon part of the legal issues in

controversy.

See Rule 121(a).

.

Grounds

Respondent asks for summary adjudication in his favor that,

at the time of decedent's death, decedent had an interest in

certain real and personal property (sometimes, the property), the

value of which, by virtue of such interest, is includable in the

gross estate.

Respondent's grounds are that the ownership of the

property was previously litigated by Gail C. Williams (sometimes

Gail or Ms. Williams), individually, and as personal

representative of decedent's estate, and that a final

determination was reached adverse to Ms. Williams' position, as

executor, in the instant case, which affords respondent the

defense of collateral estoppel and precludes petitioner from

relitigating ownership of the property.

Facts on Which We Rely

.

In support of the motion, respondent has filed the

declaration of Frederick J. Lockhart, Jr., respondent's attorney

in this case (the Lockhart declaration).

Attached to the

Lockhart declaration is a copy of the United States Estate (and

Generation-Skipping Transfer) Tax Return, Form 706 (the Form

706), filed on account of decedent's death, and copies of various

documents filed in two State court actions (which we detail

infra).

In support of petitioner's opposition to the motion,

petitioner has filed the declaration of Ms. Williams (the

Williams declaration).

We rely on those declarations to the

extent that they are undisputed.

In particular, we rely on the

Form 706 and State court documents attached to the Lockhart

declaration, since their authenticity has not been disputed by

petitioner.

We also rely on two attachments to the motion, which

petitioner also relies on.

Finally, we rely on certain

uncontested averments in the pleadings.2

Principally, the facts

on which we rely to decide the motions are as follows.

Decedent

Decedent died on January 8, 1996.

His domicile at the time

of his death was in Yellowstone County, Montana.

.

Executor

Ms. Williams (nee Chemodurow), personal representative of

the estate of decedent, signed the petition.

Her address, as

shown in the petition, is in Bozeman, Montana.

Form 706

Schedule A to the Form 706 (Schedule A) is a schedule

requiring a description of all real estate owned by the decedent.

The following item is described on Schedule A:

,

"80 acres in

i In petitioner's memorandum of law in opposition to the

motion, petitioner states petitioner's reliance on "the Protest

of Petitioner filed herein". The record contains no such

document, nor does petitioner's counsel's cover letter, dated

Dec. 12, 2000, enclosing various documents for filing, contain

reference to any such document.

a

I

- 5 -

Gallatin County, Montana near Bozeman" (the subdivision land).

Schedule A does not include any description of approximately 390

acres of ranch land adjacent to the subdivision land and

constituting the greater part of what was known as the Abagail

ranch (the Abagail ranch).

There is no accompanying schedule to the Form 706 that

describes certain personal equipment used in connection with the

Abagail ranch (the ranch equipment).

Notice

Among the adjustments giving rise to respondent's

determination of a deficiency in Federal estate tax are

adjustments increasing the value of the gross estate for the

value of the Abagail ranch and the ranch equipment.

Respondent

made those adjustments on the basis that decedent owned the

Abagail ranch and the ranch equipment on the date of his death.

Petition

Among petitioner's assignments of error in the petition are

the following:

.

(a)

The Commissioner erroneously determined that the

gross estate includes the value of the land,

improvements and water rights of the real property

known as the Abagail Ranch, which real property was

sold to the decedent's daughter on November 16, 1981.

(b) The Commissioner erroneously determined that

such sale to the decedent's daughter was null and void.

(e) The Commissioner erroneously determined that the

gross estate includes the value of farm machinery and

equipment which was sold to the decedent's daughter on

or before August 18, 1995.

Among the facts upon which petitioner bases the assignments

of error.are the following:

On November 16, 1981, * * * [decedent] sold the Abagail

Ranch to his daughter Gail Chemodureau * * *.

From November 16, 1981, until August 30, 1995 * * *

title to the Abagail Ranch remained in the names of

* * * [decedent] and his wife * * *. On August 30,

1995 * * * [decedent and his wife] executed and

delivered a Warranty Deed conveying Abagail Ranch to

Gail. Because of a minor error in such deed * * *

[decedent and his wife] executed and delivered a

corrected Warranty Deed dated December 20, 1995. * * *

Gail is the true owner of the Abagail Ranch * * * .

The Abagail Ranch is not an asset of the Estate and its

value is not properly included in the gross estate for

estate tax purposes.

*

*

*

*

*

*

*

In conjunction with formalizing the sale of the Abagail

Ranch to Gail * * * [decedent] executed and delivered

to Gail a General Assignment of all farm equipment and

machinery located at the Abagail Ranch. Consequently,

Gail is the true owner of the equipment; it is not an

asset of the Estate; and its value is not properly

included in the gross estate for estate tax purposes.

State Court Actions

Relevant to this proceeding are two actions brought in the

Montana Eighteenth Judicial District Court, Gallatin County,

Montana (the State court).

The first action is styled "CYNDI

JAKUBEK and PAUL JAKUBEK, Plaintiffs, vs. GAIL SUZANN CHEMODUREAU

aka GAIL WILLIAMS individually and in her capacity as Personal

Representative of the ESTATE OF THEODORE CHEMODUROW, Defendants",

Cause No. DV 96-60 (Cause No. DV 96-60).

Cause No. DV 96-60 was

initiated by complaint (the Second Amended Complaint and Demand

for Jury Trial in Cause No. DV 96-60 (second amended complaint)

is dated February 12, 1997).

Ms. Williams answered and made a

counterclaim (the answer and counterclaim).

The second action is

styled "GAIL SUZANN CHEMODUREAU WILLIAMS, Plaintiff, vs. GEORGIA

DARIA HOHENSEE, CYNTHIA JAKUBEK, PAUL JAKUBEK, the heirs et al.,

Defendants", Cause No. DV 96-109 (Cause No. DV 96-109).

Cause

No. 96-109 was initiated by complaint filed April 1, 1996 (the

complaint).

A cross-complaint (the cross-complaint) was brought

in Cause No. DV 96-109, styled "GEORGIA DARIA HOHENSEE,

Plaintiff, vs. GAIL SUZANN CHEMODUREAU, et al., Defendants.."

Cause No. DV 96-60 involves several causes of action based

upon agreements plaintiffs claim they entered into with decedent,

including an agreement entitled "LIVESTOCK AGREEMENT"

livestock agreement).

(the

Among the averments made by plaintiffs in

support of their causes of action are that (1) by the livestock

agreement, decedent had (A) leased the Abagail ranch to them and

(B) agreed to provide and maintain necessary equipment (i.e., the

ranch equipment) for ranch operations, and (2) Ms. Williams,

individually and as a personal representative of decedent's

estate, had breached those agreements.

Among the counts in

Ms. Williams' counterclaim are counts alleging that plaintiffs

- 8 are unlawfully in possession of, and have refused to return to

Ms. Williams, the ranch equipment.

In Cause No. DV 96-109, Ms. Williams averred that she was

the sole owner of the Abagail ranch and sought to quiet her title

as against the claims of the identified defendants and others.

.

Among defendants identified in the complaint are "the heirs and

devisees of [decedent]".

With respect to unidentified

defendants, the complaint avers that there might be persons

unknown to Ms. Williams claiming, or who might claim, an interest

in the Abagail ranch, adverse to her interest as the fee simple

holder of the title to the property.

The complaint states that

each and all of the identified defendants, as well as any unknown

persons, "are without any right, title, estate, or interest in,

or lien or encumbrance upon, the Property [Abagail Ranch], and

therefore have no valid estate, right, title, or interest in or

to, or lien or encumbrance upon, the Property or any portion

thereof."

By the cross-comp,laint, cross-complainant set forth a

cause of action against Ms. Williams individually, and in her

capacity as personal representative of the estate of decedent,

for specific performance of a land transaction involving the

Abagail ranch.

Cause Nos. 96-60 and.96-109 were consolidated and a nonjury

trial was held in each, from July 14 through July 18, 1997,

in

- 9 -

Cause No. 96-60, and on November 12 and 13, 1997, in Cause No.

96-109.

On April 8, 1998, in connection with Cause No. 96-109, the

State court issued its "Findings of Fact, Conclusions of Law and

Order"

(the Cause No. 96-109 report), together with attendant

Judgment (the Judgment in Cause No. 96-109).

Two conclusions

reached by the State court were that the Abagail ranch was

property includable in the probate estate of decedent and that

Ms. Williams held title to the ranch in constructive trust for

the estate of decedent.

Among the conclusions of law reached by

the State court were the following:

4. The first issue to be resolved is ownership of

the Abagail Ranch. Gail claims to have purchased the

ranch in 1981 from Theodore. There was no evidence

presented that Theodore agreed to sell the ranch to •

Gail in 1981 or that he considered the ranch sold to

Gail. In fact, the evidence demonstrated that he

considered the ranch as his own as reflected in his

1992 correspondence with Musser and the 1995 Will.

Gail presented no evidence of payment for the ranch no checks, credit card bills or any other written

evidence of payment to Theodore from 1981 to the date

of trial. The Court concludes that Gail did not

purchase any portion of the Abagail Ranch at any time.

5. Gai·l also claims that she acquired the Abagail

Ranch in 1995 by virtue of the claimed payments over

the years. In support of this claim, Gail produced two

deeds describing the identical portion of the Abagail

Ranch and both from Theodore and his wife Bette to Gail

- one dated August 1995 and the other December 1995

* * * . The deeds were ostensibly introduced at trial

to reflect a transfer of ownership to Gail in 1995.

Gail admitted that the August deed was defective and

had to be redone with the December deed. The August

and December 1995 deeds both indicate that all of the

consideration had been provided, but Gail admitted that

- 10 at the time of Theodore's death (January 1996), she

owed Theodore as much as $40,000-$60,000.

6. There was no credible evidence that Gail

provided Theodore with any consideration for any

portion of the Abagail Ranch at any time. It was

within Gail's ability to produce some documentary

evidence reflecting any payment for the ranch if it

existed. In light of this absence of what should have

been available evidence, the Court concludes that no

payments were ever made to Theodore by Gail for any

portion of the Abagail Ranch. In addition, there was

nothing in Theodore's 1995 tax return, prepared at

Gail's direction, or any of his other tax returns

introduced at trial, that reflected any payments from

Gail to Theodore for the Abagail Ranch.

7. The Court concludes that Gail provided no

monetary consideration for the Abagail Ranch, as

claimed by Gail. The Court also concludes that love

and affection between Theodore and Gail, if any, is not

considered valuable consideration for the conveyance.

Baker Nat. Bank v. Lestar, 153 Mont. 45, 57; 453 P.2d

774, 781. Without consideration and absent a gift

theory, the attempt to transfer ownership of the

Abagail Ranch to Gail in 1995 is void. Eliason v.

Eliason (1968), 151 Mont. 409, 417; 443 P. 2d 884, 889.

8. With regards to a gift theory, there was no

evidence presented at trial that the attempted transfer

from Theodore to Gail in 1995 was intended to be a

gift. In order for there to be a valid inter vivos

gift, Theodore must have had donative intent. State

Board of Equalization v. Cole (1948), 122 Mont. 9, 14;

195 P.2d 989, 992. Gail did not argue in her pleadings

or at the time of trial that Theodore ever intended to

gift her any portion of the ranch. Rather, she said

she was to pay for it and Theodore "intended" to sell

it to her.

9. Because there was no consideration provided by

Gail for the ranch and gift is not an issue in this

case, the Court concludes that the August and December

1995 deeds are null, void and subject to cancellation.

Eliason, 151 Mont. at 417.

10.

In light of the fact that there was no valid

transfer to Gail and no gift, that portion of the

- 11 -

.

Abagail Ranch subject to the quiet title" action should

be a part of the Estate of Theodore Chémodurow. Gail

may have title to the property by virtue of one of two

deeds, but as a matter of equity, Gail holds title to

the property in constructive trust for the Estate of

Theodore Chemodurow.

.

.

*

*

*

*

*

*

*

In this case, Gail is subject to an equitable duty

to convey it to the Estate until such time as all of

Theodore's affairs are settled and the probate court

permits her to distribute the estate according to

Thëodore's last Will. To permit Gail to keep the ranch

without having paid for it would unjustly enrich her at

the expense of Georgi.a, the Jakubeks and perhaps other

creditors, including the IRS, who are looking to the

Estate to satisfy Theodore's outstanding obligations,

debts and judgments. This conclusion does not preclude

Gail from acquiring an interest in the Abagail Ranch

per Theodore's last Will, if appropriate, once this

case and the probate of Theodore's estate have been

resolved.

11. Consequently, the Court concludes that

portion of the Abagail Ranch that Gail seeks to quiet

title is held in constructive trust for the Estate of

Theodore Chemodurow. Except as discussed below, it is

for the probate court to determine what, if any,

portion of the Abagail Ranch should be transferred to

Gail under Theodore's last Will.

The Judgment in Cause No. 96-109 incorporated the order

paragraphs from the Cause No. 96-109 report.

Among the order

paragraphs incorporated was the following:

1. Gail Williams' request to quiet title in that

portion of the Abagail Ranch identified in the

Complaint is DENIED and said property is now held by

.

Gail Williams in constructive trust for the benefit of

the Estate of Theodore Chemodurow.

•

The Judgment in Cause No. 96-109 (and, likewise, the

Judgment in Cause No. 96-60, see infra), inclusive of

- 12 -

incorporated Order (in Cause No. 96-109, only), became final as a

result of a Stipulation to Dismiss Appeal and Cross Appeal, with

Prejudice, dated October 6, 1998, and the Order of the State

court approving the dismissal, dated October 27, 1998.

Notices

of Satisfaction of Judgment were filed, and the State court

declined to dismiss the Judgments.

Also, on April 8, 1998, in connection with Cause No. 96-60,

the State court issued its "Findings of Fact, Conclusions of

Law".

An attendant Judgment was issued on April 14, 1998 (the

Judgment in Cause No. 96-60).

One conclusion reached by the

State court was that the ranch equipment was includable in the

probate estate of decedent.

Among the findings of fact made by

the State court were the following:

19. The parties [decedent and the Jakubeks]

negotiated, drafted and signed a Livestock Agreement

[(the livestock agreement)] in February 1993 * * *

*

*

*

*

*

*

*

35. The Jakubeks also contend that Gail breached

the Agreement [the livestock agreement] by refusing to

provide necessary machinery and equipment to operate

the ranch and maintain a cow/calf operation. The

necessary machinery and equipment at issue was a ranch

truck and ranch tractor. Under the Livestock Agreement

Theodore specifically agreed:

. . . to provide and maintain necessary equipment

for ranch operation, cattle, pasture and hay

ground. To provide animal health for cows and

their calves, to include; veterinary services,

vaccines, and supplies, pasture, hay, straw and

feed supplements.

- 13 39. As for the truck, Gail initially promised to

make the payments on the truck and tractor.

(P. Ex.

24). Later she claimed that she could not make the

payments because the Estate was without the funds.

Later still she claimed that she was not responsible

for making the payments on the truck because the truck

was sold to "Abagail Ranch, Inc." and there was no such

entity. She also claimed she did not need to make

payments on the truck because of a claimed forged

signature on the sales documents. * * * Nevertheless,

she demanded that the truck be returned to her as an

asset of the Estate * * * and claimed to own the

tractor as of August 1995. * * *

.

.

40. Gail claimed to have purchased the ranch

machinery in August of 1995 and produced a document

which she claimed reflected the transfer from Theodore,

including the tractor. * * *

Yet, there was nothing

presented at trial to indicate that she paid anything

for the machinery. The transfer document submitted by

Gail consists of three pages, the final two being

prepared by Cyndi. Cyndi testified that the two final

pages had not been prepared until late September or

early October of 1995. This is supported by Def. Ex.

509C which is the third page of Def. Ex. 509B except

with a date of October 1995 at the bottom. Gail's

claim that Def. Ex. 509B was created on or before

August 30, 1995 is inconsistent with the date on Def.

Ex. 509C and Cyndi's testimony.

*

*

*

*

*

*

*

69. As for the unlawful possession of the truck

and machinery and eqùipment, Gail at first claimed the

personal property belonged to the Estate and then they

belonged to her in accordance with an assignment dated

August 30, 1995. * * *

Theodore, however, still

considered the property his as late as September of

1995 because he gave Paul the back hoe to use as a

trade in, an item that Gail claims was transferred to

her in August. * * *

Among the conclusions of law reached by the State court were the

following:

3. The Livestock Agreement is a valid contract as

all essential elements to a contract are present,

- 14 -

namely, identifiable parties capable of contracting,

their consent, lawful object and consideration.

§28-2102, MCA; Klawitter v. Dettmann,

280, 886 P.2d 416, 419.

(1994), 268 Mont. 275,

4. As reflected in the Livestock Agreement, the

intent of the parties was to make it binding upon their

respective heirs, personal representatives and assigns.

Theodore's Last Will and Testament also instructs his

personal representative to pay all debts.

(Pl. Ex.1).

The Livestock Agreement is binding upon Gail as

Theodore's personal representative. See Baker v.

Berger (1994), 265 Mont. 21, 28, 876 P.2d 940, 944.

17. As personal representative of the Estate,

Gail breached the Livestock Agreement by (i) refusing

to pay any of the expenses of the cattle; (ii) letting

the truck and tractor be repossessed and not replacing

the same; and (iii) attempting to evict the Jakubeks

from the property in early 1996.

The Judgment in Cause No. 96-60 included, among others, the

following order:

Judgment is hereby entered against Gail Williams,

individually and in her capacity as personal

representative of the Estate of Theodore Chemodurow,

and in favor of Cyndi and Paul Jakubek on each and

every counterclaim brought by Ms. Williams in DV 96-60.

Discussion

I.

Introduction

The Federal estate tax is imposed on the transfer of the

taxable estate.

See sec. 2001.

The value of the taxable estate

is derived from the value of the gross estate.

See sec. 2051.

The value of the gross estate includes the value of all property

to the extent of the decedent's interest therein at the time of

- 15 -

his death.

See sec. 2033.

interests and rights.

402

We look to State law to interpret

See Tracy v. Commissioner, 70 T.C. 397,

(1978); cf. Helvering v. Stuart, 317 U.S. 154, 161

(1942).

As relevant to this proceeding, petitioner assigned error to

respondent's determinations that, at the time of his death,

decedent had an interest in the Abagail ranch and the ranch

equipment.

In support of those assignments, petitioner averred

that, prior to decedent's death, decedent had sold or otherwise

transferred the property to Ms. Williams, who, at the time of

decedent's death, was the "true owner" of the property.

Petitioner avers no other.facts that·would support the

assignments of error.

Therefore, if petitioner is estopped from

claiming that, prior to decedent's death, decedent had sold or

otherwise transferred the property to Ms. Williams, petitioner

has raised no factual issue with respect to the assignments of

error, and we may resolve those assignments as a matter of law.

II.

The Doctrine of Issue Preclusion

The doctrine of issue preclusion, or collateral estoppel,

provides that, once an issue of fact or law is "actually and

necessarily determined by a court of competent jurisdiction, that

determination is conclusive in subsequent suits based on a

different cause of action involving a party to the prior

litigation."

Montana v. United States, 440 U.S. 147, 153

(1979)

(citing Parklane Hosiery Co. v. Shore, 439 U.S. 322, 326 n.5

- 16 -

(1979)).

Issue preclusion is a judicially created equitable

doctrine the purposes of which are to protect parties from

unnecessary and redundant litigation, to conserve judicial

resources, and to foster certainty in and reliance on judicial

action.

See, e.g., id. at 153-154; United States v. ITT

Rayonier, Inc.,

627 F.2d 996, 1000 (9th Cir. 1980).

In Peck v. Commissioner, 90

T.C. 162, 166-167 (1988), affd. 904 F.2d 525

(9th Cir. 1990), we

set forth the following five conditions that must be satisfied

prior to application of issue preclusion in the context of a

factual dispute (the Peck requirements):

(1) The issue in the second suit must be identical in

all respects with the one decided in the first suit.

(2) There must be a final judgment rendered by a court

of competent jurisdiction.

(3) Collateral estoppel may be invoked against parties

and their privies to the prior judgment.

(4) The parties must actually have litigated the issues

and the resolution of these issues must have been

.

essential to the prior decision.

(5) The controlling facts and applicable legal rules

must remain unchanged from those in the prior

litigation. [Citations omitted.]

Even if the Peck requirements are satisfied, however, we

have broad discretion to determine when issue preclusion should

apply, and we may refuse to apply it where, for instance, it is

to be applied offensively, and the party against whom it is to be

applied had little incentive to defend in the first action or

- 17 -

where the second action affords the party procedural

opportunities unavailable in the first action that could readily

cause a different result.

U.S. 322, 330-331

T.C. 137, 143

See Parklane Hosiery Co. v. Shore, 439

(1979); see also McQuade v. Commissioner, 84

(1985).

.

.

In considering respondent's position that preclusive effect

attaches to the findings of the State court, we inquire whether

the courts of Montana would accord such findings preclusive

effect.

See 28 U.S.C. sec. 1738 (2000)

(the records and judicial

proceedings of a State shall have the same full faith and credit

in every court within the United States as they have in the

courts of the State from which they are taken); Kremer v.

Chemical Constr. Corp., 456 U.S. 461, 482

(1982)

("Congress has

specifically required all federal courts to give preclusive

effect to state-court judgments whenever the courts of the State

from which the judgments emerged would do so", quoting Allen v.

McCurrey, 449 U.S. 90, 96

T.C. 501, 508 (1994).

(1980)); Bertoli v. Commissioner,.103

The doctrine of collateral estoppel :Us

recognized in the courts of Montana.

971 P.2d 371, 373 (Mont. 1998)

E.g., Rafanelli v. Dale,

("The doctrine of collateral

estoppel bars a party against whom the claim is asserted or a

party in privity with the earlier party, from relitigating an

issue which has been decided in a different cause of action.").

The Supreme Court of Montana applies a three-part test to

- 18 -

determine whether collateral estoppel bars litigation:

(1) Was

the issue decided in the prior adjudication identical with the

one presented in the action in question?

judgment on the merits?

.(2) Was there a final

(3) Was the party against whom the plea

is asserted a party in privity with a party to the prior

litigation?

See id_ at 373-374.

Although the three-part test

applied by the Supreme Court of Montana does not specifically

recognize the fourth and fifth Peck requirements (actual

litigation of an issue whose resolution was essential to prior

case and no change in controlling facts and applicable legal

rules), we believe that those requirements are inherent in

Montana's three-part test.

Since the parties have couched their

arguments in terms of the Peck requirements, we shall respond

accordingly.

III.

Discussion

A.

Issue Preclusion

1.

The Abagail Ranch

Cause No. 96-109 is an action brought by Ms. Williams to

quiet title to the Abagail ranch.

by Mont. Code Ann. ch. 28 (1999)

Property).

Such actions are provided for

(Quieting Title to Real

In pertinent part, Mont. Code Ann. sec. 70-28-101

(1999) provides:

Quiet title action authorized. An action may be

brought * * * by any person * * * claiming title to

real estate against any person or persons, both known

and unknown, who claim or may claim any right, title,

- 19 -

estate, or interest therein or lien or encumbrance

thereon adverse to plaintiff's ownership * * * for the

purpose of determining such claim or possible claim

and quieting the title to said real estate.

In pertinent part, Mont. Code Ann. sec. 70-28-107

(1999)

provides:

the court in.which such action is tried shall have

jurisdiction to make a complete adjudication of the

title to the lands named in the complaint * * *,

including jurisdiction to direct:

*

*

*

*

*

*

*

(d)

the doing of any * * * act of a personal

nature necessary to give effect to the rights of the

respective parties to such action, as the same may be

adjudicated by the court.

Among the parties defendant in Cause No. 96-109 are "the

heirs and devisees of [decedent]" and all other persons "known or

unknown" claiming an interest in the Abagail ranch.

Among Ms. Williams' prayers for reli.ef is the following:

That it be decreed and adjudged by Ehis court that the

Defendants and each and all of them * * * have no.

right, title, estate, or interest in or to, or lien or

encumbrance upon, the * .* * [Abagail Ranch], and that

the Plaintiff is the sole and lawful owner thereof in

fee simple absolute, by and through good and valid

title thereto.

The State court determined that, notwithstanding that title

to the Abagail.ranch may have appeared in the name of

Ms. Williams, any title she held was held.in constructive trust

for the estate of decedent.

found:

In particular, the State court

"Gail did not purchase any portion of the Abagail ranch

at any time."

Based on that finding, the State court concluded

- 20 -

that, for lack of consideration:

"[T]he attempt to transfer

ownership of the Abagail ranch to Gail in 1995 is void", and "the

August and December 1995 deeds are null, void and subject to

cancellation".

The State court also concluded: "[T]hat portion

of the Abagail Ranch that Gail seeks to quiet title is held in

constructive trust for the Estate of [decedent]."2

The State

court's findings and conclusions of law directly contradict

Ms. Williams' averments in the complaint that:

"Plaintiff is the

sole owner of the Property [Abagail Ranch]", and "Plaintiff has

obtained her ownership rights in the Property by operation of law

and warranty deed."

Ms. Williams' prayers for relief (including

the·prayer set forth above) were denied.

Moreover, the State

court's findings and conclusions of law directly contradict

petitioner's averments in this case:

"On November 16, 1981,

* * * [decedent] sold the Abagail Ranch to his daughter Gail

Chemodureau", and "Gail is the true owner of the Abagail Ranch".

Respondent has satisfied the first of the Peck requirements; the

identical issue was decided in the first suit (Cause No. 96-109)

.

as is raised here, viz., whether decedent sold the Abagail ranch

to Ms. Williams.

2 The State court imposed the following duty upon Gail:

"Gail is subject to an equitable duty to convey it [the Abagail

Ranch] to the Estate until such time as all of * * * [decedent's]

affairs are settled and the probate court permits her to

distribute the estate according to * * * [decedent's] last Will."

- 21 -

Respondent has also satisfied the fourth of the Peck

requirements; ownership of the Abagail ranch was actually

litigated and the answer to that question was essential to the

result in the first suit (Cause No. 96-109), i.e., that Ms.

Williams held the Abagail ranch only as a constructive trustee

for the benefit of the "Estate of [decedent]".

The Judgment in Cause No. 96-109 was entered, became final,

and was satisfied.

Petitioner has failed to show that the

controlling facts or applicable law have changed since those

events occurred.

Thus, respondent has satisfied the second and

fifth Peck requirements.

Since petitioner does not challenge the

third Peck requirement, viz., whether petitioner is a party, or

in privity to a party, to the prior judgment, we conclude that it

is satisfied.

Respondent has, therefore, satisfied all of the

Peck requirements.

2.

The Ranch Equipment

In Cause No. 96-60, plaintiffs claimed that, by the

livestock agreement, decedent leased to them the Abagail ranch

and, in connection with that lease, agreed to provide and

maintain the ranch equipment for their use.

The State court

found that the livestock agreement was a valid contract, and the

intent of the parties to the livestock contract was to make it

binding on their respective heirs, personal representatives, and

assigns (including Ms. Williams, as decedent's personal

- 22 -

representative).

Plaintiffs claimed that Ms. Williams,

"individually and as personal representative of the Estate [of

decedent]", had breached the livestock agreement specifically,

that provision of the.agreement by which decedent agreed to

provide and maintain the ranch equipment for plaintiffs' use.

In

the answer and counterclaim, Ms. Williams averred that she owned

the ranch equipment.

She prayed for a judgment on her

counterclaim that, among other things, "the Plaintiffs return to

the Defendant the possession of the Truck * * * [and] tractor and

other farm and ranch equipment unlawfully held by the

Plaintiffs".

The State court found that, with respect to the

ranch equipment:

"[T]here was nothing presented at trial to

indicate that she [Ms. Williams) paid anything for the

machinery."

The State court entered judgment against Ms.

Williams, and in favor of the plaintiffs, on every count in her

counterclaim.

For substantially the same reasons as with the Abagail

ranch, we conclude that the Peck requirements are satisfied with

respect to the ranch equipment.

Issues of fact were decided by

the State court following a trial.

The State court rejected

Ms. Williams' claim that she (rather than the estate) owned the

ranch equipment.

That is the same issue before us.

Resolution

of that issue was essential to the outcome reached by the State

court.

The Judgment in Cause No. 96-60 was entered, became

.

- 23 -

final, and was satisfied.

Petitioner has failed to show that the

controlling facts or applicable law have changed since those

events occurred.

Petitioner does not question whether petitioner

is a party, or in privity to a party, to the prior judgment.

Respondent has, .therefore, satisfied all of the Peck

requirements.

3.

Exercise of Discretion

Petitioner argues that we should exercise our discretion to

preclude respondent's claim of estoppel.

First, petitioner

argues that Ms. Williams did not have the incentive to defend

vigorously the issue of ownership of the Abagail ranch in the

State court.

In the Williams declaration, Ms. Williams states:

[DV 96-109] was a quiet title action which I commenced

for the sole purpose of removing as a lien against the

Abagail Ranch a mortgage securing a note * * * held by

Georgia Hohensee.

*

* * *

*

*

*

*

*

*

At no time during the trial of the consolidated Montana

cases did I ever believe that I was litigating title to

the Abagail Ranch in any manner which was intended to

put at issue as against the whole world that I was the

owner of the ranch based upon my 1981 agreement with my

father to purchase the ranch and my subsequent payments

therefor. * * *

Petitioner claims:

"The worst possible outcome of the 1996

Action for Gail Williams was that:

(a) seven acres of an almost

400 acre ranch would go to Georgia's estate;

(b) the Jakubeks

would indeed have a valid lease (that would soon expire); and

- 24 -

.

(c) her quiet title action would be denied because of this.

None

of these possible outcomes are particularly onerous."

Petitioner ignores that, in Cause No. 96-109, the caption to

the complaint (the caption) includes, as defendants:

.

all persons known or unknown claiming or who might

claim any right, title, estate, or interest, or lien or

encumbrance upon the real property described in the

Complaint [Abagail Ranch] or any portion thereof,

adverse to Plaintiff's ownership or any cloud on

Plaintiff's title thereto whether such claim or

possible claim be present or contingent, including any

of dower, inchoate or accrued * * *.

Petitioner's claim that Cause No. 96-109 was limited to

determining Ms. Williams' rights as against only the estate of

Georgia Hohensee is belied by the caption and averments of the

complaint.

Moreover, Mont. Code Ann. sec. 70-28-104(2)

(1999)

provides:

(2) If the plaintiff shall desire to obtain a .

complete adjudication of the title to the real estate

described in the complaint, he may name as defendants

all known persons who assert or who might assert any

claim * * * and may join as defendants all persons

unknown who might make any such claim by adding in the

caption of the complaint in such action the words "and

all other persons, unknown, claiming or who might claim

any right, title, estate, or interest in or lien or

encumbrance upon the real property described in the

complaint adverse to plaintiff's ownership or any cloud

upon plaintiff's title thereto, whether such claim or

possible claim be present or contingent."

The caption contains language substantially identical to that set

forth in Mont. Code Ann. sec. 70-28-104(2)

(1999).

Moreover,

Mont. Code Ann. sec. 70-28-107 (1999), quoted supra, establishes

the jurisdiction of the trial court to make a complete

.

- 25 -

adjudication of the title to the Abagail ranch.

We cannot escape

the conclusion that, by filing the complaint, Ms. Williams placed

at risk her interest in the Abagail ranch as against all parties,

known and unknown.

.

Certainly, the State court recognized that Cause No. 96-109

involved rights other than those asserted by the estate of

Georgia Hohensee and the Jakubeks.

The State court found:

"To

permit Gail to keep the ranch without having paid for it would

unjustly enrich her at the expense of Georgia, the Jakubeks, and

perhaps other creditors, including the IRS, who are looking to

the Estate to satisfy Theodore's outstanding obligations, debts

and judgments."

Ms. Williams instigated Cause No. 96-109, and,

initially, she set the boundaries of the controversy, which

brought into question her ownership of the Abagail ranch, as

against not only the estate of Georgia Hohensee and the Jakubeks

but also anyone else claiming an interest in the property.

Petitioner has failed to prove that Ms. Williams did not have the

incentive vigorously to defend her ownership of the Abagail

ranch.

...

Second, petitioner argues that petitioner has better

procedural opportunities in this Court than Ms. Williams had in

the State court.

In the Williams declaration, she states:

During the trial of the consolidated Montana cases, the

court refused to admit important evidence which I

believe supported my ownership of the Abagail Ranch.

As I understood it, the reason for the refusal to admit

- 26 -

the supporting evidence was that my attorney in this

action had failed to produce that evidence during the

discovery stage of the cases because he thought it was

unnecessary.

In Cause No. 96-109, the State court found:

.

At trial, Gail produced an alleged agreement with

Theodore for the Abagail Ranch and Lot #3 dated in

August of 1995. The agreement for the 400 acres was

not listed on Gail's list of exhibits in the Pretrial

Order nor was it identified by Gail in her answers to

the discovery requests. Gail marked the putative

agreement for the 400 acres as Def. Ex. 510 in DV 96-60

and it was refused, but another agreement for land in

the Subdivision had been admitted as Def. Ex. 510A. In

DV 96-109, Gail switched the exhibit labels on the

exhibits and attempted to introduce the 400 acre

agreement as Def. Ex. 510A. The 400 acre agreement was

again rejected. While the Court eventually admitted

the document on other grounds, the Court does not find

this late discovered 400 acres agreement to be a

credible or authentic document or one of which the

defendants in DV 96-109 had adequate notice.

Therefore, the Court considers it of no consequence. .

We assume that the document referred to in the court's

finding is the document petitioner refers to.

The short answer

is that it was admitted into evidence in Cause No. 96-109,

contrary to petitioner's claim.

The State court's extensive

findings of fact in Cause Nos. 96-60 and 96-109 reveal that

Ms. Williams was afforded a full and fair opportunity to present

all evidence in support of her various claims.

We shall not exercise our discretion to preclude

respondent's claim of estoppel.

- 27 -

B.

Conclusion

Petitioner is precluded from claiming that, prior to

decedent's death, decedent had sold or otherwise transferred the

property to Ms. Williams.

IV.

Summary Judgment

As stated, petitioner has raised no factual issue with

respect to the assignments of error, other than that, prior to

his death, decedent had sold or otherwise transferred the

property to Ms. Williams.

such a showing.

Petitioner is precluded from making

Petitioner has not questioned the application of

section 2033 or any other provision of the Federal estate tax.

Petitioner, therefore, is left with no basis for assigning error

to respondent's determination of a deficiency based on the

inclusion of the value of the property in the gross estate.

Petitioner's assignments of error in that regard are, therefore,

without merit.

We shall grant the motion.

An appropriate order

will be issued.

1