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Hughes v. Hughes

Supreme Court of Montana

July 2, 2013

JOHN JUNIOR HUGHES, SHIRLEY A. HUGHES, JASON A. HUGHES and J&S FAMILY LIMITED PARTNERSHIP, Plaintiffs and Appellants,
v.
JOHN R. HUGHES, III, Defendant and Appellee.

Submitted on Briefs: April 10, 2013

District Court of the Tenth Judicial District, In and For the County of Fergus, Cause No. DV 11-28 Honorable Laurie McKinnon, Presiding Judge

For Appellant: W. Scott Green, Patricia D. Peterman, Patten, Peterman, Bekkedahl & Green, PLLC;

For Appellee: Jonathan W. Stidham, Stidham & Stidham, P.A.; Bartow, Florida

OPINION

Brian Morris Justice

¶1 The District Court for the Tenth Judicial District, Fergus County, consolidated multiple complaints. The dispute arose between Johnny Hughes (Johnny) and his parents, Jack and Shirley Hughes (Jack and Shirley), regarding borrowed money, the partition of jointly owned real property and accompanying water rights, and a contested pasture lease. The District Court ruled in favor of Johnny on all of the disputes except for the water rights. Jack and Shirley appeal and Johnny cross-appeals.

¶2 We affirm in part, reverse in part, and remand.

¶3 We address the following issues on appeal:

¶4 Whether Johnny's undesignated payments to Jack and Shirley restarted the statute of limitations on the 1989 promissory note?

¶5 Whether Jack and Shirley possess a life estate in the new house or a right to any of the insurance proceeds?

¶6 Whether Jack is entitled to an easement for stock water across Johnny's property?

¶7 Whether the arbitrator exceeded his authority or miscalculated damages?

PROCEDURAL AND FACTUAL BACKGROUND

¶8 Jack and Shirley loaned $104, 375 to Johnny on January 1, 1989. Johnny executed a promissory note in favor of Jack and Shirley to evidence this loan. Johnny divorced his wife in 1997. Johnny asked Jack and Shirley for a loan of $180, 000 to settle with his wife. Johnny had not yet made any payments on the 1989 promissory note. Jack and Shirley loaned Johnny an additional $180, 000 to settle with his wife on September 24, 1997. Johnny gave Jack and Shirley a second promissory note to evidence this 1997 loan.

¶9 Johnny made a series of payments to Jack and Shirley between 1999 and 2008 that totaled $155, 000. Jack and Shirley filed an action to collect the unpaid debt on the two promissory notes after they had a falling out with Johnny. The District Court determined that the statute of limitations barred Jack and Shirley from collecting on the 1989 promissory note.

¶10 Johnny claimed, as a result, that 100% of his payments should be applied to the 1997 promissory note. Jack and Shirley argued that the payments should be divided between the two loans. A decision to divide the payments between the two loans would lead to a higher remaining balance on the 1997 promissory note. The court submitted the question of the proper division of the payments between the two promissory notes to the jury. The jury divided these payments on a pro-rata basis between the two promissory notes.

¶11 The District Court awarded attorney fees to Johnny as the prevailing party pursuant to a provision of the promissory notes. Jack and Shirley appeal the District Court's conclusion that the statute of limitations barred collection on the 1989 note. Jack and Shirley further appeal the District Court's determination that Johnny represented the prevailing party and the accompanying award of attorney fees to Johnny.

¶12 Jack and Shirley granted Johnny an undivided 56% interest in the Melby Ranch through three separate deeds in 1984, 1985, and 1986. Jack and Shirley reserved for themselves a life estate in the buildings and improvements on the property. Johnny has lived in a house on the Melby Ranch since 1977. A fire destroyed the house on the Melby Ranch in 2006. Johnny received an insurance payment of $123, 156.56 for the house and $83, 826.88 for his personal property. Johnny used insurance proceeds and several hundred thousand dollars of additional personal money to rebuild the house.

ΒΆ13 Jack and Shirley claimed a life estate in the new house, or an interest in the insurance payment. The District Court determined that the fire had extinguished any life estate in the house claimed by Jack and Shirley. T he court furthered rejected their ...


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