LeFeber v. Johnson
351 Mont. 75, 2009 MT 188, 209 P.3d 254 (2009)
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Rule of Law:
When unmarried cohabitants separate, a court may apply equitable principles, similar to those used in a marital dissolution, to divide property accumulated during the relationship by finding a tenancy in common and partitioning the property based on the parties' respective financial and non-financial contributions and intentions.
Facts:
- James A. LeFeber and Margaret Rose Johnson began an intimate, exclusive relationship in 1984 that lasted over twenty years, though they never married.
- In 1991, LeFeber drafted a Power of Attorney (POA) appointing Johnson as his attorney-in-fact, which included the power to act as his nominee.
- LeFeber told Johnson he would "buy her a home," and in 1994 they jointly signed an agreement to purchase the St. Joseph property.
- LeFeber paid the entire $111,750 purchase price but directed the title company to issue the deed in the name of "Maggie R. Johnson, a single woman as nominee."
- LeFeber refused to explain the meaning of the "as nominee" language to Johnson or to remove it from the deed.
- For eleven years, Johnson performed extensive labor to improve the property, including finishing the basement, building a deck, and installing substantial landscaping, which increased its value.
- From 1998 to 2005, LeFeber prepared and had Johnson sign applications for property tax assistance that represented Johnson as the sole legal owner of the property.
- After their relationship ended in 2005, LeFeber revoked the POA and demanded Johnson sign a quitclaim deed for the property, which she refused to do.
Procedural Posture:
- James A. LeFeber filed a petition in the Twenty-first Judicial District Court, Ravalli County (a state trial court), seeking to impose a constructive trust on the St. Joseph property.
- Margaret Rose Johnson filed a response alleging the property was a completed gift to her.
- The District Court denied both parties' claims for sole ownership, ruling instead that they were tenants in common, each holding an undivided one-half interest.
- The District Court ordered the property to be partitioned by sale with the proceeds to be split equally.
- LeFeber, as appellant, appealed the District Court's judgment to the Montana Supreme Court.
- Johnson, as cross-appellant, also appealed the judgment to the Montana Supreme Court.
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Issue:
Does a court properly apply equitable principles to find that unmarried cohabitants own property as tenants in common with equal one-half interests, when one party paid the entire purchase price but the other party's name was on the deed 'as nominee' and she provided significant labor to improve the property over many years?
Opinions:
Majority - Justice Morris
Yes. A court properly applies equitable principles to find that unmarried cohabitants own property as tenants in common with equal shares, despite unequal financial contributions and ambiguous deed language. The court possesses great flexibility in fashioning relief for unmarried cohabitants by applying equitable doctrines similar to those used in dividing a marital estate. LeFeber failed to establish a constructive or resulting trust in his favor because his actions—such as telling Johnson he would buy her a home and representing to tax authorities that she was the sole owner—were wholly inconsistent with her being merely a nominee holding bare legal title. Conversely, Johnson failed to prove the property was an outright gift, as LeFeber's insertion of the words "as nominee" in the deed demonstrated an intent to retain some interest, negating full donative intent. The most equitable interpretation of these contradictory actions is that LeFeber gifted Johnson an undivided interest, creating a tenancy in common. The District Court's 50/50 partition was proper because it correctly balanced LeFeber's financial contributions (a portion of which was deemed a gift) against Johnson's significant, value-adding, non-financial contributions of labor over eleven years.
Analysis:
This case solidifies the power of courts to use equity to achieve fair property distribution for unmarried, long-term cohabitants. It establishes that non-monetary contributions, such as labor that improves a property's value ("sweat equity"), can be weighed equally against direct financial contributions. The decision confirms that courts can look past ambiguous legal title and the parties' conflicting claims to their overall conduct and history to determine their true intentions regarding property ownership. This precedent provides a crucial avenue for relief for partners in non-marital relationships who contribute to shared assets in non-financial ways.
