Opinion
Dilts & Wilson, Robert R. Wilson, Cortez, for defendant in error Stephen T. Scott.
Parga & Dyer, Robert E. Parga, Guy B. Dyer, Jr., Cortez, for plaintiffs in error.
Samuel J. Merlo, Cortez, for defendant in error Margaret Scott Sitton.
DUFFORD, Judge.
This case was transferred from the Supreme Court pursuant to statute.
Plaintiffs in error were the plaintiffs in the trial court. They instituted this action against the defendant Stephen T. Scott, their former son-in-law, alleging in part that he had agreed to repay to them certain funds in the approximate amount of $5,000 which they had previously loaned to him and their daughter, Margaret Scott Sitton. It was the plaintiffs' specific allegation that they were third-party beneficiaries of a promise made by Stephen T. Scott to repay such funds. The defendant Stephen T. Scott then caused Margaret Scott Sitton to be made an additional defendant as an indispensable party.
Margaret Scott Sitton and Stephen T. Scott had been previously married, but were divorced pursuant to proceedings which had also been brought in the same trial court as these proceedings. The divorce proceedings were Civil Action No. 3934 in such court. In his answer, Stephen T. Scott initially asserted the following defense:
'That this Court has heretofore in Civil Action No. 3934 entitled 'STEPHEN T. SCOTT vs. MARGARET C. SCOTT, etc.' already adjudicated and determined the liability, if any, of the defendant in this action and by this Court has been fully adjudicated and that by reasons thereof the issues in this case are now res adjudicata (sic) and for that reason this action is barred.'
In her answer to a cross-claim made by Stephen T. Scott against her, Margaret Scott Sitton asserted that Stephen T. Scott was obligated to the plaintiffs by reason of the divorce decree entered in the divorce action No. 3934.
Admitted as Exhibit 1 in this case was a copy of the court file in Civil Action No. 3934. An instrument entitled 'Property Settlement Agreement' was incorporated in the decree of divorce. This agreement contained the following covenant on the part of Stephen T. Scott:
'Husband agrees to use his best efforts to repay to Wife's parents moneys given to them in an amount estimated to be approximately $5,000.00.'
This agreement was signed July 22, 1964, and the decree was signed October 21, 1964. There was no appeal to the decree. Exhibit 1 also reveals that on July 1, 1965, defendant Margaret C. Scott filed a petition alleging that defendant Scott had refused to make any payments on the $5,000 obligation an that defendant should be found in contempt of court for failing to use any effort to pay the $5,000. There also appears an order wherein the defendant Scott was found in contempt for failure to render payments under the property settlement agreement. To purge himself of the contempt, Scott was ordered at that time to pay $500 into the registry of the trial court which the Clerk was directed to distribute to the Bohlings, the plaintiffs in this case. Stephen T. Scott took no appeal from this order.
The court at the conclusion of the present trial found that the $5,000 had been given to the defendants as a gift and entered judgment for defendants dismissing plaintiffs' complaint. In view of the occurrences in the divorce action, the question of whether the plaintiffs' initial advance was or was not a gift is without present significance, and the ruling of the trial court in this case was in error.
The question of whether Stephen T Scott was firmly obligated to pay the sums in question to the plaintiffs had been judicially determined in Civil Action No. 3934. That fact was raised in this case by him and by Margaret Scott Sitton, who were parties to both actions. Such question could not be re-litigated in this case. Brennan v. Grover, 158 Colo. 66, 404 P.2d 544. In the present action, the plaintiffs seek to enforce their third-party beneficiary rights to such obligation. This they are entitled to do. Hastings v. Pringle, 37 Colo. 86, 86 P. 93.
The defendant Stephen T. Scott argues that, if it should be determined he is obligated to pay the sums in question to the plaintiffs, then it must be proven that he has the ability to pay such sums before the time for him to make payment can be deemed to have accrued and before any judgment for this amount can be entered against him. If it is conceded, as Scott contends, that the nature of his obligation to pay is tantamount to an agreement 'to pay when able,' this does not mean it is within his discretion as to when he will pay. Richardson v. Bricker, 7 Colo. 58, 1 P. 433. To the contrary, we hold that under the undisputed facts of this case his ability to pay the sum in question was established as a matter of law. See Colorado Woman's College v. Bradford-Robinson Printing Co., 114 Colo. 237, 157 P.2d 612. The record here reveals that at the time of divorce Scott was awarded the family home, in which the owner's equity was valued at $7,000. He also is shown to possess personalty and mutual fund stock shares having an aggregate value of approximately $3,700. His annual earnings at the time of the trial of this case were $10,500. In view of these facts and considering the time which has elapsed since Scott incurred his contractual monetary obligation to the plaintiffs as well as the amount of that obligation, we hold that it must now be discharged.
The judgment is reversed, and this cause is remanded with directions that the trial court enter judgment for the amount now owed by the defendant Scott to the plaintiffs, the same to draw interest at the statutory rate from the date the trial court ordered dismissal of plaintiffs' complaint.
COYTE, J., concurs.
PIERCE, Judge (dissenting).
I dissent from both the reasoning and result of the majority opinion.
The primary issues for determination in this case are: (1) whether the payment made to defendant was a gift or a loan; and (2) whether the trial court properly applied the presumption favoring a gift. The trial court ruled that the $1,800 transfer was a gift and the $3,300 transfer, although it had aspects of both a gift and a loan, was in fact also a gift.
The Colorado Supreme Court has applied the presumption of a gift from a mother-in-law to her son-in-law, stating:
'* * * (D)efendant Nicholson, from a natural interest in the welfare of her posterity, made a gift of the moneys advanced to the Barretts, and the burden was upon the plaintiff to show that it was intended otherwise. The law presumes that such gifts arise between parents and children, and this legal presumption prevails until the contrary is clearly and unequivocally established.' Howard v. Barrett, 101 Colo. 249, 72 P.2d 474.
I am unable to reasonably distinguish the facts or the law of the Howard case from the case at hand, and find no abuse of discretion in the trial court's ruling that plaintiffs had not overcome the presumption that the transfer between parent and child was a gift.
The property settlement in the divorce decree may have had some evidentiary value in regard to plaintiffs' intent at the time of the transfer, but on this issue the trial court found in favor of defendant, stating:
'The wording of the agreement set out above indicated that both defendants were of the opinion that plaintiffs had made a gift to defendants of the sums here sued upon, and that the defendant Scott was recognizing only a moral obligation to repay the money if and when he could.'
Further, there is an absence of evidence as to any note, mortgage, or demand for repayment prior to the divorce which would show agreed terms for repayment or an agreed rate of interest.
It is the rule in Colorado, not requiring citations, that the weight and sufficiency of evidence offered to overcome a presumption is a matter for the determination of the trier of fact.
The majority's contention that defendant's liability has been established in a previous proceeding and that it therefore has some res judicata effect is a misapplication of the law and a misconstruction of Brennan v. Grover, 158 Colo. 66, 404 P.2d 544. The rights and liabilities being determined in the instant case are between defendant and the parents of his ex-wife who were neither party nor privy to a party in the previous case. Further, the issues of law here are completely distinct from, and irrelevant to, the issues of law determined in the previous divorce proceeding. The principle of res judicata has no application here. Daiss v. Hanes, 85 Colo. 397, 277 P. 5; See, Newby v. Bock, 120 Colo. 454, 210 P.2d 985.
I would affirm.