Roecher v. Commercial National Bank , 87 Mont. 570 ( 1930 )

The earlier cases are in some conflict as to the extent of the dominion and control retained sufficient to invalidate a claimed trust and make the attempted disposition testamentary. The later adjudications seem to have a steady trend toward holding very slight retention of dominion and control sufficient to make the transaction testamentary in character and as attempts to oust the jurisdiction of probate courts. For example, McEvoy v. BostonFive Cents Sav. Bank, 201 Mass. 50, 87 N.E. 465, decided in 1909, appears impliedly, if not expressly, to overrule Davis v.Ney, 125 Mass. 590, 28 Am. Rep. 272, decided in 1878. And inRussell v. Webster, 213 Mass. 491, 100 N.E. 637 (1913), where the trustee agreed to turn back the property on demand, which is in effect the situation here, it was held that an agency or bailment had been created. In Rudd v. Rudd, 184 Ky. 400,214 S.W. 791 (1919) where the trustee was to hold the property subject to the "control and demands" of the settlor during his lifetime, the disposition to be made upon his death was declared to be testamentary. In Demartini v. Allegretti, 146 Cal. 214,79 P. 871 (1905), where the settlor was allowed to draw out whatever money he desired during his lifetime, the same view was taken. In Witthoft v. Commercial Dev. Inv. Co.,46 Idaho, 313, 268 P. 31 (1928), it was held that where a stockholder had certificates issued in the names of relatives and designated another stockholder as trustee to deliver the certificates to the parties to whom they were made out, in case of his death, the person appointed was not a trustee for the alleged donees of the stock, but, at most, was agent of the alleged donor to deliver the stock and the agency was terminated by the donor's death. (See, also, Union Trust Co. v. Hawkins, (Ohio) 167 N.E. 389, (1929); Stevenson v. Earl, 65 N.J. Eq. 721, 103 Am. St. Rep. 790, 1 Ann. Cas. 49, 55 A. 1091; McEvoy v. Boston Five CentsSav. Bank, supra; Russell v. Webster, 213 Mass. 491,100 N.E. 637.)

In each of the following cases the evidence was held to be insufficient to show an absolute and unconditional delivery of personal property by a donor to a third person to be delivered to the donee after donor's death, the donor having retained dominion and control over the property given and hence there was no valid gift inter vivos: Taylor v. Harmison, (1899) 179 Ill. 137,53 N.E. 584; Smith v. Ferguson, (1883) 90 Ind. 229, 46 Am. Rep. 216; Augusta Sav. Bank v. Fogg, (1890) 82 Me. 538,20 A. 92; Jones v. Crisp, (1908) 109 Md. 30, 71 A. 515; Baker v. Baker, (1914) 123 Md. 32, 90 A. 776; Sherman v. NewBedford Five Cents Sav. Bank, (1885) 138 Mass. 581; Bailey v.New Bedford Inst. for Savings, (1906) 192 Mass. 564, 116 Am. St. Rep. 270, 78 N.E. 648; Re Soulard, (1897) 141 Mo. 642,43 S.W. 617; Keyl v. Westerhaus, (1890) 42 Mo. App. 49; Godard v. Conrad, (1907) 125 Mo. App. 165, 101 S.W. 1108; Stevenson v. Earl, 65 N.J. Eq. 721, 103 Am. St. Rep. 790, 1 Ann. Cas. 49, 55 A. 1091; Williams v. Guile, (1899) 117 N.Y. 343, 6 L.R.A. 366, 22 N.E. 1071; In re Rose, (1901) 35 Misc. Rep. 21,71 N.Y. Supp. 172; Id., 75 App. Div. 615, 77 N.Y. Supp. 1139, affirmed in (1903) Id., 176 N.Y. 587, 68 N.E. 1124; Walsh'sAppeal, (1888) 122 Pa. St. 177, 9 Am. St. Rep. 83, 1 L.R.A. 535, 15 A. 470.

Where personal property is delivered to a third person to be delivered to the donee after the donor's death, the ultimate question, whether the third person occupies the position of an agent of the donor or trustee for the donee, is one of fact, to be determined from the intentions of the donor, the situation and relation of the parties, the kind and character of the property, and the things said, written and done in regard thereto, as disclosed by the evidence. If it was an agency or bailment the authority of the agent or bailee ends with the death of the principal or owner and delivery cannot be made thereafter. (Sec. 7975, Rev. Codes 1921, subd. 2; Wright v. Bragg, (1901) 106 Fed. 25, 45 C.C.A. 204; Duryea v. Harvey, (1903)183 Mass. 429, 67 N.E. 351; Taylor v. Harmison, (1899) 179 Ill. 137,53 N.E. 584; Keyl v. Westerhaus, 42 Mo. App. 49.) "The donor must surrender all his title and interests, without making any conditions by means of which he may resume the possession and enjoy his former estate. This, as a legal proposition, is well settled." (Curry v. Powers,70 N.Y. 212, 217, 26 Am. Rep. 577; Irish v. Nutting, 47 Barb. (N.Y.) 370, 383; Jackson v. 23rd St. Ry. Co., 88 N.Y. 520,526; Warriner v. Rogers, (1873) L.R. 16 Eq. 340, Moaks Eng. Rpts. 781; Young v. Young, 80 N.Y. 422, 423, 36 Am. Rep. 634.) "Any gift of chattels which expressly reserves the use of the property to the donor for a certain period, or as long as the donor should live, is ineffectual." (2 Schouler on Personal Property, 118; Vass v. Hicks, 7 N.C. 493, 494.) This rule has been applied where the gift is made by a written instrument or deed, purporting to transfer the title but containing the reservation. (Sutton v. Hollowell, 13 N.C. 185; Lance v.Lance, 5 Jones (50 N.C.), 413, 72 Am. Dec. 555; see, also,Rosenburg v. Rosenburg, 40 Hun (N.Y.), 91; Crowley v.Crowley, 131 Mo. App. 178, 110 S.W. 1100; Kilmer v. Hutton,131 App. Div. 625, 116 N.Y. Supp. 127; Cummings v. Bramhall,120 Mass. 552, 563.)

"The certainty in a declaration of trust which is necessary and sufficient to create a trust, has been construed to mean clear, explicit, definite and unequivocal expressions, setting out the trust with such certainty that a court of equity may enforce its execution." (39 Cyc. 58.) An examination of the cases cited below must make it plain that where, as in this case, the settlor has indicated an intention to create a trust, and specified the subject, purpose and beneficiaries of the trust, a valid trust is created; that a provision that the beneficiaries shall have maintenance and support out of the trust fund, whether from the principal or income, or both, does not affect the validity of the trust; and that the fact that the trust is not to be completed, and the property set over to the beneficiaries designated to receive it until the death of the settlor, does not constitute an attempt to make a testamentary disposition which would be in conflict with the statutes of wills. So long as the settlor has definitely established a trust, it is just as competent for him to receive a part of the principal as the income if necessary for the declared purpose of support and maintenance; and, while the point is not important here, it is just as evident that any reservation of management or control of the trust property by the settlor is unobjectionable, so far as the validity of the trust is concerned. (See Allen v. Hendrick, 104 Or. 202, 206 P. 733;Keck v. McKinstry, 206 Iowa, 1121, 221 N.W. 851, 855;Nichols v. Emery, 109 Cal. 323, 50 Am. St. Rep. 43, 41 P. 1089, 1091; Wilcox v. Hubbell, 197 Mich. 21, 163 N.W. 497;National Newark Essex Banking Co. v. Rosahl, 97 N.J. Eq. 74,128 A. 586; Robb v. Washington Jefferson College,185 N.Y. 485, 78 N.E. 359; Hiserodt v. Hamlett, 74 Miss. 37,20 So. 143; Lewis v. Curnutt, 130 Iowa, 423, 106 N.W. 914;Sims v. Brown, 252 Mo. 58, 158 S.W. 624; Lines v. Lines,142 Pa. 149, 24 Am. St. Rep. 487, 21 A. 809; Kelly v.Parker, 181 Ill. 49, 54 N.E. 615; Tennant v. John TennantMemorial Home, 167 Cal. 570, 140 P. 242; Ward v. Conklin,232 Ill. 553, 83 N.E. 1058; Dolan's Estate, 279 Pa. St. 582, 49 A.L.R. 858, 124 A. 176; Roche v. Brickley, 254 Mass. 584,150 N.E. 866; Reel v. Hansboro State Bank, 52 N.D. 82,201 N.W. 861 (a case closely parallel to the case at bar in its facts); Williams v. Evans, 154 Ill. 98, 39 N.E. 698; Dayton v. Stewart, 99 Md. 643, 59 A. 281; Jones v. Nicholas,151 Iowa, 362, 130 N.W. 125; Larrabee v. Porter, (Tex.Civ.App.)166 S.W. 395; Schreyer v. Schreyer, 43 Misc. Rep. 520,89 N Y Supp. 508, Id., 101 App. Div. 456, 91 N.Y. Supp. 1065; Id.,182 N.Y. 555, 75 N.E. 1134; In re Horkan's Estate,193 Wis. 286, 214 N.W. 438; Schauberger v. Tafel, 202 Ky. 9,258 S.W. 953; Rollestone v. National Bank of Commerce, 299 Mo. 57,252 S.W. 394; Padfield v. Padfield, 68 Ill. 210; Light v. Scott, 88 Ill. 239;Cahlan v. Bank of Lassen County, 11 Cal.App. 533,105 P. 765; Thomas v. Lamb, 11 Cal.App. 717, 106 P. 254; Talbot v. Talbot, 32 R.I. 72, Ann. Cas. 1912C, 1221, 78 A. 535.) This is an action in conversion brought by plaintiff as administrator of the estate of Nelson Story, Sr., deceased, against defendant for the recovery of certain personal property, hereafter referred to as the "trust securities."

The complaint is in the usual form in this character of action. Defendant, by answer, admitted the possession of the property described in the complaint at the time of the death of Nelson Story, Sr., and alleged that it received the property pursuant to the terms of two certain agreements dated December 14, 1923, attached to and made a part of the answer, one between Nelson Story, Sr., and T.B. Story, and the other between Nelson Story, Sr., and Nelson Story, Jr., and that, pursuant to the terms of the agreements, it delivered the trust securities to Nelson Story, Jr., and Katherine F. Story. Demand by plaintiff for possession before the commencement of the action is admitted and liability denied.

Plaintiff demurred generally and specially to the answer, and moved to strike certain portions thereof. The demurrers were overruled and the motion to strike was denied. Thereafter plaintiff replied, putting in issue the execution of the agreements and the receipt and delivery of the trust securities as alleged in the answer.

The cause was tried before the court with a jury, and, at the close of plaintiff's case, defendant's motion for a nonsuit was granted. Judgment was accordingly entered, from which plaintiff appeals.

The validity and effect of the agreements above referred to form the basis of this controversy. The agreement between Nelson Story, Sr., and T.B. Story relates to certain securities of the value of $72,700, and recites that several years before Nelson Story, Sr., distributed a large portion of his property to his son, T.B. Story, and as a result the latter became the absolute owner of such property; that at the same time, Nelson Story, Sr., desiring to protect T.B. Story and his family from unforeseen financial misfortune, and further with the idea of providing an income to Nelson Story, Sr., if unforeseen misfortune should come to him, he caused T.B. Story to agree "to turn over" to Nelson Story, Sr., the sum of $500 per month during the natural life of Nelson Story, Sr., or until such time as he should relieve T.B. Story from the obligation, and that pursuant to such understanding a contract was entered into between the parties on February 25, 1913, to carry out the understanding, and that under that contract T.B. Story had, on the first day of each month from March 1, 1913, to and including the first day of October, 1920, paid to Nelson Story, Sr., the sum of $500. The contract then recites:

"And whereas in said contract, above referred to, it was further understood between said parties that the party of the first part would safely keep all sums of money paid under said agreement during the natural life of the party of the first part, for the benefit of the party of the second part, or his family, and said contract further provided that said sums paid under said contract by said party of the second part should, at all times, be considered the property of the party of the second part, or his heirs and assigns, to be returned to the party of the second part or his family at the demise of the party of the first part, or at any time during the life of the party of the first part if he saw fit to return said money to the party of the second part, but it was further understood that the party of the first part should at all times, or until the party of the first part should relieve the party of the second part from said contract, or at the demise of the party of the first part, as hereinbefore stated, have the right to the income accruing from said fund for his own private use, and in consideration therefor the party of the first part would pay the annual income tax thereon."

The agreement then recites that on the first day of June, 1917, the parties entered into an additional agreement to the effect that T.B. Story should pay to Nelson Story, Sr., on the first day of June and January of each year thereafter, during the life of Nelson Story, Sr., in addition to the above-mentioned payments, the sum of $4,437.50, which payments should be held by Nelson Story, Sr., subject to all the terms and conditions of the agreement relating to the $500 payments; that T.B. Story had paid to Nelson Story, Sr., under the two agreements, the sum of $72,625; that the parties had agreed to partially reform the former contracts, and in lieu thereof substitute the agreement under consideration, "which shall be considered by the parties hereto as governing their rights and liabilities growing out of said understanding"; that T.B. Story in the past had borrowed sums of money from his wife, Katherine F. Story, in excess of the principal sum named, and agreed that such fund be turned over to Katherine F. Story rather than to himself, in order that she might be partially indemnified for such loans, and proceeds:

"Therefore, in consideration of the premises, it is mutually agreed between said parties that the party of the second part shall no longer make said payments of $500.00 per month, or of $4,437.50 semi-annually, as above stated, and that the party of the first part is this day turning over to the Commercial National Bank, of Bozeman, Montana, certain securities aggregating in value the sum of $72,625.00, which represents the $72,625.00 which has been paid by the party of the second part to the party of the first part;

"That the party of the first part shall, during his natural life, receive all of the income necessary for his personal use and that of his wife, Ellen Trent Story, from said securities with the understanding, however, that he shall pay the income tax thereon during said period;

"It is also provided that should the wife of the party of the first part, to-wit, Ellen Trent Story, survive him, then she shall receive so much of the income from said securities as may be necessary for her personal use, so long as she shall live, she paying the income tax thereon during said time.

"Upon the demise of the party of the first part, or of the said Ellen Trent Story, if she should survive the party of the first part, then the said Commercial National Bank is directed to turn over to the said Katherine F. Story, or to her executors, administrators or assigns, all of said securities as referred to in this agreement, the same having become, in fact, her individual property.

"It is further mutually agreed between the parties hereto that, should an exigency arise whereby the said party of the first part, or the said Ellen Trent Story, may require for their use a larger sum than the interest from said principal, as above referred to, they or either of them, shall have the right to take from said principal fund or securities such an amount as is necessary to maintain them in their present station of life and manner of living."

The agreement between Nelson Story, Sr., and Nelson Story, Jr., is identical with the one just referred to, except as to names, the amount paid by Nelson Story, Jr., the description of the securities, and provides that, upon the death of Nelson Story, Sr., the securities should be delivered to Nelson Story, Jr., or to his executors, administrators or assigns, and was signed by him subsequent to December 14, 1923.

The testimony shows that on the morning of December 14, 1923, Nelson Story, Sr., in company with T.B. Story, came to the bank of defendant, and requested Charles Vandenhook, then vice-president, and now president, of the bank, to stay until he called him. During the afternoon Vandenhook, by request, went to the residence of Nelson Story, Sr., who stated to him that he was desirous of turning over to the bank certain securities to be held by it as trustee for Nelson Story, Jr., and Katherine F. Story, and that he would give him the key to his safety deposit box; that T.B. Story had a list of bonds to be taken out of the safety deposit box, which bonds would be a part of the securities to be turned over to the bank, and that such securities would be the ones to put into the trust box; that Nelson Story, Sr., gave to him a certificate of deposit of the Commercial National Bank for $10,000, a certificate of stock in the same bank for 200 shares, and the key to the safety deposit box, besides other securities not here involved. At the same time Nelson Story, Sr., discussed the contents of the agreements and the reason for making them; he stated that he was turning over the securities to the bank to be held for Nelson Story, Jr., and Katherine F. Story; that Nelson Story, Jr., and T.B. Story had been paying him $500 a month for many years, and that he had decided to discontinue the payments and to reimburse the sons for the payments made in the past, and he wanted the bank to act as trustee. Nelson Story, Sr., signed the instruments in the presence of the witness and delivered them to him.

Later, on the same day, T.B. Story came to the bank and signed the agreement; he had a list of the securities which were to be put in the trust box in the bank. The securities were taken from the safety deposit box of Nelson Story, Sr., and witness took possession of them, and they were put together in a separate box. A receipt for the securities was given by the bank to Nelson Story, Sr. After the delivery of the key to the safety deposit box by Nelson Story, Sr., neither he nor any member of his family had a key to the deposit box; only officers of the bank had access to that box. The securities at all times during the life of Nelson Story, Sr., were kept intact in the trust box, except such changes as were made necessary by the redemption of bonds which were a part of the trust securities. The income received from the trust securities was paid to T.B. Story, as the agent and representative of Nelson Story, Sr., but the principal remained intact.

In June, 1924, and again in October, 1925, Nelson Story, Sr., inquired about the trust securities. Ellen Trent Story died in February, 1924. Nelson Story, Sr., died on March 10, 1926, and thereafter, on March 24, 1926, Mr. Vandenhook took the trust box to the office of Geo. Y. Patten, attorney for the bank; the trust securities described in the agreement between Nelson Story, Sr., and T.B. Story were delivered to T.B. Story, representing Katherine F. Story, and the stock certificate representing 200 shares of the Commercial National Bank was delivered to Nelson Story, Jr. T.B. Story and Nelson Story, Jr., retained possession of the securities during the hour or more the parties remained in Mr. Patten's office. At that time an action involving title to the property was impending, and, at the voluntary suggestion of T.B. Story or Nelson Story, Jr., the securities were then returned to Mr. Vandenhook, to be held for the protection of the bank until the anticipated controversy should be settled, and defendant has since retained possession of all the property. Mr. Vandenhook handled the property without reference to any of the other officers of the bank; no regular bank record of the property was kept; the only record made was in an account-book which was kept in the box with the securities.

It is contended by counsel for plaintiff that, by reason of the provisions of the trust agreements which read that, "should an emergency arise whereby the said party of the first part [Nelson Story, Sr.] or of the said Ellen Trent Story, may require for their use a larger sum than the interest from said principal, as above referred to, they, or either of them, shall have the right to take from said principal fund or securities such an amount as is necessary to maintain them in their present station of life and manner of living," Nelson Story, Sr., retained ownership and control of the trust securities, with the right at any time to take the whole or any part of the principal; that there was not a sufficient transfer of the trust securities to the trustees, and the transaction amounted to an ineffectual attempt to make a testamentary disposition, and a valid trust was not created. This contention is founded upon the erroneous assumption that Nelson Story, Sr., was on December 14, 1923, the date of the trust agreements, the owner of the property therein described, and cannot be sustained.

"Parties who are competent," said the court in Union Bank [1, 2] Trust Co. v. Himmelbauer, 56 Mont. 82, 181 P. 332, 335, "have the right to fix the terms and conditions of their contracts, so long as in doing so they do not violate public policy or some express provision of law," and, when the words of a contract are unambiguous, interpretation may not be resorted to. (Frank v. Butte Boulder M. L. Co., 48 Mont. 83,135 P. 904.) "The language used is to be resorted to in the first instance, but the conclusion to be reached depends, not upon the verbal clarity of the particular sentences or paragraphs, but upon the view to be taken of the contract in its entirety." (Butte Water Co. v. City of Butte, 48 Mont. 386,138 P. 195, 197.) A contract must be interpreted so as to give effect to the intention of the parties at the time of contracting (sec. 7527, Rev. Codes 1921); the language used is to govern its interpretation, if clear and it does not involve an absurdity (sec. 7529, Id.), and the intention of the parties is to be ascertained from the writing alone, if possible (sec. 7530, Id.). The whole of a contract must be taken together "so as to give effect to every part, * * * each clause helping to interpret the other" (sec. 7532, Id.), and "a contract must receive such an interpretation as will make it lawful, operative, definite, reasonable, and capable of being carried into effect, if it can be done, without violating the intention of the parties." (Sec. 7534, Id.; State v. Rosman, 84 Mont. 207, 274 P. 850.)

In the agreements before us the parties appear to have been competent and capable of contracting. We think the language used is clear and explicit, the intention of the parties certain, and the construction of the agreements involves no difficulty.

From the recitals contained in the trust agreements it appears[3] that by the terms of the contracts of 1913 and 1917, certain property had been conveyed to the two sons, and in consideration of which, Nelson Story, Sr., desiring to protect his sons "from unforeseen financial misfortune," and further with the idea of providing an income for himself, had required the two sons to make certain payments for such period of time as the father should require. The money so paid was to be safely kept by Nelson Story, Sr., during his natural life for the benefit of the sons or their families, and the sums so paid should, at all times, be considered the property of the sons, or their heirs or assigns, to be returned to them or their families at the demise of Nelson Story, Sr., or at any time during his life if he saw fit to return the money to them.

We think it is clear that the payments made by the sons to their father were to be retained by him as trustee for the benefit of the sons and their families. It was contemplated that the father might terminate the trust at any time he desired by returning to the sons the amounts paid by them under the agreements. By the agreements of December 14, 1923, the trusts then existing were ended, and the trust property, which had at all times been the property of the sons, was by mutual consent, and evidenced by the trust agreements of that date, delivered to defendant. New trusts were created with defendant as trustee, for the benefit of Nelson Story, Sr., and Ellen Trent Story, his wife, if she survived him, during their lives, and, after the death of both of them, for Nelson Story, Jr., and Katherine F. Story.

Taking the trust agreements in their entirety, it is manifest that the purpose of Nelson Story, Sr., was to protect his sons and their families "from unforeseen financial misfortune," and likewise to provide an income for himself and wife. Upon the death of Nelson Story, Sr., the trust terminated; the trust securities were no part of his estate; and plaintiff is not entitled to their possession.

Upon the trial plaintiff offered to prove that defendant had[4] applied for, and received from, the Federal Reserve Board of the United States a permit to act as trustee, and that a permit had been granted; that on December 14, 1923, it had not acted under the permit, nor had it organized any trust department under the permit, and was not authorized to act as trustee or in any fiduciary capacity under the National Bank Act; that the trust agreement was never referred to any officer except the vice-president, nor acted upon by the board of directors of the bank, and that the trust was not accepted by the bank. The court excluded this line of testimony, and counsel predicates error upon the rulings. The uncontradicted evidence shows that the trust was created and accepted by the defendant, and that it has been fully executed. We do not think the question of the right of the bank to act was material, and the court properly excluded the offered evidence.

Counsel contends that the court erred in entering judgment "on[5] the merits." In the case of McKeon v. Kilduff,85 Mont. 562, 281 P. 345, 348, Mr. Justice Galen, speaking for the court, said: "A nonsuit should be granted only when the facts are clear and undisputed, and from them it is apparent that the plaintiff cannot recover as a matter of law. (Nord v. Boston Mont. etc. Min. Co., 30 Mont. 48, 75 P. 681.) The court will grant a nonsuit in cases where it would grant a new trial, if a jury should bring in a verdict in favor of the plaintiff. (Garver v. Lynde, 7 Mont. 108, 14 P. 697.) And where the plaintiff's own evidence shows that he has no right of recovery in application of the law to the facts, it is proper for the court to grant a nonsuit. (Cummings v. Helena Livingston S. R. Co., 26 Mont. 434, 68 P. 852.) However, it is never proper for the court, upon granting a nonsuit, to enter a judgment on the merits, since nothing is determined, except that the plaintiff has not proved his case as alleged. (15 Cal. Jur., p. 131.) A judgment of nonsuit is not, as a general rule, a judgment on the merits, and therefore it is no bar to another suit upon the same cause of action, and this applies even when the nonsuit is compulsory, as for want or insufficiency of the plaintiff's evidence. It `is like the blowing out of a candle, which a man at his own pleasure lights again.' (34 C.J., pp. 781, 782.)"

Finally, counsel insists that this court will review a cause[6] only upon the theory on which it was tried in the lower court, and that in that court the principal and only issue presented was "where the legal title to the property rested at the date of Nelson Story, Sr.'s death on March 10, 1926; and if by the contracts in evidence, and the acts of the parties in practical construction thereof, the legal title did not pass from Nelson Story, Sr., to the bank, it was in him when he died and passed by operation of law to his personal representative." In support of this argument plaintiff had certified by the trial judge and filed herein "Defendant's Brief on Demurrer to Answer and Motion to Strike."

This brief is not a part of the record and will not be considered; we cannot go outside of the record which has been duly certified as required by our statutes. We have carefully considered the entire record and there is not anything to indicate that the case was tried, considered or determined by the lower court on a theory different from that adopted by us.

However, the determinable question was the construction of the[7] trust agreements, and it is clear that the lower court reached the correct conclusion; but if it did appear that the court adopted a different theory, the judgment would not be disturbed, since the doctrine "wrong reason, right conclusion," would apply. "Admitting that the reasons assigned for, and by which the court was governed in making its ruling, are erroneous, yet it makes no difference if the ruling itself is proper and correct. It matters not by what process or method of reasoning, or by what form of argument or manner of deduction, whether true or fallacious, a conclusion is arrived at, provided the conclusion itself is right." (McMullen v. Armstrong, 1 Mont. 486;Whitcomb v. Beyerlein, 84 Mont. 470, 276 P. 430;State v. Great Northern Utilities Co., 86 Mont. 442,284 P. 772.)

For the reasons stated, the judgment is modified by striking therefrom the words "on the merits," and as modified it is affirmed. Defendant shall have its costs on appeal.

MR. CHIEF JUSTICE CALLAWAY and ASSOCIATE JUSTICES MATTHEWS and GALEN concur.

MR. JUSTICE ANGSTMAN, being absent, did not hear the argument and takes no part in the foregoing decision.

Rehearing denied July 7, 1930.