No. 13431
IN THE SUPREME COURT OF THE STATE OF MONTANA
1977
CARL F. ANDERSON et al.,
Plaintiffs and Appellants,
JAMES S. APPLEBURY et al.,
Defendants and Respondents.
Appeal from: District Court of the Fourth Judicial District,
Honorable Jack L. Green, Judge presiding.
Counsel of Record:
For Appellant:
Patterson, Marsillo, Harris and Tornabene, Missoula,
Montana
Wm. George Harris argued, Missoula, Montana
For Respondents :
Boone, Karlberg and Haddon, Missoula, Montana
Sam E. Haddon argued, Missoula, Montana
Johnson and Greef, Hamilton, Montana
Submitted: May 27, 1977
Decided :
1 5 1n
9
Mr. Justice John Conway Harrison delivered the Opinion of the Court.
This is an action wherein plaintiffs Carl F. and Joyce A.
Anderson, husband and wife, by their amended complaint sought
damages, statutory penalties and attorney fees against defendants
Andrew T. Lund and Anvil R. Summers and their sureties under the
provisions of the Montana Real Estate License Act. This action arose
out of the purchase by plaintiffs of a motel from defendants James
S. and Ruth M. Applebury. Following depositions of all parties,
Lund and Summers separately moved for summary judgment. The motion
was submitted upon briefs, oral arguments and depositions. The
district court, Ravalli County, granted the motion and summary
judgment was entered in favor of defendants Lund and Summers.
Plaintiffs appeal.
The sole substantive issue presented for review by this
Court is whether the district court erred in ruling that no genuine
issue of material fact existed between the parties and that defend-
ants Lund and Summers were entitled to judgment as a matter of law.
In the fall of 1971, plaintiffs contacted Anvil R. Summers,
a real estate salesman employed by Western States, Inc. of Hamilton,
Montana, to locate a business in Hamilton available for purchase.
Two businesses were shown and rejected. Summers indicated the
SportsmanMotel might be for sale. Andrew T. Lund, a real estate
broker d/b/a Western States, Inc., contacted James and Ruth Applebury,
then owners of the SportsmanMotel, concerning a possible sale. The
Appleburys subsequently informed him of their desire to sell. They
indicated their selling price and stated the motel stood on land
leased from the Burlington Northern Railway Co. Summers informed
the Andersons of the availability of the motel for purchase.
Plaintiffs were shown the motel, its supplies and the
surrounding property by James Applebury, in the company of Lund
and Summers. At no time did Lund or Summers make representations
regarding the location of the building or related structures upon
the leased premises, the condition of the motel, the potential
profitability of the business, or the availability of title insurance.
plaintiffs later conducted a second brief inspection of the premises.
On November 8, 1971, plaintiffs agreed to purchase the
SporfsmanMotel, admittedly relying in substance upon their inspec-
tions of the premises and the small amount of information given them
by James Applebury regarding the property. Lund and Summers repre-
sented both parties in drafting the resultant "Contract for Sale of
Property" executed on December 20, 1971. Attached to the contract
and included as an exhibit to plaintiffs' amended complaint, was a
copy of the lease agreement between the Appleburys and Burlington
Northern. The lease contained a legal description of the property
and referred to its depiction in a related plat.
Plaintiffs took possession of the motel in January, 1972.
Various problems with the physical structure of the building sur-
faced immediately, and the motel was promptly listed for sale. In
1974 plaintiffs were informed by the Montana Department of Highways
that a portion of their motel parking lot, sign, and canopy en-
croached upon a highway right-of-way. Plaintiffs on July 3, 1975,
filed their initial complaint against the Appleburys and Lund.
Summers was added as a defendant by the amended complaint, filed
on October 23, 1975. Plaintiffs alleged various violations of the
Montana Real Estate License Act by Lund and Summers, specifically
sections 66-1937 and 66-1940, R.C.M. 1947. The alleged violations
essentially involve elements of fraud and misrepresentation in the
inducement of the contract to purchase the motel.
Here, we point out the district court, in granting summary
judgment, failed to specify any grounds therefor, in its order,
by memorandum or otherwise. Defendants maintain that summary judg-
ment issued solely on the ground the statute of limitations had
run. Plaintiffs however, argue a much broader range of issues,
including questions of fraud and misrepresentation by Lund and
Summers. Therefore, while the focus of our review relates to the
propriety of summary judgment, the facts of the instant case sug-
gest two areas of inquiry:
(1) Whether any acts of Lund and Summers constitute vio-
lations of the Montana Real Estate License Act, section 66-1937,
R.C.M. 1947?
(2) Whether plaintiffs' action based upon the alleged
violations, if any, is barred by the running of the applicable
statute of limitations?
The principles governing summary judgment under Rule 56(c),
M.R.Civ.P., were recently detailed in Harland v. Anderson,
Mont . , 548 P.2d 613, 33 St.Rep. 363. Summary judgment is proper
if the pleadings, depositions, answers to interrogatories, and ad-
missions on file show there is no genuine issue of material fact
and the movant is entitled to judgment as a matter of law. The
initial burden of establishing the absence of any genuine issue of
material fact is upon the movant. The party opposing the motion
will be afforded the benefit of all reasonable inferences which
may be drawn from his offered proof. Mally v. Asanovich, 149 Mont.
99, 423 P.2d 294; Johnson v. St. Patrick's Hospital, 148 Mont.
125, 417 P.2d 469. However, where the record before the court
discloses no genuine issue of material fact, the burden shifts to
the party opposing the Rule 56(c) motion to come forward with proof
establishing such a genuine factual issue. Harland v. Anderson,
supra.; Rickard v. Paradis, 167 Mont. 450, 539 P.2d 718; Barich v.
Ottenstror, Mont . , 550 P.2d 395, 33 St.Rep. 481.
In determining the propriety of summary judgment within
the above principles, we first look to the acts of defendants, Lund
and Summers, the basis of plaintiffs' complaint. Plaintiffs, in
their amended complaint, elected to ground their cause of action
for damages against Lund and Summers not in fraud within the common
acceptance of the term, but rather under the provisions of the
Montana Real Estate License Act. The pertinent provision creates
a cause of action in favor of one injured through certain acts of
a real estate salesman or broker.
Section 66-1940 (c) provides:
"(c) Any person sustaining damages by failure of
a real estate broker or real estate salesman to
comply with the provisions of this act, shall have
the right to commence an action in his own name
against the real estate broker and his surety, or
the real estate salesman and his surety, or both
the broker and any salesman employed directly or
indirectly by such broker and their respective
sureties, for the recovery of any damages sus-
tained as a result of any act specified in section
66-1937 herein or as a result of the failure of the
real estate broker or real estate salesman to com-
ply with the provisions of this act. * * * "
The specific acts alleged to have been committed by Lund and Summers
in violation of section 66-1937 include:
" (1) Intentionally misleading, untruthful, or
inaccurate advertising, whether printed or by
radio, display, or other nature, which advertising
in any material particular or in any material way
misrepresents any property, terms, values, poli-
cies, or services of the business conducted;
"(2) Making any false promises of a character
likely to influence, persuade or induce;
" (3) Pursuing a continued and flagrant course of
misrepresentation or making false promises through
agents or salesmen, or any medium of advertising,
or otherwise;
" (15) Failing voluntarily to furnish a copy of any
written instrument to any party executing the same
at the time of its execution;
"(17) Intentionally violating any reasonable rule
of regulation promulgated by the commission in the
interests of the public and in conformance with the
provisions of this act;
"(19) Demonstrating his unworthiness or incompetency
to act as a broker or salesman;
Plaintiffs apparently abandoned reliance upon the latter three
violations above mentioned, as the record contains no facts per-
taining to such charges. They argue only their cause for fraud.
It is well settled that a prima facie case of fraud is not
established unless plaintiff proves the making of a material mis-
representation, and reliance upon the truth of such misrepresentation.
Dunlap v. Nelson, 165 Mont. 291, 529 P.2d 1394; Clough v. Jackson,
156 Mont. 272, 479 P.2d 266; Young v. Handrow, 151 Mont. 310, 443
1n the instant case the question is the making of material
misrepresentations and reliance thereon by plaintiffs. However,
the record indicates the parties are in complete agreement, in all
material respects, that virtually no representations were made by
Lund and Summers regarding the motel or the property upon which it
is situated. The deposition testimony of plaintiff Joyce A. Anderson
is replete with statements supporting that conclusion. In her
August 11, 1975 deposition, she testified:
"Q. In other words, at that point you and your
husband felt that you had all the information that
you needed to make up your minds to buy? A. We
had all the information that we -- we had gotten,
and we couldn't get, like I said, a financial state-
ment of any sort. We simply relied on the honesty
and integrity of these people and on their word.
In her November 22, 1975 deposition, she testified:
"Q. Then I would be correct in summing all these up
that inasfar as your contacts with Mr. Summers is
concerned, that at no time did he make any statement
to you or your husband in your presence concerning
any of the aspects of the motel? A. I would say
that you were correct in saying that.
"Q. And when I say any of the aspects, I'm
referring specifically to the grounds of the
Complaint that you have set forth in your
Amended Complaint, is that correct? A. Yes, sir.
"Q. Do you have any present recollection that
Mr. Lund told you anything about that lease
other than the fact that the lease was in exist-
ence at that time? A. No, I believe we got the
figures from Mr. Applebury when we were talking
in the lobby after he had shown us the motel.
"Q. So that with respect to the lease, then we
start out with the fact that Mr. Lund had told
you that there was a lease and that the Sports-
man was located on the Burlington leased property?
A. I believe this is correct." (Emphasis added.)
It is plain that there is no genuine issue of material fact
disclosed in the record, particularly in the depositions of the
parties, which relates to the alleged fraud. Clearly, plaintiffs
offer nothing in contraposition to defendants' proof no material
misrepresentations were made and none relied upon. We hold, there
being no genuine issue of material fact as to whether fraudulent
representations were made or relied upon, defendants Lund and
Summers were entitled to judgment on this point as a matter of law.
Also, there is a second ground which supports the district
court in its order granting summary judgment. As heretofore stated
plaintiffs' amended complaint against Lund and Summers seeks re-
covery of damages and penalties for alleged statutory violations.
Applicable to such claims is the two year period of limitations.
Section 93-2606(1), R.C.M. 1947, provides:
"Within two years:
"1. An action upon a statute for a penalty or
forfeiture, when the action is given to an
individual, or to an individual and the state,
except when the statute imposing it prescribes
a different limitation."
Section 93-2607 (1), R.C.M. 1947, provides:
"Within two years:
"1. An action upon a liability created by statute
other than a penalty or forfeiture."
Finch v. Kent, 24 Mont. 268, 61 P. 653; ~ r i s b e ev. Coburn,
101 Mont. 58, 52 P.2d 882; Falls Sand & Gravel Co. v. Western
Concrete Inc., 270 F.Supp. 495.
All of the acts giving rise to plaintiffs' cause of action
occurred in late 1971 and early 1972. The above periods of limita-
tion had run by early 1974, regardless of plaintiffs' knowledge or
lack of knowledge of the existence of their claims.
" ' * * * The fact that a person entitled to an
action has no knowledge of his right to sue, or
of the facts out of which his right arises, does
not, as a general rule, prevent the running of the
statute, or postpone the commencement of the period
of limitation until he discovers the facts or learns
of his right thereunder. * * * ' " Kerrigan v.
OIMeara, 71 Mont. 1, 8, 227 P. 819.
Plaintiffs argue the statutory period applicable to fraud
actions in general, containing the "discovery" exception, is control-
ling. Section 93-2607(4), R.C.M. 1947, provides:
"Within two years:
"4. An action for relief on the ground of fraud or
mistake, the cause of action in such case not to
be deemed to have accrued until the discovery by
the aggrieved party of the facts constituting the
fraud or mistake."
Plaintiffs maintain their cause of action accrued in 1974,
when they were notified of the encroachment, therefore, the complaint
of July 3, 1975 was timely filed. It is argued such absence of
actual knowledge, together with reliance upon the direction and
advice of Lund and Summers, effectively prevented "discovery" by
plaintiffs until 1974.
However, we find that even if plaintiffs had a right to rely
upon the statute of limitations for fraud and its "discovery" excep-
tion, their claims would be barred by the running of the statute.
Plaintiffs admit they were aware of the problems concerning the
structure of the motel and the income of the business shortly fol-
lowing the purchase in early 1972. Indeed, plaintiffs placed the
motel on the market for sale almost immediately upon acquisition.
Plaintiffs made no efforts to list their complaints to Lund and
Summers, the Appleburys, or an attorney until mid-1975. One object
of any given statute of limitations is to suppress stale claims and
prevent aggrieved persons from sitting on their rights. No11 v.
City of Bozeman, 166 Mont. 504, 534 P . 2 d 880.
Likewise plaintiffs claim, in regard to the encroachment, is
barred by the running of the statute. Plaintiffs rely on the excep-
tion to the rule that there must be an affirmative act, representa-
tion or concealment which is intended to and in fact does prevent
discovery of facts giving rise to the cause of action.
" * * * Unless there is some relation of trust
or confidence between the parties which imposes
upon a defendant the duty of making a full dis-
closure of the facts, there must be some active
affirmative concealment of the fraud, something
said or done to continue the deception or to
prevent inquiry and lull plaintiff into a sense
of security, in order to postpone the running
of the statute." Kerrigan v. O'Meara, 71 Mont.
1, 7, 227 P. 819.
Neither Lund nor Summers was shown to have made any repre-
sentations regarding the boundaries of the motel property. Neither
was shown to have had knowledge of the encroachment. Therefore,
there could have been no affirmative concealment. While there may
have been a relation of trust or confidence between the parties,
the fact that neither Lund nor Summers knew of the encroachment
negates any duty they may have had to disclose it.
The district court was correct in granting summary judgment
to defendants, Lund and Summers.
Justices
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M r . J u s t i c e Frank I . Haswell s p e c i a l l y c o n c u r r i n g :
I concur i n the r e s u l t , b u t n o t i n a l l t h a t i s said i n
t h e foregoing o p i n i o n .
Justice.