No. 13873
IN THE SUPREME COURT OF THE STATE OF MONTANA
1978
RAY TWITE and JACK TWITE,
Plaintiffs and Appellants,
WESTERN SURETY COMPANY, a corporation,
Defendant and Respondent.
Appeal from: District Court of the Fourth Judicial District,
Honorable wward T. Dussault, Judge presiding.
Counsel of Record:
For Appellants:
Tipp, Hoven and Skjelset, Missoula, Montana
Vernon Hoven argued, Missoula, Montana
For Respondent:
Garlington, Lohn and Robinson, Missoula, Montana
Gary Graham argued, Missoula, Montana
Submitted: January 19, 1978
Decided: HYR / 2
Filed: . 2 ;
@
M r . J u s t i c e Gene B . Daly d e l i v e r e d t h e Opinion of t h e Court.
Two s e p a r a t e a c t i o n s were f i l e d by p l a i n t i f f s Ray and
J a c k Twite a g a i n s t James Lackman, David Gregoryk and Lackman
Realty i n t h e D i s t r i c t Court, Missoula County. Counsel f o r t h e
r e s p e c t i v e p a r t i e s s t i p u l a t e d t h e two c a u s e s of a c t i o n w i t h Ray
Twite and J a c k Twite a s p l a i n t i f f s could be c o n s o l i d a t e d and
deemed submitted t o t h e t r i a l c o u r t upon t h e f i l i n g of b r i e f s .
David Gregoryk was s e r v e d i n t h a t a c t i o n on March 1 5 , 1974, b u t
did n o t appear. A d e f a u l t judgment was t a k e n a g a i n s t him on
A p r i l 29, 1974. A f t e r j u r y t r i a l t h e remaining d e f e n d a n t s were
found t o be n o t l i a b l e .
Subsequently, J a c k and Ray Twite f i l e d a c t i o n s a g a i n s t
Western S u r e t y Company (Western) on Gregoryk' s bond. The
a c t i o n s were c o n s o l i d a t e d and submitted t o t h e t r i a l c o u r t on
agreed f a c t s . Judgment was rendered i n ' f a v o r of Western and
Twites now a p p e a l from t h e f i n a l judgment.
I n t h e complaint of t h e u n d e r l y i n g a c t i o n , p l a i n t i f f s
based t h e i r s u i t on t h e f a c t David Gregoryk was a l i c e n s e d r e a l
e s t a t e salesman under t h e Real E s t a t e L i c e n s i n g Act of 1963. The
cause p r e s e n t l y b e f o r e t h i s Court was f i l e d a g a i n s t Western S u r e t y
Company a s s u r e t y f o r Gregoryk under s e c t i o n 66-1933, R.C.M. 1947, o f
t h e Real E s t a t e L i c e n s i n g Act. The bond r e q u i r e d t h a t Western
would be bound t o t h e Montana Real E s t a t e Commission i n t h e sum
of $10,000 c o n d i t i o n e d upon t h e payment by Gregoryk of judgment
recovered a g a i n s t him f o r l o s s o r damage t o any i n d i v i d u a l a r i s i n g
i n t h e c o u r s e of Gregoryk's p r a c t i c e a s a l i c e n s e d r e a l e s t a t e
salesman.
Each p l a i n t i f f e n t e r e d i n t o a w r i t t e n c o n t r a c t t o purchase
land l o c a t e d . i n t h e Garnet Range a r e a of Powell County. Title to
t h i s land was i n Gregoryk and h i s wife by v i r t u e of a c o n t r a c t f o r
deed. A t t h e time t h a t p l a i n t i f f s signed t h e s a l e s c o n t r a c t s ,
t h e Gregoryks were i n d e f a u l t under t h e i r c o n t r a c t f o r deed. The
c o n t r a c t s signed by p l a i n t i f f s were commonly used forms i n t h e r e a l
e s t a t e b u s i n e s s i n Montana. The form c o n t r a c t makes a number of
r e f e r e n c e s t o r e a l e s t a t e brokers and a g e n t s , b u t Gregoryk signed
t h e s e c o n t r a c t s a s s e l l e r r a t h e r than a s an agent o r broker. These
c o n t r a c t s were signed a t Lackman Realty, where Gregoryk worked
a s a salesman. I t a l s o appears t h a t Lackman Realty was s e l l i n g
s i m i l a r l o t s i n t h e same a r e a .
The t r i a l c o u r t made f i n d i n g s i n agreement w i t h t h e s t i p u l a t e d
f a c t s , and f u r t h e r found:
" 5 . That a t a l l times p e r t i n e n t h e r e t o David Gregoryk
was t h e owner of t h e r e a l e s t a t e which was s o l d t o and
purchased by t h e P l a i n t i f f s .
" 6 . That a l l a c t s of David Gregoryk were accomplished
a s owner of t h e r e a l property i n question."
Upon t h e s e f i n d i n g s t h e D i s t r i c t Court concluded ,
matter of law:
"1. That David Gregoryk i n a l l of h i s r e l a t i o n s h i p s
w i t h JACK TWITE and RAY TWITE was a c t i n g a s t h e owner
of t h e property i n q u e s t i o n and n o t a s a l i c e n s e d r e a l
e s t a t e salesman.
"2. That t h e Defendant i s n o t l i a b l e under s a i d bond
f o r t h e a c t s of David Gregoryk s i n c e t h e a c t i o n s com-
p l a i n e d of were a c t s accomplished by t h e owner of t h e
property and n o t w i t h i n the course of Gregoryk's b u s i n e s s
a s a r e a l e s t a t e salesman."
The i s s u e s on appeal a r e :
1. Whether o r n o t under t h e Montana Real E s t a t e Licensing
Act t h e r e a l e s t a t e agent Gregoryk, i n s e l l i n g h i s own p r o p e r t y ,
can be covered on t h e r e a l e s t a t e bond provided by Western?
2. Whether a t t o r n e y f e e s and i n t e r e s t can be recovered
i n a d d i t i o n t o t h e f u l l amount of t h e bond?
W f i n d t h e major problem i n t h i s c a s e i s t h e misapplica-
e
t i o n of t h e Real E s t a t e License Act. Section 66-1924, R.C.M.
1947, simply r e q u i r e s anyone dealing d i r e c t l y o r i n d i r e c t l y i n
t h e r e a l e s t a t e business buy a broker o r salesman l i c e n s e . This
means t h e person so engaged must comply with s e c t i o n s 66-1929
through 66-1935, R.C.M. 1947, which s e t f o r t h t h e e d u c a t i o n a l ,
p r o f e s s i o n a l , and monetary requirements t o o b t a i n t h e l i c e n s e
required f o r t h e job o r p o s i t i o n t o be h e l d by the person d e a l i n g
in real estate.
The Act, f u r t h e r , i n s e c t i o n 66-1937, R.C.M. 1947,
e n t i t l e d "Grounds f o r r e f u s a l - suspension o r revocation of l i c e n s e " ,
s e t s out t h e e t h i c a l standards t o be observed by a l i c e n s e e under
t h i s Act. There i s no provision i n t h e Act t h a t r e l a x e s t h e
e t h i c a l standards f o r a l i c e n s e e who happens t o be s e l l i n g property
t i t l e d o r contracted t o the l i c e n s e e . The contrary i s demonstrated
under s e c t i o n 66-1937(7), which p r o h i b i t s a c t i n g i n d u a l c a p a c i t y
a s a broker and undisclosed p r i n c i p a l i n a t r a n s a c t i o n . This i s
t h e sum t o t a l of our concern, given t h e agreed f a c t s i n t h i s case.
Section 66-1926 - "Exempted c l a s s e s " , has nothing t o do
with t h e problem presented by t h e agreed f a c t s of t h i s case and
i t s i n s e r t i o n i n t o t h i s case i s e r r o r .
Section 66-1926 merely enumerates t h e persons who may
be a s s o c i a t e d with a r e a l e s t a t e t r a n s a c t i o n , y e t a r e not i n t h e
r e a l e s t a t e business and t h e r e f o r e a r e "exempted" from purchasing
a r e a l e s t a t e license, i.e., an i n d i v i d u a l s e l l i n g h i s own home,
an a t t o r n e y a c t i n g f o r a c l i e n t , an a t t o r n e y - i n - f a c t , auctioneers
and many o t h e r s . The f a c t t h a t a person can s e l l h i s own property
w i t h o u t being i n v i o l a t i o n of t h e Real E s t a t e Act, f o r f a i l u r e
t o purchase a r e a l e s t a t e l i c e n s e , does n o t lend i t s e l f t o t h e
p r o p o s i t i o n t h a t a l i c e n s e d r e a l e s t a t e salesman i s r e l i e v e d
of h i s r e s p o n s i b i l i t y under s e c t i o n 66-1937, merely because he
h a s taken p r o p e r t y i n t o h i s name b e f o r e defrauding a purchaser.
T h i s would render t h e Act a n u l l i t y . Furthermore, it w i l l s t a n d
w i t h o u t d i s c u s s i o n t h a t t h i s kind of arrangement would be s t r i c t l y
a g a i n s t p u b l i c policy,which i s t o p r o t e c t t h e p u b l i c from
unscrupulous and i n s o l v e n t r e a l e s t a t e a g e n t s and b r o k e r s .
A number of j u r i s d i c t i o n s have r u l e d on t h i s m a t t e r i n
conjunction w i t h a s t a t u t o r y exemption when d e a l i n g i n a p e r s o n ' s
own p r o p e r t y . W a r e concerned only t o t h e e x t e n t t h a t they
e
demonstrate t h e s u r e t y ' s l i a b i l i t y i n c a s e s involving t h e s a l e
of a l i c e n s e e ' s p r o p e r t y .
The r u l e of t h e s e j u r i s d i c t i o n s may be s y n t h e s i z e d i n t h i s
manner :
Members of t h e p u b l i c have t h e r i g h t t o r e l y upon
e x p r e s s o r implied r e p r e s e n t a t i o n s of a l i c e n s e d r e a l
e s t a t e agent o r b r o k e r although t h e a g e n t i s i n f a c t
t h e owner of t h e p r o p e r t y being s o l d . Therefore, the
s u r e t y i s bound by such express o r implied r e p r e s e n t a -
t i o n s and t h e bond s h a l l cover such judgments e n t e r e d .
See: Goody v . Maryland Casualty Co., (1933), 53 Idaho 523, 25 P.2d
1045; Mapes v. F o s t e r , (1928), 38 Wyo. 244, 266 P. 109.
i
P l a i n t i f f s h e r e contend they were l e d t o b e l i e v e they
were d e a l i n g w i t h a r e p u t a b l e r e a l e s t a t e b r o k e r agent i n t h e
purchase of t h e land. P l a i n t i f f s point t o these external factors
which l e d them t o b e l i e v e t h a t defendant was s e l l i n g t h i s land
a s a broker:
1 ) The r e a l e s t a t e a g e n t (Gregoryk) never informed
p l a i n t i f f s he was a c t i n g a s owner of t h e l a n d , n o t a s a l i c e n s e d
r e a l e s t a t e agent.
2) The s i g n i n g of s t a n d a r d form c o n t r a c t s , a s w e l l a s
o t h e r n e g o t i a t i o n s , took p l a c e i n t h e o f f i c e s of Lackman R e a l t y ,
a l a r g e r e a l e s t a t e agency i n Missoula, where defendant Gregoryk
worked a s a salesman.
3) Lackman R e a l t y was s e l l i n g land i n t h e same a r e a and
was a d v e r t i s i n g t h a t land f o r s a l e . One of t h e p l a i n t i f f s , J a c k
Twite, responded t o t h e a d v e r t i s i n g and was d i r e c t e d t o M r . Gregoryk.
The r e c o r d c l e a r l y d i s c l o s e s t h i s s t a t e m e n t :
"A. Well, t h e land t h a t I purchased, 20 a c r e s
a d j a c e n t t o i t was a r e s u l t of m r e a d i n g t h i s
y
ad i n t h e paper by J i m Lackman and I c a l l e d
J i m Lackman and asked about t h i s land t h a t h e had
a d v e r t i s e d and a t t h a t time J i m Lackman t o l d m e
t h a t h i s , t h a t one of h i s a g e n t s , Dave Gregoryk,
was h a n d l i n g t h e s a l e of t h i s property."
From t h e s e f a c t s i t was r e a s o n a b l e f o r p l a i n t i f f s t o b e l i e v e
they were d e a l i n g w i t h a bonded r e a l e s t a t e salesman.
The l i c e n s e d r e a l e s t a t e a g e n t (Gregoryk) never i n -
formed p l a i n t i f f s t h a t he was d e a l i n g w i t h t h e p r o p e r t y a s t h e
owner. I n l i g h t of t h e p u b l i c p o l i c y of t h e A c t , t h a t of pro-
t e c t i o n f o r t h e b e n e f i t of t h e p u b l i c d e a l i n g w i t h r e a l t o r s o r
r e a l t y salesmen who may be " i r r e s p o n s i b l e o r i n s o l v e n t " , we must
conclude defendant Gregoryk i n t h i s t r a n s a c t i o n d i d n o t meet
minimum s t a n d a r d s t h a t would a l e r t a l a y person t h i s was n o t a
"Lackman Realty" t r a n s a c t i o n .
The second i s s u e i s whether a t t o r n e y f e e s and i n t e r e s t can
be recovered i n a d d i t i o n t o t h e f u l l amount of t h e bond. The
language of t h e s u r e t y bond p r o v i d e s :
"The a g g r e g a t e l i a b i l i t y of t h e s u r e t y
hereunder, whether t o one o r more persons,
s h a l l i n no event exceed t h e t o t a l sum of
TEN THOUSAND DOLLARS ($10,000.00) . I 1
I n Lapke v. Hunt, (1968), 151 Mont. 450, 460, 443 P . L a
493, a p p e l l a n t i n a r e a l e s t a t e t r a n s a c t i o n urged t h a t i n t e r e s t
could n o t be c o l l e c t e d i f i t exceeded t h e f a c e value of l i a b i l i t y
under t h e bond. This Court reasoned:
"we hold t h a t i n a n a c t i o n a g a i n s t a s u r e t y
company upon'a bond i s s u e d by t h a t company, i n t e r e s t
may be awarded even i f t h a t i n t e r e s t , i n a d d i t i o n
t o t h e amount of damages awarded, exceeds t h e amount
of l i a b i l i t y s t a t e d i n t h e bond. 12 Am.Jur.Zd, Bonds,
545, p. 508; 1 C.J.S. Bonds 5132(b), p. 511."
1
The Court f u r t h e r h e l d t h a t i n t e r e s t would commence a s a g e n e r a l
r u l e , upon demand made upon l i c e n s e e , b u t where no demand was
made on t h e s u r e t y t h e l i a b i l i t y commenced upon t h e f i l i n g of t h e
complaint a g a i n s t l i c e n s e e .
S e c t i o n 66-1940(c), R.C.M. 1947, s i n c e repealed by t h e
1977 l e g i s l a t u r e b u t t h e s t a t u t e i n f o r c e a t t h e time t h i s a c t i o n
accrued, read i n p a r t :
"(c)* ** I n a l l c a s e s where s u i t i s brought
against t h e broker o r t h e salesman, and h i s
surety, t h e c o u r t s h a l l , upon e n t e r i n g judgment
f o r the p l a i n t i f f , allow a s a p a r t of t h e c o s t s
of s u i t a reasonable amount a s a t t o r n e y ' s f e e s .
" A l l p e n a l t i e s provided f o r by t h i s s e c t i o n
may be c o l l e c t e d from t h e b r o k e r ' s and salesman's
bonds provided by s e c t i o n 66-1933." (Emphasis added.)
Costs of s u i t a r e recognized t o be c o l l e c t a b l e beyond
t h e f a c e v a l u e of t h e bond and hence w i t h p r e c i s e s t a t u t o r y
a u t h o r i t y a t t o r n e y f e e s i n t h i s i n s t a n c e w i l l be a p a r t of t h e
c o s t of s u i t .
The judgment of t h e t r i a l c o u r t i s reversed. The cause
i s remanded t o t h e t r i a l c o u r t t o e n t e r judgment f o r p l a i n t i f f s
and conduct a hearing t o determine t h e c o r r e c t amount of
i n t e r e s t and reasonable a t t o r n e y f e e s t o be included i n t h e
c o s t of s u i t .
W Concur:
e
.........
M r . Chief J u s t i c e Frank I . Haswell, d i s s e n t i n g :
I would a f f i r m t h e judgment of t h e D i s t r i c t Court.
The s u r e t y bond here was issued i n conformity with t h e
requirements of the Real E s t a t e Licensing Act of 1963, s p e c i f i c a l l y
s e c t i o n 66-1933, R.C.M. 1947, a s amended. This s t a t u t e and t h e
bond issued thereunder l i m i t t h e s u r e t y ' s l i a b i l i t y , among o t h e r
t h i n g s , t o l o s s e s r e s u l t i n g from v i o l a t i o n of t h e Act by t h e
salesman. The Act s p e c i f i c a l l y exempts s a l e s of h i s own property
by a r e a l e s t a t e salesman:
"66-1926. EXEMPTED CLASSES. A s i n g l e a c t performed,
f o r a commission o r compensation of any kind, i n
the *** selling *** **
of r e a l e s t a t e *, except
a s h e r e i n a f t e r s p e c i f i e d , s h a l l c o n s t i t u t e t h e person
performing any such a c t s a r e a l e s t a t e broker o r r e a l
e s t a t e salesman. The provisions of t h i s a c t , however,
s h a l l not:
"(1) apply t o any person who, a s owner, ***
s h a l l perform any of t h e a f o r e s a i d a c t s with
reference t o property owned *** by himself * * *.' I
(Emphasis supplied.)
I n m v i e w t h e language o f both t h e s t a t u t e and t h e s u r e t y
y
bond i s c l e a r and unambiguous. Under such circumstances, t h e r e
i s nothing f o r t h i s Court t o construe. Dunphy v. Anaconda
Company, (1968), 151 Mont. 76, 438 P.2d 660 and cases c i t e d t h e r e i n .
The f u n c t i o n of t h i s Court i s simply t o a s c e r t a i n what i n terms
o r i n substance i s contained i n t h e s t a t u t e and bond and n o t t o
i n s e r t what has been omitted nor t o omit what has been i n s e r t e d .
Section 93-401-15, R.C.M. 1947.
I n s h o r t , i t i s simply the duty of t h e Supreme Court t o
accept t h e s t a t u t e and bond a s w r i t t e n . Policy c o n s i d e r a t i o n s
should n o t be permitted t o c o n t r o l p l a i n language.
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Chief
4 b s p d
Justice .