Town of Boulder v. Bullock

No. 81-04
IN THE SUPREMF: COURT OF THE STATE OF MONTANA

TOWN OF BOULDER,
Plaintiff, Cross-Appellant, and Respondent,

WILLIAM BULLOCK and SONJA BULLOCK,
Defendants and Cross-Respondents and Appellants.

Appeal from: District Court of the Fifth Judicial District,
In and for the County of Jefferson.
Honorable Nat Allen, Judge presiding.
Counsel of Record:
For Cross-Appellant:
Allen Le Mieux, Boulder, Montana

Harlen, Picotte & Thompson, Helena, Montana
a-,-Nmimm-

Submitted on briefs: June 17, 1981
Decided : 2 1 1981
Filed: 2 1 @@'
Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d t h e Opinion of
the Court.
The Town o f B o u l d e r f i l e d a c o m p l a i n t on F e b r u a r y 6 ,
1979, to enjoin t h e Bullocks from c o n s t r u c t i n g their new

b u i l d i n g on any p a r t o f a c e r t a i n d e s i g n a t e d town s t r e e t .
The B u l l o c k s a n s w e r e d and a l s o f i l e d a c r o s s - c o m p l a i n t for
damages. The D i s t r i c t C o u r t o f t h e F i f t h J u d i c i a l D i s t r i c t ,

S t a t e o f Montana, i n and f o r t h e C o u n t y of J e f f e r s o n , d i s -
m i s s e d t h e c o u n t e r c l a i m , e n t e r e d a judgment i n f a v o r o f t h e
Bullocks on the injunction and then denied the Bullocks'

motion t o r e c o n s i d e r . The B u l l o c k s a p p e a l e d t h e e n t r y o f
judgment o f d i s m i s s a l on t h e i r c o u n t e r c l a i m . T h i s C o u r t , by
o r d e r d a t e d March 1 9 , 1980, dismissed t h a t appeal without
prejudice until a t r i a l on t h e m e r i t s o f t h e Town's com-
p l a i n t had been h e l d .
T r i a l b e f o r e t h e p r e s i d i n g j u d g e was h e l d on A u g u s t

25, 1980. The D i s t r i c t C o u r t e n t e r e d f i n d i n g s o f f a c t and
c o n c l u s i o n s of l a w and judgment i n favor of the Bullocks,
refusing t o grant the injunction. The B u l l o c k s a p p e a l t h e

dismissal of their counterclaim, and t h e Town o f Boulder
cross-appeals the denial of an injunction preventing the
building of the structure or affirmative relief requiring
i t s removal.
The B u l l o c k s a r e o w n e r s o f property located in the
C o n s o l i d a t e d A d d i t i o n t o t h e Town o f B o u l d e r , which p r o p e r t y
b o r d e r s on Main and L e s l i e S t r e e t s . The p r o p e r t y i s t r a d i -
tionally known as the L i n n Motel and c o n s i s t s of Lots 9
t h r o u g h 1 9 o f B l o c k 48 o f t h e C o n s o l i d a t e d A d d i t i o n . Some-
time prior to September 1977 the Bullocks determined to
b u i l d a home and a n o f f i c e on t h e p r o p e r t y .
William Bullock attempted t o determine t h e boundaries
of t h e p r o p e r t y . H e d e t e r m i n e d t h e b o u n d a r y on L e s l i e S t r e e t

by observing the position of the lots and the state of

physical features of longstanding, including a boundary

fence e r e c t e d before t h e Bullocks purchased t h e p r o p e r t y . I n

addition, he c o n s i d e r e d t h e power and telephone poles and

facilities located on L e s l i e Street, nearby properties

l o c a t e d on L e s l i e S t r e e t and t h e p o s i t i o n o f t h e used por-

t i o n of Leslie Street. Bullock testified t h a t he d i d n o t

know where t h e e d g e o f h i s p r o p e r t y was l o c a t e d , t h a t h e d i d

not get a surveyor to come out and that he located his

building by "eye-balling" the area. He t e s t i f i e d t h a t he

had s e e n s u r v e y p i n s on t h e b o u n d a r y where t h e e n c r o a c h m e n t

o c c u r r e d , b u t t h a t t h e y w e r e gone a t t h e t i m e h e c o n s t r u c t e d

the building on the encroachment. He d i d not locate his

property l i n e with certainty, and h e was uncertain as to

whether i t s l o c a t i o n was t o t a l l y w i t h i n h i s p r o p e r t y bound-
a r i e s a t t h e t i m e of c o n s t r u c t i o n .

B u l l o c k made a n a p p l i c a t i o n f o r a b u i l d i n g p e r m i t t o

K e n n e t h W. T r e t t i n , t h e c i t y c l e r k and b u i l d i n g i n s p e c t o r o f

the Town of Boulder and the person authorized to issue

b u i l d i n g p e r m i t s by t h e Town. He was t o l d by T r e t t i n t h a t

he would h a v e t o s u b m i t a p l a n showing t h e l o c a t i o n and t h e

dimens i o n s of t h e proposed s t r u c t u r e t o r e c e i v e a b u i l d i n g

permit. Trettin testified that at the time he, as city

c l e r k and b u i l d i n g inspector, d i d n o t h a v e d e t a i l e d knowl-

edge of t h e b o u n d a r i e s of L e s l i e S t r e e t . The B u l l o c k s s u b -

m i t t e d a p l a n which c o n s i s t e d o f a d r a w i n g o f t h e proposed

s t r u c t u r e m e a s u r e d from t h e c o r n e r o f an e x i s t i n g b u i l d i n g

on t h e Bullock property. T h i s method of m e a s u r e m e n t was

specifically a p p r o v e d by T r e t t i n . On S e p t e m b e r 26, 1977,
T r e t t i n i s s u e d a b u i l d i n g p e r m i t t o t h e B u l l o c k s b a s e d upon

the plan a s submitted. No s u r v e y o f t h e Bullock p r o p e r t y

was r e q u i r e d o f t h e B u l l o c k s a t t h a t t i m e .

D u r i n g t h e month o f O c t o b e r 1977 t h e B u l l o c k s o r d e r e d

m a t e r i a l s , h i r e d c o n t r a c t o r s and c o m p l e t e d t h e e x c a v a t i o n o f

t h e i r p r o p o s e d home and o f f i c e , had t h e f o o t i n g s p o u r e d on

the foundation and walls, and had the foundation walls

themselves poured. T h i s r e q u i r e d t h e e x p e n d i t u r e of s e v e r a l

t h o u s a n d d o l l a r s by t h e B u l l o c k s . A d d i t i o n a l p r o g r e s s was

made on t h e c o n s t r u c t i o n d u r i n g t h e r e m a i n d e r o f 1 9 7 7 .

T h e r e was no e v i d e n c e showing t h a t d u r i n g t h i s p e r i o d

o f t i m e anyone i n t h e Town o f B o u l d e r had a n y knowledge t h a t

t h e b u i l d i n g b e i n g c o n s t r u c t e d by t h e B u l l o c k s was e n c r o a c h -

i n g upon L e s l i e S t r e e t . T h i s i n f o r m a t i o n d i d n o t o c c u r u n t i l

sometime i n J u n e o r J u l y 1 9 7 8 . During t h e e a r l y c o n s t r u c -

t i o n p e r i o d i n 1978 t h e c i t y b u i l d i n g i n s p e c t o r a t t e m p t e d t o

f i n d a c u r b box and i n t h e p r o c e s s m e a s u r e d from a s u r v e y

pin eighty feet across the street. From that point the

building inspector, Trettin, sighted across the Bullock

property. At t h i s t i m e T r e t t i n assumed t h a t t h e B u l l o c k s

were building into the street, and he so informed the

Bullocks.

T h e r e was t e s t i m o n y a t t r i a l t h a t , w h i l e t h e B u l l o c k s

had no knowledge t h a t t h e y m i g h t be e n c r o a c h i n g on L e s l i e

S t r e e t w i t h t h e i r c o n s t r u c t i o n , T r e t t i n had d e t a i l e d knowl-

e d g e o f t h e b o u n d a r i e s of L e s l i e S t r e e t p r i o r t o i s s u i n g t h e
b u i l d i n g p e r m i t on S e p t e m b e r 2 6 , 1 9 7 7 . During t h e s p r i n g of

1978 t h e B u l l o c k s p r o c e e d e d t o work on t h e b a s e m e n t f l o o r o f

their building and T r e t t i n was a g a i n on the property and

particularly a t the building site. A t t h o s e t i m e s h e made
no m e n t i o n of t h e a l l e g e d e n c r o a c h m e n t .

However, a s noted above, the building inspector in

J u l y 1 9 7 8 , i n a t t e m p t i n g t o f i n d t h e c u r b box, f e l t t h a t t h e

b u i l d i n g was o u t on t h e s t r e e t and s o i n f o r m e d t h e B u l l o c k s .

On July 24, 1978, William Bullock attended the regular

meeting of t h e c i t y c o u n c i l and informed the council t h a t

T r e t t i n had t o l d him t h a t h e m i g h t b e b u i l d i n g i n t o L e s l i e

Street. Bullock further told the council that he was

w i l l i n g t o have a s u r v e y made.

The minutes of the council meeting show that the

members o f the council represented t o Bullock t h a t , if he

were b u i l d i n g i n t o t h e s t r e e t , t h e y would n e v e r make a man

t e a r down h i s h o u s e . Bullock t e s t i f i e d t h a t a t t h a t t i m e he

had i n mind a p r e v i o u s a c t i o n by t h e c i t y c o u n c i l i n O c t o b e r

1 9 7 7 when t h e y c l o s e d t w e n t y f e e t o f a s t r e e t a b u t t i n g t o

t h e n o r t h of h i s p r o p e r t y a t t h e b e h e s t of a Mr. Randall,

then a member of the c i t y council. I n r e l i a n c e upon the

r e p r e s e n t a t i o n s o f t h e members o f t h e c i t y c o u n c i l and w i t h

h i s knowledge o f t h e Randall m a t t e r , Bullock proceeded w i t h

a d d i t i o n a l work on h i s b u i l d i n g . By A u g u s t 1 4 t h e B u l l o c k s

had completed the basement floor, which was poured by a

member of t h e c i t y c o u n c i l .

S h o r t l y a f t e r August 1 4 , 1978, a s a r e s u l t of a c i t y

c o u n c i l m e e t i n g h e l d on t h a t d a t e , B u l l o c k was i n s t r u c t e d by

T r e t t i n t o c e a s e c o n s t r u c t i o n u n t i l h i s s u r v e y was s u b m i t t e d

t o the c i t y council. B u l l o c k d i d c e a s e c o n s t r u c t i o n , and on

August 2 8 , a t another r e g u l a r meeting of the c i t y council,

he submitted his survey. The survey indicated that the

Bullocks' building was, in fact, occupying approximately

e i g h t e e n f e e t o f t h e n o r t h p o r t i o n of L e s l i e S t r e e t . I t is
important t o note here t h a t the s t r e e t s , a s l a i d out i n t h i s

a d d i t i o n , were e i g h t y f e e t w i d e .

On August 28, 1 9 7 8 , a t a m e e t i n g o f t h e c i t y c o u n c i l ,

Bullock's s u r v e y was r e c e i v e d . The t h e n c i t y a t t o r n e y was

instructed to do what was necessary to take care of the

Bullocks' problem w i t h r e g a r d t o t h e s t r e e t . Both W i l l i a m

Bullock and the acting city attorney testified that they

took t h e i n s t r u c t i o n s of t h e c i t y c o u n c i l t o mean t h a t t h e

c i t y a t t o r n e y was t o p r o c e e d w i t h l e g a l r e s e a r c h t o d e t e r -

mine a l a w f u l method by which t h e B u l l o c k s would b e a l l o w e d

t o k e e p t h e i r b u i l d i n g where i t w a s , and in particular, to

a l l o w them t o o c c u p y a p o r t i o n o f L e s l i e S t r e e t on which t h e

encroachment e x i s t e d . The c i t y a t t o r n e y , i n f a c t , p r o c e e d e d

on t h a t b a s i s and s o t e s t i f i e d a t t r i a l .

R e l y i n g on t h e s e r e p r e s e n t a t i o n s and t h e a c t s o f t h e

c i t y c o u n c i l a s an a u t h o r i z a t i o n t o proceed, Bullock testi-

f i e d t h a t he p u t up t r u s s e s and o t h e r e l e m e n t s o f t h e wood

portion of the building a t various times until about

S e p t e m b e r 1 2 , 1978. A f t e r a c i t y c o u n c i l meeting of which

Bullock was not given notice, h e was i n f o r m e d by T r e t t i n

t h a t t h e Town now r e q u i r e d him t o t e a r down h i s b u i l d i n g and

remove i t from L e s l i e S t r e e t . No a c t i o n was e v e r t a k e n by

t h e Town t o r e v o k e the original building permit issued to

the Bullocks, and t h e B u l l o c k s a t a l l t i m e s r e l i e d upon t h e

b u i l d i n g p e r m i t and t h e a c t s and t h e s t a t e m e n t s o f t h e c i t y

c o u n c i l a s a u t h o r i z a t i o n t o proceed with t h e i r c o n s t r u c t i o n .

The District Court refused to grant an injunction

against further c o n s t r u c t i o n and r e f u s e d t o g r a n t t h e Town

of Boulder its r e q u e s t f o r a f f i r m a t i v e r e l i e f t o r e q u i r e t h e

removal t h e B u l l o c k s t s t r u c t u r e . W e affirm that judgment.
 A s a p p e l l a n t s , t h e B u l l o c k s r a i s e one i s s u e : Whether

t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g t h e Town o f B o u l d e r ' s
motion t o d i s m i s s t h e i r c o u n t e r c l a i m f o r f a i l u r e t o s t a t e a
c l a i m upon which r e l i e f c o u l d be g r a n t e d .
As cross-appellant, t h e Town o f Boulder raises two
additional issues: ( 1 ) Whether the court erred i n holding
t h e Town e s t o p p e d from c l a i m i n g a n i n j u n c t i o n o r r e q u i r i n g
the removal of the Bullocks' building insofar as it en-
c r o a c h e d upon L e s l i e S t r e e t i n t h e Town o f B o u l d e r ; and ( 2 )
whether the c o u r t e r r e d i n f a i l i n g t o g r a n t an i n j u n c t i o n

r e q u i r i n g t h e removal of the Bullocks' building insofar a s

i t e n c r o a c h e d upon any p o r t i o n o f L e s l i e S t r e e t .

W will
e f i r s t turn to the i s s u e s on c r o s s - a p p e a l ,
whether the court erred in ordering t h e Town o f Boulder
estopped from claiming an injunction from further con-
s t r u c t i o n or r e q u i r i n g t h e removal o f d e f e n d a n t s ' b u i l d i n g

i n s o f a r a s i t e n c r o a c h e d upon t h e p o r t i o n o f L e s l i e S t r e e t
and w h e t h e r t h e c o u r t f u r t h e r e r r e d i n r e f u s i n g t o a u t h o r i z e
an i n j u n c t i o n r e q u i r i n g t h e removal o f d e f e n d a n t s ' b u i l d i n g
from L e s l i e S t r e e t .
The Town o f B o u l d e r a r g u e s t h a t i t i s u n d i s p u t e d t h a t

a c i t y o r town h a s t h e power t o p r e v e n t t h e o b s t r u c t i o n o f
i t s s t r e e t s , c i t i n g s e c t i o n 7-14-4102, MCA, which p r o v i d e s :
"The c i t y o r town c o u n c i l h a s t h e power to: (1) Regulate

and p r e v e n t t h e . . . o b s t r u c t i o n of s t r e e t s . . . by . . .
any obstruction." The Town denies that there was any
c o n d u c t on i t s p a r t which would p e r m i t t h e D i s t r i c t C o u r t t o
invoke t h e d o c t r i n e of e q u i t a b l e e s t o p p e l and p r e v e n t t h e
Town from exercising its statutory right to remove the
o b s t r u c t i o n from t h e s t r e e t . W do n o t a g r e e .
e
 The law governing the application of equitable
estoppel as it applies to municipal corporations is dis-
cussed and set forth by this Court in two cases. City of
Billings v. Pierce Packing Co. (1945), 117 Mont. 255, 161
P.2d 636; State ex rel. Barker v. Stevensville (1974), 164
Mont. 375, 523 P.2d 1388. As argued by the Town of Boulder,
this Court noted in Stevensville that the great weight of
authority holds that a municipal corporation is not bound by
acts or statements of its agents or officers made in excess
of their authority, even where a third party relied thereon
to his detriment. However, we further noted in Stevensville
that there are exceptions to that rule. Such exceptions are
to be applied with great caution and only in exceptional
cases. We find this to be just such a case. This Court
stated in City of Billings v. Pierce Packing Co., 117 Mont.

"The general rule is that equitable estoppel
is applied to municipal corporations with
great caution and only in exceptional cases.
'While the doctrine of equitable estoppel is
sometimes invoked in what are termed "excep-
tional cases," it is always applied, and
wisely so, with much caution to municipal
corporations in matters pertaining to their
governmental functions .
. . There is greater
reason why city streets should not be subject
to destruction by nonuse or adverse posses-
sion than can be found applicable to any
other kind of property. No other kind of
public property is subject to more persistent
and insidious attacks or is less diligently
guarded against seizure.' McQuillan, Muni-
cipal Corporations, Vol. 4, Sec. 1515, and
supporting cases."
Here, the District Court in its Conclusion of Law No. 4
noted :
"The elements necessary to make out a case
for the application of the Doctrine of
Equitable Estoppel are succinctly set forth
in the case of City of Billings v. Pierce
Packing Co., 117 Mont. 266, 161 P.2d 636.
 T h o s e e l e m e n t s a r e a s f o l l o w s : ( 1 ) T h e r e must
be c o n d u c t - - a c t s , language, or silence--
amounting t o a r e p r e s e n t a t i o n o r a c o n c e a l -
ment o f f a c t s . ( 2 ) T h e s e f a c t s m u s t be known
t o t h e p a r t y estopped a t t h e time of h i s s a i d
c o n d u c t , o r a t l e a s t t h e c i r c u m s t a n c e s must
be s u c h t h a t knowledge o f them i s n e c e s s a r i l y
imputed t o him. ( 3 ) The t r u t h c o n c e r n i n g
t h e s e f a c t s must be unknown t o t h e o t h e r
p a r t y claiming t h e b e n e f i t of t h e e s t o p p e l ,
a t t h e t i m e when i t was a c t e d upon by him.
( 4 ) The c o n d u c t m u s t be done w i t h t h e i n t e n -
tion, or a t l e a s t with the expectation, t h a t
i t w i l l be a c t e d upon by t h e o t h e r p a r t y , o r
under such c i r c u m s t a n c e s t h a t i t is b o t h
n a t u r a l and p r o b a b l e t h a t i t w i l l be s o a c t e d
upon. ( 5 ) The c o n d u c t must be r e l i e d upon by
t h e o t h e r p a r t y , and t h u s r e l y i n g , h e m u s t be
l e d t o a c t upon i t . ( 6 ) H e must i n f a c t a c t
upon i t i n s u c h a manner a s t o c h a n g e h i s
p o s i t i o n f o r t h e worse; i n o t h e r words, he
m u s t s o a c t t h a t h e would s u f f e r a l o s s i f h e
were compelled t o s u r r e n d e r o r f o r e g o o r
a l t e r what h e h a s d o n e by r e a s o n o f t h e f i r s t
p a r t y b e i n g p e r m i t t e d t o r e p u d i a t e h i s con-
d u c t and t o a s s e r t r i g h t s i n c o n s i s t e n t w i t h
it."

The District Court, in its findings of fact and

conclusions of l a w , w e n t on t o n o t e t h a t T r e t t i n , the city

clerk, had sufficient knowledge, as both city clerk and

building inspector, t o have ascertained the boundaries of

the property in question and that Trettin was on the

p r o p e r t y f o r a p e r i o d of n e a r l y a y e a r b e f o r e t h e a c t i o n of

the c i t y council was taken. The c o u r t further noted the

council's representation to the Bullocks and its instruc-

tions t o the c i t y attorney t o take c a r e of the Bullocks'

p r o b l e m s a t t h e c i t y c o u n c i l m e e t i n g on A u g u s t 28, 1 9 7 8 .

The judge found that these acts and many others

constituted a representation or concealment of material

facts. W e agree with t h e D i s t r i c t Court t h a t t h e f a c t s a r e

sufficient to deny t h e Town's request for removal of the

structure. I n p a r t i c u l a r t h e judge found: t h a t t h e b u i l d i n g

p e r m i t c o n s t i t u t e d a n a u t h o r i z a t i o n t o p r o c e e d and a r e p r e -
sentation that the plans submitted by the Bullocks were

proper; that the acts and representations of the city

c o u n c i l c o n s t i t u t e d a r e p r e s e n t a t i o n r e a s o n a b l y t a k e n by t h e

Bullocks a s a u t h o r i z a t i o n t o proceed with t h e i r c o n s t r u c t i o n

a f t e r t h e presence of t h e e n c r o a c h m e n t was d i s c o v e r e d ; and

that, a c c o r d i n g t o t h e t e s t i m o n y o f t h e f o r m e r mayor o f t h e

Town, s h e , and i n h e r o p i n i o n o t h e r members o f t h e c o u n c i l ,

i n t e n d e d t o r e q u i r e t h e removal of t h e s t r u c t u r e a s e a r l y a s

J u l y 24, 1 9 7 8 , b u t d i d n o t communicate t h i s i n t e n t i o n t o t h e

Bullocks.

The i s s u e s r a i s e d by t h e B u l l o c k s on a p p e a l involve

t h e d i s m i s s a l of their counterclaim. As previously noted,

t h e Town o f B o u l d e r b r o u g h t a n a c t i o n t o e n j o i n d e f e n d a n t s '

e n c r o a c h m e n t on t h e c i t y s t r e e t , and d e f e n d a n t s a n s w e r e d by

g e n e r a l d e n i a l and a s s e r t e d a c o u n t e r c l a i m a g a i n s t t h e Town.

The Town replied by a motion to dismiss and strike the

counterclaim which the court granted. At no time did

d e f e n d a n t s amend t h e i r c o u n t e r c l a i m . The c a s e went t o t r i a l

on t h e Town's c l a i m f o r a n i n j u n c t i o n . The c o u r t h e l d t h a t

t h e Town was e s t o p p e d from p r e v e n t i n g d e f e n d a n t s ' encroach-

ment. The t o t a l e f f e c t o f t h e p r o c e e d i n g t h u s f a r h a s b e e n

t o j u d i c i a l l y a l l o w t h e e n c r o a c h m e n t and t o d e n y t h e c l a i m e d

damages.

W a r e confronted w i t h t h e b a s i c i s s u e of whether t h e
e

counterclaim states a claim upon which relief can be

granted. S t r i p p e d down t o t h e e s s e n t i a l s , the defendants'

counterclaim is very nearly an a s s e r t i o n t h a t b e c a u s e t h e

Town filed the suit, defendants have been damaged. The

c o u n t e r c l a i m c a n be d i v i d e d i n t o three counts. The f i r s t

count alleges negligent conduct giving rise to something
l i k e an e s t o p p e l , a l t h o u g h t h e term " e s t o p p e l " is n o t used,

that the council by its action led the Bullocks into

changing their position to their detriment. It further

a l l e g e s a v i o l a t i o n of defendants' constitutional right to

due p r o c e s s w i t h r e s p e c t t o a p r o p o s a l or a t t e m p t t o pur-

chase a p o r t i o n of t h e s t r e e t right-of-way i n t h a t defen-

d a n t s were n o t g i v e n n o t i c e o f a n y p r o p o s e d s a l e which was

allegedly on the agenda of the council at the time this

trouble occurred.

The second count alleges that the Bullocks were

v i c t i m s o f d i s c r i m i n a t i o n by t h e Town. It lists individuals

whose structures encroach on various street right-of-ways

and alleges that t h e Town, having allowed o t h e r encroach-

ments, is u n l a w f u l l y d i s c r i m i n a t i n g against defendants by

a t t e m p t i n g t o remove d e f e n d a n t s ' encroachment.

The third count alleges that the Town issued a

building permit t o t h e d e f e n d a n t s and u n l a w f u l l y m i s r e p r e -

s e n t e d t o them t h e y c o u l d l e g a l l y b u i l d a s t r u c t u r e on t h e i r

property and t h a t defendants relied to their d e t r i m e n t on

the misrepresentations.

In each count the Bullocks claimed damages as a

r e s u l t of t h e Town's conduct. The B u l l o c k s h a v e a l l e g e d l y

s u f f e r e d " h u m i l i a t i o n , f r u s t r a t i o n , p u b l i c r i d i c u l e , l o s s of

business reputation, m e n t a l a n g u i s h and m o r t i f i c a t i o n . "

They a l s o c l a i m t h a t i f t h e y w e r e r e q u i r e d t o remove t h e i r

building, t h e y would be e n t i t l e d t o t h e sum o f $ 2 2 , 5 0 0 a s a

c o s t of removal. As noted above, that i s s u e h a s b e e n de-

cided i n t h e i r favor. D e f e n d a n t s f u r t h e r c l a i m damages o f

$450 p e r month f o r l o s s o f r e n t and t h e i n a b i l i t y t o c l o s e

down a motel structure. Defendants prayed, among other
things, f o r t h e items o f damage m e n t i o n e d and f o r a t t o r n e y

fees.

The Town's motion to dismiss was made p u r s u a n t to

R u l e 1 2 ( b ) ( 6 ) , M.R.Civ.P., which r e a d s i n p e r t i n e n t p a r t a s

follows:

" ( b ) How p r e s e n t e d . Every d e f e n s e , i n law o r
f a c t , t o a c l a i m f o r r e l i e f i n any p l e a d i n g ,
whether a c l a i m , c o u n t e r c l a i m , cross-claim,
or t h i r d p a r t y c l a i m , s h a l l be a s s e r t e d i n
t h e r e s p o n s i v e p l e a d i n g t h e r e t o i f one is
required, except t h a t the following defenses
may, a t t h e o p t i o n o f t h e p l e a d e r , b e made by
motion: . . . ( 6 ) f a i l u r e t o s t a t e a claim
upon which r e l i e f c a n be g r a n t e d . . ."
The B u l l o c k s a r g u e t h a t t h e i r c o m p l a i n t f o r damages

s h o u l d n o t h a v e been d i s m i s s e d and r e l y on D u f f y v . Butte

T e a c h e r s ' Union No. 332, AFL-CIO ( 1 9 7 5 ) , 1 6 8 Mont. 246, 541

P.2d 1199, where this Court, speaking to a motion to

dismiss, stated:

"A m o t i o n t o d i s m i s s f o r f a i l u r e t o s t a t e a
c l a i m upon which r e l i e f c a n b e g r a n t e d , R u l e
1 2 ( b ) ( 6 ) , M.R.Civ.P., is equivalent t o a
demurrer under former c i v i l procedure.
[Citation omitted. ] A motion t o d i s m i s s
a d m i t s t o a l l f a c t s w e l l p l e a d e d and i n
c o n s i d e r i n g t h e motion t h e m a t e r i a l a l l e g a -
t i o n s of t h e p l e a d i n g a t t a c k e d a r e taken a s
true. [ C i t a t i o n o m i t t e d . I Where a c o m p l a i n t
s t a t e s f a c t s s u f f i c i e n t t o c o n s t i t u t e a cause
o f a c t i o n upon a n y t h e o r y , t h e n t h e m o t i o n t o
d i s m i s s m u s t be o v e r r u l e d . [ C i t a t i o n omit-
ted.]" 1 6 8 Mont. a t 252-253, 5 4 1 P.2d a t
1202-1203.

Defendants c i t e a l s o a s a u t h o r i t y t o t h i s holding B u t t r e l l

v. McBri.de Land and L i v e s t o c k ( 1 9 7 6 ) , 1 7 0 Mont. 296, 553

P.2d 407. Thus, i n a r g u i n g a g a i n s t t h e d i s m i s s a l of their

c o u n t e r c l a i m below, t h e B u l l o c k s a r g u e t h a t c e r t a i n assump-

tions must be made: first, all facts set forth in the

c o u n t e r c l a i m a r e assumed t r u e ; second, a l l these f a c t s are

t o be read and interpreted i n favor of the Bullocks; and

third, t h a t t h e g r a n t i n g of a motion t o d i s m i s s is held i n
disfavor unless the allegations i n the counterclaim affirma-

t i v e l y d e m o n s t r a t e t h a t no a c t i o n l i e s and t h e m o t i o n s h o u l d

be d e n i e d .
Whether the Town's conduct is characterized as
n e g l i g e n c e o r is c h a r a c t e r i z e d a s c o n t a i n i n g m i s r e p r e s e n t a -
t i o n s , w e f e e l makes l i t t l e d i f f e r e n c e . The e s s e n c e o f t h e
c l a i m s i s t h a t t h e y w e r e m i s l e d by t h e c o n d u c t o f t h e Town
to their disadvantage. This Court has held recently in

Adams v . Adams ( 1 9 7 9 ) , - Mont. , 604 P.2d 332, 334, 36
St.Rep. 2374, 2377, a s t o e q u i t a b l e e s t o p p e l :
". . . To i t e r a t e , f o r e q u i t a b l e e s t o p p e l t o
e x i s t , t h e r e must be: (1) a f a l s e r e p r e s e n t a -
t i o n o r a c o n c e a l m e n t o f f a c t s , ( 2 ) made w i t h
t h e knowledge, a c t u a l o r c o n s t r u c t i v e , o f t h e
f a c t s , ( 3 ) t o a p a r t y w i t h o u t knowledge o r
means o f knowledge o f t h e f a c t s , ( 4 ) w i t h t h e
i n t e n t i o n t h a t i t s h o u l d b e a c t e d upon and
( 5 ) r e l i a n c e on t h e f a l s e r e p r e s e n t a t i o n t o
h i s o r h e r p r e j u d i c e by t h e o t h e r . . ."
The D i s t r i c t C o u r t d i d n o t e r r i n dismissing the counter-

claim.
Affirmed.

/

W concur:
e