NO. 8 8 - 5 4 2
IN THE SUPREME COURT OF THE STATE OF MONTANA
1989
ROBERT DEW and SALLY DEW;
LEIGHTON DRESCH and JAN DRESCH;
and JAMES POSEY and LORI POSEY,
plaintiffs and Appellants,
-vs-
DOUGLAS C. DOWER and ALICE S. DOWER,
a/k/a ALYCE S. DOWER,
Defendants and Respondents.
APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Thomas ~ c ~ i t t r i c k ,
Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Cotter & Cotter; ~atricia0'~rienCotter, Great Falls,
Montana
For Respondent:
H. ~ i l l i a mCoder & Joseph M. Sullivan; Emmons & Coder,
Great Falls, Montana
Submitted on Briefs: April 27, 1 9 8 9
Decided: June 6, 1989
Mr. Justice L . C. Gulbrandson delivered the Opinion of the
Court.
The District Court for the Eighth Judicial District,
Cascade County, entered a directed verdict at the close of
trial in this matter. Plaintiffs appeal, arguing that they
presented evidence which would warrant submitting to the jury
several issues relating to their purchases of land from
defendants, the Dowers. We reverse and remand for further
proceedings consistant with this opinion.
The dispositive issue is whether the District Court
erred in directing a verdict for the defendants at the close
of all the evidence, based on the statute of frauds.
The Dowers owned approximately 205 acres of real prop-
erty south of Great Falls, Montana. They sold the property
in parcels of a little over 20 acres each. Defendant Alice
Dower was, at the time of the sales, a licensed realtor. The
plaintiffs, as husbands and wives, purchased some of those
parcels. Plaintiffs executed buy-sell agreements and con-
tracts for deed in purchasing their respective parcels.
Plaintiffs' complaint alleged negligence, fraud, an6
breach of a covenant of good faith and fair dealing for the
Dowers' failure to bring the access roads up to "county
grade." Plaintiffs testified at trial that the Dowers orally
agreed to improve two roads found on the 205 acres to "county
grade" 60-foot wide roads and to guarantee access to the
property. The Dowers testified that if any oral promises
were made about the roads, it was to improve the roads to
make them "passable" and to seek alternative access to the
property. They maintained that they had done these things.
During oral arguments on the Dowers' motion for direct-
ed verdict after all evidence had been submitted, plaintiffs'
attorney withdrew the claims as to plaintiffs Sally Dew, Jan
Rae Dresch, and L o r i Posey. She a l s o withdrew a l l n e g l i g e n c e
claims alleged by plaintiffs. The court then d i r e c t e d a
v e r d i c t f o r t h e Dowers and e n t e r e d f i n d i n g s , c o n c l u s i o n s , and
a judgment i n t h e i r f a v o r on t h e r e m a i n i n g c l a i m s . It stated
that p l a i n t i f f s were b a r r e d by t h e s t a t u t e of f r a u d s from
c l a i m i n g o r a l promises i n a d d i t i o n t o t h e terms o f t h e w r i t -
t e n c o n t r a c t s between t h e p a r t i e s .
Did t h e D i s t r i c t Court e r r i n d i r e c t i n g a v e r d i c t f o r
t h e d e f e n d a n t s a t t h e c l o s e o f a l l t h e e v i d e n c e , based on t h e
s t a t u t e of frauds?
The s t a t u t e o f f r a u d s a s a p p l i c a b l e i n t h i s c a s e i s s e t
f o r t h a t S 28-2-903 (1)( d ) , MCA:
(1) The f o l l o w i n g agreements a r e i n v a l i d
u n l e s s t h e same o r some n o t e o r memoran-
dum t h e r e o f i s i n w r i t i n g and s u b s c r i b e d
by t h e p a r t y t o be charged o r h i s a g e n t :
(dl an agreement f o r t h e l e a s i n g f o r a
longer period than 1 year o r f o r t h e s a l e
of r e a l property o r of an i n t e r e s t
therein. . . .
Plaintiffs' c e n t r a l argument i s t h a t t h e s t a t u t e o f frauds
does not bar their claim because they were fraudulently
induced i n t o s i g n i n g t h e i r c o n t r a c t s w i t h t h e Dowers by A l i c e
Dower's f a l s e r e p r e s e n t a t i o n s a b o u t t h e r o a d s which would be
built. They a l s o a s s e r t t h a t t h e D i s t r i c t Court f a i l e d . t o
examine t h e f a c t s i n t h e l i g h t most f a v o r a b l e t o them, the
non-moving parties. Third, they maintain that the court.
erred i n f a i l i n g t o submit t o t h e j u r y q u e s t i o n s r e g a r d i n q
A l i c e Dower's f i d u c i a r y d u t y a s a r e a l t o r and h e r b r e a c h o f a
c o v e n a n t of good f a i t h and f a i r d e a l i n g .
The Dowers and t h e D i s t r i c t Court r e l i e d upon Kel-ly v .
E l l i s (1P09), 39 Mont. 5 9 7 , 1 0 4 P . 8?3. That c a s e a r o s e o u t
of KeI-ly's written contract to sell his ranch to Ellis.
Kelly claimed that Ellis orally promised that Kelly would be
employed as ranch manager. Kell-y arqued that he had been
fraudulently induced into entering t :3 written contract by
l
the oral promise. This Court ruled that where there was no
allegation of failure to keep all promises made in the writ-
ten agreement, the statute of frauds precluded admission of
evidence of an oral promise directly related to the subject
matter of the contract. Kelly, 104 P. at 875-76.
Plaintiffs cite Goggans v. Winkley (1970), 154 Mont.
451, 465 P.?d 326. In that case, this Court set forth the
rule that fraud in the inducement is provable by parol evi-
dence, despite the parol evidence rule. Goggans, 465 P.2d at
330. However, evidence of a promise regarding a futurity is
only admissible if there is also evidence of intent to de-
fraud at the time the promise was made. Dodds v. Gibson
Products Co. of W. Mont. (1979), 181 Mont. 373, 379, 593 P . 2 d
1022, 1025.
Plaintiffs also cite Xajers v. Shining Mountains IMont.
1986), 713. P.2d 1375, 43 St.Rep. 16 (Majers I), aff'd after
remand (Mont. 1988), 750 P.2d 449, 45 St.Rep. 283 (~ajers
-
11). In that case, buyer and plaintiff Majers alleged a
common-law implied covenant on the part of the seller to
build roadways in Shining Mountains subdivision. As is true
in the present case, the written contracts by which plaintiff
purchased property did not contain a promise to build roads.
However, recorded plats showing roadways within the subdivi-
sion were referred to in the contracts and used by the sell-
ing agents. In Majers I, this Court held that whether the
use of the plats gave rise to an implied covenant was an
issue of fact which must go to the jury. Majers I, 711 P. 2d
at 1378. In Majers XI, this Court concluded that substantial
evidence supported the district court's finding that
defendant's sales agents had represented that defendant would
construct and provide roads. Majers 11, 750 P.2d at 451.
This Court affirmed the district court's order for specific
performance (building the roads).
The evidence presented at trial in the present case
included the testimony of plaintiffs Robert Dew and James
Posey that Alice Dower promised to improve the roads to
"county grade." A realtor who showed and sold the property
to plaintiff Leighton Dresch testified that prior to the
sale, he met Alice Dower on the property and she showed him
where the stakes were for the "county-standard-type" roads
she was going to put in. The realtor repeated this represen-
tation to Mr. Dresch. A certificate of survey was introduced
into evidence. It showed 60-foot road easements on the 205
acres. The male plaintiffs all testified that they had been
shown the certificate of survey when they were negotiating to
buy their parcels. The recorded certificate of survey was
also referenced in the contracts for deed. Further, plain-
tiffs introduced a letter from the Dowers' attorney to the
insuring title company. In that letter the attorney agreed,
on behalf of Alice Dower, to hold the title company harmless
from any claims arising from purchasers' access problems.
The written buy-sell agreements and the contracts for
deed were introduced into evidence. The buy-sell agreements
contained no promise to improve the roads and stated:
Purchaser enters into this agree-
ment in full reliance upon his indepen-
dent investigation and judgment. No
agreements, verbal or other, modify or
affect this agreement.
Each contract for deed contained a clause stating:
Purchaser has carefully examined
the described property and accepts the
same in its present condition without
reliance upon any statement,
representation or warranty by or on
behalf of the Vendor as to the condition
or state of repair thereof.
The testimony also included Alice Dower's statement
that she only promised to make the roads "passable," which
she maintained at trial that she had done. She admitted that
she only improved the roadways to a 50-foot width and d.enied
that survey stakes at the 60-foot width established the width
of the planned roads. She testified that the stakes estah-
lished only the outer boundaries to which property owners
could fence.
It was clear in Majers that the sellers admitted prom-
ising to do work on the roads. Here, too, Alice Dower admit-
ted at trial that she had promised to do roadwork; the
dispute is about the extent of the promise. Because they
sold their property in parcels of more than 20 acres, the
Dowers were not required to comply with the Montana statutes
requiring subdivision developers to provide roads. However,
the plaintiffs' case is not based upon the Montana subdivi-
sion statutes, but upon the extent of Alice Dower's promises
over and above what. she was required to do.
The Dowers point out that Majers and the present case
were submitted under different theories. Majers was decided
under contract theories; the present case i-nvolved only a
tort claim at the time the District Court entered its direct-
ed verdict. Nevertheless, we conclude that the present case
is governed by the rules set forth in Majers, Goggins, and
Dodds.
Plaintiffs are correct in their statement that, in
ruling on a motion for directed verdict, the court must
evaluate the facts in the light most favorable to the
non-moving party. Stout v. Montana Power Co. (Mont. 1988),
762 P.2d 875, 876, 45 St.Rep. 1926, 1928. There is a
conflict in the evidence regarding the representations made
by Alice Dower. We hold that the District Court erred in
taking from the jury the issue of whether the plaintiffs were
fraudulently induced to enter the contracts to purchase their
parcels of land from the Dowers.
As to the claims of fiduciary duty and breach of cove-
nant of good faith and fair dealing, those matters may be
addressed anew upon retrial o f this case.
Reversed and remanded.
t
We concur: ,=
G'
-
Justices