No. 14253
IN THE SUPREME COURT OF THE STATE MONTANA
1978
ROBERT C. VAN ETTINGER and
RUTH E. VAN ETTINGER, husband
and wife,
Plaintiff and Appellant,
ROBERT F. PAPPIN et al.,
Defendants and Respondents.
Appeal from: District Court of the Eighth Judicial District,
Honorable Joel G. Roth, Judge presiding.
Counsel of Record:
For Appellant:
Richter and Lerner, Billings, Montana
Alan J. Lerner argued, Billings, Montana
Hartelius and Lewin, Great Falls, Montana
For Respondents:
Swanberg, Koby, Swanberg & Matteucci, Great Falls, Montana
John Alke argued, Great Falls, Montana
Submitted: November 22, 1978
Decided: D F 2 1
-- 1978
Mr. 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 C o u r t .
T h i s i s an a p p e a l by t h e p l a i n t i f f s from summary judg-
ment e n t e r e d i n b e h a l f of t h e d e f e n d a n t s by t h e D i s t r i c t
C o u r t of t h e E i g h t h J u d i c i a l D i s t r i c t , County of Cascade,
t h e Honorable J o e l G. Roth s i t t i n g w i t h o u t a j u r y .
On December 3, 1975, t h e Van E t t i n g e r s , a p p e l l a n t s ,
f i l e d t h i s a c t i o n f o r damages a r i s i n g o u t of a c o n t r a c t f o r
t h e s a l e of r e a l e s t a t e under which t h e y p u r p o r t e d l y pur-
c h a s e d a n easement f o r t h e u s e o f a swimming p o o l . The
c o m p l a i n t a l l e g e d b r e a c h of c o n t r a c t , f r a u d , n e g l i g e n c e and
v i o l a t i o n of t h e R e a l E s t a t e L i c e n s e A c t by d e f e n d a n t -
respondents. Respondents a r e t h e P a p p i n s , p r i o r owners of
t h e house; Tom Mather, James Durkin and Tom Mather & Asso-
c i a t e s , t h e r e a l t o r s i n v o l v e d i n t h e s a l e ; and Western
S u r e t y Company, t h e r e a l t y bonding company.
D e p o s i t i o n s were t a k e n and i n t e r r o g a t o r i e s w e r e ex-
changed. On J u n e 30, 1977, r e s p o n d e n t s f i l e d a motion f o r
summary judgment on a l l of a p p e l l a n t s ' c l a i m s f o r r e l i e f .
On September 2 6 , 1977, a p p e l l a n t s f i l e d a c r o s s - m o t i o n f o r
p a r t i a l summary judgment on t h e i s s u e s o f l i a b i l i t y on a l l
c l a i m s and on t h e i s s u e of s t a t u t o r y damages and e n t i t l e m e n t
t o a t t o r n e y f e e s under t h e Real E s t a t e L i c e n s e Act.
F o l l o w i n g o r a l argument on November 7 , 1977, on t h e
mutual m o t i o n s f o r summary judgment, t h e 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 of f a c t , c o n c l u s i o n s of l a w , and a n o r d e r
g r a n t i n g r e s p o n d e n t s ' motion f o r summary judgment and deny-
i n g a p p e l l a n t s ' c r o s s - m o t i o n f o r summary judgment.
On a p p e a l a p p e l l a n t s do n o t c o n t e s t t h e D i s t r i c t C o u r t ' s
r u l i n g t h a t a c l a i m o f n e g l i g e n c e under t h e c i r c u m s t a n c e s
s t a t e s no c a s e upon which r e l i e f c a n be g r a n t e d . They do
c o n t e s t t h e d i s m i s s a l of t h e c o u n t s a l l e g i n g breach of
c o n t r a c t , f r a u d , and v i o l a t i o n of t h e Real E s t a t e License
Act.
T h i s c a s e i n v o l v e s t h e u s e of a swimming pool which
s t r a d d l e s two l o t s , numbered 29 and 30, i n a G r e a t F a l l s ,
Montana, s u b d i v i s i o n . Two a d d i t i o n a l l o t s , numbered 13 and
1 4 , a r e involved i n t h e c o n t r o v e r s y . The l o t s a b u t one
a n o t h e r a s diagrammed:
Alder S t r e e t
pool
Beach S t r e e t
I n 1961 d e f e n d a n t Robert Pappin owned l o t s 1 4 and 29
and d e f e n d a n t Tom Mather owned l o t s 13 and 30. A t t h a t time
t h e y agreed t o j o i n t l y develop l o t s 29 and 30. A s p a r t of
t h i s development, t h e y b u i l t a swimming pool s t r a d d l i n g l o t s
29 and 30. Mather subsequently s o l d l o t 30 t o t h e Penning-
t o n s , who along w i t h t h e Pappins, s t i l l t h e owners of l o t
29, executed and recorded i n September, 1961, an easement
f o r t h e u s e of t h e swimming pool i n f a v o r of each o t h e r .
This easement does n o t mention e i t h e r l o t 13 o r 1 4 .
I n October, 1 9 6 1 , a n o t h e r easement agreement was drawn,
p u r p o r t e d l y between t h e owners of a l l f o u r l o t s , whereby t h e
owners of l o t s 29 and 30 g r a n t e d a permanent easement f o r
t h e u s e of t h e pool t o t h e owners of l o t s 13 and 1 4 . Under
t h i s agreement t h e c o s t s n e c e s s a r y t o u s e of t h e pool were
t o be borne e q u a l l y by t h e p a r t i e s . This easement was n o t
recorded nor was t h e name o r s i g n a t u r e of t h e owner of l o t
29 p r o v i d e d . I t a p p e a r s t h a t a t t h e t i m e of t h e e x e c u t i o n
of t h i s i n s t r u m e n t P a p p i n s s t i l l owned b o t h l o t s 1 4 and 29;
t h e Mathers s i g n e d a s owners of l o t 13; and t h e P e n n i n g t o n s
s i g n e d a s owners of l o t 30. A t t h e t i m e of t h e i n c i d e n t s
complained of i n t h i s c a s e , l o t 29 w a s owned by t h e Nobles,
l o t 30 by t h e Howrys, and l o t 1 3 by t h e Mathers u n t i l
J a n u a r y 1, 1974, and t h e Huffords t h e r e a f t e r .
Although t h e ownership of t h e v a r i o u s l o t s changed o v e r
t i m e , t h e u n r e c o r d e d easement agreement was honored by a l l
s u b s e q u e n t owners. I n August, 1973, however, t h e P a p p i n s
s e n t a l e t t e r t o t h e "Members of t h e Swimming Pool Associa-
t i o n " s t a t i n g t h a t a s a r e s u l t of t h e i r move t o a downtown
a p a r t m e n t t h e y w e r e " r e s i g n i n g from t h e swimming p o o l " and
s e e k i n g i n s t r u c t i o n s a s t o whether t h e r e m a i n i n g members
" w i s h [ e d ] t h e new owners t o p a r t i c i p a t e i n t h e swimming p o o l
o r i f [ t h e y ] would p r e f e r t o r e t a i n i t among t h e t h r e e
p r e s e n t members." T h e r e a f t e r t h e Pappins d i d n o t c o n t r i b u t e
t o t h e upkeep of t h e p o o l .
I n September, 1973, t h e Pappin home l o c a t e d on l o t 1 4
was l i s t e d f o r s a l e w i t h Tom M a t h e r ' s r e a l e s t a t e agency.
P a p p i n , a s a r e a l e s t a t e salesman i n t h i s agency, r e c e i v e d a
$386.50 l i s t i n g commission. Without t h e knowledge of P a p p i n ,
however, Tom Mather i n d i c a t e d on t h e m u l t i p l e l i s t i n g employ-
ment c o n t r a c t t h a t i n c l u d e d i n t h e s a l e of t h e house w a s a
" p e r p e t u a l easement f o r p o o l u s e v i a 1 / 4 e x p e n s e s s h a r i n g " .
The m u l t i - l i s t i n g agreement and newspaper a d v e r t i s e m e n t s f o r
t h i s p r o p e r t y p r e p a r e d from t h e m u l t i p l e l i s t i n g employment
c o n t r a c t b o t h mentioned t h e easement f o r t h e u s e of t h e
pool.
I n May, 1974, R o b e r t Van E t t i n g e r , i n t e n d i n g t o move
w i t h h i s f a m i l y from C a l i f o r n i a t o Great F a l l s , s i g n e d a
b u y - s e l l agreement w i t h t h e Pappins. p his agreement con-
t a i n e d t h r e e r e f e r e n c e s t o t h e swimming pool:
"The f o l l o w i n g p e r s o n a l p r o p e r t y i s a l s o t o be
l e f t upon t h e premises a s a p a r t of t h e p r o p e r t y
purchased. .. and easement f o r pool u s e ...
" * I t i s understood by t h e buyer t h a t t h e pool
i s owned by L o t s 29 and 3 0 , Block 7, Country
Club Addition and t h a t Lot 1 4 has had t h e r i g h t
of easement f o r u s e by c o n t r i b u t i n g one-fourth
( 1 / 4 ) of t h e c o s t of maintanance ( s i c ) , opera-
t i o n and t a x e s .
"The u s e of t h e pool r e q u i r e s t h e buyer t o pay
1 / 4 of t h e c o s t of t h e o p e r a t i o n of t h e p o o l . "
I n e a r l y J u l y , 1974, a f t e r t a l k i n g t o t h e owners of
l o t s 29 and 3 0 , Van E t t i n g e r became concerned t h a t he and
h i s f a m i l y would n o t be allowed t o u s e t h e swimming pool.
He was a s s u r e d by t h e r e a l e s t a t e agency t h a t t h e y would be
allowed t o u s e t h e pool.
O J u l y 2 0 , p r i o r t o f i n a l c l o s i n g of t h e s a l e , a p p e l -
n
l a n t s moved i n t o t h e house on l o t 1 4 . O t h e same day t h e
n
a c c e s s g a t e between l o t 1 4 and t h e pool was removed by t h e
owners of l o t s 29 and 30. O J u l y 2 1 Van E t t i n g e r t r i e d t o
n
u s e t h e pool and was p r o h i b i t e d from doing s o by Howry, who
t h r e a t e n e d t o have him a r r e s t e d f o r t r e s p a s s . O July 22
n
Van E t t i n g e r hand d e l i v e r e d a l e t t e r t o T m Mather demanding
o
he r e c t i f y t h e pool s i t u a t i o n c r e a t e d by t h e Nobles' and
Howrys' r e f u s a l t o l e t them u s e t h e pool. Mather t a l k e d t o
t h e Nobles and Howrys and t r i e d t o convince them t o a l l o w
a p p e l l a n t s t h e u s e of t h e swimming pool. They r e f u s e d , and
Mather t h e n t a l k e d t o a p p e l l a n t s on J u l y 2 6 , a d v i s i n g them
t h a t t h e Nobles and Howrys would n o t a c q u i e s c e t o t h e i r u s e
of t h e pool. To p l a c a t e a p p e l l a n t s Mather o f f e r e d a t t h a t
time t o buy them a c o u n t r y c l u b membership which would a l l o w
them u s e of t h e c o u n t r y c l u b ' s p o o l .
I n s p i t e of t h e s e e v e n t s a p p e l l a n t s c l o s e d t h e i r l o a n
a p p l i c a t i o n w i t h t h e l e n d i n g i n s t i t u t i o n on J u l y 28, 1974,
and c l o s e d t h e s a l e t r a n s a c t i o n on J u l y 30. After closing
the transaction, appellants f i l e d the instant action.
The f o l l o w i n g i s s u e s are p r e s e n t e d t o t h i s C o u r t f o r
review:
1. 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 r e -
s p o n d e n t s ' motion f o r summary judgment on a p p e l l a n t s ' c o u n t
a l l e g i n g b r e a c h of c o n t r a c t ?
2. 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 r e -
s p o n d e n t s ' motion f o r summary judgment on a p p e l l a n t s ' c o u n t
a l l e g i n g fraud?
3. Whether t h e D i s t r i c t C o u r t e r r e d i n d e n y i n g a p p e l -
l a n t s ' motion f o r p a r t i a l summary judgment on t h e i r c o u n t
a l l e g i n g v i o l a t i o n o f t h e Real E s t a t e L i c e n s e Act of 1963
and i n g r a n t i n g r e s p o n d e n t s ' motion f o r summary judgment on
a p p e l l a n t s ' c o u n t a l l e g i n g v i o l a t i o n of t h e Real E s t a t e
L i c e n s e A c t of 1963?
I t i s most p r o d u c t i v e t o b e g i n a n a l y z i n g t h i s problem
from t h e l a s t e v e n t s backwards and d e t e r m i n e t h e e f f e c t on
t h e v a r i o u s c a u s e s of a c t i o n of a p p e l l a n t s p r o c e e d i n g t o
c l o s i n g t h e sales t r a n s a c t i o n . T h i s e f f e c t i s s e e n most
c l e a r l y on t h e c o n t r a c t t h e o r y i n a p p e l l a n t s ' c o m p l a i n t .
D e s p i t e t h e a s s e r t i o n by a p p e l l a n t s t h a t t h e y c l o s e d t h e
t r a n s a c t i o n on J u l y 20, t h e r e c o r d i t s e l f i n d i c a t e s t h e
t r a n s a c t i o n d i d n o t c l o s e u n t i l between J u l y 28 and 30. In
h i s d e p o s i t i o n M r . Van E t t i n g e r h i m s e l f s t a t e s it w a s be-
tween t h e 2 8 t h and 3 0 t h of J u l y when he s i g n e d t h e p a p e r s a t
t h e bank. The w a r r a n t y deed from P a p p i n s t o a p p e l l a n t s , a
document o f p u b l i c r e c o r d , w a s n o t e x e c u t e d u n t i l J u l y 29
and was n o t d e l i v e r e d t o a p p e l l a n t s u n t i l ~ u l y30. In
a d d i t i o n a p p e l l a n t s remained i n p o s s e s s i o n of t h e house a t
l e a s t u n t i l A p r i l 29, 1976, when t h e i r d e p o s i t i o n s were
taken.
I n view of t h i s r e c o r d a p p e l l a n t s ' s i m p l e a s s e r t i o n
t h a t t h e t r a n s a c t i o n c l o s e d on J u l y 20 w i l l n o t s e r v e t o
c r e a t e a n i s s u e of f a c t m e r e l y t o a v o i d summary judgment.
Brown v . Thornton ( 1 9 6 7 ) , 150 Mont. 1 5 0 , 155, 432 P.2d 386,
The d e t e r m i n a t i o n t h a t t h e t r a n s a c t i o n c l o s e d between
J u l y 28 and 30 means t h e e v e n t s t a k i n g p l a c e u n t i l t h e n must
be c o n s i d e r e d i n d e t e r m i n i n g t h e e f f e c t of a p p e l l a n t s '
decision t o close the sale. Between J u l y 20 and 28, a p p e l -
l a n t s w i t n e s s e d t h e removal of t h e a c c e s s g a t e t o t h e s w i m -
ming p o o l on J u l y 20, t h e d a t e t h e y moved i n t o t h e house on
l o t 1 4 ; M r . Van E t t i n g e r was t h r e a t e n e d w i t h a r r e s t f o r
t r e s p a s s i n g when h e a t t e m p t e d t o u s e t h e p o o l on J u l y 21;
and d e f e n d a n t Tom Mather, a f t e r t a l k i n g t o t h e owners of
l o t s 29 and 30, informed a p p e l l a n t s on J u l y 26 t h a t t h e s e
p a r t i e s r e f u s e d t o a l l o w them u s e of t h e p o o l .
D e s p i t e t h e s e g r a p h i c i n d i c a t i o n s from t h e o t h e r p a r -
t i e s t h a t t h e r e m i g h t be d e f e c t s i n t h e p u r p o r t e d easement
and t h e a p p a r e n t a c q u i e s c e n c e by one of t h e r e a l t o r s i n -
v o l v e d i n t h e m a t t e r , a p p e l l a n t s proceeded t h r o u g h f i n a l
c l o s i n g s t a g e s of t h e s a l e s t r a n s a c t i o n and remained i n pos-
s e s s i o n of t h e house.
C l a u s e 3 of t h e sales c o n t r a c t b e i n g sued upon s t a t e s :
" I f t h e s e l l e r d o e s n o t approve t h e s a l e w i t h i n
two d a y s h e r e a f t e r , o r i f s e l l e r ' s t i t l e i s n o t
m e r c h a n t a b l e o r i n s u r a b l e and c a n n o t be made s o
within a reasonable t i m e a f t e r w r i t t e n notice
c o n t a i n i n g s t a t e m e n t of d e f e c t s i s d e l i v e r e d
t o s e l l e r , t h e n s a i d e a r n e s t money h e r e i n re-
c e i p t e d f o r s h a l l be returned t o t h e purchaser
on demand and a l l r i g h t s of p u r c h a s e r t e r m i -
n a t e d u n l e s s p u r c h a s e r waives s a i d d e f e c t s and
elects -purchase."
to (Emphasis a d d e d . )
C he deed given by the Pappins to appellants conveyed
all of the pappins' rights, title, and interest in lot 14 as
well as all easements attached thereto. Sections 67-1522,
67-1523, 67-1607, R.C.M. 1947. Appellants chose to waive
any defects in Pappins' title when they agreed to close the
transaction. This waiver was made with the knowledge of a
possible dispute over the easement and effectively precludes
any remedy based on a contract theory.
Appellants' decision to close the sale also served in
part to waive any claim for relief based on fraud. In this
case Mr. Van Ettinger's desposition shows he had conducted
independent investigations which revealed unequivocally that
the Nobles and Howrys, as owners of lots 29 and 30, would
refuse appellants access to the pool. In fact he was so
advised for the first time even before he signed the buy-
sell agreement. Throughout this period of time he asserts
he was fraudulently reassured by defendant realtors that
everything would be all right with the easement.
True as this may be, on July 26 Tom Mather flatly told
appellants they would not be allowed to use the pool by the
other owners and offered to pay for a membership in the
country club as an alternative. Clearly, any claim that the
reassurance continued past this date is unfounded. Yet
appellants proceeded to close the transaction.
Appellants must have the ability to make a prima facie
showing of nine elements for their fraud claim to survive.
These elements are identified in Bails v. Gar (1976), 171
Mont. 343, 558 P.2d 458, 461, 33 St.Rep. 1256, 1259; Cowan
v. Westlund Realty (1973), 162 Mont. 379, 383, 512 ~ . 2 d714,
716; and Clough v. Jackson (1971), 156 Mont. 272, 279-80,
479 P.2d 266, 270:
1. A representation;
2. Falsity of the representation;
3. Materiality of the representation;
4. Speaker's knowledge of the falsity of the repre-
sentation or ignorance of its truth;
5. Speaker's intent it should be relied upon;
6. The hearer's ignorance of the falsity of the repre-
sentation;
7. The hearer's reliance on the representation;
8. The hearer's right to rely on the representation;
and
9. Consequent and proximate injury caused by the
reliance on the representation.
Even the excerpts taken from appellants' version of
what happened show, that at the very least, they cannot make
a prima facie showing of elements six through eight.
In the first place appellants cannot show their ignor-
ance of the falsity of respondents' alleged representations.
From the very beginning, they knew the opposite--that the
Nobles and Howrys would refuse to let them use the swimming
pool. According to Mr. Van Ettinger, this knowledge was
obtained before he signed the buy-sell agreement. Appellants
knew at all times the Nobles' and Howrys' statements were in
direct opposition to those alleged to have been made by
respondents, and they knew it was the actions of the other
owners which would dictate their ability to use the pool,
not the actions of the real estate people.
~dditionally,appellants cannot show reliance, the
seventh element. They elected to purchase lot 14 despite
three warnings from the Nobles and Howrys that they would
not be able to use the pool, despite the events of ~ u l y20
(removal of t h e a c c e s s g a t e ) , J u l y 21 ( a r r e s t t h r e a t f o r
t r e s p a s s ) and J u l y 26 ( M a t h e r ' s n o t i f i c a t i o n t h a t t h e Nobles
and Howrys would n o t a l l o w a p p e l l a n t s t o u s e t h e p o o l and
h i s o f f e r of a c o u n t r y c l u b membership a n a n a l t e r n a t i v e ) .
Assuming f r a u d u n t i l J u l y 20, a p p e l l a n t s ' a c t i o n s a f t e r t h a t
d a t e make any c l a i m of r e l i a n c e u n s u p p o r t a b l e .
A p p e l l a n t s c o u l d n o t r e l y on t h e a l l e g e d r e p r e s e n t a -
t i o n s of r e s p o n d e n t s a s a m a t t e r of law. I n Lee v. Stock-
mans N a t i o n a l Bank ( 1 9 2 2 ) , 63 Mont. 262, 284, 207 P. 623,
630, i t was s t a t e d :
"When it a p p e a r s t h a t a p a r t y , who c l a i m s t o
have been d e c e i v e d t o h i s p r e j u d i c e , h a s i n v e s -
t i g a t e d f o r h i m s e l f , o r t h a t t h e means were a t
hand t o a s c e r t a i n t h e t r u t h ... of any r e p r e -
s e n t a t i o n s made t o him, h i s r e l i a n c e upon such
r e p r e s e n t a t i o n s made t o him, however f a l s e they
m a y -- a f f o r d s no ground of complaint,
have been,
( G r i n r o d v . Anglo-American Bond Co. 34 Mont. 1 6 9 ,
85 P. 891; Power & B r o t h e r s v. T u r n e r , 37 Mont.
521, 97 P. 950; 26 C . J . 1 1 4 9 . ) " (Emphasis added.)
A p p e l l a n t s made a n i n d e p e n d e n t i n v e s t i g a t i o n i n t o t h e
p o o l s i t u a t i o n , and t h e y are b a r r e d from now c l a i m i n g t h e
p u r c h a s e was made i n r e l i a n c e on r e s p o n d e n t s ' m i s r e p r e s e n t a -
tions. Lowe v. Root ( 1 9 7 5 ) , 166 Mont. 1 5 0 , 1 5 6 , 531 P.2d
An a l t e r n a t i v e ground f o r t h i s h o l d i n g i s t h e g e n e r a l
r u l e as s t a t e d i n 37 Am.Jur.2d Fraud and D e c e i t 8394 a t 534-
" A s a g e n e r a l r u l e , where a c o n t r a c t i s wholly
e x e c u t o r y , n e i t h e r p a r t y h a v i n g performed any
p a r t of i t , i f o n e p a r t y a s c e r t a i n s t h a t t h e
o t h e r h a s been g u i l t y of f r a u d i n t h e pro-
c u r i n g o r making of a c o n t r a c t o r w i t h r e f e r -
e n c e t o t h e s u b j e c t m a t t e r t h e r e o f , h e may
r e p u d i a t e t h e c o n t r a c t , s i n c e it i s i n no way
b i n d i n g upon him, and i n such c i r c u m s t a n c e s
t h e d e f r a u d e d p a r t y may n o t remain s i l e n t a s
t o t h e f r a u d and p e r f o r m t h e c o n t r a c t and t h e n
c l a i m damages f o r - t h e f r a u d . - - v e r y gen-
It i s
Y----o n e who d i s c o v e r s t h a t f r a u d
era11 h e l d t h a t
h a s been p r a c t i c e d upon him w h i l e - t r a n s -
-- e m a i n s w h o l--u t o r y , - n e v e r t h e - the
action r ly exec but
less either executes or performs - - -
it on his
part or requires performance on - part of
-- - the
the other party, thereby waives the fraudand
cannot subsequently maintain an action for
damages therefor. " (~mphasisadded. )
Until appellants decided to close the sale on July 30,
performance under the contract was executory for both par-
ties. However, by July 26 appellants knew in no uncertain
terms that the Nobles and Howrys would not allow them to use
the pool. Additionally, Tom Mather had advised them that
the Nobles and Howrys would not let them use the pool and
offered them a country club membership. Yet appellants
decided to close the sale on July 30. Until that point
performance under the contract was executory for both par-
ties with the exception of the earnest money paid to make
the buy-sell agreement enforceable. On the date of July 30
appellants fully performed their obligation of payment of
the purchase price and demanded performance from respondents
Pappin, who in turn performed their obligation of conveyance.
Appellants' decision to go through with the purchase con-
stitutes a waiver of the alleged fraud and bars them from
now posing that fraud as a claim for relief.
Appellants' reliance on State ex rel. Dimler v. District
Court (1976), 170 Mont. 77, 550 P.2d 914, is misplaced. In
that case the defects in the purchased property were not
discovered until the day following the purchase. 170 Mont.
at 79, 550 P.2d at 918. In the instant action appellants
received numerous, consistent, and graphic indications that
there were problems with the use of the pool culminating
with the apparent acceptance of the realtor selling them the
house in the view that they would not be able to use the
pool after all. All of these indications were given before
closing the sale.
One futher point concerning appellants' contract and
fraud theories needs to be made. Appellants have not ac-
tually litigated the existence of this easement against the
other owners who are forbidding their use of the pool.
Neither are these parties joined in this action. As it
stands now, the current action is not the proper case to
decide whether in fact an easement does exist for the simple
reason that the owners of the purported servient estates
(lots 29 and 30) as indispensable parties are not repre-
sented in this action and cannot have a binding judgment
rendered against their possible interests or claims. Rule
19, M.R.Civ.P. Therefore, appellants have put the cart
before the horse: They are suing under their contract and
fraud theories for respondents' attempt to convey a non-
existent easement which has never been shown not to exist.
The final issue presented by appellants has to do with
the violation of the Real Estate License Act, section 66-
1924, et seq., R.C.M. 1947, by the various real estate
agents involved in this sale.
At the time of these incidents section 66-1937, R.C.M.
1947, provided that a broker or agent may have his license
suspended or revoked for:
" (9) Offering real property -- or
for sale
lease without the knowledge and consent of
the owner or his authorized agent or on any
terms other than those authorized & the
owner or his authorized agent." (Emphasis
added. )
Subsection (b) and (c) of section 66-1940 creates civil
penalties for violation of this Act. Under the statute
these penalties may be recovered only "by any person aggrieved",
subsection (b), or "[alny person sustaining damages", subsec-
tion (c), and see Denny v. Brissoneaud (1973), 161 Mont.
468, 474-75, 506 P.2d 77, 80. Clearly, appellants can
qualify under neither subsection. In the first place, as
discussed above, they have failed to establish the nonexis-
tence of the easement and, therefore, cannot be considered
aggrieved. Secondly, and more importantly, by closing the
transaction they have waived any claim for damages. There-
fore, even if, in fact, there was found to exist a technical
violation of the Real Estate License Act, the same arguments
that supported the District Court on the fraud and contract
issues would apply equally well and support the court on
this issue.
We agree that the Real Estate Licence Act should be
construed to lend maximum efficacy to the enforcement of the
fiduciary relationships involved in this profession. Carnell
v. Watson (1978), Mont . , 578 P.2d 308, 312, 35
St.Rep. 550, 555. This enforcement should not be taken
lightly. Yet, the heavy penalties allowed to be added to
common law damages would certainly envision that willful
misconduct be present as opposed to a natural or what may be
characterized as an "honest" mistake, regardless of the
argument that another course of conduct or the lack of some
negligence would have avoided the situation complained
about.
In this case, Tom Mather, the realtor apparently re-
sponsible for including the easement in the various listings,
had himself been a long-time member of the "swimming pool
association", serving as treasurer for the organization for
many years. When his neighbor, associate and friend Robert
Pappin's house came up for sale, he naturally hoped to
emphasize what he considered its strongest selling points,
which, to his personal knowledge, included a swimming pool
easement. T h e r e i s no e v i d e n c e t o s u g g e s t t h a t Mather
prepared t h e l i s t i n g with t h e i n t e n t i o n t o misrepresent t h e
house.
The t r i a l c o u r t concluded t h a t none of t h e r e a l e s t a t e
p e r s o n s were proved t o be c u l p a b l e of such a w i l l f u l m i s r e p r e -
s e n t a t i o n o r s h o u l d b e h e l d t o answer f u r t h e r under t h e R e a l
E s t a t e L i c e n s e Act. The r e c o r d viewed i n i t s e n t i r e t y
s u p p o r t s t h i s c o n c l u s i o n by t h e D i s t r i c t C o u r t .
The judgmen t of t h e D i s
W e Concur:
?&A$'Chief J u s t i c e
- - L/h-C(. 3L-4L- -
Justices