Mobley v. Hall

No. 82-257

I N THE SUPREME COURT O F THE S T A T E O F MONTANA

1983

JOHN R . MOBLEY, DELORES W . MOBLEX,
a n d MOBLEY LAND, I N C . , a c o r p o r a t i o n ,

P l a i n t i f f and A p p e l l a n t ,

NEWMAN R. HALL, M A R J O R I E A. HALL,
EASTERN BROKERAGE S E R V I C E , AL "BUCK"
MURI and E D KIMBALL,

D e f e n d a n t s and R e s p o n d e n i s .

Appeal from: D i s t r i c t C o u r t of t h e S i x t e e n t h J u d i c i a l D i s t r i c t ,
I n and f o r t h e C o u n t y of C u s t e r
H o n o r a b l e A. B . M a r t i n , J u d g e p r e s i d i n g .

C o u n s e l of R e c o r d :

For A p p e l l a n t :

Gene Huntley, Baker, Montana

For R e s p o n d e n t s :

L u c a s and M o n a g h a n , M i l e s C i t y , M o n t a n a
Thomas Monaghan, M i l e s C i t y , Montana

S u b m i t t e d on b r i e f s : N o v e m b e r 5, 1 9 8 2
Decided: January 2 0 , 1 9 8 3

Filed: JAN 2 o 1983
M r . Justice John C. Sheehy delivered the Opinion of the Court.

This is an appeal from an order of the District Court of the

Sixteenth Judicial District, Custer County, granting defendants' motion

for sunranary judgment on the ground that p l a i n t i f f s ' claim was barred by

the statute of limitations. W affirm the order of the D i s t r i c t Court
e

and remand the case for further consideration.

On Novemkr 3, 1975, defendants, Newman and Marjorie Hall, entered

into a l i s t i n g agreement with defendants Eastern Brokerage Service

(Eastern) and F Kimball, Eastern's agent.
A The Halls told Kimba.11 that

the c a t t l e ranch they wished t o s e l l included approximately 470 acres of

winter wheat and s m r fallowed cropland, 700 acres of i n t e m d i a t e

wheat grass and 360 acres of diked a l f a l f a with a t o t a l of 400 acres of

developed dikes. In h i s deposition M r . Hall stated that these figures

were based on crop yield and information he received from h i s s e l l e r when

he purchased the land i n 1956.

Based on these representations, Eastern printed and distributed a

brochure t h a t detailed the crop acreage. M r . Hall told both M r . Mobley,

p l a i n t i f f , and Eastern t h a t the figures were approximate but the brochure

did not indicate t h a t they were.

M r . Wbley contacted Eastern and was advised by defendant Al Muri,

Eastern's agent, t h a t the Hall property w s for sale.
a Hall received a

brochure and requested o f f i c i a l naps of the property. H did not receive
e

complete maps of the property a t the time of the sale because no such

maps existed. Halls l e f t p a r t i a l maps of the a l f a l f a crop only, i.n the

residence sold t o the Mobleys. These maps shmed t h a t M r . Hall had

miscalculated the alfalfa crop and had overstated the crop acreage by a t

l e a s t 115.6 acres. M r . Hall t e s t i f i e d that these maps w e r e delivered t o
M r . Mobley before the sale.

On March 29, 1976, the Mnbleys signed a contract for deed for the

purchase of the ranch lands. The contract provided t h a t there w e r e
"4,179.19 acres, more or l e s s , " but did not expressly s e t forth +he exact

acreage for each type of land.

M r . Mobley began planting grain i n April of 1976. A t this t i n e his

d r i l l acreage measuremnt device did not correspond w i t h the acreage

shown on Eastern's brochure but M r . Hall assured him t h a t the acreage

specified w s correct.
a In the f a l l of 1976, M r . Mobley sumner fallowed,

t h i s time he used a borrmed d r i l l . Again the d r i l l masur~mentdid not

correspond with the acreage l i s t e d on the brochure.

In June of 1977, Mr. Mobley asked the Agriculture Soil Conservation

Service (ASC) t o take acreage masurements. On June 28, 1977, the A S
C

responded:

"Enclosed find a copy of the f i e l d s you drew i n
yesterday. W only came up with 336.8 acres of
e
wheat--164.5 acres of barley plus 405.4 acres of
s m e fallow. Do you think samething is wrong?
u mr
I t i s short of your estimate.

Dot Nalley"

On August 29, 1977, 1W. Mobley paid the ASC $46.81 for acreage

measurements. H e received a masurement service record detailing the

costs. The record indicated t h a t there were 438.9 acres of wheat, 188.3

acres of barley and 393.0 acres of s m e fallow.
u mr W i t h another check

dated November 29, 1977, Mrs. Mobley paid the ASC $15.00 for additional

f i e l d measuring.

The ASC a e r i a l survey was ccgnpleted November 1, 1977. This survey

showed t h a t there were 386.1 acres of w i n t e r wheat and sunmer fallowed

cropland not 470; 434.4 acres of i n t e m i a t e wheat grass not 700

acres; 244 acres of diked a l f a l f a not 360 and 364.9 acres of developed

dikes not 400 acres a s represemted on Eastern's brochure.

After the survey was completed M r . Mobley called Eastern and

discussed. the discrepancy w i t h Ed Kimball. Kimball told Mr. Mobley to

wait u n t i l spring when the snow was off the ground, and t h a t i f there
were any shortages they could be determined at that time and that Hall
would "make it right."
In the spring of 1978, Kimball and Hall did go to the Mobley
ranch. They looked at the ASC maps and inspected the property. In May
of 1978, Kimball and Hall met with Mr. Mobley and refused to make any
adjustments in the purchase price because they felt the land was sold in
gross as a cattle ranch.
On October 18, 1979, the Mobleys filed a complaint in the District
Court seeking $100,000 in actual damages and $150,000 in punitive
damages for fraud based on the overstatemnt of cropland. On Julv 17,
1981, the Mobleys suhnitted to the District Court a mtion for partial
surmnary judgment on the issue of liability against the Halls. On March
31, 1982, the defendants moved for sumnary judgment claiming that the

Mobleys' action was barred by the two year statute of limitations for
actions based on fraud.
Section 27-2-203, MCA, provides:
"Actions for relief on ground of fraud or mistake.
The period prescribed for the commencement of an action
for relief on the ground of fraud or mistake is within
2 years, the cause of action i such case not to be
n
deemed to have accrued until the discovery by the
aggrieved party of the facts constituting the fraud or
mistake. "
Mobleys contend that they fall within the discovery exception and
that the alleged fraud was not discovered by them until the survey was
completed on November 1, 1977, within two Years of the filing of the
action.
The defendants' mtion was argued orally and the District Court
entered its memorandum and order granting defendants' motion on May 24,
1982. The summary judgment was entered on May 26, 1982. The clerk of
court served notice of entry of judgment on May 26, 1982. The Mobleys
served their motion for new trial and affidavit in support of motion for
new trial on June 9, 1982. The Mobleys did not notice their motion for
new txial at the tine it was served but secured an order from another
District Court judge continuing the hearing. Mobleys' counsel filed
notice of appeal on June 24, 1982.
In its memorandum and order, the District Court outlined the
circumstances pertaining to the Halls' suspicion, knowledge or discovery
of acreage shortages.
1. Plaintiffs (Mobleys) discovered a acreage shortage when they
n
drilled the fields i the spring of 1976.
n
2 Plaintiffs discovered or suspected shortage of intermediate
.
wheat grass in 1976.
3. Plaintiffs discussed with Hall in 1976 his concern about an
acreage shortage in three fields comprising more than one-half of the
acreage of cropland.
4 Plaintiffs found ASC maps in the ranch house shortly after
.
taking possession in 1976 showing acreage of cropland.
5. In the spring of 1977, plaintiff requested an acreage
measurement which was furnished and paid for by the ASC on or before
August 29, 1977, showing an acreage shortage. Plaintiff then requested
measurement of intermediate wheat grass which was furnished on November
1, 1977.
In response, Mobleys assert that circumstances nuhers 1 and 2
cannot be called discovery, within the meaning of the statute, because
for at least one of the masuremnts, Mobley used a borrowed drill acre
device and that Mr. Hall reassured Mr. Mobley that Hall's drill device
had s h m the fields as represented. Mobleys state that circumstance
r
&
n 3 is not supported by the record and is not determinative of
whether discovery had been made; that it was M r . Mobley who contacted Mr.
Hall and not the "plaintj.ffs;" that Mr. Hall reassured Mr. Mobley and
allayed his fears and that the acreage shortage is nowhere near one-half
but is 5 percent- of the acres purchased or 18 percent of the improved
acreage. With regard to circumstance no. 4, Mobleys assert that the ASC
maps were outdated, incomplete and unreliable rendering them virtually
useless i n calculating the acreage of t i l l a b l e cropland. Furthermore,

with regard t o c i r a m t a n c e no. 5, Mobleys argue t h a t i order for them
n
t o determine where there was an acreage shortage, justifying an action

against the defendants, it was necessary t o have a l l of the crop acreage

measured.

Finally, the court's order did not include Delores Mobley o r Mobley,

Inc. and is therefore invalid.

Moblevs raise only one issue for review, whether they discovered

facts sufficient t o constitute knowledge of fraud more than two years

prior t o the f i l i n g of the canplaint.

Mobleys contend t h a t discovery occurred November 1, 1977, when the

ASC a e r i a l survey was completed. The defendants contend t h a t discovery

occurred sometime before October 18, 1977, two years prior t o the f i l i n g

of the complaint.

This C o u r t has held that:

" I t is not enough for the plaintiff merely t o say
t h a t he was ignorant of the facts a t the time of
t h e i r occurrence, and has not come into knowledge
of them u n t i l within two years. 'He ~ m s t h m s
t h a t the acts of fraud were comnitted under such
circumstances t h a t he would not be presumd t o
have knowledge of them, it being the rule that
i f he has "notice o r information of circumstances
which would put him on inquiry which i f followed
would lead t o knowledge, o r that the facts were
p r e s q t i v e l y within h i s knowledge, he w i l l be
deemed t o have had actual knowledge of the facts."'
Davis v. Hibernia - -&- Society, 2 1 Cal. App.
-- S.
444, 132 Pac. 462; Lady Washington C. Co. v. Wood,
113 Cal. 482, 45 Pac. 809; Truett v ~ h d e r d o n ~ k
120 C a l . 581, 53 Pac. 26.)" erri is v. OIMeara
(1924), 71Mont. 1, 8, 227 P. 819, 822; Lasbv v.
Burgess (1930), 88 Writ. 49, 65-66, 289 P. lb28,
1033.

On June 28, 1977, Mobley received a l e t t e r from the A C office
S
stating t h a t the acreage was not as he had thought. On August 29, 1977,

Ylbley received the requested acre m e a s u r m t showing a discrepancy.

M~bleysdo not deny the knowledge of such information but assert t h a t

they did not have knowledge of such a nature a s t o foreclose them from

pursuing t h i s matter by s u i t f i l e d October 18, 1979.
 Flhile M r . Mobley was d i l i g e n t in h i s e f f o r t s t o ascertain the exact

acreage, he had s u f f i c i e n t notice of information of ciramstances t h a t

put him on inquiry and therefore had actual knowledge of the f a c t s .

While mere suspicion may not constitute d i s c o ~ ~ e r y
there is ample

evidence i n the record t o support the D i s t r i c t Court's determination of

discovery within t h e meaning of the s t a t u t e .

"The l a w does not contemplate such discovery a s
would give positive knowledge of the fraud, but such
discoverv a s would lead a prudent man t o inquiry o r
action. To hold that discovery must amount t o absolute
knowledge of the f a c t of fraud would be t o render the
s t a t u t e practically inoperative, since such knowledge
is r a r e l y had before the f a c t s are established by
adjudication." 37 Am.Jur. -- Fraud & Deceit S 410, a t 556.

In Montana:

"'Discovery' and 'knowledge' are not convertible terms,
and whether there has been a discovery of the f a c t s
constituting t h e fraud within the meaning of the s t a t u t e
i s a question of law t o be determined from t h e f a c t s proved."
Kerrigan, 71 Mont. 1, 8, 227 P. 819, 822; Pay v. Divers
(1928), 81 Jbnt. 552, 558, 264 P. 673; Lasby, 88 Monk. 49,
65, 289 P. 1028.

Therefore where the f a c t s established point t o discovery a s defined under

the s t a t u t e , surnnary judgment is appropriate.

The case is remanded and the D i s t r i c t Court is ordered t o dismiss

the cause on the ground of fraud. The p a r t i e s should not be precluded

fram amending the complaint t o include a cause of action f o r breach of
contract. L i a b i l i t y and the f a c t s of the case a r e not deemed proved by

t h i s opinion. The only issue decided herein is whether the Mobleys a r e

precluded from proceeding on the theory of fraud based on t h e expiration

of the s t a t u t e of 1-imitations.

' i
Justice U

W Concur:
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M r . Justice Frank B. Pbrrison, Jr., dissenting:

I respectfully dissent.

The complaint in this action was f i l e d October 18, 1979. For

plaintiff t o be barred by the statute of limitations, discovery

would have had t o occur more than two years prior t o the date of

filing.

The ASC a e r i a l survey was completed November 1, 1977. This

survey indicated an acreage shortage. After completion of the

survey Mobley called t o discuss the discrepancy w i t h Ed K h b a l l who

asked Mobley t o wait u n t i l spring when the snow was off the

ground. Kinhall stated that i f there were any shortages they could

be determined a t t h a t time and that Hall would "make it right".

In m opinion there i s a jury question wj-th reference t o both
y

date of discovery of the fraud and the question of whether

Ximball's s t a t m t t o Mohley created an estoppel. I f plaintiff

w s induced t o refrain from f i l i n g based upon an assurance t h a t any
a

shortages would be taken care of, then defendant could well be

estopped from asserting the statute of 1-imitations as a bar.

I would reverse the order of the D i s t r i c t Court granting

summary judgment and remand for trial..