No, 12316 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

HUBERT G, DENNY and PATRICIA A. DENNY, 

husband and wife, 

Plaintiffs and Appellants, 

JACK L, BRISSONNEAU~), d/b /a ESTATE REALTY : 

TOM ADAMS , d/b/a REAL ESTATE EXCHANGE, and 

GLACIER GENERAL ASSURANCE COMPANY, 

Defendants and Respondents. 

Appeal from: District Court of the Fourth Judicial District, 

Honorable Jack L. Green, Judge presiding, 

Counsel of Record: 

For Appellants : 

Tipp, Hoven and Brault, Missoula, Montana. 

Vernon Hoven argued, Missoula, Montana, 

For Respondents: 

Garlington, Lohn and Robinson, Missoula, Montana. 

Robert E, Sheridan argued, Missoula, Montana. 

Boone, Karlberg and Haddon, Missoula, Montana. 

Thomas H. Boone argued, Missoula, Montana. 

Mulroney, Delaney and Dalby, Missoula, Montana. 

Filed : 

Submitted: November 29, 1972 

MAR 12 19E 
Mr. Justice Frank I, Haswell delivered the Opinion of the Court. 

In an action for damages based on fraudulent misrepresentation involving the sale of a residence, the district court of 

Missoula County, the Hon. Jack L, Green, district judge, directed 

a verdict in favor of defendants and judgment was entered thereon. 

From this judgment and subsequent order denying a new trial, 

plaintiffs appeal. 

Plaintiffs are Hubert G. Denny and Patricia A. Denny, his 

wife, who sold their residence in Missoula to Jack L. Brissonneaud, 

d/b/a Estate Realty, one of the defendants. Another defendant is 

Thomas Adams, d/b/a Real Estate Exchange, who was the real estate 

broker involved in the transaction. The third defendant is Glacier 

General Iasurance Company, which bonded Adams as a real estate 

broker. 

In late 1970, plaintiffs moved from Missoula to Minneapolis 

and listed their Missoula residence for sale with defendant Adams 

who had previously handled their purchase of that residence the 

year before, The total sale price as listed was $22,500, involving 

a cash payment of approximately $7,150 and assumption of a mortgage 

of about $15,350, The residence did not sell immediately so on 

January 1, 1971, the listing was extended for an additional sixty 

days. 

In the latter part of January, defendant Brissonneaud offered 

to exchange a promissory note he held for plaintiffs' equity in 

the residence. This offer was communicated by defendant Adams to 

plaintiffs in Minneapolis. After first refusing the offer, plaintiffs decided to negotiate and returned to Missoula. Plaintiff 

Hubert Denny talked to defendant Adams further, and rejected another offer by defendant Brissonneaud. Thereafter on February 19, 

plaintiff Hubert Denny, defendant Adams, and defendant Brissonneaud 

had a conference in the latter's office, At this point there is a 

conflict in the testimony concerning statements and representations 

made to plaintiff Hubert Denny during this conference. 
In any event, a written "Earnest Money Receipt and Agreement to Sell and Purchasef1 was executed on the same day by plaintiffs as sellers and defendant Brissonneaud as purchaser. This 

agreement fixed a total purchase price of $22,650 on the residence 

to be paid: $6,600 by assignment of defendant ~rissonneaud's interest in an installment promissory note on which Carl A. Malcolm 

and his wife were makers, which note was in escrow at the First 

State Bank in Missoula; $750 cash at closing covering defendant 

Adamsf real estate commission; and assumption of the outstanding 

mortgage on the residence of approximately $15,300. Subsequently, 

defendant Adams attended to completion of the various documents 

involved in the transaction including an assignment of the purchaser's interest in the escrow account and the deed. 

Plaintiffs subsequently received two monthly payments on 

the Malcolm note and escrow, one in March and one in April 1971, 

Since that time plaintiffs have received no payments whatever. 

On August 11, 1971, plaintiffs filed an action for damages 

based on fraudulent misrepresentations against defendants Brissonneaud, Adams, and Glacier General, The gravamen of their action 

was that defendant Brissonneaud made false representations to them 

that the maker of the note, Malcolm, was a prominent Missoula businessman who owned property in Missoula in excess of $250,000, and 

certain other statements relating to the collectibility and security 

for the note. Plaintiffs seek to hold defendant Adams liable on the 

basis that he should have made a more thorough investigation to 

fully inform plaintiffs what they were getting into, and conducted 

himself in violation of ~ontana's Real Estate License Act, specifically sections 66-1937 and 66-1940, R.C.M. 1947. 

Issue was joined and the case came on for trial by jury 

on April 24, 1972, in the district court of Missoula County before 

Judge Green. At the conclusion of plaintiffs1 case-in-chief, 

Judge Green granted defendantsf motions for a directed verdict and 

dismissal on the basis that no damages had been proven, Judgment 
was entered thereon and plaintiffs' motion for a new trial was 

denied. Plaintiffs now appeal from the judgment and denial of 

their motion for a new trial, 

The issue upon appeal is whether the directed verdict was 

correct. The underlying issue is whether plaintiffs proved any 

damages. 

Plaintiffs contend they proved damages in these particulars: 

(I) The loss of the $750 paid defendant Adams for a real estate 

commission; (2) the loss of their equity in their residence; (3) 

the loss of their right to seek recourse against defendant Brissonneaud; and (4) the loss of use of the moneys due under monthly 

installment payments under the note. Plaintiffs contend that they 

have been deprived of a present right with a possibility of future 

damages and therefore the question of damages should have been 

submitted to the jury. 

Actual fraud is a question of fact. Section 13-310, R.C.M. 

1947, The burden of proof is upon the party alleging it, here the 

plaintiffs. Reilly v. Maw, 146 Mont. 145, 405 P. 2d 440, Proof of 

damages is an essential element of an action for fraud, Lee v. 

stockmen's Nat. Bank, 63 Mont. 262, 207 P. 623, Where, as here, 

an action for fraud is bottomed on false representations, this 

Court in Holland Furnace Co. v. Rounds, 139 Mont. 75, 80, 360 P.2d 

412, has previously expressed this requirement in this language: 

I I Damage, injury, ar prejudice from reliance on 

fraudulent representation is a necessary element 

of fraud whether fraud is being advanced as a 

ground for recovery or defense. I 1 

Generally speaking, the injury or damage which the plaintiff 

must prove must be something more than contingent damage which may 

or may not occur, 37 C.J.S, Fraud 5 41(f), p. 294. Plaintiff may 

recover when he shows that he has sustained some pecuniary damage 

or injury by reason of having been put in a position worse than he 

no 

could have occupied if there had beenlfraud, but he cannot recover 

where he does not show that he has sustained such damage or injury. 

37 C.J.S. Fraud 5 41(a), p, 290, Plaintiffs claim to have been 
placed in a worse position by the loss of the equity in their 

house in exchange for an assignment of a note. But is this not 

exactly what plaintiffs bargained for? The buy and sell agreement 

of February 19, 1971, specifically setting forth these terms of 

exhange was signed by plaintiffs. 

Plaintiffs contend the damages are not the balance of the 

note, the value of the note, nor the insolvency of the makers, but 

the loss of equity they sustained because of the fraudulent transaction. Plaintiffs, however, do not seek rescission of the contract. 

Rather, they claim the amount of $5,468, which was essentially 

plaintiffs' equity in the property at the time of the sale, plus 

defendant Adams' commission, Plaintiffs, in essence, argue they 

received nothing of value in exchange for their equity. The 

fallacy in this argument lies in the erroneous premise upon which 

it is predicated. There is evidence to the effect that shortly .-.A 

?-+ aftrr the contract was consummated no payments where 'bade by the 

makers of the note. But it does not follow that the assigned 

escrow account which they acquired at the time of the transaction 

was valueless. See: Kaufman v. Mellon National Bank and Trust 

Company, 366 F,2d 326, 330 (3d Cir,1966). 

In an action based upon fraud the defrauded party's measure 

of damages is the difference between the actual value of the 

property at the date of the sale and the contract price, Healy v. 

Ginoff, 69 Mont, 116, 123, 220 P. 539. When the parties signed 

the buy and sell agreement of February 19, 1971, plaintiffs acquired the assignment of the proceeds of an escrow account. This 

assignment had an ascertainable value equal to the value of the 

note contained within the escrow account. There is no testimony 

in the record to indicate that at the time of the transaction the 

note was worth less than its face value. 

Plaintiffs solely relied on their claim to the amount of 

the equity they transferred in exchange. There is simply no evidence to support their claim that at the time of the transaction 

they exchanged something for nothing, i.e, their equity and the 
sales commission valued at $5,468 for the proceeds of a valueless 

note. Thus no damages were proven simply because there is no 

evidence that the proceeds of the note were valueless. Judge 

Green was correct in stating "that in as much as damages have 

not been shown in any amount---a possibility of damages perhaps, 

but no damages". Accordingly, the directed verdict in favor of 

defendant Brissonneaud was correct. 

Directing our attention to plaintiffs' claim against 

defendant Adams, we note that he is a real estate broker licensed 

under the laws of the state of Montana. As he was the real estate 

broker involved in the sale from plaintiffs to defendant Brissonneaud, the basis of this action filed by plaintiffs against Adams 

and the issue before the Court relating to defendant Adams is 

covered by provisions of the Real Estate License Act, sections 

66-1937 and 66-1940, R.C,M, 1947. 

In seeking a basis for recovery plaintiffs rely upon section 

66-1940, R.C.M. 1947, which provides in pertinent part: 

"(b) In case any person in a civil action is found 

guilty of having received any money, or the equivalent 

thereof, as a fee, commission, compensation, or profit 

by or in consequence of a violation of any provision 

of this act, he shall in addition be liable to a 

penalty of not less than the amount of the sum of money 

so received and not more than three times the sum so 

received, as may be determined by the court, which 

penalty may be recovered in any court of competent 

jurisdiction by any person aggrieved. 

"(c) Any person sustaining damages by failure of a 

real estate broker or real estate salesman to comply 

with the provisions of this act, shall have the right to 

commence an action in his own name against the real 

estate broker and his surety, or the real estate salesman and hisssurety, or both the broker and any salesman 

employed directly or indirectly by such broker and their 

respective sureties, for the recovery of any damages 

sustained as the result of any act specified in section 

66-1937 herein or as a result of the failure of the real 

estate broker or real estate salesman to comply with the 

provisions of this act. In all cases where suit is 

brought against the broker or the salesman, and his 

surety, the court shall, upon entering judgment for 

the plaintiff, allow as a part of the costs of suit a 

reasonable amount as attorney's fees. I I 

Whether or not plaintiffs have shown a violation of section 

66-1937, R.C.M. 1947, it is still necessary to prove damages flowing 
from such violation within the meaning of section 66-1940, R.C.M. 

1947, Plaintiffs contend that the only proof of damages that is 

required is proof that defendant Adams received a real estate 

commission for his services. Such is not the law. Section 

66-1940(c) permits a civil action by any "person sustaining damages" 

against a real estate broker who fails to comply with the provisions of the act. The mere fact that a commission has been 

received is not enough in itself to meet the requirements of 

proof of damages. It not only must be shown that the real estate 

broker violated some provisions of the act, but that plaintiffs 

suffered some damages thereby. To hold otherwise would be contrary to the intent of the statute which gives a remedy to one 

who has suffered some damage by virtue of certain actions of a real 

estate broker or salesman. Since no damages have been shown as 

a result of the transaction with Brissonneaud heretofore discussed, 

likewise no proof of damages has been shown against defendant 

Adams , 

Here, plaintiffs are still the holders or assignees of the 

escrow account for which they bargained. There is no proof that 

it was or is valueless. Plaintiffs made no attempt to contact 

the Malcolms for payment or contact Brissonneaud for information 

or assistance. In short, they did nothing but sue Brissonneaud 

and Adams without proof of the noncollectibility or worthlessness 

of the escrowed note. As yet they have not been damaged as the 

escrowed note may be fully collectible with interest, For these 

reasons, the district court properly granted defendants' motion 

for a directed verdict, 

The judgment of the district court is affirmed. 

Associate Justice 
Mr. Justice John Conway Harrison dissenting: 

I dissent. Qi&L-b*-& # 

ociate Justice