No. 14585 

IN THE SUPREBE COURT OF THE STATE OF IWlTPANA 

1979 

RIcH?mD D. MSUIRE, 

Plaintiff and Appellant, 

-VSJESS C. ARMITAGE, 

Defendant and Respondent. 

Appeal froan: District Court of the Fifth Judicial District, 

Honorable W. W. Lessley, Judge presiding. 

Counsel of Record: 

For Appellant: 

Thnas C. Honzel argued, Helena, Fbntana 

For F&spndent: 

~rruw, Sedivy and Olson, Bozm, mntana 

Thomas A. Olson argued, Bozeman, Fbntana 

Suhnitted: June 12, 1979 

at?; . Decided: :4 .- .: - '979 

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Filed: 
Honorable James M. Salansky, District Judge, sitting in place 

of Mr. Justice Sheehy, delivered the Opinion of the Court. 

Plaintiff appeals from the findings of fact, conclusions 

of law and judgment entered by the District Court, Madison County, 

dismissing plaintiff's complaint and awarding defendant general 

damages, attorney fees, and costs on the grounds that the suit 

had been maliciously prosecuted. 

In August 1972, plaintiff, Richard McGuire, contacted 

defendant, Jess Armitage, for the purpose of discussing the sale 

of certain real property owned jointly by plaintiff, with his now 

deceased wife and Keith and Leah Rush. Defendant, a licensed real 

estate agent, orally agreed to list the property. Approximately 

one month later, defendant located a possible buyer, a neighboring landowner named Herbert Wellington. 

A buy-sell agreement was executed providing that the 

McGuires would maintain possession of the house on the land until 

April 15, 1973, if they needed a personal dwelling. The document 

also provided that a final agreement would follow. 

Plaintiff informed defendant that he wanted the final agreement to be drawn quickly because his wife was ill and he wanted 

money to build a new house. Defendant suggested that James H. 

Morrow, an attorney in Bozeman, Montana, prepare the final agreement. Plaintiff agreed, and a contract for deed was signed on 

October 31, 1972. 

Some months later, Wellington filed suit in District Court 

to evict plaintiff from the land because plaintiff had remained 

in the house in violation of the agreement. Wellington's attorney 

in the matter was James H. Morrow. (The record of the action, 

cause No. 6306, is appended to the District Court file.) In a 

judgment entered April 3, 1974, the District Court ordered plaintiff to turn over possession of the dwelling house and surrounding 

real property to Wellington. 
In March 1973, plaintiff filed a written complaint 

with the Montana Board of Real Estate alleging defendant had 

failed to disclose that James H. Morrow was representing 

Wellington at the time of the real estate transaction. Edmund 

F. Sheehy, a special investigator for the Department of Licensing, Montana Real Estate Board, conducted an investigation of 

the matter in Ennis, Montana, and the surrounding area. A report 

was then filed by Sheehy with the secretary of the ~oard of ~eal 

Estate, Matt Brown. Brown, in turn, gave the information to the 

Board and the complaint was dismissed. An index card in the 

Board's file was marked "no issue", and dated July 23, indicating 

that the case was closed. Plaintiff, however, was never notified 

of the disposition of the case. 

On June 14, 1977, plaintiff filed a complaint in ~istrict 

Court, Madison County, alleging that defendant had failed to disclose James H. Morrow's status as Wellington's attorney, thereby 

damaging plaintiff because certain terms had not been included in 

the final agreement. The cause was tried by the District Court, 

sitting without a jury, on May 11, 1978. On June 14, 1978, the 

District Court entered findings of fact and conclusions of law. 

The court found that defendant had disclosed to plaintiff that 

James H. Morrow was Wellington's attorney and dismissed the complaint. In response to defendant's counterclaim, the court found 

that plaintiff did not have probable cause to file the complaint 

and concluded that the suit had been maliciously prosecuted. It 

was determined that defendant had suffered injury to his reputation, 

health, business and credit. The District Court estimated that 

an award of $1,000 would compensate defendant for the damages incurred. Judgment was entered August 11, 1978, directing plaintiff 

to pay defendant's damages, attorney fees and costs. Plaintiff's 

notice of appeal was filed on September 1, 1978. 

Plaintiff frames the issues in the following manner: 
1. Did the District Court err in denying plaintiff's 

motion to dismiss defendant's counterclaim? 

2. Was there sufficient evidence presented to support 

finding of fact No. 10 that plaintiff's complaint with the Board 

of Real Estate had been dismissed? 

3. Was there sufficient evidence presented to support 

finding of fact No. 13 that in filing the complaint in this case, 

the plaintiff did not have probable cause? 

4. Was there sufficient evidence presented to conclude 

that defendant was entitled to have judgment against the plaintiff on his counterclaim? 

5. Did the District Court err in using cause No. 6306 

for concluding that plaintiff's complaint should be dismissed and 

that defendant should have judgment on the counterclaim? 

6. Did the District Court err in dismissing plaintiff's 

complaint? 

A malicious prosecution has been briefly defined as one 

that is begun in malice, without probable cause to believe that 

it can succeed, and that finally ends in failure. McIntosh v. 

City and County of Denver (1936), 98 Colo. 403, 55 P.2d 1337. 

The elements necessary to make out a prima facie case of 

malicious prosecution were noted by this Court 65 years ago in 

Stephens v. Conley (1914), 48 Mont. 352, 369, 138 P. 189, 193-194. 

A plaintiff is required to allege and prove: 

"(a) That a judicial proceeding was commenced and 

prosecuted against him; (b) that the defendant was 

responsible for instigating, prosecuting or continuing such proceeding; (c) that there was want of probable cause for defendant's act or acts; (d) that he 

was actuated by malice; (e) that the proceeding 

terminated favorably for plaintiff; and (f) that plaintiff suffered damage with the amount thereof," 

More recently, the same elements were set forth at 52 

Am Jur 2d Malicious Prosecution, 56, p. 190, wherein it was noted 

that the judicial proceeding complained of may be civil, criminal 
administrative or disciplinary in nature. 

In the case on appeal, the judicial proceeding which defendant alleged was maliciously prosecuted was before an administrative board--the Montana Board of Real Estate. An action for 

malicious prosecution may be founded upon the institution of a 

proceeding before an administrative agency. This rule is in no 

way dependent upon the type of judicial review which is allowed 

after decision of the administrative agency involved. Hardy v. 

Vial (1957), 48 Cal.2d 577, 311 P.2d 494; Restatement 2d, Torts, 

8680; Anno. 143 A.L.R. 157. 

Want of probable cause is the very gist of an action for 

malicious prosecution. Wilson v. Gehring (1968), 152 Mont. 221, 

448 P.2d 678; Noblett v. Bartsch (1903), 31 Wash. 24, 71 P. 551. 

Although malice may be inferred from want of probable cause, Wendel 

v. Metropolitan Life Ins. Co. (1928), 83 Mont. 252, 272 P. 245, 

want of probable cause cannot be inferred from malice. Cornner v. 

Hamilton (1922), 62 Mont. 239, 204 P. 489. 

The requirement that the judicial proceeding has been terminated favorably to the plaintiff necessarily implies that an action 

for malicious prosecution may not be asserted by way of a crosscomplaint or counterclaim in the original proceeding. Baker v. 

Littman (1956), 138 Cal.App.2d 510, 292 P.2d 595. This Court in 

Bollinger v. Jarrett (1965), 146 Mont. 355, 406 P.2d 834, relied 

on Baker in refusing to overturn a summary judgment against a 

counterclaim for malicious prosecution. However, the Court's opinion unnecessarily narrows the rule: 

"It is also contended that it was error for the 

court to render summary judgment against appellantbuyers' counterclaim. The basis of the counterclaim 

was that the sellers' action wrongfully injured the 

credit standing of the buyers. The only possible 

grounds for such a claim are libel and malicious 

prosecution, neither of which can be sustained here. 

There is no libel because any publication made in a 

judicial proceeding is privileged under R.C.M. 1947 

864-208. And malicious prosecution founded on a civil 
action is not the proper subject of a counterclaim 

since it requires proof of termination of the former 

proceeding in favor of the defendant therein. Baker 

v. Littman, 138 Cal.App.2d 510, 292 P.2d 595; 54 

C.J.S. Malicious Prosecution 854, p. 1021." (Emphasis added.) 146 Mont. at 360, 406 P.2d at 837. 

A counterclaim for malicious prosecution would not be 

premature if the claim is based on a previously terminated proceeding. 52 Am Jur 2d Malicious Prosecution, 814, p. 195. The 

Bollinger case incorrectly states that malicious prosecution may 

not be the subject of a counterclaim, without explaining that 

the rule applies only where the counterclaim is made during the 

original proceeding. 

If the above-mentioned rules are applied to the instant 

case, it appears that defendant's recovery for malicious prosecution should stand despite some irregularities in the District 

Court's findings of fact. In findings of fact No. 13, the court 

states that plaintiff did not have probable cause in filing "this" 

complaint. The pertinent complaint can only be the one filed with 

the Board of Real Estate and, in fact, the evidence in the record 

concerns only the previous complaint. The Board concluded that 

"no issue" existed and an index card was placed in its file noting 

such. The conclusion had been reached after a special investigation had taken place and a board meeting had been held. (Finding 

of fact No. 10 concerns these facts.) Therefore, although the 

District Court incorrectly refers to the complaint before it, the 

record and other findings clearly reveal that the proceeding instigated without probable cause (for purposes of the counterclaim) 

was the one filed with the Board of Real Estate. 

Since defendant's counterclaim was based on a proceeding 

that had terminated in his favor and the proceeding had been instigated without probable cause, the District Court properly inferred malice from the circumstances and upheld the counterclaim. 

"Reliance upon the advice of counsel, provided 

it is given in good faith and is based upon a 
full and fair statement of the facts by the 

client, may afford the latter a complete defense 

to an action for malicious prosecution. [Citing 

authority.] But it is an affirmative defense. 

It may be shown under a general denial in the 

answer [citing cases], but the burden of establishin~ it is uDon the defendant." Masterson v. 

Pig'n Whistle ~br~oration (1958) , 161 ~.~.2d 323, 

326 P.2d 918, 929. (Emphasis added.) 

Only on appeal does plaintiff raise the contention that he relied 

on the advice of his counsel. The defense was not presented 

nor proved to the District Court. 

Finding of fact No. 9 states: 

"That said WELLINGTON thereafter filed claim against 

the McGuires and Rushes in this Court in Cause No. 

6306, and this Court takes judicial notice of said 

action and all matters contained therein, and finds 

therefrom that the Plaintiff herein was making the 

same claims of failure to disclose that MORROW was 

the attorney for said WELLINGTON, and that this Court 

did, after trial, give judgment in favor of said 

WELLINGTON, and the Court further finds that in said 

Cause No. 6306 a dispute over distribution of money 

did exist between said McGuires and said Rushes. 

This Court did find in favor of said Rushes and that 

said matter has been settled." 

Plaintiff contends the District Court considered cause 

No. 6306 to be dispositive of the instant case. However, the 

finding of fact does not state that the complaint was dismissed 

because a similar claim was made in cause No. 6306. The District 

Court dismissed the complaint because it believed defendant's 

testimony that he informed plaintiff that James H. Morrow was 

Wellington's attorney. Finding of fact No. 7 formed the basis of 

the dismissal: 

"That at the time of the original Receipt and Agreement to Sell and Purchase, the Plaintiff herein 

told the Defendant, as a licensed realtor and an 

employee of First National Insurance Group of Ennis, 

Montana, that he wanted the final agreement to be 

drawn quickly, as his wife was ill and he wanted 

monies to build a new house; that the Defendant then 

informed Plaintiff that said J. H. Morrow was the 

attorney for said WELLINGTON, and that what he prepared would be acceptable to WELLINGTON; that the 

Defendant did then contact said MORROW to prepare the 

agreement." 

Defendant's testimony concerning his disclosure of James 
H. Morrow's status appears on page 89 of the transcript. "Where 

the evidence is conflicting, but substantial evidence appears in 

the record to support the judgment, the judgment will not be disturbed on appeal . . ." Jessen v. O'Daniel (1959), 136 Mont. 513, 

In summary, cause No. 6306 was not relied on by the District Court to conclude that defendant had disclosed James H. 

Morrow's status. Sufficient evidence exists in the record itself 

to support dismissal of the complaint. 

With respect to the issue of whether the administrative 

proceeding before the Board of Real Estate had terminated in defendant's favor, finding of fact No. 10 states as follows: 

"That the Plaintiff herein did cause a sworn complaint 

to be filed against Defendant before the Montana Real 

Estate Commission on March 13, 1973, with details as 

set forth in his Complaint filed in this cause, and as 

testified by him in this cause and cause No. 6306; 

that the Montana Real Estate Commission, through its 

Special Investigator, did make an investigation of the 

Company by inquiry of Mr. Rush and realtors and others 

in the area; that the records of the Montana Real Estate 

Commission reflect and that the investigation was closed 

July 23, 1973, and the Complaint was dismissed." 

Substantial evidence appears in the record to support 

that finding, and was therefore properly used by the District 

Court to conclude that defendant was being maliciously prosecuted 

by plaintiff. 

Af f irmed. 

\ ; 

F 3- * *-A.. ------,,--&-----I-------------*------ 

Hon. James. M. Salansky, District 

Judge, sitting in place of ~r.'~ustice 

~ohn 'c.Sheehy . 

We concur: 

&S>iiz ustices