No. 14946 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1980 

GREGORY J. WALSH, 

Plaintiff and Respondent, 

ELLINGSON AGENCY, a Montana 

Corporation, and FOUR SEASONS MOTOR INN, 

a Montana Corporation, 

Defendant and Appellant. 

Appeal from: District Court of the Eleventh Judicial District, 

Honorable Robert Holter, Judge presiding. 

Counsel of Record: 

For Appellant: 

Murray, Kaufman, Vidal and Gordon, Kalispell, Montanp 

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For Respondent: 

Warden, Christiansen and Johnson, Kalispell, Montana 

Filed: 

Submitted on briefs: April 25 1980 

~ecided: July 22, 1980 

Clerk 
Mr. Chief Justice Frank I. Haswell delivered the Opinion of the Court. 

Plaintiff-respondent Gregory Walsh brought this action 

for specific performance of a real estate sales contract in the 

Flathead County District Court. The court awarded specific performance and the two corporate defendants appeal. 

In late February or early March of 1977 Gregory Walsh 

contacted Chet Ellingson at the Ellingson Agency, an insurance and 

real estate corporation, concerning an advertised parcel of real 

estate. After finding the price prohibitive on this piece of 

property, he detailed his needs to Mr. Ellingson. Walsh was 

looking for a lot 150' by 300' or larger located near a grocery 

store in order to construct an apartment complex. Mr. Ellingson 

showed Walsh a lot that he thought might meet Walshls needs. The 

lot was on the southeast side of Kalispell near Roseaurs' and the 

Outlaw Inn. Ellingson told Walsh that he owned the property with 

I I some partners1' and that it was for sale for $30,000. 

On March 17, 1977, Walsh returned to the Ellingson Agency 

and told Chet Ellingson that he wished to buy the property for 

$29,000 cash. A buy-sell agreement was drafted and signed by 

both parties, and Greg Walsh gave Ellingson $1,000 in earnest 

money. A closing date of April 5, 1977 was set. 

Prior to March 17 the other owners of the property had 

not been disclosed. Walshls testimony reveals that on the day he 

first saw the property Chet Ellingson said, "I and my partners 

own the piece of property" and "that [$29,000] was the lowest we 

can go." Ellingson testified, "I had told him [Walsh] that I 

did have some partners and I just said I thought it would be 

okay." Mr. Ellingson also testified that he never told Gregory 

Walsh that he had authority to bind others and that he implied 

that corporate resolutions from the other people were necessary. 

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Shortly after March 17, 1977, Walsh received a title 

insurance policy which revealed that the property was owned by 

the Ellingson Agency and Four Seasons Motor Inn as tenants in 

common. This is the first time that Walsh learned who the other 

"partners" were. 

On April 5, 1977, Gregory Walsh went to the Ellingson 

Agency and told Mr. Ellingson that he was ready to write a check 

pursuant to the buy-sell agreement. Mr. Ellingson told Walsh 

that he could not get his partners to sell, and he offered to 

return the $1,000. Walsh would not accept the return of his earnest money. 

The Four Seasons Motor Inn is a corporation owned by 

three brothers, Con, Dan and Everett Lundgren. Con Lundgren, a 

vice-president and director of Four Seasons, testified that Chet 

Ellingson had no authority to sell the property and had never 

approached Four Seasons concerning a sale of the property. 

Chet Ellingson also testified that he had no authority to 

act for the Four Seasons but that he thought the sale would be 

acceptable to the Four Seasons. He also stated that he never 

told Walsh that he would have to deal or talk to his co-owner to 

make arrangements for the sale as far as the buy-sell agreement 

is concerned. Mr. Ellingson further testified that he is a 

licensed real estate broker and that he has been in business 

in the Kalispell area for twenty years. 

Testimony was also adduced concerning a prior land 

holding between Ellingson Agency and Four Seasons. According to 

the testimony, the two corporations had purchased another parcel 

of land which was sold in 1975. Chet Ellingson was approached by 

an individual concerning the sale of the first parcel. He 

testified that he talked it over with Con Lundgren and they 

decided on a price to offer the prospective buyer. The offer was 

accepted and the proceeds were equally divided between the 

Ellingson Agency and the Four Seasons. Ellingson testified that 

both real estate dealings were investments for profit between 

long-time friends. 
The subject property also has a building on it which is 

suitable for a residence. Chet Ellingson testified that he manages the property, "so to speak." He receives rent and keeps 

ledgers of the receipts which are used to pay taxes and 

maintenance. 

Plaintiff Gregory Walsh filed a complaint on November 18, 

1977, seeking the execution and delivery of a warranty deed to 

the subject property or in the alternative a quitclaim deed of 

Ellingson's interest in the property and actual damages as reimbursement for expenses occasioned as a result of the defendants' 

refusal to perform. Plaintiff alleged that Chet Ellingson represented that he was the agent of the other owners and was 

authorized to contract to sell the property. It was further 

alleged that Chet Ellingson had apparent authority to sell the 

property by reason of his status as the president of Ellingson 

Agency and as a licensed real estate broker. 

The trial before the District Court, sitting without a 

jury, was concluded on April 5, 1979. The court's findings and 

conclusions were entered on May 23, 1979. The court made the 

following relevant findings and conclusions: that Chet Ellingson 

made reference to his ownership of the property with his 

"partners" without identifying them; that plaintiff did not know 

nor could he infer that the "partners" referred to were "persons 

or entities extraneous to Ellingson Agency"; that the buy-sell 

agreement was drafted by Chet Ellingson and was duly executed and 

I1 appears clear and complete on its face and does not appear to 

require the signature of any additional party"; that plaintiff 

tendered the $28,000 balance due under the buy-sell agreement but 

Mr. Ellingson refused to tender a deed to the property; that the 

defendants "are engaged in a partnership involving the purchase of 

real estate on a parcel by parcel basis for later sale at a 

profit"; that Chet Ellingson acted as an agent of the partnership 

and had the "ostensible authority" of both defendants to contract 

to sell the subject property; that the buy-sell agreement is 

complete on its face and specifically enforceable as against 

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the interests of both defendants in the subject property. 

Judgment was entered against the defendants on May 30, 

1979. The defendants were ordered to specifically perform the 

terms of the buy-sell agreement by conveying their interests in 

the subject property by warranty deed. 

Two issues are presented on appeal: 

(1) Whether there was sufficient evidence to support a 

finding that defendants were a partnership as tenants in common 

owners of certain real property; and 

(2) Whether Chet Ellingson had authority to contract to 

sell the subject property on behalf of both defendants. 

If the District Court was correct in concluding that a 

partnership exists between the appellants, the second issue is 

answered by section 35-10-301(1), MCA, which provides: 

"Every partner is an agent of the partnership 

for the purpose of its business, and the act of 

every partner, including the execution in the 

partnership name of any instrument, for 

apparently carrying on in the usual way the 

business of the partnership of which he is a 

member binds the partnership unless the partner 

so acting has in fact no authority to act for 

the partnership in the particular matter and 

the person with whom he is dealing has 

knowledge of the fact that he has no such 

authority .'I 

Chet Ellingson represented that he and his partners 

owned the property, and the respondent had no knowledge that 

he did not have authority to sell the property. Thus, if a 

partnership exists, it is bound by the contract drafted and 

signed by Chet Ellingson on behalf of the Ellingson Agency. 

Consequently, we must address the sole issue of whether or not 

there was substantial evidence to support the trial court's 

determination of the existence of a partnership. 

It is well established that a partnership may be created 

for the purchase and sale of real estate for a profit. Harmon v. 

Martin (19471, 71 N.E.2d 74, 395 Ill. 595; 68 C.J.S. Partnership 

56. Pursuant to section 35-10-202(2), MCA, the holding of property as tenants in common is not in itself sufficient to 

establish the existence of a partnership, however, "it is well 
settled, that a partnership can acquire real estate by having the 

partners take title as cotenants." Robertson v. Robertson (19781, 

Mont. , 590 P.2d 113, 116, 35 St.Rep. 1889, 1892. In 

general a partnership requires an agreement between the parties 

which may be oral or written, express or implied by conduct. 

Gustafson v. Taber (19511, 125 Mont. 225, 234 P.2d 471; Robertson 

v. Robertson, supra. There need be no partnership name and a 

partnership will be found if persons engage in a venture for 

their mutual benefit or profit, Cutler v. Bowen (Utah, 19751, 543 

P.2d 1349, and if persons enter into an informal agreement to 

purchase and later sell land there need be no evidence that they 

discussed any terms of the agreement other than equal ownership 

of the property purchased for later sale. See Mathis v. Meyeres 

(Alaska 19781, 574 P.2d 447. 

The evidence reveals that the appellant corporations had 

previously bought and sold an unimproved lot. The property was 

held as a tenancy in common and the corporations made equal 

contributions and received equal distributions of the proceeds. 

The subject property was also owned by the appellants as tenants 

in common with each contributing equal shares of the purchase 

price. The purpose of both purchases was to sell the property 

for a profit, and Chet Ellingson represented that he and 

"partners" owned the subject property. The Ellingson Agency 

collected rent from the subject property and kept records of the 

amounts collected. The rent proceeds were used to pay property 

taxes and maintain the structure'. No rent distributions were made to 

either of the tenants in common. On the basis of this evidence 

the District Court concluded that the appellants "are engaged in 

a partnership involving the purchase of real estate on a parcel by parcel basis for later sale at a profit'' and that "Chet 

Ellingson acted as an agent of the partnership for the purpose of 

carrying on the partnership business." 

With regard to the standard of review, this Court has 

repeatedly stated it will not overturn findings of fact and 
conclusions of law if supported by substantial evidence and by 

the law. Evidence will be viewed in the light most favorable to 

the prevailing party. Rule 52, M.R.Civ.P.; Luppold v. Lewis 

(19771, 172 Mont. 280, 563 P.2d 538; Morgen & Oswood Construction 

Co. v. Big Sky of Montana, Inc. (19761, 171 Mont. 268, 557 P.2d 

1017. The judgment of the District Court is presumed to be 

correct and will be upheld unless clearly shown to be erroneous; 

the burden of such showing is upon the appellant. Kamp v. First 

National Bank and Trust Co. (19731, 161 Mont. 103, 504 P.2d 987. 

In viewing the evidence in the light most favorable to 

the respondent, we cannot find the judgment of the District Court 

to be clearly erroneous. There was substantial evidence to support a finding of the existence of a partnership by reason of the 

appellants' conduct with regard to the past and present real 

estate transactions. As a result of the existence of a partnerhip and section 35-10-301(1), MCA, the appellants are bound 

by the buy-sell agreement executed by the Ellingson Agency. 

The appellants strongly rely on this Court's finding of 

no partnership in Ivins v. Hardy (19471, 120 Mont. 35, 179 P.2d 

745. In Ivins the District Court found a partnership existed 

between tenant-in-common owners of real estate; however, this 

Court reversed, finding that the partnership was formed after the 

purchase of the interest in land. Were we faced with the same 

facts today, we would find sufficient evidence to support the 

District Court's finding in Ivins that the real estate was held as 

partnership property. We distinguished Ivins on the facts in 

Robertson v. Robertson, supra, however; today we are compelled to 

expressly overrule Ivins to the extent of the finding of no partnership in existence with respect to the purchase and ownership 

of real estate. 

The judgment of the District Court is affirmed. 

Chief Justice \ 
We concur: