No. 86-562 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

ROBERT H. BURKLAND and BETTY M. 

BURKLAND , Plaintiffs and Appellants, 

-vsELECTRONIC REALTY ASSOCIATES, INC., 

Defendants and Respondents. 

APPEAL FROM: District Court of the Thirteenth Judicial District, 

In and for the County of Yellowstone, 

The Honorable G. Todd Baugh, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Nye & Meyer; Joan Meyer Nye argued, Billings, Montana 

For Respondent: 

Crowley Law Firm; William 0. Bronson argued, Billings, 

Montana 

Submitted: June 171 1987 

Filed: AUG 1 7 1987 

Clerk 
Mr. Justice R. C. McDonough delivered the Opinion of the 

Court. 

Plaintiffs Robert and Betty Burkland appeal the August 

28, 1986, order of the Thirteenth Judicial District Court, 

County of Yellowstone, granting summary judgment in favor of 

defendant Electronic Realty Associates, Inc. We reverse. 

The basic issue in this case is whether the local 

franchisee, ERA Hannah, may be considered an ostensible agent 

of the franchisor, Electronic Realty Associates, Inc. (ERA, 

Inc.) Plaintiffs Robert and Betty Burkland purchased a home 

from defendants Scott and Carmen Mullen. At that time, Scott 

Mullen was an agent for ERA Hannah Real Estate in Billings, 

Montana. The sale of the Mullen home was transacted through 

ERA Hannah with Zane Johnson acting as the real estate 

broker. 

After moving in, Burklands became sick from drinking the 

tap water which was supplied by a well on the property. The 

heating system broke down and had to be supplemented with 

wood heat. Burklands filed suit against Scott and Carmen 

Mullen, Elwood, Randall and Thomas Hannah d/b/a/ ERA Hannah 

Real Estate; and ERA, Inc. The suit alleged fraud, breach of 

fiduciary duty, breach of the duty of good faith and fair 

dealing, realtor malpractice and breach of implied warranty. 

ERA, Inc. moved for summary judgment contending that 

there was no evidence of an agency relationship with ERA 

Hannah and that ERA, Inc. could not be held responsible for 

ERA Hannah's actions as a matter of law. The affidavit of 

ERA, Inc. President E.R. Gresham included the following: 1) 

ERA, Inc. has no ownership interest in ERA Hannah; 2) ERA, 

Inc. exercises no control over the management and operations 

of ERA Hannah; 3) ERA Hannah is independently owned and 

operated and must display its licensed name ERA "Hannah" in 
all advertising; 4) ERA, Inc. does not share in the profits 

or losses of ERA Hannah but merely charges fixed fees for use 

of the ERA trademark and national marketing services; 5) ERA, 

Inc. is not a licensed real estate broker in Montana and had 

nothing to do with the sale to Burklands. 

Burklands opposed summary judgment contending ERA 

Hannah's relationship with ERA, Inc. raised questions of 

material fact regarding the existence of actual or apparent 

agency. Burklands argued that ERA, Inc. requires ERA Hannah 

to prominently display the national logo on all advertising 

and materials and that they had relied on the national 

reputation of ERA, Inc. in purchasing the Mullen's home. 

Burklands did not notice the "independently owned and 

operated'' disclaimer in ERA Hannah's listing of the Mullen 

home nor was it explained to them. 

The District Court entered summary judgment in favor of 

ERA, Inc. The court found no actual or apparent agency 

between ERA Hannah and ERA, Inc. The court determined that 

Burklands did not produce evidence in support of their claim 

that they reasonably believed ERA Hannah was an agent of ERA, 

Inc . 

Burklands appeal and raise the following issue: Whether 

the District Court erred in finding no genuine issue of 

material fact as to the existence of ostensible agency 

between ERA Hannah and ERA, Inc.? 

Section 28-10-103, MCA, provides: 

An agency is either actual or ostensible. An 

agency is actual when the agent is really employed 

by the principal. An agency is ostensible when the 

principal intentionally or by want of ordinary care 

causes a third person to believe another to be his 

agent who is not really employed by him. 
Burklands contend they relied on ERA, Inc.'s reputation 

in deciding to purchase the Mullen home. Betty Burkland's 

affidavit states in part: 

3. I responded to Scott Mullen's ad on a 

house to rent. Mullen was an agent for ERA Hannah, 

and he persuaded us to buy their house right away. 

In making that investment we had faith in what the 

ERA Hannah representatives said, partly because we 

had seen TV advertising for ERA realties. We saw 

the big "ERA" name and ERA logo on ERA Hannah 

materials given to us. We trusted and relied on 

the reputation of that national name and company. 

4. No Defendant ever explained to me that 

there was a difference or separation between ERA 

Hannah and the ERA I had seen advertised on TV. 

5. I never noticed any small print in any 

advertisement stating that ERA was separate from 

ERA Hannah. No one ever called my attention to the 

print at any time. I was under the impression that 

ERA Hannah was responsible to or controlled by the 

ERA company I had seen advertised on TV. 

The membership agreement between ERA, Inc. and ERA 

Hannah contains goals for shared identity. ERA Hannah is 

required to prominently display the ERA, Inc. trademark, yet 

ERA Hannah must also hold itself out to be independently 

owned and operated. The District Court found that the 

disclaimer informed third parties of the franchise 

relationship, and that Burklands' failure to read the 

disclaimer made their reliance on ERA, Inc.'s reputation 

unreasonable. Specifically, the court stated, "This evidence 

may prove that plaintiffs relied on ERA'S alleged 'holding 

out', but it does not prove that their reliance was 

reasonable." 

Our question is whether the district judge properly 

decided that the conduct of the plaintiffs was unreasonable 

in their failure to read the disclaimer and in their reliance 

upon ERA. The statements of contention of the parties give 
rise that an issue of fact does exist. ERA, Inc. contends, 

however, that its disclaimer was sufficient and that case law 

in Montana and other jurisdictions clearly shows this issue 

was properly determined by summary judgment. 

In Elkins v. Husky Oil Company (1969), 153 Mont. 157, 

455 P.2d 329, a fire at a Husky stated in Laurel caused the 

death of a patron. Husky Oil Company was named as a 

defendant in the wrongful death action under a theory of 

ostensible agency. Plaintiff raised the issue of ostensible 

agency based on the Husky signs at the station and the 

language on the back of a Richfield Oil Company credit card 

stating, "This card will also be honored at service stations 

of the following companies . . . Husky Oil Co." This Court 

found these facts insufficient to raise a jury question as to 

ostensible agency. 153 Mont. 168, 455 P.2d 333. 

Burklands cite City of Delta Junction v. Mack Trucks, 

Inc. (Alaska 1983), 670 P.2d 1128, as persuasive authority. 

In City of Delta Junction, the plaintiff City purchased a 

customized fire truck from Alaska Mack, Inc., which was 

unsuitable for its intended use. In a suit for breach of 

contract, Mack Trucks, Inc., was named as a defendant under a 

theory of apparent agency. Alaska Mack was listed in various 

directories under the heading, "Mack Trucks" and its 

advertising made prominent use of the Mack logo. Alaska Mack 

displayed Mack truck brochures at its dealership, and did not 

post signs indicating its independent ownership. City 

officials testified that they believed they were dealing with 

Mack, Inc. and relied on Mack, Inc.'s reputation in entering 

the deal with Alaska Mack. The Alaska court held that the 

City's reliance on the Mack tradename raised a jury question 

as to apparent agency between Alaska Mack and Mack, Inc. 670 

P.2d at 1131. 
In the present case, the affidavits of the plaintiffs 

establish that they did not read any disclaimer by ERA, Inc., 

they relied on the national TV advertising they had seen of 

ERA, the reputation of ERA, Inc., and they believed they were 

dealing with ERA, Inc., at the time of purchasing the home. 

The affidavit of ERA, Inc., established without contradiction 

that ERA, Inc., had no control over the selling real estate 

agent, that it did not share in the profits of that agent, 

and that it was not a licensed real estate agent in Montana 

and actually had nothing to do with the sale to the 

plaintiffs. The listing of the home in question contained 

the "independently owned and operated" disclaimer. Are these 

facts sufficient to raise a genuine issue of material fact as 

to the existence of ostensible agency? Rule 56 (c) , 

M.R.Civ.P., in pertinent part provides that a summary 

judgment shall be rendered if "there is no genuine issue as 

to any material fact." We conclude that these facts do 

constitute a genuine issue of material fact. A key material 

fact is whether the disclaimer was sufficient to make the 

plaintiffs ' reliance on ERA, Inc. , unreasonable. It is an 

issue to be determined by a trier of fact and, under these 

circumstances, is not appropriate for determination by the 

District Court. Summary judgment was not proper. 

The District Court is reversed and this matter is 

remanded for proceedings consistent with this opinion.