No. 91-600 IN THE SUPFU3ME COURT OF THE STATE OF MONTANA

JOHN R. MURRAY and JUDITH R. MURRAY, husband and wife, ERIK F. NEVA and LAURA L. NEVA, husband and wife, and C. GENE ENDRESEN and ARDYCE E. ENDRESEN, husband and wife, Plaintiffs and Appellants,

Defendants and Respondents.

APPEAL FROM: District Court of theThirteenthJudicial ~istrict, In and for the County of Stillwater, The Honorable Russell K. Fillner, Judgepresiding.

COUNSEL OF RECORD: For Appellants: Bruce E. Lee,Attorney 

### at Law, Billings,Montana For Respondents: Robert Edd 

### Lee, Crowley, Haughey, 

### Hanson, Toole & Dietrich,Billings, Montana

Submitted 

### on Briefs: April 23, 1992

Filed: Decided: September 29, 1992Justice William E. Hunt, Sr., delivered the opinion of the Court. This is an appeal from an order of the Thirteenth Judicial District Court, Stillwater County, ruling that appellants8 "equitableNeasement claim is barred by laches. We affirm. Appellants raise only the "equitable" easement question for this Court to consider,however we find the following issue raised by respondents to be dispositive. Is appellants' claim for an "equitable" easement through Tract 143 barred by laches? In 1972, respondents, Charles J. Heringer, Jr., Richard C. Hoefle,and Donald E. Dubeau formed a limited partnership known as the Countryman Creek Ranch (hereinafter "partnership"). Sometime in 1970,Heringer became aware of a 2025 acre ranch situated south of the Yellowstone River and a few miles west of Columbus whichwas being offered for sale. Heringer and Hoefle ultimately purchased the ranch with the intention of developing it for resale as recreational homesites. In 1972,thepartnership employedtheBud HansenAgency for an initial sales campaignduring that summer. Inthebeginning of the year, the layout, engineering, and legal work was well underway. Sales information packets were assembled and closingdocument forms

were printed. Throughout the early period from 1970 to 1972, several developments were considered. The final scheme called for the land to be subdivided into 141 residential tracts, with each tract containing at least 10 acres.The initial sales campaign began by June 1972. Dubeau, a general manager of the project, was also at that time a principal in the Bud Hansen Agency, a real estate broker operation out of Billings, Montana. Through DuBeau's activities for the partnership,Bud Hansen Sales'representatives negotiated and closed sales with tract buyers. A sales officewas opened in an existing ranch house on the partnership ranch land one-half mile from the Yellowstone River. Diagrammatic maps and aerial photographs were placed on the walls of the sales office and reduced for distributiontoprospective buyers to aid in locationof the tracts being offered for sale. The subdivision was subjected to certain use restrictions defined by the declaration of covenants and restrictions, which together with the certificate of survey plat, were filed with the Clerk and Recorder of Stillwater County on July 7, 1972. The recorded plat and covenants were expressly referenced in all contracts for sale and warranty deeds for all purchasers of tracts at the Countryman Creek Ranch development, including the appellants. One of the first saleswent to appellants C. Gene and Ardyce E. Endresen. On September 8, 1972, the Endresens received

awarranty deed conveyingTract 88. InMay 1973,appellantJohn

### R. Murray purchased Tract 62. In the late 1970s, the Countryman Creek Ranch Homeowners Association (hereinafter "association") was formed. This was a nonprofit corporation formed to carry out operational activities for all tract owners. Platted Tract 142was designated on themapsas "recreation area" land and was immediately deeded by the partnership to the association and held in common for the association. The recreational land was to be managed for use of all tract owners by the association as "common area" pursuant to the declaration of covenantsand restrictionsas soonas sufficient tractshad been sold to activate the association. Thepartnership retained ownership of adjacent "ranch landvplatted as Tract 143 along the river bottom, which the partnership continued to farm, and across which the association was granted an express right-of-way for traverse and for access along the bank of the Yellowstone River. The original declaration of covenants was amended on two occasions. The first amendment to the declaration of covenants concerned changes with respect to grazing and was signed by appellants onApril 9, 1979. The second amendment concerned a sale of some ranch buildings located on Tract 143. Apparently, this sale created some confusion between the association and the partnership because the land sold was originally intended to be a recreational complex for the subdivision. As a result, an agreementwas reached between thepartnership and the association. The land would be sold in exchange for it being bound by 

### the declaration of covenants and for some adjacent property to be deeded over to the association for recreational purposes. This second amendment was intended to clear up any confusionas towhat

was common area land and what was ranch land. Appellants John R.Murray and C. Gene Endresen signed the amended declaration of covenants on May 10, 1983. Appellants believed that they had acquired certain recreational rights on or over the ranch land of the partnership similar to those enjoyed in the vvcommon area." On November 14, 1980, they filed a complaint against the partnership with the Montana Realty Board. The Montana Realty Board cleared the partnership of any wrong doing. In 1988,thepartnership subdivided a river front "ranchettev1 from a portion of Tract 143 and sold it to Wayne Schile, a person who is not part of this action. Schile placed a fence around his

"ranchette" and limited tract owners to a 50-foot river bank easement described in the declaration of covenants. This sparked

a long-smoldering resentment of the appellantswho, since 1980,had arguedwith thepartnership overtheirunderstanding concerning the ranch land. In 1989, appellants filed their claim in District Court. The

casewas originally scheduled as a jury trial. Prior to trial, the District Courtbifurcated the cause and set thematter for hearing before the court, without a jury, on what were perceived to be equitable issues. Appellants Nevasv claim was severed from the otherappellants because theNevashad notpurchasedtheirproperty directly from respondents. On May 2, 1991, the District Court entered its findings of fact and conclusions of law, finding that appellants did not have

an vvequitablevl easement for common use and enjoyment of the landsin question. The courtheld that no implied covenantof good faith and fair dealing existed, and with regard to a contract claim for recreational improvements, the court awarded appellantsthe return of tenpercent of theirpurchase price of their lots. Appellantsv appeal is limited to the easement question. The only question we need to discuss is whether appellantsv claim for an "equitable" easement through Tract 143 is barred by the equitable doctrine of laches. Respondents contend that by at least 1980 there was not an easement of any nature or any other intangible undefined rights over partnership ranch land when the partnership changed its ownership maps to preclude any implication that the partnership ranch land was to be included as recreation or common area, and therefore, the doctrine of laches applies. We have previously stated that: Lachesexistswhere there hasbeen anunexplainabledelay of such duration or character as to render the enforcement of an asserted right inequitable, and is appropriate when a party is actually or presumptively aware of his rights but fails to act. Larson v. Undem (1990), 246 Mont. 336, 340, 805 P.2d 1318, 1321. The appropriate time to apply laches to a certain set of facts

can be evaluated by an analogy to the equivalent statute of limitations: Under ordinary circumstances,a suit in equity will not be stayed for laches before, and will be stayed after, the time fixed by the analogous statute, but if unusual conditions or extraordinary circumstances make it inequitable to allow the prosecution of a suit after a briefer, or to forbid its maintenance after a longer, period than that fixed by the analogous statute, a courtof equity will not be bound by the statute, but will determine the extraordinary case in accordancewith the equities which condition it. When a suit is brought within the time fixed by the analogous statute, the burden is on the defendant to show,either from the face of the complaint or by his answer, that extraordinary circumstancesexist which require the application of the doctrine of laches. On the other hand,when the suit is brought after the statutory timehas elapsed, the burden is on the complainant to aver and prove circumstances 

### making it inequitable to apply laches to his case. Brabender v. Kit Manufacturing Co. (1977),174Mont. 63, 68-69, 568 P.2d 547, 550 (quoting Shell v. Strong (10thCir. 1945), 151 F.2d

Inthis instance,appellants stipulatedthat theyhad knownof their rights prior to this action but did not enforce them. In 1980, the partnership changed its ownership maps to preclude any implication that the partnership ranch land was to be included as recreation or common area. The maps clearly distinguish between Tract 142 (common area) retained by the association and Tract 143

(ranch land) retained by thepartnership. 

### Itwas the recording of the common area deed to the association and the allocationof farm lease proceeds between the association 

### and the partnership,based upon their respective ownerships, aswell as the change in themaps to show the distinction, which gave rise to the 1980 complaint with the Montana Board of Realty. These actions placed the appellants onnotice since 1980 that there was not an easement of any nature or any other intangible undefined rights over partnership lands. Appellants admittedly knew 

### of their rights for nine years and failed to exercise them. Without determining that an wequitableweasement exists, we holdthat appellants' claim for an "equitable" easement 

### is barred by laches. We affirm the District Court.



### We concur:

Chief Justice

Chief Justice J. A. Turnage, specially concurring: I concur with the result in this opinion. I would like to make it clear that the Court has not indicated that there is such a legal theory as "equitable easement." Such a theory does not exist in Montana law and certainly should not be considered as possibly existing because of any statements in this opinion.September29, 1992 CERTIFICATEOFSERVICE Iherebycertifythat thefollowingorderwas sentbyUnited Statesmail,prepaid, to the followingnamed:

Bruce

### E.Lee AttorneyatLaw P.O.Box 1222 Billings,MT 59103 RobertEddLee Crowley,Haughey,Hanson,Toole&Dietrich P.O.Box2529 Billings,MT 59103-2529 

### EDSMITH CLERKOFTHESUPREMECOURT STATEOFMONTANA