No. 82-257 IN THE SUPREME COURT OF THE STATE OF MONTANA 1983

JOHN R. MOBLEY, DELORES W. MOBLEX, and MOBLEY LAND, INC., a 

### corporation, Plaintiff and Appellant,

NEWMAN R. HALL, MARJORIE A. HALL, EASTERN BROKERAGE SERVICE, AL "BUCK" MURI and ED KIMBALL, Defendantsand Respondenis.

Appeal from: District Court of the Sixteenth Judicial District, 

### In and 

### for the County 

### of Custer Honorable A. B. Martin, Judge presiding. Counsel of Record: For Appellant: Gene Huntley, Baker, Montana For Respondents: Lucas and Monaghan, Miles City, Montana Thomas Monaghan, Miles City, Montana

Submitted 

### on briefs: November 5, 1982 Decided: January 20, 1983 Filed: 

## JAN 

## 2

# o1983Mr. Justice John C. Sheehy delivered the Opinion 

### of the Court.

This is an appeal from an order of the District Court of the Sixteenth Judicial District, Custer County, granting defendants' motion for sunranary judgment on the ground that plaintiffs' claim was barred by the statute of limitations. We affirm the order of the District Court and remand the case for further consideration. On Novemkr 3, 1975, defendants, Newman and Marjorie Hall, entered into a listing agreement with defendants Eastern Brokerage Service (Eastern) and FA Kimball, Eastern's agent. The Halls told Kimba.11 that the cattle ranch they wished to sell included approximately 470 acres of winter wheat and 

### smr fallowed cropland, 700 acres of intemdiate wheat grass and 360 acres of diked alfalfawith a total of 400 acres of developed dikes. In his deposition 

### Mr. Hall stated that these figures

were based on cropyield and information he received fromhis sellerwhen he purchased the land in 1956. Based on these representations, Eastern printed and distributed a brochure that detailed the crop acreage. Mr. Hall told both Mr. Mobley, plaintiff, and Eastern that the figures

### were approximate but thebrochure did not indicate that 

### theywere. Mr. Wbley contacted Eastern and was advised by defendant 

### Al Muri, Eastern's agent, that 

### the Hall property 

### was for sale. Hall received a brochure and requested officialnaps of theproperty. He did not receive complete maps of the property at the time of the sale because no such maps existed. Halls left partial maps of the alfalfa crop only, i.n the residence sold to the Mobleys. These maps shmed that 

### Mr. Hall had miscalculated the alfalfa crop and had overstated the crop acreage by at least 115.6 acres. 

### Mr. Hall testified that these maps 

### were delivered to Mr. Mobley before the sale. On March 29, 1976, the Mnbleys signed a contract for deed for the purchase of 

### the ranch lands. The contract provided that there 

### were"4,179.19 acres, more or less," but did not expressly set forth +heexact acreage for each type of land. 

### Mr. Mobley began planting grain inApril of 1976. Atthis tinehis drill acreage measuremnt device did not correspond with the acreage shown on Eastern's brochure but 

### Mr. Hall assured him that the acreage specified 

### was correct. In the fall of 1976, 

### Mr. Mobley sumner fallowed, this time he used a borrmed drill. Again the drillmasur~ment did not correspond with the acreage listed on thebrochure. In June of 1977, Mr. Mobley asked the Agriculture Soil Conservation Service (ASC) to take acreage masurements. On June 28, 1977, the ACS responded: "Enclosed find a copy of the fieldsyou drew 

### in yesterday. We only came up with 336.8 acres of wheat--164.5 acres of barley plus 405.4 acres of 

### summer fallow. Doyou think samething iswrong? It 

### is short of your estimate. Dot Nalley"

On August 29, 1977, 1W. Mobley paid the ASC $46.81 for acreage measurements. He received a masurement service record detailing the costs. The record indicated that there were 438.9 acres of wheat, 188.3

acres of barley and 393.0 acres of 

### summer fallow. With another check dated November 29, 1977, Mrs. Mobley paid the ASC $15.00 for additional fieldmeasuring. The ASC aerial survey was ccgnpleted November 1, 1977. This survey showed that there were 386.1 acres of 

### winter wheat and sunmer fallowed cropland not 470; 434.4 acres of intemiate wheat grass not 700 acres; 244 acres of diked alfalfa not 360 and 364.9 acres of developed dikes not 400 acres asrepresemted on Eastern's brochure. After the survey was completed Mr. Mobley called Eastern and discussed. the discrepancy with Ed Kimball. Kimball told Mr. Mobley 

### to wait until spring 

### when the snow was off the ground, and that if there

### were any shortages they could 

### be determined at that 

### time and that Hall would "make it right. " 

### In the spring of 1978, Kimball and Hall did go to the Mobley ranch. They looked at the ASC maps and inspected the property. InMay of 1978, Kimball and Hall met with 

### Mr. Mobley and refused to make any adjustments in the purchase price because they felt the land was sold in gross as a cattle ranch. On October 18, 1979, 

### the Mobleys filed a complaint in 

### the District Court seeking $100,000 in actual damages and $150,000 in punitive damages for fraud based on the overstatemnt of cropland. On Julv 17, 1981, the Mobleys suhnitted to the District Court a mtion for partial surmnary judgment on the issue of liability against the Halls. On 

### March 31, 

### 1982, the defendants moved for sumnary judgment claiming that the Mobleys' action was barred by the two year statute of limitations for actionsbased on fraud. Section 27-2-203,MCA, 

### provides: "Actions for relief on ground of fraud ormistake. 

### The period prescribed for the commencement of an action for relief on the ground of fraud or mistake iswithin 2

### years, the cause of action 

### in such case not tobe deemed to have accrued until the discoveryby the aggrievedparty of the facts constituting the fraud or mistake.

### " Mobleys contend that 

### they fallwithin the discovery exception and that the alleged fraudwas not discoveredby 

### themuntil the surveywas completed onNovember 1, 1977,within twoYears of the filing of the action. The defendants'mtionwas argued orally and the District Court entered its memorandum and order granting defendants' motion onMay 24, 1982. The summary judgmentwas entered onMay 26, 1982. The clerk of court servednotice of entry 

### of judgment onMay 26, 

### 1982. TheMobleys served their motion fornew trial and affidavit in support of motion for new trial on June 9, 1982. TheMobleys did not notice their motion for

new txial at the tine itwas served but secured 

### an order from another

### District Court judge continuing the hearing. Mobleys' counsel filed notice of appeal on June 24, 1982. In itsmemorandum and order, the District Court outlined the circumstances pertaining to the Halls' suspicion, knowledge or discovery of acreage shortages. 1. Plaintiffs (Mobleys)discovered

### an acreage shortagewhen 

### they drilled the fields 

### in the springof 1976. 2. Plaintiffsdiscoveredor suspected shortage of intermediate wheat grass in 1976. 3. 

### Plaintiffs discussed with Hall in 1976 his concern about an 

### acreage shortage in 

### three fields comprisingmore than one-half of the acreage of cropland. 4. Plaintiffs found ASC maps in the ranchhouse shortly after takingpossession in 1976 showingacreage of cropland. 5. 

### In the springof 1977,plaintiff requested

### an acreage measurement whichwas furnishedandpaid forby theASC on or before August 29, 1977, showingan acreage shortage. Plaintiff 

### then requested measurement of intermediatewheat grass whichwas furnished onNovember 1, 1977. In response,Mobleys assert that circumstances nuhers 1 and 2 cannotbe calleddiscovery,within the meaning of the statute,because for at least one of themasuremnts,Mobley used aborrowed drill acre device and that

### Mr. Hall reassured

### Mr. Mobley that Hall's drill device had shm

### the fields as represented. Mobleys state that circumstance n&r 3 

### is not supportedby the record and is not determinative of whether discoveryhad been made; that it was Mr. 

### Mobley who contactedMr. 

### Hall and not the "plaintj.ffs;"thatMr. 

### Hall reassuredMr. 

### Mobley and allayed his fears and that the acreage shortage is nowhere near one-half but is 5

### percent-of the acres purchased or 18 percent of the improved acreage. With regard to circumstanceno. 4,Mobleys assert that the ASC maps were outdated, incomplete and unreliable rendering 

### themvirtuallyuseless incalculating the acreage of tillable cropland. Furthermore, with regard tociramtance no. 5, Mobleys argue that 

### in order for them todetermine where there was an acreage shortage, justifying an action against the defendants, it was necessary tohave allof the crop acreage measured. Finally, the court's order did not include Delores Mobley orMobley, Inc. and 

### istherefore invalid. Moblevs raise only one issue for review, whether they discovered facts sufficient toconstitute knowledge of fraud more 

### than two years prior tothe filingof the canplaint. Mobleys contend that discovery occurred November 1, 1977, when the ASC aerial survey

### was completed. The defendants contend thatdiscovery occurred sometime before October 18, 1977, two years prior tothe filing of the complaint. This Courthas held that: "Itisnot enough for theplaintiff merely to say thathe was ignorant of the facts atthe time of their occurrence, and has not come intoknowledge of them untilwithin 

### twoyears. 'He ~mst shm thatthe actsof fraud were comnitted under such circumstances thathe would not be presumd to have knowledge of 

### them, it being the rule that ifhe has "notice or information of circumstances which would put him on inquiry which if followed would lead toknowledge, orthat the factswere presqtivelywithin hisknowledge, he willbe deemed tohave had actual knowledge of the facts."' Davis v. Hibernia S. & Society, 21Cal. App. -- 

### --- 444, 132 Pac. 462; Lady Washington C. Co. v. Wood, 113Cal. 482, 45 Pac. 809; Truett v~hderdon~k 120 Cal. 581, 53 Pac. 26.)" 

## erri is v. OIMeara (1924), 71Mont. 1, 8, 227 P. 819, 822; Lasbv v. Burgess (1930)

## ,88 Writ. 49, 65-66, 289 P. lb28, 1033. On June 28, 1977, Mobley received a letter from the ASC office stating that the acreage was not ashe had thought. On August 29, 1977, Ylbley received the requested acremeasurmt showing a discrepancy. M~bleys do not deny the knowledge of such information but assert that they did not have knowledge of such a nature astoforeclose 

### them from pursuing thismatter by suit filedOctober 18, 1979.Flhile Mr. Mobley was diligent in his efforts toascertain the exact acreage, he had sufficient notice of information of ciramstancesthat put him on inquiry and thereforehad actual knowledge of 

### the facts. While mere suspicion may not constitute disco~~ery there is ample evidence inthe record to support the District Court's determination of discovery within themeaning of the statute. "The lawdoes not contemplate such discovery as would give positive knowledge of the fraud, but such discoverv aswould lead a prudent 

### man toinquiry or action. To hold 

### that discovery must amount toabsolute knowledge of the factof fraud would be torender the statutepractically inoperative, since such knowledge 

### is rarelyhad before the facts 

### are established by adjudication." 37 

### Am.Jur. -- Fraud & Deceit 

### S 410, at556. In Montana: "'Discovery' and 'knowledge' are not convertible 

### terms, and whether there has been a discovery of the facts constituting the fraud within themeaning of the statute is a question of law tobe determined from the factsproved." Kerrigan, 71Mont. 1, 8, 227 P. 819, 822; 

### Payv. Divers (1928), 81Jbnt. 552, 558, 264 P. 673; Lasby, 88 Monk. 49, 65, 289 P. 1028.

Therefore where the factsestablished point todiscovery asdefined under the statute, surnnary judgment is appropriate. The case isremanded and the DistrictCourt isordered todismiss the cause on the ground of fraud. The parties should not be precluded 

### framamending the complaint toinclude a cause of action forbreach of contract. Liability and the facts of the case arenot deemed proved by this opinion. The only issuedecided herein iswhether theMobleys are precluded from proceeding on the theory of fraud based on the expiration of the statute of 1-imitations.

' i Justice 

### U

WeConcur:Mr. Justice Frank B. Pbrrison, Jr., dissenting: I respectfully dissent. The complaint in this action was filed October 18, 1979. For plaintiff to be barred by the statute of limitations, discovery would have had to 

### occur more 

### than 

### two years prior to the date of filing. The 

### ASC aerial survey was completed November 1, 1977. This survey indicated an acreage shortage. After completion of the survey Mobley called todiscuss the discrepancy 

### withEd Khball who asked Mobley to wait until spring when the snow was off the ground. Kinhall stated that if there were 

### any shortages they could be determined at that time and that Hall would "make 

### it right". In my opinion there 

### is a jury question wj-th reference toboth date of discovery of the fraud and the question of whether Ximball's 

### statmt to Mohley created an estoppel. If plaintiff



### was induced torefrain from filingbased upon an assurance that any shortages would be taken care of, then defendant could well be estopped 

### from asserting the statuteof 1-imitationsas a bar. I would reverse the order of the District Court granting summary judgment and remand for trial..