NO. 80-414 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1981 

ROBERT V. WHITE and KAREN WHITE, 

Plaintiffs and Respondents, 

FRANK LOBDELL and KATHRYN LOBDELL and 

PONDEROSA REAL ESTATE, 

Defendants and Respondents, 

and 

FIDELITY REAL ESTATE, 

Defendant and Appellant. 

Appeal from: District Court of the Fourth Judicial District, 

In and for the County of Missoula 

Honorable Jack L. Green, Judge presiding 

Counsel of Record: 

For Appellant: 

Milodragovich, Dale and Dye, Missoula, Montana 

Michael J. Milodragovich argued, Missoula, Montana 

For Respondents: 

William R. Baldassin argued, (Lobdell), Missoula, Montana 

Datsopoulos, MacDonald & Lind, Missoula, Montana 

Christopher Swartley argued (White) Missoula, Montana 

Submitted: September 23, 1981 

Decided: ;i!f{ 5- Iq'gZ 

Filed: !I. rv 5 [-. I 9 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Fidelity Real Estate appeals from a judgment against it 

in the District Court, Fourth Judicial District, Missoula 

County, in favor of Roger V. White and Karen White, in the 

sum of $10,255.00 and costs. 

We affirm the judgment in favor of Frank and Kathryn 

Lobdell and reverse the remainder of the judgment and remand 

the case for a new trial. 

On December 19, 1978, Frank G. Lobdell entered into an 

exclusive listing agreement with Ponderosa Realty, a Missoula 

realtor, to sell his residence located on Lot 13A, Block 3, 

Hillside Homes Addition No. 1, Missoula County, Montana. In 

the listing agreement, the irregular four-sided lot was 

shown as having dimensions of 214.5 feet, 190.2 feet, 92.4 

feet and 130 feet. 

At the time, Ponderosa Realty was a participant in the 

Missoula Multiple Listing Service. That service sent out to 

the participating Missoula realtor offices a multiple listing 

document which showed Ponderosa Realty as the listing office, 

and repeated in a diagram the above dimensions for the 

Lobdell lot shown on the original Ponderosa listing. Fidelity 

Real Estate, also a Missoula realtor, received a copy of the 

multiple listing as a participant in the Missoula Multiple 

Listing Service. 

Robert White, a civil engineer with the United States 

Forest Service, came to Missoula on January 26, 1979, to 

look for a home. He and his wife Karen White were shown the 

Lobdell residence by Valerie Ann Demos of Fidelity Real 

Estate. The Whites personally examined the real property 

involved, and on January 29, entered into a buy-sell agreement 
through Fidelity Real Estate. They subsequently obtained a 

warranty deed from the Lobdells on March 13, 1979, conveying 

the property described as Lot 13A, Block 3, Hillside Homes 

No. 1, Missoula County, Montana. 

After the transaction was completed, the Whites learned 

through a Veterans Administration survey encroachment document 

that the actual dimensions of the lot which they had purchased 

were 170.52 feet by 122.73 feet by 84.95 feet by 80 feet. 

The latter dimensions contained 11,349 square feet whereas 

the dimensions shown in the listing agreement diagram 

contained 19,107 square feet. 

The Whites filed suit in Missoula County District Court 

against Frank Lobdell and Kathryn Lobdell as sellers of the 

real property, Robert Payne and James Payne, d/b/a Ponderosa 

Realty, and Fidelity Real Estate. The complaint charges the 

defendants with negligence, actual fraud and constructive 

fraud in connection with the sale of the house. 

The Lobdells, Robert and James Payne, and Ponderosa 

Realty filed an answer and cross-complaint, denying any 

liability to the Whites and cross-claiming against Fidelity Real 

Estate on the ground that Fidelity Real Estate was acting as 

agent of the Whites and failed in its duties as their agent 

in closing the real estate transaction. 

Fidelity Real Estate answered the Whites' complaint by 

general denial, answered the cross-claim by general denial 

and alleged that the damages of the Whites were the direct 

and proximate result of the errors and omissions of the 

Lobdells and Ponderosa Realty. 

A pretrial order was entered by the District Court on 

June 25, 1980. It lists the contentions of the Whites 

against the various defendants. The only defendants' contentions 
listed are those of Fidelity Real Estate to the effect that 

the Whites may not recover because of comparative negligence 

and that any damages that the Whites may have suffered are 

the result of the acts of the other defendants. 

On the morning that the case came on for jury trial, it 

was disclosed to the District Court that although defendants 

Robert Payne and James Payne had been sued "d/b/a Ponderosa 

Realty," it was nevertheless true that Ponderosa Realty 

was a corporate entity. No issue had been raised by any 

party prior thereto, by pleading or otherwise, that Robert 

Payne and James Payne were not proper parties doing business 

as Ponderosa Realty. The colloquy between Court and counsel 

connection with that development follows: 

"THE COURT: Do the Defendants Lobdells and Payne 

have any objection? 

"MR. MILODRAGOVICH: None, Your Honor. One question 

I have for purposes of clarity of the record, when 

the caption was originally established on this the 

Defendants were Robert and Jim Payne; I think since 

then it's been stipulated that Ponderosa Real 

Estate, which was the organization that they were 

working for, was the actual party in interest and 

that Paynes were taken out of it. I don't know 

what the status of that is as far as at the present 

time. I know we show it as Ponderosa Realty in the 

pretrial order. 

"MR. SWARTLEY: For the record, Your Honor, the 

complaint was originally drawn reflecting Ponderosa 

Realty as a partnership or sole proprietorship; we 

later learned it was a corporation, and I believe 

still has corporate existence. 

"MR. BALDASSIN: That is correct. 

"MR. SWARTLEY: And if that is the case, then the 

individual Defendants Robert and James Payne were 

-- as I am sure that the evidence will develop, 

were acting merely as either officers, agents, or 

employees of the corporation, and we would be 

willing to stipulate to that fact. 

"THE COURT: Robert Payne and James Payne will be 

stricken as parties Defendant. It will be Frank 

Lobdell and Kathryn Lobdell, Ponderosa Realty 

Company and Fidelity Real Estate? 

"MR. SWARTLEY: Correct. 
Based on the special verdict, the District Court entered 

judgment against Fidelity Real Estate. This defendant moved 

for a new trial and for remittitur of the damage award on 

the ground that it was not supported on the evidence. The 

court denied the motion for a new trial or remittitur and 

the appeal here ensued. 

Fidelity Real Estate raises these issues: 

1. The District Court erred in dismissing Ponderosa 

Realty on the basis of State ex rel. City of Havre v. District 

Court, which either does not apply to this case or should be 

overruled by this Court. 

2. It was error to find that Fidelity was an agent of 

the Whites. 

3. Fidelity acted as a subagent of Ponderosa Realty 

and therefore Ponderosa Realty is liable for the conduct of 

Fidelity. 

4. Liability for a defective legal description in 

multiple listing should be placed on the listing realtor and 

not upon the subagent, the selling realtor. 

5. The damage award is unsupported by the evidence. 

The most important issue on appeal is the propriety of 

the dismissal of Ponderosa Realty as a party defendant. 

As we have noted, the Whites named in their complaint 

the defendants, "Robert Payne and James Payne d/b/a Ponderosa 

Realty." There is nothing alleged in the complaint other 

than in the caption of the cause to show the type of legal 

entity that Ponderosa Realty is or was. From the caption, 

however, it might be assumed that Ponderosa Realty was 

a partnership or joint venture. 

When the remaining parties filed answers, they adopted 

the caption of the complaint naming the Paynes under the 

style of "d/b/a Ponderosa Realty." As such, they, including 
"THE COURT: Very well. " 

Following the noon recess, when counsel were in the 

District Court's chambers, the attorney for Ponderosa Realty 

brought the subject up again: 

"MR. BALDASSIN: I have two requests. First one 

is, at an earlier conference in chambers the 

Defendants, Robert Payne and James Payne, were 

dismissed as parties Defendant; in discussing the 

matter with them, they were a little unsure as to 

the legal implications of that, so I have asked 

counsel whether we could go on the record and 

formally stipulate that the Defendants, Robert 

Payne and James Payne, are hereafter dismissed or 

hereby dismissed with prejudice. 

"MR. MILODRAGOVICH: We have no objection. 

"MR. SWARTLEY: I will stipulate to that. 

"THE COURT: Very well, the names of Robert and 

James Payne will be dismissed with prejudice." 

At the close of the plaintiffs' case in the jury trial, 

counsel for Ponderosa Realty moved, and the District Court 

ordered, that Ponderosa Realty be dismissed as a party 

defendant on the basis of this Court's ruling in State ex 

rel. City of Havre v. ~istrict Court (1980), - Mont . - I 

The cause was thereafter submitted to the jury as 

between Roger and Karen White, as plaintiffs, and Frank 

Lobdell, Kathryn Lobdell and Fidelity Real Estate as defendants. 

The jury returned a special verdict in which it was 

determined that the Lobdells were not guilty of any fraud or 

negligence in connection with the sale to the Whites. The 

jury found that Fidelity Real Estate was guilty of fraud and 

negligence, and found Robert and Karen white's damages in 

the sum of $10,255.00. In attributing negligence, they 

found Fidelity Real Estate 40 percent negligent, and "other 

parties" 60 percent negligent. They also found that Fidelity 

Real Estate was the agent of the Whites. 
action might be subject to a motion for misjoinder, but 

Rule 21, M.R.Civ.P. provides that a misjoinder of the parties 

is not a ground for dismissal and that parties may be dropped 

or added by order of the court on motion of any party or of 

its own initiative at any stage of the action and on such 

terms as are just. The court in this case simply added a 

party, the corporation, and dropped a party, the alleged 

copartnership. In addition, under the state of the record 

here, at the time of the purported dismissal with prejudice 

by the District Court, the Paynes had earlier been eliminated 

from the cause as party defendants by an order of the court. 

Therefore, those parties were not before the court for a 

dismissal with prejudice. 

In view of the state of the record, and the circumstances 

under which Ponderosa Realty was substituted as a defendant 

corporate entity in this cause, it is not necessary for 

to review our decision in -- City of Havre, supra. The case is 

not applicable here. 

The order of the District Court dismissing Ponderosa 

Realty as a corporate entity must therefore be vacated, and 

the cause sent back for retrial between the Whites as plaintiffs 

and Fidelity Real Estate and Ponderosa Realty as defendants. 

As to the Lobdell defendants, a jury has already determined 

that they were not negligent or fraudulent in connection 

with the sale of the property to the Whites. Moreover, neither 

by appeal nor by cross-appeal does any party raise any issue 

as to the propriety of the judgment in favor of the Lobdell 

defendants. 

Since this cause must be retried, we discuss the remaining 

issues raised by the appellant only for the guidance of the 

District Court. 
Ponderosa Realty, cross-claimed against Fidelity Real Estate 

for any liability that might be found against them in the 

suit. In none of the responsive pleadings did the other 

defendants, including Ponderosa Realty, raise the status of 

Ponderosa Realty as a legal entity, either through answer or 

by special defense. The pretrial order of the District 

Court continued the caption adopted from the original complaint, 

showing Ponderosa Realty as the "d/b/aw defendant. In the 

4 defendants. contentions in the pretrial order, there is nothing 

as to the status of Ponderosa Realty. 

In State ex rel. City of Havre v. District Court (1980), 

- Mont . - , 609 P.2d 275, 37 St-Rep. 552, this Court 

sustained an order of the District Court granting summary 

judgment in favor of the City of Havre and Hill County upon 

the ground that since the plaintiff had earlier dismissed 

with prejudice his claim against an agent or employee of the 

city and county, the summary judgment was proper because the 

liability of the city and county could only be vicarious or 

derivative. It was on the authority of that holding that 

the District Court in the case at bar decided that the 

dismissal with prejudice of James Payne and Robert Payne, 

in effect, was a dismissal of Ponderosa Realty, since the 

corporation could only be liable through the actions of its 

employees or agents. 

We determine, however, that the -- City of Havre rationale 

was improperly applied in this case. What occurred here was 

not a substantive dismissal with prejudice of an agent or 

employee, but rather the substitution of a proper party 

before the court. The District Court simply struck the 

entity of a copartnership and inserted the entity of a 

corporation. If the corporation had not been added, the 
service. Under the instruments that are in evidence in this 

case, each of the realtor agencies were acting as agents for 

the sellers, independent of one another, except for the duty 

of dividing the commission if the property was sold by a 

realtor other than the original listing agency. 

Since the cause will be retried, there is no necessity 

to discuss the other issues raised by the appellant. 

Accordingly this cause is affirmed as to the judgment 

in favor of Frank Lobdell and Kathryn Lobdell; it is reversed 

and remanded for a new trial as to the defendants Fidelity 

Real Estate and Ponderosa Realty; and the order of the 

District Court dismissing Ponderosa Realty with prejudice is 

vacated. Costs of appeal shall be borne by Ponderosa Realty. 

We Concur: 

pie£ Justice 
We have no issue before us as to Fidelity's right of 

indemnity against Ponderosa Realty since such issue was not 

raised in the case below, but only upon appeal. Chadwick v. 

Giberson (1980), - Mont. - , 618 P.2d 1213, 1215, 37 

St.Rep. 1723, 1726. After remittitur, Fidelity may move to 

amend its pleadings with respect to indemnity against Ponderosa 

Realty, but that is a motion which will be addressed to the 

sound discretion of the District Court. Rule 15(b), M.R.Civ.P.; 

Reilly v. Maw (1965), 146 Mont. 145, 156, 405 P.2d 440, 

447. 

There should be no issue submitted to the jury as to 

whether one of the realtor agencies is an agent or subagent 

of the other. Under the listing agreement signed by Frank 

G. Lobdell, Ponderosa Realty was given an exclusive listing 

to sell the property, and in it Lobdell agreed that in the 

event that "[Ponderosa Realty] or any broker cooperating 

with [Ponderosa Realty] shall find a buyer . . . I hereby 

agree to pay you in cash for your services and commission 

equal in amount to 6% of said selling price." The listing 

agreement further authorized Ponderosa Realty to list the 

property with any multiple listing service at Ponderosa's 

expense and to accept the assistance and cooperation of 

other brokers. 

When the Whites signed the earnest money receipt and 

agreement to purchase, on January 29, 1979, they agreed in 

writing to purchase the property at the price stated and 

gave Fidelity Real Estate one day to secure the sellers' 

acceptance. The sellers accepted, and agreed to pay a 

commission to Fidelity of $4,085.00 for services rendered. 

The division of the realtor's fee was simply a matter of 

agreement between realtors utilizing the multiple listing 
Mr. Justice Frank B. Morrison, Jr., dissenting: 

I respectfully dissent from the majority opinion. 

Plaintiffs went to trial against Frank Lobdell, Kathryn 

Lobdell, Robert Payne, James Payne, Ponderosa Realty and 

Fidelity Real Estate. Ponderosa Realty was originally sued 

as a partnership as indicated by the colloquy set forth in 

the majority opinion. That business was subsequently discovered 

to be a corporate entity. During trial, Robert Payne and 

James Payne were dismissed with prejudice. The trial court 

thereafter dismissed their employer, Ponderosa Realty, on 

the basis that the liability of Ponderosa Realty was derivative; 

that a dismissal with prejudice in favor of Robert Payne and 

James Payne adjudicated liability in their favor and thereby 

adjudicated the liability of their employer, Ponderosa 

Realty. The trial court's decision was based upon State ex 

rel. City of Havre v. District Court (1980), Mont . I 

609 P.2d 275, 37 St.Rep. 552. 

The majority opinion attempts to distinguish this case 

from State -- ex rel. City - of Havre on the basis that in the 

case at bar, there actually was a substitution of parties 

rather than the dismissal of one defendant. The distinction 

is without a difference. This case is controlled by State 

-- ex rel. -- City of Havre wherein this Court said: 

"Therefore, a stipulation of dismissal with 

prejudice of a defendant is tantamount to a 

judgment on the merits; and accordingly, 

such a dismissal with prejudice is - res 

judicata as to every issue reasonably raised 

by the pleadings. Under the doctrine of 

respondeat superior, an employer defendant's 

liability is vicarious or derivative and does 

not arise until an employee acts negligently 

within the scope of his employment. A dismissal of a claim with prejudice of an employee 

is equivalent to a finding that the employee 

was not negligent. Under the doctrine of 

respondeat superior, such a dismissal of an 

employee operates to exonerate the employer. 

This Court will ---- look at the dismissal with - 

prejudice --- on its face, and will not look behind 

the words 'with prejudice. 111 - - 

- (Emphasis added.) 
This case cannot be reconciled with the holding set 

forth above. The trial bar is, as the result of this decision, 

being left with no guidelines for future action. In State 

-- ex rel. City of Havre, where the dismissed party was a 

government employee and thereby immune from execution under 

the tort claims law, the court fashioned a inflexible rule 

to defeat the plaintiff's claim. The court emphasized it 

would not look behind the words "with prejudice" to determine 

what facts gave rise to the dismissal. Had the court looked 

to those facts, it would have found: (1) the employee who 

was dismissed should not have been joined in the first place 

because he was immune from execution under the tort claims 

law, (2) no money was paid for the dismissal of the employee, 

and (3) it was the intent of all parties to the stipulation 

of dismissal with prejudice that the employee not be put 

through the expense and trauma of a trial when no recovery 

could be had against the employee. 

State ex g&. City of Havre, supra, has not been overruled 

and controls the outcome here. The District Court had no 

alternative but to dismiss Ponderosa Realty as a party 

defendant. 

If this Court had overruled State ex -- rel. City of - 

Havre, supra, thereby authorizing the continuation of a 

claim against Ponderosa Realty, the verdict in favor of this 

plaintiff could not be disturbed under the law. Only the 

plaintiff has any standing to claim prejudice from the 

dismissal of Ponderosa Realty. The theory by which Fidelity 

claims prejudice from such dismissal is that Fidelity thereby 

becomes responsible to pay the entire judgment. Of course, 

under well established legal principles, this does not 

provide a basis for Fidelity to raise the dismissal as 
error. 

Plaintiffs brought this action against these two real 

estate firms alleging them to be joint tort feasors. The 

pre-trial order states that the listing agent, Ponderosa 

Realty, was guilty of negligence in failing to investigate 

and determine that the lot size was not as represented. 

Likewise, plaintiffs contended that defendant Fidelity Real 

Estate was negligent in failing to make such an investigation 

prior to the time it sold the property. The liability of 

Ponderosa Realty does not depend upon the liability of 

Fidelity Real Estate, nor is the opposite true. The two 

defendants were being pursued as joint tort feasors. Their 

liability is joint and several. The plaintiffs could recover 

against either or both. Once the plaintiffs collected the 

judgment they would be able to satisfy that judgment against 

one or all of the defendants. 

In this case, plaintiffs were free to sue either Fidelity 

Real Estate or Ponderosa Realty or both. Plaintiffs were 

free to collect the judgment against either or both and 

satisfy that judgment against either or both. his is the 

very essence of joint and several liability. 

In returning the verdict in this case, the jury, in 

special interrogatories, found that Fidelity Real Estate was 

guilty of both negligence and fraud. The jury exonerated 

the owners of the lot, Frank and Kathryn ~obdell. 

The effect of this Court's decision is to say that 

Fidelity Real Estate, found by the jury to be guilty of 

negligence and constructive fraud is entitled to contribution 

from Ponderosa Realty, the absent defendant. The essence of 

the Court's holding is that Fidelity Real Estate should not 

have to bear the entire burden of this judgment, but should 
have the opportunity to have another defendant share in the 

load. 

The holding of this Court violates its previous decision 

in Consolidated Freightways v. Osier (1979) , Mont. 

-I - P. 2d , 36 St.Rep. 1810. In a case certified 

from Federal District Court, this Court held that, where the 

plaintiff elected to sue but one defendant, that defendant 

could not implead another potentially negligent defendant 

for purpose of seeking contribution in the plaintiff's case. 

Now this Court sees fit to vacate plaintiffs' judgment 

against one defendant on the basis that the defendant against 

whom judgment was rendered, is entitled to have another 

potentially liable defendant made a party to the action. 

The result is to force the plaintiffs to try their case 

again although no trial error inured to plaintiffs' benefit. 

Surely this must be a first in the annals of American Jurisprudence. 

I would affirm.