Rase v. Castle Mountain Ranch, Inc

631 P.2d 680 (Mont. 1981)

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Nature of the Case

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Facts

Rase (P) and others, since 1922, built improved summer homes with the consent of the then property owner, Tavenner. Tavenner eventually sold the property to Ward Paper Box, and it was eventually transferred to Castle Mountain (D). The cabins were built around the lake over the course of many years by friends, neighbors, and employees of the ranch owners with their consent. This relationship was amicable for over 50 years. The cabins were inherited and even bought and sold without interference from the landowner. At the time of trial, the cabins had an assessed value of $300,000. On some occasions, various cabin owners attempted to purchase the underlying cabin sites, but the ranch owners advised them that the lake provided water for the ranch, and the ranch owners wanted to maintain control over the lake itself. The use of the lake for irrigation did not interfere with the owners’ use of their cabins. Some of the cabin owners entered into lease agreements with the ranch owners, but these agreements expired on their own terms. Starting in 1963, cabin owners signed documents that were called lease agreements. The lease agreements all had the same terms and were terminable on 30 days notice. Tavenner never served notice of termination on any cabin owner during the terms of the agreements. Provisions of the license/lease agreement were breached by the various cabin owners without objection from Rock Creek Irrigation, Inc. There was no contemplation by the parties of the sales of the ranches, but eventually, the ranches were sold. After Ward Paper Box Co. took over from Tavenner, he mailed a letter to all the cabin owners informing them of the sale and that they basically had no rights other than those arising from a licensing agreement which indicated that either party could terminate with a 30-day notice. After completion of the sale, D terminated all the leases and gave each owner 30 days. P sued for interlocutory and permanent injunctive relief and to quiet title in their cabins and to establish permanent easements thereto. The court found that there were no express assurances from Tavenner that the cabin owners had any right of possession beyond the permission stated in the license agreements. It is also clear that Tavenner gave the cabin owners implied assurance of a somewhat permanent tenure sufficient that they made substantial investments. It was also never the intention of Tavenner to use the license agreements for a wholesale termination of every cabin owner’s permission at one time. In fact, Tavenner refused to do that. It was the intent of Tavenner to have a degree of control such that he could terminate any undesirable possessors. The District Court found that the cabin owners had no right, title or interest in the property under adverse possession or by prescriptive rights because their occupancy was by Tavenner’s permission. The District Court concluded that the predecessor landowners created a constructive trust in the improvements placed on the property by the cabin owners and that the equitable lien could be satisfied by continued use for a reasonable period of time or by compensation and money for the value of the structures. The court allowed the cabin owners to occupy them until December 31, 1987, of gave D an option to purchase the structures and fixtures by May 1, 1980. D appealed.