                              No. 82-428
               IN THE SUPREME COURT OF THE STATE OF MONTANA

                                  1984



JOAN A. DEIST,
               Plaintiff and Respondent,


PAUL D. WACHHOLZ JOHN R. DITTMAN
VAN KIRKE NELSON, and CONRAD NATIONAL
BANK ,
               Defendants and Appellants.




APPEAL FROM:   District Court of the Eleventh Judicial District,
               In and for the County of Flathead,
               The Honorable John S. Henson, Judge presiding.

COUNSEL OF RECORD:
      For Appellants:
               Garlington, Lohn & Robinson; Gary L. Graham
               argued and Sherman V. Lohn argued, Missoula,
               Montana
               Murphy, Robinson, Heckathorn & Phillips,
               Kalispell, Montana
               Murray, Kaufman, Vidal & Gordon, Kalispell,
               Montana
      For Respondent :
               Sharon Morrison argued, Helena, Xontana
               William Rossbach, Missoula, Montana



                              Submitted:    November 17, 1983
                                Decided:    February 22, 1984




                              Clerk
Honorable Henry Loble, District Judge, delivered the Opinion
of the Court.

            Defendants Wachholz, Dittman, and Nelson appeal from
the judgment of the District Court of the Eleventh Judicial
District, Flathead County.              Defendant Conrad National Bank
was not affected by the judgment and therefore is not a
party to this appeal.                For the reasons stated below, we
affirm the District Court judgment in part, reverse in part,
and     remand     for      further proceedings    to    be    conducted    in
accordance with this opinion.
            Joan Deist and her husband, Russell, owned a ranch
west of Kalispell, Montana.             During the course of operation,
Russell incurred a large debt on the ranch, represented by a
Farmers1 Home Administration mortgage and a demand note with
the Conrad National Bank of Kalispell.                 By the late 19701s,
the ranch had become an unprofitable enterprise.                      Russell
died        in   May   of    1978,    leaving   Joan    with     a   debt   of
approximately $200,000.
            Officers of the Conrad National Bank informed Joan
that something had to be done about the debt.                  Joan had been
a ranch wife for much of her life, and although she had been
appointed to fill her late husband's seat on the Flathead
County Commission, and had been elected to the position in
her own right in 1980, she had little, if any, experience in
real estate matters.            Eugene Gillette, president of the bank
and     a    family      friend, advised    Joan   that       she had   three
options: continue to operate the ranch, subdivide it, or
sell.        Gillette recommended a complete liquidation of her
interest in the property, recognizing that the ranch was not
turning a profit in its current condition, and that Joan
would not pursue subdivision.
         Paul Wachholz was vice-president for marketing at the
Bank.      According        to his       testimony at         trial, his      chief
responsibility consisted of matching people with business
opportunities, although he did counsel bank customers from
time to time.         Wachholz had toured the Deist ranch with
other bank officials after Russell's death when they were in
the process of deciding how to help Joan deal with                              the
outstanding debt.          Joan asked him to help her find a buyer,
and he agreed to do so.             There is nothing in the record to
suggest that he was authorized to negotiate a sale on Joan's
behalf, or that he acted in an advisory capacity similar to
the role played by Eugene Gillette.                   Apparently, any offers
to buy     made    their     way    to    Joan      through    Roy   Deming,     an
agricultural loan officer with the Conrad National Bank.
Deming    then passed        on    any    information about prospective
buyers to Joan.
         That the Deist ranch was for sale was obviously common
knowledge in the Kalispell community, as Joan was approached
by   prospective      buyers        or    individuals who            knew   about
prospective       buyers.         One    of   the    former was       Dr.     Loren
Vranish, a local physician and acquaintance of Joan Deist.
Joan     was   willing      to     negotiate with Vranish,              and    her
attorney, James Murphy of Kalispell, assisted her in drawing
up acceptable terms.          Vranish made an offer to purchase the
real property for $500,000 with a $50,000 down payment and
monthly     payments       of approximately $3800 reflecting an
interest       rate   of    nine-and-one-half            percent      (9-1/2%).
Vranish also wanted deed releases included in the contract,
to allow sale of 80 acre parcels after 1985.                    Although Joan
was     hoping       that    an   agreement       could    be   reached, the
negotiations eventually fell through.                     Vranish was having
trouble raising sufficient money to make the purchase.                        He
sought a loan from the Conrad National Bank, but was turned
down.     Vranish's testimony, however, revealed that his deal
with     Joan    collapsed         over   the     proposed      deed    release
provisions.          Joan was unwilling to sell without assurances
that    the     land would        be   preserved    for agricultural        use.
Vranish testified that he intended to ranch the land for as
long as it proved economically feasible to do so, but wanted
the deed       release option available.                This compromise was
unacceptable to Joan.
        In     the    meantime,        however,    another      offer    became
available.        Wachholz referred a local forestry consultant
and real estate investor, John Dittman, to Joan's attention.
Dittman was willing to purchase the ranch, and had already
submitted an offer to Roy Deming in late September of 1978,
about the time the Vranish deal was floundering.                        Wachholz
and Gillette represented Dittman to be a reputable buyer,
and Joan testified that Wachholz told her that entering into
an agreement with Dittman would be a "good deal."                      After the
Vranish       deal    fell   through, negotiations           between    Murphy,
Joan's attorney, and Dittman proceeded.
        There        is some dispute       about    the extent of Joan's
knowledge as to what took place during these negotiations.
Joan usually was             not present when Murphy a.nd Dittman
discussed contract terms.               Eventually, on January 2, 1979,
Joan signed a contract for deed with Dittman, who purchased
as a trustee.            There were no          other     signatories to     the
contract, and there was nothing in the contract, except the
designation of Dittman as trustee, to indicate whether other
buyers were involved in the purchase.                The agreement called
for a sales price of $532,400 for the land and outbuildings
with $74,200 downpayment and the balance to be paid over
fifteen     years        at     eight      percent      (8%)       interest.
Interestingly,     the    agreement       provided    for   deed    releases
beginning in 1980.            Joan also sold the farm machinery for
$25,800.
        The immediate dispute began the same day the contract
was signed.      While dining with her daughter and son-in-law,
Joan learned from them that Wachholz and a local physician,
Van Kirke Nelson, were partners in the Dittman purchase.
The three had entered into a partnership agreement covering
the ownership and management of the ranch a few days before
the contract was signed.            Furthermore, testimony at trial
revealed that Dittman and Wachholz were partners in other
local real estate transactions.             Joan was apparently upset
about     this   revelation        and,    in   particular,        Nelson's
involvement, although she testified at trial that, some time
prior   to completion of her negotiations with Dittman,
Wachholz had told her that he might join in the Dittman
purchase.     She insisted, however, that Wachholz never told
her that he had finally decided to join Dittman.
        In the weeks following the signing of the contract,
Wachholz, Dittman        and    Nelson    had   the   land platted      into
twenty and forty acre parcels, in expectation that proposed
changes in state law might affect future subdivision of the
property.     They sold the ranch machinery and equipment, and
eventually sold the Deist family home located on the ranch,
in    addition         to    twenty      acres      for       $115,000     on    a        contract

p r o v i d i n g nine-and-one-half             percent        (9-1/2%)       interest.            In
t h e i n t e r i m , Joan sought a d v i c e a s t o any l e g a l r e c o u r s e s h e
might        have    against         Wachholz,          Dittman       and Nelson.                  In
December,        1979,      Joan     formally requested              rescission            of     the

contract,        but       her    request     was      refused.          In    September          of
1 9 8 0 , t h e p a r t n e r s s o l d a n o t h e r t w e n t y a c r e s f o r $ 5 6 , 0 0 0 on

a c o n t r a c t f o r nine-and-one-half              p e r c e n t (9-1/2%) i n t e r e s t .
         A    c o m p l a i n t was      filed      in     January,        1980,          seeking

r e s c i s s i o n o f t h e c o n t r a c t a s a g a i n s t Wachholz, D i t t m a n a n d
Nelson,          and,       in    the     alternative,             damages           from       the
t r a n s a c t i o n a s a g a i n s t t h e Conrad N a t i o n a l Bank.        The t h e o r y
behind t h e i n i t i a l complaint involved an a l l e g e d breach of

f i d u c i a r y d u t y by Wachholz o r t h e Bank t o J o a n .                An amended
c o m p l a i n t f i l e d i n May o f 1 9 8 1 c l e a r l y s e t f o r t h a l l e g a t i o n s
of   constructive            fraud      and undue         i n f l u e n c e on t h e p a r t o f

Wachholz,        and s o u g h t r e s c i s s i o n a g a i n s t t h e t h r e e p a r t n e r s
o r , i n t h e a l t e r n a t i v e , damages a g a i n s t t h e Bank.
         After extensive discovery,                      t h e c a s e came t o t r i a l i n

April,       1982.          Following       trial      and     further        briefing,         the
court      rendered          judgment       against           Wachholz,         Dittman         and

Nelson.          The      Court    concluded           that    Wachholz         owed       Joan     a
f i d u c i a r y duty both        i n h i s c a p a c i t y a s an o f f i c e r          of   the

Bank, which t h e c o u r t f o u n d was i n a f i d u c i a r y r e l a t i o n s h i p
w i t h J o a n , and b e c a u s e Wachholz a n d t h e Bank were h e r a g e n t s

i n the s a l e of          t h e ranch.        Wachholz was f o u n d l i a b l e f o r
c o n s t r u c t i v e f r a u d a n d undue i n f l u e n c e i n h i s d e a l i n g s w i t h

Joan,      and      the     contract      was    ordered         rescinded        as       to   all
parties.            Joan    was    ordered        to     tender     payment          of    monies
r e c e i v e d under t h e c o n t r a c t t o g e t h e r w i t h t e n p e r c e n t ( 1 0 % )
interest, and defendants were ordered to pay Joan rental
payments for the time the ranch was in their possession, and
also the monies due them under land sales made after the
contract    was   signed.     An   amended    judgment was         entered
specifying the sums due all of the parties.                 The Bank was
not adjudged liable to Joan in any way.              Wachholz, Dittman
and Nelson filed a notice of appeal.
        Appellants present four issues for review:
        (1) Whether the trial court erred in finding that a
fiduciary relationship existed on the part of Wachholz with
respect to dealings with Joan?
        (2) Whether     the   trial    court        erred    in   finding
constructive fraud and undue influence respecting the real
estate transaction between Joan and the appellants?
        (3) Whether rescission was a proper remedy?
        (4) Whether the trial court erred in its determination
of amounts due Joan under the judgment?
THE EXISTENCE OF A FIDUCIARY DUTY
        Appellants    correctly    note      that    a   finding    of   a
fiduciary duty is essential to subsequent findings of
constructive fraud and undue influence.              In the absence of
such a duty, Joan's grounds for rescission are shaky at
best.
        The claim of a fiduciary duty on the part of Wachholz
is based on three alleged relationships:             (1) that the Bank
was Joan's agent for the sale of the ranch, and that the
fiduciary duty arising from the agency relationship flowed
to all the Bank's officers, including Wachholz; (2)                   that
Wachholz was Joan's personal agent for the sale of the
ranch, and therefore owed her a personal fiduciary duty; and
(3) that the Bank, acting as Joan's financial adviser, owed
her a fiduciary duty and that this duty flowed to all the
bank's officers, including Wachholz.
      Upon review of the testimony, we conclude that the
existence of a true agency relationship between either the
Bank or Wachholz and Joan is unsubstantiated.            Unlike the
trial court, we find no evidence to suggest that either the
Bank or Wachholz were authorized to negotiate a sale of the
ranch or to direct to Joan only those prospective buyers
whom the bankers deemed appropriate.         Thus, any fiduciary
duty owed to Joan by the Bank and its officers had to arise
from the Bank's role as Joan's financial advisor.
      The relationship between a bank and its customer is
generally described as that of debtor and creditor, State v.
Banking Corp. of Montana (1926), 77 Mont. 134, 251 P. 151,
and   as   such     does   not   give   rise        to   fiduciary
responsibilities.     Neverthless,   there    are   exceptions   in
certain situations:
           "As a general rule, the relationship
           between a bank and a depositor or
           customer does not ordinarily impose a
           fiduciary duty of disclosure upon the
           bank.    They deal at arm's length.
           [citations omitted]     However, special
           circumstances may dictate otherwise: one
           who speaks must say enough to prevent his
           words from misleading the other party;
           one who has special knowledge of material
           facts to which the other party does not
           have access may have a duty to disclose
           these facts to the other party; and one
           who stands in a confidential or fiduciary
           relation to the other party to a
           transaction must disclose other facts.
           [citation    omitted]        Present-day
           commercial transactions are not, as in
           past generations, primarily for cash;
           rather, modern banking practices involve
           a highly complicated structure of credit
           and other complexities which often thrust
           a bank into the role of an advisor,
           thereby creating a relationship of trust
               and confidence which may result in a
               fiduciary duty upon the bank to disclose
               facts when dealing with the customer.
               [citation omitted] '
                                  I
Tokarz v.       Frontier     Fed.     Sav.    &       Loan    Assln. (1983), 33
Wash.App.     456, 656 P.2d         1089, 1092.              See also Dolton v.
Capitol Fed. Sav.       &    Loan Assln. (1981 Colo.App.),                642 P.2d
21. See generally Annot., 70 A.L.R.3d                   1344 (1976) (existence
under    special circumstances of                     fiduciary relationship
between bank      and depositor or            customer so as to              impose
special duty of disclosure upon bank).
        The existence of a fiduciary duty to a loan customer
depends upon satisfactory proof of a special relationship.
In Stewart v. Phoenix Nat'l Bank                      (1937), 49 Ariz. 34, 64
P.2d     101,     the       Arizona      Supreme             Court   held    that:
                "[wlhere it is alleged [that] a bank has
               acted as the financial advisor of one of
               its depositors for many years, and that
               the latter has relied upon such advice,
               it is a sufficient allegation that a
               confidential relationship in regard to
               financial matters does exist and that, if
               it is proved, the bank is subject to the
               rules applying to confidential relations
               in general."
49 Ariz. 34, 64 P.2d at 106.              Accord: Fridenmaker v. Valley
Nat'l Bank of Ariz. (1975), 23 Ariz.App. 565, 534 P.2d 1064;
Bank of America v. Sanchez (1934), 3 Cal.App.2d                      238, 38 P.2d
787; Lloyds Bank, Ltd.              v.   Bundy        [1974], 3 Al1.E.R.       757
(C.A.) (English Court of Appeal, Civil Division) (Opinion of
Sir Erich Sachs).            Similarly, in Pigg v. Robertson (1977
Mo.App.),     549 S.W.2d     597, the Missouri Court of Appeals held
that evidence that a banker was aware he was being called
upon to advise a customer on obtaining a loan for purchase
of     real   estate would          entitle       a    jury     to find     that   a
confidential relation existed and that certain disclosures
by the customer to the banker should be protected, and that

disclosures by the banker to the customer of any adverse
interests on the former's part should be encouraged.
       There is substantial, credible evidence in the case at
bar that the relationship between the Conrad National Bank
and   Joan    Deist   was   more   than    a    simple debtor-creditor
affair.      Joan and her husband had dealt with the bank for
about twenty-four years prior to his death.                  Both she and
Russell had imposed trust and confidence in the advice of
Eugene Gillette, who as an officer was the alter-ego of the
enterprise and, for all practical purposes, was the "bank"
to Joan and other customers.        See Independent Banker's Ass'n
of Georgia, Inc. v. Dunn (1973), 230 Ga. 345, 197 S.E.2d
129, appeal after remand, 231 Ga. 421, 202 S.E.2d 78, appeal
after remand (1976), 237 Ga. 252, 227 S.E.2d             227.      Gillette
acted as a financial advisor to Joan after Russell's death
with respect to handling the ranch debt.              Even though Joan's
association with the Bank in this transaction did not extend
over several years, the nature of the association and her
reliance, combined with her husband's years of dealings with
the bank on essentially the same matters, were sufficient to
make out a prima facie case that a fiduciary relationship
existed.     Even appellants Wachholz, Dittman and Nelson have
conceded      that    the   Bank   might       have   been    in   such     a
relationship and had such a duty under these facts.
      Appellants       principal     concern,         however,     is     how
Wachholz, as a bank         officer, is vested         with   a    duty    or
responsibility to Joan.        Appellants emphasize that Wachholz
did not act in the same capacity as Gillette.                      Wachholz
never advised Deist on her financial situation and how she
might cope with it.       He did agree to help Joan find a buyer
for the ranch, and he did tell her that selling to Dittman
would amount to a "good deal," but there is no evidence that
he participated in negotiations between Joan or her attorney
and Dittman.       Appellants point to this lack of evidence as
satisfactory proof that Wachholz was not acting in the role
of confidant and advisor and could not therefore be vested
with fiduciary responsibilities.
     Nevertheless,        the court found          that because     "the
officers of the Conrad National Bank were Joan's financial
and business advisors and because she reposed trust and
confidence in them, the officers of the bank owed to Joan
Deist a fiduciary duty.           That fiduciary duty extended to
Paul Wachholz      . ..   "     Presumably, the court was convinced
that, because Eugene Gillette, and perhaps Roy Deming, acted
as financial advisors to Joan respecting the sale of the
ranch, any fiduciary duty vested in them carried over to any
other bank officer involved in the transaction, including
Wachholz.      This presumption        appears well         grounded   in
precepts of agency, so long as the duty imposed does not
extend    beyond    the   scope of     the Bank's      or    Wachholzgs
association with the sale of the Deist ranch.                 Appellants
argue that Wachholz cannot be held liable merely because the
Bank fails to discharge affirmative duties which it owes to
a third person.       This argument, however, misconceives the
nature of Wachholzgs duties and any liabilities arising from
the breach thereof.           As noted above, the duty extends no
further     than    his       involvement   with    the     land   sale.
Appellants' fear that innocent employees could be made to
suffer for the sins of errant coworkers is assuaged by the
rule that the agent of a disclosed principal            (here, the
Bank) is not subject to liability for the conduct of other
agents unless he is at fault in cooperating with them.          See
Restatement (Second) of Agency, Section 358 (1957).
     We     recognize that most,       if not all, of the cases
relied    upon   to   support   the trial court's   finding of    a
fiduciary duty involve fact situations different than those
in the immediate dispute.       Nevertheless, the ratio decidendi
of these decisions is not incompatible with the facts of the
case at bar.      The Bank acted as Joan's financial advisor,
and she undoubtedly relied upon their counsel.          Equity is
not compromised by holding Wachholz to a fiduciary duty to
Joan in those dealings intimately associated with the
off ices of the Bank, so long as the duty reaches no further
than the internal association that gave rise to it.             The
Bank was unquestionably involved in the sale of the ranch,
and Wachholz was not so detached from the transaction that
imposition       of    fiduciary     responsibilities   would    be
impermissible.         Appellants'    retort that innocent bank
employees would always suffer unjustly because of another
employee's indiscretions is unwarranted.
         In summary, Wachholz had an obligation to inform Joan
fully as to his involvement in the ranch purchase and to do
nothing which would place Joan at a disadvantage.          He was
bound to insure that Joan was not "insufficiently informed
of some factor which could affect [her] judgment."          Bundy,
supra, at 768.        We are not saying that Wachholz could not
make a "reasonable legitimate profit" from his dealing with
Joan, so long as he disclosed fairly and honestly all the
information which might be presumed to have influenced her
in the transaction.           Cf.     Stewart v.   Phoenix Nat'l Bank,
supra, 49 Ariz. 34, 64 P.2d 101, 106 (bank owing fiduciary
duty to client in transaction may make reasonable legitimate
profit from client so long as bank fully discloses all facts
presumed to influence client in the transaction).
PROOF OF CONSTRUCTIVE FRAUD AND UNDUE INFLUENCE
        According to Section 28-2-406, MCA, constructive fraud
consists of:
                 "(1) any breach of duty which, without an
                 actually fraudulent intent, gains an
                 advantage to the person in fault or
                 anyone claiming under him by misleading
                 another to his prejudice or to the
                 prejudice of anyone claiming under him;
                 or (2) any such act or omission as the
                 law especially declares to be fraudulent
                 without respect to actual fraud."
Clearly, subsection          (1) of     Section 28-2-406    is at issue
here,     even    though    respondent relies      upon   some case law
construing subsection (2).            Appellants have also muddied the
waters with references to the nine elements of actual fraud,
which have nothing to do with proof of constructive fraud.
See Moschelle        v.    Hulse    (Mont. 1980), 622 P.2d      155, 37
St.Rep.    1506.      Consequently, the following discussion will
address only those factual and legal issues pertinent to
subsection (1).
        The trial court found a breach of duty on Wachholz's
part by concluding that (1) the contract price and terms
were disadvantageous to Joan; (2) the true purchasers were
undisclosed to her; and             (3) the property was used by the
buyers for purposes other than those contemplated by Joan.
        With     respect to        the contract price,     it should be
remembered that Joan and Dittman agreed to a total sales
price of approximately $558,000, which included the land and
farm equipment.      This figure was higher than that proposed
in the unsuccessful negotiations between Joan and Dr.
Vranish, the only other figure that was the result of actual
negotiations.     Nevertheless, the trial court's attention was
not focused on the Vranish         figure.     Instead, the court
considered two varying estimates of the fair market value of
the ranch as of January 2, 1979, the date of sale.            Joan's
appraiser, Roger      Jacobson, valued     the property at about
$870,000, or about $300,000 over the actual contract price.
Appellants'     appraiser, Wayne Neil, testified          that the
property was worth about $515,000, just slightly under the
contract price.      In its findings of fact, the trial court
makes mention of the $870,000 figure, but found that the
fair market value as of January 2, 1979, was $635,000.
      There   is only       one possible   source for   the   latter
figure.     During    her   testimony, Joan   indicated   that   she
consulted another appraiser named Zugliani sometime after
the sale.     This appraisal produced        a value of $635,000.
Zugliani was not called as a witness, and his report was not
entered   into evidence.        Under   the circumstances,    it is
arguable whether the court's finding should be upheld.           The
figure adopted by the trial court is based on data that
could not be cross-examined by appellants.          Nevertheless,
the court's implicit recognition of the Jacobson appraisal
of $870,000 suggests that the fair market value of the ranch
on the date of sale was substantially higher than the actual
contract price.      The expression of market value in specific
dollars is not as important as the fact that the value was
higher than the agreed contract price.
     Although we regard the trial court's acceptance of the
$635,000 figure as harmless error in this case, this does
not absolve the court from its failure to explain why one
appraiser's figure should be believed over that of another.
In marriage dissolution and property settlement cases, this
Court    has   expressed       dissatisfaction     with   district   court
findings       on    valuation       that   skip   the    essentials   of
elaboration:
               "As a general rule, if contested evidence
               is presented to the trial court regarding
               the existence or valuation of marital
               assets and no findings are made regarding
               that asset or no explanation is provided
               as to why the District Court accepted one
               party's valuations over that of the
               other, the District Court has abused its
               discretion. Peterson v. Peterson (1981)
               Mont., 636 P.2d 821, 38 St.Rep. 1723.
               Item-by-item findings are not required in
               property division cases, but findings
               nevertheless    must   be   sufficiently
               adequate to ensure that this Court need
               not   succumb    to  speculation    while
               assessing   the conscientiousness or
               reasonableness of the District Court's
               judgment. In re the Marriage of Caprice
               (1978), 178 Mont. 455, 585 P.2d 641.


               "This Court cannot uphold [a] District
               Court's judgment as within the realm of
               its broad discretion if we have no
               inkling of its thought process."
Larson v.      Larson       (Mont. 1982), 649 P.2d        1351, 1354, 39
St.Rep.     1628, 1631-32.           The same principle should be
followed by         trial   judges   in all   future cases     involving
valuation of real estate.
         Evidence was submitted challenging the other contract
terms.     Much if not all of it came through the testimony of
attorney Milton Datsopolous, who was called by Joan as an
expert in the field of real estate transactions.               In answer
to a question about a hypothetical sale similar to the one
to appellants, Datsopolous indicated that the Deist contract
was     "tilted very much        so    in    favor    of   the    purchasers."
Specifically, Datsopolous faulted the sales price as being
below market value, the               interest rate as being              below
prevailing rates in the area, and the annual payments as
being lower than usual.               Datsopolous also criticized the
deed     release        provisions     for        giving    appellants        the
opportunity to sell off choice parcels, thereby jeapordizing
any interest or value Joan would have in the land if the
parties terminated the contract and allowed all legal and
equitable interests to revert to Joan.
        Datsopolous did not examine the escrow files of the
Bank or make independent studies of interest rates other
than to speak to his experience as a real estate speculator
in the area and as a director of the bank in Columbia Falls,
Montana.      He did not conduct an independent appraisal of the
Deist property.         Nevertheless, appellants did not attempt to
challenge his status as an expert witness.                       However, they
did rely on testimony from other witnesses that the contract
was the result of honest bargaining.                 For example: attorney
Murphy testified that, in his opinion, he had negotiatied a
good deal on Joan's behalf.                 Wachholz testified that, in
other    real    estate purchases           he    participated     in shortly
before the Deist purchase, he was giving a slightly lower
interest rate on contracts, although Dittman admitted that
the interest rate on future sales of sections of Deist land
was nine-and-one-half percent (9-1/2%).
        The     trial    court   obviously         accepted      Datsopolous'
testimony       that    the   contract      was    more    favorable     to   the
purchasers.            His    testimony      is,     for   the    most    part,
uncontradicted and credible.                Because this Court will not
disturb findings based        on substantial though conflicting
evidence, unless there is a clear preponderence of evidence
against such findings, Toeckes v. Baker (Mont. 1980), 611
P.2d 609, 37 St.Rep. 948, the trial court's observation that
the contract terms were more           favorable   to    appellants
withstands challenge.
         The matter of whether Joan knew Wachholz and Nelson
were involved in the purchase also involves consideration of
conflicting testimony.        Joan insists that she never knew
these individuals were partners in the Dittman purchase,
even though she knew at one time that Wachholz had expressed
to her an interest in possibly joining as a co-purchaser.
Wachholz contends that Joan was aware he would be a buyer
before    the contract was     signed, and    that her     attorney,
Murphy, corroborated this testimony.         Gillette thought it
best     that Wachholz   inform Joan    if he   intended    to   join
Dittman, as that would be proper policy for a bank employee.
The court again chose to believe Joan and we can find no
acceptable reason to question that judgment.
         The interesting aspect of the disclosure matter is
whether Joan knew that Dr. Nelson was a purchaser.         Gillette
testified that Joan came into his office sometime after the
sale and told him that Nelson "was involved in buying the
ranch and had she known it, she would not have sold it to
them."     This testimony was corroborated by Nelson himself.
He indicated that when he first saw Joan after the sale, she
expressed displeasure with his involvement, and again said
that had she known he would be a co-purchaser, she would
never have signed the contract.        There was no indication at
trial why     Joan   looked   upon Nelson's     involvement with
disfavor, but it does appear that she did not know of his
interest, even if it can be argued that she knew or had
reason to know that Wachholz was involved.
      Although    the trial court concluded that appellants
"intended to use the property for purposes other than those
represented to Joan before the sale," Joan's "intentions"
were somewhat cloudy.     She testified that it was always her
intention to have the ranch remain in agricultural use, but
she admitted that the ranch was unprofitable and that the
sale of some acreage was inevitable.         Moreover, she agreed
to deed releases in the Dittman contract, to begin in 1980,
even though she had rejected the Vranish proposal, which
included provisions for deed releases beginning in 1985.
Dittman maintained that Joan never told him directly that
she wanted the land maintained as a ranching unit, but he
admitted hearing rumors to the contrary.          Once again, the
trial court was forced to weigh conflicting testimony, and
chose to believe Joan, even though her entire testimony on
the matter    was   confusing   and    possibly   contradictory.
ZIJevertheless, even    if we   concede     that Joan had    full
knowledge of the appellant's actual          intentions, such an
admission    is   not   fatal   to    the   ultimate   finding   of
constructive fraud.
      Two other considerations affecting the alleged breach
of duty must be addressed.      The first was the introduction
into evidence of the so-called "Bowler Report," the results
of an internal audit of the Conrad National Bank conducted
in 1980.     Bowler appeared as a witness         for appellants,
although his report, submitted during presentation of Joan's
case-in-chief, was potentially damaging to Wachholz.             The
report     concluded         that     the    bank     had       made   loans     to
individuals, partnerships and companies in which Wachholz
had financial interests.              All were real estate projects.
Wachholz's      personal        net    worth        had     increased     nearly
$2,000,000 in the years between                 1972 and          1980, and     the
increase was due primarily to his real estate investments.
The   audit    found    nothing       illegal    in       these    transactions,
principally because the Bank did not have a clear conflict
of    interest policy.          However, the          audit       concluded    that
because of his "extensive outside interest,"                           Wachholz's
lending authority should be                 curtailed      or     eliminated    and
brought into compliance with a formal conflict of interests
policy.
       The other consideration was the role played by Joan's
attorney, James Murphy, during the negotiations.                       Appellants
cannot conceive how            Joan     could       assert      that   her     best
interests were         unprotected when         she was           represented    by
counsel.      Admittedly, Joan was not present during many of
the    meetings,   although           Murphy    testified          that   he    had
counseled Joan on all important decisions and had striven to
get the best possible deal for her.                 Murphy's testimony does
not    describe        the     negotiation          process         beyond      his
generalizations about protecting Joan's best interests.                          He

did indicate, however, that he did not advise Joan on the
difference     between various          interest rates, or             about the
legal significance of a "trustee."               As noted earlier, Murphy
claimed that Joan was aware of Wachholz's involvement, but
his testimony is silent as to his knowledge of Nelson's
interest.      Obviously, the court was unimpressed with his
representation, and possibly                 regarded portions of his
testimony as revealing less than a yeoman's effort on behalf
of Joan.
        Considering together the testimony about contract
price    and   terms,    the   allegations    about    disclosure, the
alleged misrepresentations of          intended     use of      the   land,
Wachholz's past activities, and attorney Murphy's role, we
cannot say that the trial court erred in finding a breach of
duty amounting to constructive fraud.              There is substantial
credible evidence that the contract terms favored appellants
at Joan's expense, and the fact that she was represented by
counsel does not mitigate             any   harm    suffered     by   her.
Wachholz breached his fiduciary duty and failed to consider
Joan's best interests.
        The court also found that the evidence support.ed a
finding of undue influence, relying on Section 28-2-40'7(1),
MCA, which provides, in pertinent part, that undue influence
"consists in    . . .    the use by one in whom a confidence is
reposed by another       . . .   of such confidence      ...      for the
purpose of obtaining an unfair advantage over him."                   This
subsection     has    apparently    never   been    construed    by   this
Court, and     there is little guidance from the California
courts as to the scope of identical language in Cal.Civ.Code
Section 1575(1) (West 1982).          As a general rule, however, a
presumption of undue influence arises from a transaction
between individuals in a fiduciary relationship where the
dominant party in the relationship is the beneficiary of the
transaction.         See 25 AmJur    2d Duress and Undue Influence
Section 39 (1966).       Presumably, however, the dominant party
must exert some kind of unfair presuasion over the victim.
Id.
-       Because Wachholz never negotiated directly with Joan,
and because there was no evidence of unfair persuasion on
Wachholzls part         when    he    told    Joan about      the Dittman
proposal,    it seems clear          that    the presumption     of undue
influence was       successfully       rebutted by     the testimony of
several     parties,      including      Joan.       Nevertheless,       the
available        evidence      still    supports       the    finding     of
constructive fraud.
THE APPROPRIATENESS OF RESCISSION
        Section     28-2-1712(1),           MCA,   requires    the    party
aggrieved     by    the   contract      to     "rescind   promptly      upon
discovering the facts which entitle him to rescind                   . . ."
Because     Joan    allegedly        took    several    months   to     seek
rescission, appellants argue that pursuit of the remedy is
barred by laches.         It is unnecessary, however, to inquire
into the time frame in which Joan acted.                     Laches is an
affirmative defense and must be set forth in a defendant's
answer.    Rule 8(c), M.R.Civ.P.            Appellants, however, did not
raise this defense in answers to the initial and amended
complaints, and it cannot be raised for the first time on
appeal.     Moschelle, supra, 622 P.2d             at 160, 37 St.Rep.     at
1511.
        Appellants also maintain that rescission is improper
because Dittman, not Wachholz, was the "actual" purchaser,
and because Dittman (and Nelson) did not breach any duty to
Joan and therefore cannot be held liable to rescind.                    This
argument is an unpersuasive exercise in semantics.               Wachholz
was a "purchaser" by virtue of his partnership with Dittman
and     Nelson     to   buy    the     ranch.        Moreover,    Section
28-2-1711(1), MCA, apparently allows for rescission against
all the par ties even though the sole llwrongdoer,ll
                                                   Wachl?olz,
did not participate in the negotiations or the signing.                  The
statute provides that the aggrieved party may rescind his
contract if his consent "was          ...     obtained through         . . .
fraud, or        undue    influence   exercised      by    or    with    the
connivance of the party as to whom he rescinds or of any
other party to the contract jointly interested."
VALUATION OF AMOUNTS DUE UNDER THE JUDGMENT
        In the judgment, the court ordered appellants to pay
Joan $11,122 in rent for each year or part thereof when they
were    in possession of the ranch, or $35,072 total.                     In
addition, the court ordered            appellants         to   tender    the
$171,000 they earned from sale of the parcels after purchase
of the ranch.      Both sums were to be applied as a set-off to
the $249,512.48 that Joan had received from the sale of the
ranch between January 1979 and               the   time of       judgment.
Appellants maintain that the computations behind these
set-offs are in error.
        The $11,122 per year rental payment is based on an
esimate     of   annual    net    income   derived    from       the    Neil
appraisal,       the     report    commissioned      by        appellants.
Apparently, this figure is based upon an assumption that
approximately $100,000 of additional capital                   improvements
would have to be made on the property to generate that net
income.     Under the circumstances, the figure used by the
trial     court could      be   considered    erroneous.         We note,
however, that this figure represents the net return after
expenses on a gross         return of approximately $25,000 per
year.     This $25,000 figure appears to be akin to an average
estimate of gross returns ranging from approximately $5,250
per year to over $35,000 per year, depending upon the basis
of r e n t i n g o r l e a s i n g a g r i c u l t u r a l p r o p e r t y .     The low f i g u r e

reflects         a     pure       cash      rental        method.           The     high        figure

r e f l e c t s a c o m b i n a t i o n o f c r o p and c a l f s h a r i n g .             A    third

method c o n t e m p l a t e s o p e r a t i n g t h e r a n c h s t r i c t l y f o r c a t t l e

raising,        and g i v e s a r e n t a l        f i g u r e of      $22,725,       a sum v e r y

c l o s e t o t h e $25,000 used a s a g r o s s r e t u r n .                   Given t h a t a l l

three bases for renting or leasing a g r i c u l t u r a l property a r e

observable           in    the     v i c i n i t y of    the D e i s t      ranch,       and     given

constant annual                 expenses of         operation,          the      $11,122        annual

r e n t a l payment o r d e r e d b y t h e c o u r t a s a s e t - o f f                 does not

appear excessive o r unreasonable.                             Even when w e g r a n t t h a t

t h e f i g u r e h a s some c o n n e c t i o n t o g r o s s income f r o m g r e a t l y

improved p r o p e r t y , i t s t i l l a p p e a r s t o a p p r o x i m a t e c l o s e l y a

fair     net      return         on    property          not    substantially            improved.

Because        of      this      close       proximity,           we       are    reluctant         to

o v e r t u r n t h i s p o r t i o n o f t h e t r i a l c o u r t ' s judgment.

          W do n o t a g r e e w i t h t h e t r i a l c o u r t t h a t a p p e l l a n t s
           e

must     "tender"          to    Joan      in    the     form of       a    set-off       the     full

$ 1 7 1 , 0 0 0 owed t o them u n d e r            the contracts for                s a l e of     the

parcels.          Appellants note                t h a t t h e $171,000           is n o t y e t i n

t h e i r hands.           T h i s i s a sum owing t o them o v e r t h e p e r i o d s

of   the contracts.                The p r e s e n t v a l u e o f a n y sum d u e i n t h e

f u t u r e , w h e t h e r i n i n s t a l l m e n t s o r lump sum,             is worth less
today.        S e e A.      Alchian       & W.    A l l e n , E x c h a n g e and P r o d u c t i o n :

-o r y i n
T h e-            Use,       264      ( 1 9 6 9 ) ; R.    Heilbroner,            Understanding

Macroeconomics,                  118-19         (4th     ed.     1972).            Any      set-off

involving t h e s a l e of               t h e two p a r c e l s       s h o u l d amount t o no

more     than        the    present value           of    the    $171,000          t o be       earned

over     the     life       of     the    sales        contracts.           The     trial        court

s h o u l d h a v e examined t h e p e r i o d            t h a t t h e c o n t r a c t s were i n
effect prior to delivery of the warranty deeds and applied
an appropriate discount rate to the total sales price in
order to reflect present value.
JUDGMENT
       Those portions of           the District Court's         judgment
involving the finding of a fiduciary duty and a breach of
that duty amounting to constructive fraud are affirmed.                 The
requirement that $11,122 in rent for each year or part
thereof     appellants were    in    possession    of    the    ranch    be
applied as a set-off to the amount owed by Joan under the
terms of rescission is also affirmed.           That portion of the
judgment requiring treatment of the full $171,000 owing on
the two contracts for deed as a set-off is reversed, and the
case   is    remanded   to   the    District   Court    for    additional
proceedings to determine the present value of the amounts
owing to appellants under those contracts and to enter an
appropriate judgment.




                                    Ho~orableH e n r y ~ o ~ l e ,
                                                                District
                                                                 Justice



We concur:


3 ~ 4.$v&
      4 d,
Chief Justice
Justices
Mr. Justice L.C. Gulbrandson dissenting

       I respectfully dissent.
      After citing Stewart v. Phoenix National Bank (1937),
49 Ariz.      34, 64 P.2d    101, for the existence of a bank's
fiduciary duty to a loan customer, the majority opinion
states: "The Bank was unquestionably involved in the sale of
the   ranch    and Wachholz was not       so detached   from   the
transaction that imposition of fiduciary responsibilities
would be impermissible."
       I quote from the next case cited by the majority,
Fridenmaker v. Valley National Bank of Arizona (1975), 23


              "Fridenmaker has previously alleged that
              he was in a confidential relationship
              with the Bank and that this relationship
              forces this court to examine the right to
              rely in that light. It is contended that
              the length of time he dealt with the
              Bank, the receipt of credit lines on a
              signature, the intermittent advice given
              by the Bank, all, if proven, indicate a
              confidential relationship.     Stewart v.
              Phoenix National Bank, 49 Ariz. 34, 64
              P.2d 101 (1937). We agree that this is a
              correct statement of law and will
              concede, for argument's sake, that
              initially a confidential relationship
                        -
              existed.    The presence and participation
              o f counsel representing------------
              ......................       Fridenmaker
              interests was so Drevalent. however. as
              - leave any coniidential relationship
              to
              that existed of nugatory legal effect."
              ( Emphasis added. )

      Here, the plaintiff was represented by attorney James
Murphy throughout all negotiations for the sale of the ranch
after Mr. Diest's death.         Attorney Murphy was instrumental
in drawing the proposed contract to Dr. Vranish, and in fact
testified that he told Dr. Vranish the offer of $800 per
acre was too low.           When the Vranish negotiations ended,
attorney        Murphy,        after      consultations            with      the     plaintiff,
o b t a i n e d i n f o r m a t i o n from t h e p l a i n t i f f ' s a c c o u n t a n t , H a r r y
Isch,     r e g a r d i n g t e r m s o f down p a y m e n t ,       a n n u a l payments and

release provisions,                and t h e n drew t h e f i n a l c o n t r a c t w i t h
Dittman, t r u s t e e , a t $1,050 p e r a c r e .

          A t t o r n e y Murphy t e s t i f i e d a s f o l l o w s :
                  "Q. With r e f e r e n c e t o Mr. I s c h , w h a t d i d
                  he do i n t h e c o n t i n u i n g n e g o t i a t i o n s over
                  t h e summer and autumn?

                  " A . I c o n s u l t e d w i t h him a b o u t t h e amount
                  o f money w e c o u l d t a k e down o n t h e Ranch.
                  I c o n s u l t e d w i t h him a b o u t t h e p a y m e n t s .
                  I p a r t i c u l a r l y c o n s u l t e d w i t h him a b o u t
                  release provisions, because we d i d n ' t
                  w a n t a whole bunch o f money t o b e coming
                  i n i n any one y e a r where--and                    l e t too
                  much o f i t g o t o income t a x . "



                  "Q.       A l l right.          Do you remember, Mr.
                  Murphy, a c o n v e r s a t i o n w i t h Dr. V r a n i s h
                  w i t h r e f e r e n c e t o an e i g h t hundred d o l l a r
                  per acre figure?
                  A .     Yes.

                  "Q.  What d i d you s a y t o Dr. V r a n i s h w i t h
                  reference t o t h a t conversation?
                  "A.      H e s a i d h e was g o i n g t o t a l k t o J o a n
                  a b o u t i t , a n d I a s k e d him n o t t o .

                  "Q.     Why?
                  "A.       W e l l , b e c a u s e t h e y were r e a l good
                  friends.           And i f h e was g o i n g t o t a l k t o
                  h e r , I f e l t t h a t h e was g o i n g t o t r y t o
                  g e t her t o t a k e e i g h t hundred d o l l a r s a n
                  acre.        And I a s k e d him n o t t o , b e c a u s e
                  s h e n e e d e d t h e money a l o t more t h a n h e
                  d i d , b e c a u s e t h a t was a l l s h e had t o l i v e
                  on.       And h e had a m e d i c a l p r a c t i c e t o
                  k e e p him g o i n g .       And I t o l d him t h a t we
                  c o u l d g e t more t h a n t h a t f o r i t .
                  "Q.     Did you g e t more t h a n t h a t ?
                  "A.    W g o t one hundred
                            e                                   [sic]     thousand
                  and f i f t y f o r i t .
                  "Q. Okay.          I n y o u r b e s t judgment a s h e r
                  c o u n s e l , Mr. Murphy, d o you b e l i e v e t h a t
                was a fair price for the sale at that
                time of the land?
                "A. I thought we had made a heck of a
                good deal."
         In my view, the knowledge of the purchasers, and of
all the terms of the contract, by the plaintiff's attorney
and   accountant, rendered       the existence       of   any   fiduciary
relationship between Paul Wachholz and               the plaintiff of
little legal effect.
         In addition, the majority correctly states Montana law
regarding the appropriateness of findings by a trial judge,
but then ignores that case law, with the admonition that
trial     judges should     comply in future cases involving
valuation of real estate.         Here the trial court found the
market value of the Deist ranch at the time of sa.le was
$635,000.       The testimony to that figure was by the plaintiff
that she consulted an appraiser named Zugliani about ten
months    after    the sale and    that his appraisal value was
$635,000.       Zugliani was not called, his appraisal was not
offered by        the plaintiff, and      no   foundation was made
regarding qualifications, acreage appraised, or appraisal
methods used.
         The trial court also found that the annual rental
value of the ranch was $11,122.          That figure could only have
come from the report of the purchaser's appraiser, Mr. Wayne
Neal,     and    was   clearly   based    on   the   assumption     that
approximately $100,000 of ditch improvements would ha.ve to
be made first to generate that income.               In addition, the
plaintiff herself testified that the ranch had not shown a
profit    in the ten-year period preceding the sale of the
ranch.
        The t r i a l c o u r t f u r t h e r ordered an immediate s e t o f f
i n favor of t h e p l a i n t i f f of t h e proceeds of t h e two s a l e s
made by t h e a p p e l l a n t s even though t h e s a l e s were made on
contract.        I n essence,        the   judgment      converted       a   contract
r e c e i v a b l e i n t o a cash payment w i t h o u t c o n s i d e r a t i o n of any

discounted value.

        Because I b e l i e v e erroneous f i n d i n g s and c o n c l u s i o n s
were e n t e r e d , I would r e v e r s e and remand f o r a new t r i a l .
