                               No. 81-04
             IN THE SUPREMF: COURT OF THE STATE OF MONTANA




TOWN OF BOULDER,
                   Plaintiff, Cross-Appellant, and Respondent,


WILLIAM BULLOCK and SONJA BULLOCK,
                   Defendants and Cross-Respondents and Appellants.


Appeal from:   District Court of the Fifth Judicial District,
               In and for the County of Jefferson.
               Honorable Nat Allen, Judge presiding.
Counsel of Record:
    For Cross-Appellant:
         Allen Le Mieux, Boulder, Montana



         Harlen, Picotte   &   Thompson, Helena, Montana
         a-,-Nmimm-



                                Submitted on briefs: June 17, 1981
                                           Decided :       2 1 1981
Filed:      2 1 @@'
Mr. J u s t i c e J o h n Conway H a r r i s o n d e l i v e r e d            t h e Opinion of
the Court.
           The Town o f B o u l d e r f i l e d a c o m p l a i n t on F e b r u a r y 6 ,
1979,      to    enjoin           t h e Bullocks      from c o n s t r u c t i n g     their    new

b u i l d i n g on any p a r t o f           a c e r t a i n d e s i g n a t e d town s t r e e t .
The B u l l o c k s a n s w e r e d and a l s o f i l e d a c r o s s - c o m p l a i n t       for
damages.         The D i s t r i c t C o u r t o f t h e F i f t h J u d i c i a l D i s t r i c t ,

S t a t e o f Montana,             i n and f o r t h e C o u n t y of J e f f e r s o n , d i s -
m i s s e d t h e c o u n t e r c l a i m , e n t e r e d a judgment i n f a v o r o f t h e
Bullocks        on     the        injunction        and    then denied          the Bullocks'

motion t o r e c o n s i d e r .           The B u l l o c k s a p p e a l e d t h e e n t r y o f
judgment o f d i s m i s s a l on t h e i r c o u n t e r c l a i m .          T h i s C o u r t , by
o r d e r d a t e d March 1 9 ,           1980,     dismissed         t h a t appeal without
prejudice until               a     t r i a l on t h e m e r i t s o f       t h e Town's      com-
p l a i n t had been h e l d .
           T r i a l b e f o r e t h e p r e s i d i n g j u d g e was h e l d on A u g u s t

25,    1980.         The D i s t r i c t C o u r t e n t e r e d f i n d i n g s o f f a c t and
c o n c l u s i o n s of     l a w and judgment            i n favor of          the Bullocks,
refusing t o grant the injunction.                              The B u l l o c k s a p p e a l t h e

dismissal         of       their     counterclaim,          and       t h e Town o f        Boulder
cross-appeals               the    denial      of    an    injunction          preventing       the
building        of     the structure or               affirmative relief                requiring
i t s removal.
           The B u l l o c k s a r e o w n e r s o f            property located            in the
C o n s o l i d a t e d A d d i t i o n t o t h e Town o f B o u l d e r , which p r o p e r t y
b o r d e r s on Main and L e s l i e S t r e e t s .            The p r o p e r t y i s t r a d i -
tionally        known        as     the   L i n n Motel         and    c o n s i s t s of   Lots 9
t h r o u g h 1 9 o f B l o c k 48 o f t h e C o n s o l i d a t e d A d d i t i o n .        Some-
time     prior         to    September         1977       the    Bullocks       determined        to
b u i l d a home and a n o f f i c e on t h e p r o p e r t y .
           William Bullock attempted t o determine t h e boundaries
of t h e p r o p e r t y .     H e d e t e r m i n e d t h e b o u n d a r y on L e s l i e S t r e e t

by    observing            the     position        of    the        lots    and         the    state        of

physical           features         of        longstanding,           including            a    boundary

fence e r e c t e d before t h e Bullocks purchased t h e p r o p e r t y . I n

addition,           he c o n s i d e r e d     t h e power      and      telephone poles                   and

facilities               located       on L e s l i e     Street,          nearby          properties

l o c a t e d on L e s l i e S t r e e t and t h e p o s i t i o n o f                t h e used por-

t i o n of     Leslie Street.                   Bullock        testified          t h a t he d i d n o t

know where t h e e d g e o f h i s p r o p e r t y was l o c a t e d , t h a t h e d i d

not    get     a        surveyor         to    come     out    and      that       he     located          his

building           by    "eye-balling"           the area.             He t e s t i f i e d      t h a t he

had s e e n s u r v e y p i n s on t h e b o u n d a r y where t h e e n c r o a c h m e n t

o c c u r r e d , b u t t h a t t h e y w e r e gone a t t h e t i m e h e c o n s t r u c t e d

the building              on     the     encroachment.              He d i d        not       locate his

property           l i n e with        certainty,        and h e was             uncertain            as    to

whether       i t s l o c a t i o n was t o t a l l y w i t h i n h i s p r o p e r t y bound-
a r i e s a t t h e t i m e of c o n s t r u c t i o n .

            B u l l o c k made a n a p p l i c a t i o n f o r a b u i l d i n g p e r m i t t o

K e n n e t h W.    T r e t t i n , t h e c i t y c l e r k and b u i l d i n g i n s p e c t o r o f

the     Town        of    Boulder         and    the     person         authorized             to     issue

b u i l d i n g p e r m i t s by t h e Town.             He was t o l d by T r e t t i n t h a t

he would h a v e t o s u b m i t a p l a n showing t h e l o c a t i o n and t h e

dimens i o n s of          t h e proposed s t r u c t u r e t o r e c e i v e a b u i l d i n g

permit.            Trettin        testified           that     at    the     time        he,     as    city

c l e r k and b u i l d i n g       inspector,          d i d n o t h a v e d e t a i l e d knowl-

edge of t h e b o u n d a r i e s of L e s l i e S t r e e t .                  The B u l l o c k s s u b -

m i t t e d a p l a n which c o n s i s t e d o f a d r a w i n g o f                   t h e proposed

s t r u c t u r e m e a s u r e d from t h e c o r n e r o f            an e x i s t i n g b u i l d i n g

on    t h e Bullock property.                     T h i s method           of     m e a s u r e m e n t was

specifically              a p p r o v e d by T r e t t i n .        On S e p t e m b e r       26,    1977,
T r e t t i n i s s u e d a b u i l d i n g p e r m i t t o t h e B u l l o c k s b a s e d upon

the plan a s submitted.                     No s u r v e y o f      t h e Bullock p r o p e r t y

was r e q u i r e d o f t h e B u l l o c k s a t t h a t t i m e .

            D u r i n g t h e month o f O c t o b e r 1977 t h e B u l l o c k s o r d e r e d

m a t e r i a l s , h i r e d c o n t r a c t o r s and c o m p l e t e d t h e e x c a v a t i o n o f

t h e i r p r o p o s e d home and o f f i c e ,         had t h e f o o t i n g s p o u r e d on

the     foundation          and     walls,        and      had     the    foundation          walls

themselves poured.                T h i s r e q u i r e d t h e e x p e n d i t u r e of s e v e r a l

t h o u s a n d d o l l a r s by t h e B u l l o c k s .      A d d i t i o n a l p r o g r e s s was

made on t h e c o n s t r u c t i o n d u r i n g t h e r e m a i n d e r o f 1 9 7 7 .

            T h e r e was no e v i d e n c e showing t h a t d u r i n g t h i s p e r i o d

o f t i m e anyone i n t h e Town o f B o u l d e r had a n y knowledge t h a t

t h e b u i l d i n g b e i n g c o n s t r u c t e d by t h e B u l l o c k s was e n c r o a c h -

i n g upon L e s l i e S t r e e t . T h i s i n f o r m a t i o n d i d n o t o c c u r u n t i l

sometime i n J u n e o r J u l y 1 9 7 8 .               During t h e e a r l y c o n s t r u c -

t i o n p e r i o d i n 1978 t h e c i t y b u i l d i n g i n s p e c t o r a t t e m p t e d t o

f i n d a c u r b box and i n t h e p r o c e s s m e a s u r e d from a s u r v e y

pin     eighty       feet     across       the     street.          From     that      point      the

building         inspector,          Trettin,         sighted        across        the     Bullock

property.           At    t h i s t i m e T r e t t i n assumed t h a t t h e B u l l o c k s

were      building         into     the      street,        and     he     so    informed         the

Bullocks.

            T h e r e was t e s t i m o n y a t t r i a l t h a t , w h i l e t h e B u l l o c k s

had no knowledge t h a t t h e y m i g h t be e n c r o a c h i n g on L e s l i e

S t r e e t w i t h t h e i r c o n s t r u c t i o n , T r e t t i n had d e t a i l e d knowl-

e d g e o f t h e b o u n d a r i e s of L e s l i e S t r e e t p r i o r t o i s s u i n g t h e
b u i l d i n g p e r m i t on S e p t e m b e r 2 6 , 1 9 7 7 .     During t h e s p r i n g of

1978 t h e B u l l o c k s p r o c e e d e d t o work on t h e b a s e m e n t f l o o r o f

their      building         and T r e t t i n was a g a i n on            the     property        and

particularly a t the building site.                              A t t h o s e t i m e s h e made
no m e n t i o n of t h e a l l e g e d e n c r o a c h m e n t .

           However,         a s noted         above,      the building           inspector          in

J u l y 1 9 7 8 , i n a t t e m p t i n g t o f i n d t h e c u r b box, f e l t t h a t t h e

b u i l d i n g was o u t on t h e s t r e e t and s o i n f o r m e d t h e B u l l o c k s .

On    July      24,     1978,      William         Bullock        attended        the    regular

meeting of         t h e c i t y c o u n c i l and        informed        the council t h a t

T r e t t i n had t o l d him t h a t h e m i g h t b e b u i l d i n g i n t o L e s l i e

Street.          Bullock         further          told    the       council     that      he     was

w i l l i n g t o have a s u r v e y made.

           The     minutes        of     the      council       meeting       show      that     the

members o f        the council            represented t o Bullock t h a t ,                 if      he

were b u i l d i n g i n t o t h e s t r e e t ,        t h e y would n e v e r make a man

t e a r down h i s h o u s e .         Bullock t e s t i f i e d t h a t a t t h a t t i m e he

had i n mind a p r e v i o u s a c t i o n by t h e c i t y c o u n c i l i n O c t o b e r

1 9 7 7 when t h e y c l o s e d t w e n t y f e e t o f a s t r e e t a b u t t i n g t o

t h e n o r t h of     h i s p r o p e r t y a t t h e b e h e s t of        a Mr.      Randall,

then     a member        of    the c i t y council.                 I n r e l i a n c e upon     the

r e p r e s e n t a t i o n s o f t h e members o f t h e c i t y c o u n c i l and w i t h

h i s knowledge o f           t h e Randall m a t t e r , Bullock proceeded w i t h

a d d i t i o n a l work on h i s b u i l d i n g .        By A u g u s t 1 4 t h e B u l l o c k s

had    completed         the     basement          floor,       which     was    poured        by    a

member of t h e c i t y c o u n c i l .

           S h o r t l y a f t e r August 1 4 , 1978, a s a r e s u l t of a c i t y

c o u n c i l m e e t i n g h e l d on t h a t d a t e , B u l l o c k was i n s t r u c t e d by

T r e t t i n t o c e a s e c o n s t r u c t i o n u n t i l h i s s u r v e y was s u b m i t t e d

t o the c i t y council.               B u l l o c k d i d c e a s e c o n s t r u c t i o n , and on

August 2 8 ,       a t another          r e g u l a r meeting of         the c i t y council,

he    submitted         his    survey.            The     survey       indicated        that     the

Bullocks'         building        was,       in    fact,      occupying         approximately

e i g h t e e n f e e t o f t h e n o r t h p o r t i o n of L e s l i e S t r e e t .      I t is
important t o note here t h a t the s t r e e t s , a s l a i d out i n t h i s

a d d i t i o n , were e i g h t y f e e t w i d e .

           On August 28, 1 9 7 8 , a t a m e e t i n g o f t h e c i t y c o u n c i l ,

Bullock's        s u r v e y was r e c e i v e d .      The t h e n c i t y a t t o r n e y was

instructed          to   do    what    was     necessary         to    take    care     of    the

Bullocks'        problem w i t h r e g a r d t o t h e s t r e e t .           Both W i l l i a m

Bullock      and     the      acting     city        attorney     testified        that      they

took t h e i n s t r u c t i o n s of      t h e c i t y c o u n c i l t o mean t h a t t h e

c i t y a t t o r n e y was t o p r o c e e d w i t h l e g a l r e s e a r c h t o d e t e r -

mine a l a w f u l method by which t h e B u l l o c k s would b e a l l o w e d

t o k e e p t h e i r b u i l d i n g where i t w a s ,          and   in particular,           to

a l l o w them t o o c c u p y a p o r t i o n o f L e s l i e S t r e e t on which t h e

encroachment e x i s t e d .          The c i t y a t t o r n e y , i n f a c t , p r o c e e d e d

on t h a t b a s i s and s o t e s t i f i e d a t t r i a l .

           R e l y i n g on t h e s e r e p r e s e n t a t i o n s and t h e a c t s o f t h e

c i t y c o u n c i l a s an a u t h o r i z a t i o n t o proceed, Bullock testi-

f i e d t h a t he p u t up t r u s s e s and o t h e r e l e m e n t s o f          t h e wood

portion        of    the      building        a t      various        times    until      about

S e p t e m b e r 1 2 , 1978.      A f t e r a c i t y c o u n c i l meeting of which

Bullock      was     not given notice,                 h e was     i n f o r m e d by T r e t t i n

t h a t t h e Town now r e q u i r e d him t o t e a r down h i s b u i l d i n g and

remove      i t from L e s l i e S t r e e t .         No a c t i o n was e v e r t a k e n by

t h e Town t o r e v o k e       the original building                  permit      issued      to

the Bullocks,            and t h e B u l l o c k s a t a l l t i m e s r e l i e d upon t h e

b u i l d i n g p e r m i t and t h e a c t s and t h e s t a t e m e n t s o f t h e c i t y

c o u n c i l a s a u t h o r i z a t i o n t o proceed with t h e i r c o n s t r u c t i o n .

           The      District      Court       refused       to    grant       an   injunction

against further             c o n s t r u c t i o n and r e f u s e d t o g r a n t t h e Town

of Boulder its r e q u e s t f o r a f f i r m a t i v e r e l i e f t o r e q u i r e t h e

removal t h e B u l l o c k s t s t r u c t u r e .     W e affirm that judgment.
           A s a p p e l l a n t s , t h e B u l l o c k s r a i s e one i s s u e :        Whether

t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g t h e Town o f B o u l d e r ' s
motion t o d i s m i s s t h e i r c o u n t e r c l a i m f o r f a i l u r e t o s t a t e a
c l a i m upon which r e l i e f c o u l d be g r a n t e d .
           As    cross-appellant,                t h e Town o f       Boulder         raises        two
additional issues:                  ( 1 ) Whether         the court erred i n holding
t h e Town e s t o p p e d from c l a i m i n g a n i n j u n c t i o n o r r e q u i r i n g
the    removal         of    the    Bullocks'           building       insofar         as     it    en-
c r o a c h e d upon L e s l i e S t r e e t i n t h e Town o f B o u l d e r ; and ( 2 )
whether      the       c o u r t e r r e d i n f a i l i n g t o g r a n t an i n j u n c t i o n

r e q u i r i n g t h e removal of           the Bullocks'           building         insofar a s

i t e n c r o a c h e d upon any p o r t i o n o f L e s l i e S t r e e t .

           W will
            e               f i r s t turn       to     the   i s s u e s on c r o s s - a p p e a l ,
whether       the      court       erred      in      ordering      t h e Town o f          Boulder
estopped        from        claiming        an     injunction         from        further          con-
s t r u c t i o n or    r e q u i r i n g t h e removal o f d e f e n d a n t s ' b u i l d i n g

i n s o f a r a s i t e n c r o a c h e d upon t h e p o r t i o n o f L e s l i e S t r e e t
and w h e t h e r t h e c o u r t f u r t h e r e r r e d i n r e f u s i n g t o a u t h o r i z e
an i n j u n c t i o n r e q u i r i n g t h e removal o f d e f e n d a n t s ' b u i l d i n g
from L e s l i e S t r e e t .
           The Town o f B o u l d e r a r g u e s t h a t i t i s u n d i s p u t e d t h a t

a c i t y o r town h a s t h e power t o p r e v e n t t h e o b s t r u c t i o n o f
i t s s t r e e t s , c i t i n g s e c t i o n 7-14-4102,          MCA,       which p r o v i d e s :
"The c i t y o r         town c o u n c i l h a s t h e power            to:         (1) Regulate

and p r e v e n t t h e     . . .     o b s t r u c t i o n of s t r e e t s    . . .    by    . . .
any     obstruction."               The       Town      denies      that        there       was     any
c o n d u c t on i t s p a r t which would p e r m i t t h e D i s t r i c t C o u r t t o
invoke t h e d o c t r i n e of            e q u i t a b l e e s t o p p e l and p r e v e n t t h e
Town     from       exercising          its      statutory        right         to    remove        the
o b s t r u c t i o n from t h e s t r e e t .        W do n o t a g r e e .
                                                       e
          The   law governing    the   application of   equitable
estoppel as it applies to municipal corporations is dis-
cussed and set forth by this Court in two cases.          City of
Billings v. Pierce Packing Co. (1945), 117 Mont. 255, 161
P.2d 636; State ex rel. Barker v. Stevensville (1974), 164
Mont. 375, 523 P.2d 1388.       As argued by the Town of Boulder,
this Court noted in Stevensville that the great weight of
authority holds that a municipal corporation is not bound by
acts or statements of its agents or officers made in excess
of their authority, even where a third party relied thereon
to his detriment.     However, we further noted in Stevensville
that there are exceptions to that rule.       Such exceptions are
to be applied with great caution and only in exceptional
cases.     We find this to be just such a case.         This Court
stated in City of Billings v. Pierce Packing Co., 117 Mont.


          "The general rule is that equitable estoppel
          is applied to municipal corporations with
          great caution and only in exceptional cases.
          'While the doctrine of equitable estoppel is
          sometimes invoked in what are termed "excep-
          tional cases," it is always applied, and
          wisely so, with much caution to municipal
          corporations in matters pertaining to their
          governmental functions   .
                                   . . There is greater
          reason why city streets should not be subject
          to destruction by nonuse or adverse posses-
          sion than can be found applicable to any
          other kind of property.    No other kind of
          public property is subject to more persistent
          and insidious attacks or is less diligently
          guarded against seizure.'    McQuillan, Muni-
          cipal Corporations, Vol. 4, Sec. 1515, and
          supporting cases."
Here, the District Court in its Conclusion of Law No. 4
noted :
          "The elements necessary to make out a case
          for the application of the Doctrine of
          Equitable Estoppel are succinctly set forth
          in the case of City of Billings v. Pierce
          Packing Co., 117 Mont. 266, 161 P.2d 636.
           T h o s e e l e m e n t s a r e a s f o l l o w s : ( 1 ) T h e r e must
           be c o n d u c t - - a c t s ,      language, or silence--
           amounting t o a r e p r e s e n t a t i o n o r a c o n c e a l -
           ment o f f a c t s .        ( 2 ) T h e s e f a c t s m u s t be known
           t o t h e p a r t y estopped a t t h e time of h i s s a i d
           c o n d u c t , o r a t l e a s t t h e c i r c u m s t a n c e s must
           be s u c h t h a t knowledge o f them i s n e c e s s a r i l y
           imputed t o him.                  ( 3 ) The t r u t h c o n c e r n i n g
           t h e s e f a c t s must be unknown t o t h e o t h e r
           p a r t y claiming t h e b e n e f i t of t h e e s t o p p e l ,
           a t t h e t i m e when i t was a c t e d upon by him.
           ( 4 ) The c o n d u c t m u s t be done w i t h t h e i n t e n -
           tion, or a t l e a s t with the expectation, t h a t
           i t w i l l be a c t e d upon by t h e o t h e r p a r t y , o r
           under such c i r c u m s t a n c e s t h a t i t is b o t h
           n a t u r a l and p r o b a b l e t h a t i t w i l l be s o a c t e d
           upon.         ( 5 ) The c o n d u c t must be r e l i e d upon by
           t h e o t h e r p a r t y , and t h u s r e l y i n g , h e m u s t be
           l e d t o a c t upon i t .            ( 6 ) H e must i n f a c t a c t
           upon i t i n s u c h a manner a s t o c h a n g e h i s
           p o s i t i o n f o r t h e worse; i n o t h e r words, he
           m u s t s o a c t t h a t h e would s u f f e r a l o s s i f h e
           were compelled t o s u r r e n d e r o r f o r e g o o r
           a l t e r what h e h a s d o n e by r e a s o n o f t h e f i r s t
           p a r t y b e i n g p e r m i t t e d t o r e p u d i a t e h i s con-
           d u c t and t o a s s e r t r i g h t s i n c o n s i s t e n t w i t h
           it."

           The     District         Court,       in     its       findings        of     fact   and

conclusions of            l a w , w e n t on t o n o t e t h a t T r e t t i n ,         the city

clerk,      had     sufficient         knowledge,            as    both      city       clerk   and

building        inspector,          t o have     ascertained             the      boundaries     of

the     property         in   question          and        that    Trettin         was    on    the

p r o p e r t y f o r a p e r i o d of n e a r l y a y e a r b e f o r e t h e a c t i o n of

the c i t y council           was    taken.           The c o u r t      further        noted   the

council's         representation           to    the Bullocks             and      its instruc-

tions t o the            c i t y attorney t o take                c a r e of      the Bullocks'

p r o b l e m s a t t h e c i t y c o u n c i l m e e t i n g on A u g u s t 28, 1 9 7 8 .

           The     judge      found       that     these          acts      and    many    others

constituted          a    representation              or     concealment           of    material

facts.       W e agree with t h e D i s t r i c t Court t h a t t h e f a c t s a r e

sufficient         to    deny     t h e Town's         request        for      removal of       the

structure.          I n p a r t i c u l a r t h e judge found: t h a t t h e b u i l d i n g

p e r m i t c o n s t i t u t e d a n a u t h o r i z a t i o n t o p r o c e e d and a r e p r e -
sentation         that       the      plans    submitted          by     the     Bullocks         were

proper;        that       the      acts       and    representations              of     the      city

c o u n c i l c o n s t i t u t e d a r e p r e s e n t a t i o n r e a s o n a b l y t a k e n by t h e

Bullocks a s a u t h o r i z a t i o n t o proceed with t h e i r c o n s t r u c t i o n

a f t e r t h e presence of             t h e e n c r o a c h m e n t was d i s c o v e r e d ;    and

that,     a c c o r d i n g t o t h e t e s t i m o n y o f t h e f o r m e r mayor o f t h e

Town, s h e , and i n h e r o p i n i o n o t h e r members o f t h e c o u n c i l ,

i n t e n d e d t o r e q u i r e t h e removal of t h e s t r u c t u r e a s e a r l y a s

J u l y 24,    1 9 7 8 , b u t d i d n o t communicate t h i s i n t e n t i o n t o t h e

Bullocks.

           The i s s u e s r a i s e d by t h e B u l l o c k s on a p p e a l              involve

t h e d i s m i s s a l of      their       counterclaim.           As    previously noted,

t h e Town o f B o u l d e r b r o u g h t a n a c t i o n t o e n j o i n d e f e n d a n t s '

e n c r o a c h m e n t on t h e c i t y s t r e e t , and d e f e n d a n t s a n s w e r e d by

g e n e r a l d e n i a l and a s s e r t e d a c o u n t e r c l a i m a g a i n s t t h e Town.

The     Town      replied        by     a   motion      to      dismiss        and     strike      the

counterclaim           which       the       court     granted.            At     no     time      did

d e f e n d a n t s amend t h e i r c o u n t e r c l a i m .    The c a s e went t o t r i a l

on t h e Town's c l a i m f o r a n i n j u n c t i o n .              The c o u r t h e l d t h a t

t h e Town was e s t o p p e d from p r e v e n t i n g d e f e n d a n t s '           encroach-

ment.       The t o t a l e f f e c t o f t h e p r o c e e d i n g t h u s f a r h a s b e e n

t o j u d i c i a l l y a l l o w t h e e n c r o a c h m e n t and t o d e n y t h e c l a i m e d

damages.

           W a r e confronted w i t h t h e b a s i c i s s u e of whether t h e
            e

counterclaim             states         a    claim      upon      which         relief      can     be

granted.          S t r i p p e d down t o t h e e s s e n t i a l s ,         the defendants'

counterclaim           is very nearly               an a s s e r t i o n t h a t b e c a u s e t h e

Town     filed      the      suit,      defendants           have      been     damaged.           The

c o u n t e r c l a i m c a n be d i v i d e d      i n t o three counts.               The f i r s t

count      alleges        negligent           conduct      giving        rise     to    something
l i k e an e s t o p p e l ,     a l t h o u g h t h e term " e s t o p p e l " is n o t used,

that      the        council        by     its     action           led     the     Bullocks        into

changing           their     position         to      their      detriment.               It     further

a l l e g e s a v i o l a t i o n of defendants'                    constitutional right to

due p r o c e s s w i t h r e s p e c t t o a p r o p o s a l              or     a t t e m p t t o pur-

chase a p o r t i o n of             t h e s t r e e t right-of-way                i n t h a t defen-

d a n t s were n o t g i v e n n o t i c e o f a n y p r o p o s e d s a l e which was

allegedly           on    the     agenda of           the     council        at     the    time     this

trouble occurred.

              The     second        count       alleges         that       the      Bullocks        were

v i c t i m s o f d i s c r i m i n a t i o n by t h e Town.              It lists individuals

whose         structures         encroach        on    various            street     right-of-ways

and    alleges that              t h e Town,        having allowed o t h e r               encroach-

ments,         is u n l a w f u l l y d i s c r i m i n a t i n g    against         defendants         by

a t t e m p t i n g t o remove d e f e n d a n t s '        encroachment.

              The     third       count       alleges          that       the      Town        issued    a

building permit               t o t h e d e f e n d a n t s and u n l a w f u l l y m i s r e p r e -

s e n t e d t o them t h e y c o u l d l e g a l l y b u i l d a s t r u c t u r e on t h e i r

property           and   t h a t defendants            relied        to their         d e t r i m e n t on

the misrepresentations.

              In    each      count       the      Bullocks          claimed        damages        as    a

r e s u l t of      t h e Town's         conduct.           The B u l l o c k s h a v e a l l e g e d l y

s u f f e r e d " h u m i l i a t i o n , f r u s t r a t i o n , p u b l i c r i d i c u l e , l o s s of

business            reputation,          m e n t a l a n g u i s h and m o r t i f i c a t i o n . "

They a l s o c l a i m t h a t i f           t h e y w e r e r e q u i r e d t o remove t h e i r

building,           t h e y would be e n t i t l e d t o t h e sum o f $ 2 2 , 5 0 0 a s a

c o s t of      removal.          As     noted above,            that      i s s u e h a s b e e n de-

cided i n t h e i r favor.                 D e f e n d a n t s f u r t h e r c l a i m damages o f

$450 p e r month f o r l o s s o f r e n t and t h e i n a b i l i t y t o c l o s e

down      a     motel      structure.              Defendants             prayed,      among       other
things,      f o r t h e items o f damage m e n t i o n e d and f o r a t t o r n e y

fees.

           The    Town's       motion      to    dismiss         was    made p u r s u a n t     to

R u l e 1 2 ( b ) ( 6 ) , M.R.Civ.P.,        which r e a d s i n p e r t i n e n t p a r t a s

follows:

           " ( b ) How p r e s e n t e d .    Every d e f e n s e , i n law o r
           f a c t , t o a c l a i m f o r r e l i e f i n any p l e a d i n g ,
           whether a c l a i m , c o u n t e r c l a i m , cross-claim,
           or t h i r d p a r t y c l a i m , s h a l l be a s s e r t e d i n
           t h e r e s p o n s i v e p l e a d i n g t h e r e t o i f one is
           required, except t h a t the following defenses
           may, a t t h e o p t i o n o f t h e p l e a d e r , b e made by
           motion:       . . .       ( 6 ) f a i l u r e t o s t a t e a claim
           upon which r e l i e f c a n be g r a n t e d          . . ."
           The B u l l o c k s a r g u e t h a t t h e i r c o m p l a i n t f o r damages

s h o u l d n o t h a v e been d i s m i s s e d and r e l y on D u f f y v .               Butte

T e a c h e r s ' Union No.       332, AFL-CIO          ( 1 9 7 5 ) , 1 6 8 Mont.        246,   541

P.2d     1199,      where      this      Court,         speaking        to    a   motion         to

dismiss, stated:

           "A m o t i o n t o d i s m i s s f o r f a i l u r e t o s t a t e a
           c l a i m upon which r e l i e f c a n b e g r a n t e d , R u l e
           1 2 ( b ) ( 6 ) , M.R.Civ.P.,                  is equivalent t o a
           demurrer             under        former c i v i l procedure.
           [Citation omitted. ]                        A motion t o d i s m i s s
           a d m i t s t o a l l f a c t s w e l l p l e a d e d and i n
           c o n s i d e r i n g t h e motion t h e m a t e r i a l a l l e g a -
           t i o n s of t h e p l e a d i n g a t t a c k e d a r e taken a s
           true.         [ C i t a t i o n o m i t t e d . I Where a c o m p l a i n t
           s t a t e s f a c t s s u f f i c i e n t t o c o n s t i t u t e a cause
           o f a c t i o n upon a n y t h e o r y , t h e n t h e m o t i o n t o
           d i s m i s s m u s t be o v e r r u l e d .        [ C i t a t i o n omit-
           ted.]"            1 6 8 Mont. a t 252-253,                5 4 1 P.2d a t
           1202-1203.

Defendants c i t e a l s o a s a u t h o r i t y t o t h i s holding B u t t r e l l

v.     McBri.de    Land     and L i v e s t o c k    ( 1 9 7 6 ) , 1 7 0 Mont.       296,       553

P.2d     407.     Thus,     i n a r g u i n g a g a i n s t t h e d i s m i s s a l of      their

c o u n t e r c l a i m below, t h e B u l l o c k s a r g u e    t h a t c e r t a i n assump-

tions     must      be    made:      first,       all    facts         set   forth        in    the

c o u n t e r c l a i m a r e assumed t r u e ;     second,       a l l these f a c t s are

t o be    read     and     interpreted          i n favor        of    the Bullocks;            and

third,     t h a t t h e g r a n t i n g of a motion t o d i s m i s s is held i n
disfavor unless the allegations i n the counterclaim affirma-

t i v e l y d e m o n s t r a t e t h a t no a c t i o n l i e s and t h e m o t i o n s h o u l d

be d e n i e d .
           Whether          the     Town's        conduct            is    characterized               as
n e g l i g e n c e o r is c h a r a c t e r i z e d a s c o n t a i n i n g m i s r e p r e s e n t a -
t i o n s , w e f e e l makes l i t t l e d i f f e r e n c e .            The e s s e n c e o f t h e
c l a i m s i s t h a t t h e y w e r e m i s l e d by t h e c o n d u c t o f t h e Town
to    their        disadvantage.             This Court              has    held     recently          in

Adams v . Adams ( 1 9 7 9 ) , - Mont.                            ,   604 P.2d 332, 334, 36
St.Rep.       2374, 2377, a s t o e q u i t a b l e e s t o p p e l :
            ". . .         To i t e r a t e , f o r e q u i t a b l e e s t o p p e l t o
            e x i s t , t h e r e must be: (1) a f a l s e r e p r e s e n t a -
            t i o n o r a c o n c e a l m e n t o f f a c t s , ( 2 ) made w i t h
            t h e knowledge, a c t u a l o r c o n s t r u c t i v e , o f t h e
            f a c t s , ( 3 ) t o a p a r t y w i t h o u t knowledge o r
            means o f knowledge o f t h e f a c t s , ( 4 ) w i t h t h e
            i n t e n t i o n t h a t i t s h o u l d b e a c t e d upon and
            ( 5 ) r e l i a n c e on t h e f a l s e r e p r e s e n t a t i o n t o
            h i s o r h e r p r e j u d i c e by t h e o t h e r .          . ."
The D i s t r i c t C o u r t d i d n o t e r r          i n dismissing the counter-

claim.
            Affirmed.


                                                                                                   /




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