## Facts

- Since at least 1922, owners of summer cabins around Rock Creek Lake built and improved permanent cabins on ranch-owned lakeshore land with the ranch owner’s consent.
- The cabins were substantial, long-standing structures; cabin owners and ranch owners maintained amicable relations for decades, and cabins were inherited and transferred without interference.
- Some later-written “lease” or license forms (beginning in 1963) allowed termination on 30 days’ notice, but the ranch owner did not invoke termination during its ownership and tolerated violations of agreement terms.
- The cabins and related improvements had an assessed value of about $300,000 at the time of trial, reflecting substantial investment by cabin owners.
- In 1972, the ranch and lakeshore parcels were sold to a corporate purchaser; the property later became owned by Castle Mountain Ranch, Inc.
- After the sale, the new owner treated the cabin owners’ rights as purely terminable licenses, served 30-day termination notices to all cabin owners, and demanded they vacate.
- The trial court found no express promise of perpetual possession, but found the prior owner’s conduct provided implied assurance of relatively stable, long-term occupancy that induced significant investment.

## Issues

1. Whether a successor landowner could summarily terminate, en masse, decades-long cabin occupancies under a 30-day termination clause after the cabin owners made substantial, reliance-based permanent improvements.
2. Whether equity required a constructive trust or comparable remedy to prevent constructive fraud and unjust enrichment, and what form that remedy should take.

## Decision

- The Montana Supreme Court affirmed the judgment granting equitable relief to the cabin owners.
- The court held that enforcing an immediate, wholesale termination based solely on the 30-day clause would amount to constructive fraud and unjust enrichment under the circumstances.
- The court approved imposing a constructive trust in the cabin-site improvements, enforced as an equitable lien against the ranch property owned by Castle Mountain.
- The court declined to award the cabin owners fee title to the underlying land or to recognize an express permanent easement; relief was grounded in equity to protect the value created by reliance.

## Legal Principles

- A constructive trust may be imposed when a breach of confidence would wrongfully deprive another of rights and unjustly enrich the legal titleholder.
- Long-term permissive occupation coupled with substantial, permanent improvements made in reasonable reliance on the landowner’s conduct can justify equitable limits on strict enforcement of a revocation clause.
- Written termination rights are evaluated in light of the parties’ course of dealing and expectations; equity may prevent a successor from using formal termination rights to capture improvement value without compensation.
- An equitable lien may be used to secure the beneficiary’s equitable interest in improvements while leaving legal title to the land with the record owner.

## Conclusion

The court held that decades of permitted cabin construction and improvement created reliance interests that made wholesale 30-day termination inequitable, and it affirmed a constructive trust enforced by an equitable lien to prevent the successor landowner from being unjustly enriched by the cabin owners’ improvements.


Rase v. Castle Mountain Ranch, Inc., 193 Mont. 209, 631 P.2d 680 (Mont. 1981)