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Rase v. Castle Mountain Ranch, Inc

    Brief Fact Summary. Owners of cabins on a ranch believed that they would have long-term occupancy of their residences. However, when ownership of the ranch changed, an attempt was made to terminate their licenses.

    Synopsis of Rule of Law. A constructive trust will be given to a party when there has been a breach of confidence that will wrongfully deprive the party of its rights and unjustly enrich the legal holder.

    Facts. The owners of cabins (Appellants) located on the Rock Creek Lake front had been in the area since 1922, with the consent of the surrounding ranch. The construction has been built with the consent and help of the ranch owners. No written agreements were entered into between the ranch owners and cabin owners in the earlier years. In 1963, though, the cabin owners entered into license agreements with the ranch owners, which included a termination provision. Over the years, notice of termination was never served on the ranch owners, even though provisions of the license agreement had been breached by various cabin owners. The ranch was sold to a corporation (Appellees), who sent the cabin owners a notice of termination of their licenses, which was against the wishes of the original ranch owners. Appellants filed an action for interlocutory and permanent injunctive relief, and to quiet the title in their cabins and establish permanent easements.

    Issue. When real property is held by a license agreement over several years, and the holders of the license make improvements and reasonably relies on the licensor’s promise that the license will be of a long duration, can that license be revoked at any time?

    Held. No. Judgment affirmed.
    The original ranch owners allowed the cabins to be built with the intention that the structures would be permanent structures. In fact, they would not allow trailers or movable homes on the property because they wanted permanent structures on the ranch.
    It was probably assumed by all parties that ownership of the ranch would remain unchanged. Even during the sale of the ranch, the original ranch owners led the Appellants to believe that they did not have to fear losing their cabins. Appellants built and improved on their cabins under the assumption that they would retain long-term occupancy.
    The original owners gave Appellants an implied assurance of a somewhat permanent tenure so that they made substantial investments in erecting and maintaining the cabins. An immediate termination of the lease would result in a constructive fraud against Appellants.
    The conduct of the original ranch owners created a constructive trust in the improvements placed on the property by the cabin owners and that trust was imposed on Appellees as an equitable lien on the property in favor of Appellants. The equitable line could be satisfied by a continued use by the cabin owners for a reasonable period of time or by compensation and money for the value of the structures by Appellees.
    Appellants do not have right, title or interest in the lace property under the doctrine of adverse possession or prescriptive right; their occupancy is based on permission by Appellees predecessors in interest.
    Appellants may occupy their cabins until December 31, 1987.
    Concurrence. The Appellants should be able to stay on the property for much longer than the date given by the majority.

    Discussion. The substantial expenditures on the land and the reliance on the licensor’s promise of a long-term license make the license irrevocable. But, the license is only irrevocable for the period of time necessary to protect the reliance interest.


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