Case Title: MENDS v DYKSTRA

Citation: 

Docket Number: 81-139

State: montana

Court: Montana Supreme Court

Date: 1981-11-25T00:00:00Z

Document:
No. 81-139 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 NIGEL MENDS and CATHERINE J. MENDS, Plaintiffs and Appellants, WAYNE R . DYKSTRA, PATRICIA R. DYKSTRA, and JERRY R. GOSSEL, Defendants and Respondents. Appeal from: District Court of the Eighteenth Judicial District, In and for the County of Gallatin. Honorable W.W. Lessley, Judge presiding. Counsel of Record: For Appellants: Berg, Coil, Stokes and Tollefsen, Bozeman, Montana For Respondents: Zion Law Firm, Helena, Montana Filed: Submitted on briefs: July 30, 1981 Decided : November 2 5, 1.9 8 1 M r . J u s t i c e Fred J. Weber d e l i v e r e d t h e Opinion of t h e Court. P l a i n t i f f s sued f o r r e s c i s s i o n of a c o n t r a c t t o purchase defendants' dwelling, o r i n t h e a l t e r n a t i v e , f o r damages because of d e f e c t s i n t h e dwelling. A judgment was e n t e r e d f o r t h e defendants i n accordance w i t h t h e j u r y v e r d i c t i n t h e Eighteenth J u d i c i a l D i s t r i c t Court, G a l l a t i n County. W e r e v e r s e t h e D i s t r i c t Court, holding t h a t it e r r e d i n r e f u s i n g p l a i n t i f f s ' i n s t r u c t i o n s on c o n s t r u c t i v e f r a u d , and i n g i v i n g an a 1 t e r n a te f r a u d i n s t r u c t i o n . I n May of 1978, while viewing homes f o r s a l e i n t h e Belgrade a r e a w i t h t h e i r r e a l t o r , Nigel and Catherine Mends n o t i c e d a "For S a l e " s i g n o u t s i d e t h e house owned by Wayne and P a t r i c i a Dykstra, and stopped i n , unannounced, t o m e e t t h e owners and look t h e house over. Because they l i k e d t h e looks of t h e house, t h e view, and t h e p r i c e of $41,000, t h e Mends made an e a r n e s t money o f f e r of $200 which was accepted by t h e Dykstras. Between t h e end of May and e a r l y August when t h e Mends moved i n t o t h e house, they v i s i t e d it t h r e e t i m e s . Each t i m e they were permitted t o walk around t h e house and yard p r e t t y much a s they pleased. During t h e Mends' f i r s t , unannounced, v i s i t , M r s . Dykstra pointed o u t t h a t t h e house had no c e n t r a l h e a t i n g , b u t was heated by a f i r e p l a c e i n t h e d i n i n g room, a f i r e p l a c e i n t h e l i v i n g room, and t h r e e electric space h e a t e r s . During t h e second v i s i t , t h e Dykstras t o l d t h e Mends t h a t M r . Dykstra i s a c a r p e n t e r and t h a t he b u i l t t h e house himself f o r h i s family t o l i v e i n ; t h a t t h e Dykstras and t h e i r young c h i l d r e n had l i v e d comfortably i n t h e house summer and w i n t e r ; and t h a t t h e r e had been no problems w i t h p i p e s f r e e z i n g s i n c e Dykstras c l o s e d i n t h e garage. M r . Dykstra mentioned t h a t t h e house was n o t e n t i r e l y completed -- t h e w e l l house should be i n s u l a t e d , and a half-bathroom and t h e family room made of t h e covered-over garage needed f i n i s h i n g and i n s u l a t i n g . On t h e t h i r d v i s i t i n mid-July, M r . Dykstra explained again t h a t t h e family room and half-bath needed f i n i s h i n g and t h e w e l l house needed i n s u l a t i n g . M r . Mends asked M r . Dykstra i f t h e r e w e r e any o t h e r problems w i t h t h e house he should know about and M r . Dykstra responded t h a t he could n o t think of anything else. The Mends w e r e unable t o o b t a i n conventional f i n a n c i n g f o r t h e purchase of t h e house u n l e s s they i n s t a l l e d c e n t r a l h e a t i n g , s o they a p p l i e d f o r an F.H.A. i n s u r e d loan and signed a second e a r n e s t money agreement, t h i s one i n d i c a t i n g t h a t t h e amount due t h e Dykstras would be $42,800. The second agreement contained t h e phrase " c o n d i t i o n a l upon no a d d i t i o n a l work t o be r e q u i r e d by a p p r a i s a l " w r i t t e n i n by M r s . Dykstra. Neither p a r t y wanted t o have t o i n v e s t more i n a l t e r a t i o n s t o t h e house. I t was understood and agreed t h a t i f t h e independent a p p r a i s a l r e q u i r e d by t h e F.H.A. i n d i c a t e d r e p a i r s o r a l t e r a t i o n s w e r e necessary before an F.H.A. i n s u r e d loan could be approved, t h e sale was o f f . The a p p r a i s a l , conducted by an independent a p p r a i s e r a s r e q u i r e d by t h e F.H.A., r e s u l t e d i n approval of an F.H.A. i n s u r e d loan t o t h e Mends, who then purchased t h e Dykstra house. The c l o s i n g was on August 8, 1978. The Dykstras had given t h e Mends t h e house key during t h e Mends' t h i r d v i s i t , i n mid-July; t h e Mends moved i n a t l e a s t a week b e f o r e c l o s i n g . They found t h e house p l e a s a n t and comfortable u n t i l September. They d i d n o t c a l l i n anybody t o i n s p e c t t h e house i n t h e week o r more before c l o s i n g . I n l a t e September, with cooler weather, t h e Mends t r i e d t o h e a t t h e i r house. The f i r e p l a c e i n t h e dining room would n o t draw and f i l l e d t h e house with smoke. The concrete f i r e b o x i n the l i v i n g room f i r e p l a c e began t o crack and crumble with t h e heat, leaving a hole a t t h e back of t h e firebox. The f a l l r a i n s caused leakage around t h e dining room chimney, which was surrounded a t t h e roof l e v e l by asbestos boards held i n by asbestos wadding and c h i p s i n s t e a d of proper f l a s h i n g . There w e r e gaps a t t h e chimney corners which permitted water t o run down onto t h e c e i l i n g and d r i p i n t o t h e dining room. Nigel Mends sealed o f f t h e chimney with roofing compound and i n s t a l l e d a woodstove. The i n s t a l l a t i o n uncovered a number of o t h e r d e f e c t s i n t h e construction of t h e house, which were l a t e r confirmed by a Bozeman housing inspector. Ceiling j o i s t s were few and f a r between; t h e sheetrock c e i l i n g was l a i d across an i m i t a t i o n beam made of 1 x 4 ' s . I n some places it was j u s t balanced on t h e "beam." C e i l i n g j o i s t s balanced a g a i n s t t h e 1 x 4 ' s o r were held up by twisted b a i l i n g wire " l i k e you would a fence corner." Much of t h e c e i l i n g i n s u l a t i o n was upside down. An e l e c t r i c a l junction box between t h e sheetrock and i n s u l a t i o n above t h e l i v i n g room c e i l i n g was uncovered with bare w i r e s exposed and connections dangling. Roof r a f t e r s which were too s h o r t w e r e pieced together "with l i t t l e broken up pieces" of 1 x 4 ' s . The Mends' attempts t o c o n t a c t Dykstras w e r e unsuccessful, and t h e Dykstras' r e a l t o r informed Nigel Mends t h a t t h e Mends w e r e picky and t h e so-called flaws were merely " d i f f e r e n c e i n perception of d e t a i l . " The Mends bundled up and made do with t h e i r woodstove although t h e house was d r a f t y and cold and because t h e water h e a t e r s were very small t h e r e o f t e n was not enough h o t water. I n mid-~ecember, and again before New Year's Day, t h e p i p e s f r o z e . The second t i m e they remained frozen u n t i l A p r i l . The pump i n t h e w e l l house f r o z e and b u r s t , a s d i d t h e p i p e s under t h e bathroom. When a plumber w a s c a l l e d he was unable t o g e t under t h e house because t h e "crawlspace" was only a few inches deep. During t h e w i n t e r , t h e Mends made s e v e r a l more a t t e m p t s t o e s t a b l i s h communication with t h e Dykstras, b u t t h e i r letters w e r e n o t answered. They a l s o c a l l e d i n a p r o f e s s i o n a l b u i l d i n g c o n t r a c t o r t o look a t t h e house. H i s testimony r e v e a l s t h a t he had l i v e d n e x t door t o t h e Dykstras f o r two w i n t e r s , 1975-76 and 1976-77. During t h a t t i m e t h e i r plumbing f r o z e " f i v e o r s i x t i m e s " each w i n t e r , and t h e Dykstras came t o h i s home f o r water and t o borrow a space h e a t e r . The cm-hramr t e s t i f i e d t h a t p i p e s f r o z e i n both t h e new and o l d s e c t i o n s of t h e house. When t h e Mends c a l l e d him over t o check o u t t h e house, he found "about 85 percent" of t h e flaws l i s t e d below by b u i l d i n g i n s p e c t o r Barrick, and he advised Nigel Mends t o bulldoze t h e house down and s t a r t over; t h e c o s t of c o r r e c t i n g t h e d e f e c t s would be a t l e a s t a s g r e a t a s s t a r t i n g from t h e ground and b u i l d i n g a s a f e and s t a b l e new house. F i n a l l y , on J u l y 3 , 1979, t h e Mends g o t Bozeman c i t y b u i l d i n g i n s p e c t o r , Don Barrick, t o come o u t and look f o r d e f e c t s i n t h e i r house. H i s r e p o r t t o them, dated J u l y 15, 1979, alarmed t h e Mends enough t h a t they moved o u t of t h e house before t h e end of J u l y . B a r r i c k ' s testimony, b e s i d e s a f f i r m i n g t h e e x i s t e n c e of those flaws a l r e a d y described, i n d i c a t e s t h a t h i s i n s p e c t i o n uncovered t h e following major d e f e c t s , among many o t h e r d e f e c t s of less importance: 1) The c o n c r e t e f o o t i n g s f o r t h e house w e r e n o t set i n t h e ground b u t poured over t h e top of t h e ground, leaving t h e e n t i r e s t r u c t u r e s u b j e c t t o f r o s t heaves and d i f f e r e n t i a l s e t t l e m e n t which would break the foundation and crack t h e walls. Some cracking i n the footings and i n t h e rockwork above t h e foundation was already evident. 2 ) The e x t e r i o r s i d i n g was made of Celotex, a kind of fiberboard which i s n o t intended f o r e x t e r i o r use, a s it absorbs moisture and w i l l eventually d e t e r i o r a t e and f a l l o f f . C e r t a i n p a r t s of t h e s i d i n g i n t h e Mends house were already "very near t h e p o i n t of f a l l i n g o f f . " 3 ) Because of t h e use of d i s s i m i l a r wires (copper and aluminum), s p l i c e s without junction boxes, and breaker boxes with higher amperage l e v e l than t h e wires, t h e e l e c t r i c a l system posed a s e r i o u s f i r e hazard. 4 ) Improper framing over doors and windows, under t h e f l o o r s , and i n t h e roof had r e s u l t e d i n dragging doors, springy f l o o r s , and a sag i n the roof. I n f a c t s e v e r a l f l o o r j o i s t s were supported by a rock s i t t i n g on t h e ground under t h e house. 5) The f i r e b o x was concrete i n s t e a d of f i r e b r i c k ; t h e concrete had cracked from t h e h e a t and allowed h e a t buildup behind the firebox; t h e a r e a behind t h e f i r e b o x was n o t protected and t h e r e was r e a l danger of a major f i r e . 6 ) The plumbing system was inadequately vented; t h e sewer gases might back up, c r e a t i n g a s a n i t a t i o n problem. 7 ) The woodstove i n t h e family room (closed-in garage) was too c l o s e t o combustible m a t e r i a l s and posed a f i r e hazard. Barrick t e s t i f i e d t h a t the home w a s n e i t h e r s a f e nor s t a b l e and t h a t r e p a i r s would be very c o s t l y . H e s t a t e d t h a t a person experienced i n construction p r a c t i c e s could discover most of t h e d e f e c t s " j u s t by looking a t them," b u t t e s t i f i e d t h a t , i n order t o look a t many of them, it would be necessary t o s c r a t c h under t h e concrete footings, crawl around underneath t h e house i f t h e r e was crawlspace, remove - sheetrock walls, remove panels over wiring, open e l e c t r i c a l d i s t r i b u t i o n boxes, and go up i n t o t h e a t t i c . Nigel and Catherine Mends f i l e d t h i s a c t i o n , i n i t i a l l y f o r damages alone, a g a i n s t Wayne and P a t r i c i a Dykstra, both r e a l t o r s involved i n t h e s a l e , and t h e independent f e e a p p r a i s e r , J e r r y Gossel, whose i n i t i a l a p p r a i s a l of t h e house r e s u l t e d i n t h e approval of an F.H.A. insured loan. Subsequently t h e complaint was amended t o allow f o r r e s c i s s i o n of t h e c o n t r a c t and a r e t u r n t o Mends of a l l moneys paid, a s an a l t e r n a t i v e t o damages. The a c t i o n w a s dismissed as t o t h e two r e a l t o r s . O n t h e morning t r i a l began, p l a i n t i f f s Mends and defendant Gossel s t i p u l a t e d t h a t Gossel consented t o judgment a g a i n s t him i n the amount of $5,000. T r i a l commenced on October 1 4 , 1980; and continued f o r four days. The D i s t r i c t Court r u l e d t h a t t h e r e was no c o n s t r u c t i v e fraud i n t h i s case, refused t o i n s t r u c t t h e jury on c o n s t r u c t i v e fraud, and advised counsel t h a t they were n o t t o t a l k about c o n s t r u c t i v e fraud i n t h e i r c l o s i n g arguments. The jury returned a v e r d i c t a g a i n s t t h e p l a i n t i f f s . The D i s t r i c t Court denied p l a i n t i f f s ' motion f o r judgment notwithstanding t h e v e r d i c t and f o r a new trial. The D i s t r i c t Court allowed defendants' deposition c o s t s i n t h e amount of $497.50. P l a i n t i f f s appeal. P l a i n t i f f s maintain t h a t t h e D i s t r i c t Court e r r e d i n r e f u s i n g t o give p l a i n t i f f s ' i n s t r u c t i o n s No. 1 4 and No. 17, and i n giving i t s own proposed i n s t r u c t i o n A. (Given a s i n s t r u c t i o n No. 9. ) During the s e t t l i n g of jury i n s t r u c t i o n s p l a i n t i f f s o b j e c t e d t o one of defendants1 i n s t r u c t i o n s because, although it defined a c t u a l f r a u d , it f a i l e d t o d e f i n e c o n s t r u c t i v e fraud. The following d i s c u s s i o n then took place: "THE COURT: [ t o defense counsel] [I] s i t your p o s i t i o n t h a t c o n s t r u c t i v e f r a u d can be used i n t h i s case? "MR. REYNOLDS: [defense counsel] No. "THE COURT: Is t h a t because o f t h e r e l a - t i o n s h i p of t h e p a r t i e s ? "MR. REYNOLDS: Because of t h e r e l a t i o n s h i p between t h e p a r t i e s and because of t h e con- t r a c t between t h e p a r t i e s . "THE COURT: I s o r u l e . I s o r u l e . N o c o n s t r u c t i v e f r a u d , sir. ". . . I ' v e r u l e d t h a t t h e r e i s n ' t any con- s t r u c t i v e fraud. I ' m s u r e w e ' r e going t o be i n a p o s i t i o n where w e ' r e going t o have t o t a k e your arguments. But, I assume t h a t y o u ' r e n o t going t o be embarred [ s i c ] by m e admonishing e i t h e r one of you. You're n o t t a l k i n g about c o n s t r u c t i v e fraud. " A s a r e s u l t of t h e t r i a l c o u r t ' s r u l i n g , p l a i n t i f f s 1 proposed i n s t r u c t i o n s 1 4 and 17 w e r e r e f u s e d . I n s t r u c t i o n 17 states: "The consent of t h e p a r t y of a c o n t r a c t must be f r e e . An apparent consent i s n o t r e a l o r f r e e when obtained through f r a u d o r mistake. "Fraud i s e i t h e r a c t u a l o r c o n s t r u c t i v e . ". . . [ s t a t u t o r y d e f i n i t i o n of a c t u a l f r a u d omitted . I "Constructive f r a u d c o n s i s t s i n : "1. Any breach of duty which, w i t h o u t an a c t u a l l y f r a u d u l e n t i n t e n t , g a i n s an advan- t a g e t o t h e person i n f a u l t o r anyone claim- i n g under him by misleading a n o t h e r t o h i s p r e j u d i c e o r t o t h e p r e j u d i c e of anyone claiming under him; o r " 2 . Any such a c t o r omission a s t h e law s p e c i a l l y d e c l a r e s t o be f r a u d u l e n t , w i t h o u t r e s p e c t t o a c t u a l fraud. "Mistake of f a c t i s a mistake n o t caused by t h e n e g l e c t of a l e g a l d u t y on t h e p a r t of t h e person making t h e mistake and c o n s i s t i n g i n a n unconscious ignorance o r f o r g e t f u l l n e s s [ s i c ] of a f a c t , p a s t o r p r e s e n t , m a t e r i a l t o t h e c o n t r a c t . l1 The d e f i n i t i o n s included i n t h i s i n s t r u c t i o n a r e v i r t u a l l y i d e n t i c a l t o those s t a t u t o r y d e f i n i t i o n s of a c t u a l fraud, (Section 28-2-405, MCA) , c o n s t r u c t i v e f r a u d (Section 28-2- 406, MCA) and mistake of f a c t (Section 28-2-409, MCA) . In- s t r u c t i o n 1 4 s t a t e s : "The p l a i n t i f f s have a l l e g e d t h a t they w e r e f r a u d u l e n t l y induced i n t o e n t e r i n g i n t o t h e c o n t r a c t with t h e defendants. Fraud of t h e n a t u r e involved i n t h e claim of f r a u d u l e n t inducement i s defined a s e i t h e r c o n s t r u c t i v e fraud o r a c t u a l fraud. "Constructive f r a u d occurs when a p a r t y t o a t r a n s a c t i o n conceals from t h e o t h e r p a r t y m a t e r i a l f a c t s about t h e n a t u r e of t h e trans- a c t i o n . " . . . [common law d e f i n i t i o n of a c t u a l f r a u d omitted . I " I f you f i n d t h a t t h e defendants Dykstra have committed e i t h e r c o n s t r u c t i v e o r a c t u a l fraud, then you may a l s o f i n d t h a t they a r e l i a b l e f o r damages a s a r e s u l t of fraud i n t h e inducement a s a g a i n s t t h e p l a i n t i f f s . The t r i a l c o u r t i n s t r u c t e d t h e jury as follows: "You a r e i n s t r u c t e d t h a t where m a t e r i a l f a c t s a r e known t o one p a r t y and n o t t o t h e o t h e r , f a i l u r e t o d i s c l o s e them i s n o t a c t i o n a b l e fraud. " ( I n s t r u c t i o n No. 9. ) P l a i n t i f f s objected t o t h a t i n s t r u c t i o n a s n o t being a complete statement of t h e law. P l a i n t i f f s maintain t h a t i n Lyle v. Moore (19791, Mont. , 599 P.2d 336, 339, 36 S t . Rep. 1307, 1312, and i n B A J I 12:36 ( 4 t h Ed.), both c i t e d by t h e t r i a l c o u r t a s sources f o r t h e i n s t r u c t i o n , t h e law allowed f o r exceptions when a duty t o d i s c l o s e would e x i s t . I n Lyle v. Moore, supra, t h e f i n d i n g of a duty t o d i s c l o s e turned on t h e e x i s t e n c e of a f i d u c i a r y r e l a t i o n s h i p between seller and buyer. This C o u r t ' s f u l l statement w a s : "As w e have noted, t h e r e a r e t i m e s when t h e law imposes a duty upon a p a r t y t o speak r a t h e r than t o remain s i l e n t and thereby t o d i s c l o s e information t o place t h e person with whom he i s dealing on an equal f o o t i n g with him. The f a i l u r e t o speak i n such a c a s e amounts t o t h e suppression of a f a c t which should have been disclosed and c o n s t i t u t e s fraud. " The B A J I c i t a t i o n was considerably abbreviated by t h e D i s t r i c t Court. The f u l l i n s t r u c t i o n i n t h e c u r r e n t volume of B A J I follows: "Except a s you may otherwise be i n s t r u c t e d , where m a t e r i a l f a c t s a r e known t o one p a r t y and n o t t o t h e o t h e r , f a i l u r e t o d i s c l o s e them i s n o t actionable fraud u n l e s s t h e r e i s some r e l a t i o n s h i p between t h e p a r t i e s which gives r i s e t o a duty t o d i s c l o s e such known f a c t s . "A duty t o d i s c l o s e known f a c t s a r i s e s where t h e p a r t y having knowledge of t h e f a c t s i s i n a f i d u c i a r y o r a c o n f i d e n t i a l r e l a t i o n s h i p which imposes on him a duty of d i s c l o s u r e . "A f i d u c i a r y o r a c o n f i d e n t i a l r e l a t i o n s h i p e x i s t s whenever under the circumstances t r u s t and confidence reasonably may be and i s reposed by one person i n t h e i n t e g r i t y and f i d e l i t y of another. "[A duty t o d i s c l o s e known f a c t s a r i s e s [in t h e absence of a f i d u c i a r v o r c o n f i d e n t i a l r e l a t i o n s h i p ] where - one p a r t y knows of m a t e r i a l f a c t s -- and a l s o knows t h a t such f a c t s -- are n e i t h e r known nor r e a d i l y a c c e s s i b l e t o t h e o t h e r p a r t y . ] " ( B A J I , 6 t h Ed. ) ( ~ m p h a s i s - . - . supplied.) The p a r t i e s agree t h a t an indispensable element of c o n s t r u c t i v e fraud i s a breach of duty t o d i s c l o s e m a t e r i a l f a c t s , b u t defendants argue t h a t no such duty e x i s t e d here because no f i d u c i a r y r e l a t i o n s h i p o r c o n f i d e n t i a l r e l a t i o n s h i p e x i s t e d between t h e p a r t i e s . Defendants argue t h a t t h e Mends and t h e Dykstras w e r e n e i t h e r f r i e n d s nor acquaintances b u t "opposite p a r t i e s t o an arms-length business t r a n s a c t i o n . " F i n a l l y , defendants concede t h a t i n a few cases t h i s Court has found t h a t s p e c i a l circumstances surrounding t h e t r a n s a c t i o n impose a duty upon t h e seller t o d i s c l o s e c e r t a i n information t o t h e buyer. I n Moschelle v. Hulse (1980), Mont. 622 P.2d 155, 159, 37 S t . Rep. 1506, 1510, " a p a t t e r n of repeated concealments of t h e t r u e s t a t e of a f f a i r s concerning t h e c o n d i t i o n of t h e premises and probable business earnings" r e s u l t e d i n a f i n d i n g t h a t breach of a duty t o d i s c l o s e was Po'Llsen @ j P c o n s t r u c t i v e fraud. I n %mben v. Treasure S t a t e I n d u s t r i e s , Inc. (1981), Mont. , 626 P.2d 822, 829, 38 S t . Rep. 218, 226, t h i s Court found c o n s t r u c t i v e f r a u d when sellers f a i l e d t o d i s c l o s e t o buyers " s e r i o u s impairments t o t h e property which [ t h e buyers] had no reason t o suspect. " I n Poulson, 626 P.2d a t 828, 38 S t . Rep. a t 225, w e r e l i e d upon R u s s e l l v. R u s s e l l (1969), 152 Mont. 461, 465-466, 452 P.2d 77, 79-80, i n support of our f i n d i n g of c o n s t r u c t i v e fraud: ". . . fraud i s complete where a vendor knowingly suppresses a s e r i o u s v i c e of h i s property which t h e vendee had no reason t o suspect." Defendants argue t h a t t h e r e was no concealment, no suppression of d e f e c t s i n t h e building. They p o i n t o u t t h a t p l a i n t i f f s w e r e permitted t o look t h e house over whenever they v i s i t e d , t h a t a n independent a p p r a i s e r had evaluated t h e b u i l d i n g , and t h a t p l a i n t i f f s had been p e r f e c t l y f r e e t o c a l l i n p r o f e s s i o n a l s t o i n s p e c t t h e house i n t h e s e v e r a l weeks before c l o s i n g , af ter t h e Dykstras had vacated t h e premises and turned t h e key over t o t h e Mends. Defendants maintain t h a t i n support of t h e i r claims of c o n s t r u c t i v e fraud, p l a i n t i f f s r e l y s o l e l y upon Wayne Dykstra's statement t o Nigel Mends t h a t t h e r e w e r e no o t h e r problems with t h e house t h a t he could t h i n k o f . This i s n o t enough, argue defendants, t o bring t h i s d i s p u t e under t h e " s p e c i a l circum- stances" r u l e which imposes a duty t o d i s c l o s e upon t h e s e l l e r . P l a i n t i f f s argue t h a t the t r i a l c o u r t refused t o i n s t r u c t t h e jury i n matters c r u c i a l t o t h e i r case, i . e . , mistake and c o n s t r u c t i v e fraud. I t i s t r u e i n s t r u c t i o n s Nos. 10-14 informed t h e jury t h a t i f they found t h a t p l a i n t i f f s ' consent t o the c o n t r a c t was given by mistake o r obtained by fraud o r by an unlawful a c t o r omission of defendants, they might a l s o f i n d t h a t p l a i n t i f f s were e n t i t l e d t o rescind t h e c o n t r a c t o r c o l l e c t damages. But t h e reference t o fraud i s q u a l i f i e d by t h e words " a s explained t o you," and t h e only explanation of fraud allowed i n t h e i n s t r u c t i o n s o r during c l o s i n g argument was t h e explanation of a c t u a l fraud. Furthermore, t h e r e i s no i n s t r u c t i o n whatsoever explaining mistake of f a c t . The D i s t r i c t Court's r e f u s a l of p l a i n t i f f s ' i n s t r u c t i o n s Nos. 1 4 and 17 and i t s inclusion of t h e abbreviated B A J I i n s t r u c t i o n on duty t o d i s c l o s e (No. 9 ) followed i t s r u l i n g t h a t c o n s t r u c t i v e fraud was not a proper element of t h i s case. The t r i a l c o u r t made no r u l i n g whatsoever on t h e existence o r absence of mistake, and y e t , i n refusing p l a i n t i f f s ' proposed i n s t r u c t i o n No. 17, refused t h e only i n s t r u c t i o n defining mistake. Mistake of f a c t i s a b a s i s f o r t h e r e s c i s s i o n of a c o n t r a c t and was a c r i t i c a l element of p l a i n t i f f s ' case. A s a r e s u l t of t h e t r i a l c o u r t ' s r e f u s a l of t h e i n s t r u c t i o n , t h e jury was n o t i n s t r u c t e d on t h e elements of mistake of f a c t . The t r i a l c o u r t r u l e d t h a t t h e r e was no c o n s t r u c t i v e fraud i n t h i s case because of t h e r e l a t i o n s h i p of t h e p a r t i e s and because of t h e c o n t r a c t between t h e p a r t i e s . I t is t r u e t h a t t h e r e was n o t a f i d u c i a r y r e l a t i o n s h i p o r a c o n f i d e n t i a l r e l a t i o n s h i p between t h e p a r t i e s , b u t t h e r e may have been s p e c i a l circumstances which i n Montana can j u s t i f y t h e f i n d i n g of c o n s t r u c t i v e fraud. See Poulson v. Treasure S t a t e I n d u s t r i e s , Inc., supra, where a seller was found t o have committed c o n s t r u c t i v e fraud upon a buyer by f a i l i n g t o d i s c l o s e s e r i o u s impairments t o t h e property s o l d which t h e buyer had no reason t o suspect. I n Poulson, t h e r e was n e i t h e r a f i d u c i a r y r e l a t i o n s h i p nor a c o n f i d e n t i a l r e l a t i o n - s h i p between t h e p a r t i e s ; t h e r e was a c o n t r a c t . This Court s t a t e d : ". . . defendants had knowledge of p o l l u t i o n v i o l a t i o n s a t t h e s h a l e p l a n t including t h e hammermill, e l e v a t o r s , spray tower and s t o r a g e and truck loading f a c i l i t i e s . Further- more, defendants were aware of t h e water drainage problem . . . The record i s void of any attempt by defendants t o d i s c l o s e t h i s information t o p l a i n t i f f s . " Poulsen v. Treasure S t a t e I n d u s t r i e s , Mont. a t I 626 P.2d a t 828-829, 38 St.Rep. a t 225-226. Again, i n Moschelle v. Hulse, supra, w e found c o n s t r u c t i v e fraud where t h e r e was n e i t h e r a f i d u c i a r y nor a c o n f i d e n t i a l r e l a t i o n s h i p and t h e p a r t i e s had executed a c o n t r a c t of s a l e . There a r e s t r i k i n g , f a c t u a l , s i m i l a r i t i e s i n Moschelle and t h e p r e s e n t case. I n Moschelle, t h i s Court s t a t e d : "Although t h e record does n o t c l e a r l y e s t a b l i s h a c t u a l f r a u d u l e n t i n t e n t on t h e p a r t of t h e defendants, t h e r e can be no doubt t h a t t h e i r r e p r e s e n t a t i o n s concerning t h e s u b j e c t of t h e s a l e amounted t o c o n s t r u c t i v e fraud. Several of t h e i r statements w e r e misleading on t h e i r f a c e and thus required f u r t h e r e l a b o r a t i o n s o a s n o t t o g i v e t h e p l a i n t i f f s t h e wrong impression. Helen Hulse t o l d t h e p l a i n t i f f s t h a t t h e b u i l d i n g was i n good condition, b u t t h e d e f e c t s which p l a i n t i f f s l a t e r discovered showed t h a t f u r t h e r r e p a i r s w e r e needed t o bring t h e b u i l d i n g up t o standard. Guy Hulse t o l d p l a i n t i f f Brent Moschelle t h a t he had i n s t a l l e d new wiring i n t h e building. H e neglected t o t e l l him t h a t he had done s o more than t h i r t y years before. The c o s t t o bring t h i s wiring up t o standard was estimated a t $3,259.30. Helen Hulse t o l d p l a i n t i f f Brent Moschelle t h a t t h e tavern was connected t o t h e c i t y sewer system, b u t she neglected t o t e l l him t h a t he would be responsible f o r the maintenance of 200 f e e t of 100-year-old pipe which r a n between t h e tavern and c i t y l i n e . . . "The defendantst statements cannot be excused simply because d e l i b e r a t e misstatements may not have been proven. The f a c t s i n d i c a t e a p a t t e r n of repeated concealments of t h e t r u e s t a t e of a f f a i r s concerning t h e condition of the premises and probable business earnings. Withholding r e l e v a n t f a c t s concerning purchased property can be a fraudulent a c t . See Russell v. Russell (1969), 152 Mont. 461, 452 P.2d 77. Furthermore, where a vendor by h i s conduct o r words c r e a t e s a f a l s e impression concerning a matter of v i t a l importance t o t h e purchaser, f u l l d i s c l o s u r e of r e l e v a n t f a c t s may be re- quired. See Twing v. Schott (1959), 80 Wyo. 1 0 0 , 338 P.2d 839; 1 2 W i l l i s t o n on Contracts (3rd e d . ) , 81498, a t 387; Restatement of Contracts, S472(1) (b) , Comment b. "Under the f a c t s here, t h e defendants were under a duty t o make such d i s c l o s u r e s a s would e r a s e t h e f a l s e impressions c r e a t e d i n t h e minds of t h e p l a i n t i f f s t h a t r e p a i r s t o t h e premises w e r e n o t needed and t h a t winter earn- i n g s were s u f f i c i e n t f o r the p l a i n t i f f s t needs." Moschelle v. Hulse, Mont. a t + , 622 P.2d a t 158, 159, 37 St.Rep. a t 1-509-1510. I n t h i s c a s e t h e presence of a c o n t r a c t and t h e absence of a s p e c i a l r e l a t i o n s h i p between t h e p a r t i e s i s n o t enough t o preclude a finding of c o n s t r u c t i v e fraud. The record i n d i c a t e s t h a t , a p a r t from Wayne Dyks t r a ' s assurance t o Nigel Mends t h a t t h e r e was nothing more he needed t o know about t h e house, a jury could have found numerous i n s t a n c e s of t h e Dykstras giving misleading information and t e l l i n g half t r u t h s which w e r e s u f f i c i e n t t o e s t a b l i s h a duty t o d i s c l o s e . A jury could have found t h a t 1) the Dykstras t o l d t h e Mends t h a t t h e r e had been no problems with pipes f r e e z i n g s i n c e t h e garage was covered, b u t neglected t o t e l l them t h a t the pipes - had frozen i n the o l d s e c t i o n of t h e house which was unaffected by covering t h e garage; 2 ) t h e Dykstras s a i d t h a t t h e f i r e p l a c e s w e r e used t o h e a t t h e house, b u t neglected t o mention t h a t t h e c o n c r e t e f i r e b o x i n t h e l i v i n g room had a l r e a d y cracked and been f i l l e d i n and r e p a i n t e d ; 3 ) t h e Dykstras showed t h e Mends t h a t t h e house was e l e c t r i c a l l y l i g h t e d and p a r t i a l l y e l e c t r i c a l l y heated, b u t neglected t o i n d i c a t e t h a t t h e e l e c t r i c a l system was s o poorly c o n s t r u c t e d t h a t it posed a s e r i o u s f i r e hazard; 4 ) t h e Dykstras assured t h e Mends t h a t t h e house was cozy and comfortable i n summer and w i n t e r , b u t d i d n o t mention t h a t they l i k e d t h e i r house c o o l e r than most houses. There a r e more i n s t a n c e s a l l e g e d than w e can h e r e r e c o u n t of s t a t e m e n t s by t h e Dykstras which, while n o t s t r i c t l y u n t r u e , w e r e s u f f i c i e n t l y misleading t o c r e a t e a duty t o d i s c l o s e . That t h e duty was n o t m e t i s e v i d e n t i n t h e testimony of Wayne Dykstra himself. On cross-examination, he admitted t o being aware of t h e flawed foundation, sub-standard framing and f l o o r i n g , p a r t i c l e - board s i d i n g , and dangerous f i r e p l a c e and wiring; y e t he t e s t i f i e d t h a t he d i d n o t inform t h e Mends of any of t h e s e d e f e c t s . Defendants argue t h a t because t h e d e f e c t s w e r e e v i d e n t , t h e r e was no concealment, r e l y i n g upon Lowe v. Root (1975), 166 Mont. 150, 156, 531 P.2d 674, 677-678, wherein t h i s Court s t a t e s : " . . . [ i f ] a p p e l l a n t ' s i n s p e c t i o n of t h e premises r e v e a l e d o r would have revealed t h e t r u e p h y s i c a l c o n d i t i o n o f t h e premises, s h e would have no r i g h t t o r e l y upon any concealment by respondents w i t h r e s p e c t t o t h e p h y s i c a l c o n d i t i o n of t h e premises." I n Lowe, however, t h e Court found t h a t " a l l of t h e a l l e g e d d e f e c t s w e r e open and n o t o r i o u s . . . A s u p e r f i c i a l i n s p e c t i o n of t h e b u i l d i n g would r e v e a l t h e s e d e f i c i e n c i e s . " Lowe v . Root, 166 Mont. a t 156, 531 P.2d a t 678. I n t h e c a s e a t b a r , according t o t h e testimony of Don Barrick, t h e Bozeman b u i l d i n g i n s p e c t o r , i n o r d e r t o look a t many of t h e d e f e c t s i n t h e Dykstra house, t h e Mends would have had t o crawl under t h e house where p o s s i b l e , d i g under t h e foundation, remove sheetrock p a n e l s , f l o o r i n g and i n s u l a t i o n , and uncover plumbing and wiring. S u r e l y t h e p r o s p e c t i v e buyer of a house should n o t be r e q u i r e d t o t a k e t h e house a p a r t board by board t o determine i t s c o n d i t i o n . The evidence i n d i c a t e s t h a t many of t h e d e f e c t s i n t h i s house w e r e n o t open and notorious, and f a r more than a s u p e r f i c i a l i n s p e c t i o n was necessary t o determine t h e i r e x i s t e n c e . See Moschelle v. Hulse, Mont. a t , 622 P.2d a t 159, 160, 37 S t . Rep. a t 1510, 1511. I t i s e v i d e n t t o t h i s Court t h a t c o n s t r u c t i v e f r a u d was a c r u c i a l element, i f n o t - t h e c r u c i a l element of t h i s c a s e . Furthermore, t h e r e w e r e numerous f a c t s i n d i s p u t e . w i t h o u t making f a c t u a l determinations p r o p e r l y l e f t t o t h e jury t h e is t r i c t Court could n o t have decided t h a t c o n s t r u c t i v e f r a u d was n o t a n element of t h i s case. W e hold t h a t t h e D i s t r i c t Court e r r e d i n r e f u s i n g p l a i n t i f f s ' proposed i n s t r u c t i o n s No. 14 and No. 17, i n g i v i n g i t s own i n s t r u c t i o n No. 9, and i n r e f u s i n g t o a l l o w any mention of c o n s t r u c t i v e f r a u d i n c l o s i n g argument. W e r e v e r s e and remand t h i s c a s e f o W e concur: