IN T7'I-IF: SUPRBMF; COURT OF' ?'HE: STATE OF MONTANA

DONA1,D E. PARE AND LOIS M. PARE, Plaintiffs and appellant.^,-VSM. C. MORRISON AND DOROTHY MORRISON, Defendants and Respondents.

APPEAL FROM: DistrictCourt of the FirstJudicial District, In and for the County of Lewis & Clark, The Honorable Jeffrey Sherlock, Judge presiding.

COUNSEL OF RECORD: For Appellant: CharlesA. Graveley, Helena, Montana For Respondent: Richard TI. Parish; Harlen, Thompson & Parish, Helena, Montana

-------- ---------- Submitted on Briefs: Dec. 14, 1989

; February 5, 1990Justice Diane G. Barz delivered the Opinion of the Court.

Donald E. and Lois M. Pare, plaintiffs, appeal the decision of the District Court of the First Judicial District, Lewis and Clark County, finding that M.C. and Dorothy Morrison, defendants, did not fraudulently induce the plaintiffs to purchase real property from them. We affirm. Donald E. and LoisM. Pareowned and operated an autowrecking service in Helena, Montana. The Pares operated this business out of their home on North Harris Street. Dhring theend of the summer in 1985, the Pares wanted to expand their business and began investigating thepurchase ofproperty located onKerr Drive. This property, located in the Hiltabrand subdivision, Lewis and Clark County, was subject to restrictive covenants that were first recorded on February 14, 1958. The restrictive covenant that applies to this case states in pertinent part that 1. [N]o lot or building plot shall be used except for strictly residential purposes, and no business, trade ormanufacture of any sort or nature shall be conducted thereon. 

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These covenants are to run with the land and shall be binding on all parties and all persons claiming under them for a period of twenty-five (25) years from the date these covenants are recorded, after which time said covenants automatically shall be extended for successive periods of ten (10) years unless changed in whole or part as hereafter stated.

These covenants were recorded in Book 63, pages 180-82 in the Office of the Clerk and Recorder, Lewis and Clark County.The property on Kerr Drive was owned by M.C. and Dorothy Morrison at the time the Pares investigated purchasing the property. The Pares inspected the property and talked with the Morrisons regarding the sale of the property. The Pares returned later with familymembers and inspected the property for a second and third time. During these visits, the parties negotiated the price and terms of a potential sale. The parties agreed to a price for the property and the Pares began to move their home and business onto the property prior to the closingdate. As theyweremoving onto theproperty, the Pares discovered a problem with the plumbing. The Pares called an appraiser to look at theproperty and theparties agreed to reduce the purchase price by $6,000 due to the defective plumbing. The finalpurchase price agreed upon between thepartieswas $109,500. Prior to signing the final papers, an officer of Helena Abstract and Title Company showed the Pares a title commitment that referencedtherestrictive covenantsbybook and page. The officer also showed them a document that set out the covenants in substantial form, stating specifically that no business shall be operated on the premises and that the restrictions shall last for twenty-five years and shall automatically renew in ten years, unless otherwisemodified. The Pares nonetheless signed the final papers on November 29, 1985,transferring thedeed and closing the transaction. Shortly aftertheclosing,BruceLanthornnoted thatthePares

were attempting to operate an auto wrecking business on thepremises and informed them that the restrictive covenants that bound the property would prohibit such a business. The Pares received a follow-up letter from an attorney representing various neighbors and informing the Pares to cease operation of their business. After consulting with their own attorney, the Pares realized that the restrictive covenants on the property would prevent them fromoperating their business as intended. Theymoved out of the Kerr Drive property and back to their former residence and place of business onNorth Harris Street. The Pares attempted to restore themselves to status quo through negotiations with the Morrisons,butthosenegotiations failed. ThePares thenattempted to sell theKerr Driveproperty andwere unsuccessful until January 21, 1987,when they sold it for $75,000. On November 18, 1987, the Pares filed a complaint in the District Court of the First Judicial District, Lewis and Clark County, alleging that theMorrisons fraudulently induced them into buying theproperty on Kerr Drive. Thematterwas tried before the District Court, sitting without a jury, on May 15 and 16, 1989. The court returned a judgment in favor of theMorrisons. The Pares then filed a motion pursuant to Rule 59(g), M.R.Civ.P., to alter

or amend the judgment. The District Court denied the motion and the Pares appealed. The sole issue raised on appeal iswhether the District Court erred indeterminingthat theMorrisonsdidnot fraudulently induce the Pares into entering a contract for the saleand purchase of the Kerr Drive property.The Paresprimary allegation is that the Morrisons committed fraudby falsely representingto them that theKerr Driveproperty

was not subject to any restrictionsas to a business and therefore induced them into signing a contract for the sale and purchase of the property. In particular, the Pares argue that the Morrisons knew of the restrictive covenants, but failed to reveal the covenants so as to gain an unfair advantage over them. The Pares in this case have the burden of proof of establishingby a preponderance of evidence thenine elements that constitute fraud. These nine elements are: 1. a representation; 2. the falsity of the representation; 3. themateriality of the representation; 4. the speaker's knowledgeof the falsityof the representation or the speaker's ignorance of its truth; 5. the speaker's intent that the false representation should be relied upon; 6. the hearer's ignorance of the falsity of the representation; 7. the hearer's reliance on the false representation; 8. the hearer's right to rely on the false representation;and 9. the consequent and proximate injury caused by the reliance on the false representation. Wortmanv. Griff (1982), 200Mont. 528,531-32, 651P.2d 998,1000; Van Ettingerv. Pappin (1978), 180Mont. 1, 10, 588 P.2d 988,994. TheDistrict Court found that thePares failedtomeet theirburdenofproof. When a district court functionsas a trier of fact,this Court will not substitute its judgment for that of a district court. On review, this Court will uphold a district courtts decision when substantial credible evidence supports its findings of fact. Lorenzv. Estate of Schilling (Mont. 1989), 768 P.2d 869, 870, 46 St.Rep. 198, 200;Meridian Minerals Co. v. Nicor Minerals, Inc. (Mont. 1987), 742 P.2d 456, 461, 44 St.Rep. 1516, 1523-24. In concluding that the Pares did not meet their burden of proof, the District Court noted the conflicting storiespresented by the Pares and the Morrisons, and concluded that no reason existed why it should accept the Parestversion of events over the Morrisonstor vice versa. The District Court also concluded that the Pares did not successfully satisfy all of the nine elements that constitute fraud. In particular, the court noted that in attempting to establish fraudulent conduct by the Morrisons, the Paresprimarily relied upon a statement by the Morrisons in which they stated that they operated a business on theproperty for four years and had no problems. The court noted,however, that this is a true statement and therefore cannot be the basis for an action in fraud. The court also noted that prior to signing the final papers, the Pares were presented with documents specifying the existence of the restrictive covenantsand stating their substance inunambiguous terms. The District Court therefore concluded that the Pares did not meet their burden of establishing fraudulent intent by the Morrisons. In light of the above, we hold that substantial credibleevidence supports the District Court's findings and conclusions that the Morrisons did not fraudulently induce the Pares into entering a contract for the sale and purchase of the Kerr Drive property. The Pares also mention in their briefs that the Morrisons "misleadtt themby not informing them that thepropertywas subject to flooding and that the wiring and plumbing did not meet code. However, the Paresdid not argue to this Court that thesewere the bases for the fraud action. This Court thereforedoes not need to address them on appeal. Affirmed.

We concur: /:' 

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rC 'chiefJustice