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: District Court of the First Judicial District, 

In and for the County of Lewis & Clark, 

The Honorable Jeffrey Sherlock, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Charles A. Graveley, Helena, Montana 

For Respondent: 

Richard TI. Parish; Harlen, Thompson & Parish, Helena, 

Montana 

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Submitted on Briefs: Dec. 14, 1989 

; February 5, 1990 
Justice 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 Lois M. Pare owned and operated an auto wrecking 

service in Helena, Montana. The Pares operated this business out 

of their home on North Harris Street. Dhring the end of the summer 

in 1985, the Pares wanted to expand their business and began 

investigating the purchase of property located on Kerr 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 or manufacture of any sort 

or nature shall be conducted thereon. . . 

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 family members 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 closing date. As they were moving onto the property, the Pares 

discovered a problem with the plumbing. The Pares called an 

appraiser to look at the property and the parties agreed to reduce 

the purchase price by $6,000 due to the defective plumbing. The 

final purchase price agreed upon between the parties was $109,500. 

Prior to signing the final papers, an officer of Helena Abstract 

and Title Company showed the Pares a title commitment that 

referenced the restrictive covenants by book 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 otherwise modified. The Pares nonetheless signed the final 

papers on November 29, 1985, transferring the deed and closing the 

transaction. 

Shortly after the closing, Bruce Lanthorn noted that the Pares 

were attempting to operate an auto wrecking business on the 
premises 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 from operating their business as intended. They moved 

out of the Kerr Drive property and back to their former residence 

and place of business on North Harris Street. The Pares attempted 

to restore themselves to status quo through negotiations with the 

Morrisons, butthose negotiations failed. The Pares then attempted 

to sell the Kerr Drive property and were 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 the Morrisons fraudulently induced them into 

buying the property on Kerr Drive. The matter was tried before the 

District Court, sitting without a jury, on May 15 and 16, 1989. 

The court returned a judgment in favor of the Morrisons. 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 is whether the District Court 

erred in determining 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 primary allegation is that the Morrisons committed 

fraud by falsely representing to them that the Kerr Drive property 

was not subject to any restrictions as 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 

establishing by a preponderance of evidence the nine elements that 

constitute fraud. These nine elements are: 

1. a representation; 

2. the falsity of the representation; 

3. the materiality of the representation; 

4. the speaker's knowledge of the falsity of 

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. 

Wortman v. Griff (1982), 200 Mont. 528, 531-32, 651 P.2d 998, 1000; 

Van Ettinger v. Pappin (1978), 180 Mont. 1, 10, 588 P.2d 988, 994. 

The District Court found that the Pares failed to meet their burden 
of proof. When a district court functions as 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. Lorenz v. 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 stories presented 

by the Pares and the Morrisons, and concluded that no reason 

existed why it should accept the Parest version of events over the 

Morrisonst or 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 

Pares primarily relied upon a statement by the Morrisons in which 

they stated that they operated a business on the property 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 covenants and stating their substance 

in unambiguous 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 credible 
evidence 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 them by not informing them that the property was subject 

to flooding and that the wiring and plumbing did not meet code. 

However, the Pares did not argue to this Court that these were the 

bases for the fraud action. This Court therefore does not need to 

address them on appeal. 

Affirmed. 

We concur: /:' /' 

rC 

'chief Justice