No. 86-460 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1987 

THE FIRST NATIONAL BANK IN HAVRE, 

Plaintiff, Cross-Appellant 

and Respondent, 

-vsARNOLD E. NELSON, 

Defendant, Cross-Respondent 

and Appellant. 

APPEAL FROM: District Court of the Twelfth Judicial District, 

In and for the County of Hill, 

The Honorable Chan Ettien, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Morrison, Hauge, Ober, Young & Melcher; Stephen R. 

Brown, Jr., Havre, Montana 

For Respondent: 

Thompson & Swenson; Bruce E. Swenson, Havre, Montana 

Filed: 

Submitted on Briefs: Feb. 26, 1987 

Decided: August 18, 1987 

*,u 4 

Clerk 
Mr. Justice William E. Hunt, Sr., delivered the Opinion of 

the Court. 

This is an appeal and cross-appeal from an action on a 

promissory note brought before the Twelfth Judicial District 

Court in Hill County. 

We remand for rehearing of the summary judgment 

proceeding. 

The definitive issue on appeal is whether the District 

Court erred in granting partial summary judgment on the issue 

of liability. 

The parties also raised the following issues not reached 

by this decision: 

1. Did the District Court err in finding there was 

adequate consideration for this contract? 

2. Did the District Court err in upholding the forced 

sale of certain interests in real property resulting from a 

mortgage foreclosure on a note signed by appellant and 

recorded before a declaration of homestead was filed by 

appellant's wife as joint tenant and did it err in denying 

appellant's motion for application of foreclosure proceeds? 

3. Did the District Court err in granting certain 

pre-appeal attorney fees, paralegal fees and costs to the 

respondent? 

First National Bank in Havre (hereinafter the Bank) 

brought this action to collect the amount due on a promissory 

note signed by defendant Nelson and to foreclose a mortgage 

securing repayment of the promissory note. The Bank had 

initially been a lender to Nelson's adult daughter, Kay 

Pierson, owner of Pierson's Parkway Grocery. 
In May, 1984, Nelson signed the promissory note in favor 

of the Bank for the sum of $30,000. The Bank then 

distributed over $25,000 of the loan monies. 

Pierson made payments on this distribution of $400 per 

month. 

On February 6, 1985, Nelson signed an updated promissory 

note evidencing his indebtedness to the Bank in the amount of 

$25,326.59 and a mortgage securing repayment of the 

promissory note. The mortgage involved Nelson's interest in 

his home in Lot 2, Block 1, Second Sunrise Addition, Havre, 

Hill County, Montana. This is the note at issue in this 

case. 

Appellant Nelson contends that partial summary judgment 

was erroneously granted to the Bank on the issue of liability 

since he raised genuine issues of material fact which 

precluded summary judgment. 

Unfortunately we do not have the transcript of the trial 

court's proceedings on this issue for our reference as the 

tape was not retained by the Clerk of Court. Appellant 

claims his answer to the complaint, along with two 

affidavits, supports the conclusion that genuine issues of 

material fact exist. He raises the issues of fraud and lack 

of consideration as affirmative defenses and argues that any 

allegations of violation of the parol evidence rule are 

inaccurate since fraud is an exception to the parol evidence 

rule. 

In opposition, the Bank argues that fraud was improperly 

pleaded by appellant who therefore should not be allowed to 

use fraud as an affirmative defense nor parol evidence in the 

form of the two affidavits which bolstered the fraud claim. 

The Bank argues the District Court correctly excluded 

consideration of the defense and the affidavits. 
For an allegation of fraud, the law requires a party to 

plead and prove nine elements. Krone v. McCann (1982) , 197 

Mont. 380, 642 P.2d 584. Those requisite elements are that 

there be : (1) a representation; (2) falsity of 

representation; (3) materiality of that representation; 

(4) speaker's knowledge of falsity of representation or 

ignorance of its truth; (5) the speaker's intent that it 

should be relied on; (6) the hearer is ignorant of the 

falsity of the representation; (7) the hearer relies on the 

representation; (8) the hearer has a right to rely on the 

representation; and, (9) consequent and proximate injury was 

caused by reliance on the representation. 

The defendant's answer attempts to plead fraud as an 

affirmative defense but fails to allege all of the 

above-mentioned nine required elements of fraud. The answer 

makes certain representations regarding the terms and nature 

of the promissory note. The trial court, however, found that 

fraud was not properly plead and proceeded to grant the 

plaintiff Bank's motion for partial summary judgment. No 

transcript or record of the partial summary judgment 

proceedings is available for this Court upon appeal. A 

review of the remaining record on appeal indicates no 

amendment to defendant's affirmative defense pleading of 

fraud was made at any later point. 

Because of the missing record, we are unable to 

determine whether the defendant requested leave to amend his 

complaint and whether the court refused such a request. It 

appears an amendment would have been a simple, 

non-prejudicial way to eliminate the next question which was 

whether certain affidavits by defendant would cure his 

defective fraud pleading. This issue would not have arisen 

had the defendant been allowed to amend the complaint. 
Rule 15 (a), M.R.Civ.P. liberally permits a party to 

amend pleadings. A trial court may not unreasonably refuse 

to grant an application to amend a pleading. S 3101 

Am. Jur.2d Pleadings at 297. A pleading may be amended 

provided that the original cause of action or ground of 

defense remains the same. 5 322, Arn.Jur.2d Pleadings at 315. 

The purpose of this liberal amendment rule is to insure trial 

of all the issues on the facts of the case. 

As a court of appeal, we cannot thus proceed beyond a 

determination of the summary judgment issue of law without a 

proper record. It is unfortunate that we must therefore 

remand this case to the District Court for rehearing on the 

issue of partial summary judgment with instructions to give 

full consideration of law to any motion to amend the fraud 

pleadings. 

Because of our decision to remand this case on the issue 

of liability, we do not find it necessary to address the 

other issues raised by the parties at this time. 

This case is remanded for reheying in accordance with 

this Opinion. 

We Concur: 

Justice