A group of 12 investors has settled its protracted lawsuit against D.A. Davidson Inc. of Great Falls and seven out-of-state promoters and sellers of Utah securities, one of the group confirmed Thursday.

Al Donohue of Great Falls said an out-of-court settlement has been reached but all parties agreed to not discuss details.Turner Graybill, a lawyer for the plaintiffs, and Bruce MacKenzie, a vice president for D.A. Davidson, refused comment.

A check of court records showed the dispute was dismissed Sept. 30 after an agreement was signed by five lawyers involved.

The plaintiffs had bought limited partnerships in 1976 and 1977, as tax shelters, in companies that owned Utah coal reserves, according to records.

The complaint was first filed in federal court in 1984. It was refiled in 1985 in state district court after U.S. District Judge James Battin ruled a statute of limitations had expired on some federal counts and declined to take jurisdiction over a number of state counts.

The lawsuit alleged various charges, including fraud and securities violations.

The investors contend that Fresno, Calif., lawyer Donald Jackson and some associates set up five limited partnerships on the coal leases as bogus tax shelters.

An Internal Revenue Service investigation led to losses of tax deductions that the buyers had expected, and disclosed that the coal leases involved insufficient coal to mine commercially, the plaintiffs said in court papers.

The plaintiffs maintained that general partners in the coal-lease proj-ects had done little or nothing to develop the business as a mining enterprise, despite such things as large advance royalty payments made by investors.

According to their 1985 complaint, the investors put up a total of $898,945.

The plaintiffs contended that D.A. Davidson helped sell the limited-partnership shares without adequately investigating them, and that by silence and other acts the defendants defrauded their limited partners into believing the partnerships were viable.

Ian Davidson of Great Falls, who heads the investment firm, responded by calling the lawsuit an attempt to harass a financially successful local firm. He said his company investigated the limited partnerships before selling interests and said the plaintiffs were sophisticated investors who bought tax shelters knowing the risks.

Other plaintiffs besides Dononue were Dorothy Anderson, Thomas Mather, Harold Poulsen, Michael Tilton and Ray Volk of Great Falls; Robert Rangitsch of Missoula; Robert Scriver of Browning; the Wharram Ranch Co. of Highwood; Lawrence Rossmiller of Brady; Tommy Curran of Homedale, Idaho; and Charles Hope of San Jose, Calif.