THIEL v TAURUS DRILLING LIMITED 19

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No. 84-352 IN THE SUPREME COURT OF THE STATE OF MONTANA 1985 JOHN L.THIEL and KATHRYN M. THIEL, husband & wife, Plaintiffs, -vsTAURUS DRILLING LIMITED 1980-11, a Colorado limited partnership; NATHAN J. EMORY; D.A. DAVIDSON & COMPANY, a Mont. corp.; DONALD E. METLER; J. JOE MENA; JOHN D. PRUIT; GAYLE S. HIGBEE; JON MARCHI; JOSEPH R SOLOMAN; and ROBERT W. PETERSEN, . Defendants. ORIGINAL PROCEEDING: COUNSEL OF RECORD: For Plaintiffs: Hendrickson Montana & Everson; Jim Ragain argued, Billings, For Defendants: Hooks & Budewitz; Patrick F. Hooks argued, Townsend, Montana & * Dorsey & Whitney; Edward J. Pluimer argued, Minneapolis, Minnesota (D.A. Davidson, Jon Narchi, Robert Peterson)& Steven Bell of Dorsey & Whitney, Great Falls, Montana Anderson, Brown, Law Firm; Steven J. Harman, Billings, Montana Richard Vermiere; Head & Moye, Denver, Colorado & Hibbs, Sweeney, Colberg & Koessler; Maurice R. Colberg, Jr., Billings, Montana (Taurus Drilling, Nathan Emory, Donald Metler, J. Joe Mena, John Pruit, Gayle Higbee, Joseph Soloman) For Amicus Curiae: Turner C. Graybill, Great Falls, Montana (Plaintiffs in US Dist. Ct. Nos. CV-34-17-GF, CV-84-18-GF, CV-84-19-GF & CV-84-20-GF) Michael J Mulroney, Helena, Montana (Plaintiffs in 47714, 47715, 47716 in L & C County Dist. Ct.) Thomas F. Dowling, Helena, Montana (Plaintiffs in 50566, 50534 & CV-82-246-H) J. Rim Schulke, Mont. Securities Dept., Helena, Montana Crowley Law Firm; G. Dalthorp & P. Habein, Billings, Montana & * Charles Wake; Lewis, D'Amato, et al., Los Angeles, California (Donald Jackson, Kimble, MacMichael, Jackson & Upton) Boone, Karlberg & Haddon; Sam E. Haddon, Missoula, Montana (Boettcher & Co., Dain Bosworth, Edward Jones & Co., Merrill Lynch, Pierce, Fenner & Smith & Piper, Jaffray & Hopwood, Inc. ) - Submitted: Decided : - - -- - Clerk September 4, 1995 October 5 , 1985 Mr. J u s t i c e F r e d J . Weber d e l - i v e r e d t h e Opinion of t h e C o u r t . S t a t e s District The U n i t e d Court for the D i s t r i c t of Montana h a s c e r t i f i e d t h e f o l l o w i n g q u e s t i o n t o t h i s C o u r t : What s t a t u t e o r s t a t u t e s o f l i m i t a t i o n a p p l y t o c i v i l a c t i o n s b r o u g h t p u r s u a n t t o § 30-10-307, MCA, o f t h e S e c u r i t i e s Act o f Montana? Based upon 8-year the pleadings limitation in period this we hold case, contained in that the 27-2-202 (1), MCA, § applies. On September Kathryn M. 16, 1980, plaintiffs John Thiel L. and T h i e l p u r c h a s e d two l i m i t e d p a r t n e r s h i p u n i t s i n T a u r u s D r i l l i n g L i m i t e d 1980-11, a Colorado l i m i t e d p a r t n e r - s h i p o r g a n i z e d t o e x p l o r e and d r i l l f o r o i l and g a s . Plain- tiffs paying purchased the Taurus partnership units by $10,000 i n c a s h and p o s t i n g a l e t t e r o f c r e d i t f o r $46,000. A p p r o x i m a t e l y 2 y e a r s l a t e r on O c t o b e r 1 5 , 1 9 8 2 , p l a i n tiffs filed a complaint for rescission of their purchase. The c o m p l a i n t a l l e g e d i n t e r a l i a t h a t t h e o f f e r and s a l e o f t h e p a r t n e r s h i p u n i t s v i o l a t e d t h e S e c u r i t i e s A c t o f Montana. Count I o f t h e c o m p l a i n t a l l e g e d f a i l u r e t o comply w i t h t h e securities -205, registration Count MCA. misrepresentations connection with 5 30-10-301(1), of fiduciary alleged requirements alleged I1 or the MCA. duties negligence, sale of remedies for making of of material securities in and material fact violation in of Count I11 a l l e g e d n e g l i g e n c e and b r e a c h by the breach broker of f i d u c i a r y d u t i e s o f t h e non-broker As the omissions 55 30-10-202 of the defendants. contract and Count IV breach of alleged in defendants. statutory violations C o u n t s I and I1 o f t h e i r c o m p l a i n t , p l a i n t i f f s c l a i m e d t h a t t h e y w e r e e n t i t l e d , u n d e r S 30-10-307, MCA, to rescind t h e i r p u r c h a s e and r e c o v e r t h e c o n s i d e r a t i o n p a i d f o r t h e s e c u r i t y , interest and attorney fees. Defendants f i l e d a motion t o dismiss Counts I and I1 on the grounds that the 2-year statute of limitation in S 27-2-211 (1) (c), MCA, barred claims based on liabilities created by statute. United States District Court Chief Judge Battin held that the 2-year limitation applied to the securities registration claim and dismissed Count I of the complaint. dants filed a motion for clarification or Defenfurther consideration, seeking to have Count I1 dismissed as well. Plaintiffs asserted that the 8-year 5 27-2-202(1), MCA, applied to both counts. limitation of They requested certification of the issue to this Court. The federal court certified the question and this Court heard oral argument on which statute or statutes of limitation apply to actions brought pursuant to 5 30-10-307, MCA, the civil enforcement provision of the Securities Act of Montana? I The legislature adopted the Securities Act of Montana in 1961. Sec. 2, Ch. 251, L. 1961. The Act contained substan- tial provisions from the Uniform Securities Act promulgated by the Conference of Commissioners on Uniform State Laws. Some variations were made in order to accommodate the Uniform Act to situations peculiar to Montana. The 5-year original limitation limitation on Securities Act on of Montana criminal prosecutions and private enforcement of civil Sections 15-2021 (1) and 15-2022 (3), R.C.M. Montana Legislature contained extended the a 2-year liabilities. 1947. limitation a The 1981 on criminal prosecutions from 5-years to 8 years after the alleged violation, or within 1 year after the date the commissioner or prosecuting officer becomes Section 30-10-306 (1), MCA. aware of the violation. In 1967, the legislature eliminated the 2-year statute of limitation on civil enforcement of the Act. No limitation period was substituted when the "two (2) years after the contract of sale" language was deleted from R.C.M. 1947. $ 15-2022 (3), The federal court has asked us to explore the outer limits of this statutory black hole. I1 The judicial function in construing and applying statutes is to effect the intention of the legislature. In determining legislative intent, the Court looks first to the plain meaning of the words used in the statute. If intent cannot be determined from the content of the statute, we examine the legislative history. Billings Sch. Dist. Dorn v. Bd. of Trust. of (Mont. 1983), 661 P.2d 426, 430, 40 St-Rep. 348, 352. In this case, the legislature omitted the specific 2-year-from-sa le 1imitation without substituting a different period of limitation. Thus, the Court's primary tool for ascertaining legislative intent, i.e., the "plain meaning" of the words used in the statute, is of no assistance. We must turn to the legislative history. In 1967, Representatives James, Nutting and Cox introduced House Bill No. 515, entitled "An Act Amending Section 15-2022, R.C.M. 1947, Relating to Civil Remedies Afforded Purchasers of Securities Sold in Violation of the Securities Act of Montana; Providing for a Cause of Action to Be Brought Within Two (2) Years after Discovery of Violation." Bill 515 proposed to amend $ 15-2022(3), R.C.M. ... No person may sue under this section more- than tw6 (2) years after the e e ~ t r a e t - e 4 - s e 4 e discovery of a violation of the ~rovisions of t h i s act . .. . House as follows: The rest of the language in the bill is identical to that in the original statute. The House Judiciary Committee discussed H.B. February 1, 1967. 515 on Committee Minutes sparsely report that: HB 515 was discussed. Mrs. James, chief sponsor, could not appear. Testifying as a proponent was: Harry H. Jones, Investment Department, State Auditor's Office, Helena, Montana. ... [actions on other bills] HB 515: -- Hall moved it - DO PASS, AS AMENDED. which amendment would s t z k e the provision of actions having to be brought within 2 years and the one making the bill effective immediately, and the motion carried. Hall also moved that the amendment be adopted, which also carried. Although the Committee Minutes indicate that Harry Jones of the State Auditor's Office spoke as a proponent of the bill, there is no evidence as to what Mr. Jones said. spoke in opposition. No one There was no record why Rep. Hall moved to strike the "2 years from discovery" limitation or why the original "2 years from sale" limitation was deleted. House Bill 515 passed both houses in this amended form and was signed into law by the Governor in 1967. civil liabilities provision, $ The current 30-1.0-307, MCA, contains no time limitation. Since neither the plain meaning of the statute nor the legislative history sheds any light on the legislature ' s intent in deleting the original limitation, we look next to the circumstances surrounding the change in the law. In 1964, the Administrator of the Seattle Regional Office of the Securities and Exchange Commission publish.ed an article that sharply criticized both the federal and state statutes of limitation in civil cases. Both a c t s p r o v i d e f o r a v e r y s h o r t s t a t u t e of l i m i t a t i o n s . I n f a c t , t h i s period i s s o s h o r t a s t o n e g a t e much o f t h e b e n e f i t designed t o accrue t o i n v e s t o r s . The Montana Act provides a two-year p e r i o d from d a t e o f s a l e . The F e d e r a l A c t p r o v i d e s f o r o n l y o n e y e a r from d a t e of sale f o r violations of t h e registrat i o n requirements. In t h e case of fraud t h e Federal A c t extends t h i s period t o o n e y e a r from d i s c o v e r y , w i t h a maximum The Montana A c t makes no of three years. such d i s t i n c t i o n . This short e d by t h e effective provisions s t a t u t e o f 1-imitations provida c t s unquestionably precludes use of t h e civil l i a b i l i t i e s by p u r c h a s e r s . . .. Newton, - - - - a t t h e Montana S e c u r i t i e s - - - R e l a t i o n A Look A c t and I t s t o th - -e Federal Securities A c t , P l a i n t i f f s and s e v e r a l a m i c i c u r i a e c o n t e n d t h a t t h e Montana L e g i s l a t u r e d e l e t e d t h e 2-year criticism. 2-year l i m i t a t i o n i n response t o such Defendants a s s e r t t h a t p l a i n t i f f s ' limitation Nothing was in the under siege is historical l e g i s l a t i v e minutes committee o r i n d i v i d u a l r e f e r r e d t o M r . d i s c u s s i n g t h e change i n t h e law. idea t h a t t h e fiction. indicates that Newton's any article in W e draw no c o n c l u s i o n from the fact that t h i s a r t i c l e existed prior t o the legislature's amendment o f t h e s t a t u t e . The legislature e x i s t i n g laws. Inc. R.C.M., of Department o f Revenue v. B u r l i n g t o n N o r t h e r n , ( 1 9 7 6 ) , 169 Mont. time the i s presumed t o h a v e f u l l knowledge o f 2-year 202, 2 1 1 , 545 P.2d limitation was 1083, 1088. deleted from A t the S 15-2022, t h e R e v i s e d Code c o n t a i n e d f o u r a l t e r n a t i v e s t a t u t e s l i m i t a t i o n t h a t might apply to civil securities 93-2601. Periods of l i m i t a t i o n prescribed. The p e r i ~ d s ~ r e s c r i b efd r t h e o commencement o f a c t i o n s , o t h e r t h a n f o r t h e r e c o v e r y o f r e a l p r o p e r t y , are a s follows: 93-2603. Within e i g h t y e a r s . Within eight years: An action upon any cases: contract, obligation, or liability, founded e d upon a n i n s t r u m e n t i n w r i t i n g . kwo W i t h i n two 93-2606. Within - years. years: ( 2 ) An a c t i o n u p o n a s t a t u t e , o r upon an u n d e r t a k i n g i n a c r i m i n a l action, for a forfeiture o r penalty t o the state. ... 93-2607. Two-year l i m i t a t i o n . Within ( 4 ) An a c t i o n f o r r e l i e f two y e a r s : on t h e ground o f f r a u d o r m i s t a k e , t h e c a u s e o f a c t i o n i n such c a s e n o t t o b e deemed t o h a v e a c c r u e d u n t i l t h e d i s c o v e r y by t h e a g g r i e v e d p a r t y o f t h e f a c t s c o n s t i t u t i n g t h e fraud o r mistake. ... 93-2613. Actions f o r r e l i e f not hereinfor. An a c t i o n f o r before provided r e l i e f n o t h e r e i n b e f o r e provided f o r must be commenced w i t h i n f i v e y e a r s a f t e r t h e c a u s e o f a c t i o n s h a l l have- a c c r u e d . Similar 8, 2 and 5 year limitations a r e contained today i n S S 27-2-202 (1), - 2 1 1 (1), -203 a n d - 2 1 5 , A statute of limitation is MCA. the legislature's rough " t h e p o i n t a t which t h e i n t e r e s t s i n f a v o r approximation of o f p r o t e c t i n g v a l i d c l a i m s a r e o u t w e i g h e d by t h e i n t e r e s t s i n p r o h i b i t i n g s t a l e ones. ( 1 9 7 5 ) , 4 2 1 U.S. Because Johnson v. l1 R a i l w a y E x p r e s s Agency 4 5 4 , 463-64. i s no there statute of limitations for civil enforcement a c t i o n s under 5 1 0 ( b ) , o f t h e Federal S e c u r i t i e s Exchange Act of 1934, federal s t a t u t e from e a c h forum s t a t e . Cir. gous" 1 9 8 0 ) , 6 2 5 F.2d statute of 151, 153. limitations 478, 488. C a h i l l v. apply Ernst the & relevant P Ernst (7th S e l e c t i o n o f " t h e most analo- characterization o f t h e claim. ( 1 9 8 0 ) , 446 U . S . cou'rts is. governed by the courts1 B o a r d o f R e g e n t s v. Tomanio The c h o i c e o f w h i c h s t a t u t e o f l i m i t a t i o n s u l t i m a t e l y a p p l i e s rests upon a d e t e r m i n a t i o n o f which s t a t u t e w i l l b e s t e f f e c t u a t e t h e c o n g r e s s i o n a l p o l i c i e s underlying t h e federa 1 A c t . The u n d e r l y i n g p o l i c y and p u r p o s e s o f M o n t a n a ' s S e c u r i - ties A c t a r e expressed i n 30-10-102, § MCA: P a r t s 1 through 3 of t h i s chapter s h a l l be construed t o : (1) p r o t e c t t h e i n v e s t o r , p e r s o n s engaged i n s e c u r i t i e s t r a n s a c t i o n s , and t h e public interest; (2) and promote u n i f o r m i t y among t h e s t a t e s ; ( 3 ) e n c o u r a g e , p r o m o t e , and c a p i t a l i n v e s t m e n t i n Montana. Subsections 1983. (1) and Prior to (3) w e r e time, that facilitate added the by Act the legislature contained one in policy " P a r t s 1 through 3 o f t h i s chapter s h a l l be s o statement: c o n s t r u e d a s t o e f f e c t u a t e i t s g e n e r a l p u r p o s e t o make u n i form the law 30-10-102, of (1981). MCA primary purpose, ba l a n c e d those states Since which the enact no Act it." Section longer has one e a c h o f t h e t h r e e d e c l a r e d p u r p o s e s must b e against the others. In choosing an appropriate s t a t u t e o f l i m i t a t i o n s f o r c i v i l s e c u r i t i e s c a s e s i n Montana, w e k e e p e a c h o f t h e s e p u r p o s e s i n mind. Each which party genera1 Plaintiffs and amicus limitation contend S 27-2-202(1), MCA, curiae i s most that is the most has a preference appropriate t o 8-year as the case. limitation appropriate. That to of section provides : The p e r i o d p r e s c r i b e d f o r t h e commencement o f a n a c t i o n upon any c o n t r a c t , o b l i g a t i o n , o r l i a b i l i t y founded upon a n instrument i n writing i s within 8 years. Counsel f o r t h e Montana Auditor's Office asserts S e c u r i t i e s Department o f that securities the State transactions can b e s t b e d e s c r i b e d a s b i l a t e r a l , e x e c u t o r y c o n t r a c t s , and t h a t t h e c i v i l remedy f o r v i o l a t i o n s o f t h e S e c u r i t i e s A c t i s t h e t r a d i t i o n a l c o n t r a c t remedy of r e s c i s s i o n w i t h i n t e r e s t minus income r e c e i v e d . Defendants contend that the 2-year "liability created by statute" applies. limitation on a Section 27-2-211(1), MCA, provides: Within 2 years is the period prescribed for the commencement of an action upon: (a) a statute for a penalty or forfeiture when the action is given to an individual or to an individual and the state, except when the statute imposing it prescribes a different limitation; (c) a liability created by statute other than: (i) a penalty or forfeiture; or (ii) a statutory debt created payment of public assistance. by the Defendants point out that Count I of plaintiffs' complaint alleges registration violation of §§ 30-10-202 and -205, MCA. Defendants argue that the registration requirement did not exist at common law, and that claims of registration violations cannot be construed as a contract action. Defendants contend that the 2-year limitation also applies to Count I1 because (1) plaintiffs' complaint recites statutory violation and seeks statutory remedies, and (2) liabilities created by the sale of a security by "fraud or misrepresentation" under the Act are vastly different from those imposed in a common law fraud action. Under certain circumstances, potential liability in tort may coexist with a liability in contract. When the facts warrant either form of action, an injured party has the right to elect which form of action he will pursue. Garden City Floral Co. v. Hunt (1953), 126 Mont. 537, 543-44, 255 ~ . 2 d 352, 356. The general rule applied to situations falling within the twilight zone of contract and tort law is that doubt must be contract. resolved in favor of an action based upon (Mont. 1 9 8 1 ) , 633 P.2d Unruh v . B u f f a l o Bldg. Co. It is, of course, possible t o allege several, individual c a u s e s o f a c t i o n b a s e d upon t h e same i n j u r y . A c o u r t may b e o b l i g a t e d t o s e g r e g a t e p l a i n t i f f ' s v a r i o u s c l a i m s and a p p l y separate statutes of l i m i t a t i o n s t o each. Mu1 t i p l e p e r i o d s o f l i m i t a t i o n c o u l d a p p l y t o t h e same c a s e . Construing t h i s t h e o r y o f e l e c t i o n of r e m e d i e s w i t h r e f e r e n c e t o s t a t u t e s o f limitations, the United States Supreme Court has stated: ... I f t h e choice of t h e s t a t u t e of were dependent upon the limitations particular facts o r the precise legal theory of each claim, counsel could almost always argue, w i t h c o n s i d e r a b l e f o r c e , t h a t two o r more p e r i o d s o f l i m i tations should a p p l y t o e a c h § 1983 claim. Moreover, u n d e r s u c h a n a p p r o a c h , d i f f e r e n t s t a t u t e s o f l i m i t a t i o n s would b e a p p l i e d t o t h e v a r i o u s S 1983 c l a i m s a r i s i n g i n t h e same S t a t e , and m u l t i p l e p e r i o d s o f l i m i t a t i o n s would o f t e n a p p l y t o t h e same c a s e . T h e r e i s no r e a s o n t o b e l i e v e t h a t C o n g r e s s would h a v e s a n c its tioned this interpretation of statute. Wilson v. 1946. W e appreciate the logic of reason why Garcia it (1985), , U.S. should n o t be 103 S . C t . 1938, t h i s a n a l y s i s and see no followed in securities cases, where c l a i m s o f f r a u d , s t a t u t o r y v i o l a t i o n , b r e a c h o f f i d u c i - ary d u t y , and b r e a c h o f c o n t r a c t may a l l s p r i n g from t h e same injury. The c h o i c e o f which s t a t u t e o f l i m i t a t i o n s s h o u l d a p p l y u l t i m a t e l y r e s t s on a c h a r a c t e r i z a t i o n o f t h e e s s e n c e o f t h e claim. In determining which limitation claims under t h e f e d e r a l S e c u r i t i e s A c t , should apply to the federal courts select t h e s t a t e s t a t u t e o f l i m i t a t i o n s t h a t w i l l b e s t e f f e c tuate the Likewise, congressional in policies characterizing underlying plaintiffs' l e g i s l a t i v e purposes o f uniformity, claims the here, Act. the i n v e s t o r p r o t e c t i o n , and p r o m o t i o n o f i n v e s t m e n t must b e weighed i n t h e b a l a n c e . Only two Montana S e c u r i t i e s A c t c a s e s have r e a c h e d t h i s S t a t e v. Court: 1026, and v. Brown ( 1 9 8 2 ) , 197 Mont. criminal ( 1 9 7 9 ) , 181 1 , 640 P.2d for contract 382, Pierce, 593 P.2d Fenner, Etc. I n Duncan, w e a f f i r m e d a 453. deceptive securities. Mont. Lynch, Merrill, conviction unregistered ment Duncan practices and sale of I n d e t e r m i n i n g w h e t h e r an i n v e s t - s e c u r i t y was w e adopted t h e sold, following b r o a d d e f i n i t i o n o f " s e c u r i t y " from t h e U n i t e d S t a t e s Supreme Court: The t o u c h s t o n e [ o f an i n v e s t m e n t cont r a c t ] i s t h e p r e s e n c e o f an i n v e s t m e n t i n a common v e n t u r e p r e m i s e d on a r e a s o n a b l e e x p e c t a t i o n o f p r o f i t s t o be derived from t h e e n t r e p r e n e u r i a 1 o r m a n a g e r i a l e f f o r t s of others. Duncan, 1 8 1 Mont. 593 P.2d a t 392, a t 1032, q u o t i n g u n i t e d Housing F o u n d a t i o n , I n c . v . Forman ( 1 9 7 5 ) , 421 U.S. S e c t i o n 30-10-103(11), its definition criminal case, of MCA, 837, 852. includes "investment c o n t r a c t " i n "security." Our opinion is relevant here only in i.n that Duncan, a it d i s c u s s e s security i n contract t e r m s . Brown was civil a action plaint in occurred, tort plaintiffs causes two individual of chose t o action of 10-11, & 640 P.2d a t 456 & 458. n o t a l l o w f o r p u n i t i v e damages. Court addressed each of frame t h e i r negligence p r a y i n g f o r a c t u a l and p u n i t i v e damages. 7 investors Although. S e c u r i t i e s A c t v i o l a t i o n s a g a i n s t a brokerage firm. purportedly by and defendants had been The S e c u r i t i e s A c t d o e s S e e S 30-10-307, plaintiffs' limitations o r choice of properly fraud, Brown, 197 Mont. a t five MCA. causes of s e p a r a t e l y i n d e t e r m i n i n g w h e t h e r summary judgment of com- granted. No remedy i s s u e was r a i s e d The action i n favor statute of i n Brown. N e i t h e r Duncan n o r Brown o f f e r g u i d a n c e a s t o t h e manner i n which p l a i n t i f f s ' case. claims should be characterized in this Count alleges I Registration that and violations securities defendants failed to of the a of requirements, registration deliver Order in Units' copy of the P l a c e m e n t Memorandum t o p l a i n t i f f s p r i o r t o s a l e , file a copy o f t h e map and other geological Private failed t o and economic i n f o r m a t i o n u s e d a s s a l e s l i t e r a t u r e , and f a i l e d t o d i s c l o s e defendant Davidson's of Taurus O i l . o w n e r s h i p i n t e r e s t i n t h e common s t o c k Count I1 c o n t a i n s allegations of deceit a s w e l l a s violations of the Act. fraud o r Count 111 a l l e g e s n e g l i g e n c e and b r e a c h o f f i d u c i a r y d u t i e s on t h e p a r t o f t h e broker-dealers and agents. Count alleges IV negligence, b r e a c h o f c o n t r a c t and b r e a c h o f f i d u c i a r y d u t i e s on t h e p a r t of the officers, directors and general partners of Taurus Drilling. The c o m p l a i n t s p e c i f i e s t h a t p a r a g r a p h s 9 t h r o u g h 20 a r e incorporated by reference into each of the four counts. A l l e g a t i o n s o f m a t e r i a l m i s r e p r e s e n t a t i o n s and u n t r u e s t a t e f a c t a r e c o n t a i n e d i n p a r a g r a p h s 9 t h r o u g h 20. ments o f a l s o note that, a l t h o u g h Counts I11 and IV do n o t We allege s p e c i f i c s t a t u t o r y v i o l a t i o n s , t h e S e c u r i t i e s A c t o f Montana i m p l i c i t l y e s t a b l i s h e s a code o f brokers and others S e c t i o n 30-10-301, 457. We find involved MCA; in Brown, conduct t o be the s a l e of 197 Mont. t h a t each count o f f o l l o w e d by any a t 9, plaintiffs' security. 640 P.2d at complaint i n t h i s c a s e can b e i n t e r p r e t e d a s s o u n d i n g i n t o r t , c o n t r a c t o r statutory violation. Where t h e r e i s a s u b s t a n t i a l q u e s t i o n a s t o which o f two o r more rule statutes of limitations should apply, i s t h a t t h e doubt should be resolved s t a t u t e containing t h e 12-01 Corp. (Wash. longest e x i s t s a s t o the nature of application of the 994, the action, longer period of genera1 i n favor of limitations. 1 9 8 5 ) , 6 9 5 P.2d the 995. Akada v . the Park Where d o u b t c o u r t s l e a n toward limitations. Shew v . Coon Bay Loafers, Inc. (Wash. 19691, 455. P.2d 359, 366, (10th Cir. 1931), 46 F.2d citing Hughes v. Reed 435, 440. This [general rule] serves the legislative intent of protecting defendants from stale claims, yet provides an approach of liberality which affords a plaintiff party-litigant maximum free access to our court system. Although statutes of limitation are primarily designed to assure fairness to defendants because they prevent claims from being brought when the relevant evidence is so old that it is unreliable, the policy of repose is outweighed when the interests of justice require ot.herwise. Williams v. Lee Way Motor Freight As above, discussed the (Okla. 1984), 688 P.2d legislature deleted the 2-years-from-sale limitation from the Act at the same time it rejected a proposed limitation of 2-years-from-discovery- of-violation. Limitations longer than 2 years are found in 5 s 27-2-202(1) & -215, MCA. An action founded upon an in- strument in writing must be commenced within 8 years. tion 27-2-202 (1), MCA. Sec- An action for relief not otherwise provided for must be commenced within 5 years after the cause of action accrues. Section "catch-all" statute of 27-2-215, MCA, limitation. is Montana's No federal court has applied a state catch-all limitation period to any claims Cahill v. Ernst made under the federal Securities Act. & Ernst (7th Cir. 1980), 625 F.2d 151, 155. Application of the longer limitation period comports with the Act's purposes of protecting the investor and encouraging capital investment. purpose of promoting promoted Montana. by We recognize that the other uniformity among our application of the Most 45-55.220 (f) (1980); Colo.Rev.Stat. 1984); s Idaho 90.200 (5) states is not 8-year limitation in state securities acts contain statutes of limitations in the 2 to 4 year range. s the Code 5 30-1446 (3) (1979); N.M. Stat. 13 See e.g., ~ l a s k aStat. § 11-51-125 (8) (Supp. (1980); Nev. Ann. Rev. 5 58-13-42(A) Stat. (Supp. 1983) ; Okla. Stat. Ann. tit. 71, S 408 (a)(2) (e)(Supp. 1985) ; Utah Code Ann. S 61-1-22 (5), (Supp. 1983) ; Wash. Rev. Code Ann. S 21.20.430 (4) (b) (1977). (1983); Wyo. Stat. S 17-4-122 (e) The legislature deleted the 2-year limitation from the Montana Act. It is for that same body to harmonize our securities law with the laws of other states, should it chose to do so. Based upon the pleadings and the facts presented to us by the federal court in this case, we hold that the 8-year limitation period contained in 5 27-2-202(1), MCA, applies to civil actions brought pursuant to S 30-10-307, MCA, of the Securities Act of Montana. We concur: Chief Justice Mr. Justice L.C. Gulbrandson, dissenting. 1 respectfully dissent. I agree with the majority that the selection of the appropriate statute of limitations rests on the characterization of the essence of the claim, with an effort to effectuate the declared legislative policies. the majority has In my view, failed to characterize the claims, and instead has found "that each count of plaintiffs' complaint can be interpreted as sounding in tort, contract, or statutory violation," and the majority then proceed to adopt the statute of limitations containing the longest time period. (1977), 567 P.2d This Court in Anderson v. Applebury 951 at 955 stated: .. amended complaint. [p]laintiffsf seeks recovery of damages and penalties for alleged statutory violations. Applicable to such claims is the two year period of limitations. Relying upon that authority, I would hold that United States District Court Judge Battin correctly applied the two year limitation to the securities registration claim. The histories of the Securities Act of Montana and the Uniform Securities Act suggest that claims brought under those Acts are based on fraud. Relying upon those histories, the declared purposes of the Montana Legislature in enacting the Securities Act, and the allegations of plaintiffs' complaint, I would characterize the remainder of the claims as sounding in tort, and would discovery time period of apply the two year from limitations as expressed in S 27-2-203, MCA, and as interpreted in Mobley v. Hall (Mont. 19831, 657 P.2d 604, 40 St.Rep. 49.

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