*1
THE
OF
UNITED
YELLOWSTONE
CONFERENCE
CHURCH,
v. Aрpellant,
METHODIST
Plaintiff
Larry Dover,
DAVIDSON,
INC.,
Dick
Drew and
Warren
Respondents.
Hughes,
Defendants
No. 86-458.
May 28, 1987.
Submitted
Sept.
Decided
Paterson, Marsillo, Schuyler; Tornabene & Charles J. Tornabene Missoula, argued, appellant. for Mulroney, Scott; Delaney Delaney argued, & L. Dexter Dale, Milodragovich, Missoula, Dye; Dale & Lon J. D.A. David- for son, Hughes. Dover and argued, Missoula,
David Rodli for Drew. MR. CHIEF Opinion JUSTICE TURNAGE delivered the Cоurt.
Plaintiff Yellowstone Conference of United Methodist (Church) District, appeals an Judicial Missoula order Fourth County, dismissing following presentation its claim case, period. required We failure file the claim within time affirm. appeal: issues are raised on court de-
1. Did the District Court abuse its discretion whеn the complaint? nied the Church’s motion to amend 2. Did the District Court err when it held that MCA, barred the Church’s cause of action? spe-
3. Did Court its discretion when it failed to the District abuse cifically separate findings conclusions of law? of fact and corporation, appellant Montana main-
Plaintiff and from Methodist tained financial accounts with funds received local church Donations received the Church were disbursed donations. programs, including clergy- to fund various church Methodist monthly in these ac- pension men’s fund. The Church’s balance $300,000. $20,000 An- greatly, fluctuating counts varied between $500,000 nually, through Church’s accounts. flowed Larry hired in 1969 as the Church’s trea- Defendant Dover was payment bookkeeping, of bills and a surer. Dover’s duties included accounting. general responsibility At the for the Church’s financial treasurer, employed as he was time Dover became the Dover had worked for Mid- loan officer Midland National Bank. em- land 1955. Dover later moved to Missoula and became since ployed by kept Church funds First Bank Southside. Dover Dover’s annual vested at First Bank Southside. 1970 and $11,000. between income was *3 1971, $20,000 In Dover invested with D. A. Davidson a “hero” Church’s funds. Dover testified that he wanted to become mоney in and investing the Church’s stocks securities and Later, opened Dover thereby increasing pension funds. the Church’s $20,000 America.” of “CB Radio Club of account under the name 1975, D.A. Davidson’s From 1972 to defendant Warren Drew was requested authorization representative. never Church account Drew encouraged Dover to Drew from Dover to invest Church funds. 1974, percent the Church’s “speculative In vest stocks.” 1977, person- portfolio speculative In Dover was invested stock. from the wrongfully ally Drew that Dover had taken loaned Church. D.A. Davidson’s July Hughes
In Richard became defendant high in- representative. Hughes the Church’s account maintained invested speculative In 1976 Dover vestment ratio of stock. Addi- Creek. project located on Grant into a Missoula subdivision for each tionally, opened D. A. Davidson Dover an account with funds to- Church investment of his three children. His children’s $30,000. approximately taled
In requested Administra- Dover the Council of Finance and (COFA) pass authority tion granting to Dover to “sell resolution Herbert, COFA, signed Hugh some stocks.” Reverend Chairman of approximately twenty January In stock authorization forms. requested Hugh again Dover Herbert, Reverend Herbert and that contactеd COFA, approval authorizing as give chairman of Dover to invest Church funds in stocks securities. Herbert and Reverend granted request Dover’s and Dover invested additional funds.
From firm employed accounting 1971 to the Church Galusha, Higgins, fi- annually and Galusha to review the Church’s audit, Following nances. customarily presented firm Galusha findings passed to Dover. Dover the audit information to itself, present gen- COFA. Dover gave did the audit but rather concerning eral information condition. In financial present June Dover failed audit statement to COFA at meeting. annual Bishop Dover assured Reverend Herbert and Wheatley, and the members COFA that the audit statement forthcoming. spoke would be Dover also with Reverend Herbert on during numerous occasions 1978. Dover told Herbert the Church was experiencing year’s financial but difficulties assured Herbert end, straightened would all be out.” “[T]his
In December Dover contacted and Hеrbert stated the facing problems serious poor financial “due to the stock mar- and, ket.” Bishop Wheatley Herbert then contacted chair- new COFA, man of Whanger Reverend Wilbur on or about December 1978.Herbert improprieties notified them of Dover’s and the result- ing problems. financial Jаnuary COFA met discuss the problems. time, Church’s financial At that Dover told COFA that he Additionally, wrongfully both invested and taken Church funds. many Dover told COFA that failed. Church’s investments had As a meeting, result of the COFA Dover termi- pleaded felony nated as the guilty Church’s treasurer. Dover later theft, 45-6-301(1)(a), MCA.
Appellant agents Church claims that D. A. Drew Hughes handling negligently fraudulently acted respondents: investments. The Church contends that *4 require funds; proper failed to authorization to invest Church large proportion specu- invested a of Church into volatile and funds procedures; lative stocks in recognized violation of investment (3) frequently changed or “churned” investments to result, brokerage in excess of increase fees. As a the Church lost in excess of in stock market investments and brokerage fees.
Appellant original filed its by set negligence, governed is statute of limitations a tort which found, in its forth in Section MCA. The District Court April order: amended been tak- plaintiff knew in 1979 that Dover had
“[T]hat [Church] ing December 1977. funds and the last conversion had occurred on money entrusted knew that some of the December report received according to the loss to Dover had been converted evidence at trial.” plaintiff’s insurance carrier and admitted into April opinion and order dismissed court’s complaint against all defendants. Church, more than four Appellant prior two to trial and weeks pretrial order filing original complaint, filed a after complaint. The proposed which the Church to amend generally alleged claiming D.A. Davidson and securities fraud rules: agents Hughes laws and Drew and violated 1) Montana; Act of Securities
2) 1934; Exchange Securities and Act 3) 1933; Securities Act of Practice;
4) Dealers Rule of Fair National Association of Securities 5) Exchange, Pacific Stock Rule of the Board оf Governors of the Inc.;
6) Rules; Exchange Midwest Stock Act; 7) Management of Institutional Funds Montana Uniform 8) protection Consumer Act. Montana of statu- by including these claims The court held that the action, violation, ex- original tory “[S]eeking to amend its for securities panding previous negligence into аn action action fraud, terms.” one couched the broadest I ISSUE pre- appellant’s
Did the court abuse its discretion when it denied pleadings? trial motion to amend the reviewing a employed by this Court when The standard of review is to amend District Court’s denial of a motion v. Chevalier Betor discretion. whether District Court abused its plead- M.R.Civ.P., may his provides, amend Rule “[A]
293 ing only by by party; of court adverse leave or written consent of the freely . . given justice requires leave shall so .” be when (1972), 8, 17,
In Prentice Lumber Co. v. 504 Hukill 161 Mont. P.2d 277, 282, (1962), 178, 227, citing Foman v. 371 83 S.Ct. 9 Davis U.S. 226, 222, error, any L.Ed.2d of we held it is the absence declared reason, аpparent or deny for a Court to to amend the District leave complaint. —
“. . . In any apparent the or reason such as absence declared delay, movant, undue dilatory part faith or bad motive on the the repeated by previously failure to cure deficiencies аmendments al- lowed, prejudice opposing party by undue to the virtue of allow- — amendment, futility amendment, ance of the the etc. the leave should, sought require, ‘freely given.’ [Empha- as the rules be . . .” sis added.] Lumber, 17,
Prentice
we grant held it was an abuse of an tо the discretion amendment trial, on the eve of constituted when the amendment complaint, different cause of action. offered The Church’s amended trial, prop- after four discovery prior weeks and two erly supports denied the District Court. The evidence also finding unduly prejudiced District Court’s that defendants would be Therefore, allowing Mc- complaint. the amended in accord with (1972), Guire and Lumber Prentice Co. v. Hukill 161 Mont. the court motion for defendant’s complaint. an amended
ISSUE II 27-2-204(1), MCA,
Did the it District Court err when held Section complaint? barred the Church’s 27-2-204(1), MCA, period provides: “The described uрon upon liability founded
commencement of an action generally years.” has writing three This Court strument is within actions, limitations non-malpractice the statute of held that tort Kerrigan v. plaintiff’s injury. begins to run on date (1924), 227 P. O’Mera 71 Mont. knowledge of has no that a with a cause of action fact
“[T]he arises, does not of which the cause rights, his or even the facts out party] delay until dis- running of the statute of limitations [the v. Bennett rights under those facts.” covers the facts or learns of his (Mont. 992, 994, 1986), St.Rep. cit- P.2d Dow Chemical Ray Geophysical 156 Mont. ing Carlson v. Division *6 481 P.2d 329. prevents
However, concealment” when defendant’s “fraudulent action, of limita discovering cause of the statute from a (D. Co., Ruger Inc. and generally Much v. Sturm tions is tolled. negligence 1980), non-malpractice F.Supp. 745. In a 502 action, the defend an affirmative act committed there must be the exis ant, to obscure act must be calculated and the affirmativе Much, F.Supp. 502 at 745. tence of a cause of action. 9, 1978, defendant
A record reveals that on December review of the Bishop Wheatley and Larry Reverend Herbert and Dover contacted problems. resulting financial of his tortious acts and informed them January in improprieties оf Dover’s Herbert testified he was aware when Dover arguably notice earlier 1978. The Church stock for his requested COFA’s authorization 1974 and received transactions. Dover’s notice of Church had
The District Court that the found However, to failed the Church wrongdoing on 1978. December that al- argues 1982. The Church filе a until wrongdoing, the Dover’s though it was aware of defendant fraudulently Inc., aware that defendant speculative investing highly negligently “churning” stocks and securities. investigate defendant’s placed notice to
The Church was
Herbert
meeting
Reverend
with
tortious acts
defendant’s
reveals
The record
Bishоp Wheatley in
December
Addition
action.
investigate its cause of
properly
Church failed
fraudu
that defendants
ally,
presented to show
no evidence was
Much,
F.Supp.
744. Plain
at
lently
injury.
fact of
concealed the
27-2-204(1), MCA.
by Section
cause of action is barred
tiff’s
The Church also contеnds the District Court erred when it failed
apply equitable estoppel.
(1977),
Keneco v. Cantrell
174 Mont.
130, 136,
apply equitable
1228. In
estoppel,
order to
estopped
to be
must have concealed facts material to an-
Mont,
Keneco,
injury.
other’s
at
Defendant Dover revealed his to Church officials in 1978. employees Defendant D.A. Davidson and its did not conceal alleged Therefore, improprieties. their the District Court appellant’s apply equitable motion estoppel. ISSUE III
Did the District Court specifi- abuse its discretion when it failed to cally separate findings оf fact and conclusions of law? 52(a), M.R.Civ.P.,
Rule provides pertinent part: “In all actions upon tried jury facts without advisory jury, or with an court shall find the specially facts separately and state its conclu- sions of . . law .”
The Church contends that separate the court’s failure to its find- ings of facts and рrejudicial. conclusions of law was Montana Power Co. v. 369, 372, Kravik 189 Mont. provides 52(a): (1) three reasons for Rule as an aid in judge’s process the trial (2) adjudication, purpose judicata of res estoppel by judg- ment, as an appellate aid to the court on review.
Although the 52(a), District Cоurt did not adhere to Rule M.R.Civ.P., appellant provide Church has failed to this Court with evidence of prejudice. undue We hold the District Court did not However, commit reversible error. we caution the District Court to comply with Rule M.R.Civ.P.
We hold the District plaintiff’s Court motion to amend the properly dismissed its suit for failure to file the action within required period. the time
Affirmed.
MR. HARRISON, JUSTICES WEBER and GULBRANDSON and HON. LANGEN, LEONARD H. Judge, sitting District for MR. JUSTICE MORRISON concur.
MR. SHEEHY, JUSTICE concurring: The essential in issue this case is whether the District Court should permitted have an amendment to under Rule M.R.Civ.P.
My essentially point concurrence turns on the that allowance of the amendment completеly would have made a different lawsuit as it affected D.A. and that therefore the doctrine of relation back under apply. Rule 15 should not
If permitted problem the amendment had been the first which the fiduciary District Court would have to determine is whether a rela- tionship fiduciary D.A. A existed between Davidson and the church. relationship automatically is in established a stockbroker-client Paine, Jackson, Webber, Curtis, relationship in as the court (Colo. 1986), Inc. v. Adams 508, 515, pointed out. Whether fiduciary depends stockbroker is a to its customer on the attend- discovery in ant facts and circumstances. Thus this case would have begin just point all over related to different issues fact on the fiduciary whether the stockbroker in this case was a of the Then, relationship eyes church. if the in was established law, cheating it would make no difference that Dover himself was obligation fiduciary directly the church. The would run to the Thus, allowed, prejudice church. if the amendment had been completely Davidson is evident that a different kind of law- suit would have resulted. manner, equitable estoppel
In like I think is not available this v. case. In Kenneco Cantrell approved equitable estoppel
we the use of to set aside a statute of prevent hardship. equitable limitations so as to es- The elements toppel apply question set out in that case do not here because the is applica- set aside Equitable estoppel not the same. was used to ble statute bar, simply limitations. question is the case at District whether the amendments should have been allowed amendment, If be no Court. the court allowed the there would question would of statute of limitations because the amendment bring the case within the statute. opinion.
I therefore concur in the foregoing special MR. concur- JUSTICE HUNT concurs rence of MR. JUSTICE SHEEHY.