ESTATE OF SCHUEREN v UNION BK T

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No. 12118 I N THE SUPREME C U T O T E STATE O M N A A OR F H F OTN 1973 I N T E M T E O THE ESTATE O A N L H ATR F F R OD C. SCHUEREN, DECEASED, ...................................... ELEANORE A. SCHUEREN , P l a i n t i f f and A p p e l l a n t , UNION BANK AND TRUST COMPANY, a Corporation, Defendant and Respondent. Appeal from: D i s t r i c t Court o f t h e S i x t h J u d i c i a l D i s t r i c t , Honorable L. C. Gulbrandson, Judge p r e s i d i n g . Counsel of Record : For Appellant : Small, Cumminsand Hatch, Helena, Montana Floyd 0 . Small argued and Robert C u m i n s appeared, Helena, Montana For Respondent : Luxan and M u r f i t t , Helena, Montana H. J. Luxan and Walter S. M u r f i t t argued, Helena, Montana Submitted: June 18, 1973 M r . J u s t i c e Wesley C a s t l e s d e l i v e r e d t h e Opinion of t h e Court. This i s an appeal from a judgment f o r defendant entered on a j u r y v e r d i c t a f t e r a motion f o r new t r i a l was denied. was t r i e d i n Park County, Hon. L.C. The case Gulbrandson, presiding. P l a i n t i f f Eleanore A. Schueren, a s b e n e f i c i a r y of t h e e s t a t e of Arnold Schueren, f i l e d a negligence a c t i o n a g a i n s t defendant Union Bank and T r u s t Company a s executor of t h e e s t a t e of Arnold C. Schueren. The claimed negligence and mismanagement of t h e executor was t h a t defendant (1) f a i l e d t o c o l l e c t a s s e t s owned by t h e decedent on t h e d a t e of h i s death January 30, 1967, o r i n t h e a l t e r n a t i v e (2) f a i l e d t o discover t h a t those a s s e t s had been f r a u d u l e n t l y disposed of by decedent's agent Leston B. Nay during decedent's l i f e t i m e and f o r f a i l i n g t o p r e s e n t t o Nay a claim f o r t h e value thereof and t o c o l l e c t thereon. The Seventh C i r c u i t Court of Appeals described t h e aforementioned agent Leston Nay i n i t s Cause No. 71-1422, 466 F.2d 1035, decided August 1, 1972, i n t h i s manner: "This i s another sad chapter i n t h e c a s e of Leston B. Nay and t h e frauds he p e r p e t r a t e d over a long period of xears a g a i n s t a g r e a t number of innocent investors. W s e t t h i s f o r t h a t t h i s time t o s e t t h e s t a g e f o r what follows. e Nay murdered h i s w i f e and committed s u i c i d e on June 3 , 1968, leaving many innocent i n v e s t o r s t o s u f f e r . P l a i n t i f f - a p p e l l a n t contends t h e i s s u e s i n t h e c a s e were t h e question of negligence and damages r e s u l t i n g therefrom. W e agree. Appellant s e t s out some fourteen claimed e r r o r s ; some a r e merely t h e contentions s e t out above. It i s c l e a r t h e j u r y be- l i e v e d , a s i t had a r i g h t t o do, t h a t defendant was n o t n e g l i g e n t ; and, t h a t i n any event no damage r e s u l t e d because t h e r e was no l o s s of e s t a t e property o r a s s e t s occasioned by a c t i o n s of t h e executor. I n o t h e r words, t h e a l l e g e d v a l u e of t h e e s t a t e was simply n o t t h e r e . A s u b s t a n t i a l p a r t of ~ c h u e r e n ' se s t a t e had been embezzled and stolen prior to his death; thus no damage occurred by reason of defendant's activities. The other claimed errors have to do with the evidence admitted and the instructions given and refused. Before discussing these claimed errors, we set forth the agreed facts. Arnold C. Schueren during his lifetime was a resident of Chicago, Illinois, engaged in a small manufacturing business in that city. In 1954, Schueren retired from business, sold his interest in the company, and moved to a ranch near Pray, Montana. In approximately 1936 Schueren became acquainted with Leston B. Nay, also of Chicago, a stock salesman employed by the brokerage firm of Webber, Darch & Company. On April 16, 1936, Schueren made, executed, and delivered to Leston B e Nay a power of attorney which vested Nay with broad discretion and authority to deal with all securities owned by Arnold Schueren including the right to sell and dispose of such securities. A new power of attorney was given by Arnold Schueren to Leston B. Nay on July 7, 1937, and contained the same broad powers. It was ~chueren'spolicy to leave securities which he had purchased in the possession of Nay and/or the brokerage firm with which Nay was then associated. In 1942, Nay became an employee of the brokerage firm of Ryan-Nichols & Co. During the course of the next several years, Nay acquired all of the stock of RyanNichols & Co. and subsequently changed the name of the brokerage firm to First Securities Company of Chicago. Nay was president of that firm at the time of his death and owned ninety percent of the outstanding stock. The brokerage firms with which Nay was associated were all members of the Midwest Stock Exchange. Nay, as a long time friend and trusted business associate of Arnold Schueren, retained in his custody almost all securities, whether stocks or bonds, purchased for Schueren's account. The records of First Securities Company of Chicago show that it would purchase securities for Schueren and the stock certificates were delivered to Schueren. Receipts were signed by Schueren acknow- ledging he had received t h e c e r t i f i c a t e s . After each t r a n s - a c t i o n , Schueren would d e l i v e r t h e s e c u r i t i e s t o Leston Nay and would r e c e i v e i n r e t u r n a document e n t i t l e d "safekeeping r e c e i p t . II I n sending t h e income t o Schueren, Nay would i s s u e , over t h e l e t t e r h e a d of F i r s t S e c u r i t i e s Company of Chicago, typewritten monthly income statements r e f l e c t i n g t h e amount of dividends and/or i n t e r e s t purportedly received f o r Schueren's account and remit t h e amounts shown t o Schueren by c a s h i e r ' s checks. t h e c a s h i e r ' s checks from v a r i o u s Chicago banks. Nay purchased Periodically, upon request of Schueren, Nay would send t o Schueren a d e t a i l e d l i s t of stocks and bonds which were purportedly held by Nay f o r ~ c h u e r e n ' s account. The correspondence between Nay and Schueren r e v e a l s t h a t a t times Schueren, who kept a c c u r a t e r e c o r d s , would question t h e inventory statements and/or t h e income statements. Arnold Schueren died on January 30, 1967. Thereafter, a f t e r due n o t i c e and hearing, h i s w i l l , dated A p r i l 1, 1963, was admitted t o probate on February 28, 1967 and t h e Union Bank and T r u s t Company was appointed executor t h e r e o f . ~ c h u e r e n ' sw i l l provided t h a t a l l of h i s property was t o be d i s t r i b u t e d t o t h e Union Bank and T r u s t Company, a s t r u s t e e . One-half of h i s e s t a t e a f t e r payment of d e b t s , t a x e s and a d m i n i s t r a t i v e c o s t s , was t o be held i n t r u s t f o r Eleanore Schueren his widow, with income from such one-half t o be paid t o h e r monthly. The t r u s t e e was given t h e power t o invade t h e p r i n c i p a l of t h e t r u s t i n t h e event t h e income was i n s u f f i c i e n t t o provide f o r M r s . tenance. Mrs. ~ c h u e r e n ' s support and main- Schueren has t h e power t o dispose of any of t h e a s s e t s remaining i n t h e t r u s t f o r h e r b e n e f i t t o any person whom she d e s i r e s , upon h e r death. The o t h e r one-half of ~ c h u e r e n ' se s t a t e i s held i n a t r u s t designated t h e "residuary t r u s t " . Mrs. Schueren i s t o r e c e i v e a l l of t h e income from t h e r e s i d u a r y t r u s t and t h e t r u s t e e has t h e a u t h o r i t y t o d i s b u r s e from t h e p r i n c i p a l of t h e r e s i d u a r y t r u s t such sums a s may be required t o provide f o r h e r support, but only i n t h e event t h a t a l l of the a s s e t s of t h e trust over which she has a power of appointment have been exhausted. Upon her death, all of the assets in the residuary trust are distributable to the Montana Heart Association. Following its appointment as executor, Union Bank on March 3, 1967, wrote to Leston Be Nay requesting that all assets owned by Schueren be turned over to it, as executor. The response from Nay was almost immediate and he pledged his cooperation to Union Bank and promised to furnish an inventory of all the securities owned by Arnold Schueren. Nay advised Union Bank it would be necessary to transfer the securities to the name of Union Bank and Trust Company, as executor, and requested twenty-five certified copies of Letters Testamentary to effect the transfers. These documents were mailed to Nay on March 13, 1967. An inventory was received from Nay in the latter part of April 1967, together with valuations of all securities, computed by Nay. The inventory failed to in- clude any stock or bond certificate numbers. At various times from May 13, 1967, through February 8, 1968, Nay requested and was furnished by Union Bank the same documentation and additional documentation including inheritance tax waivers issued by the state of Montana, affidavits of domicile for the state of New York and for the state of California, all purportedly required by the various transfer agents. In the latter part of February 1968, Union Bank began to investigate the reason for its not having received the securities from Nay. Inquiries were made of its correspondent bank in Chicago, Continental Illinois National Bank of Chicago, and to certain selected transfer agents, and thereafter in May 1968, to all companies and transfer agents in which Arnold Schueren was supposed to hold stocks or bonds. In April 1968, Nay mailed to Union Bank purported copies of letters to all transfer agents showing the request for transfer. After N~Y'Sdeath, it was established that the original requests had never been mailed to the transfer agents. While the investigation was in progress, Leston B, Nay on June 3, 1968, murdered his wife and committed suicide. No securities were delivered to Union Bank by First Securities Company or Leston Nay prior to June 3, 1968. Following advice of ~ay'ssuicide, an officer of Union Bank went to Chicago to determine what course of action to take to recover the securities which were purportedly held by First Securities Company for the account of Arnold Schueren. The firm of Pope, Ballard, Shepard & Fowle was employed. Upon learning of the claim of Union Bank as executor of Arnold Schueren's estate, the Securites and Exchange Commission immediately filed an action in the United States District Court of Illinois and a receiver was appointed to take charge of the assets and property of First Securities Company of Chicago. A bank officer appeared at the hearing. That action is entitled "In the District Court of the United States for the Northern District of Illinois, Eastern Division, Securities and Exchange Commission, Plaintiff, vs. First Securities Company of Chicago, Defendant, No. 68C 1053. I' A special master was appointed by the court to hear the various claims of persons claiming monies and/or securities due from First Securities Company, including the claim of Union Bank as executor of the last will and testament of Arnold Schueren. Union Bank on April 30, 1968, prior to Nay's death, and as required by law, filed with the Internal Revenue Service at Helena, Montana, a United States Estate Tax Return (Form 706) with respect to ~chueren'sestate reporting assets of the value of $565,291.20 and concurrently therewith paid inheritance tax in the amount of $17,369. During the period between March 1967, through April 1968, thirteen remittances by cashier's checks purporting to be remittances of specific dividend and interest income theretofore received by First Securities Company of Chicago with respect to securities held by it for the account of Schueren, accompanied in each instance by a memorandum itemizing the specific dividend and interest income r e m i t t e d therewith, aggregating t h e sum of $20,254.59, were received by Union Bank. I n August 1968, Union Bank f i l e d with t h e r e c e i v e r , a p e t i t i o n f o r reclamation of a l l s e c u r i t e s s e t f o r t h on t h e l i s t furnished by Nay i n A p r i l 1967, and requesting t h e r e c e i v e r t o t u r n over a l l of t h e l i s t e d s e c u r i t i e s . Union Bank a l s o f i l e d with t h e r e c e i v e r a proof of claim claiming t h e v a l u e of a l l s e c u r i t i e s appearing on t h e Nay l i s t . P e t i t i o n f o r removal of t h e executor and complaint i n t h e i n s t a n t a c t i o n was f i l e d on June 16, 1969, by p l a i n t i f f - a p p e l l a n t herein. Union Bank, defendant-respondent, f i l e d an inventory and appraisement i n t h i s matter on June 25, 1969, showing a s s e t s i n i t s possession owned by Arnold Schueren on t h e d a t e of h i s death t o be: i n d i v i d u a l l y owned property property with Eleanore Schueren - - $46,800.04; j o i n t l y owned $16,342.14. On August 19, 1969, Union Bank f i l e d i t s f i r s t i n t e r l o c u t o r y account and r e p o r t and p e t i t i o n f o r s e t t l e m e n t t h e r e o f . Appellant f i l e d o b j e c t i o n s t o hearing of t h e account. On August 14, 1969, an o r d e r was entered i n t h e r e c e i v e r s h i p proceedings pending i n Chicago, r e q u i r i n g t h e r e c e i v e r t o t u r n over t o Union Bank, a s executor, a l l of t h e s e c u r i t i e s found i n t h e o f f i c e of F i r s t S e c u r i t i e s Company of Chicago, which were r e g i s t e r e d i n t h e name of Arnold C. Schueren. On September 17, 1969, a f t e r r e c e i p t of t h e s e c u r i t i e s , Union Bank f i l e d i t s f i r s t supplemental inventory and appraisement showing t h e v a l u e of t h e s e c u r i t i e s received t o be $98,399. 44. On June 30, 1970, the s p e c i a l master appointed by t h e f e d e r a l c o u r t i n I l l i n o i s t o hear t h e various claims, a f t e r hearing proof on t h e claim of Union Bank, a s executor, recommended t h e claim be denied upon t h e grounds t h a t t h e powers of a t t o r n e y granted by Schueren t o Nay i n 1936 and 1937 empowered Nay t o dispose of a l l of t h e c e r t i f i c a t e s e n t r u s t e d t o him and a s such Nay was n o t a c t i n g as an o f f i c e r o r agent of F i r s t S e c u r i t i e s Company, b u t was a c t i n g a s t h e agent of Schueren. The s p e c i a l master a t t h e same t i m e recom- mended t h e claim of Eleanore Schueren be accepted and approved. On March 22, 1971, the court adopted the recommendations of the special master and entered an order denying the claim of Union Bank, as executor, and approving the claim of Eleanore Schueren. Subsequent to the filing of the pretrial order in the instant case, the order of the federal district court entered in the Chicago receivership proceedings denying the claim of Union Bank, as executor of Arnold Schueren's estate, was appealed to the United States Court of Appeals, Seventh Circuit. On August 1, 1972, that court reversed the order of the federal district court and allowed the claim of Union Bank, as executor. The decision entitled "~ecuritiesand Exchange Commission, Plaintiff v. First Securities Company of Chicago, Defendant; Union Bank & Trust Company, Helena, Montana, Claimant-Appellant, -- Keith S. McKy, Receiver-Appellee, Customer Creditors Committee, Appellee. 11 appears at 466 F.2d 1035. Union Bank has not filed an estate inheritance tax return with the state of Montana but did, on February 12, 1971 pursuant to the laws of the state of Montana, deposit with the clerk of this Court the amount of $2,537.08 as and for Montana inheritance tax estimated to be due from the estate. Union Bank, as executor, has disbursed to Eleanore A. Schueren, surviving widow of Arnold Schueren, as and for a widow's allowance, cash sums in the total amount of $62,000. Leston Nay died testate. No proceedings for the probate of his will or for the administration of his estate have been filed. During the course of the trial in the district court in the instant case, other facts were developed including generally customs and practices in the securities industry; the proof that no securities (the loss of which is the alleged subject of the suit) existed on January 30, 1967, the date of ~chueren's death; a death or suicide note written by Leston Nay documenting his own fraudulent disposition of securities and money entrusted to him; and, certain other matters prior to Schueren's death and subsequent to ~ay'sdeath, - 8 - The claimed e r r o r s , a s we have regrouped them, a r e : (1) O t h e question of negligence, t h e evidence should n have been confined t o a period of t i m e from February 28, 1967, (when respondent Union Bank became executor) t o June 3, 1968, (when Leston Nay k i l l e d himself). (2) That t h e c o u r t e r r e d i n admitting i n t o evidence t h e death statement o r s u i c i d e n o t e of Leston Nay. (3) Error i n admitting matters i n t h e r e c e i v e r s h i p pro- ceedings i n Chicago a g a i n s t F i r s t S e c u r i t i e s Company i n September 1969. (4) Error i n admitting l e t t e r s from v a r i o u s t r a n s f e r agents i n January 1970, s t a t i n g they d i d n o t have any record of s e c u r i t i e s i n t h e name of Arnold Schueren. (5) Errors claimed i n i n s t r u c t i o n s given and refused. (6) The a c t i o n s of t h e Union Bank i n allowing Nay t o p a r t i c i p a t e i n marshalling t h e a s s e t s made i t a guarantor o r r a i s e d an e q u i t a b l e estoppel a g a i n s t it. Under claimed e r r o r ( I ) , a p p e l l a n t contends no evidence concerning t h e handling of t h i s e s t a t e should have been received which r e l a t e d t o any period of time p r i o r t o February 28, 1967, o r subsequent t o June 3, 1968. This contention does n o t conform t o t h e conduct of p r e t r i a l i n v e s t i g a t i o n , t h e preparation and approval of t h e p r e t r i a l o r d e r , o r t h e t r i a l of t h e case. The agreed statement of f a c t s a s contained i n t h e p r e t r i a l order covers t h e period from 1936 through March 22, 1971, including t h e commencement of Arnold ~ c h u e r e n ' sr e l a t i o n s h i p with Leston Nay (1936) through t h e appointment of Union Bank a s executor, i t s f i l i n g of a claim i n t h e r e c e i v e r s h i p proceedings i n Chicago, i t s p a r t i c i p a t i o n i n those proceedings and t h e f i l i n g of t h e inventory and appraisement and supplement t h e r e t o , and p e t i t i o n s f o r settlement of i t s account. I n a d d i t i o n , a p p e l l a n t introduced t h e inventory dated June 25, 1969, and questioned M r . Mayer, a Union Bank t r u s t o f f i c e r , with r e s p e c t t o t h e Chicago proceedings, and M r . Dion, a Union Bank t r u s t o f f i c e r , with r e s p e c t t o t h e f i l i n g of a claim a g a i n s t Nay o r F i r s t S e c u r i t i e s . The happenings a f t e r June 3, 1968, were included a s a p a r t of t h e h y p o t h e t i c a l question asked of M r . Finger, a p p d a n t ' s witness. Introduced and received i n evidence without o b j e c t i o n of a p p e l l a n t ' s counsel were defendant's Exhibit R (complaint f i l e d i n t h e r e c e i v e r s h i p proceedings by t h e S e c u r i t i e s & Exchange Commission a g a i n s t F i r s t S e c u r i t i e s Company of Chicago on June 10, 1968); Exhibit S ( t h e a f f i d a v i t of t h e s e n i o r s e c u r i t y i n v e s t i g a t o r on t h e s t a f f of t h e S e c u r i t i e s & Exchange Commission which was f i l e d with t h e complaint); Exhibit T ( t h e order of t h e f e d e r a l d i s t r i c t c o u r t appointing Keith D. McKy a s r e c e i v e r ) ; Exhibit U ( t h e p e t i t i o n f o r reclamation f i l e d on behalf of Union Bank, a s executor of t h e e s t a t e of Arnold Schueren); Exhibit V (proof of claim f i l e d by Union Bank, a s executor); and Exhibit W ( t h e order of t h e f e d e r a l d i s t r i c t c o u r t r e q u i r i n g t h e turnover of c e r t a i n s t o c k c e r t i f i c a t e s t o Union Bank, a s executor of t h e e s t a t e of Arnold Schueren, r e l a t i n g t o c e r t a i n s e c u r i t i e s r e g i s t e r e d i n t h e name of Arnold Schueren). claimed e r r o r . See: It i s c l e a r a p p e l l a n t waived the C h a r l i e v. Foos, Mon t . , 503 P.2d 538, 29 St.Rep. 927. Appellant complains t h a t respondent Union Bank i n s i s t e d upon t h e r i g h t t o take depositions of v a r i o u s i n d i v i d u a l s i n t h e Chicago a r e a f o r use during t r i a l . A g r e a t d e a l of t h e evidence r e q u i r e d by respondent t o properly present i t s c a s e was located i n and about t h e c i t y of Chicago. I n a d d i t i o n , each of t h e t r a n s f e r agents having t h e records of t h e companies i n which Arnold Schueren was purportedly a stockholder o r bondholder have o f f i c e s i n t h e midwestern and e a s t e r n c i t i e s of t h e United S t a t e s . Appellant was advised of t h e n a t u r e of t h e evidence which respondent intended t o produce a t t r i a l . Appellant was furnished with a copy of t h e t r a n s c r i p t of t h e hearing of t h e r e c e i v e r s h i p claims of Eleanore Schueren and Union Bank, a s executor, and copies of t h e proceedings i n t h e Chicago l i t i g a t i o n which respondent intended t o use a t t h e t h e t r i a l , a l l w e l l i n advance of t h e t r i a l . The following stipulation between counsel appears in the pretrial order: ~tThe parties stipulate and agree that all pleadings, exhibits and all the testimony by deposition or at the hearings before the Court or Special Master in the cause entitled In the District Court of the United States for the Northern District of Illinois, Eastern Division, Securities and Exchange Commission, plaintiff, vs. First Securities Company of Chicago, defendant, No. 68C 1053, may be used by either party hereto with like effect as if the witnesses were present in Court and testifying." Appellant reserved all objections save and except as to foundation. There was no suggestion by stipulation or otherwise, nor does the record reveal, that appellant intended to attempt to limit the evidence to the period of time now claimed. It has long been the law of Montana that failure to make timely objection constitutes a waiver. Seder v. Kiewit sons' Co., 156 Mont. 322, 479 P.2d 448; Charlie v. Foos, supra. Appellant's contention that the evidence with respect to the financial condition of First Securites or Nay should have been excluded as being immaterial and too remote in time is without merit. The Nay suicide note was admittedly written by Nay before he died on June 3, 1968. The note was written within the time limitation urged by appellant, which should obviate any objection or claimed irregularity with respect thereto. note is evidence of #ap's The deceit of Arnold Schueren, the theft of the securities including the time the thefts commenced (1936) and the method used (sold as collateral for loans), and the effect of this deceit on the financial condition of First Securities. Other documents received in evidence, over objection as being too remote in time and immaterial, were defendant's exhibits G-1, H-1, 1-1 and J-1. The first three numbered exhibits are the reports of the special master in the Chicago proceedings regarding the claims of various creditors referred to as "the escrow claimants". The reports were written after hearings at which evidence was taken and the amount due each of the creditors was proved. The total of the claims filed was over $1,300,000, of which approximately $1,000,000 was proved as.due. A reading of the synopsis of the evidence produced at the hearings shows Nay's financial condition as far back as 1953. ~efendant's exhibit G-1, wherein the receiver concluded the total claims proved was $972,500, evidence was produced showing Nay had paid as interest for the years 1953 through 1967 the sum of $639,551.24. The special master stated: "During the last several years prior to ~ay's death, his interest payments to the claimants on the escrow funds became irregular and delinquent.11 The evidence is clear that Nay was heavily indebted to third persons and was in fact insolvent long prior to the death of Arnold Schueren and the appointment of Union Bank as executor. The special master recommended the claims of the "escrow claimants" against First Securities be denied on the ground that Nay was not an agent of First Securities. This recommendation was adopted by the federal district judge whose order was appealed to the Court of Appeals, Seventh Circuit. That court reversed the decision and concluded that Nay in his defalcations was acting as an agent of First Securities and the claims were properly claims against First Securities. Securities & Exchange Commission v, First Securities Company of Chicago --- Olga ~#chfelder, et al, Claimants-Appellants, Keith S. McKy, Receiver-Appellee, Customers Creditors Committee, Appellee, 463 F.2d 981, 988. The statement of facts in the above entitled action outlines the method by which Nay succeeded in duping the claimants into selling legitimate securities, and investing in the so-called escrow account". 11 Nay acknowledged receipt of cash either by a hand-written receipt or by giving promissory notes to each claimant. Nay made the interest payments due thereon with his own personal checks. Nay deducted these interest payments from his own per- sonal income tax return, In connection with Internal Revenue Service audits in 1956 and 1965, Nay requested and received from each claimant a letter verifying the amount of his indebtedness. From time to time, some of the claimants referred to their escrow investments in correspondence with Nay as being personal loans to him. Nay was very s e c r e t i v e with r e s p e c t t o t h e escrow accounts and e s t a b l i s h e d , a s p r e s i d e n t of F i r s t S e c u r i t i e s , an o f f i c e r u l e forbidding anyone o t h e r than himself t o open mail addressed t o him o r t o F i r s t S e c u r i t i e s marked f o r h i s a t t e n t i o n . The p r i n c i p a l b a s i s f o r t h e r e v e r s a l was t h e v i o l a t i o n by F i r s t S e c u r i t i e s of t h e S e c u r i t i e s Exchange Act of 1934, and t h e Rules of F a i r P r a c t i c e of t h e National Association of S e c u r i t i e s Dealers, Inc. The Court of Appeals s t a t e d : " e have no doubt t h a t t h e enforcement of Nay's W r u l e regarding t h e opening of t h e mail i s s u f f i c i e n t without more t o c o n s t i t u t e a v i o l a t i o n of Rule 27. Such v i o l a t i o n s provide a b a s i s f o r p r i v a t e damage a c t i o n s where t h e r u l e v i o l a t e d serves t o p r o t e c t t h e public. [ c i t i n g c a s e s ] F i r s t S e c u r i t i e s i s properly l i a b l e f o r Nay's fraud because of i t s v i o l a t i o n of Rule 27 of t h e N.A.S.D." The evidence of t h e e x t e n t of Nay's indebtedness, a s r e f l e c t e d i n t h e pleadings, evidence and d e c i s i o n s , which came t o l i g h t only a f t e r Nay's death, was c e r t a i n l y admissible t o show h i s f i n a n c i a l condition during t h e period a r b i t r a r i l y s e t by a p p e l l a n t and t o f u r t h e r show t h e i n a b i l i t y of e i t h e r F i r s t S e c u r i t i e s o r Nay t o pay t o Union Bank t h e sum of approximately $400,000, t h e market v a l u e of t h e s e c u r i t i e s s t o l e n by Nay from Arnold Schueren. One of t h e i s s u e s r a i s e d by t h e pleadings here was t h e value of t h e e s t a t e ' s claim a g a i n s t F i r s t S e c u r i t i e s o r Nay a s an 1I a s s e t " of t h e e s t a t e . To support h e r a l l e g a t i o n t h a t t h e bank's f a i l u r e a s executor t o f u l l y c o l l e c t t h e claim r e s u l t e d i n a l o s s t o t h e e s t a t e , i t was incumbent upon a p p e l l a n t t o prove t h e f i n a n c i a l a b i l i t y of t h e debtor t o pay t h e claim, t o produce such evidence. Appellant f a i l e d Moreover, respondent produced evidence a f f i r m a t i v e l y showing t h e debtor d i d n o t have t h e f i n a n c i a l a b i l i t y t o pay t h e claim, had one been presented, and was hopelessly i n solvent. A s another " i r r e g u l a r i t y 1 ' , a p p e l l a n t s t a t e s t h a t Union Bank has taken i n c o n s i s t e n t p o s i t i o n s i n t h e Chicago l i t i g a t i o n and i n t h i s action. The o r i g i n a l complaint requestlngthe f e d e r a l c o u r t t o appoint a r e c e i v e r was d r a f t e d by a t t o r n e y s f o r t h e S e c u r i t i e s & Exchange Commission and f i l e d i n i t s behalf and i s not an admission by Union Bank t h a t ~ a y ' s e c e i t f u l and deceptive p r a c t i c e s s t a r t e d d after its appointment. It is an allegation only and the proof subsequently developed during those proceedings indicated the deceit had been practiced for over thirty years. In the Chicago proceedings, Union Bank on July 31, 1968, filed its "Petition for Reclamation" requesting the turnover of all Schueren's securities and further requesting all cash proceeds of any of such securities as may have been sold. Thereafter, when the extent of Nay's fraudulent practices had been established and it was certain that the missing securities hdd long been disposed of, Union Bank in 1968 filed its "Proof of Claim". Union Bank was desirous of obtaining possession of such existing securities (if any) as were registered in the name of Arnold Schueren or as held in street name for his account by First Securities, together with the value of such of Schueren's securities as could not be accounted for. As executor, Union Bank has recovered securities of the value of approximately $98,000. Subsequent investigation revealed that no other securities belonging to Schueren were in existence at the time of his death. What was originally believed to be assets having a "market value" is now merely a claim against an insolvent, bankrupt company and/or against a decedent's estate. Union Bank pursued the claim of its testator in the Chicago proceedings and was successful in obtaining a judgment requiring the receiver to allow the claim as a valid claim against First Securities. The executor is chargeable by law with only those assets which are in existence on the date of the decedent's death. Since the stolen securities were nonexistent at ~chueren's death, the 11 asset" is the claim against First Securities and/or Nay for their value. Proceedings for the administration of Nay's (insolvent) estate have understandably not been commenced. Union Bank followed the only fruitful course available under the circumstances by filing a claim against First Securities for the value of the stolen securities. The value of that claim (as distinguished from the value of t h e converted s e c u r i t i e s ) depends upon i t s c o l l e c t a b i l i t y and t h i s has n o t a s y e t been determined. It w i l l n o t be determined u n t i l t h e r e c e i v e r s h i p proceedings have been terminated and t h e amount of money a v a i l a b l e f o r d i s t r i b u t i o n t o r e c e i v e r s h i p c r e d i t o r s has been a s c e r t a i n e d . The evidence i s c l e a r t h a t except f o r t h e s e c u r i t i e s r e g i s t e r e d i n t h e name of Arnold Schueren, none of t h e missing s e c u r i t i e s was i n e x i s t e n c e on t h e d a t e Arnold Schueren died and t h a t ~ a y ' s r e p r e s e n t a t i o n s t o t h e c o n t r a r y , made t o Union Bank during t h e period following ~ c h u e r e n ' sdeath and u n t i l ~ a y ' ss u i c i d e , were fhlse and fraudulent. It i s admitted t h a t Arnold Schueren believed u n t i l the day he died t h a t t h e s e c u r i t i e s contained on t h e Nay l i s t were held i n some form f o r h i s account by F i r s t S e c u r i t i e s and Nay. The i n s t a n t a c t i o n was commenced i n June 1969, more than one year a f t e r Nay's s u i c i d e . Appellant a l l e g e s t h e s e c u r i t i e s s e t f o r t h on t h e Nay l i s t were i n e x i s t e n c e and were a s s e t s of t h e e s t a t e ; t h a t they were l o s t and t h e l o s s was due t o negligence on t h e p a r t of Union Bank. The defense of Union Bank i s based upon t h e known f a c t s t h a t t h e s e c u r i t i e s d i d n o t e x i s t and t h a t t h e only a s s e t of t h e e s t a t e was a claim, t h e value of which was unknown. There i s no inconsistency a s contended by a p p e l l a n t . It i s t h e duty of t h e executor t o c o l l e c t a l l c o l l e c t i b l e a s s e t s owned by t h e decedent. The Union Bank has pursued t h i s duty. Appellant's theory i n t h i s a c t i o n seems t o be t h a t because Arnold Schueren was t h e v i c t i m of t h e f r a u d u l e n t , d e c e i t f u l and unlawful conduct of Nay, and Union Bank d i d n o t promptly discover t h a t f a c t , i t , a s executor, succeeds t o Arnold ~ c h u e r e n ' sp o s i t i o n and must s u f f e r t h e l o s s . Under Montana law i t i s c l e a r t h a t an executor i s chargeable with only such a s s e t s a s a r e i n e x i s t e n c e on t h e d a t e of t h e t e s t a t o r ' s death. I n r e Dolenty's E s t a t e , 53 Mont. 33, 161 P. 524; Section 91-3402, R.C.M. 1947. In this e s t a t e , t h e "asset" i n question i s the claim t h a t e x i s t e d a t t h e t e s t a t o r ' s death f o r t h e value of s e c u r i t i e s s t o l e n from him during h i s lifetime. For the foregoing reason alone, the trial court might well have granted the motion for a directed verdict; that is, no loss was shown as a result of the executor's action. The foregoing discussion answers appellant's contentions () I, ( ) and ( ) heretofore set forth. As to contention ( ) 3, 4, 2, the admissibility of the death statement or suicide note, even without it there is sufficient proof to warrant the conclusion that the securities involved did not exist. As to the note, one Roy Campbell, the office manager, cashier, secretary and director of First Securities, testified by deposition. The note was read in its entirety by Campbell without objection and this would constitute a waiver. Moreover, the note was properly admissible as a declaration against interest and a business record. 1101-17(1), R.C.M. Section 93- 1947; MacDonald v. Protestant Episcopal Church, 150 Mont. 332, 435 P.2d 369; Section 93-801-2, R.C.M. 1947. The note was proven as to authenticity and was clearly relevant. No error was committed. As to appellant's contention ( ) errors concerning instruc5, tions given and refused, we have examined them and find no error. First, as we have said heretofore, there was a failure of proof of any loss occasioned by the executor and the trial court might well have granted a directed verdict. occurred. Thus no error in instructions Second, appellant's contentions on admissibility of evidence not having merit, heretofore discussed, many of the claimed errors in instructions are not applicable. ' We have dwelled herein largely on the matter of whether any loss was occasioned by the actions of the executor Union Bank. Appellant's contention (6) is that Union Bank, as executor, was negligent in allowing Nay to perform duties in marshalling the assets of the estate during the period of over one year. Further, that Union Bank failed to file an inventory and appraisement of the estate for over two years. We do not herein approve of the actions of Union Bank,'since it could have and should have gone to the court for an extension of time, but the jury did not find those actions to be negligence. Appellant urges t h a t when Union Bank allowed Nay t o perform i t s d u t i e s of marshalling t h e a s s e t s , i t , t h e Bank, became a guarantor f o r t h e a c t s of Nay a s i t s agent. W recognize t h a t such i s t h e e r u l e i n a proper c a s e , i f t h a t delegation of a u t h o r i t y r e s u l t s i n a loss. But, we emphasize again, t h e r e must be proof of a l o s s . Appellant a l s o urges t h a t t h e a c t i o n s of Union Bank and i t s i n a c t i o n , f a i l u r e t o f i l e t h e inventory, r a i s e d an e q u i t a b l e e s t o p p e l a g a i n s t t h e Bank. That i s , t h a t t h e Bank i s estopped from denying t h e amount of a s s e t s a s s e r t e d i n i t s p e t i t i o n f o r appointment. The e q u i t a b l e e s t o p p e l p r i n c i p l e simply i s n o t applicable. It i s r e g r e t t a b l e t h a t Leston Nay was so s u c c e s s f u l i n gaining and keeping t h e t r u s t and confidence of Arnold Schueren. Nay, a super conman, a l i a r and a t h i e f , reached t h e u l t i m a t e depths of depravity when he murdered h i s i n v a l i d w i f e and then He obviously could not f a c e t h e d i s g r a c e he committed s u i c i d e . knew he would s u f f e r . The economic l o s s s u f f e r e d by t h e Sbhuerens cannot be a t t r i b u t e d t o any negligence of Union Bank, b u t must be placed squarely on t h e shoulders of Leston Nay. The j u r y , a f t e r hearing t h e evidence, found i n favor of respondent Union Bank and Trust Company. and t h e judgment affirmed. Chief J u s t i c ---zad-&- - --------- -------- -----I , / A iaK4y-- /- C ~ G y c i a t e ustices. J The v e r d i c t i s upheld

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