BROWN v MERRILL LYNCH PIERCE FE

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No. 81-293 IN THE SUPREME COURT OF THE STATE OF MONTANA 1981 JAMES E. BROWN and HELEN BROWN, husband and wife, Plaintiffs and Appellants, VS. MERRILL LYNCH, PIERCE, FENNER & SMITH, INC. , a corporation;,JOHNE. BARBO, individually and as an employee or agent; & DICK SPALDING, Defendants and Respondents. Appeal from: District Court of the Thirteenth Judicial District, In and for the County of Yellowstone Honorable Diane G. Barz, Judge presiding. Counsel of Record: For Appellants: Wright, Tolliver, Guthals, Prater and Leroy, Billings, Montana Pierre L. Bacheller argued, Billings, Montana Bridger Law Office, Bridger, Montana For Respondents: Crowley, Haughey, Hanson, Toole & Dietrich, Billings, Montana Robert Lee argued, Billings, Montana Submitted: October 27, 1981 @ Decided : f?8? f ! M r . C h i e f J u s t i c e F r a n k I . H a s w e l l d e l i v e r e d t h e O p i n i o n of t h e Court. P l a i n t i f f s James and H e l e n Brown b r o u g h t an a c t i o n i n n e g l i g e n c e and f r a u d a g a i n s t t h e b r o k e r a g e f i r m of Merrill Lynch, P i e r c e , Fenner & Smith, I n c . , ( M e r r i l l Lynch) and i t s a g e n t s s e e k i n g t o r e c o v e r a c t u a l and p u n i t i v e damages. Summary judgment was g r a n t e d t o t h e d e f e n d a n t s by t h e D i s t r i c t C o u r t of Y e l l o w s t o n e County. I n 1979 James Brown b o u g h t and s o l d g o l d c o i n s a t a p r o f i t o f approximately $44,000. Brown l e a r n e d from h i s b r o t h e r - i n - l a w t h a t he m i g h t d e f e r r e p o r t i n g t h e income from t h e g o l d f o r a y e a r b y means of a t a x s t r a d d l e . A s n e i t h e r Brown n o r h i s w i f e were f a m i l i a r w i t h t a x s t r a d d l e s , t h e y m e t w i t h o n e of Merrill L y n c h ' s a g e n t s , J o h n B a r b o , on December 1 0 , 1 9 7 9 , to d i s c u s s t h e a p p l i c a b i l i t y o f a commodity s t r a d d l e f o r t a x d e f e r r a l p u r p o s e s . The p a r t i e s a g r e e t h a t d u r i n g t h e December 1 0 m e e t i n g Barbo d i s c u s s e d t h e r i s k s involved w i t h a t a x s t r a d d l e . t h e y d i s a g r e e a s t o what was s a i d r e g a r d i n g t h e r i s k s . However Brown c o n t e n d s t h a t Barbo r e p r e s e n t e d to him t h a t t h e o n l y r i s k i n v o l v e d w a s t h e r i s k o f h a v i n g to pay Merrill Lynch a c o m m i s s i o n and y e t n o t r e c e i v e t h e d e s i r e d b e n e f i t i f t h e m a r k e t was f l a t and d i d n o t move. B a r b o c o n t e n d s t h a t he e x p l a i n e d t h a t r i s k a s w e l l a s other r i s k s associated with a s t r a d d l e position. Barbo a l s o i n d i c a t e d i n h i s d e p o s i t i o n t h a t he may h a v e r e p r e s e n t e d to t h e Browns t h a t t h e r e was n o t much r i s k i n v o l v e d w i t h a t a x straddle . Brown e n t e r e d i n t o a commodity a c c o u n t a g r e e m e n t w i t h M e r r i l l Lynch t h a t same d a y and a c o u p l e of d a y s l a t e r o b t a i n e d t h e n e c e s s a r y funds to p l a c e t h e s t r a d d l e . The commodity a c c o u n t a g r e e m e n t c o n t a i n e d a g e n e r a l acknowledgment o f t h e h i g h d e g r e e o f r i s k i n v o l v e d i n commodity f u t u r e s c o n t r a c t s . Brown a l s o s i g n e d a r i s k d i s c l o s u r e s t a t e m e n t and a n a u t h o r i z a t i o n to t r a n s f e r t h e customer's segregated funds. Brown d i d n o t r e a d t h e d o c u m e n t s he s i g n e d n o r d i d he r e q u e s t c o p i e s of t h e d o c u m e n t s . A s h o r t t i m e l a t e r Brown l e a r n e d t h a t Merrill Lynch was p a y i n g h i g h e r i n t e r e s t on d e p o s i t e d f u n d s t h a n l o c a l b a n k s . He c l o s e d h i s b a n k a c c o u n t , and o n December 1 8 h e d e p o s i t e d $ 1 1 1 , 3 9 9 i n a j o i n t r e a d y a s s e t a c c o u n t w i t h Merrill Lynch. On December 1 9 , 1 9 7 9 , h e and h i s w i f e e x e c u t e d a j o i n t a c c o u n t form w h i c h g a v e Merrill Lynch a u t h o r i t y to a c t upon t h e o r d e r s of e i t h e r Brown o r h i s w i f e w i t h r e g a r d t o t h e j o i n t a c c o u n t . Sometime b e t w e e n December 24 and December 26, Brown b o u g h t 2 , 0 0 0 s h a r e s o f K e l d o n O i l Company s t o c k upon t h e r e c o m m e n d a t i o n o f o n e o f h i s close f r i e n d s . The K e l d o n O i l Company s h a r e s were p u r c h a s e d t h r o u g h a n o r d e r a t Merrill Lynch a f t e r Brown s i g n e d the necessary papers. D u r i n g t h e same t i m e p e r i o d , B a r b o c a l l e d Brown and t o l d him t h a t h e had a n u n r e a l i z e d l o s s o f a p p r o x i m a t e l y $18 , 0 0 0 o n h i s commodity s t r a d d l e . B a r b o t o l d Brown a t t h a t t i m e t h a t he had n o t h i n g to worry a b o u t . On F r i d a y , J a n u a r y 11, 1 9 8 0 , Brown was a g a i n a d v i s e d t h a t h i s l o s s e s were a p p r o x i m a t e l y $18 , 0 0 0 . A t t h a t t i m e Barbo e x p r e s s e d c o n c e r n a b o u t c o n t i n u i n g t h e commodity s t r a d d l e and e x p l a i n e d t h a t Brown c o u l d b a i l o u t and t a k e t h e l o s s or possibly " l i f t a leg". " L i f t i n g a l e g " means a b a n d o n i n g t h e commodity s t r a d d l e p o s i t i o n and c o n t i n u i n g i n t h e commodity m a r k e t on a s i n g l e l e g o f t h e s t r a d d l e . wanted t o l i q u i d a t e . B a r b o a s k e d Brown i f h e Brown i n d i c a t e d t h a t he needed some time to t h i n k a b o u t it and t h a t he would be u n a b l e t o make a d e c i s i o n b e f o r e t h e f o l l o w i n g Monday. By t h e f o l l o w i n g Monday, t h e market. had moved a g a i n s t Brown and h i s l o s s e s were f l u c t u a t i n g b e t w e e n $ 8 0 , 0 0 0 and $125,000. Brown d e c i d e d n o t t o do a n y t h i n g a t t h a t t i m e . A p p r o x i m a t e l y a week l a t e r , Brown and B a r b o a g a i n d i s c u s s e d B r o w n ' s d e t e r i o r a t i n g commodity s p r e a d p o s i t i o n . Brown i n s t r u c t e d Barbo a t t h a t t i m e t o l i f t a l e g . B o t h Barbo and Brown c o n t e n d t h a t B r o w n ' s o r d e r t o l i f t a l e g was n o t f o l l o w e d i m m e d i a t e l y b e c a u s e Merrill Lynch1s o f f i c e manager t o l d B a r b o n o t to c a r r y o u t t h e o r d e r u n t i l t h e r i s k of l e g g i n g o u t was e x p l a i n e d t o Brown. The o f f i c e manager s t a t e d t h a t he c o u l d n o t r e c a l l w h e t h e r Brown had g i v e n an o r d e r to l i f t a leg. A f t e r t h e m e e t i n g i n which t h e r i s k was e x p l a i n e d to Brown, it was no l o n g e r p o s s i b l e t o l i f t a l e g b e c a u s e o f c e r t a i n i n t e r n a l r u l e s imposed by Merrill Lynch1s c o r p o r a t e c r e d i t department. A f t e r he r e a l i z e d t h a t he would n o t be a l l o w e d to l e g o u t o f t h e t a x s t r a d d l e , Brown w i t h d r e w what money he c o u l d from t h e j o i n t r e a d y a s s e t a c c o u n t he and h i s w i f e m a i n t a i n e d w i t h Merrill Lynch. p r i o r t o t h a t t i m e c e r t a i n f u n d s had b e e n t r a n s f e r r e d o u t o f t h a t a c c o u n t by Merrill Lynch to meet m a r g i n c a l l s on t h e commodity s t r a d d l e . S h o r t l y t h e r e a f t e r Merrill Lynch l i q u i d a t e d Brown1s comm o d i t y s t r a d d l e p o s i t i o n to c o v e r c e r t a i n o t h e r margin c a l l s t h a t Brown had f a i l e d t o meet. A f t e r l i q u i d a t i n g Brown's p o s i t i o n M e r r i l l Lynch c o n t i n u e d Brown's a c c o u n t w i t h a d e f i c i e n c y b a l a n c e f o r a p p r o x i m a t e l y t h r e e w e e k s , a f t e r which t i m e a number of s h a r e s o f Brown's Keldon O i l Company s t o c k were l i q u i d a t e d b y M e r r i l l Lynch t o c o v e r t h e d e f i c i e n c y . On March 7, 1 9 8 0 , Brown and h i s w i f e f i l e d a c o m p l a i n t a g a i n s t Merrill Lynch, John B a r b o , and t h e o f f i c e m a n a g e r , Dick Spalding. 1 An amended c o m p l a i n t was f i l e d on ~ u l y 1 i n r e s p o n s e t o d e f e n d a n t s 1m o t i o n f o r a more d e f i n i t e s t a t e m e n t . The amended c o m p l a i n t c o n t a i n e d f i v e c o u n t s : (1) a c o u n t i n f r a u d i n r e g a r d t o a n a l l e g e d m i s r e p r e s e n t a t i o n of t h e r i s k i n v o l v e d w i t h a t a x s t r a d d l e , ( 2 ) a c o u n t i n n e g l i g e n c e b a s e d on an a l l e g e d f a i l u r e t o d i s c l o s e t h e t r u e r i s k involved with a tax s t r a d d l e , ( 3 ) a c o u n t i n n e g l i g e n c e b a s e d on a n a l l e g e d f a i l u r e o f Merrill L y n c h ' s a g e n t s to e x e c u t e o r d e r s , ( 4 ) a c o u n t i n f r a u d based on Elerrill L y n c h ' s a l l e g e d i m p r o p e r use of f u n d s i n t h e B r o w n s ' r e a d y a s s e t a c c o u n t to c o v e r m a r g i n c a l l s and ( 5 ) a c o u n t b a s e d on a n a l l e g e d i m p r o p e r l i q u i d a t i o n o f Brown's K e l d o n O i l Company s t o c k . I n t h e amended c o m p l a i n t t h e Browns p r a y e d f o r a c t u a l damages o f $ 1 8 , 0 0 0 , a r e f u n d of a l l m o n i e s i n v e s t e d o r l o s t b a s e d o n t h e a b o v e c o u n t s , a r e t u r n o f t h e s t o c k t h a t was l i q u i d a t e d , p l u s $ 1 0 0 , 0 0 0 i n p u n i t i v e damages. V a r i o u s d e p o s i t i o n s were t a k e n and i n t e r r o g a t o r i e s were f i l e d and a n s w e r e d . Then on ~ p r i l6 , 1 9 8 1 , t h e d e f e n d a n t s f i l e d a m o t i o n f o r summary j u d g m e n t which was g r a n t e d on A p r i l 20. The p l a i n t i f f s a p p e a l from t h e o r d e r g r a n t i n g summary j u d g m e n t to defendants. The f o l l o w i n g i s s u e s a r e r a i s e d i n t h i s a p p e a l : 1. Whether e v i d e n c e of oral s t a t e m e n t s r e g a r d i n g t h e r i s k i n v o l v e d i n a t a x s t r a d d l e would v i o l a t e t h e p a r 0 1 e v i d e n c e r u l e . 2. W h e t h e r t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary j u d g m e n t on t h e p l a i n t i f f s ' c o u n t i n n e g l i g e n c e i n r e g a r d to t h e a l l e g e d f a i l u r e o f M e r r i l l L y n c h ' s a g e n t to d i s c l o s e t h e t r u e r i s k involved i n a t a x s t r a d d l e . 3. W h e t h e r t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary j u d g m e n t on p l a i n t i f f s ' c o u n t i n n e g l i g e n c e b a s e d o n a n a l l e g e d f a i l u r e o f I 4 e r r i l l L y n c h ' s a g e n t s to p r o p e r l y e x e c u t e o r d e r s . 4. W h e t h e r t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary j u d g m e n t on t h e p l a i n t i f f s ' c o u n t i n f r a u d b a s e d o n a n a l l e g e d m i s r e p r e s e n t a t i o n of the r i s k involved i n a t a x s t r a d d l e . 5. W h e t h e r t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary j u d g m e n t on t h e p l a i n t i f f s ' c o u n t i n f r a u d b a s e d o n a n a l l e g e d i m p r o p e r t r a n s f e r o f f u n d s b y Merrill L y n c h ' s a g e n t s from t h e p l a i n t i f f s f j o i n t r e a d y a s s e t a c c o u n t , and i f summary j u d g m e n t was p r o p e r l y g r a n t e d on t h i s k o u r t w h e t h e r H e l e n Brown s h o u l d be d i s m i s s e d as a p a r t y p l a i n t i f f 6. . W h e t h e r t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary j u d g m e n t on t h e p l a i n t i f f s g c o u n t i n f r a u d b a s e d o n a n a l l e g e d i m p r o p e r l i q u i d a t i o n by Merrill L y n c h ' s a g e n t s of t h e K e l d o n O i l Company s t o c k . 7. W h e t h e r damages s h o u l d be l i m i t e d i n t h e e v e n t t h i s case p r o c e e d s t o t r i a l . The f i r s t i s s u e d e a l s w i t h t h e p a r o l e v i d e n c e r u l e . In r e a c h i n g a d e c i s i o n r e g a r d i n g a summary a d j u d i c a t i o n a c o u r t i s t o e x c l u d e from i t s c o n s i d e r a t i o n e x t r i n s i c e v i d e n c e which would v i o l a t e t h e p a r o l e v i d e n c e r u l e . On a m o t i o n f o r summary j u d g m e n t o n l y a d m i s s i b l e e v i d e n c e c a n be c o n s i d e r e d . Gazette P r i n t i n g Company v . C a r d e n ( 1 9 7 3 ) , 1 6 3 Mont. 4 0 1 , 517 P.2d 361. The d e f e n d a n t s c o n t e n d t h a t t h e D i s t r i c t C o u r t p r o p e r l y h e l d t h a t evidence of Barbo's o r a l s t a t e m e n t s regarding t h e r i s k i n v o l v e d w i t h a t a x s t r a d d l e would be i n a d m i s s i b l e as b e i n g i n c o n s i s t e n t w i t h t h e terms o f t h e d o c u m e n t s e x e c u t e d b y Brown. The commodity a c c o u n t a g r e e m e n t s i g n e d b y Brown c o n t a i n e d a g e n e r a l a c k n o w l e d g m e n t o f t h e h i g h d e g r e e of r i s k i n v o l v e d i n commodity f u t u r e s c o n t r a c t s . I n Montana t h e p a r o l e v i d e n c e r u l e h a s b e e n c o d i f i e d . S e c t i o n 28-2-905, MCA, provides in part: " (1) Whenever t h e terms of a n a g r e e m e n t h a v e b e e n r e d u c e d t o w r i t i n g by t h e p a r t i e s , it is to b e c o n s i d e r e d as c o n t a i n i n g a l l t h o s e terms. T h e r e f o r e , t h e r e c a n be b e t w e e n t h e p a r t i e s and t h e i r r e p r e s e n t a t i v e s or s u c c e s s o r s i n i n t e r e s t n o e v i d e n c e o f t h e terms of t h e a g r e e m e n t o t h e r t h a n t h e c o n t e n t s of t h e w r i t i n g e x c e p t i n t h e f o l l o w i n g cases : " ( a ) when a m i s t a k e or i m p e r f e c t i o n o f t h e w r i t i n g is p u t i n i s s u e by t h e p l e a d i n g s ; " ( b ) when t h e v a l i d i t y o f t h e a g r e e m e n t is t h e f a c t in dispute. " ( 2 ) This s e c t i o n does not exclude o t h e r evid e n c e of t h e c i r c u m s t a n c e s u n d e r w h i c h t h e was made o r it as a g r e e m e n t - - - - t o w h i c h -r e l a t e s , d e s c r i b e d i n 1-4-102, o r o t h e r e v i d e n c e t o e x p l a i n a n e x t r i n s i c a m b i g u i t y o r to e s t a b l i s h i l l e g a l i t y or f r a u d (Emphasis added. ) ." S u b s e c t i o n ( 2 ) of t h e above quoted s t a t u t e c o n t a i n s t h e s t a t u t o r y e x c e p t i o n s to t h e p a r o l e v i d e n c e r u l e . e x c e p t i o n s is d e s c r i b e d i n s e c t i o n 1-4-102, MCA, One of t h e which p r o v i d e s : "For t h e proper c o n s t r u c t i o n of an i n s t r u m e n t , t h e c i r c u m s t a n c e s u n d e r which it was made, i n c l u d i n g t h e s i t u a t i o n of t h e s u b j e c t o f t h e i n s t r u m e n t and o f t h e p a r t i e s to i t , may a l s o be shown so t h a t t h e j u d g e be p l a c e d i n t h e p o s i t i o n o f t h o s e whose l a n g u a g e h e is to i n t e r p r e t ." B a s e d on t h e l a n g u a g e o f s e c t i o n 1-4-102, ~ i l l b a c hv . P.2d MCA, t h i s Court i n I n l a n d C o n s t . Corp. ( 1 9 7 8 ) , 1 7 8 Mont. 3 7 4 , 3 7 9 , 584 1274, 1277, s t a t e d : ... "Here t h e circumstances of t h e p a r t i e s , t h e i r r e a l p u r p o s e i n e x e c u t i n g and r e c e i v i n g t h e i n s t r u m e n t s is s u b j e c t t o i n t e r p r e t a t i o n and may be p r o v e d by p a r o l t e s t i m o n y . " I n t h i s case w h a t t h e p a r t i e s m e a n t by t h e term " r i s k " as i t p e r t a i n e d t o t h e t a x s t r a d d l e is l i k e w i s e s u b j e c t to i n t e r p r e - t a t i o n and may be p r o v e d b y p a r o l t e s t i m o n y . Also, the p l a i n t i f f s allege fraudulent misrepresentation a n d e v i d e n c e o f f r a u d is e x p r e s s l y e x c l u d e d from t h e o p e r a t i o n of the parol evidence rule. S e c t i o n 28-2-905 ( 2 ) , MCA. T h e r e f o r e we hold t h a t t h e District Court e r r e d i n i t s d e t e r m i n a t i o n t h a t e v i d e n c e of t h e o r a l s t a t e m e n t s r e g a r d i n g t h e r i s k i n v o l v e d i n a t a x s t r a d d l e would be i n a d m i s s i b l e . This evi- d e n c e s h o u l d have been c o n s i d e r e d by t h e District Court i n d e t e r m i n i n g w h e t h e r to g r a n t t h e m o t i o n f o r summary j u d g m e n t . Of t h e r e m a i n i n g s i x i s s u e s , f i v e d e a l w i t h t h e D i s t r i c t C o u r t ' s g r a n t i n g o f summary j u d g m e n t . The g r a n t i n g o f summary j u d g m e n t is p r o p e r o n l y when t h e r e is no g e n u i n e i s s u e as to a n y m a t e r i a l f a c t and t h e moving p a r t y is e n t i t l e d t o a j u d g m e n t as a m a t t e r of l a w . R u l e 5 6 ( c ) , M.R.Civ.P. I t is w e l l e s t a b l i s h e d in Montana t h a t a l l r e a s o n a b l e i n f e r e n c e s t h a t may be drawn from t h e o f f e r e d p r o o f are t o be drawn i n f a v o r o f t h e p a r t y who o p p o s e s summary j u d g m e n t . R e a v e s v. R e i n b o l d ( 1 9 8 0 ) , P.2d 8 9 6 , 37 S t . R e p . Mon t . r 615 1 5 0 0 , and c a s e s c i t e d t h e r e i n . The p l a i n t i f f s f i r s t c o n t e n d t h a t t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g summary j udgment on t h e i r n e g l i g e n c e claim i n v o l v i n g t h e a l l e g e d f a i l u r e o f M e r r i l l L y n c h ' s a g e n t to d i s c l o s e t h e t r u e r i s k s involved i n a tax s t r a d d l e . The p l a i n t i f f s c o n t e n d t h a t t h e r e are g e n u i n e i s s u e s o f material f a c t which p r e c l u d e t h e summary a d j u d i c a t i o n of t h i s i s s u e . They claim t h a t c e r t a i n f a c t u a l i s s u e s m u s t be r e s o l v e d b e f o r e a d e t e r m i n a t i o n c a n be made a s to w h e t h e r Merrill L y n c h ' s a g e n t b r e a c h e d h i s d u t y t o Brown and a l s o a s t o w h e t h e r a b r e a c h o f d u t y was t h e p r o x i m a t e c a u s e of t h e i n j u r i e s t h a t Brown s u f f e r e d . The S e c u r i t i e s A c t o f Montana c o n t a i n s a p r o v i s i o n which i m p l i c i t l y e s t a b l i s h e s a c o d e of c o n d u c t t o be f o l l o w e d b y a broker. S e c t i o n 30-10-301, The b r o k e r is t o r e f r a i n from MCA. making a n y u n t r u e s t a t e m e n t o f a m a t e r i a l f a c t o r from o m i t t i n g t o s t a t e a m a t e r i a l f a c t which would be m i s l e a d i n g to h i s customer. S e c t i o n 30-10-301(b), MCA. A v i o l a t i o n of t h i s code o f c o n d u c t may c o n s t i t u t e a b r e a c h of t h e d u t y t h a t a b r o k e r owes t o h i s customer. W e f i n d t h a t h e r e t h e r e is a g e n u i n e i s s u e of m a t e r i a l f a c t a s t o w h e t h e r t h i s d u t y was b r e a c h e d . The p l a i n - t i f f s c o n t e n d t h a t t h e y were m i s l e d r e g a r d i n g t h e amount of r i s k i n v o l v e d i n a t a x s t r a d d l e and t h e d e f e n d a n t s c o n t e n d t h a t B a r b o f u l l y explained t o the p l a i n t i f f s the r i s k s involved. must r e s o l v e t h i s f a c t u a l d i s p u t e . A jury I n a d d i t i o n t h e r e is a genuine i s s u e of m a t e r i a l f a c t regarding t h e proximate cause of Brown's i n j u r i e s . T h i s i s s u e a l s o m u s t go to t h e j u r y . W e hold t h a t t h e D i s t r i c t C o u r t i m p r o p e r l y g r a n t e d summary j udgment on t h i s count. The p l a i n t i f f s n e x t c o n t e n d t h a t t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g summary j u d g m e n t on t h e i r s e c o n d n e g l i g e n c e c o u n t w h i c h was b a s e d on a n a l l e g e d f a i l u r e of Merrill L y n c h ' s a g e n t s to properly execute orders. Again t h e p l a i n t i f f s claim t h a t t h e r e a r e g e n u i n e i s s u e s o f m a t e r i a l f a c t which m u s t be d e c i d e d by a jury. Under o r d i n a r y c i r c u m s t a n c e s a b r o k e r h a s a d u t y to e x e c u t e t h e o r d e r g i v e n t o him w i t h i n a r e a s o n a b l e t i m e . v . Merrill Lynch, P i e r c e , F e n n e r 1 9 7 1 ) , 337 F.Supp. 107. & Robinson S m i t h , I n c . (N.D. Alabama The p l a i n t i f f s claim t h a t t h i s d u t y was b r e a c h e d by Merrill L y n c h ' s a g e n t s when t h e y f a i l e d to i m m e d i a t e l y e x e c u t e B r o w n ' s o r d e r to l i f t a l e g and i n s i s t e d upon a m e e t i n g w i t h Brown b e f o r e c a r r y i n g o u t t h e o r d e r . The D i s t r i c t C o u r t g a v e s e v e r a l r e a s o n s f o r i t s d e t e r mination t h a t the f a c t u a l dispute regarding t h i s issue was not material. W e f i n d t h a t t h e r e a s o n s g i v e n by t h e D i s t r i c t C o u r t a r e e i t h e r n o t a p p l i c a b l e t o t h i s case o r a r e n o t s u p p o r t e d b y the facts. O r d i n a r i l y i s s u e s of n e g l i g e n c e are n o t s u s c e p t i b l e t o summary j u d g m e n t and are b e t t e r r e s o l v e d by t r i a l . D a h l ( 1 9 7 8 ) , 1 7 9 Mont. 2 3 , 5 8 5 P.2d 1307. McAlpine v . " [ N l e g l i g e n c e and b r e a c h of d u t y a r e f o r t h e c o u r t t o d e c i d e o n l y i f t h e evidence i s u n d i s p u t e d o r s u s c e p t i b l e o f b u t o n e c o n c l u s i o n by r e a s o n a b l e men." Dean v. F i r s t N a t i o n a l Bank o f Great F a l l s ( 1 9 6 9 ) , 1 5 2 Mont. 4 7 4 , 4 8 3 , 4 5 2 P.2d case h e r e . 4 0 2 , 407. W e f i n d t h a t s u c h is n o t t h e Whether o r n o t M e r r i l l Lynch's a g e n t s e x e c u t e d t h e o r d e r w i t h i n a r e a s o n a b l e t i m e is f o r t h e j u r y t o d e c i d e . We h o l d t h a t t h e g r a n t i n g o f summary j u d g m e n t was i m p r o p e r o n t h i s count. The n e x t i s s u e r a i s e d b y t h e p l a i n t i f f s is w h e t h e r t h e D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary j u d g m e n t on t h e i r c o u n t i n f r a u d b a s e d on a n a l l e g e d m i s r e p r e s e n t a t i o n by Merrill L y n c h ' s a g e n t of the r i s k involved i n a tax s t r a d d l e . The p l a i n t i f f s have based t h i s c a u s e of a c t i o n i n t o r t p r a y i n g f o r p u n i t i v e damages. I n o r d e r t o go t o t h e j u r y o n t h i s c o u n t , t h e p l a i n t i f f s m u s t make o u t a p r i m a f a c i e c a s e e m b r a c i n g t h e e l e m e n t s of f r a u d , viz: (1) a r e p r e s e n t a t i o n ; ( 2 ) its falsity; ( 4 ) t h e s p e a k e r ' s knowledge of truth; ( 5 ) the speaker's ( 3 ) its materiality; i t s f a l s i t y o r i g n o r a n c e of i t s i n t e n t t h a t it. s h o u l d be a c t e d upon by t h e p e r s o n and i n t h e manner r e a s o n a b l y c o n t e m p l a t e d ; ( 6 ) t h e hearer's i g n o r a n c e o f i t s f a l s i t y ; ( 7 ) t h e h e a r e r ' s r e l i a n c e upon its truth; ( 8 ) t h e r i g h t o f t h e h e a r e r t o r e l y t h e r e o n ; and ( 9 ) t h e h e a r e r ' s c o n s e q u e n t and p r o x i m a t e i n j u r y o r damage. v.Jackson ( 1 9 7 1 ) , 1 5 6 Mont. 2 7 2 , 479 P.2d 266. Clough The p l a i n t i f f s c o n t e n d t h a t t h e y h a v e made o u t a p r i m a f a c i e case and t h a t t h e r e are g e n u i n e i s s u e s o f m a t e r i a l f a c t t h a t m u s t be d e c i d e d b y t h e j u r y . The d e f e n d a n t s , o n t h e o t h e r h a n d , c o n t e n d t h a t a p r i m a f a c i e case h a s n o t b e e n e s t a b l i s h e d . They claim t h a t w i t h r e g a r d to t h e f o u r t h e l e m e n t of f r a u d t h e p l a i n t i f f s f a i l e d t o a l l e g e f a c t s which would e s t a b l i s h t h e n e c e s s a r y requirement of " s c i e n t e r " , i.e., a n i n t e n t to d e f r a u d , r e c k l e s s d i s r e g a r d f o r t h e t r u t h o r u s e of a d e v i c e , scheme o r a r t i f i c e to d e f r a u d . They a l s o claim t h a t Brown had no r i g h t t o r e l y on a n y r e p r e s e n t a t i o n s t h a t may h a v e b e e n made to him. I n t h i s c a s e Brown i n d i c a t e d i n h i s d e p o s i t i o n t h a t he d i d n o t b e l i e v e t h a t B a r b o d e l i b e r a t e l y m i s i n f o r m e d him, and B a r b o i n d i c a t e d t h a t he b e l i e v e d t h a t what he t o l d t h e Browns r e g a r d i n g t h e r i s k was t r u e . However, u n d e r c e r t a i n c i r c u m s t a n c e s t h e r e c a n b e a f i n d i n g o f f r a u d e v e n i f t h e p e r s o n making t h e f a l s e r e p r e s e n t a t i o n b e l i e v e d t h a t it was t r u e . A t o r t a c t i o n i n f r a u d may e i t h e r be b a s e d on a n i n t e n t i o n a l f r a u d u l e n t and d e c e i t f u l m i s r e p r e s e n t a t i o n or it may be b a s e d on a n e g l i g e n t misrepresentation. An a c t i o n b a s e d on n e g l i g e n t m i s r e p r e s e n t a t i o n is a r a t h e r r e c e n t d e v e l o p m e n t i n t o r t l a w and h a s b e e n d e s c r i b e d i n t h e Restatement (Second) of Torts . § 552 ( 1 9 7 7 ) , a s f o l l o w s : "One who, i n t h e c o u r s e o f h i s b u s i n e s s , prof e s s i o n or e m p l o y m e n t , o r i n a n y o t h e r t r a n s a c t i o n i n which he h a s a p e c u n i a r y i n t e r e s t , s u p p l i e s f a l s e i n f o r m a t i o n f o r t h e g u i d a n c e of o t h e r s i n t h e i r b u s i n e s s t r a n s a c t i o n s , is subj e c t t o l i a b i l i t y f o r p e c u n i a r y l o s s c a u s e d to them b y t h e i r j u s t i f i a b l e r e l i a n c e upon t h e i n f o r m a t i o n , i f he f a i l s t o e x e r c i s e r e a s o n a b l e c a r e or c o m p e t e n c e i n o b t a i n i n g o r c o m m u n i c a t i n g t h e i n £ ormat i o n . " I n t h i s c a s e t h e p l a i n t i f f s h a v e made o u t a p r i m a f a c i e case o f n e g l i g e n t m i s r e p r e s e n t a t i o n , and t h e j u r y m u s t r e s o l v e t h e c o n f l i c t i n g c o n t e n t i o n s o f f a c t i n r e g a r d to t h i s c a u s e of action. The d e f e n d a n t s c o n t e n d , h o w e v e r , t h a t t h e e v i d e n c e p r e s e n t e d on t h e m o t i o n f o r summary j u d g m e n t e s t a b l i s h e d t h a t Brown h a d no r i g h t t o r e l y on a n y r e p r e s e n t a t i o n s t h a t may h a v e b e e n made t o him. T h i s c o n t e n t i o n is w i t h o u t m e r i t . T h e r e is a r i g h t t o r e l y when t h e p a r t i e s a r e n o t o n e q u a l f o o t i n g and d o n o t h a v e e q u a l means o f knowing t h e t r u t h . Mont. 4 4 7 , 1 8 8 I?. 933. Koch v . Rhodes ( 1 9 2 0 ) , 5 7 The e v i d e n c e b e f o r e t h e ~ i s t r i c t o u r t C d i d n o t e s t a b l i s h t h a t t h e p a r t i e s were on e q u a l f o o t i n g o r t h a t t h e y had a n e q u a l o p p o r t u n i t y o f knowing t h e t r u t h of t h e representations. I f a n y t h i n g t h e e v i d e n c e is to t h e c o n t r a r y . Based o n t h e r e a s o n s g i v e n a b o v e , w e h o l d t h a t t h e D i s t r i c t C o u r t i m p r o p e r l y g r a n t e d summary j udgment on t h i s c o u n t . The n e x t two i s s u e s w i l l be a d d r e s s e d t o g e t h e r . The p l a i n - t i f f s c o n t e n d t h a t t h e D i s t r i c t C o u r t e r r e d i n g r a n t i n g summary j u d g m e n t on t h e c o u n t i n which t h e y a l l e g e t h a t M e r r i l l Lynch i m p r o p e r l y w i t h d r e w money from t h e Browns1 r e a d y a s s e t a c c o u n t to c o v e r m a r g i n c a l l s and on t h e c o u n t i n which t h e y a l l e g e t h a t M e r r i l l Lynch i m p r o p e r l y l i q u i d a t e d s h a r e s of t h e K e l d o n O i l Company s t o c k t o c o v e r a d e f i c i e n c y b a l a n c e i n James B r o w n ' s account. W f i n d t h a t t h e g r a n t i n g o f summary j u d g m e n t was p r o p e r e w i t h r e g a r d to t h e s e c o u n t s . The commodity a c c o u n t a g r e e m e n t which James Brown s i g n e d contained the following provisions : " 2 . Any and a l l s e c u r i t i e s or c o m m o d i t i e s o r c o n t r a c t s r e l a t i n g t h e r e t o , now or h e r e a f t e r h e l d o r c a r r i e d b y Merrill Lynch f o r you i n a n y o f y o u r a c c o u n t s ( e i t h e r i n d i v i d u a l l y or j o i n t l y w i t h o t h e r s ) a r e t o be h e l d by Merrill Lynch as s e c u r i t y f o r t h e payment o f a n y l i a b i l i t y of y o u r s to us. " 3 . Merrill Lynch s h a l l h a v e t h e r i g h t , w h e n e v e r i n o u r d i s c r e t i o n w e c o n s i d e r it n e c e s s a r y f o r t o s e l l a n y or a l l s e c u r i our protection t i e s and c o m m o d i t i e s i n y o u r a c c o u n t ( s ) w i t h u s ( e i t h e r individually o r j o i n t l y with others) and to c l o s e a n y and a l l o u t s t a n d i n g c o n t r a c t s and i t b e i n g f u r t h e r u n d e r s t o o d t h a t you s h a l l a t a l l times be l i a b l e f o r t h e payment o f a n y d e b i t b a l a n c e owing i n y o u r a c c o u n t ( s ) w i t h u s upon demand and t h a t you s h a l l be l i a b l e f o r ... ... . .. any d e f i c i e n c y remaining i n any such a c c o u n t ( s ) i n t h e e v e n t o f t h e l i q u i d a t i o n t h e r e o f i n whole o r i n p a r t by u s or by you." Brown a l s o s i g n e d a n a u t h o r i z a t i o n t o t r a n s f e r c u s t o m e r s s e g r e g a t e d f u n d s which s t a t e d i n p a r t : " U n t i l f u r t h e r n o t i c e i n w r i t i n g , you are h e r e b y a u t h o r i z e d and d i r e c t e d t o t r a n s f e r from my/our R e g u l a t e d Commodity A c c o u n t t o my/our S e c u r i t i e s A c c o u n t or U n r e g u l a t e d Commodity A c c o u n t s u c h amount o f e x c e s s f u n d s as i n y o u r j u d g m e n t may b e n e c e s s a r y a t a n y t i m e to a v o i d c a l l s f o r margin . . ." Brown c o n s e n t e d t o h a v i n g f u n d s i n t h e j o i n t r e a d y a s s e t a c c o u n t t r a n s f e r r e d to c o v e r margin c a l l s . He a l s o agreed t h a t M e r r i l l Lynch w a s f r e e t o s e l l a n y o f t h e s e c u r i t i e s and com- m o d i t i e s i n h i s a c c o u n t s i f Merrill Lynch f e l t i t was n e c e s s a r y f o r i t s own p r o t e c t i o n . I n a d d i t i o n , Brown a c k n o w l e d g e d t h a t he was l i a b l e f o r a n y d e f i c i e n c i e s i n h i s a c c o u n t s w i t h Merrill Lynch. Brown s t a t e d t h a t he was unaware o f t h e s e p r o v i s i o n s b e c a u s e h e d i d n o t r e a d t h e d o c u m e n t s t h a t he s i g n e d and h e cont e n d s t h a t Merrill Lynch s h o u l d be h e l d l i a b l e f o r f a i l i n g t o bring these provisions specifically to h i s attention. T h i s con- t e n t i o n is u n f o u n d e d . T h i s Court has s t a t e d : " I t is t h e g e n e r a l r u l e t h a t a p a r t y w i l l n o t b e r e l i e v e d , e i t h e r by a c o u r t o f e q u i t y o r a c o u r t o f l a w , where he e x e c u t e s an i n s t r u m e n t w i t h o u t r e a d i n g i t , when he negligently f a i l s t o a s c e r t a i n t h e c o n t e n t s o f it; t h e o t h e r p a r t y n o t b e i n g g u i l t y o f a n y d e c e i t or f a l s e r e p r e s e n t a t i o n as to i t s c o n t e n t s H j e r m s t a d v. B a r k u l o o ( 1 9 5 4 ) , 1 2 8 Mont. 8 8 , 9 8 1 270 P.2d 1 1 1 2 1 1 1 1 7 . ... . . ." The p l a i n t i f f s a l s o c o n t e n d t h a t Merrill Lynch i s l i a b l e t o H e l e n Brown f o r damages b e c a u s e Merrill Lynch f a i l e d to o b t a i n h e r c o n s e n t b e f o r e w i t h d r a w i n g f u n d s from t h e j o i n t r e a d y a s s e t account. T h i s c o n t e n t i o n is a l s o u n f o u n d e d . Both H e l e n and J a m e s Brown s i g n e d a j o i n t a c c o u n t form w h i c h c o n t a i n e d t h i s language : "With r e s p e c t to o u r j o i n t a c c o u n t w i t h r i g h t of s u r v i v o r s h i p w e c o n f i r m t h a t : 1. I n a l l matters p e r t a i n i n g t o t h e a c c o u n t you may a c t upon o r d e r s and i n s t r u c t i o n s from e i t h e r of u s . " T h e r e f o r e a n y a u t h o r i z a t i o n g i v e n by J a m e s Brown t o M e r r i l l Lynch was b i n d i n g on H e l e n Brown. The D i s t r i c t C o u r t p r o p e r l y g r a n t e d summary j u d g m e n t on t h e s e two c o u n t s and a s H e l e n Brown's o n l y claim w i t h r e g a r d to t h i s c a s e i n v o l v e d t h e w i t h d r a w a l of f u n d s from t h e j o i n t r e a d y a s s e t a c c o u n t , s h e s h o u l d be d i s m i s s e d a s a p a r t y p l a i n t i f f i n t h i s action. The l a s t i s s u e d e a l i n g w i t h damages is p r e m a t u r e l y r a i s e d a n d w i l l n o t be a d d r e s s e d . The D i s t r i c t C o u r t o r d e r g r a n t i n g summary j udgment is a f f i r m e d i n p a r t and r e v e r s e d i n p a r t , and t h e c a s e is remanded f o r further proceedings consistent with t h i s opinion. Chief ~ u s t i c e Mr. J u s t i c e D a n i e l J . Shea c o n c u r r i n g : I a g r e e w i t h t h e m a j o r i t y o p i n i o n , b u t I f e e l compelled I t was t o comment on t h e o r d e r g r a n t i n g summary judgment. p r e p a r e d e n t i r e l y by c o u n s e l f o r t h e p r e v a i l i n g p a r t y and t h e t r i a l c o u r t a d o p t e d i t word f o r word. T h i s C o u r t , i n summary judgment a c t i o n s , h a s e x p r e s s e d i t s c o n c e r n w i t h t h e t r i a l c o u r t a d o p t i n g word f o r word t h e proposed o r d e r s of p r e v a i l i n g c o u n s e l . See Stepanek v . Kober C o n s t r u c t i o n , e t a l . Mont. 51, 38 St.Rep. (1981), , 625 P.2d 385, 386. During o r a l argument of t h i s a p p e a l c o u n s e l f o r d e f e n d a n t s t a t e d t h a t h e was d o i n g n o t h i n g more t h a n complying w i t h a l o c a l r u l e of t h e D i s t r i c t C o u r t which r e q u i r e s t h a t any p a r t y r e q u e s t i n g r e l i e f must p r e s e n t a l o n g w i t h t h a t r e q u e s t a proposed o r d e r . While t h i s r u l e may be l a u d a b l e i n most c a s e s , it d o e s n o t l e n d i t s e l f t o be p r o p e r h a n d l i n g of a motion f o r summary judgment. I n any c a s e i n v o l v i n g summary judgment, i f it i s g r a n t e d , it i s n o t a d i f f i c u l t m a t t e r f o r t h e t r i a l c o u r t t o set f o r t h i n a n o r d e r t h e f a c t s which t h e l o s i n g p a r t y c l a i m s t o be m a t e r i a l , t o g e t h e r w i t h a n e x p l a n a t i o n by t h e t r i a l c o u r t o f why t h o s e f a c t s a r e n o t m a t e r i a l . T h i s does n o t c o n s t i t u t e f a c t f i n d i n g of a t r i a l c o u r t i n t h e t r a d i t i o n a l s e n s e , and s u c h a n o r d e r would be of immense b e n e f i t t o an a p p e l l a t e court. On t h e o t h e r hand, b e c a u s e a n o r d e r denying summary judgment i s n o t f i n a l and normally means t h a t t h e c a s e w i l l p r o c e e d t o t r i a l , t h e need f o r a d e t a i l e d o r d e r d e n y i n g summary judgment, is not as great. N o n e t h e l e s s , it would be most h e l p f u l t o t h e p a r t i e s and c o u n s e l f o r t h e moving p a r t y t o know why t h e t r i a l c o u r t d e n i e d summary judgment and j u s t what f a c t s t h e t r i a l c o u r t d e c i d e d were m a t e r i a l s o t h a t a summary judgment would be improper. I b e l i e v e we a r e g e t t i n g a n i n o r d i n a t e number of summary judgment a p p e a l s and t h a t a d o p t i o n of m recommendations y would c a u s e t h e t r i a l c o u r t s t o be more c a r e f u l i n d e t e r mining whether summary judgment i s t h e p r o p e r remedy. A summary judgment p r o p e r l y g r a n t e d i s a n e f f i c i e n t and u s e f u l device. But a summary judgment i m p r o p e r l y g r a n t e d h a s j u s t

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