No. 84-352 IN THE SUPREME COURT OF THE STATE OF MONTANA
JOHN L.THIEL and KATHRYN M. THIEL, husband & wife, Plaintiffs, -vs- TAURUS 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 & Everson; Jim Ragain argued, Billings, Montana
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: September 4, 1995 Decided : October 5 , 1985
- - -- - Clerk 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 .
The U n i t e d S t a t e s District 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 the pleadings in this case, we hold that the
8-year limitation period contained in § 27-2-202 (1), MCA,
applies.
On September 16, 1980, plaintiffs John L. Thiel and
Kathryn M. 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 purchased the Taurus partnership units by paying
$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 registration requirements of 55 30-10-202 and
-205, MCA. Count I1 alleged the making of material
misrepresentations or omissions of material fact in
connection with the sale of securities in violation of
5 30-10-301(1), MCA. 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
of fiduciary duties by the broker defendants. Count IV
alleged negligence, breach of contract and breach of
f i d u c i a r y d u t i e s o f t h e non-broker defendants.
As remedies for the statutory violations alleged in
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 regis- tration claim and dismissed Count I of the complaint. Defen- dants filed a motion for clarification or further consideration, seeking to have Count I1 dismissed as well. Plaintiffs asserted that the 8-year limitation of 5 27-2-202(1), MCA, applied to both counts. 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 limita- tion 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 original Securities Act of Montana contained a 5-year limitation on criminal prosecutions and a 2-year limitation on private enforcement of civil liabilities. Sections 15-2021 (1) and 15-2022 (3), R.C.M. 1947. The 1981 Montana Legislature extended the limitation on criminal prosecutions from 5-years to 8 years after the alleged viola- tion, or within 1 year after the date the commissioner or prosecuting officer becomes aware of the violation. Section 30-10-306 (1), MCA. 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 $ 15-2022 (3), R.C.M. 1947. The federal court has asked us to explore the outer limits of this statutory black hole. I1 The judicial function in construing and applying stat- utes 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. Dorn v. Bd. of Trust. of Billings Sch. Dist. (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 intro- duced 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." House Bill 515 proposed to amend $ 15-2022(3), R.C.M. as follows: ... No person may sue under this sec- tion 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 .. .. The rest of the language in the bill is identical to that in the original statute. The House Judiciary Committee discussed H.B. 515 on February 1, 1967. Committee Minutes sparsely report that: HB 515 was discussed. Mrs. James, chief sponsor, could not appear. Testifying as a proponent was: Harry H. Jones, Invest- ment Department, State Auditor's Office, Helena, Montana. ... [actions on other bills] HB 515: -- Hall moved it - - DO PASS, AS AMEND- - ED. 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. No one spoke in opposition. 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. The current civil liabilities provision, $ 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 registra- t 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 of three years. The Montana A c t makes no such d i s t i n c t i o n .
This short s t a t u t e o f 1-imitations provid- e d by t h e a c t s unquestionably precludes effective use of t h e civil l i a b i l i t i e s provisions by p u r c h a s e r s . . .. A c t and I t 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
- -e t o th 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 l i m i t a t i o n i n response t o such
criticism. Defendants a s s e r t t h a t p l a i n t i f f s ' idea t h a t t h e
2-year limitation was under siege is historical fiction.
Nothing in the l e g i s l a t i v e minutes indicates that any
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 . Newton's article in
d i s c u s s i n g t h e change i n t h e law. 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 i s presumed t o h a v e f u l l knowledge o f
e x i s t i n g laws. Department o f Revenue v. B u r l i n g t o n N o r t h e r n ,
Inc. ( 1 9 7 6 ) , 169 Mont. 202, 2 1 1 , 545 P.2d 1083, 1088. A t the
time the 2-year limitation was deleted from S 15-2022, R.C.M., 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
of l i m i t a t i o n t h a t might apply to civil securities cases:
93-2601. Periods of l i m i t a t i o n pre- scribed. 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 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 .
93-2606. Within - years. kwo - W i t h i n two 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 two y e a r s : ... ( 4 ) An a c t i o n f o r r e l i e f 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 herein- before provided - for. An a c t i o n f o r 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 , MCA.
A statute of limitation is the legislature's rough
approximation of " 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
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. l1 Johnson v. R a i l w a y E x p r e s s Agency
( 1 9 7 5 ) , 4 2 1 U.S. 4 5 4 , 463-64.
Because there i s no 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 cou'rts apply the relevantP
s t a t u t e from e a c h forum s t a t e . C a h i l l v. Ernst & Ernst (7th
Cir. 1 9 8 0 ) , 6 2 5 F.2d 151, 153. S e l e c t i o n o f " t h e most analo-
gous" statute of limitations is. governed by the courts1
characterization o f t h e claim. B o a r d o f R e g e n t s v. Tomanio
( 1 9 8 0 ) , 446 U . S . 478, 488. 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 en- gaged 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) promote u n i f o r m i t y among t h e s t a t e s ; and
( 3 ) e n c o u r a g e , p r o m o t e , and facilitate c a p i t a l i n v e s t m e n t i n Montana.
Subsections (1) and (3) w e r e added by the legislature in
1983. Prior to that time, the Act contained one policy
statement: " P a r t s 1 through 3 o f t h i s chapter s h a l l be s o
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 of those states which enact it." Section
30-10-102, MCA (1981). Since the Act no longer has one
primary purpose, 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
ba l a n c e d 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 party and amicus curiae has a preference as to
which genera1 limitation i s most appropriate t o the case.
Plaintiffs contend that the 8-year limitation of
S 27-2-202(1), MCA, is most appropriate. That 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 commence- ment 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 S e c u r i t i e s Department o f the State
Auditor's Office asserts that securities 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 limitation on a "liability created by statute" applies. 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 forfei- ture 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 by the payment of public assistance. 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 viola- tions 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 resolved in favor of an action based upon
contract. Unruh v . B u f f a l o Bldg. Co. (Mont. 1 9 8 1 ) , 633 P.2d
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 limitations were dependent upon the 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 - tioned this interpretation of its statute.
Wilson v. Garcia (1985), U.S. , 103 S . C t . 1938,
1946. W e appreciate the logic of t h i s a n a l y s i s and see no
reason why it should n o t be 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 should apply to
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 , 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 congressional policies underlying the Act.
Likewise, in characterizing plaintiffs' claims here, the
l e g i s l a t i v e purposes o f uniformity, 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
Court: S t a t e v. Duncan ( 1 9 7 9 ) , 181 Mont. 382, 593 P.2d
1026, and Brown v. Merrill, Lynch, Pierce, Fenner, Etc.
( 1 9 8 2 ) , 197 Mont. 1 , 640 P.2d 453. I n Duncan, w e a f f i r m e d a
criminal conviction for deceptive practices and sale of
unregistered securities. 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 -
ment contract s e c u r i t y was sold, w e adopted t h e 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 con- t 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. a t 392, 593 P.2d 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. 837, 852.
S e c t i o n 30-10-103(11), MCA, includes "investment c o n t r a c t " i n
its definition of "security." Our opinion i.n Duncan, a
criminal case, is relevant here only in that it d i s c u s s e s
security i n contract t e r m s .
Brown was a civil action by two individual investors
a g a i n s t a brokerage firm. Although. S e c u r i t i e s A c t v i o l a t i o n s
purportedly occurred, plaintiffs chose t o frame t h e i r com-
plaint in tort causes of action of negligence and fraud,
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. Brown, 197 Mont. a t
7 & 10-11, 640 P.2d a t 456 & 458. The S e c u r i t i e s A c t d o e s
n o t a l l o w f o r p u n i t i v e damages. S e e S 30-10-307, MCA. The
Court addressed each of plaintiffs' five causes of action
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 i n favor
of defendants had been properly granted. No statute of
limitations o r choice of remedy i s s u e was r a i s e d 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 ' claims should be characterized in this
case. Count I alleges violations of the Units' Order of
Registration and securities registration requirements, in
that defendants failed to deliver a copy of the Private
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 , failed t o
file a copy o f t h e map and other geological 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 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
of Taurus O i l . Count I1 c o n t a i n s allegations of fraud o r
deceit a s w e l l a s violations of the Act. 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 IV alleges 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 -
ments o f 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. We
a l s o note that, a l t h o u g h Counts I11 and IV do n o t 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 conduct t o be f o l l o w e d by
brokers and others involved in the s a l e of any security.
S e c t i o n 30-10-301, MCA; Brown, 197 Mont. a t 9, 640 P.2d at
457. We find t h a t each count o f plaintiffs' 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 statutes of limitations should apply, the genera1
rule i s t h a t t h e doubt should be resolved i n favor of the
s t a t u t e containing t h e longest limitations. Akada v . Park
12-01 Corp. (Wash. 1 9 8 5 ) , 6 9 5 P.2d 994, 995. Where d o u b t
e x i s t s a s t o the nature of the action, c o u r t s l e a n toward
application of the longer period of limitations. Shew v . Coon Bay Loafers, Inc. (Wash. 19691, 455. P.2d 359, 366, citing Hughes v. Reed (10th Cir. 1931), 46 F.2d 435, 440. This [general rule] serves the legisla- tive 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 (Okla. 1984), 688 P.2d
As discussed above, the 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. Sec- tion 27-2-202 (1), MCA. An action for relief not otherwise provided for must be commenced within 5 years after the cause of action accrues. Section 27-2-215, MCA, is Montana's "catch-all" statute of limitation. No federal court has applied a state catch-all limitation period to any claims made under the federal Securities Act. Cahill v. Ernst &
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 en- couraging capital investment. We recognize that the other purpose of promoting uniformity among the states is not promoted by our application of the 8-year limitation in Montana. Most state securities acts contain statutes of limitations in the 2 to 4 year range. See e.g., ~ l a s k aStat. s 45-55.220 (f) (1980); Colo.Rev.Stat. § 11-51-125 (8) (Supp.
1984); Idaho Code 5 30-1446 (3) (1980); Nev. Rev. Stat. s 90.200 (5) (1979); N.M. Stat. Ann. 5 58-13-42(A) (Supp.
13 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) (1983); Wyo. Stat. S 17-4-122 (e)
(1977). 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. In my view, the majority has 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. This Court in Anderson v. Applebury (1977), 567 P.2d 951 at 955 stated: [p]laintiffsf amended complaint. .. 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 apply the two year from discovery time period of 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.