Case Title: BROWN v MERRILL LYNCH PIERCE FE

Citation: 

Docket Number: 81-293

State: montana

Court: Montana Supreme Court

Date: 1982-02-11T00:00:00Z

Document:
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;,JOHN E. 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 . Chief J u s t i c e Frank I. Haswell d e l i v e r e d t h e Opinion of t h e Court. P l a i n t i f f s James and Helen Brown brought 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 brokerage firm of Merrill Lynch, P i e r c e , Fenner & Smith, I n c . , ( M e r r i l l Lynch) and its a g e n t s s e e k i n g to 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 Court of Yellowstone County. I n 1979 James Brown bought and s o l d gold c o i n s a t a prof it o f approximately $44,000. Brown learned from h i s brother-in-law t h a t he might d e f e r r e p o r t i n g t h e income from t h e gold f o r a y e a r by means of a tax s t r a d d l e . A s n e i t h e r Brown nor h i s wife were f a m i l i a r with tax s t r a d d l e s , they m e t with one of Merrill Lynch's a g e n t s , John Barbo, on December 10, 1979, to d i s c u s s t h e a p p l i c a - b i l i t y of a commodity s t r a d d l e f o r tax d e f e r r a l purposes. The p a r t i e s a g r e e t h a t during t h e December 10 meeting 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 . However 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 . 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 involved w a s t h e r i s k of having to pay Merrill Lynch a commission 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 market was f l a t and d i d n o t move. Barbo contends t h a t he explained t h a t r i s k a s w e l l a s o t h e r r i s k s a s s o c i a t e d with a s t r a d d l e p o s i t i o n . 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 have 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 involved w i t h a tax s t r a d d l e . Brown e n t e r e d i n t o a commodity account agreement with Merrill Lynch t h a t same day and a couple of days l a t e r obtained 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 account agreement contained a g e n e r a l acknowledgment of the high d e g r e e of r i s k involved 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 an 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 read t h e documents he signed nor d i d he r e q u e s t c o p i e s of t h e documents. A s h o r t t i m e later Brown l e a r n e d t h a t Merrill Lynch was paying h i g h e r i n t e r e s t on d e p o s i t e d funds than l o c a l banks. H e c l o s e d h i s bank a c c o u n t , and on December 18 he d e p o s i t e d $111,399 i n a j o i n t r e a d y asset account with Merrill Lynch. On December 1 9 , 1979, he and h i s w i f e executed a j o i n t account form which 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 wife w i t h r e g a r d t o t h e j o i n t account. Sometime between December 24 and December 26, Brown bought 2,000 s h a r e s of Keldon O i l Company s t o c k upon t h e recommendation o f one o f h i s close f r i e n d s . The Keldon O i l Company s h a r e s were purchased through an o r d e r a t Merrill Lynch a f t e r Brown signed t h e n e c e s s a r y p a p e r s . During t h e same t i m e p e r i o d , Barbo c a l l e d Brown and t o l d him t h a t he had an u n r e a l i z e d loss of a p p r o x i m a t e l y $18 ,000 o n h i s commodity s t r a d d l e . Barbo t o l d Brown a t t h a t time 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, 1980, Brown was a g a i n advised 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 ,000. A t t h a t t i m e Barbo e x p r e s s e d concern 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 could b a i l o u t and t a k e t h e loss or p o s s i b l y " l i f t a l e g " . " L i f t i n g a l e g " means abandoning 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 market on a s i n g l e l e g of t h e s t r a d d l e . Barbo asked Brown i f he wanted t o l i q u i d a t 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 about it and t h a t he would be unable 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 between $80,000 and $125,000. Brown decided n o t t o do a n y t h i n g a t t h a t t i m e . Approximately a week l a t e r , Brown and Barbo a g a i n d i s c u s s e d Brown's d e t e r i o r a t i n g commodity spread 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 . Both Barbo and Brown contend t h a t Brown's o r d e r t o l i f t a l e g was n o t followed immediately because Merrill Lynch1 s o f f i c e manager t o l d Barbo 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 explained to Brown. The o f f i c e manager s t a t e d t h a t he could n o t recall whether Brown had g i v e n an o r d e r to l i f t a l e g . A f t e r t h e meeting i n which t h e r i s k was explained to Brown, it was no l o n g e r p o s s i b l e to l i f t a l e g because of c e r t a i n i n t e r n a l r u l e s imposed by Merrill Lynch1 s 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 not be allowed to l e g o u t o f t h e t a x s t r a d d l e , Brown withdrew what money he could from t h e j o i n t ready a s s e t account he and h i s wife maintained 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 funds had been t r a n s f e r r e d o u t o f t h a t account by Merrill Lynch to meet margin c a l l s on t h e com- modity 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 Brown1 s com- modity s t r a d d l e p o s i t i o n to cover 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 Merrill Lynch continued Brown's account with a d e f i c i e n c y b a l a n c e f o r approximately t h r e e weeks, a f t e r which t i m e a number of s h a r e s of Brown's Keldon O i l Company s t o c k were l i q u i d a t e d by Merrill Lynch t o cover t h e d e f i c i e n c y . On March 7, 1980, Brown and h i s wife f i l e d a complaint a g a i n s t Merrill Lynch, John Barbo, and the o f f i c e manager, Dick Spalding. An amended complaint was f i l e d on ~ u l y 1 1 i n response t o d e f e n d a n t s 1 motion f o r a more d e f i n i t e s t a t e m e n t . The amended complaint contained f i v e c o u n t s : (1) a count i n f r a u d i n regard t o an 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 involved w i t h a t a x s t r a d d l e , ( 2 ) a count i n negligence based 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 w i t h a tax s t r a d d l e , ( 3 ) a count i n negligence based on an a l l e g e d f a i l u r e o f Merrill Lynch's a g e n t s to e x e c u t e o r d e r s , ( 4 ) a count i n f r a u d based on Elerrill Lynch's a l l e g e d improper use of funds i n t h e Browns' ready a s s e t account to cover margin c a l l s and ( 5 ) a count based on an a l l e g e d improper l i q u i d a t i o n of Brown's Keldon O i l Company s t o c k . I n t h e amended complaint t h e Browns prayed f o r a c t u a l damages of $18,000, a refund of a l l monies i n v e s t e d o r l o s t based on t h e above c o u n t s , a r e t u r n of 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 $100,000 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 taken and i n t e r r o g a t o r i e s were f i l e d and answered. Then on ~ p r i l 6 , 1981, t h e d e f e n d a n t s f i l e d a motion f o r summary judgment 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 judgment to d e f e n d a n t s . The f o l l o w i n g i s s u e s are r a i s e d i n t h i s appeal: 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 par01 e v i d e n c e r u l e . 2. Whether t h e D i s t r i c t Court p r o p e r l y g r a n t e d summary judgment 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 regard to t h e a l l e g e d f a i l u r e of M e r r i l l Lynch'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 . Whether t h e D i s t r i c t Court p r o p e r l y g r a n t e d summary judgment 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 based on an a l l e g e d f a i l u r e of I4errill Lynch'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 . Whether t h e D i s t r i c t Court p r o p e r l y g r a n t e d summary judgment 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 based on an 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 involved i n a t a x s t r a d d l e . 5. Whether t h e District Court p r o p e r l y g r a n t e d summary judgment 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 based on an a l l e g e d improper t r a n s f e r of funds by Merrill Lynch'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 asset a c c o u n t , and i f summary judgment 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 whether Helen Brown should 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 . Whether t h e D i s t r i c t Court p r o p e r l y g r a n t e d summary judgment 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 based on an a l l e g e d improper l i q u i d a t i o n by Merrill Lynch's a g e n t s of t h e Keldon O i l Company s t o c k . 7 . Whether damages should 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 to 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 is to e x c l u d e from its 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 motion f o r summary judgment o n l y a d m i s s i b l e evidence can be c o n s i d e r e d . G a z e t t e P r i n t i n g Company v. Carden ( 1 9 7 3 ) , 1 6 3 Mont. 401, 517 P.2d 361. The d e f e n d a n t s contend t h a t t h e District Court p r o p e r l y h e l d t h a t e v i d e n c e of B a r b o ' s 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 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 being i n c o n s i s t e n t with t h e terms of t h e documents executed by Brown. The commodity account agreement signed by Brown c o n t a i n e d a g e n e r a l acknowledgment of t h e high d e g r e e of r i s k involved 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 evidence r u l e has been c o d i f i e d . S e c t i o n 28-2-905, MCA, p r o v i d e s i n p a r t : " (1) Whenever t h e terms of an agreement have been reduced t o w r i t i n g by t h e p a r t i e s , it is to be 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 can be between 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 no e v i d e n c e of t h e terms of t h e agreement 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 of 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 of t h e agreement is t h e f a c t i n d i s p u t e . " ( 2 ) T h i s s e c t i o n does not exclude o t h e r e v i - dence of t h e c i r c u m s t a n c e s under which t h e agreement was made or to which it relates, as ---- -- - d e s c r i b e d i n 1-4-102, or 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 ambiguity 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 . One of t h 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, which p r o v i d e s : " F o r t h e p r o p e r 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 under 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 of t h e i n s t r u m e n t and of t h e p a r t i e s to it, may a l s o be shown so t h a t t h e judge be placed i n t h e posi- t i o n of t h o s e whose language he is to i n t e r p r e t ." Based on t h e language of s e c t i o n 1-4-102, MCA, t h i s Court i n ~ i l l b a c h v. Inland Const. Corp. ( 1 9 7 8 ) , 178 Mont. 374, 379, 584 P.2d 1274, 1277, s t a t e d : "Here . . . t h e c i r c u m s t a n c e s of t h e p a r t i e s , t h e i r real purpose 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 to i n t e r p r e t a t i o n and may be proved by p a r o l testimony." I n t h i s case what t h e p a r t i e s meant by t h e term " r i s k " as it 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 proved by p a r o l testimony. A l s o , t h e p l a i n t i f f s a l l e g e f r a u d u l e n t m i s r e p r e s e n t a t i o n and e v i d e n c e of f r a u d is e x p r e s s l y excluded from t h e o p e r a t i o n of t h e p a r o l e v i d e n c e r u l e . 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 its 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 involved 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 . T h i s e v i - dence should 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 - mining whether to g r a n t t h e motion f o r summary judgment. Of t h e remaining s i x i s s u e s , f i v e d e a l with t h e District C o u r t ' s g r a n t i n g of summary judgment. The g r a n t i n g of summary judgment is p r o p e r o n l y when t h e r e is no genuine i s s u e as to any material f a c t and t h e moving p a r t y is e n t i t l e d to a judgment as a m a t t e r of l a w . Rule 5 6 ( c ) , M.R.Civ.P. It is w e l l e s t a b l i s h e d i n 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 proof are to be drawn i n f a v o r of t h e p a r t y who opposes summary judgment . Reaves v. Reinbold (1980 ) , Mon t . r 615 P.2d 896, 37 St.Rep. 1500, 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 contend t h a t t h e District Court 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 of Merrill Lynch'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 t a x s t r a d d l e . The p l a i n t i f f s contend t h a t t h e r e are genuine i s s u e s of material f a c t which p r e c l u d e t h e sum- mary 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 must 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 can be made a s to whether Merrill Lynch's a g e n t breached h i s d u t y t o Brown and a l s o a s t o whether a breach of d u t y was t h e proximate cause 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 of 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 code of conduct to be followed by a b r o k e r . S e c t i o n 30-10-301, MCA. The b r o k e r is t o r e f r a i n from making any u n t r u e s t a t e m e n t of 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 misleading 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 conduct may c o n s t i t u t e a breach 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 genuine i s s u e of m a t e r i a l f a c t a s t o whether t h i s d u t y was breached. The p l a i n - t i f f s contend t h a t t h e y were misled r e g a r d i n g t h e amount of r i s k involved 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 contend t h a t Barbo f u l l y e x p l a i n e d t o t h e p l a i n t i f f s t h e r i s k s involved. A j u r y 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 . 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 must go to t h e jury. W e hold t h a t t h e District Court improperly 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 contend t h a t t h e District Court e r r e d i n g r a n t i n g summary judgment on t h e i r second n e g l i g e n c e count which was based on an a l l e g e d f a i l u r e of Merrill Lynch'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 . 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 genuine i s s u e s of m a t e r i a l f a c t which must be decided 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 exe- c u t e t h e o r d e r given to him w i t h i n a r e a s o n a b l e t i m e . Robinson v . Merrill Lynch, P i e r c e , Fenner & Smith, I n c . (N.D. Alabama 1971) , 337 F.Supp. 107. 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 breached by Merrill Lynch's a g e n t s when t h e y f a i l e d to imme- d i a t e l y e x e c u t e Brown'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 meeting 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 District Court gave s e v e r a l r e a s o n s f o r its d e t e r - m i n a t i o n t h a t t h e f a c t u a l d i s p u t e r e g a r d i n g t h i s i s s u e w a s n o t 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 District Court are e i t h e r n o t a p p l i c a b l e to t h i s case o r a r e n o t s u p p o r t e d b y t h e f a c t s . 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 judgment and are b e t t e r r e s o l v e d by t r i a l . McAlpine v. Dahl ( 1 9 7 8 ) , 179 Mont. 23, 585 P.2d 1307. " [ 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 e v i d e n c e is undisputed o r s u s c e p t i b l e of b u t one 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 of Great F a l l s ( 1 9 6 9 ) , 152 Mont. 474, 483, 452 P.2d 402, 407. W e f i n d t h a t such is n o t t h e case h e r e . Whether o r n o t M e r r i l l Lynch's a g e n t s executed 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 . W e h o l d t h a t t h e g r a n t i n g of summary judgment was improper on t h i s c o u n t . The n e x t i s s u e r a i s e d by t h e p l a i n t i f f s is whether t h e District Court p r o p e r l y g r a n t e d summary judgment on t h e i r c o u n t i n f r a u d based on an 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 Lynch's a g e n t of t h e r i s k involved i n a t a x 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 cause of a c t i o n i n t o r t praying f o r p u n i t i v e damages. I n o r d e r t o go to t h e j u r y on t h i s c o u n t , t h e p l a i n t i f f s must make o u t a prima f a c i e c a s e embracing t h e e l e m e n t s of f r a u d , v i z : (1) a r e p r e s e n t a t i o n ; ( 2 ) i t s f a l s i t y ; ( 3 ) i t s m a t e r i a l i t y ; ( 4 ) t h e s p e a k e r ' s knowledge of its f a l s i t y o r ignorance of its t r u t h ; ( 5 ) t h e s p e a k e r ' s i n t e n t t h a t it. should be a c t e d upon by t h e person and i n t h e manner r e a s o n a b l y contemplated ; ( 6 ) t h e h e a r e r ' s ignorance of its 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 t r u t h ; ( 8 ) t h e r i g h t of t h e h e a r e r t o r e l y thereon; and ( 9 ) t h e h e a r e r ' s consequent and proximate i n j u r y o r damage. Clough v.Jackson (1971) , 156 Mont. 272, 479 P.2d 266. The p l a i n t i f f s contend t h a t they have made o u t a prima f a c i e case and t h a t t h e r e are genuine i s s u e s of m a t e r i a l f a c t t h a t must be decided by t h e j u r y . The d e f e n d a n t s , on t h e o t h e r hand, contend t h a t a prima f a c i e case h a s n o t been e s t a b l i s h e d . They claim t h a t with r e g a r d to t h e f o u r t h element 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 to 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 r e q u i r e m e n t of " s c i e n t e r " , i.e., an 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 use 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 also claim t h a t Brown had no r i g h t t o r e l y on any r e p r e s e n t a t i o n s t h a t may have been 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 Barbo d e l i b e r a t e l y misinformed him, and Barbo 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, under 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 can be a f i n d i n g of f r a u d even i f t h e person 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 based on an 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 based on a 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 . An a c t i o n based 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 development i n t o r t l a w and h a s been d e s c r i b e d i n t h e Restatement (Second) o f T o r t s . § 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 of h i s b u s i n e s s , pro- f e s s i o n or employment, or i n any 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 guidance 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 sub- j 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 loss caused to them by 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 care or competence i n o b t a i n i n g or communicating t h e in£ 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 have made o u t a prima f a c i e case of 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 must 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 of f a c t i n r e g a r d to t h i s cause o f a c t i o n . The d e f e n d a n t s c o n t e n d , however, t h a t t h e e v i d e n c e pre- s e n t e d on t h e motion f o r summary judgment e s t a b l i s h e d t h a t Brown had no r i g h t t o r e l y on any r e p r e s e n t a t i o n s t h a t may have been 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 merit. There is a r i g h t t o r e l y when t h e p a r t i e s are n o t on e q u a l f o o t i n g and do n o t have e q u a l means of knowing t h e t r u t h . Koch v. Rhodes ( 1 9 2 0 ) , 57 Mont. 447, 188 I ? . 933. The evidence b e f o r e t h e ~ i s t r i c t Court 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 an e q u a l o p p o r t u n i t y of knowing t h e t r u t h of t h e r e p r e s e n t a t i o n s . 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 on t h e r e a s o n s g i v e n above, we hold t h a t t h e D i s t r i c t Court improperly 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 addressed t o g e t h e r . The p l a i n - t i f f s contend t h a t t h e District Court e r r e d i n g r a n t i n g summary judgment 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 withdrew money from t h e Browns1 r e a d y asset a c c o u n t to c o v e r margin c a l l s and on t h e count i n which t h e y a l l e g e t h a t Merrill Lynch improperly l i q u i d a t e d s h a r e s of t h e Keldon O i l Company s t o c k to 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 Brown's a c c o u n t . W e f i n d t h a t t h e g r a n t i n g of summary judgment was p r o p e r w i t h r e g a r d to t h e s e c o u n t s . The commodity account agreement which James Brown signed c o n t a i n e d t h e f o l l o w i n g p r o v i s i o n s : " 2 . Any and a l l s e c u r i t i e s or commodities 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 by Merrill Lynch f o r you i n any o f your 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 ) are 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 of any 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 have t h e r i g h t , whenever i n o u r d i s c r e t i o n we c o n s i d e r it n e c e s s a r y f o r o u r p r o t e c t i o n . . . to s e l l any or a l l s e c u r i - t i e s and commodities i n your a c c o u n t ( s ) w i t h u s ( e i t h e r i n d i v i d u a l l y o r j o i n t l y w i t h o t h e r s ) . . . and to c l o s e any 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 it being f u r t h e r understood 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 of any d e b i t b a l a n c e owing i n your 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 of 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 us or by you." Brown also s i g n e d an a u t h o r i z a t i o n to t r a n s f e r customer s s e g r e g a t e d funds 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 Regulated Commodity Account t o my/our S e c u r i t i e s Account or Unregulated Commodity Account such amount of e x c e s s funds as i n your judgment may be n e c e s s a r y a t any t i m e to avoid c a l l s f o r margin . . ." Brown consented t o having funds i n t h e j o i n t r e a d y asset a c c o u n t t r a n s f e r r e d to cover margin c a l l s . H e a l s o agreed t h a t Merrill Lynch w a s f r e e to s e l l any of 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 it was n e c e s s a r y f o r its own p r o t e c t i o n . I n a d d i t i o n , Brown acknowledged t h a t he was l i a b l e f o r any 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 with Merrill Lynch. Brown s t a t e d t h a t he was unaware of t h e s e p r o v i s i o n s because he d i d n o t read t h e documents t h a t he signed and he con- t e n d s t h a t Merrill Lynch should be h e l d l i a b l e f o r f a i l i n g t o b r i n g t h e s e p r o v i s i o n s s p e c i f i c a l l y t o h i s a t t e n t i o n . T h i s con- t e n t i o n is unfounded. T h i s Court h a s 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 not be r e l i e v e d , e i t h e r by a c o u r t of e q u i t y o r a c o u r t of 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 it, when he . . . n e g l i g e n t l y f a i l s to a s c e r t a i n t h e c o n t e n t s of it; t h e o t h e r p a r t y n o t being g u i l t y of any 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 its c o n t e n t s . . ." Hjermstad v. Barkuloo ( 1 9 5 4 ) , 128 Mont. 88, 981 270 P.2d 11121 1117. The p l a i n t i f f s a l s o contend t h a t Merrill Lynch is l i a b l e t o Helen Brown f o r damages because 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 withdrawing funds from t h e j o i n t r e a d y asset a c c o u n t . T h i s c o n t e n t i o n is a l s o unfounded. Both Helen and James Brown signed a j o i n t account form which 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 account w i t h r i g h t of s u r v i v o r s h i p we confirm t h a t : 1. In a l l matters p e r t a i n i n g t o t h e account 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 us." T h e r e f o r e any a u t h o r i z a t i o n given by James Brown t o Merrill Lynch was binding on Helen Brown. The District Court p r o p e r l y g r a n t e d summary judgment on t h e s e two c o u n t s and a s Helen Brown's o n l y claim w i t h regard to t h i s c a s e involved t h e withdrawal of funds 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 , she should be dismissed a s a p a r t y p l a i n t i f f i n t h i s a c t i o n . The last 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 and w i l l n o t be a d d r e s s e d . The District Court 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 case is remanded f o r f u r t h e r p r o c e e d i n g s c o n s i s t e n t w i t h t h i s o p i n i o n . Chief ~ u s t i c e M r . J u s t i c e Daniel J. Shea concurring: I agree with t h e majority opinion, b u t I f e e l compelled t o comment on t h e order granting summary judgment. I t was prepared e n t i r e l y by counsel 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 adopted it word f o r word. This Court, i n summary judgment a c t i o n s , has expressed i t s concern with t h e t r i a l c o u r t adopting word f o r word t h e proposed orders of p r e v a i l i n g counsel. See Stepanek v. Kober Construction, e t a l . (1981), Mont. , 625 P.2d 51, 38 St.Rep. 385, 386. During o r a l argument of t h i s appeal counsel f o r defen- d a n t s t a t e d t h a t he was doing nothing more than complying with a l o c a l r u l e of t h e D i s t r i c t Court which r e q u i r e s t h a t any p a r t y requesting r e l i e f must p r e s e n t along with t h a t request a proposed order. While t h i s r u l e may be laudable i n most cases, it does n o t lend i t s e l f t o be proper handling of a motion f o r summary judgment. I n any case involving summary judgment, i f it is granted, it i s n o t a d i f f i c u l t matter 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 an order t h e f a c t s which t h e l o s i n g p a r t y claims t o be m a t e r i a l , together with an explanation by t h e t r i a l c o u r t of why those f a c t s a r e n o t m a t e r i a l . This 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 sense, and such an order 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, because an order denying summary judgment i s not f i n a l and normally means t h a t t h e case w i l l proceed t o t r i a l , t h e need f o r a d e t a i l e d order denying summary judgment, i s n o t a s g r e a t . Nonetheless, it would be most h e l p f u l t o t h e p a r t i e s and counsel 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 denied 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 decided 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 an i n o r d i n a t e number of summary judgment appeals and t h a t adoption of m y recommendations would cause 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 proper remedy. A summary judgment properly granted is an e f f i c i e n t and u s e f u l device. But a summary judgment improperly granted has j u s t