Sunday, November 17, 2013

State v. Duncan case brief

State v. Duncan case brief summary
593 P.2d 1026 (1979)

Defendant sought review of a judgment from the 18th Judicial District Court of Gallatin County (Montana) that convicted him following a nonjury trial for deceptive practices, in violation of Mont. Rev. Code Ann. § 94-6-307, now Mont. Code Ann. § 45-6-317, and for the sale of unregistered securities in violation of §§ 15-2007,15-2021 of the Securities Act of Montana, now Mont. Code Ann. §§ 30-10-202, 30-10-306.

Defendant was convicted in part for the sale of unregistered securities in violation of §§ 15-2007, 15-2021 of the Securities Act of Montana, now Mont. Code Ann. §§ 30-10-202,30-10 -306. The security which defendant allegedly sold was a package sealer contract. The trial court found that the contracts were investment contracts under Montana law and therefore subject to registration requirements.


  • The court affirmed after adopting a broadened definition of "security" in line with a vast weight of authority across the country. 
  • Montana had adopted the Uniform Securities Act, Mont. Rev. Code Ann. § 15-2001 (1947), now Mont. Code Ann. § 2-15-1901, which in turn relied for its definition on the Federal Securities Act. 
  • Case law established that the touchstone of an investment contract was the presence of an investment in a common venture premised on a reasonable expectation of profits to be derived from the entrepreneurial or managerial efforts of others. 
  • Under the this test, the sealer contracts, with their promise of profits to come from the entrepreneurial efforts of defendant and his employees, were clearly classifiable as investment contract securities and subject to regulation.

The court affirmed defendant's conviction for deceptive practices and the selling of unregistered securities.

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