                               No. 12118

      I N THE SUPREME C U T O T E STATE O M N A A
                       OR    F H         F OTN

                                   1973



I N T E M T E O THE ESTATE O A N L
     H   ATR F              F R OD
C. SCHUEREN, DECEASED,
......................................
ELEANORE A. SCHUEREN ,

                       P l a i n t i f f and A p p e l l a n t ,



UNION BANK AND TRUST COMPANY, a Corporation,

                       Defendant and Respondent.



Appeal from:   D i s t r i c t Court o f t h e S i x t h J u d i c i a l D i s t r i c t ,
               Honorable L. C. Gulbrandson, Judge p r e s i d i n g .

Counsel of Record :

    For Appellant :

          Small, Cumminsand Hatch, Helena, Montana
          Floyd 0 . Small argued and Robert C u m i n s appeared,
           Helena, Montana

    For Respondent :

          Luxan and M u r f i t t , Helena, Montana
          H. J. Luxan and Walter S. M u r f i t t argued, Helena,
           Montana



                                                  Submitted:         June      18, 1973
M r . J u s t i c e Wesley C a s t l e s d e l i v e r e d t h e Opinion of t h e Court.

       This i s an appeal from a judgment f o r defendant entered on
a j u r y v e r d i c t a f t e r a motion f o r new t r i a l was denied.               The case
was t r i e d i n Park County, Hon. L.C.               Gulbrandson, presiding.
       P l a i n t i f f Eleanore A. Schueren, a s b e n e f i c i a r y of t h e e s t a t e
of Arnold Schueren, f i l e d a negligence a c t i o n a g a i n s t defendant
Union Bank and T r u s t Company a s executor of t h e e s t a t e of Arnold
C. Schueren.        The claimed negligence and mismanagement of t h e
executor was t h a t defendant (1) f a i l e d t o c o l l e c t a s s e t s owned
by t h e decedent on t h e d a t e of h i s death January 30, 1967, o r i n
t h e a l t e r n a t i v e (2) f a i l e d t o discover t h a t those a s s e t s had been
f r a u d u l e n t l y disposed of by decedent's agent Leston B. Nay during
decedent's l i f e t i m e and f o r f a i l i n g t o p r e s e n t t o Nay a claim f o r
t h e value thereof and t o c o l l e c t thereon.
       The Seventh C i r c u i t Court of Appeals described t h e afore-
mentioned agent Leston Nay i n i t s Cause No. 71-1422, 466 F.2d 1035,
decided August 1, 1972, i n t h i s manner:
       "This i s another sad chapter i n t h e c a s e of Leston
       B. Nay and t h e frauds he p e r p e t r a t e d over a long
       period of xears a g a i n s t a g r e a t number of innocent
       investors.
W s e t t h i s f o r t h a t t h i s time t o s e t t h e s t a g e f o r what follows.
 e
Nay murdered h i s w i f e and committed s u i c i d e on June 3 , 1968,
leaving many innocent i n v e s t o r s t o s u f f e r .
       P l a i n t i f f - a p p e l l a n t contends t h e i s s u e s i n t h e c a s e were
t h e question of negligence and damages r e s u l t i n g therefrom.                          We
agree.
       Appellant s e t s out some fourteen claimed e r r o r s ; some a r e
merely t h e contentions s e t out above.                   It i s c l e a r t h e j u r y be-
l i e v e d , a s i t had a r i g h t t o do, t h a t defendant was n o t n e g l i g e n t ;
and, t h a t i n any event no damage r e s u l t e d because t h e r e was no
l o s s of e s t a t e property o r a s s e t s occasioned by a c t i o n s of t h e
executor.       I n o t h e r words, t h e a l l e g e d v a l u e of t h e e s t a t e was
simply n o t t h e r e .    A s u b s t a n t i a l p a r t of ~ c h u e r e n ' se s t a t e had
been embezzled and stolen prior to his death; thus no damage
occurred by reason of defendant's activities.
     The other claimed errors have to do with the evidence admitted
and the instructions given and refused. Before discussing these
claimed errors, we set forth the agreed facts.
     Arnold C. Schueren during his lifetime was a resident of
Chicago, Illinois, engaged in a small manufacturing business in
that city.   In 1954, Schueren retired from business, sold his
interest in the company, and moved to a ranch near Pray, Montana.
     In approximately 1936 Schueren became acquainted with Leston
B. Nay, also of Chicago, a stock salesman employed by the brokerage
firm of Webber, Darch & Company.    On April 16, 1936, Schueren made,
executed, and delivered to Leston B e Nay a power of attorney which
vested Nay with broad discretion and authority to deal with all
securities owned by Arnold Schueren including the right to sell
and dispose of such securities. A new power of attorney was given
by Arnold Schueren to Leston B. Nay on July 7, 1937, and contained
the same broad powers.
     It was ~chueren'spolicy to leave securities which he had
purchased in the possession of Nay and/or the brokerage firm with
which Nay was then associated.     In 1942, Nay became an employee
of the brokerage firm of Ryan-Nichols & Co.     During the course
of the next several years, Nay acquired all of the stock of Ryan-
Nichols & Co. and subsequently changed the name of the brokerage
firm to First Securities Company of Chicago.    Nay was president
of that firm at the time of his death and owned ninety percent
of the outstanding stock.   The brokerage firms with which Nay was
associated were all members of the Midwest Stock Exchange.
    Nay, as a long time friend and trusted business associate
of Arnold Schueren, retained in his custody almost all securities,
whether stocks or bonds, purchased for Schueren's account.    The
records of First Securities Company of Chicago show that it would
purchase securities for Schueren and the stock certificates were
delivered to Schueren. Receipts were signed by Schueren acknow-
ledging he had received t h e c e r t i f i c a t e s .               After each t r a n s -
a c t i o n , Schueren would d e l i v e r t h e s e c u r i t i e s t o Leston Nay and
would r e c e i v e i n r e t u r n a document e n t i t l e d "safekeeping r e c e i p t .           II


        I n sending t h e income t o Schueren, Nay would i s s u e , over t h e
l e t t e r h e a d of F i r s t S e c u r i t i e s Company of Chicago, typewritten
monthly income statements r e f l e c t i n g t h e amount of dividends and/or
i n t e r e s t purportedly received f o r Schueren's account and remit
t h e amounts shown t o Schueren by c a s h i e r ' s checks.                       Nay purchased
t h e c a s h i e r ' s checks from v a r i o u s Chicago banks.                 Periodically,
upon request of Schueren, Nay would send t o Schueren a d e t a i l e d
l i s t of stocks and bonds which were purportedly held by Nay f o r
~ c h u e r e n ' s account.      The correspondence between Nay and Schueren
r e v e a l s t h a t a t times Schueren, who kept a c c u r a t e r e c o r d s , would
question t h e inventory statements and/or t h e income statements.
        Arnold Schueren died on January 30, 1967.                            Thereafter, a f t e r
due n o t i c e and hearing, h i s w i l l , dated A p r i l 1, 1963, was admitted
t o probate on February 28, 1967 and t h e Union Bank and T r u s t Com-
pany was appointed executor t h e r e o f .                  ~ c h u e r e n ' sw i l l provided
t h a t a l l of h i s property was t o be d i s t r i b u t e d t o t h e Union Bank
and T r u s t Company, a s t r u s t e e .          One-half of h i s e s t a t e a f t e r
payment of d e b t s , t a x e s and a d m i n i s t r a t i v e c o s t s , was t o be held
i n t r u s t f o r Eleanore Schueren his widow, with income from such
one-half t o be paid t o h e r monthly.                     The t r u s t e e was given t h e
power t o invade t h e p r i n c i p a l of t h e t r u s t i n t h e event t h e income
was i n s u f f i c i e n t t o provide f o r M r s .       ~ c h u e r e n ' s support and main-
tenance.        Mrs.    Schueren has t h e power t o dispose of any of t h e
a s s e t s remaining i n t h e t r u s t f o r h e r b e n e f i t t o any person whom
she d e s i r e s , upon h e r death.
        The o t h e r one-half of ~ c h u e r e n ' se s t a t e i s held i n a t r u s t
designated t h e "residuary t r u s t " .               Mrs.     Schueren i s t o r e c e i v e
a l l of t h e income from t h e r e s i d u a r y t r u s t and t h e t r u s t e e has
t h e a u t h o r i t y t o d i s b u r s e from t h e p r i n c i p a l of t h e r e s i d u a r y
t r u s t such sums a s may be required t o provide f o r h e r support, but
only i n t h e event t h a t a l l of the a s s e t s of t h e trust over which
she has a power of appointment have been exhausted. Upon her death,
all of the assets in the residuary trust are distributable to the
Montana Heart Association.
     Following its appointment as executor, Union Bank on March 3,
1967, wrote to Leston Be Nay requesting that all assets owned by
Schueren be turned over to it, as executor.    The response from Nay
was almost immediate and he pledged his cooperation to Union Bank
and promised to furnish an inventory of all the securities owned by
Arnold Schueren. Nay advised Union Bank it would be necessary to
transfer the securities to the name of Union Bank and Trust Com-
pany, as executor, and requested twenty-five certified copies of
Letters Testamentary to effect the transfers.    These documents
were mailed to Nay on March 13, 1967. An inventory was received from
Nay in the latter part of April 1967, together with valuations
of all securities, computed by Nay.    The inventory failed to in-
clude any stock or bond certificate numbers. At various times
from May 13, 1967, through February 8, 1968, Nay requested and
was furnished by Union Bank the same documentation and additional
documentation including inheritance tax waivers issued by the
state of Montana, affidavits of domicile for the state of New
York and for the state of California, all purportedly required
by the various transfer agents.
     In the latter part of February 1968, Union Bank began to
investigate the reason for its not having received the securities
from Nay.   Inquiries were made of its correspondent bank in
Chicago, Continental Illinois National Bank of Chicago, and to
certain selected transfer agents, and thereafter in May 1968, to
all companies and transfer agents in which Arnold Schueren was
supposed to hold stocks or bonds.     In April 1968, Nay mailed to
Union Bank purported copies of letters to all transfer agents
showing the request for transfer. After N~Y'Sdeath, it was estab-
lished that the original requests had never been mailed to the
transfer agents.
      While the investigation was in progress, Leston B, Nay on
June 3, 1968, murdered his wife and committed suicide. No
securities were delivered to Union Bank by First Securities
Company or Leston Nay prior to June 3, 1968. Following advice
of ~ay'ssuicide, an officer of Union Bank went to Chicago to
determine what course of action to take to recover the securities
which were purportedly held by First Securities Company for the
account of Arnold Schueren. The firm of Pope, Ballard, Shepard
&   Fowle was employed. Upon learning of the claim of Union Bank
as executor of Arnold Schueren's estate, the Securites and Exchange
Commission immediately filed an action in the United States
District Court of Illinois and a receiver was appointed to take
charge of the assets and property of First Securities Company of
Chicago. A bank officer appeared at the hearing.     That action
is entitled "In the District Court of the United States for the
Northern District of Illinois, Eastern Division, Securities and
Exchange Commission, Plaintiff, vs. First Securities Company of
Chicago, Defendant, No. 68C 1053. I'   A special master was appointed
by the court to hear the various claims of persons claiming monies
and/or securities due from First Securities Company, including
the claim of Union Bank as executor of the last will and testament
of Arnold Schueren.
      Union Bank on April 30, 1968, prior to Nay's death, and as
required by law, filed with the Internal Revenue Service at Helena,
Montana, a United States Estate Tax Return (Form 706) with respect
to ~chueren'sestate reporting assets of the value of $565,291.20
and concurrently therewith paid inheritance tax in the amount of
$17,369.
      During the period between March 1967, through April 1968,
thirteen remittances by cashier's checks purporting to be remittances
of specific dividend and interest income theretofore received by
First Securities Company of Chicago with respect to securities
held by it for the account of Schueren, accompanied in each instance
by a memorandum itemizing the specific dividend and interest income
r e m i t t e d therewith, aggregating t h e sum of $20,254.59, were
received by Union Bank.
        I n August 1968, Union Bank f i l e d with t h e r e c e i v e r , a p e t i t i o n
f o r reclamation of a l l s e c u r i t e s s e t f o r t h on t h e l i s t furnished
by Nay i n A p r i l 1967, and requesting t h e r e c e i v e r t o t u r n over
a l l of t h e l i s t e d s e c u r i t i e s .   Union Bank a l s o f i l e d with t h e
r e c e i v e r a proof of claim claiming t h e v a l u e of a l l s e c u r i t i e s
appearing on t h e Nay l i s t .
        P e t i t i o n f o r removal of t h e executor and complaint i n t h e
i n s t a n t a c t i o n was f i l e d on June 16, 1969, by p l a i n t i f f - a p p e l l a n t
herein.       Union Bank, defendant-respondent, f i l e d an inventory and
appraisement i n t h i s matter on June 25, 1969, showing a s s e t s i n
i t s possession owned by Arnold Schueren on t h e d a t e of h i s death
t o be: i n d i v i d u a l l y owned property           -   $46,800.04; j o i n t l y owned
property with Eleanore Schueren                     -   $16,342.14.
        On August 19, 1969, Union Bank f i l e d i t s f i r s t i n t e r l o c u t o r y
account and r e p o r t and p e t i t i o n f o r s e t t l e m e n t t h e r e o f .   Appellant
f i l e d o b j e c t i o n s t o hearing of t h e account.
        On August 14, 1969, an o r d e r was entered i n t h e r e c e i v e r s h i p

proceedings pending i n Chicago, r e q u i r i n g t h e r e c e i v e r t o t u r n
over t o Union Bank, a s executor, a l l of t h e s e c u r i t i e s found i n
t h e o f f i c e of F i r s t S e c u r i t i e s Company of Chicago, which were
r e g i s t e r e d i n t h e name of Arnold C. Schueren.                On September 17,
1969, a f t e r r e c e i p t of t h e s e c u r i t i e s , Union Bank f i l e d i t s f i r s t
supplemental inventory and appraisement showing t h e v a l u e of t h e
s e c u r i t i e s received t o be $98,399. 44.
        On June 30, 1970, the s p e c i a l master appointed by t h e f e d e r a l
c o u r t i n I l l i n o i s t o hear t h e various claims, a f t e r hearing proof
on t h e claim of Union Bank, a s executor, recommended t h e claim be
denied upon t h e grounds t h a t t h e powers of a t t o r n e y granted by
Schueren t o Nay i n 1936 and 1937 empowered Nay t o dispose of a l l
of t h e c e r t i f i c a t e s e n t r u s t e d t o him and a s such Nay was n o t a c t i n g
as an o f f i c e r o r agent of F i r s t S e c u r i t i e s Company, b u t was a c t i n g a s
t h e agent of Schueren.               The s p e c i a l master a t t h e same t i m e recom-
mended t h e claim of Eleanore Schueren be accepted and approved.
     On March 22, 1971, the court adopted the recommendations
of the special master and entered an order denying the claim of
Union Bank, as executor, and approving the claim of Eleanore
Schueren.
     Subsequent to the filing of the pretrial order in the instant
case, the order of the federal district court entered in the
Chicago receivership proceedings denying the claim of Union Bank,
as executor of Arnold Schueren's estate, was appealed to the
United States Court of Appeals, Seventh Circuit.   On August 1,
1972, that court reversed the order of the federal district court
and allowed the claim of Union Bank, as executor. The decision
entitled "~ecuritiesand Exchange Commission, Plaintiff v.
First Securities Company of Chicago, Defendant; Union Bank &
Trust Company, Helena, Montana, Claimant-Appellant,   --   Keith S.
McKy, Receiver-Appellee, Customer Creditors Committee, Appellee. 11
appears at 466 F.2d 1035.
     Union Bank has not filed an estate inheritance tax return
with the state of Montana but did, on February 12, 1971 pursuant
to the laws of the state of Montana, deposit with the clerk of
this Court the amount of $2,537.08 as and for Montana inheritance
tax estimated to be due from the estate.
     Union Bank, as executor, has disbursed to Eleanore A. Schueren,
surviving widow of Arnold Schueren, as and for a widow's allowance,
cash sums in the total amount of $62,000.
     Leston Nay died testate. No proceedings for the probate of
his will or for the administration of his estate have been filed.
     During the course of the trial in the district court in the
instant case, other facts were developed including generally customs
and practices in the securities industry; the proof that no
securities (the loss of which is the alleged subject of the suit)
existed on January 30, 1967, the date of ~chueren's death; a death
or suicide note written by Leston Nay documenting his own fraudu-
lent disposition of securities and money entrusted to him; and,
certain other matters prior to Schueren's death and subsequent
to ~ay'sdeath,
                            - 8 -
        The claimed e r r o r s , a s we have regrouped them, a r e :
        (1)   O t h e question of negligence, t h e evidence should
               n
have been confined t o a period of t i m e from February 28, 1967,
(when respondent Union Bank became executor) t o June 3, 1968,
(when Leston Nay k i l l e d himself).

        (2)   That t h e c o u r t e r r e d i n admitting i n t o evidence t h e
death statement o r s u i c i d e n o t e of Leston Nay.

        (3)   Error i n admitting matters i n t h e r e c e i v e r s h i p pro-
ceedings i n Chicago a g a i n s t F i r s t S e c u r i t i e s Company i n September
1969.

        (4)   Error i n admitting l e t t e r s from v a r i o u s t r a n s f e r agents
i n January 1970, s t a t i n g they d i d n o t have any record of s e c u r i -
t i e s i n t h e name of Arnold Schueren.
        (5) Errors claimed i n i n s t r u c t i o n s given and refused.
        (6)   The a c t i o n s of t h e Union Bank i n allowing Nay t o
p a r t i c i p a t e i n marshalling t h e a s s e t s made i t a guarantor o r
r a i s e d an e q u i t a b l e estoppel a g a i n s t it.
        Under claimed e r r o r ( I ) , a p p e l l a n t contends no evidence
concerning t h e handling of t h i s e s t a t e should have been received
which r e l a t e d t o any period of time p r i o r t o February 28, 1967,
o r subsequent t o June 3, 1968.               This contention does n o t conform
t o t h e conduct of p r e t r i a l i n v e s t i g a t i o n , t h e preparation and
approval of t h e p r e t r i a l o r d e r , o r t h e t r i a l of t h e case.   The
agreed statement of f a c t s a s contained i n t h e p r e t r i a l order
covers t h e period from 1936 through March 22, 1971, including t h e
commencement of Arnold ~ c h u e r e n ' sr e l a t i o n s h i p with Leston Nay
(1936) through t h e appointment of Union Bank a s executor, i t s
f i l i n g of a claim i n t h e r e c e i v e r s h i p proceedings i n Chicago,
i t s p a r t i c i p a t i o n i n those proceedings and t h e f i l i n g of t h e
inventory and appraisement and supplement t h e r e t o , and p e t i t i o n s
f o r settlement of i t s account.
        I n a d d i t i o n , a p p e l l a n t introduced t h e inventory dated June
25, 1969, and questioned M r . Mayer, a Union Bank t r u s t o f f i c e r ,
with r e s p e c t t o t h e Chicago proceedings, and M r . Dion, a Union
Bank t r u s t o f f i c e r , with r e s p e c t t o t h e f i l i n g of a claim a g a i n s t
Nay o r F i r s t S e c u r i t i e s .   The happenings a f t e r June 3, 1968, were
included a s a p a r t of t h e h y p o t h e t i c a l question asked of M r .
Finger, a p p d a n t ' s witness.             Introduced and received i n evidence
without o b j e c t i o n of a p p e l l a n t ' s counsel were defendant's Exhibit
R (complaint f i l e d i n t h e r e c e i v e r s h i p proceedings by t h e S e c u r i t i e s
& Exchange Commission a g a i n s t F i r s t S e c u r i t i e s Company of Chicago

on June 10, 1968); Exhibit S ( t h e a f f i d a v i t of t h e s e n i o r s e c u r i t y
i n v e s t i g a t o r on t h e s t a f f of t h e S e c u r i t i e s & Exchange Commission
which was f i l e d with t h e complaint); Exhibit T ( t h e order of t h e
f e d e r a l d i s t r i c t c o u r t appointing Keith D. McKy a s r e c e i v e r ) ;
Exhibit U ( t h e p e t i t i o n f o r reclamation f i l e d on behalf of Union
Bank, a s executor of t h e e s t a t e of Arnold Schueren); Exhibit V
(proof of claim f i l e d by Union Bank, a s executor); and Exhibit W
( t h e order of t h e f e d e r a l d i s t r i c t c o u r t r e q u i r i n g t h e turnover
of c e r t a i n s t o c k c e r t i f i c a t e s t o Union Bank, a s executor of t h e
e s t a t e of Arnold Schueren, r e l a t i n g t o c e r t a i n s e c u r i t i e s r e g i s t e r e d
i n t h e name of Arnold Schueren).                 It i s c l e a r a p p e l l a n t waived the
claimed e r r o r .       See:      C h a r l i e v. Foos,         Mon t   .       ,   503 P.2d
538, 29 St.Rep. 927.
        Appellant complains t h a t respondent Union Bank i n s i s t e d
upon t h e r i g h t t o take depositions of v a r i o u s i n d i v i d u a l s i n t h e
Chicago a r e a f o r use during t r i a l .           A g r e a t d e a l of t h e evidence
r e q u i r e d by respondent t o properly present i t s c a s e was located
i n and about t h e c i t y of Chicago.               I n a d d i t i o n , each of t h e t r a n s f e r
agents having t h e records of t h e companies i n which Arnold Schueren
was purportedly a stockholder o r bondholder have o f f i c e s i n t h e
midwestern and e a s t e r n c i t i e s of t h e United S t a t e s .           Appellant was
advised of t h e n a t u r e of t h e evidence which respondent intended t o
produce a t t r i a l .        Appellant was furnished with a copy of t h e
t r a n s c r i p t of t h e hearing of t h e r e c e i v e r s h i p claims of Eleanore
Schueren and Union Bank, a s executor, and copies of t h e proceedings
i n t h e Chicago l i t i g a t i o n which respondent intended t o use a t t h e
t h e t r i a l , a l l w e l l i n advance of t h e t r i a l .       The following
stipulation between counsel appears in the pretrial order:
     ~tThe parties stipulate and agree that all

     pleadings, exhibits and all the testimony
     by deposition or at the hearings before the
     Court or Special Master in the cause entitled
     In the District Court of the United States
     for the Northern District of Illinois, Eastern
     Division, Securities and Exchange Commission,
     plaintiff, vs. First Securities Company of
     Chicago, defendant, No. 68C 1053, may be used
     by either party hereto with like effect as if the
     witnesses were present in Court and testifying."
Appellant reserved all objections save and except as to founda-
tion.     There was no suggestion by stipulation or otherwise, nor
does the record reveal, that appellant intended to attempt to
limit the evidence to the period of time now claimed.    It has long
been the law of Montana that failure to make timely objection
constitutes a waiver.     Seder v. Kiewit sons' Co., 156 Mont. 322,
479 P.2d 448; Charlie v. Foos, supra.
     Appellant's contention that the evidence with respect to
the financial condition of First Securites or Nay should have
been excluded as being immaterial and too remote in time is
without merit.    The Nay suicide note was admittedly written by
Nay before he died on June 3, 1968. The note was written within
the time limitation urged by appellant, which should obviate
any objection or claimed irregularity with respect thereto.    The
note is evidence of #ap's   deceit of Arnold Schueren, the theft
of the securities including the time the thefts commenced (1936)
and the method used (sold as collateral for loans), and the effect
of this deceit on the financial condition of First Securities.
Other documents received in evidence, over objection as being too
remote in time and immaterial, were defendant's exhibits G-1,
H-1, 1-1 and J-1. The first three numbered exhibits are the
reports of the special master in the Chicago proceedings regarding
the claims of various creditors referred to as "the escrow
claimants".    The reports were written after hearings at which
evidence was taken and the amount due each of the creditors was
proved.    The total of the claims filed was over $1,300,000, of
which approximately $1,000,000 was proved as.due. A reading of
the synopsis of the evidence produced at the hearings shows
Nay's financial condition as far back as 1953. ~efendant's
exhibit G-1, wherein the receiver concluded the total claims
proved was $972,500, evidence was produced showing Nay had paid
as interest for the years 1953 through 1967 the sum of $639,551.24.
The special master stated:
     "During the last several years prior to ~ay's
     death, his interest payments to the claimants
     on the escrow funds became irregular and de-
     linquent.11
 The evidence is clear that Nay was heavily indebted to third
persons and was in fact insolvent long prior to the death of
Arnold Schueren and the appointment of Union Bank as executor.
     The special master recommended the claims of the "escrow
claimants" against First Securities be denied on the ground that
Nay was not an agent of First Securities. This recommendation
was adopted by the federal district judge whose order was appealed
to the Court of Appeals, Seventh Circuit. That court reversed the
decision and concluded that Nay in his defalcations was acting
as an agent of First Securities and the claims were properly claims
against First Securities.    Securities & Exchange Commission v,
First Securities Company of Chicago   ---   Olga ~#chfelder, et al,
Claimants-Appellants, Keith S. McKy, Receiver-Appellee, Customers
Creditors Committee, Appellee, 463 F.2d 981, 988.
     The statement of facts in the above entitled action outlines
the method by which Nay succeeded in duping the claimants into
selling legitimate securities, and investing in the so-called
 escrow account".
11                  Nay acknowledged receipt of cash either by a
hand-written receipt or by giving promissory notes to each claimant.
Nay made the interest payments due thereon with his own personal
checks.   Nay deducted these interest payments from his own per-
sonal income tax return, In connection with Internal Revenue
Service audits in 1956 and 1965, Nay requested and received from
each claimant a letter verifying the amount of his indebtedness.
From time to time, some of the claimants referred to their escrow
investments in correspondence with Nay as being personal loans to
him.     Nay was very s e c r e t i v e with r e s p e c t t o t h e escrow accounts
and e s t a b l i s h e d , a s p r e s i d e n t of F i r s t S e c u r i t i e s , an o f f i c e r u l e
forbidding anyone o t h e r than himself t o open mail addressed t o
him o r t o F i r s t S e c u r i t i e s marked f o r h i s a t t e n t i o n .        The p r i n c i p a l
b a s i s f o r t h e r e v e r s a l was t h e v i o l a t i o n by F i r s t S e c u r i t i e s of
t h e S e c u r i t i e s Exchange Act of 1934, and t h e Rules of F a i r P r a c t i c e
of t h e National Association of S e c u r i t i e s Dealers, Inc.                           The Court
of Appeals s t a t e d :
       " e have no doubt t h a t t h e enforcement of Nay's
        W
       r u l e regarding t h e opening of t h e mail i s s u f f i c i e n t
       without more t o c o n s t i t u t e a v i o l a t i o n of Rule 27.
       Such v i o l a t i o n s provide a b a s i s f o r p r i v a t e damage
       a c t i o n s where t h e r u l e v i o l a t e d serves t o p r o t e c t t h e
       public.         [ c i t i n g c a s e s ] F i r s t S e c u r i t i e s i s properly
       l i a b l e f o r Nay's fraud because of i t s v i o l a t i o n of
       Rule 27 of t h e N.A.S.D."

        The evidence of t h e e x t e n t of Nay's indebtedness, a s
r e f l e c t e d i n t h e pleadings, evidence and d e c i s i o n s , which came
t o l i g h t only a f t e r Nay's death, was c e r t a i n l y admissible t o
show h i s f i n a n c i a l condition during t h e period a r b i t r a r i l y s e t by
a p p e l l a n t and t o f u r t h e r show t h e i n a b i l i t y of e i t h e r F i r s t
S e c u r i t i e s o r Nay t o pay t o Union Bank t h e sum of approximately
$400,000, t h e market v a l u e of t h e s e c u r i t i e s s t o l e n by Nay from
Arnold Schueren.
        One of t h e i s s u e s r a i s e d by t h e pleadings here was t h e
value of t h e e s t a t e ' s claim a g a i n s t F i r s t S e c u r i t i e s o r Nay a s an
1I
 a s s e t " of t h e e s t a t e .    To support h e r a l l e g a t i o n t h a t t h e bank's
f a i l u r e a s executor t o f u l l y c o l l e c t t h e claim r e s u l t e d i n a l o s s
t o t h e e s t a t e , i t was incumbent upon a p p e l l a n t t o prove t h e
f i n a n c i a l a b i l i t y of t h e debtor t o pay t h e claim,               Appellant f a i l e d
t o produce such evidence.                  Moreover, respondent produced evidence
a f f i r m a t i v e l y showing t h e debtor d i d n o t have t h e f i n a n c i a l a b i l i t y
t o pay t h e claim, had one been presented, and was hopelessly i n -
solvent.
       A s another " i r r e g u l a r i t y 1 ' , a p p e l l a n t s t a t e s t h a t Union Bank
has taken i n c o n s i s t e n t p o s i t i o n s i n t h e Chicago l i t i g a t i o n and
i n t h i s action.        The o r i g i n a l complaint requestlngthe f e d e r a l c o u r t
t o appoint a r e c e i v e r was d r a f t e d by a t t o r n e y s f o r t h e S e c u r i t i e s
& Exchange Commission and f i l e d i n i t s behalf and i s not an admission

by Union Bank t h a t ~ a y ' s e c e i t f u l and deceptive p r a c t i c e s s t a r t e d
                              d
after its appointment.     It is an allegation only and the proof
subsequently developed during those proceedings indicated the
deceit had been practiced for over thirty years.     In the Chicago
proceedings, Union Bank on July 31, 1968, filed its "Petition
for Reclamation" requesting the turnover of all Schueren's
securities and further requesting all cash proceeds of any of
such securities as may have been sold.    Thereafter, when the
extent of Nay's fraudulent practices had been established and
it was certain that the missing securities hdd long been disposed
of, Union Bank in 1968 filed its "Proof of Claim".    Union Bank
was desirous of obtaining possession of such existing securities
(if any) as were registered in the name of Arnold Schueren or
as held in street name for his account by First Securities, together
with the value of such of Schueren's securities as could not be
accounted for.
        As executor, Union Bank has recovered securities of the
value of approximately $98,000.     Subsequent investigation revealed
that no other securities belonging to Schueren were in existence
at the time of his death.    What was originally believed to be
assets having a "market value" is now merely a claim against an
insolvent, bankrupt company and/or against a decedent's estate.
Union Bank pursued the claim of its testator in the Chicago pro-
ceedings and was successful in obtaining a judgment requiring the
receiver to allow the claim as a valid claim against First Securi-
ties.     The executor is chargeable by law with only those assets
which are in existence on the date of the decedent's death.       Since
the stolen securities were nonexistent at ~chueren's death, the
11
 asset" is the claim against First Securities and/or Nay for their
value.
        Proceedings for the administration of Nay's (insolvent) estate
have understandably not been commenced.    Union Bank followed the
only fruitful course available under the circumstances by filing
a claim against First Securities for the value of the stolen securi-
ties.     The value of that claim (as distinguished from the value of
t h e converted s e c u r i t i e s ) depends upon i t s c o l l e c t a b i l i t y and t h i s
has n o t a s y e t been determined.                  It w i l l n o t be determined u n t i l
t h e r e c e i v e r s h i p proceedings have been terminated and t h e amount
of money a v a i l a b l e f o r d i s t r i b u t i o n t o r e c e i v e r s h i p c r e d i t o r s has
been a s c e r t a i n e d .
        The evidence i s c l e a r t h a t except f o r t h e s e c u r i t i e s r e g i s t e r e d
i n t h e name of Arnold Schueren, none of t h e missing s e c u r i t i e s
was i n e x i s t e n c e on t h e d a t e Arnold Schueren died and t h a t ~ a y ' s
r e p r e s e n t a t i o n s t o t h e c o n t r a r y , made t o Union Bank during t h e
period following ~ c h u e r e n ' sdeath and u n t i l ~ a y ' ss u i c i d e , were
fhlse and fraudulent.              It i s admitted t h a t Arnold Schueren believed
u n t i l the day he died t h a t t h e s e c u r i t i e s contained on t h e Nay
l i s t were held i n some form f o r h i s account by F i r s t S e c u r i t i e s
and Nay.
        The i n s t a n t a c t i o n was commenced i n June 1969, more than one
year a f t e r Nay's s u i c i d e .       Appellant a l l e g e s t h e s e c u r i t i e s s e t
f o r t h on t h e Nay l i s t were i n e x i s t e n c e and were a s s e t s of t h e
e s t a t e ; t h a t they were l o s t and t h e l o s s was due t o negligence
on t h e p a r t of Union Bank.              The defense of Union Bank i s based
upon t h e known f a c t s t h a t t h e s e c u r i t i e s d i d n o t e x i s t and t h a t
t h e only a s s e t of t h e e s t a t e was a claim, t h e value of which was
unknown.        There i s no inconsistency a s contended by a p p e l l a n t .
It i s t h e duty of t h e executor t o c o l l e c t a l l c o l l e c t i b l e a s s e t s
owned by t h e decedent.              The Union Bank has pursued t h i s duty.
        Appellant's theory i n t h i s a c t i o n seems t o be t h a t because
Arnold Schueren was t h e v i c t i m of t h e f r a u d u l e n t , d e c e i t f u l and
unlawful conduct of Nay, and Union Bank d i d n o t promptly discover
t h a t f a c t , i t , a s executor, succeeds t o Arnold ~ c h u e r e n ' sp o s i t i o n
and must s u f f e r t h e l o s s .       Under Montana law i t i s c l e a r t h a t an
executor i s chargeable with only such a s s e t s a s a r e i n e x i s t e n c e
on t h e d a t e of t h e t e s t a t o r ' s death.         I n r e Dolenty's E s t a t e , 53
Mont. 33, 161 P. 524; Section 91-3402, R.C.M.                              1947.      In this
e s t a t e , t h e "asset" i n question i s the claim t h a t e x i s t e d a t t h e
t e s t a t o r ' s death f o r t h e value of s e c u r i t i e s s t o l e n from him during
h i s lifetime.
      For the foregoing reason alone, the trial court might well
have granted the motion for a directed verdict; that is, no loss
was shown as a result of the executor's action.
      The foregoing discussion answers appellant's contentions
()
 I,   ( ) and ( ) heretofore set forth. As to contention ( )
       3,      4,                                         2,
the admissibility of the death statement or suicide note, even
without it there is sufficient proof to warrant the conclusion that
the securities involved did not exist.     As to the note, one Roy
Campbell, the office manager, cashier, secretary and director of
First Securities, testified by deposition.        The note was read in
its entirety by Campbell without objection and this would consti-
tute a waiver.    Moreover, the note was properly admissible as a
declaration against interest and a business record.        Section 93-
1101-17(1),   R.C.M.   1947; MacDonald v. Protestant Episcopal Church,
150 Mont. 332, 435 P.2d 369; Section 93-801-2, R.C.M.       1947. The
note was proven as to authenticity and was clearly relevant. No
error was committed.
      As to appellant's contention ( ) errors concerning instruc-
                                    5,
tions given and refused, we have examined them and find no error.
First, as we have said heretofore, there was a failure of proof
of any loss occasioned by the executor and the trial court might
well have granted a directed verdict.     Thus no error in instructions
occurred.     Second, appellant's contentions on admissibility of
evidence not having merit, heretofore discussed, many of the claimed
errors in instructions are not applicable.    '



      We have dwelled herein largely on the matter of whether any
loss was occasioned by the actions of the executor Union Bank.
Appellant's contention (6) is that Union Bank, as executor, was
negligent in allowing Nay to perform duties in marshalling the
assets of the estate during the period of over one year.       Further,
that Union Bank failed to file an inventory and appraisement of
the estate for over two years. We do not herein approve of the
actions of Union Bank,'since it could have and should have gone
to the court for an extension of time, but the jury did not find
those actions to be negligence.
           Appellant urges t h a t when Union Bank allowed Nay t o perform i t s
    d u t i e s of marshalling t h e a s s e t s , i t , t h e Bank, became a guarantor
    f o r t h e a c t s of Nay a s i t s agent.           W recognize t h a t such i s t h e
                                                           e
    r u l e i n a proper c a s e , i f t h a t delegation of a u t h o r i t y r e s u l t s
    i n a loss.        But, we emphasize again, t h e r e must be proof of a l o s s .
           Appellant a l s o urges t h a t t h e a c t i o n s of Union Bank and
    i t s i n a c t i o n , f a i l u r e t o f i l e t h e inventory, r a i s e d an e q u i t a b l e
    e s t o p p e l a g a i n s t t h e Bank.   That i s , t h a t t h e Bank i s estopped
    from denying t h e amount of a s s e t s a s s e r t e d i n i t s p e t i t i o n f o r
    appointment.          The e q u i t a b l e e s t o p p e l p r i n c i p l e simply i s n o t
    applicable.
            It i s r e g r e t t a b l e t h a t Leston Nay was so s u c c e s s f u l i n
    gaining and keeping t h e t r u s t and confidence of Arnold Schueren.
    Nay, a super conman, a l i a r and a t h i e f , reached t h e u l t i m a t e
    depths of depravity when he murdered h i s i n v a l i d w i f e and then
    committed s u i c i d e .         He obviously could not f a c e t h e d i s g r a c e he
    knew he would s u f f e r .          The economic l o s s s u f f e r e d by t h e Sbhuerens
    cannot be a t t r i b u t e d t o any negligence of Union Bank, b u t must
    be placed squarely on t h e shoulders of Leston Nay.
            The j u r y , a f t e r hearing t h e evidence, found i n favor of
    respondent Union Bank and Trust Company.                         The v e r d i c t i s upheld
    and t h e judgment affirmed.




         Chief J u s t i c


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