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State v. Duncan

Montana Supreme Court
593 P.2d 1026 (1979)


Norman Duncan (defendant) was president of Smart Pak, Inc., a subsidiary of Survival Heat Products, Inc. Smart Pak produced and marketed a dry granulated charcoal lighter (Smart Start) and a combination package of Smart Start and charcoal briquettes (Smark Pak). After Duncan discovered that automated packaging machines could not properly seal the special “child proof” paper used in the products, Duncan and other employees sold “package sealer agreements” in Gallatin County to those who paid between $500 to $5,000 to be exclusive sealers for Smart Pak. The sealers received all materials from Smart Pak, sealed the packages, and then sold the sealed bags back to the company. Shortly thereafter, Smart Pak came under federal and state investigation as to whether the sealer agreements were investment contracts which Duncan had failed to register. After Smart Pak ceased operations and went into receivership, the State charged Duncan with a four-count information, namely: (1) deceptive practices; (2) fraudulent securities practices; (3) failure to register securities; and (4) issuing a bad check. The trial court dismissed count 4 and Duncan pled not guilty to the other three counts. After Duncan waived his right to a trial by jury, the court found Duncan guilty on counts 1 and 3 and dismissed count 2. Duncan was sentenced to five years imprisonment on count 1 and three years imprisonment on count 3. The sentences ran concurrently. Duncan appealed.

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