MYHRE v MYHRE

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No. 13291 I N THE SUPREME COURT OF THE STATE OF FIONTANA 1976 ERIC MYHRE, P l a i n t i f f and Respondent, -vs - THOR M H E and GERTRUDE MYHRE, YR D e f e n d a n t s and A p p e l l a n t s . D i s t r i c t Court of t h e Eighth J u d i c i a l District, Honorable P a u l G. H a t f i e l d , J u d g e p r e s i d i n g . Appeal from: C o u n s e l o f Record : For Appellants : Anderson, Syrnrnes, F o r b e s , P e e t e and Brown, B i l l i n g s , Montana Raymond K. P e e t e a r g u e d , B i l l i n g s , Montana R o b e r t G a b r i e l a p p e a r e d , G r e a t F a l l s , Montana F o r Respondent : H u t t o n , Sheehy and Cromley, B i l l i n g s , Montana J o h n C. Sheehy a p p e a r e d , B i l l i n g s , Montana James, Sogard & Fopp, G r e a t F a l l s , Montana B r u c e A . MacKenzie a r g u e d and Ted James a p p e a r e d , B i l l i n g s , Montana Submitted: Decided Filed : SEP 1 !$ii$ p - *44Tt h;PR/jnTia; . 8 Clerk $EP J u n e 1, 1976 I j$'[G Hon. Gordon B e n n e t t , D i s t r i c t J u d g e , s i t t i n g i n p l a c e of M r . J u s t i c e John Conway H a r r i s o n , d e l i v e r e d t h e Opinion of t h e Court. T h i s i s a n a p p e a l by d e f e n d a n t s from a judgment e n t e r e d i n t h e d i s t r i c t c o u r t i n Cascade County. P l a i n t i f f cross-appealed from a p o r t i o n o f t h e judgment a s w i l l h e r e i n a f t e r be d e v e l o p e d . A p p e l l a n t s a s k r e v e r s a l o f a judgment d i r e c t i n g a p p e l l a n t G e r t r u d e Myhre t o s p e c i f i c a l l y perform h e r agreement t o t r a n s f e r 4 0 7 s h a r e s of s t o c k i n a n a d v e r t i s i n g company t o h e r s o n , t h e r e s p o n d e n t ; d i r e c t i n g a p p e l l a n t Thor Myhre t o t r a n s f e r 108 s h a r e s of company s t o c k t o h i s w i f e , a p p e l l a n t G e r t r u d e Myhre; e n j o i n i n g Thor Myhre from removing h i s s o n , r e s p o n d e n t , a s v i c e p r e s i d e n t of t h e company; g r a n t i n g r e s p o n d e n t a money judgment a g a i n s t h i s f a t h e r f o r damages o c c a s i o n e d by t h e f a t h e r ' s removal of t h e son from t h e v i c e p r e s i d e n c y ; r e s t r a i n i n g a p p e l l a n t s from s p e c i f i e d a c t i v i t i e s r e l a t e d t o t h e c o r p o r a t i o n and awarding c o s t s a g a i n s t appellants. I n a cross-appeal, r e s p o n d e n t a s k s r e v e r s a l of a p a r t of t h e judgment t h a t d i r e c t s a l l p a r t i e s t o c a r r y o u t a r e t i r e m e n t p l a n f o r a p p e l l a n t Thor Myhre approved by t h e company board o f d i r e c t o r s . The c o u r t found t h a t Myhre A d v e r t i s i n g was a Montana c o r p o r a t i o n , t h e s t o c k ownership of which was l a r g e l y i n t h e Myhre family. On J u l y 1, 1968, a p p e l l a n t s had a n argument i n t h e i r B i l l i n g s home. H e a c c u s e d h e r of m a r r y i n g him f o r h i s money. Angered and c o n f u s e d a s t o h e r own i n t e n t i o n s w i t h r e g a r d t o t h e t r a n s f e r o f ownership, s h e t o o k c e r t i f i c a t e No. 1 0 of t h e c o r p o r a t i o n , r e p r e s e n t i n g 108 s h a r e s of s t o c k , from t h e f a m i l y s a f e , endorsed it o v e r t o him and handed i t t o him. H e l a i d it on a nearby t a b l e and a p p a r e n t l y d i d n o t g i v e t h e m a t t e r f u r t h e r consideration a t that t i m e . A few d a y s l a t e r s h e r e t u r n e d t h e c e r t i f i c a t e t o t h e f a m i l y s a f e , where i t remained u n t i l December 3 0 , 1970. H e d i d n o t p r e s e n t t h e c e r t i f i c a t e f o r t r a n s f e r on t h e c o r p o r a t i o n books, nor d i d he a s k h i s w i f e , a s c o r p o r a t i o n s e c r e t a r y , t o do s o . N consideration w a s tendered o r accepted o f o r t h e endorsement. N f e d e r a l g i f t t a x r e t u r n was f i l e d w i t h o r e s p e c t t o t h e purported t r a n s f e r . The c o r p o r a t e r e c o r d s show a c a n c e l l a t i o n of t h e c e r t i f i c a t e on December 30, 1970, and t h e t r a n s f e r of t h e 108 s h a r e s of s t o c k , by new c e r t i f i c a t e s , t o a p p e l l a n t s ' f o u r c h i l d r e n and t o M r s . Myhre, who r e c e i v e d a c e r t i f i c a t e f o r 38 s h a r e s . The f a c e of c e r t i f i c a t e No. 1 0 , which r e m a i n s i n t h e c o r p o r a t e r e c o r d s , shows M r s . Myhre's n o t a t i o n : The word " C a n c e l l e d " , w i t h o u t d a t e , i s " C a n c e l l e d 12/30/70." w r i t t e n a c r o s s t h e endorsement t o Thor Myhre on t h e r e v e r s e s i d e . A p p e l l a n t s made g i f t t a x r e t u r n s showing t h e t r a n s f e r s t o t h e c h i l d r e n i n t h e c a l e n d a r y e a r 1970. The c o r p o r a t e r e c o r d s be- tween December 30, 1970, and J u n e 6 , 1974, r e f l e c t t h e t r a n s f e r made on t h e former d a t e . The m i n u t e s of s u b s e q u e n t s t o c k h o l d e r s ' m e e t i n g s , s i g n e d by b o t h a p p e l l a n t s , show s t o c k o w n e r s h i p , f o r v o t i n g p u r p o s e s , based on t h e 1970 t r a n s f e r . A t t h e i r J u l y 3 , 1972 m e e t i n g , t h e board o f d i r e c t o r s d i s c u s s e d and approved " t h e l e g a l i n t e n t " of a f u t u r e compensat i o n and r e t i r e m e n t p l a n f o r Thor Myhre. The p e r t i n e n t f a c t s a s d i s c l o s e d by t h e r e c o r d w i l l be more f u l l y d e t a i l e d a t a l a t e r point i n t h i s opinion. On A p r i l 30, 1973, p l a i n t i f f and h i s mother, t h e a p p e l l a n t G e r t r u d e Myhre, s i g n e d a n o p t i o n agreement wherein s h e a g r e e d t o t r a n s f e r t o him 407 s h a r e s of t h e c o r p o r a t i o n ' s s t o c k upon h i s e x e r c i s e of t h e o p t i o n . The s i g n i n g was i n t h e p r e s e n c e o f h e r a t t o r n e y , who n o t a r i z e d it J u n e 30, 1973. On J u l y 11, 1973, t h e a t t o r n e y , who had r e t a i n e d p o s s e s s i o n of t h e document, d e l i v e r e d it t o t h e p l a i n t i f f , having been a u t h o r i z e d t o do s o by G e r t r u d e , who had r e c e i v e d v a l u a b l e c o n s i d e r a t i o n i n t h e form of a $50 payment from p l a i n t i f f . A t t h e t i m e s h e s i g n e d t h e agreement and had i t d e l i v e r e d s h e was f u l l y knowledgeable a s t o i t s p r o v i s i o n s . She had c o n f e r r e d w i t h a banker a b o u t some of i t s p r i n c i p l e terms. She had a l s o c o n f e r r e d w i t h h e r l a w y e r . She was f u l l y competent m e n t a l l y and a c t e d w i t h o u t r e s e r v a t i o n , h e s i t a t i o n o r question. There was no showing o f undue i n f l u e n c e o r d u r e s s . On August 1, 1973, Thor f i l e d f o r a d i v o r c e from G e r t r u d e . On December 11, 1973, d u r i n g t h e pendency of t h e d i v o r c e proc e e d i n g s and t h r e e y e a r s a f t e r t h e c a n c e l l a t i o n of c e r t i f i c a t e No. 1 0 and t h e d i s t r i b u t i o n of t h e 108 s h a r e s r e p r e s e n t e d t h e r e b y , Thor made w r i t t e n demand upon G e r t r u d e f o r t h e t r a n s f e r t o him of t h e 108 s h a r e s on t h e b a s i s of t h e 1968 endorsement. Gertrude's a t t o r n e y a d v i s e d h e r t h e p u r p o r t e d t r a n s f e r by endorsement w a s i n v a l i d and u n e n f o r c e a b l e . The demand was r e j e c t e d . May 29, 30 and 31, 1974, w e r e busy d a y s f o r t h e Myhre's. On May 29, E r i c , t h r o u g h c o u n s e l , w r o t e G e r t r u d e ' s a t t o r n e y a l e t t e r , w i t h a copy t o G e r t r u d e , a d v i s i n g h e e x e r c i s e d h i s o p t i o n t o p u r c h a s e 4 0 7 s h a r e s of company s t o c k and e n c l o s e d a c a s h i e r ' s check f o r $5,000 and a p r o m i s s o r y n o t e f o r t h e b a l a n c e , a l l i n a c c o r d a n c e w i t h t h e A p r i l 30, 1973, agreement. Gertrude's a t t o r - ney r e c e i v e d t h e s e documents t h e f o l l o w i n g day and G e r t r u d e rec e i v e d h e r copy on t h e 3 1 s t . On t h e 3 0 t h t h e a p p e l l a n t s had m e t w i t h o u t c o u n s e l and a g r e e d i n w r i t i n g t o t h e t r a n s f e r by G e r t r u d e of 108 of h e r s h a r e s i n t h e company t o Thor a s p a r t of t h e d i v o r c e p r o p e r t y s e t t l e m e n t agreement, and Thor had a g r e e d t o h o l d h e r h a r m l e s s f o r any s u i t s o r a c t i o n s a r i s i n g o u t of t h e t r a n s f e r . The agreement was e f f e c t u a t e d on J u n e 6 , 1974, s i x d a y s a f t e r G e r t r u d e had r e c e i v e d n o t i c e of E r i c ' s e x e r c i s e o f h i s o p t i o n , by c a n c e l l a t i o n of s t o c k c e r t i f i c a t e No. 3 , h e l d by G e r t r u d e and r e p r e s e n t i n g 407 s h a r e s ( t h e e x a c t number f o r which E r i c h e l d a n o p t i o n t o p u r c h a s e ) and i s s u a n c e o f two new c e r t i f i c a t e s : No. 3 3 f o r 108 s h a r e s t o Thor and No. 34 f o r 299 s h a r e s t o G e r t r u d e . The t r a n s f e r w a s made on t h e c o r p o r a t e books t h e same d a y , J u n e 6 t h , and t h e new c e r t i f i c a t e s w e r e s i g n e d by Thor and Gertrude a s corporate o f f i c e r s . A t t h e t i m e of t h e t r a n s f e r agreement and i t s implementation b o t h a p p e l l a n t s w e r e aware of t h e s t o c k o p t i o n agreement and t h a t t h e t r a n s f e r made i t imposs i b l e f o r Gertrude t o c a r r y it o u t . A t a l l t i m e s s i n c e May 29, 1974, E r i c h a s o f f e r e d t o c a r r y o u t h i s p a r t of t h e o p t i o n a g r e e ment and G e r t r u d e h a s r e f u s e d t o c a r r y o u t h e r s . The 407 s h a r e s of s t o c k w i t h h e l d by G e r t r u d e , t o g e t h e r w i t h o t h e r s h a r e s he now h o l d s , would g i v e E r i c o v e r 51 p e r c e n t o f t h e c o r p o r a t i o n ' s stock, o r e f f e c t i v e stockholder control. On October 23, 1974, Thor, b e i n g p r e s i d e n t o f t h e company, f i r e d E r i c a s a n employee, removed him from h i s d u t i e s and c u t and f i n a l l y e l i m i n a t e d h i s s a l a r y and p e r q u i s i t e s . Eric a t t h a t t i m e was a l s o a n o f f i c e r o f t h e company, a v i c e p r e s i d e n t , and t h e company bylaws p r o v i d e t h a t o f f i c e r s o r a g e n t s may be removed by board a c t i o n o n l y . I n d i s m i s s i n g E r i c , Thor a c t e d on h i s own and w i t h o u t any o f f i c i a l a c t i o n on t h e p a r t o f t h e b o a r d . These f a c t s g i v e r i s e t o s e v e r a l p r i n c i p a l q u e s t i o n s , t h e f i r s t of which i s whether t h e p u r p o r t e d 1968 t r a n s f e r of 108 s h a r e s of company s t o c k from G e r t r u d e t o Thor Myhre was v a l i d and e n f o r c e a b l e . A l l p a r t i e s r e c i t e Baird v. B a i r d , 125 Mont. 1 2 2 , 134, 232 P.2d 348, a s t h e i r r e s p e c t i v e g o s p e l s and a g r e e i t l a y s t h e ground r u l e s f o r o u r c o n s i d e r a t i o n . That c a s e h o l d s , i n t e r a l i a , t h a t a t r a n s f e r between s p o u s e s i s presumed t o be a g i f t , absent consideration. I t i s s a i d t h e r e t h a t t o overcome t h e presumption t h e e v i d e n c e must be and p r a c t i c a l l y f r e e from d o u b t . * * " *I' * * * F i n a l l y , t h e c a s e sets f o r t h t h e horn-book r e q u i r e m e n t s f o r a g i f t : i n t e n t and a c c e p t a n c e . 210, c l e a r , convincing delivery, donative ( S e e a l s o D e t r a v . B a r t o l e t t i , 150 Mont. 433 P.2d 485.) The t e s t i m o n y g i v e n a t t r i a l l e a v e s l i t t l e d o u b t t h a t t h e r e was p h y s i c a l d e l i v e r y and a c c e p t a n c e . G e r t r u d e endorsed c e r t i f i c a t e No. 1 0 , handed it t o Thor and he t o o k it i n t o h i s hand. But what of t h e accompanying d o n a t i v e i n t e n t ? The ex- p e r t on t h i s m a t t e r s h o u l d be t h e p u r p o r t e d d o n o r , G e r t r u d e . Her p i v o t a l t e s t i m o n y l e f t t h e matter i n s e r i o u s d o u b t : And what d i d you do w i t h t h e c e r t i f i c a t e a t t h a t t i m e , t h a t i s , when you had it i n your p h y s i c a l p o s s e s s i o n ? A. I s i g n e d it on t h e back, o v e r t o him, and g a v e i t t o him. "Q. "Q. And by ' o v e r t o him, ' d i d you show him a s a s s i g n e e of t h a t s t o c k ? A. Yes. "Q. And w i l l you t e l l u s what your p u r p o s e was a t t h a t time i n g i v i n g it t o him? A. W e l l , we had had a n argument, and I was mad. "Q. I s it f a i r t o s a y t h a t you wanted t o s e t t l e a bone o f c o n t e n t i o n a s between t h e two o f you Oh, a t t h a t p o i n t , by g i v i n g him t h e s t o c k ? A. I d o n ' t r e a l l y know. I t was j u s t a n argument, and i t was a s p u r o f t h e moment t h i n g t h a t I d i d , when I was j u s t mad. "Q. Were you t r y i n g t o make p e a c e w i t h him? You might s a y t h a t . A. "Q. And w a s i t your i n t e n t i o n a t t h a t t i m e t o g i v e him a b s o l u t e l y and c o m p l e t e l y t h e ownership Well, I d o n ' t of S t o c k C e r t i f i c a t e No. l o ? A. know. A s I s a y , I j u s t d i d i t w a s a s p u r o f t h e moment k i n d of t h i n g , and a r g u m e n t a t i v e manner, and I d i d i t , and I j u s t f o r g o t a b o u t i t a f t e r wards. "Q. You d i d , i n e f f e c t , d e l i v e r t h e s t o c k t o Yes. him, i s t h a t r i g h t ? A. "Q. You s i g n e d it o v e r t o him, and you d e l i v e r e d it t o him? A. Yes, I d i d . " ~ u st b s e q u e n t o c c u r r e n c e s u n q u e s t i o n a b l y g a v e t h e c o u r t subu s t a n t i a l grounds f o r c o n c l u d i n g t h a t t h e presumption was overthrown c l e a r l y , c o n v i n c i n g l y and p r a c t i c a l l y f r e e from d o u b t . i s p a r t i c u l a r l y compelling. One f a c t Two and a h a l f y e a r s a f t e r t h e pur- p o r t e d t r a n s f e r of c e r t i f i c a t e No. 1 0 t o Thor Myhre, t h a t c e r t i f i c a t e was c a n c e l l e d on i t s f a c e and on t h e books of t h e c o r p o r a t i o n and f i v e new c e r t i f i c a t e s r e p r e s e n t i n g t h e same 108 s h a r e s of s t o c k were i s s u e d t o t h e f o u r c h i l d r e n (70 s h a r e s i n a l l ) and t o M r s . Myhre (38 s h a r e s ) . One m i g h t d i s c o u n t t h i s on t h e g r o u n d s , urged by a p p e l l a n t s , t h a t M r s . Myhre k e p t t h e c o r p o r a t e r e c o r d s and Thor Myhre was n o t aware of them. However, on t h e same d a y , Thor Myhre's c e r t i f i c a t e No. 11, r e p r e s e n t i n g 109 s h a r e s was s i m i l a r l y c a n c e l l e d and new c e r t i f i c a t e s w e r e i s s u e d i n t h e same manner t o t h e c h i l d r e n and Thor Myhre. This, together w i t h t h e s u b s e q u e n t f i l i n g of j o i n t g i f t t a x r e t u r n s and t h e v o t i n g of t h e s t o c k i n a c c o r d a n c e w i t h t h e new d i s t r i b u t i o n , i s highly persuasive evidence t h a t both a p p e l l a n t s understood t h e J u l y 1, 1968, t r a n s a c t i o n w a s a n u l l i t y f o r l a c k of any r e a l i n t e n t i o n on t h e p a r t of e i t h e r t h a t t i t l e was t o p a s s . There being s u b s t a n t i a l evidence t o support t h e determination of t h e c o u r t t h a t t h e p u r p o r t e d g i f t was i n c o m p l e t e , we must s u s t a i n t h a t determination. The second p r i n c i p a l q u e s t i o n i s whether t h e o p t i o n a g r e e ment of A p r i l 30, 1973, between E r i c and h i s mother, G e r t r u d e , f o r t h e t r a n s f e r o f 407 o f h e r s h a r e s o f company s t o c k i s v a l i d and e n f o r c e a b l e by s p e c i f i c performance. The f a c t s i n t h i s r e - g a r d , s e t o u t above, l e a v e l i t t l e room f o r d o u b t t h a t t h e r e was a v a l i d , s u b s i s t i n g c o n t r a c t a t t h e i n c e p t i o n ; E r i c performed a c c o r d i n g t o t h e t e r m s of t h e c o n t r a c t , and h i s mother r e f u s e d to. The r e q u i r e m e n t s of b a s i c c o n t r a c t law were m e t , t h e r e was mutual a s s e n t , o r t h e "meeting of minds", and c o n s i d e r a t i o n . There were t h r e e c o n d i t i o n s i n t h e o p t i o n : a n n u a l payments, w r i t t e n n o t i c e o f a c c e p t a n c e , and t e n d e r of a s p e c i f i e d down payment w i t h i n a s e t t i m e . A11 conditions w e r e s a t i s f a c t o r i l y m e t , i n s o f a r a s E r i c was a b l e t o do s o . was made. The f i r s t a n n u a l payment I t became f u t i l e t o make a d d i t i o n a l a n n u a l payments when G e r t r u d e r e f u s e d t o perform. The o r i g i n a l n o t i c e of accep- t a n c e was s e n t t o G e r t r u d e ' s a t t o r n e y , who s h o u l d be viewed as h e r a g e n t , and a copy went t o G e r t r u d e ; t h e s p e c i f i e d down payment w a s not only tendered but accepted within t h e required t i m e . I n s u b s e q u e n t a c t i o n s and a p p e a r a n c e s b e f o r e t h i s C o u r t , w e have been made aware o f t h e f a c t t h a t s u b s e q u e n t t o t h i s a p p e a l G e r t r u d e h a s now c o n f i r m e d and a c t e d on t h e o p t i o n a g r e e ment t o E r i c . A p p e l l a n t s u r g e f i v e grounds f o r i n v a l i d i t y a r e : i n £luence, (2) unconscionability, (1) undue (3) i m p o s s i b i l i t y due t o a r e s t r a i n i n g order issued i n connection with t h e divorce, (4) E r i c ' s l a c k of s u f f i c i e n t f u n d s t o c a r r y o u t t h e c o n t r a c t , and ( 5 ) G e r t r u d e ' s i n a b i l i t y t o d e l i v e r b e c a u s e o f t h e 1968 t r a n s f e r o f 108 s h a r e s of s t o c k t o Thor. A l l lack m e r i t . Grounds (1) and ( 2 ) a r e n o t c l e a r l y s u p p o r t e d by t h e r e c o r d and t h e d i s t r i c t c o u r t had ample s u b s t a n t i a l e v i d e n c e t o a r r i v e a t a c o n t r a r y conclusion. The r e s t r a i n i n g o r d e r m i g h t have i n h i b i t e d t h e t r a n s f e r d u r i n g t h e pendency o f t h e d i v o r c e , b u t i t c o u l d n o t p r o h i b i t G e r t r u d e from e n t e r i n g i n t o t h e o p t i o n a g r e e m e n t , n o r from t r a n s f e r r i n g t h e o p t i o n e d s t o c k o n c e t h e r e s t r a i n i n g o r d e r was l i f t e d . The l a c k o f f u n d s argument was n o t p r o v e n f a c t u a l l y , n o r c a n it b e s u s t a i n e d l e g a l l y a s a r e a s o n f o r r e f u s a l t o p e r form on a c o n t r a c t , u n l e s s s u c h l a c k o f f u n d s r e s u l t s i n a c t u a l nonperformance. F i n a l l y , w e have c o n c l u d e d above, a s t h e d i s t r i c t c o u r t d i d , t h a t t h e p u r p o r t e d t r a n s f e r o f 108 s h a r e s i n 1968 w a s invalid. F u r t h e r m o r e , even i f t h e t r a n s f e r was v a l i d , it would n o t r e l i e v e G e r t r u d e o f h e r l i a b i l i t y t o t r a n s f e r a s many s h a r e s a s s h e c o u l d i n f u l f i l l m e n t o f t h e o p t i o n agreement. A s p o i n t e d o u t by d e f e n d a n t s , t h e g r a n t i n g of s p e c i f i c performance i s d i s c r e t i o n a r y w i t h t h e c o u r t . E n g e l , 58 Mont. 597, 194 P . 137. S e e Babcock v . The d i s t r i c t c o u r t h a s o r d e r e d s p e c i f i c performance o f t h e o p t i o n agreement a n d , b a s e d on t h e f a c t s i n t h i s c a s e , w e f i n d no a b u s e o f d i s c r e t i o n . Clearly the awarding of damages would not have been appropriate because they would not have been ascertainable without the wildest speculation. The stock in question had no recognized market value. Its value will depend on the performance of the company in a highly competitive field. Acquisition of the stock will, it appears, give Eric Myhre operating control of the company. This is a highly intangible factor contingent upon innumerable and indeterminate events. Given these circumstances, or lack of definable circumstances, it would seem to have been an abuse of discretion on the part of the court to fail to decree specific performance. To implement the specific performance decree, the district court, at its own instance, directed Eric to deliver an executed agreement pledging the stock to be received under the option as security for full payment of the agreed-upon stock price. No ob- jection to this requirement was raised on appeal, it was within the court's equitable powers to establish it, and it would appear to be an effective way to assure performance on the part of the plaintiff. To further implement its specific performance order, the court also ordered Thor Myhre to do whatever was necessary to transfer back to Gertrude the 108 shares of company stock he acquired from her in the divorce settlement agreement of May 30, 1974. This would enable her to fulfill her commitment under the option agreement. Including Thor Myhre in the specific perform- ance order seems appropriate in view of his involvement in the transaction calling forth the order. His inclusion seems to have legal sanction for two reasons: First, he knew of Gertrude's commitment under the option at the time the transfer was made to him. He knew that she could not meet that commitment without at least part of the 108 shares he had acquired from her. The b o a r d , t h a t r a n from May I , 1973 t o A p r i l 3 0 , 1974, b u t t h e r e i s no e v i d e n c e o f r e n e w a l . I n h i s l e t t e r d i s m i s s i n g E r i c from employment by t h e c o r p o r a t i o n , Thor made it c l e a r he w a s n o t a t t e m p t i n g t o a l t e r E r i c ' s s t a t u s a s e i t h e r a v i c e p r e s i d e n t o r a member o f t h e There i s no e v i d e n c e o f a w r i t t e n c o n t r a c t o r agreement board. between E r i c and t h e board a s t o E r i c ' s employment by t h e company. U n c o n t r a d i c t e d t e s t i m o n y and p l e a d i n g s by E r i c e s t a b l i s h he d i d n o t r e c e i v e any compensation a s v i c e p r e s i d e n t o r d i r e c t o r ; he was employed a s manager of t h e G r e a t F a l l s o f f i c e and i n t h e y e a r 1974 h i s s a l a r y w a s i n c r e a s e d by Thor w i t h o u t board a c t i o n . The whole r e c o r d shows t h i s was a c l o s e l y h e l d f a m i l y c o r p o r a t i o n w i t h Thor a c t i n g a s head of t h e c o r p o r a t i o n a s w e l l a s t h e f a m i l y and c a r r y i n g on t h e c o r p o r a t e o p e r a t i o n s p r e t t y much a s h e wished with t h e approval of t h e board. F i n a l l y , t h e owners o f a major- i t y of t h e s t o c k w e r e aware of T h o r ' s move, b o t h b e f o r e and a f t e r it w a s made, and t h e y r a t i f i e d it a t t h e n e x t board of d i r e c t o r s meeting. W e c o n c l u d e from t h i s t h a t E r i c wore t h r e e h a t s v i v - a - v i s the corporation: he was a d i r e c t o r , a n o f f i c e r and a n employee. ( A s t o d i v i s i b i l i t y o f s t a t u s , see 2 F l e t c h e r C y c l o p e d i a C o r p o r a t i o n s , S e c t i o n 2 6 6 , p. 1 5 , PermEd., 1969. H e w a s d i s c h a r g e d a s a n em- p l o y e e and n o t a s d i r e c t o r o r o f f i c e r . A s a n employee, h e had no e n f o r c e a b l e c o n t r a c t of employment w i t h t h e board. A s presi- d e n t , a c t i n g f o r t h e chairman of t h e b o a r d , Thor Myhre had a u t h o r i t y t o h i r e and f i r e employees. H i s dismissal of E r i c w a s i n f o r m a l l y approved a t t h e t i m e by d i r e c t o r s w i t h c o n t r o l of a m a j o r i t y of t h e c o r p o r a t i o n ' s s t o c k and f o r m a l l y r a t i f i e d a t t h e n e x t meeting of t h e board of d i r e c t o r s . Where t h e d i r e c t o r s of a c o r p o r a t i o n a r e t h e o n l y s t o c k h o l d e r s , t h e y may a c t f o r t h e c o r p o r a t i o n w i t h o u t f o r m a l m e e t i n g s . Formal m e e t i n g s c a n a l s o be waived by custom o r g e n e r a l c o n s e n t , r u l e seems t o be t h a t one who a c q u i r e s o r p u r c h a s e s p r o p e r t y , knowing t h a t t h e p r o p e r t y i s s u b j e c t t o a c o n t r a c t t o be s o l d t o a n o t h e r , may be compelled t o perform t h e c o n t r a c t i n t h e same manner and t o t h e same e x t e n t a s h i s g r a n t o r would have been l i a b l e t o do had t h e g r a n t o r n o t made t h e t r a n s f e r t o him. Moore v. Crawford, 130 U.S. 122, 32 L.Ed. 7 1 Am J u r 2d S p e c i f i c Performance. 878, 9 S.Ct. 447; Second, a s n o t e d above, t h e t r a n s f e r agreement p r o v i d e d E r i c would s a v e G e r t r u d e harm- less from any a c t i o n t h a t m i g h t a r i s e a s a r e s u l t of t h e a g r e e ment. This i s t h a t action. I t d o e s n o t a p p e a r from t h e f a c t s t h a t it would be n e c e s s a r y t o t r a n s f e r t h e e n t i r e 108 s h a r e s back t o G e r t r u d e Myhre i n o r d e r t o f u l f i l l h e r commitment t o d e l i v e r 407 s h a r e s under t h e o p t i o n . She had, i n a d d i t i o n t o t h e 407 s h a r e s i n c e r t i f i c a t e No. 3, a t l e a s t 3 8 s h a r e s from t h e d i s t r i b u t i o n of c e r t i f i c a t e No. 1 0 on December 30, 1970. ( S e e above.) Thus, it would seem t h e o r d e r o f t h e d i s t r i c t c o u r t s h o u l d b e modif i e d t o d i r e c t Thor Myhre t o r e t u r n t o G e r t r u d e Myhre a s u f f i c i e n t number of s h a r e s o f company s t o c k t o meet h e r commitment u n d e r t h e o p t i o n agreement w i t h E r i c Myhre. The d i s t r i c t c o u r t h e l d , a s a matter o f law, t h a t t h e p l a i n t i f f , E r i c Myhre, c o u l d b e r e l i e v e d o f h i s d u t i e s and s a l a r y from t h e c o r p o r a t i o n o n l y by a c t i o n o f t h e Board o f d i r e c t o r s , t h a t t h e bylaws o f t h e c o r p o r a t i o n e s t a b l i s h a c o n t r a c t u r a l r e l a t i o n s h i p between t h e o f f i c e r and t h e c o r p o r a t i o n , and t h a t Thor Myhre w r o n g f u l l y removed E r i c h i s o f f i c e i n c h a r g e of s a l e s " * * * from t h e d u t i e s o f * * *." On t h i s b a s i s , t h e c o u r t awarded damages a g a i n s t Thor Myhre f o r E r i c ' s l o s s o f wages and and permanently e n j o i n e d Thor from removing E r i c " * * * from t h e d u t i e s of h i s o f f i c e and p o s i t i o n a s v i c e p r e s i d e n t i n c h a r g e of s a l e s * * *." When Thor f i r e d E r i c on October 23, 1974, h e was p r e s i d e n t of t h e c o r p o r a t i o n , having been e l e c t e d a s such a t t h e J u l y 2 , 1974 board of d i r e c t o r s m e e t i n g . A t t h e same m e e t i n g , t h e board had adopted new bylaws, which p r o v i d e d f o r a chairman of t h e board who was t o be t h e p r i n c i p a l e x e c u t i v e o f f i c e r of t h e c o r p o r a t i o n and e x e r c i s e g e n e r a l s u p e r v i s i o n and c o n t r o l o v e r a l l t h e b u s i n e s s a f f a i r s of t h e c o r p o r a t i o n . The new bylaws made t h e p r e s i d e n t t h e p r i n c i p a l o p e r a t i o n o f f i c e r o f t h e c o r p o r a t i o n who was t o e x e r c i s e g e n e r a l o p e r a t i o n a l c o n t r o l of t h e day-to-day b u s i n e s s and a f f a i r s of t h e c o r p o r a t i o n . They f u r t h e r provided : " I n t h e a b s e n c e of t h e chairman of t h e board of d i r e c t o r s , o r i n t h e e v e n t of t h e d e a t h o f s a i d chairman, o r i n a b i l i t y and r e f u s a l t o a c t , t h e p r e s i d e n t s h a l l perform t h e d u t i e s of s a i d c h a i r man, and when s o a c t i n g s h a l l have a l l of t h e powers of and be s u b j e c t t o a l l o f t h e r e s t r i c t i o n s upon s a i d chairman." A t t h e same m e e t i n g , t h e board had v o t e d t o l e a v e t h e o f f i c e o f t h e chairman of t h e board v a c a n t u n t i l t h e n e x t a n n u a l m e e t i n g of t h e board. Thus, under t h e new bylaws and a s a r e s u l t o f t h e a c t i o n of t h e board a t t h e 1974 m e e t i n g , Thor Myhre had, on October 2 3 , 1974, f u l l e x e c u t i v e a u t h o r i t y t o r u n t h e company a s b o t h chairman and p r e s i d e n t . The new bylaws a l s o p r o v i d e d f o r "one o r more" v i c e p r e s i d e n t s and d i d n o t s p e c i f y any p a r t i c u l a r d u t i e s f o r them o t h e r t h a n s t a n d i n g i n f o r t h e p r e s i d e n t i n h i s a b s e n c e and "such o t h e r d u t i e s a s from t i m e t o t i m e may be a s s i g n e d " by t h e chairman of t h e b o a r d , by t h e p r e s i d e n t o r by t h e board of d i r e c t o r s . The b o a r d , a t t h e 1974 m e e t i n g , e l e c t e d o n e v i c e p r e s i d e n t E r i c Myhre, w i t h o u t any f u r t h e r t i t l e s p e c i f i c a t i o n o r a s s i g n m e n t o f duty. The m i n u t e s of t h a t meeting i n c l u d e t h e f o l l o w i n g e n t r y : "Action on t h e employment c o n t r a c t and comp e n s a t i o n p l a n of E r i c Myhre w a s d e l a y e d u n t i l a f u t u r e meeting." There had been a n employment compensation p l a n , approved by t h e which seems t o have been t h e c a s e w i t h t h e Myhre c o r p o r a t i o n . See 2 F l e t c h e r Cyclopedia C o r p o r a t i o n s , S e c t i o n 394 a t pp. 236, 237 and d i s c u s s i o n and c a s e s 1 9 Am J u r 2d C o r p o r a t i o n s , 55 1 1 2 1 and 1122. F o r t h e above r e a s o n s , t h e award o f damages t o t h e p l a i n t i f f should b e s e t a s i d e , a s s h o u l d t h e i n j u n c t i o n a g a i n s t removal o f E r i c from employment. Turning now t o t h e c r o s s - a p p e a l of E r i c , t h e m i n u t e s of t h e J u l y 3 , 1972, a n n u a l m e e t i n g o f t h e c o r p o r a t i o n ' s board of directors includes t h i s entry: "A compensation p l a n w a s d i s c u s s e d a t g r e a t l e n g t h f o r t h e p r e s e n t P r e s i d e n t , Thor Myhre. I t w a s moved by Harry B a t t y and seconded by Fred Marble t h a t t h e d i r e c t o r s approve t h e l e g a l i n t e n t of t h i s p l a n . "The p l a n i s t o be d r a f t e d i n l e g a l form and s u b m i t t e d t o t h e Board of D i r e c t o r s f o r s t u d y . The b a s i c p l a n t o be: From May 1, 1972 t o A p r i l 30, 1975 Thor Myhre w i l l r e c e i v e $36,000.00 annually. From May 1, 1975 t o A p r i l 30, 1980, a s Chairman o f t h e Board h e w i l l r e c e i v e $30,000.00 a n n u a l l y , a s compensation from May 1, 1980 u n t i l h i s d e a t h , Thor Myhre w i l l r e c e i v e $20,000.00 a n n u a l l y and i n c a s e o f h i s d e a t h G e r t r u d e Myhre, h i s widow, w i l l r e c e i v e $20,000.00 a n n u a l l y u n t i l her re-marriage o r death." ( T h i s C o u r t h a s added t h e comma between t h e words "$30,000.00 a n n u a l l y " and " a s compensation" i n o r d e r t o make t h e second paragraph comprehensible, both p a r t i e s agreeing t h a t i t s omission was a c l e r i c a l e r r o r . ) The d i s t r i c t c o u r t ' s judgment d i r e c t e d : "That t h e p l a n o f r e t i r e m e n t approved by t h e Board o f D i r e c t o r s o f Myhre A d v e r t i s i n g i n i t s Annual Meeting of 1972, be a d h e r e d t o by a l l p a r t i e s t o t h i s a c t i o n w h i l e a c t i n g as s t o c k h o l d e r s , d i r e c t o r s and o f f i c e r s o f s a i d c o r p o r ation. " A t t h e t i m e o f t h e 1972 board m e e t i n g , the corporation's bylaws c a l l e d f o r a n n u a l m e e t i n g s o f s t o c k h o l d e r s t o e l e c t d i r e c tors. D i r e c t o r s h e l d o f f i c e u n t i l t h e n e x t a n n u a l meeting. Of- f i c e r s w e r e t o be e l e c t e d a n n u a l l y by t h e board a t a m e e t i n g h e l d immediately after the stockholder's meeting. office until their successors were elected. Officers held Officers could be removed by the board at any time. At the next annual meeting, on July 2, 1973, the so-called employment contract was discussed again and it was resolved to analyze the plan as proposed (apparently the draft called for in the 1972 resolution) and a report be made on it at the next meeting. At the next meeting on August 27, 1973, a plan for Thor Myhre's employment contract was tabled after Thor objected it did not conform to the principles for the plan approved in 1972. At the next meeting, on January 30, 1974, a member of the board presented a resolution for study which resolution stated the corporation had an employment agreement with Thor Myhre under consideration. At its annual meeting in July, 1974, action was delayed by the board on the employment contract "until a future meeting. " The basic plan, approved by the board in 1972, was beyond the powers of the board. It made him chairman of the board for five years and set his annual compensation for his service as such. Even though the bylaws at that time did not provide for a chairman of the board, the board could have created that position because they were authorized to elect or appoint "Such other officers and assistant officers as may be deemed necessary * * *." And we see no obstacle in the bylaws as they then existed to the board setting a compensation plan for a period longer than a year. But clearly the bylaws did not permit them to elect an officer to serve between 1975 and 1980 by a resolution of the board in 1972. Thus, even if the plan had been adopted, it could not be carried out by the board over the objection of any stockholder. Nor can the plan be enforced on a contractual basis. The minutes of subsequent meetings all too vividly reveal the board n e v e r a g r e e d on t h e d e t a i l s o f t h e p l a n , much l e s s d i d t h e y r a t i f y o r approve o f any p a r t i c u l a r p l a n o r t h e d e t a i l s t h e r e o f . Equity can enforce c o n t r a c t s b u t n o t i d e a s f o r c o n t r a c t s . Equity c a n e n f o r c e p r o v i s i o n s of c o n t r a c t s b u t it c a n n o t s u p p l y them. Even i f t h e 1972 r e s o l u t i o n c o u l d be c a l l e d a n agreement t o a g r e e , e q u i t y c a n n o t be c a l l e d upon t o d r a f t t h e agreement and t o e x e c u t e it f o r t h e p a r t i e s . While t h e r e a p p e a r t o be numerous and most c o m p e l l i n g e q u i t a b l e r e a s o n s f o r t h e awarding of a j o b s e c u r i t y and r e t i r e m e n t p l a n f o r Thor Myhre, a p p a r e n t l y t h e c h i e f a r c h i t e c t and b u i l d e r o f t h e company, t h e r e a r e v e r y d i s t i n c t l i m i t s on t h e e q u i t a b l e powers of t h e c o u r t s , and t h e judgment o f t h e d i s t r i c t Its order with regard t o t h e retirement plan c o u r t e x c e e d s them. must be r e v e r s e d . p. 2 F l e t c h e r C y c l o p e d i a C o r p o r a t i o n s , B 392 a t 227 (Perm. Ed. 1 9 6 9 ) ; E l e c t r i c a l P r o d u c t s C o n s o l i d a t e d v. E l Campo, I n c . , 105 Mont. 386, 73 P.2d 199; 1 C o r b i n C o n t r a c t s , B 29, pp. 84, 85; 1 W i l l i s t o n on C o n t r a c t s , 3 r d Ed, S e c t i o n 45; E s s e l y s t y n v . Meyer Phillips & & Chapman S t a t e Bk., E a s t o n Sup. Co., 63 Mont. 461, 208 P. 910; I n c . v. E l e a n o r I n t e r n a t ' l , I n c . , Kan. 730, 512 P.2d 379, 383; 27 Am J u r 2d, E q u i t y , 5 7 0 , p. 212 593; Autry v. Republic P r o d u c t i o n s , 30 Cal.2d 1 4 4 , 180 P.2d 888, 893; T h i s t e d v . Tower Management Corp., 147 Mont. 1, 409 P.2d 813. The d i s t r i c t c o u r t judgment i n c l u d e s a n o r d e r r e s t r a i n i n g d e f e n d a n t s from ( a ) t r a n s f e r r i n g o r encumbering c o r p o r a t i o n stock, (b) spending c o r p o r a t e funds f o r noncorporate purposes, ( c ) s e t t i n g new s a l a r i e s , ( d ) a l t e r i n g , amending o r c h a n g i n g t h e c o r p o r a t e r e c o r d s , and ( e ) d i s p o s i n g of c o r p o r a t e a s s e t s e x c e p t i n t h e r e g u l a r c o u r s e o f company b u s i n e s s . This i s very strong e q u i t a b l e m e d i c i n e t o a p p l y t o a g o i n g c o n c e r n , even though cond i t i o n s i n t h e f i r m a r e a c u t e l y a g g r a v a t e d and u n s t a b l e , a s s e e m s t o be t h e c a s e h e r e . I n any e v e n t , t h e t i m e h a s come t o release t h e s e c o n s t r a i n t s , and t h e d i s t r i c t c o u r t s h o u l d d o s o w i t h o u t delay. A p p e l l a n t s o b j e c t on t e c h n i c a l grounds t o t h e a s s e s s m e n t of c o s t s a g a i n s t them. W e a f f i r m t h e judgment of t h e d i s t r i c t c o u r t i n t h i s regard. The c a u s e i s remanded t o t h e d i s t r i c t c o u r t f o r f u r t h e r proceedings i n accordance w i t h t h i s opinion. c-** Hon. Gordon B e n n e t t , D i s t r i c t J u d g e , s i t t i n g i n p l a c e of M r . J u s t i c e John C. H a r r i s o n . / (#hie£ J u s t i c e _----_----_-______-__-----------Justices I N THE SUPREME COURT O THE STATE O M N A A F F OTN No. 13291 E R I C MYHRE, r, P l a i n t i f f and Respondent, .-- . r! i ' VS. THOR MYHRE and GERTRUDE MYHRE, D e f e n d a n t s and A p p e l l a n t s . , La -i . " ' i -.- . a"; ;* - $ O R D E R I n t h i s c a u s e a p e t i t i o n f o r r e h e a r i n g was f i l e d by a p p e l l a n t s ; o b j e c t i o n s t h e r e t o f i l e d by r e s p o n d e n t s . While t h e C o u r t d o e s n o t o r d i n a r i l y have a n argument by c o u n s e l o n t h e m e r i t s of p e t i t i o n s f o r r e h e a r i n g , i n t h i s i n s t a n c e we o r d e r e d s u c h a n argument. I t h a s been h e l d , c o u n s e l p r e s e n t e d t h e i r p o s i t i o n s and t h e m a t t e r w a s t a k e n u n d e r advisement. The C o u r t h a v i n g now c o n s i d e r e d t h e arguments o f c o u n s e l and t h e documents f i l e d by t h e p a r t i e s d e n i e s t h e p e t i t i o n f o r rehearing. Let remittitur issue forthwith. DATED t h i s 1 0 t h d a y of December, 1976. Hon. Gordon B e n n e t t , D i s t r i c t J u d g e , s i t t i n g f o r M r . J o h n Conway H a r r i s o n , who i s d i s q u a l i f i e d . Justice ;

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