FLEMMER v MING
Annotate this Case
Download PDF
No. 80-73 I N THE St1PRE:ME COURT O THE STATE G MONTANA F F 198C: EVELYN M. F1,EMMER , P e r s o r r a l R e p r e s e n t a t i v e o f t h e E s t a t e o f J a c k Flemrner, Deceased, P l a i n t i f f and Resportdent, -VS- J O H N J. M I N G , I n d i v i d u a l l y , J O U N J , M I N G , I N C and INCOME PROPERTIES,INC., ., D e f e n d a n t and A p p e l l a n t . Appeal from: C i s t r i c t Court o f t h e Mineteenth J u d i c i a l D i s t r i c t , I n and f o r t h e County o f L i n c o l n , The H o n o r a b l e Rclbert M. H o l t e r , J u d g e p r e s i d i n g . Counsel o f Record: F o r Appellant:: Murray, Kaufman, V i d a l & Gardon, K a l i s p e l l , Montana F o r Respondent : F e n n e c s y , C r o c k e r , Harnan 6 B o s t o c k , L i b b y , Montana Submitted a n B r i e f s : ~ecide: d -P* Clerk August 1 3 , 198Cc D EC 11 19&) Mr. J u s t i c e Court. Daniel Defendants Shea J. appeal the delivered judgment the Opinion of t h e Lincoln of the County D i s t r i c t Court, entered a f t e r a jury v e r d i c t for p l a i n t i f f s , i n t h e amount o f $ 3 4 , 8 0 6 i n a c t u a l and p u n i t i v e damages and $7,727 i n c o s t s and a t t o r n e y f e e s w i t h i n t e r e s t t o a c c r u e a t 10 percent Flemmer her , husband, of note. Jack the is there verdict. Flemmer, and Plaintiffs Evelyn M. fraud appeal, sued for the the defendants nonpayment defendants allege for of that a the i n d e n y i n g t h e i r m o t i o n s t o d i s m i s s and f o r summary judgment of paid. and a s t h e p e r s o n a l r e p r e s e n t a t i v e o f On court erred terms until contract promissory trial year individually, late breach per and i n a d m i t t i n g e v i d e n c e t o v a r y t h e promissory note. insufficient Defendants evidence to a l s o urge support the that jury's W f i n d no e r r o r and a f f i r m . e I n 1 9 6 8 , t h e Flemmers l i s t e d t h e E v e r g r e e n M o t e l , w h i c h t h e y had owned and o p e r a t e d s i n c e 1 9 4 8 , w i t h d e f e n d a n t J o h n J . Ming, a r e a l e s t a t e a g e n t i n L i b b y . several months to sell the motel, Flemmers a b o u t b u y i n g i t h i m s e l f . p u r c h a s e p r i c e o f $110,000. contract for After attempting for Ming approached the The p a r t i e s a g r e e d on a Ming had h i s a t t o r n e y d r a w up a deed and a p r o m i s s o r y n o t e f o r $ 1 0 , 0 0 0 w h i c h represented the Ming, a s b u y e r and t h e p r o m i s s o r y n o t e was s i g n e d by Inc., downpayment. The c o n t r a c t l i s t e d John J. J o h n J . Ming a s p r e s i d e n t o f J o h n J . Ming, I n c . c o n t r a c t was that he was prepared, not Ming buying not informed property in had the Before t h e the his sellers individual c a p a c i t y , b u t r a t h e r t h a t t h e b u y e r would b e a c l o s e l y - h e l d , family corporation Flemmer testified of at which trial he the was the president. Mrs. "Inc." after designation M i n g ' s name on t h e c o n t r a c t had h e l d no s p e c i a l s i g n i f i c a n c e to either her or her husband and that t h e y were lead to b e l i e v e t h a t Ming would make p a y m e n t s u n d e r t h e c o n t r a c t . A f t e r c l o s i n g t h e s a l e , t h e Flemmers moved f r o m Montana to Lodi, March California, 1970, Ming where wrote to they the intended Flemmers to In informed and retire. them t h a t t h e m o t e l was n o t a s p r o f i t a b l e a s had b e e n a n t i c i p a t e d and t h a t h e would h a v e t o d e f a u l t u n l e s s t h e Flemmers w e r e willing to renegotiate monthly payments. the purchase price and J a c k Flemmer was i n p o o r n o t want t o t a k e t h e m o t e l b a c k . lower the h e a l t h and d i d C o n s e q u e n t l y , t h e Flemmers a g r e e d t o reduce t h e s e l l i n g p r i c e from $110,000 t o $85,000. Ming's attorney drew up the renewal contract a g r e e m e n t was e x e c u t e d on A p r i l 1, 1 9 7 0 . received t o be Inc., that contract. filed by a different Moreover, the the corporation introduced into evidence buyer 1970 with at s i g n e d by J o h n J . Ming had a t no t i m e would be named note with John Report the Secretary of by Ming, J. Inc., the S t a t e and plaintiffs show t h a t Ming was a c o r p o r a t e o f f i c e r a t a l l . promissory in Annual Corporation trial new When t h e Flemmers and was Ming, a s p r e s i d e n t o f t h a t c o r p o r a t i o n . disclosed the i t showed t h e b u y e r t h e new c o n t r a c t i n t h e m a i l , Income P r o p e r t i e s , and does not The o r i g i n a l became the downpayment f o r t h e new c o n t r a c t w i t h Income P r o p e r t i e s . Ming c o u l d n o t pay t h e p r o m i s s o r y n o t e when i t became d u e on November 9 , 1 9 7 3 , and t h e r e f o r e a s k e d t h e Flemmers t o a c c e p t a new n o t e f o r $ 1 3 , 1 2 7 . 0 5 , b e i n g t h e o r i g i n a l $10,000 downpayment p l u s a c c r u e d i n t e r e s t . The maker was a g a i n J o h n J . Ming, The Flemmers a s s e n t e d . Inc. The t e r m s o f the renewal n o t e c a l l e d f o r monthly i n t e r e s t payments o f $87.51 to be made to the Flemmers, with the entire principal b a l a n c e f a l l i n g due on F e b r u a r y 1, 1 9 7 5 . Ming s e n t t h e n o t e to of the Flemmers by mail on stationary Treasure State Realtors, Inc. an agent used--as The l e t t e r was s i g n e d by Ming, o s t e n s i b l y a s for Treasure State Realtors, Inc. This letter d i d a l l c o r r e s p o n d e n c e f r o m Ming t o t h e Flemmers- - t h e p l u r a l p r o n o u n "we" when r e f e r r i n g t o who was l i a b l e t o make p a y m e n t s u n d e r t h e n o t e . Only s i x i n t e r e s t p a y m e n t s w e r e made on t h e new n o t e , a t l e a s t two o f which w e r e drawn on t h e c h e c k i n g a c c o u n t o f Treasure S t a t e Realtors, Inc. J a c k Flemmer 1 9 7 8 , Mrs. died on J u l y 3 1 , 1975. On F e b r u a r y 2, Flemmer i n s t i t u t e d t h i s a c t i o n f o r c o l l e c t i o n o f the balance due on t h e n o t e . She a l l e g e d t h a t Ming had d e v i s e d a f r a u d u l e n t scheme t o d e f r a u d t h e p l a i n t i f f s o f t h e money owed them u n d e r t h e 1 9 7 3 p r o m i s s o r y n o t e . Plaintiffs a l s o contended t h a t t h e c o r p o r a t e d e f e n d a n t s d i d n o t have any genuine or s e p a r a t e c o r p o r a t e e x i s t e n c e and t h a t existed for t h e s o l e purpose of they e n a b l i n g Ming t o t r a n s a c t h i s personal business i n a corporate guise. W e trial find court no m e r i t i n the defendants' erred ruling in charge t h a t the procedural and on certain of defendants' evidentiary questions. The lower court's denial summary judgment was e n t i r e l y p r o p e r . motion for An e x a m i n a t i o n o f t h e p r e t r i a l record c l e a r l y i n d i c a t e s t h a t the following f a c t u a l i s s u e s were i n d i s p u t e and c o u l d o n l y be r e s o l v e d by a t r i a l on t h e m e r i t s : Ming, Inc., Realtors, Ming (1) Income Inc., as fraudulently w h e t h e r J o h n J . Ming o p e r a t e d J o h n J . Properties, his Inc., personal represented to and businesses; the (2) plaintiffs would be l i a b l e on t h e c o n t r a c t and n o t e s ; a c t e d a s an a g e n t f o r Treasure State whether that he ( 3 ) w h e t h e r Ming the defendant corporations; and (4) w h e t h e r t h e c o r p o r a t e v e i l s s h o u l d be p i e r c e d s o a s t o h o l d Ming, T r e a s u r e S t a t e R e a l t o r s , and Income P r o p e r t i e s l i a b l e on t h e 1 9 7 3 r e n e w a l n o t e . where the pretrial Summary judgment record discloses is proper only that there are no g e n u i n e i s s u e s of m a t e r i a l f a c t and t h a t t h e moving p a r t y i s entitled t o judgment (1979)I Mont a s a matter of . , 597 P.2d S c o t t v. law. Robson 1150, 1154; Rule 5 6 ( c ) , M.R.Civ.P. Neither did Properties, Inc., Ming's motion "contractual" the trial court err in denying Treasure S t a t e Realtors, Inc., to dismiss parties to essence on grounds the and J o h n J . they were not These d e f e n d a n t s m i s - the note. of that Income construe the plaintiffs' action. The Flemmers' l a w s u i t i s b a s e d n o t o n l y on a n a c t i o n a t l a w f o r b r e a c h o f c o n t r a c t , b u t a l s o on a c l a i m i n e q u i t y f o r f r a u d . Plaintiff alleged, i n substance, t h a t the defendants acted i n concert t o perpetrate a fraud. on a m o t i o n complaint t o dismiss, as true, must Gunderson and must construe plaintiff. 594 P.2d beyond in relief. in a v. for failure doubt v. to that support of his Fraunhofer, supra, of a l l e g a t i o n s of Commissioners light 883. most favorable (1979), Mont 327. the of to . the I A c o m p l a i n t w i l l n o t be claim unless plaintiff can prove c l a i m which would 594 P.2d at it a p p e a r s no set of e n t i t l e him t o 327. D i s t r i c t Court is n o t t o engage i n f a c t - f i n d i n g on a m o t i o n t o d i s m i s s . ruling . state a the the Bd. Price 3 2 4 , 3 2 7 , 36 S t . R e p . any facts them Fraunhofer dismissed take Mont Cascade County ( 1 9 7 9 ) , The l o w e r c o u r t , Hence, the when r u l i n g S e e F r a u n h o f e r , s u p r a , 594 P.2d at What e v i d e n c e was l a t e r a c t u a l l y a d d u c e d i n s u p p o r t o f p l a i n t i f f s ' p o s i t i o n i s o f no c o n s e q u e n c e when r e v i e w i n g t h e a p p r o p r i a t e n e s s of t h e lower c o u r t ' s d e n i a l of a motion t o d i s m i s s made p r i o r t o t r i a l . Defendants urge t h a t t h e t r i a l c o u r t e r r e d i n admitting extrinsic Flemmers, evidence, relating e x e c u t i o n of evidence the rule chiefly letters from Ming to the t o t h e c i r c u m s t a n c e s l e a d i n g up t o t h e 1973 n o t e . prohibits They c o n t e n d the admission that the parol of any and all e x t r i n s i c evidence c o n t r a d i c t i n g o r varying t h e terms of t h e note. T h e r e a r e numerous e x c e p t i o n s t o t h e p a r o l e v i d e n c e rule. Evidence of t h e c i r c u m s t a n c e s u n d e r which a w r i t t e n i n s t r u m e n t was made o r t o which i t r e l a t e s i s a d m i s s i b l e t o establish fraud. Section 28-2-905(2), There MCA. was t h e r e f o r e no e r r o r . Defendants a l s o f a u l t t h e t r i a l c o u r t f o r not g r a n t i n g t h e i r motion t o d i s m i s s p l a i n t i f f s ' c l o s e of that the plaintiffs' assignment of claim of case i n chief. error together fraud a t the W w i l l consider e with the defendants' c h a r g e t h a t t h e r e was i n s u f f i c i e n t e v i d e n c e t o s u p p o r t t h e jury's conclusion that S t a t e Realtors, Inc., Income Properties, Inc., and J o h n J . Ming, I n c . , Treasure were t h e a l t e r e g o o f J o h n J . Ming and had no s e p a r a t e i d e n t i t i e s o f t h e i r own. This Court has recognized which t h e c o r p o r a t e called theory. "agency" State ( 1 9 4 2 ) , 1 1 3 Mont. court's i d e n t i t y may be d i s r e g a r d e d : theory ex two g e n e r a l t h e o r i e s and rel. 303, instruction to the "identity" Monarch 307-08, the Fire Ins. 124 P.2d jury or the "alter Co. 994, accorded under v. soego" Holmes 996. The with these recognized t h e o r i e s : ". . . a c o r p o r a t i o n ' s s e p a r a t e i d e n t i t y may be d i s r e g a r d e d when s u c h c o r p o r a t i o n i s u n d e r the control of another corporation or i n d i v i d u a l , and a c t e d a s t h a t c o r p o r a t i o n ' s agent a s t o the particular transaction, o r , when t h e c o r p o r a t i o n ' s i d e n t i t y is so identified with the other corporation or i n d i v i d u a l sought t o be h e l d l i a b l e a s t o make t h e two c o r p o r a t i o n s o n e . B e f o r e you can d i s r e g a r d t h e s e p a r a t e i d e n t i t y of t h e c o r p o r a t i o n , h o w e v e r , you m u s t a l s o f i n d . t h a t t h e c o r p o r a t i o n is u t i l i z e d a s a s u b t e r - .. fuge t o d e f e a t p u b l i c convenience, t o j u s t i f y wrong, o r t o p e r p e t r a t e f r a u d . " Where the controlling corporate form shareholder e q u i t y may p i e r c e S e a t o n Ranch Co. is abused i n order by an t o defraud the corporate veil. See, individual creditors, S t r o m b e r g v. ( 1 9 7 2 ) , 1 6 0 Mont. 293, 502 P.2d 4 1 ; S h a f f e r v . Buxbaum ( 1 9 6 0 ) , 1 3 7 Mont. 397, 352 P.2d 8 3 . The e v i d e n c e s u p p o r t s a f i n d i n g o f f r a u d and j u s t i f i e s piercing the corporate veil. The record shows that t h r e e of t h e c o r p o r a t e d e f e n d a n t s were c l o s e l y - h e l d , corporations. boards of people: all family The o f f i c e r s , s t o c k h o l d e r s and members o f t h e directors Ming, consisted h i s wife, in each the same and h i s d a u g h t e r . h i s son, case of The r e g i s t e r e d o f f i c e s o f a l l t h r e e c o r p o r a t i o n s were l o c a t e d i n Ming's personal engaged in development alone residence. same e n t e r p r i s e -- t h e p u r c h a s e , of real would not, estate. of These course, t h e c o r p o r a t i o n s were p u t d o e s . to corporations the corporation's limited l i a b i l i t y . asked three All renegotiate the facts, warrant However, if s a l e and they stood abrogating a t h e u s e t o which In particular, original were contract, when Ming he never m e n t i o n e d t o t h e Flemmers t h a t t h e r e n e w a l c o n t r a c t would be w i t h Income P r o p e r t i e s , I n c . , o r t h a t t h e Flemmmers would be r e q u i r e d t o r e t a i n t h e o r i g i n a l promissory n o t e with John J. Ming, I n c . , regularly a s t h e downpayment f o r t h e new c o n t r a c t . corresponded b u s i n e s s names. word "we" when note the referring with under different he h a b i t u a l l y used t h e t o t h e p a r t i e s who w e r e t o make He made i n t e r e s t p a y m e n t s on t h e checks drawn on d i f f e r e n t accounts (Treasure S t a t e Realtors, Inc.). Flemmers In those l e t t e r s , payment u n d e r t h e n o t e . renewal with Ming Inc., corporate and J o h n J . Ming, Under t h e c i r c u m s t a n c e s , i t was e n t i r e l y r e a s o n a b l e f o r t h e Flemmers t o c o n c l u d e t h a t t h e v a r i o u s c o r p o r a t i o n s were a l l a p a r t o f M i n g ' s p e r s o n a l b u s i n e s s e m p i r e . 1970, In executed, Inc., when the second Income P r o p e r t i e s , as the purchaser, contract Inc., for r e p l a c e d John J. Ming t e s t i f i e d r e a l l y t h e same. gratis Ming, t h a t no c o n s i d e r a - o n e c o r p o r a t i o n would t r a n s £ e r i n c o m e - p r o d u c i n g corporation was It is highly unlikely t h a t t i o n was p a i d f o r t h a t t r a n s f e r . another deed unless their property t o interests were Ming, a d m i t t e d on t h e s t a n d , t h e u n i t y o f i n t e r e s t which h e had w i t h Income P r o p e r t y , I n c . : . I t i s n o t r e a l l y good b u s i n e s s s e n s e , i s t o s e l l p r o p e r t y and s t i l l s t a y l i a b l e r t e n o r twelve thousand ($10,000.00 o r $12,000.00) of t h e o b l i g a t i o n ? A. I was l i a b l e on t h e n o t e w h e t h e r I g a v e t h e m o t e l back t o t h e Flemmers o r n o t ; w h e t h e r J o h n J . Ming, I n c o r p o r a t e d was. " , Ming a l s o a d m i t t e d on t h e s t a n d t h a t a t t h e t i m e t h e r e n e w a l note was m a i l e d to the Flemmers, John Ming, J. Inc. was f i n a n c i a l l y i n c a p a b l e of p a y i n g o f f t h e n o t e . The evidence negotiated with showed the that when to purchase Flemmers Ming originally their motel 1 9 6 8 , h e had b e e n e n g a g e d a s t h e i r r e a l e s t a t e a g e n t . in The l a w i m p o s e s an a f f i r m a t i v e d u t y upon a r e a l e s t a t e a g e n t n o t only to refrain also to act disclose from t a k i n g with the a l l material advantage of utmost good , Mont. Flemmers that faith, f a c t s concerning a might a f f e c t t h e c l i e n t ' s d e c i s i o n . 599 P.2d Treasure f r o m J o h n J . Ming, I n c . , 336. State his client, and to fully transaction L y l e v. Moore but that (1979), Ming d i d n o t a d v i s e t h e Realtors, Inc. was separate o r t h a t a n y o f t h e s e were s e p a r a t e from J o h n J . Ming, h i m s e l f . Nor d i d h e r e v e a l , a t t h e time of e x e c u t i n g t h e second n o t e , t h a t t h e c o r p o r a t e maker, J o hn J . Ming, Inc., Under court c o u l d n o t pay i t o f f . the circumstances, abused its discretion we c a n n o t s a y t h a t t h e t r i a l by denying the defendants' motion t o d i s m i s s p l a i n t i f f s ' the plaintiffs' evidence was case introduced in claim of fraud a t t h e c l o s e of chief. at trial Clearly, to justify substantial the jury's decision t o pierce the corporate veil. Defendants next contend that the Since t h e r e is s u b s t a n t i a l evidence of t h i s claim. jury fails was clearly p u n i t i v e damages. Plaintiff within its province S e c t i o n 27-1-221, requests this to T h e r e i s no m e r i t t o s u p p o r t a n award o f e x e m p l a r y damages. the evidence fraud, in awarding her attorney MCA. Court to allow f e e s f o r c o s t s i n c u r r e d r e s u l t i n g from t h e d e f e n d a n t s ' p o s t t r i a l m o t i o n s and a p p e a l u n d e r o u r h o l d i n g i n Erdman v . C C Sales, Inc. W decline e (1978 ) , t o do so. Mont. The award o f , 577 P.2d 55, & 59. reasonable p o s t - t r i a l a t t o r n e y f e e s i n Erdman was g r o u n d e d upon s e c t i o n 39-3-214, MCA ( f o r m e r l y s e c t i o n 41-1306, R.C.M. 1947), a s t a t u t e t h a t is i n a p p l i c a b l e t o t h e p r e s e n t c a s e . The judgment o f t h e D i s t r i c t C o u r t i s a f f i r m e d . W Concur: e Chief Justice U3-k-L -2-+--Justices -
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
