LARRY C IVERSON INC v BOUMA

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No. 80-83 I N THE SUPREME COURT O F THE STATE O MONTANA F 1981 LARRY C . IVERSON, I N C . , a Montana C o r p o r a t i o n , P l a i n t i f f , Respondent and Cross-Appellant, VS . RALPH BOUMA and MRS. RALPH BOUMA, D e f e n d a n t s and A p p e l l a n t s . Appeal from: D i s t r i c t Court o f t h e Ninth 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 P o n d e r a H o n o r a b l e Leonard H. Langen, J u d g e p r e s i d i n g . C o u n s e l o f Record: For Appellants: G a l e R. G u s t a f s o n a r g u e d , C o n r a d , Montana For Respondents: Swanberg, Koby, Swanberg and M a t t e u c c i , Great F a l l s , Montana Raymond F. Koby a r g u e d , Great F a l l s , Montana Church, H a r r i s , J o h n s o n and W i l l i a m s , G r e a t F a l l s , Montana C r e s a p S. McCracken a r g u e d , G r e a t F a l l s , Montana Submitted: Decided: September 1 6 , 1 9 8 1 ]UOV 1 7 19fll Mr. Justice Gene B. Daly delivered the Opinion of the Court. On December 10, 1971, the receiver commenced this action in the Ninth Judicial District of the State of Montana, in and for the County of Pondera, for the purpose of obtaining a decree installment contract adjudging documents naming Larry C. comprising Iverson, Inc., an as seller, and Ralph Bouma, as purchaser, to be invalid, to regain possession of and quiet title to the 4,520 acres of farmland embraced in the contract, together with appropriate ancillary relief including an accounting by the Boumas. In August 1978, plaintiff and the receiver joined in a motion for summary judgment, asserting that the Bouma contract was void as a matter of law. On September 25, 1979, the motion for summary judgment came on for hearing before the then presiding district judge, the Honorable Leonard H. Langen, who granted the motion for summary judgment. The court reporter's notes containing the order as announced from the bench were discovered missing following a break-in scribed. of her automobile before the notes were tran- Consequently, Judge Langen prepared and filed a "Memorandum in Lieu of Transcript of Hearing" in October 1979. On November 30, 1979, a formal summary judgment for plaintiff was entered which adjudged the Bouna contract void and ordered the Boumas to account for the money, rents, issues and profits derived from possession of the farm. Boumas filed their accounting on February 21, 1980. Hearing on the accounting was held May 12 through 14, 1980. On September 9, 1980, the court entered its findings of fact, conclusions of law, judgment and decree on accounting, setting forth all of the respective adjustments found by the c o u r t t o be a p p r o p r i a t e between t h e p a r t i e s in conjunction w i t h r e s t o r a t i o n of t h e f a r m t o t h e c o r p o r a t i o n . In judgment February 1980, following entry of the summary f o r t h e c o r p o r a t i o n and d e n i a l o f Boumas' m o t i o n s , t h e Boumas f i l e d a n o t i c e o f a p p e a l t o t h i s C o u r t . Boumas r e q u e s t e d a n o r d e r d e f e r r i n g p r o s e c u t i o n o f t h e a p p e a l , and this r e q u e s t was February 2 9, granted 1980, in an o r d e r of t h i s Court deferring prosecution dated u n t i l t h i r t y days a f t e r t h e c o n c l u s i o n of t h e a c c o u n t i n g and f i n a l a d j u s t m e n t and s e t t l e m e n t o f a c c o u n t s by n o t i c e of e n t r y by t h e c l e r k o f c o u r t of t h e f i n a l o r d e r or judgment. w h given judgment N o t i c e of e n t r y of by t h e c l e r k o f c o u r t S e p t e m b e r 1 0 , 1 9 8 0 , ana t h i s a p p e a l followed. To f u l l y comprehend t h e nature of t h i s case, it is n e c e s s a r y t o i n c l u d e a h i s t o r y of t h e f a c t s and p r o c e d u r e s . This matter began hereinafter called July 1964. 17, when the Larry C. "the corporation," The c o r p o r a t i o n is a Iverson Corporation, was incorporated Montana on corporation w i t h i t s p r i n c i p a l p l a c e o f b u s i n e s s a t L e d g e r , Montana. It was c a p i t a l i z e d f o r $ 5 0 0 , 0 0 0 d i v i d e d i n t o 5 , 0 0 0 s h a r e s o f a single c l a s s of common s t o c k of $100 p a r governed its business organized to be directors of three persons in empowered value. by a It board was of to elect officers to perform t h e e x e c u t i v e f u n c t i o n s of t h e c o r p o r a t i o n . On A u g u s t 1 9 , 1 9 6 4 , a t o t a l o f 2 , 5 2 3 s h a r e s o f s t o c k of the corporation were issued to the following persons i n c e r t i f i c a t e s a s follows: Stockholder Larry C. Iverson L i n d a M. I v e r s o n Mabel I v e r s o n Cert. # No. o f Shares named Mabel Iverson Irene A. Keierleber Gilbert F. Keierleber Connie Iverson Fulton Darrell L. Brown Carl 0 . Iverson Carl 0 . Iverson Total Shares 2,523 Further, on November 22, 1965, the following certificates were issued to replace lost certificates representing shares in the corporation: Stockholder Cert. No. Irene A. Keierleber Mabel Iverson Carl 0 . lverson 11 12 13 Issued to Replace No. of Shares 5 3 10 300 58 60 In December 1964, Carl and Mabel Iverson and Gilbert and Irene Keierleber hired J. Milton Krull and John C. Treadaway as business managers for the corporation. Krull and Treadaway continued as business managers, consultants, purported officers, directors and stockholders of the corporation until 1970. it went into receivership in November In the receiver action it was adjudged that Krull and Treadaway were corporate usurpers, and they were "stripped" of their titles and any interest they "did not" have. Soon thereafter, the stockholders of the corporation came upon hard times and by March 16, 1967, Farmers State Bank of Conrad had become the owner of 450 shares of Mabel Iverson's stock (of the original issue) and 450 shares of Carl Iverson's stock (of the original issue). Farmers State Bank acquired the ownership as a result of a pledge of the shares by Carl and Mabel on which the bank eventually had to foreclose. Also, as a result of this foreclosure, the corporation was able to redeem as treasury stock and become the equitable owner of 182.7 shares of the 900 shares now owned by F a r m e r s S t a t e Bank. P r i o r t o t h e a b o v e f o r e c l o s u r e , on J u l y 2 1 , 1 9 6 6 , i n H e l e n a , Montana, U n i t e d Bank o f P u e b l o purchased, a t a s h e r i f f ' s s a l e , 118 s h a r e s o f s t o c k of the c o r p o r a t i o n t h e n owned by C a r l and Mabel I v e r s o n . The o t h e r major s t o c k h o l d e r s a l s o f e l l on bad times. Gilbert and January 24, Stanley M. 1966. Swaine, t h e e s t a t e of were As a result, became i s , S t a n l e y M. stock--that of Irene Keierleber the adjudicated the trustee owner of bankrupt on i n bankruptcy, the Keierlebers' Swaine, a s t r u s t e e i n bankruptcy Irene Keierleber, became t h e owner o f 300 s h a r e s of s t o c k , a n d , a s t r u s t e e i n b a n k r u p t c y of t h e e s t a t e oi Gilbert Keierleber, he became the owner of 300 more s h a r e s s u b j e c t t o a p l e d g e t o F a r m e r s S t a t e Bank. As Narch 1 6 , a r e s u l t of t h e above e v e n t s , t h e c o r p o r a t i o n by 1 9 6 7 , was "owned" by a l m o s t a c o m p l e t e l y new s e t of s h a r e h o l d e r s . The o w n e r s h i p was a s f o l l o w s : Stockholder Shares UNITED BANK OF PUEBLO 118 C O N N I E IVERSON FULTON 440 ( S u b j e c t t o pledge t o t h e United Bank o f P u e b l o f o r t h e p u r c h a s e p r i c e a t p a r v a l u e o f $100 p e r s h a r e ) FARMERS STATE BANK OF CONRAD 7 17 STANLEY M . SWAINE, a s t r u s t e e i n bankruptcy of t h e e s t a t e of Irene Keierleber 300 STANLEY M . SWAINE, a s t r u s t e e i n b a n k r u p t c y of t h e e s t a t e of Gilbert Keierleber (subect t o a p l e d g e t o t h e F a r m e r s S t a t e Bank of Conrad) IVERSON, I N C . treasury stock) LARRY C . , (as 'Total F a r m e r s S t a t e Bank, 2,523 t h e t r u s t e e and U n i t e d Bank had a l l made demands upon t h e c o r p o r a t i o n , K r u l l and Treadaway for issuance of stock demands w e r e r e f u s e d . Nos. certificates to them, but these This resulted i n s t a t e court actions, 8 2 2 1 a n d 8073 r e s p e c t i v e l y , i n t h e D i s t r i c t C o u r t of t h e Ninth J u d i c i a l D i s t r i c t , Pondera County, t o q u i e t t i t l e t o t h e o w n e r s h i p of t h e s t o c k . t h e F a r m e r s S t a t e Bank, the The D i s t r i c t C o u r t f o u n d f o r trustee and United Bank and awarded them t i t l e on A p r i l 7 , 1 9 7 1 . It is necessary a t t h i s j u n c t u r e t o include s e v e r a l f a c t u a l e v e n t s t r a n s p i r i n g p r i o r t o t h e s a l e of 4,520 a c r e s of farmland from the corporation a p p e l l a n t s Bouma i n J u l y 1 9 6 8 . the defendants- From t h e f i n d i n g s o f and c o n c l u s i o n s o f l a w o f Cause Nos. found t h a t a p u r p o r t e d m e e t i n g of to 8 2 2 1 and 8 0 7 3 , fact i t was s t o c k h o l d e r s was h e l d i n P h o e n i x , A r i z o n a , on November 2 2 , 1 9 6 5 , which r e s u l t e d - i n a s e c o n d i s s u e o f s t o c k t o be d i s t r i b u t e d on J a n u a r y 3 , 1 9 6 6 . However, i t was f o u n d t h a t n o t o n l y was t h e m e e t i n g i m p r o p e r b u t t h a t no c o m p e n s a t i o n was g i v e n t o t h e c o r p o r a t i o n f o r the stock issued and the amount of stock issued was in e x c e s s o f t h a t a u t h o r i z e d by t h e a r t i c l e s o f i n c o r p o r a t i o n . T h e r e was a n o t h e r " e v e n t " which t o o k p l a c e i n J a n u a r y 1967 and was d i s c u s s e d by t h e D i s t r i c t C o u r t . This "eventt' was a n o t h e r i m p r o p e r s h a r e h o l d e r m e e t i n g i n D i l l o n , Montana. At t h i s meeting, Treadaway, a t t e n d e d o n l y by C a r l I v e r s o n , K r u l l and i t was d e c i d e d t o c a n c e l a l l t h e s h a r e s o f s e c o n d i s s u e and t o a u t h o r i z e a t h i r d i s s u e . t i o n was g i v e n f o r t h e 2,595 s h a r e s No c o n s i d e r a - "created," s h a r e s were " g i v e n " t o K r u l l and Treadaway. the and 2,477 I t is i m p o r t a n t t o n o t e t h a t a t t h e t i m e o f t h i s m e e t i n g a t l e a s t 600 s h a r e s of the originally issued stock was "equitably" owned by Stanley Swaine, as trustee in bankruptcy for the Keierlebers. A l t h o u g h t h e r e w e r e numerous e v e n t s t r a n s p i r i n g a f t e r incorporation in 1964 t h a t well illustrate t h e manner in w h i c h t h e c o r p o r a t i o n was mismanaged, s u f f i c e i t t o s a y t h a t t h e c o n t r a c t i n q u e s t i o n h e r e was t h e f o u n t a i n h e a d . 1968 t h e c o r p o r a t i o n p u r p o r t e d t o s e l l 4,520 In July a c r e s of land t o R a l p h Bouma on a c o n t r a c t f o r d e e d f o r a p u r c h a s e p r i c e of $734,500. The v a l i d i t y o f the s a l e of land to Ralph Bouma ( h e r e i n a f t e r c a l l e d t h e Bouma c o n t r a c t ) i s t h e u n d e r l y i n g i s s u e of t h i s appeal. Again, a h i s t o r y of t h e c o n t r a c t negotiations, terms, results, is necessary t o provide etc., a c l e a r u n d e r s t a n d i n g o f t h e i s s u e a t hand. t o k e e p i n mind, mary, that while 76 p e r c e n t F a r m e r s S t a t e Bank of reading the of the following factual corporation Conrad, I t is important United was Bank o f S t a n l e y Swaine, t r u s t e e i n bankruptcy f o r sum- "owned" Pueblo, by and the Keierlebers, a t l e a s t a y e a r b e f o r e t h e Bouma c o n t r a c t . I n J u l y 1968 a p p r o x i m a t e l y 4 , 5 0 0 a c r e s o f l a n d o f t h e c o r p o r a t i o n was s o l d t o R a l p h Bouma on a c o n t r a c t f o r d e e d for a purchase downpayment to 1,440 of acres price the of $734,500. corporation land located in in Bouma made the Teton form of County a a partial t r a d e of (hereinafter c a l l e d t h e Agawam p l a c e ) a t a n a l l o w a n c e o f $150 p e r a c r e . i t was f o u n d from t h e D i s - Though n o t i m m e d i a t e l y r e l e v a n t , t r i c t Court's f i n d i n g s of s i x weeks a f t e r Krull and the sale, Treadaway, f a c t and c o n c l u s i o n s o f law t h a t t h e Agawam p l a c e was acting for the resold corporation, to by the f a t h e r and b r o t h e r s o f R a l p h Bouma a t a p r i c e o f $ 9 2 . 5 0 p e r acre, resulting in a l o s s of $82,800 to the corporation. Also, the father and brothers sold the Agawam place one year later at $120 per acre. The sale of the corporate farm occurred during a purported directors meeting in Phoenix, Arizona, on July 19, 1968. Krull The parties involved at the meeting were Treadaway, and Carl and Mabel Iverson. There were no other shareholders at the meeting, and there is no record of any notice having been given to any of the shareholders about the meeting. Also, no publication of notice or filing of the resolution authorizing the sale was published in the local newspaper, and no filing of the certificate of proceedings and no resolution authorizing sale was made with the Pondera County clerk and recorder. attorney was retained during the Further, no Montana transaction, no title investigation was undertaken, and the contract authorized payment of 44 percent of the unpaid installment balance of the contract directly to Krull and Treadaway. In 1968 Farmers State Bank and Stanley W. Swaine commenced a stockholders derivative action against the corporation and the persons controlling it (District Court Cause No. 8073). action for In 1969 United Bank of Pueblo commenced an similar (Cause No. 8221). relief and for corporate dissolution These actions were consolidated during trial and concluded in 1971 with the exception of continuing jurisdiction to govern the receivership of the corporation. George Campanella was appointed receiver pendente lite and his status as receiver was affirmed in the final judgment. The receiver then proceeded in 1971 against Bouma to recover the 4,520 acres of land which was originally the principal asset of the corporation. In February 1978, the Honorable B. W . Thomas granted a petition of the receiver for relief from his responsibilities in pursuing covery of the acreage. the re- The present stockholders reorganized the corporation under the directive of Judge Thomas and continued the action (Cause No. 8509) as a partially reconstituted corporation. It was not until September 25, 1979, that Judge Langen granted plaintiff-respondent's motion for summary judgment. In so doing he brought to an end some fifteen years of litigation involving the corporation which began with a receivership action by Farmers State Bank in 1965. In the summary judgment motion, Judge Langen held that, as a matter of law, the persons with whom Bouma dealt and from whom he obtained the Bouma contract--namely, Krull, Treadaway and the Iversons--were without lawful authority to contract in behalf of the corporation, and, therefore, the contract was void. The judge also found that Bouma knew, or should have known, that these purported officers of the corporation did not have the authority to authorize the sale. The court reporter's notes containing the order as announced from the bench on September 25, 1979, were discovered before missing they were following a transcribed. break-in of her automobile Judge Langen, therefore, prepared and filed a "Memorandum in Lieu of Transcript of Hearing'' in October 1979. On November 30, 1979, a formal summary judgment for plaintiff was entered which adjudged the Bouma contract void and ordered Boumas to account for the money, rents, issues and profits derived from possession of the Iverson farm. Appellants filed their accounting on February 21, 1980. B e a r i n g on t h e a c c o u n t i n g was h e l d May 12 t h r o u g h 1 4 , 1980. On S e p t e m b e r 9 , 1 9 8 0 , t h e c o u r t e n t e r e d i t s f i n d i n g s o f f a c t , c o n c l u s i o n s o f l a w , judgment and d e c r e e on a c c o u n t ing ( h e r e i n a f t e r "accounting d e c r e e " ) s e t t i n g f o r t h a l l of t h e r e s p e c t i v e a d j u s t m e n t s f o u n d by t h e c o u r t t o be a p p r o pr i a t e between t h e p a r t i e s i n c o n j u n c t i o n w i t h r e s t o r a t i o n of t h e I v e r s o n farm t o t h e c o r p o r a t i o n . In credit the for accounting two-thirds decree of the the crop Boumas were harvested allowed during the p e r i o d b e t w e e n t h e Bouma c o n t r a c t d a t e of A p r i l 1 7 , 1 9 6 8 , t o the date 1980, of the together September accounting with 30 o f hearing interest each year. which on As each a result closed annual of May crop this 14, from finding, Boumas were a l l o w e d c r o p s h a r e and i n t e r e s t t h e r e o n t o t a l i n g $819,321.08. In a prehearing brief filed by the corporation in A p r i l 1 9 8 0 , t h e c o r p o r a t i o n f u r n i s h e d a r g u m e n t and a u t h o r i t y t o the court in support of i t s c o n t e n t i o n t h a t t h e Boumas s h o u l d be t r e a t e d a s " w i l l f u l trespassers" not entitled t o t h e f r u i t s of t h e i r wrongful occupation of t h e Iverson farm. The c o u r t d i s a g r e e d w i t h t h i s c o n t e n t i o n and made t h e c r o p h a r v e s t award a s p r e v i o u s l y d e s c r i b e d . I n its accounting decree, Boumas t h e c o u r t a l s o allowed t h e credit for totaling $264,074 the value of certain i m p r o v e m e n t s made t o t h e I v e r s o n f a r m , t o t h e e x t e n t o f t l i e enhanced v a l u e of ments. t h e p r o p e r t y r e s u l t i n g from t h e That is a s f o l l o w s : improve- Improvement P e r Accounting Decree Page 6 Cost or Replacement C o s t Per Bouma A c c t - $106,352 $154,500 4,000 38,000 $110,352 T h r e e 7 , 5 0 0 bu. b i n s s i x 2 2 , 0 0 0 bu. b i n s C r e d i t Court Allowed Bouma $192,500 & R e s t o r a t i o n of a c r e a g e Totals The 7,500 b u s h e l b i n s were i n s t a l l e d i n 1975 and 1976 and t h e 22,000 b u s h e l b i n s i n 1 9 7 6 . The a c r e a g e r e s t o r a t i o n took p l a c e o v e r a p e r i o d of s i x o r s e v e n y e a r s . The e x c e s s a l l o w a n c e was awarded o v e r t h e c o r p o r a t i o n ' s o b j e c t i o n s t h a t t h e e n h a n c e d v a l u e s h o u l d be r e s t r i c t e d t o t h e c o s t t h e r e o f . The 1968 Bouma contract purported to convey the I v e r s o n f a r m , m i n e r a l s and a l l , t o t h e Boumas, l e s s a n "un- divided one-half interest oil royalty interest which against his running in it the now account landowner's and gas has." for credit $1 per at Later, acre, Ralph Bouma p r o c u r e d a " m i n e r a l d e e d " f r o m K r u l l and Treadaway p u r p o r t i n g t o c o n v e y t h e c o r p o r a t i o n ' s m i n e r a l s on and u n d e r Iverson farm to received Bouma. $34,748 When Bouma i n o i l revenue was from t h e shown to the have I v e r s o n farm and c o u l d n o t r e l y upon t h e v o i d Bouma c o n t r a c t , he a s s e r t e d t h e revenue was his by virtue of the "mineral deed." Judge Langen r u l e d , o v e r t h e Boumas' o b j e c t i o n s , t h a t t h e c o r p o r a t i o n was e n t i t l e d t o t h e o i l money w i t h interest. Boumas r a i s e d t h e i s s u e a g a i n i n t h e i r m o t i o n t o a l t e r o r amend t h e accounting decree. deleted from $41,215.46, The credits being the trial awarded $34,748 judge the oil reversed himself corporation revenue the sum and of with accrued the summary interest. In February 1980, following entry of judgment for the corporation and denial of Boumas' motions pursuant to Rules 52 and 59, M.R.Civ.P., notice of appeal to this Court. the Boumas filed Boumas requested an order deferring prosecution of the appeal, and this request was granted in an order of this Court dated February 29, 1980, deferring prosecution until thirty days after the conclusion of the accounting and final adjustment and settlement of accounts by notice of entry by the clerk of court of the final order of judgment. Notice of entry of judgment was given by the clerk of court September 10, 1980. In conclusion, the matters that now stand before this Court are the appeal by the Boumas of the District Court's ruling on summary judgment and the cross-appeal by the corporation on the District Court's accounting decree. Numerous issues have been presented to this Court for review by appellants Bouma. The nineteen issues set forth in appellants' brief can be summarized as follows: 1. Did the District Court err in holding that the disputed contract was void? 2. Were there genuine issues of material fact in the case which made summary judgment inappropriate? 3. Are any of the appellants' "defenses" sufficient to warrant reversal of the summary judgment laches, (b) estoppel, (c) ratification, ( e l (a) (d) statute of limitations, (e) etc.)? 4. Did the District Court err in substituting as plaintiff the partially reconstituted corporation in place of the plaintiff receiver while the corporation remained under receivership? The following issue is presented by cross-appellant Iverson, Inc: 1. Did the District Court err in accounting its decree? W note e at the outset of this opinion that Ralph Bouma, o n e o f t h e a p p e l l a n t s , h a s b e e n o b l i g e d i n e v e r y way. T h i s C o u r t h a s t r i e d t o be f a i r and i m p a r t i a l r e g a r d l e s s o f t h e f a c t t h a t Mr. Bouma h a s f a i l e d t o r e c i p r o c a t e . H e has p u b l i c l y a c c u s e d t h i s C o u r t and i t s i n d i v i d u a l j u s t i c e s o f c o n s p i r i n g a g a i n s t him and o f u s i n g t h e i r p o s i t i o n s t o h i s personal detriment. Mr. Bouma h a s e v e n g o n e s o f a r a s t o f i l e an a c t i o n i n F e d e r a l D i s t r i c t C o u r t a l l e g i n g t h a t t h e j u s t i c e s of t h i s Court have v i o l a t e d h i s c i v i l r i g h t s . is h i s r i g h t . That However, Mr. Bouma d o e s n o t seem t o r e a l i z e t h e l a w c a n n o t b e , and w i l l n o t b e , d i s t o r t e d t o s a t i s f y t h e p e r s o n a l whims o f o n e man--for o u r s is a s y s t e m of l a w s , n o t men. From t h e f a c t s and a p p e l l a n t s ' contentions i t would seem t h a t t h i s c a s e p r e s e n t s numerous complex l e g a l i s s u e s requiring careful legal analysis. Actually, the only r e a l p r o b l e m is t r y i n g t o " f i n d " t h e i s s u e s t h r o u g h t h e d e l u g e o f i r r e l e v a n t m a t e r i a l t h a t a p p e l l a n t s have p r e s e n t e d Court. have T h i s a p p e a r s t o be t h e a p p e l l a n t s ' continued over the years to to this "style," a s they inundate the opposing p a r t y , t h e l o w e r c o u r t and t h i s C o u r t w i t h reams o f u n n e c e s s a r y papers, f i l e s and demands. One need o n l y t o r e a d t h i s C o u r t ' s comments t o w a r d a p p e l l a n t s i n two p r i o r m a t t e r s t o g r a s p t h e d e g r e e t o w h i c h t h e a p p e l l a n t s h a v e made a mockery of t h e a p p e l l a t e p r o c e s s . W were f i r s t i n t r o d u c e d t o t h e a p p e l l a n t s i n Farmers e S t a t e Bank o f Conrad v . Iverson, e t a l . , and Bouma ( 1 9 7 3 ) , 1 6 2 Mont. 130, 509 P.2d 839. T h i s Court found that a p p e l l a n t s never even f i l e d t h e a p p r o p r i a t e papers to a intervene entitled to in be case in interested which they parties. alleged the seeking they said: The C o u r t were "In a d d i t i o n w e m u s t comment on t h e ' b a c k d o o r ' a t t e m p t by p e t i tioners and appellants [Boumas] to introduce extraneous e v i d e n c e i n t h e s e p r o c e e d i n g s by a t t a c h i n g Appendix ' A , ' 'B' and The 'C' to their brief Court added, on a p p e a l . " 509 P.2d a t 841. "We s t r o n g l y condemn t h i s p r a c t i c e by c o u n s e l f o r a p p e l l a n t s and u s e t h i s o c c a s i o n t o warn o t h e r p a r t i e s t o f u t u r e a p p e a l s t h a t t h i s p r a c t i c e w i l l n o t be t o l e r a t e d . " The C o u r t dismissed the appeal as fgivolous &y$Q damages o f $ 1 , 0 0 0 u n d e r R u l e 3 2 , M.R.Civ.P., and assessed f o r b r i n g i n g an appeal without merit. In Campanella v. Bouma ( 1 9 7 4 ) , 164 Mont. 214, 520 P.2d 1073, 1074, t h i s Court a g a i n noted t h a t t h e a p p e l l a n t s had filed motions unheard twenty-eight counts impertinent, and i m m a t e r i a l . instances shall apparent t h a t go of of in error uncited the that law set forth termed frivolous, The C o u r t s t a t e d : "Specific at i n t h e p a s t Mr. were and this time, it is lack of however Bouma h a s u s e d his r e p r e s e n t a t i o n t o h i s a d v a n t a g e i n t h e s e p r o c e e d i n g s and h a s a l s o used t h e f a c t o f h i s w i f e ' s r e p r e s e n t a t i o n a l s o t o h i s advantage." "In so 520 P.2d ruling, objectivity, the a t 1075. Court continuing The C o u r t f u r t h e r s t a t e d : has attempted to its retain t o assume t h a t s u c h m o t i o n [motion f o r s u b s t i t u t i o n o f a p p e a r a n c e s ] was l e g i t i m a t e l y m o t i v a t e d , an exceedingly difficult absurd i n nature, vituperative task considering the motion is i r r e l e v a n t and s c a n d a l o u s i n c o n t e n t a n d i n tone." 520 P.2d at 1078. Finally, this C o u r t , w h i l e on t h e b r i n k o f h o l d i n g t h a t a p p e l l a n t s ' m o t i o n was c o n t e m p t u o u s , s t a t e d : " T h e r e i s no p l a c e i n o u r j u d i c i a l s y s t e m f o r s u c h a n u n d i g n i f i e d p r o d u c t e v e n i f a member o f t h e b a r had n o t l e n t h i s name t o i t . " is apparent t h a t t h e 520 P.2d a t 1 0 7 8 . a p p e l l a n t s do n o t t a k e heed o f Court's warnings b u t continue t o p r e s e n t dalous, burdensome, frivolous, It this scan- i n a n e and t o t a l l y i r r e l e v a n t m a t e r i a l s f o r review. I s s u e 1: Did t h e D i s t r i c t C o u r t e r r i n h o l d i n g t h a t t h e d i s p u t e d c o n t r a c t was v o i d ? The D i s t r i c t C o u r t ' s narrow i s s u e . r u l i n g was b a s e d on o n l y o n e T h i s i s s u e was t h e b a s i s f o r t h e g r a n t i n g o f t h e c o r p o r a t i o n ' s summary judgment m o t i o n . Af t e r r e v i e w i n g the court decrees, affidavits, orders and depositions, findings of fact documents, and c o n s o l i d a t e d c a u s e s 8221/8073, conclusions of law from t h e D i s t r i c t C o u r t found t h a t t h e c o n t r a c t was v o i d from t h e s t a r t . b e e n numerous m a t e r i a l s p r e s e n t e d Though t h e r e may h a v e to the court, t h e judge f o u n d t h a t t h e whole m a t t e r b o i l e d down t o t h e v a l i d i t y o f the contract. The c o u r t ' s finding that t h e c o n t r a c t was v o i d i s w e l l s u p p o r t e d by t h e f a c t s a n d t h e l a w . From t h e f i n d i n g s o f c a u s e s 8221/8073, f a c t and c o n c l u s i o n s o f law o f i t was d e t e r m i n e d t h a t t h e c o r p o r a t i o n m e t o n l y t w i c e b e f o r e t h e Bouma c o n t r a c t was e n t e r e d i n t o . The f i r s t t i m e was on A u g u s t 1 9 , 1 9 6 4 , when t h e c o r p o r a t i o n was organized, and t h e s e c o n d t i m e w a s J a n u a r y 30, 1967. in Dillon, Montana, on The f i r s t m e e t i n g was a p r o p e r m e e t i n g , and it was a t t h i s m e e t i n g t h a t t h e c o r p o r a t i o n a t t e m p t e d t o a d o p t a bylaw t h a t may h a v e p r e v e n t e d from b e i n g v o i d . the later contract The b y l a w c o n t a i n e d t h e f o l l o w i n g p r o v i - sion: "The Board of D i r e c t o r s s h a l l h a v e t h e power and g e n e r a l authority to sell, lease, mortgage, exchange o r o t h e r w i s e d i s p o s e of t h e whole o r a n y p a r t o f t h e p r o p e r t y and a s s e t s of e v e r y k i n d and d e s c r i p t i o n o f t h e c o r p o r a t i o n , f o r p r o p e r t y f o r t h e whole o r p a r t of t h e c a p i t a l s t o c k of any o t h e r corporation . . ." T h i s bylaw was n e v e r made e f f e c t i v e . 15-909, that, R.C.M. for 1947, which t h i s type of were S e c t i o n s 15-908 then bylaw t o be in effect, effective, and required it must be n o t i c e d and p u b l i s h e d i n a newspaper p r i n t e d i n t h e c o u n t y , a n d r e c o r d e d i n t h e o f f i c e o f t h e c o u n t y c l e r k and r e c o r d e r i n t h e same f a s h i o n a s s p e c i f i c a u t h o r i z a t i o n m e e t i n g s f o r the s a l e of substantially a l l of a corporation's assets. The a f f i d a v i t o f t h e p u b l i s h e r o f t h e l o c a l n e w s p a p e r , J a c k Lee, and the a f f i d a v i t of Gladys Mortenson, both t h e county establish that clerk no and recorder, notice was pub- l i s h e d and no f i l i n g o f t h e bylaw was made. S e c t i o n 15-908, R.C.M. 1947, provided i n p a r t : " S t o c k h o l d e r s may adopt by-law giving d i r e c t o r s power t o s e l l o r l e a s e p r o p e r t y o f corporation--limitations on w h i c h a u t h o r i t y . A t any m e e t i n g o f t h e s t o c k h o l d e r s o f a n y c o r p o r a t i o n c a l l e d and n o t i c e d i n t h e manner p r o v i d e d by t h i s c h a p t e r , t h e s t o c k h o l d e r s may a d o p t a by-law g i v i n g t h e b o a r d o f d i r e c t o r s of such c o r p o r a t i o n such g e n e r a l a u t h o r it y t o s e l l , l e a s e , mortgage , exchange o r o t h e r w i s e d i s p o s e o f t h e whole o r a n y p a r t o f t h e p r o p e r t y and a s s e t s o f e v e r y k i n d and d e s c r i p t i o n of such c o r p o r a t i o n . .. . . ." S e c t i o n 15-909, R.C.M. 1947, provided i n p a r t : "Same--contents of r e s o l u t i o n and n o t i c e . The r e s o l u t i o n c a l l i n g t h e m e e t i n g and t h e n o t i c e m a i l e d t o s t o c k h o l d e r s and p u b l i s h e d s h a l l s t a t e t h a t t h e meeting is c a l l e d f o r t h e p u r p o s e o f c o n s i d e r i n g t h e a d o p t i o n of a by-law empowering t h e b o a r d o f d i r e c t o r s o f t h e c o r p o r a t i o n t o s e l l , l e a s e , mortgage, e x c h a n g e , o r o t h e r w i s e d i s p o s e o f t h e whole o r a n y p a r t o f t h e p r o p e r t y and a s s e t s o f e v e r y k i n d and d e s c r i p t i o n o f s u c h c o r p o r a - t i o n , f o r p r o p e r t y , o r f o r t h e whole o r p a r t of t h e c a p i t a l s t o c k o f a n y o t h e r c o r p o r a t i o n , whether domestic or f o r e i g n , o r o t h e r wise. I n a l l o t h e r r e s p e c t s n o t i c e s h a l l be g i v e n and t h e m e e t i n g s h a l l be had and a copy of t h e m i n u t e s t h e r e o f s h a l l be f i l e d a s p r o v i d e d by t h i s c h a p t e r . " Appellants cannot expect a court t o overlook a s t a t u t e t h a t is c l e a r i n its i n t e n t . There support the is further judge's case ruling. l a w and encyclopedia In c a s e of the law t o Hanrahan v . A n d e r s e n ( 1 9 3 9 ) , 1 0 8 Mont. 218, 90 P.2d 4 9 4 , 499, t h e C o u r t held: ". . . i t is e q u a l l y w e l l s e t t l e d i n t h e a b s e n c e of e x p r e s s s t a t u t e , t h a t i n t h e c a s e o f a s o l v e n t c o r p o r a t i o n w h i c h h a s accumul a t e d property for use i n its business, n e i t h e r t h e d i r e c t o r s , nor even t h e s t o c k h o l d e r s e x c e p t by unanimous v o t e , h a v e t h e a u t h o r i t y t o dispose of such property except i n t h e f u r t h e r a n c e and i n t h e o r d i n a r y c o u r s e of t h e business; f o r otherwise the a u t h o r i t y i s b e i n g used t o d e f e a t , t o t h a t e x t e n t , t h e v e r y p u r p o s e f o r w h i c h t h e a u t h o r i t y was given. . ." Also, i n 19 C.J.S. that: C o r p o r a t i o n s , S 1240 a t 9 3 2 , i t i s f o u n d " S a l e s and a s s i g n m e n t s by c o r p o r a t i o n s , t o be v a l i d , m u s t be w i t h i n t h e c o r p o r a t e p o w e r s , made i n good f a i t h and i n conformity with governing or s t a t u t o r y regula- The law i s c l e a r on t h i s p o i n t . tions." charter I t is n o t p r o p e r f o r a corporation t o sell its property a s s e t s , in t h i s case the only statutes, real asset, without following the u n l e s s t h e r e i s a bylaw p r o v i s i o n requisite t h a t h a s been p r o p e r l y f i l e d and p u b l i s h e d t o a l l o w i t . F u r t h e r , f r o m t h e f i n d i n g s o f f a c t and c o n c l u s i o n s o f l a w o f c a u s e s 8221/8073, i t was f o u n d t h a t t h e p a r t i e s who r e p r e s e n t e d t h e c o r p o r a t i o n a t t h e t i m e of tract, August 1968, were w i t h o u t corporation. Thus, t h e Bouma con- authority t o act for the t h e p e o p l e who p u r p o r t e d to represent the corporation Motor Co. v. C.J.S. lacked Contracts, the (1939), H i l l capacity contract. 227, 54 A r i z . to 94 P.2d Worman 865; 17 27 a t 6 3 0 . § I t i s a l s o t o be o b s e r v e d , by way o f l i m i t a t i o n of t h e d o c t r i n e o f u l t r a v i r e s , t h a t a n a t t e m p t e d c o n v e y a n c e by the officers of a corporation its of property without a u t h o r i t y does n o t involve t h e d o c t r i n e of u l t r a v i r e s , b u t of agents to 193 C a l . Hotaling, on behalf 368, a board of of their principal without 5 963 a t 441; H o t a l i n g v . H o t a l i n g 1 9 Am.Jur.2d authority. (1924), act 224 P. 455, 56 A.L.R. 734. In d i r e c t o r s m e e t i n g was h e l d t o d e c i d e w h e t h e r c e r t a i n p r o p e r t y o f t h e c o r p o r a t i o n was t o be s o l d , and u n d e r t h e bylaws of t h e c o r p o r a t i o n a m a j o r i t y of the b o a r d o f d i r e c t o r s was n e c e s s a r y t o a p p r o v e a p r o p e r t y s a l e . At t h e m e e t i n g o n l y two o f the f i v e d i r e c t o r s voted. The c o u r t r u l e d t h e c o n t r a c t v o i d and t h a t t h i s a c t was n o t a q u e s t i o n o f u l t r a v i r e s b u t of a g e n t s who a c t e d on b e h a l f o f a principal ( t h e corporation) without the a u t h o r i t y t o do SO. W i t h o u t t h e bylaw n e c e s s a r y t o p r o v i d e an e x c e p t i o n to the statutory rules, the "purported" directors required t o follow s t r i c t s t a t u t o r y procedure farmland to 1 5 - 9 0 1 , R.C.M. the appellants. In pertinent to sell part the section 1947, a p p l i c a b l e a t t h e time of t h e c o n t r a c t , provided : "Procedure for sale, lease, etc., of corporate property--call of s t o c k h o l d e r s 1 meeting. The b o a r d o f d i r e c t o r s o r t r u s t e e s s h a l l have of any s t o c k c o r p o r a t i o n p o w e r , and upon r e q u e s t o f s t o c k h o l d e r s r e p r e s e n t i n g a t l e a s t one-half ( 1 / 2 ) of t h e entitled c a p i t a l s t o c k o u t s t a n d i n g and t o vote a t t h e meeting h e r e i n a f t e r p r o v i d e d f o r , i t s h a l l be t h e i r d u t y t o c a l l by r e s o l u t i o n a m e e t i n g o f t h e s t o c k h o l d e r s . . . . . . were . . . of s u c h c o r p o r a t i o n , a p p e a r i n g a s s u c h upon i t s b o o k s , and e n t i t l e d t o v o t e a t s u c h meeting, a s a f o r e s a i d , f o r t h e purpose of c o n s i d e r i n g t h e q u e s t i o n of s e l l i n g , l e a s i n g , mortgaging, exchanging, or otherwise disp o s i n g of t h e whole o r a n y p a r t o f t h e p r o p e r t y and a s s e t s o f e v e r y k i n d and d e s c r i p t i o n of such c o r p o r a t i o n , f o r p r o p e r t y , o r f o r t h e whole o r p a r t o f t h e c a p i t a l s t o c k of any o t h e r c o r p o r a t i o n , whether domestic o r foreign, or otherwise. Such m e e t i n g s h a l l be held a t t h e p r i n c i p a l p l a c e of b u s i n e s s of s u c h c o r p o r a t i o n , and a t l e a s t t h i r t y ( 3 0 ) d a y s p r e v i o u s n o t i c e o f t h e t i m e and p l a c e o f such meeting . . ." S e c t i o n 15-902, R.C.M. 1947, provided i n p e r t i n e n t p a r t : " N o t i c e of s t o c k h o l d e r s ' m e e t i n g - - c o n t e n t s - mailing--publication. The s e c r e t a r y o f t h e c o r p o r a t i o n s h a l l make o u t and d e p o s i t i n t h e United S t a t e s p o s t o f f i c e , postage p a i d , a n o t i c e of s u c h m e e t i n g , d i r e c t e d t o e a c h s t o c k h o l d e r of r e c o r d of t h e c o r p o r a t i o n , e n t i t l e d t o v o t e a t such meeting, a s afores a i d , by h i s name and h i s p l a c e o f r e s i d e n c e a p p e a r i n g on s a i d r e c o r d s , and s h a l l make and The f i l e h i s a f f i d a v i t of such d e p o s i t . n o t i c e s h a l l s t a t e t h e t i m e , p l a c e and t h e p u r p o s e o f t h e m e e t i n g , and s h a l l c o n t a i n a c o m p l e t e and s p e c i f i c s t a t e m e n t o f t h e p r o p o s a l t o be c o n s i d e r e d and a c t e d upon a t s a i d m e e t i n g , i n c l u d i n g i n a l l c a s e s where o n l y a p a r t of t h e p r o p e r t y of such c o r p o r a t i o n is a f f e c t e d , a g e n e r a l d e s c r i p t i o n of t h e prope r t y p r o p o s e d t o be s o l d , l e a s e d , m o r t g a g e d , exchanged, o r otherwise disposed o f . A s i m i l a r n o t i c e s h a l l a l s o be p u b l i s h e d a t l e a s t o n c e a week f o r a t l e a s t f o u r ( 4 ) cons e c u t i v e weeks p r e c e d i n g t h e d a y o f s a i d m e e t i n g , i n some newspaper o f g e n e r a l c i r c u l a t i o n published i n t h e county wherein t h e p r i n c i p a l p l a c e of b u s i n e s s of s u c h c o r p o r a t i o n is l o c a t e d . . . . ." F u r t h e r , s e c t i o n 15-903, R.C.M. 1947, provided: " O r g a n i z a t i o n o f m e e t i n g - - v o t e on p r o p o s a l - adoption of resolution. Upon t h e d a y i f stockappointed f o r s a i d meeting holders representing a t l e a s t two-thirds ( 2 / 3 ) o f t h e whole number o f s h a r e s o f t h e c a p i t a l s t o c k of s a i d c o r p o r a t i o n t h e n o u t s t a n d i n g , and o f r e c o r d on t h e b o o k s o f t h e c o r p o r a t i o n , and e n t i t l e d , a s a f o r e s a i d , t o vote a t such meeting, appearing a t s a i d m e e t i n g i n p e r s o n o r by a g e n t s o r p r o x i e s , a s above p r o v i d e d , v o t e i n f a v o r o f any such p r o p o s i t i o n , w h e t h e r p r o p o s e d by t h e d i r e c t o r s or t r u s t e e s , or not, a s s a i d stock- . . . holders may see fit, which proposition shall be in the form of a resolution specifying the particulars thereof and entered on the minutes of said stockholders' meeting, the said proposition or resolution shall be taken and adopted as the act of the corporation, and shall be carried out as such, and shall be approved and adopted by the board of directors or trustees." And, section 15-905, R.C.M. 1947, provided: "Secretary to enter result in minutes--copy thereof to be filed with county clerk of counties where corporation owns real estate. The secretary of such meeting shall enter upon the minutes of said stockholders meeting the total number of shares, and the number of shares of each class, voted for or against the proposition or resolution, and by whom voted, and stockholders voting against said proposition or resolution shall be taken as dissenting therefrom. Upon the adoption of any proposition or resolution such as above referred to, by the stockholders meeting, the secretary of the meeting shall make out a true and complete copy of the minutes of the stockholders' meeting, which shall be signed by the chairman of such meeting, and attested by said secretary and verified by them and acknowledged as required in the case of conveyance of real estate, and shall file the same for record in the office of the county clerk and recorder of the county wherein the principal office or place of business of such corporation is situated, and also in the office of the county clerk and recorder of any other counties wherein any of the real property included in the proposition or resolution adopted by said stockholders' meeting is situated." Finally, section 15-501, R.C.M. 1947, provided: "Meeting of stockholders and board of directors--where held. The meetings of the stockholders of a corporation must be held at its office or principal place of business in the state of Montana, except as hereinafter provided . . ." The statutory language is clear. A corporation must comply with the statutes to properly convey corporate property. Failure to do so has been addressed by this Court in Hanrahan v. Andersen, supra. In Hanrahan this Court held that failure to comply with the statutes in a transaction of this type voids the contract. The case dealt with a con- veyance of substantially all the assets of a corporation. Sections 15-901 through 15-910, R.C.M. 1947, were all codified as section 6004, R.C.M. 1921, and these same statutes were in effect at the time of the Bouma sale. The Court held in Hanrahan, 90 P.2d at 500, as follows: "Defendants contend that these transfers to Consolidated and Andersen do not come within the provisions of section 6004, because Capital retained its official books, records and office, and thereafter transacted business and was shown thereafter to have had other property. The argument overlooks the reason for the rule. If the question were merely whether the corporation had other property after the transaction, no sale could ever be objected to by a minority stockholder, for in any sale other property is received as consideration. Furthermore, the statute refers-to the sale of 'the whole or any part' of the property. Every part of the statute must be construed as havinq some ........................ meaning, and since the obvious purpose of the statute- to enlarge corporate powers to was s e l l p --p ---y......................... d a s r o e r t , it must be c o n s t r u e ----authorizinq sales not ---------- -----------already within the powers of the board of directors because not in the furtherance and in the ordinary course of the corporation's established business. In it- any event- is apparent from the record that both transactions involved all, of the corporate --- ----- assets and greatly affected the established corporate business, and therefore of came well within the class-- transactions necessitating compliance with the statute. "--------- y --------------- a --------T h e c o n v e a n c e t o C o n s o l i d t e d was a -nullity, for the stockholders' meetings - .............................. ~ -- ~ o r t e to authorize it were held on u r ------_-------------------------d insufficient notice. Whether the defects indicated in those proceedings were material need not be considered. . ". .Furthermore, the trust deed to Andersen was obviously void because of failure to comply with the provisions of section 6004." (Emphasis added.) Also, in Schwartz v. Inspiration Gold Mining Co. (D. Mont. 1936), 15 F.Supp. similar conclusion: 1030, 1036, the court came to a "The s t a t u t e r e q u i r e s t h a t ' n o t i c e s h a l l s t a t e t h e t i m e , p l a c e and t h e p u r p o s e of t h e shall meeting' [of s t o c k h o l d e r s ] ; 'and c o n t a i n a c o m p l e t e and s p e c i f i c s t a t e m e n t o f t h e p r o p o s a l t o be c o n s i d e r e d and a c t e d upon a t s a i d meeting. ' S e c t i o n 6004, Rev. Codes Mont. 1 9 2 1 , a s amended, S e s s . Laws 1 9 3 1 , pp. 1 0 8 , 1 0 7 , c . 42, S 1 ... "No answer t o a n y o f t h e s e i n q u i r i e s c a n be found i n t h e n o t i c e h e r e under c o n s i d e r a t i o n . I t follows t h a t the notice does not 'contain a c o m p l e t e and s p e c i f i c s t a t e m e n t o f t h e p r o p o s a l t o be c o n s i d e r e d and a c t e d upon a t t h e m e e t i n g ' ; w i t h t h e r e s u l t t h a t t h e same d o e s n o t m e e t t h e r e q u i r e m e n t s o f t h e Montana s t a t u t e and i s i n s u f f i c i e n t i n law t o s e t t h e power o f t h e s t o c k h o l d e r s o f t h e d e f e n d a n t c o r p o r a t i o n i n motion. J o n e s v . Vance Shoe 7 t h C i r . ) 1 1 5 F . 7 0 7 , 708; Company ( C . C . A . F o r r e s t e r v . B o s t o n & M. Mining Company, 2 1 M o n t . 5 4 4 , 5 5 P . 2 2 9 , 2 5 3 ; Thompson o n C o r p o r a t i o n ( 3 r d E d . ) p p . 106 and 2 8 4 . " Clearly, t h e c o u r t s have h e l d t h a t t h e s t a t u t e s r e g u l a t i n g t h e s a l e of that c o r p o r a t e a s s e t s m u s t be s t r i c t l y f o l l o w e d and the failure t o do s o w i l l result in the transaction being d e c l a r e d a n u l l i t y . The o n l y l a w i n s u p p o r t o f a p p e l l a n t s ' p o s i t i o n , c i t e d by a p p e l l a n t s , c a n be found a t 9 A.L.R.2d can e a s i l y be d i s t i n g u i s h e d . s e c t i o n of when not 1 2 9 7 , and There is a d i s c u s s i o n i n t h i s and how a c o r p o r a t i o n in t h e b u s i n e s s of s e l l i n g p r o p e r t y need n o t h a v e s h a r e h o l d e r a p p r o v a l t o s e l l corporate assets. where a holds that However, corporation necessary. in those t h e s e c t i o n draws a d i s t i n c t i o n selling i t s o n l y major circumstances shareholder is asset and approval is F u r t h e r , a n o t h e r d i s t i n c t i o n c a n be f o u n d i n t h e f a c t t h a t t h e r e i s no m e n t i o n of how s t a t e s t a t u t e s a f f e c t ing c o r p o r a t e property s a l e s may a f f e c t t h e v a l i d i t y o f a s a l e without shareholder approval. The f a c t s and l a w i n s u p p o r t o f J u d g e L a n g e n ' s r u l i n g does n o t end h e r e . I n t h e f i n d i n g s o f f a c t and c o n c l u s i o n s of 8221/8073, law in causes the court held that the d i r e c t o r s m e e t i n g i n which t h e Bouma c o n t r a c t came t o p a s s was a t o t a l sham. The r e a s o n s a r e c l e a r . The c o r p o r a t e l a w a t t h a t time r e q u i r e d t h a t f o r a person t o be a c o r p o r a t e director, parties t h e y a l s o had t o be a s t o c k h o l d e r . present stockholders. their at That the is, Phoenix Mabel "directors" and None o f the were I v e r s o n had Carl meeting lost s t o c k t o F a r m e r s S t a t e Bank o v e r a y e a r b e f o r e t h i s meeting was called. Krull and Treadaway had n e v e r owned s t o c k i n t h e c o r p o r a t i o n and d i d n o t own a n y a t t h e t i m e o f t h e meeting. A l s o , a l l t h e o t h e r s t o c k was h e l d by v a r i o u s i n t e r e s t s t h a t were n o t p r e s e n t a t t h e m e e t i n g . The r e a s o n t h a t no s t o c k h o l d e r s were i n a t t e n d a n c e a t t h e m e e t i n g was t h a t no n o t i c e o f was even g i v e n , contrary t h e stockholders meeting t o Chapter 9, Title Montana C o r p o r a t i o n Code, t h e n i n e f f e c t . was made f o r p r o t e c t i o n o f f i l i n g of the A l s o no p r o v i s i o n No p u b l i c a t i o n o f n o t i c e t h e r e s o l u t i o n a u t h o r i z i n g t h e s a l e was pub- l i s h e d i n t h e l o c a l newspaper, f i c a t e s of of t h e r i g h t s of d i s s e n t i n g stock- holders, as the s t a t u t e s required. or 15, and no f i l i n g o f t h e c e r t i - p r o c e e d i n g s and r e s o l u t i o n a u t h o r i z i n g t h e s a l e was made w i t h t h e P o n d e r a County c l e r k and r e c o r d e r . Quite s i m p l y , t h e m e e t i n g was a f a r c e . Appellants argue that the p r e s e n t were t h e s h a r e h o l d e r s of S t a t e Bank, U n i t e d Bank o f n o t s h a r e h o l d e r s of notice. shareholders who r e c o r d and t h a t , were Farmers P u e b l o and S t a n l e y S w a i n e w e r e record and, therefore, not entitled t o T h i s a r g u m e n t f l i e s i n t h e f a c e o f t h e l a w and t h e r e a l i t y of the situation. F i r s t of a l l , Montana c a s e l a w holds that a person may be owner of stock in a corporation even though certificates of stock have not been issued. Henningsen v. Stromberg (1950), 124 Mont. 185, 221 P.2d 438. Secondly, it required a suit by Farmers State Bank, United Bank of Pueblo and Stanley Swaine to have their interests recognized. Farmers State Bank of Conrad v. Iverson and Bouma (1973), 162 Mont. 130, 509 P.2d 839. The fact that Krull and Treadaway refused to issue certificates until they were forced to do so by court order does not mean that the aforementioned parties were not shareholders. Thus, the meeting was held by parties incapable of authorizing anything, much less a sale of the only major corporate asset. Of importance in any determination is the manner in which Bouma conducted himself at the time of the sale. No Montana attorney was retained in connection with the transaction. No title investigation was conducted by Boumas on a three-quarters of a million dollar land transaction. The contract authorized payment of 44 percent of the unpaid contract installment balance directly to Krull and Treadaway instead of to the corporation. These facts illustrate the existence of questionable circumstances. Further, the fact that Bouma's ranch, the Agawam place, was purchased by the corporation for $150 per acre and six weeks later sold to members of Bouma's family, together with the fact that Bouma admitted knowing of the Farmers State Bank action and even being told of Farmers State Bank interests by Krull and Treadaway indicate that Judge Langen's ruling was not contrary to the weight of the evidence. It is apparent from the record in this case that the transactions involved virtually all of the corporate assets, greatly affected therefore, the came necessitating established well within compliance corporate that with the class business of statute. and, transactions Accordingly, t h e r e was a p r e t e n s e t o comply w i t h t h e l a w , and t h e f a i l u r e t o d o s o c a u s e d t h e c o n t r a c t t o be v o i d . T h e r e i s no q u e s - t i o n t h a t t h e m e e t i n g was a sham and t h a t t h e s h a r e h o l d e r s e n t i t l e d t o vote, 76 p e r c e n t o f notified represented. and not t h e c o r p o r a t i o n , were n o t Appellants knew a b o u t the s h a r e h o l d e r a c t i o n , t o o k a gamble when t h e y " p u r c h a s e d " t h e I v e r s o n f a r m and l o s t . I s s u e 2: Were t h e r e g e n u i n e i s s u e s o f m a t e r i a l f a c t i n t h e c a s e which made summary judgment i n a p p r opr i a t e ? Summary judgment i s p r o p e r depositions, ". . . answers t o i n t e r r o g a t o r i e s , i f the pleadings, and a d m i s s i o n s on f i l e , t o g e t h e r w i t h t h e a f f i d a v i t s , i f a n y , show t h a t t h e r e i s no g e n u i n e i s s u e a s t o a n y m a t e r i a l f a c t and t h a t t h e moving party . . ." R u l e 5 6 ( c ) , M.R.Civ.P. is e n t i t l e d to judgment as a matter of law A p p e l l a n t s contend t h a t t h e D i s t r i c t Court e r r e d i n granting the corporation's t h e r e were m a t e r i a l summary j u d g m e n t m o t i o n b e c a u s e i s s u e s of m u s t be a d j u d i c a t e d by a t r i a l . f a c t t h a t were p r e s e n t and Appellants urge t h a t they p r e s e n t e d 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 i r own summary judgment m o t i o n and t o d e n y t h e r e s p o n d e n t ' s m o t i o n . Ap- p e l l a n t s argue t h a t because of their "numerous a f f i d a v i t s " t h e m o t i o n s h o u l d be d e n i e d . Also, t h e y contend t h a t t h e c o n t r a c t v o i d a b i l i t y was a q u e s t i o n o f f a c t f o r a j u r y , the judge's misquotation of their that s e v e n t h d e f e n s e was i m p r o p e r and t h a t somehow r e s j u d i c a t a h a s b e e n i m p r o p e r l y u s e d a g a i n s t them. None o f t h e s e arguments a r e on p o i n t . Nor a r e a n y o f them s u f f i c i e n t t o w a r r a n t a r e v e r s a l o f t h e District Court's ruling. A p p e l l a n t s p r e s e n t e d n o t h i n g b u t f a n c i f u l and f r i v o l o u s m a t e r i a l , n o t h i n g which c o u l d be c o n s i d e r e d t o be of a substantial nature. T h i s i s c o n t r a r y t o t h e l a w i n Montana. Bank v . C h e y e n n e W. Young 401, 35 S t . R e p . issue has times. and 492, 587 P . 2 d The c a s e law i n Montana i s c l e a r o n 1806. this ( 1 9 7 8 ) , 1 7 9 Mont. been repeated and discussed I n F l a n s b e r g v . Montana Power Co. numerous ( 1 9 7 0 ) , 1 5 4 Mont. 5 3 , 460 P . 2 d 2 6 3 , t h e C o u r t h e l d t h a t t h e b u r d e n is upon t h e p a r t y opposing t h e motion t o p r e s e n t evidence of a substant i a l and m a t e r i a l n a t u r e r a i s i n g a g e n u i n e issue of fact. Once t h e c o r p o r a t i o n had p r e s e n t e d i t s f a c t s i n s u p p o r t o f t h e m o t i o n , a p p e l l a n t s had t h e b u r d e n o f o p p o s i n g t h e m o t i o n w i t h t h e i r own f a c t s . The c a s e law They f a i l e d t o d o s o . is e x p l i c i t and the citations abound t h a t t h e burden s h i f t s t o t h e p a r t y opposing t h e motion t o p r e s e n t m a t e r i a l and s u b s t a n t i a l f a c t s t o oppose t h e motion. H a r l a n d v. Taylor v. Anderson Anaconda F e d e r a l 5 1 , 540 P.2d Mont . Prac. , 447, C r e d i t Union 1 5 1 ; Rumph v . D a l e E d w a r d s , 600 P.2d 756.16. District ( 1 9 7 6 ) , 1 6 9 Mont. Court In 163, State (1972), 36 S t . R e p . ex rel. 1 5 9 Mont. 548 P.2d 613; ( 1 9 7 6 ) , 1 7 0 Mont. Inc. (1979), 1022; 6 Moore's Fed. Burlington 295, 496 Northern P.2d 1152, affirmed the rule that: " F a i l u r e o f t h e p a r t y opposing t h e motion t o e i t h e r r a i s e or demonstrate t h e existence of a genuine i s s u e of material fact, o r t o demonstrate t h a t t h e l e g a l i s s u e should not be determined i n f a v o r o f t h e movant, i s e v i d e n c e t h a t t h e p a r t y ' s b u r d e n was n o t carried. Summary j u d g m e n t i s t h e n p r o p e r , t h e c o u r t b e i n g u n d e r no d u t y t o a n t i c i p a t e v. we p r o o f t o e s t a b l i s h a m a t e r i a l and s u b s t a n t i a l i s s u e o f f a c t . " 496 P.2d a t 1 1 5 5 . I n Harland v. Anderson, once t h e burden h a s s h i f t e d , supra, t h e Court held that t h e p a r t y opposing t h e motion i s h e l d t o a s t a n d a r d o f p r o o f which i s a s s u b s t a n t i a l a s that initially imposed on t h e moving p a r t y . Finally, in N a e g e l i v . D a n i e l s ( 1 9 6 5 ) , 1 4 5 Mont. 3 2 3 , 400 P.2d 8 9 6 , t h e Court held t h a t t h e t r i a l c o u r t , i n c o n s i d e r i n g a motion f o r summary j u d g m e n t , h a s no d u t y t o a n t i c i p a t e p o s s i b l e p r o o f t h a t m i g h t be o f f e r e d u n d e r t h e p l e a d i n g s and t h a t a s k i n g f o r s u c h f o r e s i g h t demands " c l a i r v o y a n c e " n o t p o s s e s s e d by even a trial judge. The contentions a p p e l l a n t s argued ( i . e . , r e s j u d i c a t a , etc.) were not presented in a for reversal that contract voidability, substantial and material manner t o t h e t r i a l c o u r t . The c o u r t f o u n d t h e c o n t r a c t v o i d b e c a u s e t h e r e a m s of evidence presented by t h e r e s p o n d e n t s u p p o r t e d i t , and one need o n l y t o look t o t h e p r e v i o u s d i s c u s s i o n t o s e e t h a t t h e e v i d e n c e was awesome. A p p e l l a n t s had t o p r e s e n t e v i d e n c e t o oppose t h i s m a t e r i a l . They d i d n o t , a n d , t h e r e f o r e , the summary judgment m o t i o n was p r o p e r . A p p e l l a n t s c o n t e n d t h a t t h e manner i n which t h e j u d g e c o n s t r u e d t h e i r s e v e n t h d e f e n s e s h o u l d be s u f f i c i e n t t o d e n y t h e motion. The s u b s t i t u t i o n of the word "further" for " l a t e r " is n o t s u f f i c i e n t g r o u n d s i n l i g h t o f t h e t r e m e n d o u s amount of facts presented by respondent to warrant a r e v e r s a l of t h e r u l i n g . Finally, c a u s e s 8221/8073 them. appellants argue that s h o u l d n o t be u s e d the judgment (res judicata) from against The f i n d i n g s o f f a c t and c o n c l u s i o n s o f l a w t h a t w e r e e s t a b l i s h e d i n c o n s o l i d a t e d c a u s e s 8221/8073 a r e b i n d i n g o n the appellants. 6 Moore's Fed. Prac. 7156; In Re Russell (1974), 115 Ca1.Rptr. First, the issue 511, 12 Cal.3d 229, 524 P.2d 1295. is one that would involve collateral estoppel, i.e., issue preclusion; the issue does not involve res judicata, i.e., claim preclusion. Second, it would be burdensome, if not illogical, for a court not to recognize the findings and factual issues. judgment of another court on the same Finally, the contract was void ab initio in August 1968, and the contract remains so today. Issue 3: Are any of the appellants' "defenses" sufficient to warrant a reversal of the summary judgment (i.e., (a) laches, (b) estoppel, (c) ratification, (d) statute of limitations, (e) etc.)? Appellants contend that the lower court erred because it failed to recognize the numerous "defenses" that would warrant reversal of the summary judgment. discussion presented. the basis for granting In the previous summary judgment was Appellants had the burden at the time of the motion in the District Court to present material and substantial facts to oppose the granting of the motion. Naegeli v. Daniels (1965), 145 Mont. 323, 400 P.2d 896; Harland v. Anderson (1976), 169 Mont. 447, 548 P.2d 613; 6 Moore's Fed. Prac. 156.15. They failed to do this. Appellants contend that the respondent by its actions ratified the contract and is thereby estopped from saying the contract is void. It has been held that a contract entered into without the power to contract cannot be ratified or enforced and that the incapacity to contract cannot be removed by estoppel. Cir. 1937), 89 F.2d 83. Granzow v. Village of Lyons (7th Further, appellants argue that respondent's action is barred by laches. The respondent has been pursuing this matter since the court declared that the corporate usurpers must be ejected and the rightful stockholders must be recognized. Farmers State Bank of Conrad v. Iverson (1973), 162 Mont. 130, 509 P.2d 839. Respondent has not failed to pur- sue this action in a timely manner, but was merely delayed by the actions of the appellants and the corporate usurpers. The final contention by the appellants is that the respondent is barred by the statute of limitations to bring this action. This is unfounded because section 27-2-214 and section 27-2-202, MCA, hold otherwise. could not have December expected 10, 1971, respondent to because the Also, appellants file sooner corporation was than in the control of the usurpers and the degree to which the usurpers had been defrauding the corporation did not become known until well after the contract in question was entered into. Issue 4: Did the District Court err in substituting the partially reconstituted corporation in place of the plaintiff receiver while the corporation remained under receivership? Appellants contend the lower court erred in substituting the partially reconstituted corporation in place of the receiver. Under section 15-2291, R.C.M. 1947 (now section 35-1-922, MCA), the District Court had the power to make the substitution. Appellants' argument is unfounded in the facts and the law. Issue on cross-appeal: Did the District Court err in its accounting decree? This is a suit for an accounting. It must be decided upon i t s own p e c u l i a r f a c t s and c i r c u m s t a n c e s which c l e a r l y d i s t i n g u i s h it f r o m a l l o t h e r a u t h o r i t i e s c i t e d and r e l i e d upon by either party. ( 1 9 5 0 ) , 1 2 3 Mont. The Reickoff v. Consolidated Gas Co. 555, 217 P.2d 1 0 7 6 . District Court e n t i t l e d t o $819,321.08 ruled that appellants were f o r t h e c r o p s h a r e and i n t e r e s t . The c o r p o r a t i o n argues t h a t t h i s i s improper because t h e c o u r t is rewarding t h e a p p e l l a n t s f o r t h e i r i l l e g a l a c t i o n . accounting action, circumstances appellants f a c t s presented, which did is s i t t i n g i n e q u i t y and c a n the court d e t e r m i n e from t h e awards not act are in I n an t h e t e s t i m o n y and most the good the The faith equitable. in their effort to T h e r e is l i t t l e d o u b t t h a t acquire the land i n question. a p p e l l a n t s knew t h e c o n t r a c t t h e y e n t e r e d i n t o was s u s p e c t . However, they did g i v e up s o m e t h i n g t o acquire the farm. They gambled t h a t t h e c o n t r a c t would n e v e r be q u e s t i o n e d a n d proceeded t o t r e a t the land as t h e i r d e p r i v e p e r s o n s of their not actually "keep" own s i n c e 1 9 6 8 . To e f f o r t s and t o s a y t h a t t h e y d i d the farm operating efficiently and p r o f i t a b l y ' d u r i n g t h a t p e r i o d would a l s o be u n f a i r . A dilemma o c c u r s a s t o whether a p p e l l a n t s s h o u l d be awarded f o r t h e i r e f f o r t s o r d e p r i v e d of for the caretaking proper in ruling thirds of the reason than of the farm. that the appellants crop share, i t was f a i r any r e i m b u r s e m e n t The D i s t r i c t should $819,321.08, and e q u i t a b l e . if Court receive for no was two- other To d e p r i v e a p p e l - l a n t s t h e f r u i t s o f t h e i r l a b o r f o r t h i r t e e n y e a r s would n o t be in the best policy. i n t e r e s t s of justice, f a i r p l a y and p u b l i c Rieckhoff, supra, does not apply a s t h a t case d e a l s with a w i l l f u l trespasser. This Court w i l l not t r e a t appel- l a n t s a s such, b u t w i l l f o l l o w t h e r u l e of e q u i t y t h a t each c a s e s t a n d s on i t s own f a c t s i n a n e q u i t y a c t i o n . Hamilton v . Rock ( 1 9 4 8 ) , 1 2 1 Mont. 245, 1 9 1 P.2d 663. However, t h e D i s t r i c t C o u r t d i d e r r i n i t s a c c o u n t i n g d e c r e e i n a l l o w i n g a p p e l l a n t s t h e e x c e s s amounts by w h i c h t h e v a l u e of i m p r o v e m e n t s made upon t h e f a r m e x c e e d e d t h e c o s t of s u c h improvements. The c o r p o r a t i o n a r g u e s t h a t t h e r e i m b u r s e m e n t f o r t h e i m p r o v e m e n t s s h o u l d be l i m i t e d t o t h e c o s t o f t h o s e i m p r o v e m e n t s and c i t e s t h e R e s t a t e m e n t o f t h e Law, Restitution, 42 § at 42, as authority, along v a r i o u s c a s e c i t a t i o n s i n support of t h e Restatement. with Also, t h e c o r p o r a t i o n contends t h a t t h e r u l e i n t h i s s t a t e is t h a t a w i l l f u l t r e s p a s s e r s h a l l r e c e i v e no c o m p e n s a t i o n f o r t h e i m p r o v e m e n t s made and a n y i m p r o v e m e n t s a p p e l l a n t s made a f t e r the i n s t i g a t i o n of for. However, this a c t i o n should not compensated t h e c o r p o r a t i o n asked i n its p l e a d i n g s t h a t a p p e l l a n t s r e c e i v e no more ments. be 42 C . J . S . than the c o s t Improvements, § of the 7 a t 436-437, improve- states: "As a g e n e r a l r u l e a n o c c u p a n t i s r e g a r d e d a s a n o c c u p a n t i n bad f a i t h and n o t e n t i t l e d t o c o m p e n s a t i o n f o r h i s i m p r o v e m e n t s , w h e r e , and o n l y w h e r e , he e i t h e r h a s a c t u a l n o t i c e o f a d v e r s e t i t l e , o r what i s e q u i v a l e n t t h e r e t o , s u c h a s where t h e r e i s b r o u g h t home t o him n o t i c e o f some f a c t o r c i r c u m s t a n c e t h a t would p u t a man o f o r d i n a r y p r u d e n c e t o s u c h an i n q u i r y a s would, i f h o n e s t l y f o l l o w e d , l e a d t o a knowledge o f t h e a d v e r s e t i t l e . I t h a s a l s o been h e l d t h a t an o c c u p a n t c a n n o t r e c o v e r i f he had f u l l means o f d i s c o v e r i n g t h e e x i s t e n c e of such adverse t i t l e , because i n o r d e r t o be i n t h e p o s i t i o n o f a h o l d e r i n good f a i t h h e must h a v e u s e d p r o p e r c a r e and d i l i g e n c e i n ascertaining t h e condition of t h e t i t l e on which h e b a s e s h i s c l a i m ." .. See a l s o Fouser 137. v. Paige ( 1 9 8 0 ) , 1 0 1 I d a h o 294, The d i s c u s s i o n c o n t i n u e s i n 42 C . J . S . 7 a t 438, by s t a t i n g , ". . . 612 P.2d Improvements, S it is g e n e r a l l y h e l d t h a t an occupant is not entitled to compensation for improvements made on the land after the commencement of an action in which title is disputed." From the foregoing and from the facts on hand in this matter, it would appear that appellants are not entitled to the cost of their improvements, much less the enhanced value. Appellants were aware of the questionable nature of their title, contained in the void contract, and there is no question that the majority of the improvements took place after this suit had commenced. However, the corporation is asking that the credit allowed appellants be reduced by $82,148--that is, it does not want the entire credit removed but only the enhanced value. Since this is the amount plead, and this Court is sitting in equity on the accounting decree, the award to appellants should be reduced from $192,500 (enhanced value of improvements) to $110,352, the cost of the improvements. The District Court further erred in the accounting decree by allowing appellants to retain the oil and gas income derived from the accounting period. corporation by the Boumas received "title" to the oil and gas rights through the void represented farmland during Krull and contract. The corporation, Treadaway, did not have the authority to make the original contract and, therefore, did not have the authority to contract away the corporation's mineral (oil and gas) rights. This allowance must be vacated. As so modified, the judgment of the District Court is af f irmed. W concur: e Chief J u s t i c e Honorable J a c k L. Green, D i s t r i c t Judge, s i t t i n g i n p l a c e o f Mr. J u s t i c e D a n i e l J . S h e a Mr. Justice John C. Sheehy: I concur in part but dissent to the offset result in the majority opinion.

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