BOWMAN v PRATER

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No. 84-231 IN THE SUPREME COURT OF THE STATE OF MONTANA 1984 DELBERT S. BOWMAN and PATRICIA BOWMAN, Plaintiffs and Defendants, JOHN R. PRATER, GERI PRATER, ELMER G. SPIDEL & AVIS SPIDEL, Defendants and Appellants. APPEAL FROPI: The District Court of the Sixteenth Judicial District In and for the County of Prairie, The Honorable A. B. Martin, Judge presiding. COUNSEL OF RECORD: For Appellant: Wright, Tolliver Montana & Guthals; Joel E. Guthals, Billings, For Respondent: Ira D. Eakin, Baker, Montana Submitted on Briefs: Aug. 30, 1984 Decided: December 4, 1984 Filed: i j i 11 . '2 1984 Clerk 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 O p i n i o n o f t h e Court Mr. The d e f e n d a n t s a p p e a l from a n i n j u n c t i o n p e n d e n t e l i t e order of the District, Court District Prairie of County, the Sixteenth enjoining Judicial defendants from t r a n s f e r r i n g o r encumbering a s s e t s owned by t h e c o r p o r a t i o n . The plaintiffs Montana. desire are marketing formed : Bowman Developers, Inc. keepers bee pollen. Apiaries, , residing in Terry, formed s e v e r a l c o r p o r a t i o n s w i t h t h e The p a r t i e s of bee Three Inc., (P.C.L.D. ) corporations Prairie and County Made Bee were Land Products Laboratories, Inc. In return for capital stock in the corporation, the p l a i n t i f f s c o n t r i b u t e d l a n d w i t h a s e r v i c e s t a t i o n on i t , a s well as their business. pounds note. in Additionally, of bottle. labor pollen, running the the plaintiffs 3 1 honey drums, proceeds of the 28,000 250 pound p r o p a n e a n $89,000 p r o m i s s o r y were loan production contributed and a The p l a i n t i f f s a l s o c o - s i g n e d The pollen used to acquire a t a b l e t i n g m a c h i n e , g r i n d e r and p r e s s and o t h e r e q u i p m e n t f o r the production contributed and marketing of pollen. The defendants a r e n t a l h o u s e and o f f i c e b u i l . d i n g i n e x c h a n g e f o r c a p i t a l stock i n t h e venture. On May 8 , 1 9 8 2 , t h e d e f e n d a n t s t r a n s f e r r e d t i t l e o f t h e rental property individually. from The P.C.L.D. defendants Inc also . to mortgaged defendants the office b u i l d - i n g and. r e n t a l p r o p e r t y t o s e c u r e a p e r s o n a l l o a n i n t h e amount of plaintiffs. defendant $1.09,000 without The p l a i n t i f f , used corporate the Mrs. knowledge Bowman, funds or consent of testified that the without consent or a u t h o r i z a t i o n t o pay f o r h i s s o n ' s p e r s o n a l l i v i n g expenses. The testimony further established that the defendant took the tableting and grinding machines to Colorado without knowledge or consent of the plaintiffs. the The plaintiffs repeatedly requested to examine the financial records of the corporation, but were refused. No payments have been made on the $89,000 loan, as a result, the plaintiffs credit rating has been ruined. On July 22, 1983, plaintiffs filed an action against defendants claiming corporate mismanagement and breach of fiduciary duty as counter-claimed corporate for breach officers. of Defendants settlement agreement, interference with contractual relations, breach of fiduciary duties, and defamation of character. On March 26, 1984, the plaintiffs petitioned for a preliminary injunction to enjoin defendants from transferring corporate money and property. was held on April 20, 1984. An order to show cause hearing The injunction was granted. It is from the injunction pendente lite order of the District Court which the defendants appeal. Two issues are before this Court: (1) Whether plaintiff's the District preliminary Court injunction erred without in issuing defendants presenting evidence at the show cause hearing. (2) Whether the findings of fact and conclusions of law in support of the preliminary injunction are clearly erroneous. Injunction proceedings are prescribed and regulated by Chapter 19, Title 27, Section 27-19-301, MCA correspondingly provide: of the Montana and section Code Annotated. 27-19-303, MCA "27-19-301. Notice of application hearing. (1) No preliminary injunction may be issued without reasonable notice to the adverse party of the time and place of the making of the application therefor. "(2) Before granting an injunction order, the court or judge shall make an order requiring cause to be shown, as a the specified time a.nd place, why injunction should not be granted, and the adverse party may in the meantime be restrained as provided in 27-19-314. "27-19-303. Time of granting injunction, (1) The injunction evidence required. order may be granted after the hearing at any time before judgment. "(2) Upon the hearing each party may present affidavits or oral testimony. An injunction order may not be granted on affidavits unless: " (a) they are duly verified; and "(b) the material allegations of the affidavits setting forth the grounds for the order are made positively and not upon information and belief. " (3) Upon the hearing of a contested application for an injunction order, a verified answer has the effect only of an affidavit. " In the instant case, notice of the hearing on the preliminary injunction was given to defendants. hearing was had. An order to show cause The counsel of both parties were present. The defendants submit that the court granted the injunction after hearing only the plaintiffs' side of the case. defendants claim they were not given any The opportunity to present evidence as to why the preliminary injunction should not be issued as provided by section 2 7 - 1 9 - 3 0 3 ( 2 ) , The District Court record indicates MCA. otherwise. Following a presentation of evidence the court asked if there was "anything further?" position to the court. The plaintiffs sumrna.rized their The defendants remained silent. It is a t this p o i n t t h e c o u r t r u l e d and r e q u e s t e d p l a i n t i f f s c o u n s e l t o submit proposed f i n d i n g s o f of law. f a c t and c o n c l u s i o n s Moreover, t h e D i s t r i c t C o u r t r e c o r d i n d i c a t e s t h a t defendants d i d not r a i s e an objection o r request t o provide an offer of proof at the close of the hearing. The d e f e n d a n t s simply f a i l e d t o r a i s e t h i s i s s u e i n t h e D i s t r i c t C o u r t . W h o l d t h i s i s s u e c a n n o t b e ra.ised f o r t h e f i r s t t i m e e W have r e p e a t e d l y s t a t e d t h a t t h i s C o u r t w i l l e on a p p e a l . not consider presented Council to v. questions of the court. trial Board of claimed Natural error not Northern Resources raised Plains and C o n s t . Co. 513, 579 P.2d Resource Conservation ( 1 9 7 9 ) , 181 Mont. 500, 594 P.2d 297; Hayes v . J. M. ( 1 9 7 8 ) , 176 Mont. or 1225; Kearnes v. S . Const. McIntyre ( 1 9 7 7 ) , 173 Mont. 239, 567 P.2d 433. The d e f e n d a n t s a r g u e on a p p e a l t h a t t h e D i s t r i c t C o u r t failed to exercise independent p l a i n t i f f s 1 proposed f i n d i n g s . claim the District Court judgment by adopting the S p e c i f i c a l l y , t h e defendants erred in making the following findings : (1) The p l a i n t i f f s and d e f e n d a n t s w e r e i n c o r p o r a t o r s of t h e corporation i n question; ( 2 ) The p l a i n t i f f s were 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 ; ( 3 ) The d e f e n d a n t s t r a n s f e r r e d ownership o f t h e r e n t a l owned by P.L.C.D., Inc. to John R. Prater and Geraldine Prater; ( 4 ) The t a b l e t i n g machine and g r i n d e r were removed t o Colorado by John P r a t e r ; ( 5 ) The d e f e n d a n t s s u r r e n d e r e d p o s s e s s i o n of t h e o f f i c e building; ( 6 ) The d e f e n d a n t s f a i l e d t o show t h e p l a i n t i f f s t h e c o r p o r a t i o n ' s f i n a n c i a l r e c o r d ; and (7) No payments have been made to the plaintiffs on a promissory note, as a result their credit rating has been ruined. The plaintiffs claim the District Court's findings are supported by the record. We agree. The standard for review of findings made by a district court is the same whether the district court has prepared them or has adopted conclusions. a party's Goodmundson v. proposed Goodmundson findings and (1982), 655 P.2d 509, 39 St.Rep. 2295; In re the Marriage of LeProuse (Mont. 1982), 642 P.2d 526, 39 St.Rep. 1053; Public Service Commission St.Rep. fact 1162. that City of Billings v. (Mont. 1981), 631 P.2d 1295, 38 "Although the practice is disapproved, the the District Court substantially adopted the findings proposed by respondent's counsel does not change the standard of review by this Court." In re the Marriage of Hunter (Mont. 1982), 639 P.2d 489, 39 St. Rep. 59. We must ascertain whether the "clearly erroneous standard of Rule 52 (a) supports the findings on appeal." (Mont. 1982), 654 P.2d Marriage of Jensen 1109. Rule 52(a) 1001, 39 St.Rep. (Mont. 1981), 631 P.2d M.R.Civ.P. fact shall not be "findings of provides, Speer v. Speer 2204; In re the 700, 38 St.Rep. in part, that set aside unless clearly erroneous, and due regard shall be given to the opportunity of the trial witnesses." court This appellate court. to judge of the credibility of the rule reiterates our function as an In General Mills Inc. v. Zerbe Bros., Inc. (Mont. 1983), 672 P.2d 1109, 40 St. Rep. 1830, we defined this function: "We cannot deviate from our function as an appellate court and reverse the District Court's decision. Our functions do not include a retrial of the case. We will not substitute our judgment for that of the trial court. We are 'confined to determining whether there is substantial credible evidence to support the findings of fact and conclusions of law' Cameron v. Cameron (1978), 179 Mont. 219, 227 587 P.2d 939, 344; In the Matter of the Estate of LaTray (1979), 183 Mont. 141, P.2d G19; Olson v. Westfork 598 Properties, Inc. (1976), 171 Mont. 154, 557 P.2d 821; Hornung v. Estate of Lagerquist (1970), 155 Mont. 412, 473 P.2d 541.'' We disagree with defendants ' contention that the findings and conclusions adopted by the District Court as a result of the hearing are clearly erroneous. Specifical-ly, the record supports the District Court's findings that the defendants as well as the plaintiffs were incorporators a.nd served as directors of the corporation. The plaintiff, Mrs. Bowman and testified that her husband incorporators of all three corporations. she was a director. herself were She also claimed The Bowmans' testimony likewise supports the remaining findings made by the trial court. The findings are further substantiated by plaintiffs' warranty deed and quit claim deed exhibit evincing the transfer of the rental house from P.L.C.D. , Inc. , to the defendants. The evidence will he viewed in the light most favorable to the prevailing party. 939. Cameron v. Cameron (1978), 179 Mont. 219, 587 p.26 We hold substantial, credible evidence supports the District Court's findings. was proper. The issuance of the injunction The order of the District Court is affirmed. We concur:

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