No. 13185
I N THE SUPREME C U T OF THE STATE OF M N A A
OR OTN
1976
CHARLES M. HAUPTMAN,
P l a i n t i f f and Appellant,
EDWARD, I N C . , a corpora t i o n ,
KENNETH E V R S AND GARY EDVARDS ,
DAD
Defendants and Respondents.
Appeal from: D i s t r i c t Court of t h e Seventh J u d i c i a l D i s t r i c t ,
Honorable L. C. Gulbrandson, Judge p r e s i d i n g .
Counsel of Record:
For Appellant :
Moulton, Bellingham, Longo and Mather, B i l l i n g s ,
Montana
Bruce Ennis argued, B i l l i n g s , Montana
For Respondents:
Gene Huntley argued, Baker, Montana
R. W. Heineman, Wibaux, Montana
Submitted: T"I?rEh:5, 1976
Decided : AFK 2 8 1976
F i l e d : kpb 2.81 7
96
M r . J u s t i c e John Conway Harrison d e l i v e r e d t h e Opinion o f t h e
Court .
This a p p e a l i s from a p a r t i a l summary judgment g r a n t e d
i n t h e d i s t r i c t c o u r t , Dawson County, i n an a c t i o n f o r s p e c i f i c
performance of an o p t i o n .
Two i s s u e s a r e p r e s e n t e d f o r t h i s c o u r t ' s c o n s i d e r a t i o n :
(1) Did t h e d i s t r i c t c o u r t e r r by g r a n t i n g p a r t i a l
judgment i n f a v o r of Edwards, I n c . , t h e c o r p o r a t e d e f e n d a n t ,
on t h e t h e o r y t h a t t h e c o r p o r a t e o f f i c e r s were n o t a u t h o r i z e d
t o e x e c u t e an o p t i o n on i t s b e h a l f ?
(2) Did t h e d i s t r i c t c o u r t e r r i n r e f u s i n g t o g r a n t
p l a i n t i f f ' s motion f o r judgment on t h e p l e a d i n g s w i t h r e g a r d t o
defendants' cross-complaint?
C h a r l e s M. Hauptman, a g e o l o g i s t and l e a s e b r o k e r , was
the p l a i n t i f f i n t h i s action in the d i s t r i c t court. Defendants
were Edwards, I n c . , a Montana farm c o r p o r a t i o n , and Kenneth Edwards
and Gary Edwards, o f f i c e r s of t h e c o r p o r a t i o n .
P l a i n t i f f o b t a i n e d an o p t i o n t o l e a s e , signed by Kenneth
Edwards and Gary Edwards, which was r e p u d i a t e d when p l a i n t i f f
attempted t o exercise i t . P l a i n t i f f t h e n sued t h e c o r p o r a t i o n f o r
s p e c i f i c performance of t h e o p t i o n . I n i t s answer t h e c o r p o r a t i o n
a l l e g e d t h e o p t i o n was n o t v a l i d because i t was n o t approved by
t h e c o r p o r a t i o n ' s board of d i r e c t o r s o r s t o c k h o l d e r s a s r e q u i r e d
by s e c t i o n 15-2272, R.C.M. 1947. T h e r e a f t e r p l a i n t i f f amended
h i s complaint t o j o i n a s d e f e n d a n t s Kenneth and Gary Edwards,
o f f i c e r s of t h e c o r p o r a t i o n , who had executed t h e o p t i o n on b e h a l f
of t h e c o r p o r a t i o n .
T h e r e a f t e r r e s p o n s i v e p l e a d i n g s by defendant c o r p o r a t i o n
and d e f e n d a n t s Kenneth and Gary Edwards brought about a second
amended complaint, t o which a second amended answer and a c r o s s -
complaint was f i l e d by d e f e n d a n t s . The second amended answer
a l l e g e d t h e o p t i o n was u n e n f o r c e a b l e because (1) i t was s u b j e c t
t o an u n f u l f i l l e d c o n d i t i o n p r e c e d e n t ; (2) i t was n o t p r o p e r l y
e x e r c i s e d ; and ( 3 ) i t was o b t a i n e d by f r a u d .
The second amended answer a l s o a l l e g e d , a s a d e f e n s e ,
t h a t t h e o p t i o n w a s n o t v a l i d b e c a u s e t h e c o r p o r a t e o f f i c e r s who
e x e c u t e d t h e o p t i o n were n o t a u t h o r i z e d t o do s o and t h e c o r p o r a -
tion did not r a t i f y t h e i r a c t s , The second amended answer i n
a c r o s s c o m p l a i n t r e q u e s t e d damages f o r s l a n d e r o f t i t l e b e c a u s e
of t h e f i l i n g o f a l i s pendens by p l a i n t i f f . Both p a r t i e s f i l e d
motions f o r summary judgment.
The c o u r t on August 8 , 1975, 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 law and a p a r t i a l summary judgment which d i s m i s s e d
p l a i n t i f f ' s c l a i m a g a i n s t t h e c o r p o r a t i o n on t h e ground t h e
c o r p o r a t e o f f i c e r s had n o t been a u t h o r i z e d t o a c t f o r t h e c o r p o r a -
t i o n when t h e y e x e c u t e d t h e o p t i o n . The d i s t r i c t c o u r t d e n i e d
p l a i n t i f f ' s motion f o r summary judgment on t h e p l e a d i n g s , and
d e n i e d summary judgment on t h e motion o f Kenneth and Gary Edwards
seeking r e l i e f individually.
The f a c t s , f o r t h e most p a r t , a r e n o t i n d i s p u t e . On
/'
May 1 9 , 1973, Kenneth Edwards and Gary Edwards s i g n e d a n o p t i o n
a s p r e s i d e n t and s e c r e t a r y r e s p e c t i v e l y o f Edwards, I n c . , t o
l e a s e t o p l a i n t i f f c e r t a i n l a n d s i n Dawson County, f o r t h e p u r p o s e
o f mining f o r c o a l , d e s c r i b e d a s :
ownsh ship 15 N o r t h , Range 5 3 " F a s t
2 M.P.M.
II
Section 9: A l l
" S e c t i o n 11: A l l
" s e c t i o n 1 7 : S-112."
Such l a n d s were owned and o p e r a t e d a s a farm by Kenneth
Edwards f o r some 25 y e a r s . P r i o r t o t h a t t h e y had been owned
by h i s f a t h e r and mother. H e owned i n e x c e s s o f 7,000 a c r e s of farm
land. O J a n u a r y 1, 1972, a c o r p o r a t i o n was formed w i t h Kenneth
n
a s p r e s i d e n t ; J e a n n i e Edwards, h i s w i f e , v i c e - p r e s i d e n t , and Gary,
h i s son, a s s e c r e t a r y . Of t h e 1 , 0 7 8 s h a r e s o f s t o c k i s s u e d f o r
t h e c o r p o r a t i o n , Kenneth owns 932 s h a r e s , Gary 145 s h a r e s and
Jeannie 1 share. I n addition t o the f a c t t h e corporation
owns i n e x c e s s o f 7,000 a c r e s o f farm l a n d , i t a l s o l e a s e s i n
e x c e s s o f 6,000 acres.
I n l a t e 1972 and e a r l y 1973, p l a i n t i f f Hauptman was
a t t e m p t i n g t o put t o g e t h e r o p t i o n s f o r a l a r g e a r e a , c o v e r i n g
ten square miles, f o r a c o a l lease. A t t h e time he c o n t a c t e d
t h e Edwards he had o p t i o n s on some 14,000 m i n e r a l a c r e s . On
March 1 4 , 1973, Hauptman met w i t h Kenneth and Gary Edwards a t
t h e r a n c h house n e a r Glendive, Montana. A t t h a t meeting t h e
p a r t i e s a r r i v e d a t c e r t a i n agreements ( t h e s u b s t a n c e o f which
a r e i n d i s p u t e ) , and a document e n t i t l e d a n o p t i o n t o l e a s e was
executed.
A d e s c r i p t i o n o f t h e l a n d s and a copy o f t h e proposed c o a l
l e a s e were a t t a c h e d t o t h e o p t i o n . The l a n d d e s c r i b e d t o t a l e d
l G O O a c r e s . Kenneth and Gary Edwards i n i t i a l e d e a c h page o f t h e
option t o lease. N e i t h e r Kenneth n o r Gary Edwards t o l d
Hauptman t h e y were a c t i n g w i t h o u t a u t h o r i t y on b e h a l f o f t h e
c o r p o r a t i o n a t t h e time t h e y e x e c u t e d t h e o p t i o n . The board o f
d i r e c t o r s n e v e r f o r m a l l y m e t t o c o n s i d e r whether t h e c o r p o r a t i o n
s h o u l d e x e c u t e t h e o p t i o n o r f o r t h e purpose of r a t i f y i n g .
Hauptman n o t i f i e d t h e c o r p o r a t i o n by two l e t t e r s , d a t e d
J u l y 1 0 , 1973 and September 8 , 1973, o f h i s e x e r c i s e o f t h e
o p t i o n on 960 a c r e s o f t h e 1600 a c r e s covered by i t . Hauptman
had d i s c o v e r e d t h e c o r p o r a t i o n d i d n o t own c o a l under 640 a c r e s
of the lands described i n t h e option. Kenneth Edwards f i r s t
informed Hauptman t h e r e a s o n t h e c o r p o r a t i o n would n o t perform t h e
o p t i o n was t h a t he d i d n o t l i k e t h e t e r m s o f t h e t r a n s a c t i o n and
h e d i d n o t want t h e s u r f a c e t o b e i n v o l v e d . The l a c k o f
c o r p o r a t e a u t h o r i t y d e f e n s e f i r s t appeared i n t h e c o r p o r a t i o n ' s
answer. A f t e r t h e c o r p o r a t i o n r e p u d i a t e d t h e o p t i o n , Hauptman
sued t o compel t h e c o r p o r a t i o n t o i s s u e a l e a s e c o v e r i n g t h e 960
a c r e s under which i t owned c o a l .
Before c o n s i d e r i n g t h e i s s u e s r a i s e d on a p p e a l , w e
n o t e t h a t much of a p p e l l a n t ' s o r i g i n a l b r i e f was d e v o t e d t o
e s t a b l i s h i n g t h a t n e i t h e r t h e c o r p o r a t e defendant nor t h e
i n d i v i d u a l d e f e n d a n t s c o u l d r e l y on Montana s t a t u t e s s e c t i o n
15-2271 and s e c t i o n 15-2272, R.C.M. 1947, t o j u s t i f y t h e
c o r p o r a t i o n r e f u s a l t o perform t h e o p t i o n . The a p p e l l a t e b r i e f
of t h e c o r p o r a t i o n and Kenneth and Gary Edwards r e f e r s t o t h i s
s t a t u t o r y a u t h o r i t y f o r s u p p o r t a s a "red h e r r i n g " , and t h e n
states:
"we have no q u a r r e l w i t h t h e p r o p o s i t i o n t h a t t h e
d i s p o s i t i o n o f t h i s m a t t e r i s governed by s t a t u t e
and t h e c o n s i s t e n t c o n s t r u c t i o n o f c o n t r o l l i n g
s t a t u t e s p l a c e d upon them by t h i s Court and c o u r t s
5enerally.
he s t a t u t e upon which we r e l y i s 915-2233 R.C.M. (1947)
which r e a d s a s f o l l o w s :
" ' ~ o a r dof d i r e c t o r s . The b u s i n e s s and a f f a i r s
13i a c o r p o r a t i o n s h a l l b e managed by a b o a r d o f
d i r e c t o r s . D i r e c t o r s need n o t b e r e s i d e n t s o f t h i s
s t a t e o r s h a r e h o l d e r s of t h e c o r p o r a t i o n u n l e s s 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 o r bylaws s o r e q u i r e . The
a r t i c l e s o f i n c o r p o r a t i o n o r bylaws may p r e s c r i b e o t h e r
q u a l i f i c a t i o n s f o r d i r e c t o r s . The b o a r d o f d i r e c t o r s
s h a l l have a u t h o r i t y t o f i x t h e compensation o f d i r e c t o r s
dnless otherwise provided i n t h e a r t i c l e s of incorpor-
ation. t
"We c o n s i d e r t h i s s t a t u t e t o b e d i s p o s i t i v e o f t h e i s s u e
5efore the court. * +c :k. I '
',dich t h e c o n s i d e r a t i o n s s o focused,we d i s c u s s t h e i s s u e s .
Issue (1). Did t h e d i s t r i c t c o u r t e r r by g r a n t i n g p a r t i a l
sur1nlaz.y judgment i n f a v o r of t h e c o r p o r a t e d e f e n d a n t on t h e t h e o r y
Lhe c o r p o r a t e o f f i c e r s were n o t a u t h o r i z e d t o e x e c u t e a n o p t i o n
Cor t h e c o r p o r a t i o n ? W find that it did.
e
W have no argument w i t h ~ o n t a n a ' sc a s e and s t a t u t o r y a u t h -
e
~ i - i t yc h a t he b u s i n e s s and a f f a i r s o f a c o r p o r a t i o n s h a l l b e
alanaged by a b o a r d o f d i r e c t o r s . I' P i o n e e r M i n e r a l s Corp. v.
k r a b i e Bros. Rankers, I n c . , 99 Mont. 358, 43 P.2d 884; R a i s h v.
. k c h a r d Canal Co., 67 Mont. 140, 218 P. 655. However, i n t h e
i n s t a n t c a s e , t h e c o r p o r a t e d e f e n d a n t i s bound by t h e a c t s o f i t s
~ f f i c e r s o r s e v e r a l r e a s o n s : (1) t h e o f f i c e r s of t h e c o r p o r a t i o n
f
had e x p r e s s o r i m p l i e d a u t h o r i t y t o e x e r c i s e t h e o p t i o n , ( 2 )
t h e c o r p o r a t e o f f i c e r s a r e e s t o p p e d t o deny t h e o p t i o n , and ( 3 )
t h e o f f i c e r s of t h e c o r p o r a t i o n a r e n o t e n t i t l e d t o r e l i e f upon
t h e c o r p o r a t i o n ' s s e p a r a t e existence i n order t o avoid t h e cor-
p o r a t i o n ' s o b l i g a t i o n s under t h e o p t i o n .
Defendant c o r p o r a t i o n c i t e s numerous Montana c a s e s i n
s u p p o r t o f i t s p o s i t i o n t h a t t h e o f f i c e r s were w i t h o u t a u t h o r i t y
t o a c t f o r the corporation. Major r e l i a n c e i s p l a c e d on
Hanrahan v. Andersen, 108 Mont. 218, 90 P.2d 494. Hanrahan i s
not f a c t u a l l y s i m i l a r t o t h e i n s t a n t s i t u a t i o n . There a
g e n e r a l manager who was a d i r e c t o r and a l s o t r e a s u r e r , o p e r a t e d
f a r beyond h i s a u t h o r i t y , n e a r l y d e s t r o y i n g t h e c o r p o r a t i o n , and
a s t o c k h o l d e r i n s t i t u t e d t h e s u i t t o undo a s e r i e s of q u e s t i o n a b l e
transactions. That i s n o t t h e f a c t s i t u a t i o n i n t h e i n s t a n t
case. Other cases c i t e d a r e not f a c t u a l l y i n p o i n t w i t h t h e
i n s t a n t case. However, t h e most r e c e n t c a s e of t h i s Court c o n s i d e r i n g
a c o r p o r a t e o f f i c e r ' s a c t u a l and i m p l i e d a u t h o r i t y , was n o t c i t e d
n o r d i s c u s s e d by t h e c o r p o r a t e d e f e n d a n t i n i t s b r i e f on a p p e a l .
That c a s e , B e n t a l l v. Koenig B r o t h e r s , I n c . , 140 Mont. 339, 372
P.2d 91, i s f a c t u a l l y s i m i l a r t o t h e i n s t a n t c a s e and i t i s
controlling.
I n B e n t a l l , p l a i n t i f f B e n t a l l sued d e f e n d a n t Koenig
B r o t h e r s , I n c . on a p r o m i s s o r y n o t e e x e c u t e d by Arne Poulsen
a s ~ o e n i g ' sp r e s i d e n t . Poulsen had power t o e x e r c i s e f u l l
management and c o n t r o l o f t h e c o r p o r a t i o n ' s a f f a i r s . The p r o c e e d s
o f t h e l o a n were used f o r c o r p o r a t e p u r p o s e s . Koenig had t h r e e
d i r e c t o r s : R. W. Brenneke, Alvin F. Koenig and Arne Poulsen.
N r e g u l a r meeting o f K o e n i g ' s b o a r d o f d i r e c t o r s was h e l d t o
o
g i v e formal a u t h o r i t y f o r execution of t h e n o t e , b u t r a t h e r Alvin
F. Koenig and Poulsen d e c i d e d t o e x e c u t e t h e n o t e . I n an e f f o r t
t o a v o i d i t s o b l i g a t i o n s under t h e n o t e , t h e c o r p o r a t i o n a r g u e d ,
a s i n t h e i n s t a n t c a s e , t h a t t h e n o t e i n q u e s t i o n w a s e x e c u t e d and
d e l i v e r e d by t h e p r e s i d e n t Poulsen, w i t h o u t d i r e c t a u t h o r i z a -
t i o n by any o r d e r o r r e s o l u t i o n o f t h e c o r p o r a t i o n ' s board
of directors. T h i s Court h e l d t h a t Poulsen had b o t h e x p r e s s
and i m p l i e d a u t h o r i t y t o e x e c u t e t h e n o t e . The f a c t s i n B e n t a l l
a r e s i m i l a r t o t h o s e now i n q u e s t i o n i n t h e i n s t a n t c a s e . We
f i n d no d i s t i n c t i o n between s i g n i n g a promissory n o t e by Poulsen
and t h e s i g n i n g o f a n o p t i o n by Kenneth Edwards.
I n t h e i n s t a n t c a s e , t h e o p t i o n was g r a n t e d Hauptman who
had no p r i v i t y t o t h e i n t e r n a l a f f a i r s o f t h e c o r p o r a t i o n . The
f a c t s , a s d i s c l o s e d by d e p o s i t i o n s , r e v e a l t h a t Kenneth Edwards
had c o n t r o l l e d t h e l a n d f o r over 25 y e a r s p r i o r t o i n c o r p o r a t i o n
and was t h e c o n t r o l l i n g f a c t o r s i n c e i t s c o r p o r a t i o n . The
c o r p o r a t i o n d e f e n d a n t g i v e s much emphasis t h a t Hauptman knew
t h e l a n d was owned by a c o r p o r a t i o n . He d i d , and responded
r e a s o n a b l y t h a t he h e l d a n o p t i o n e x e c u t e d by two o f f i - c e r s o f
t h a t c o r p o r a t i o n who h e l d themselves o u t t o a c t on b e h a l f o f t h e
corporation. W f i n d A l l e y v. B u t t e & Western Mining Co.,
e 77
Mont. 477, 251 P. 517, i s c o n t r o l l i n g a s t o a c o r p o r a t e p r e s i d e n t ' s
special authority. See a l s o : Yucca Mining & Petroleum Co. v.
Howard C. P h i l l i p s O i l Co., 69 N.M. 281, 365 P.2d 925, 929;
P h i l l i p s Petroleum Co. v. Roclc Creek Mining Co., 449-F.2d 664,
I n addition, i n t h e i n s t a n t case, t h e corporation i s
e s t o p p e d t o deny t h e e f f e c t o f t h e o p t i o n under t h e r e c e n t h o l d i n g
i n Howeth v. D. A . Davidson & Co., 163 Mont. 355, 365, 517 P.2d
722. There t h i s Court s a i d :
f 1 +< -1-
8b
t h e s t o c k h o l d e r s o r d i r e c t o r s and c o r p o r a t i o n
may b e e s t o p p e d t o deny t h e v a l i d i t y o f t h e i r a c t i o n
where i t i s t h e custom o r usage o f t h e d i r e c t o r s t o
a c t s e p a r a t e l y o r where b e n e f i t s have been r e c e i v e d o r
t h e a c t i o n s s u b s e q u e n t l y a c q u i e s c e d i n o r r a t i f i e d by
t h e d i r e c t o r s . II
C l e a r l y , w e have h e r e a c a s e f o r e s t o p p e l , b e c a u s e a
r e f u s a l t o e n f o r c e t h e o p t i o n c o u l d s a n c t i o n a f r a u d and r e s u l t
i n an i n j u s t i c e . Here, a s i n B e n t a l l , where t h e c o r p o r a t i o n r e c e i v e s
t h e b e n e f i t s i t i s e s t o p p e d from a s s e r t i n g t h e a l l e g e d d e f e n s e s
Issue (2). The t r i a l c o u r t tired i n r e f u s i n g plaintiff's
?ioiloii f o r summary judgment on t h e c o r p o r a t i o n ' s c r o s s c o m p l a i n t .
9nJer t h e f a c t s of t h i s case the p l a i n t i f f ' s publication of a
!-is pendens was p r i v i l e g e d and n o t s u b j e c t t o a s l a n d e r o f t i t l e
ac t i o n .
Defendants c i t e and r e l y upon West I n v e s t m e n t Co. v.
, m o r h e a d , 120 Cal.App.2d 837, 262 P.2d 322. The h o l d i n g
t h e r e was o v e r r u l e d by a l a t e r C a l i f o r n i a c a s e , A l b e r t s o n v.
Xaboff, 46 Cal.2d 375, 295 P.2d 405. I n -I b e r t s o n t h e c o u r t
A
h e l d a l i s pendens f i l e d under a C a l i f o r n i a s t a t u t e n e a r l y
i d e n t i c a l t o ~ o n t a n a ' ss e c t i o n 93-3005, R.C.M. 1947, was
absolutely privileged without reference t o t h e merits o f , t h e
?[ + (,Fyg~
,& 1)
underlying action. See: Kropp v. P r a t h e r (Texas 1 9 7 5 ) , 526
S.W.2d 283, 287; S t e w a r t v. Fahey, 14 Ariz.App. 149, 4 8 1 P.2d
519; Zamarello v. Y a l e , (Alaska 1 9 7 3 ) , 514 P.2d 228.
For t h e f o r e g o i n g r e a s o n s , we r e v e r s e t h e d i s t r i c t c o u r t ' s
p a r t i a l judgment i n f a v o r of t h e c o r p o r a t i o n and d i r e c t t h a t
c o u r t t o g r a n t p l a i n t i f f ' s motion f o r summary judgment on t h e
c o r p o r a t i o n ' s c r o s s complaint.
!de Concur:
--
Hon. ~ ~ b e ? - t e l l e r , ~ it r s c t - -
K i
Judge, s i t t i n g f o r Chief J u s t i c e
James T . H a r r i s o n .
Hon. P e t e r G. M e l o y , D i s t r i c t Judge, s i t t i n g i n p l a c e of M r .
J u s t i c e Frank I . Haswell, and M r . J u s t i c e Gene B. Daly,
d i s s e n t i n g i n p a r t and c o n c u r r i n g i n p a r t :
The m a j o r i t y o p i n i o n grounds t h e r e s u l t t h e r e i n r e a c h e d
o n t h e c a s e of B e n t a l l v . Koenig B r o t h e r s , I n c . , which a p p r o v e s
a c l e a r r u l e t h a t t h e o f f i c e r s have no power t o a c t u n i l a t e r a l l y
e x c e p t i n i n s t a n c e s where management a u t h o r i t y i s p l a c e d i n s u c h
o f f i c e r and h i s a c t s a r e i n t h e o r d i n a r y c o u r s e of t h e c o r p o r a t e
business. The o p i n i o n i n t h e B e n t a l l c a s e s p e c i f i c a l l y h o l d s
t h e n o t e t h e r e i n i n v o l v e d w a s i n t h e u s u a l and o r d i n a r y c o u r s e
of t h e c o r p o r a t e b u s i n e s s . I n t h e c a s e under c o n s i d e r a t i o n h e r e
t h e m a j o r i t y o p i n i o n f i n d s no d i s t i n c t i o n between t h e n o t e i n
t h e B e n t a l l c a s e and t h e o p t i o n h e r e . With t h i s c o n c l u s i o n w e
disagree.
The o r d i n a r y c o u r s e of t h e b u s i n e s s of Edwards, I n c . , is
t h a t o f a g r i c u l t u r e and i n no s e n s e c a n we u n d e r s t a n d t h a t t h e
g r a n t i n g of a l e a s e o f a c r e a g e t o " l o o k f o r , t e s t , work, mine,
e x c a v a t e , r a i s e , c l e a n , c a r r y away and s e l l c o a l " , i s i n t h e
usual course of t h e corporate business.
W e a r e m i n d f u l of t h e f a c t t h a t i n t h e case under c o n s i d e r -
a t i o n t h e c o r p o r a t e o f f i c e r s s i g n i n g t h e l e a s e owned a l m o s t a l l
of t h e c o r p o r a t e s t o c k b u t t h e y c h o s e t o a c t i n a c o r p o r a t e form
which would r e q u i r e , i n o u r o p i n i o n under t h e f a c t s o f t h i s c a s e ,
a c o r p o r a t e a u t h o r i t y which i s n o t p r e s e n t . To h o l d o t h e r w i s e
t h w a r t s t h e l e g i s l a t i v e i n t e n t of t h e s t a t u t e and i s n o t c o n s i s -
t e n t w i t h t h e r u l e of t h i s C o u r t i n s u c h i n s t a n c e . The m a j o r i t y
o p i n i o n , i n o u r view, a d o p t s a r u l e t h a t t h e o f f i c e r o r o f f i c e r s
h o l d i n g a m a j o r i t y of t h e s t o c k i n a c o r p o r a t i o n c a n a c t f o r t h e
c o r p o r a t i o n i n any i n s t a n c e w i t h o u t a c t i o n by t h e Board o f D i r e c t o r s .
W e do not concur with t h e m a j o r i t y o p i n i o n ' s a p p l i c a t i o n
of t h e d o c t r i n e of e s t o p p e l .
We concur in the majority opinion's conclusion that the
publication of a lis pendens was privileged and not subject to
a slander of title action.
.....................................
Hon. Peter G. Meloy, district judge,
sitting in place of Mr. Justice Frank
I. Haswell
Justice
#13,185 Hauptman v . Edwards, I n c .
I concur i n t h e r e s u l t s , but s o l e l y on t h e b a s i s of e s t o p p e l ,
and a d i f f e r e n t e s t o p p e l t h a n t h a t r e l i e d upon i n t h e m a j o r i t y
opinion. When Kenneth and Gary Edwards, a s owners of 99.9 p e r
c e n t of t h e s t o c k of t h e c o r p o r a t i o n , and c o n s t i t u t i n g two-thirds
of t h e board of d i r e c t o r s , e n t e r e d i n t o a c o n t r a c t f o r t h e corpora-
t i o n , they a r e bound under p r i n c i p l e s of e s t o p p e l t o a f f i r m t h e
c o n t r a c t , 19 C.J.S. 485, $1012. This c o u r t h e l d s i m i l a r l y , with-
o u t r e f e r r i n g t o e s t o p p e l , i n B e n t a l l v. Koenig B r o t h e r s , I n c . ,
(1962), 140 M 339, 372 P2d 91, 94: "In t h e i n s t a n t c a s e , t h e
defendant corporation's A r t i c l e s of I n c o r p o r a t i o n provided f o r
t h r e e members t o a c t a s d i r e c t o r s of t h e c o r p o r a t i o n . A t t h e time
of t h e e x e c u t i o n of t h e n o t e i n q u e s t i o n , R.W. Brenneke, Alvin F .
Koenig, and Arne Poulsen were i t s d i r e c t o r s . It i s undisputed
t h a t Alvin Koenig and Arne Poulsen a u t h o r i z e d t h e e x e c u t i o n of t h e
n o t e i n q u e s t i o n . They c o n s t i t u t e d a quorum and t h e i r a c t i o n ,
which was not c o n t r a r y t o law nor c o n t r a r y t o t h e a r t i c l e s of
i n c o r p o r a t i o n o r by-laws of t h e defendant c o r p o r a t i o n , was binding
on t h e defendant c o r p o r a t i o n . "
The p o i n t of t h e d i s s e n t i s w e l l made, and f o r t h a t r e a s o n ,
I am n o t w i l l i n g t o r e l y upon a p p a r e n t o r o s t e n s i b l e a u t h o r i t y
(which, i n t u r n , i s dependent upon t h e i n s t a n t t r a n s a c t i o n being
i n t h e u s u a l o r o r d i n a r y course of b u s i n e s s ) .
A t t h e same time, I am n o t s a t i s f i e d t h a t c o r p o r a t e o f f i c e r s
a r e l i a b l e i n d i v i d u a l l y f o r a c t s done a s c o r p o r a t e o f f i c e r s , even
though without a u t h o r i t y , a b s e n t f r a u d , i . e . , t o uphold t h e t r i a l
c o u r t would be t o d i s m i s s t h e c o r p o r a t i o n from t h i s a c t i o n , l e a v -
i n g t h e two defendants i n d i v i d u a l l y , and they may w e l l n o t be
l i a b l e , having a c t e d a s c o r p o r a t e o f f i c e r s .
I concur i n t h e m a j o r i t y o p i n i o n ' s conclusion t h a t t h e pub-
l i c a t i o n of t h e l i s pendens was p r i v i l e g e d and not s u b j e c t t o a
s l a n d e r of t i t l e a c t i o n .
UL!.L-
Hon. Robert S. K e l l e r , D i s t r i c t
Judge, s i t t i n g f o r c h i e f J u s t i c e
James T . Harrison