97-142
No. 97-142
IN THE SUPREME COURT OF THE STATE OF MONTANA
1997
C. HAYDON LIMITED and DR. K. M. CLEWS,
Plaintiffs and Respondents,
v.
MONTANA MINING PROPERTIES, INC., a Montana corporation;
ORO FINO PLACER MINING CORPORATION, a Montana corporation;
BLUEBIRD MINING CO., a Montana corporation; WEST BUTTE
METALS, INC., a Montana corporation; GOLDBRICK MINING CO.,
a Montana corporation; EAST RIDGE MINING CO., a Montana
corporation; SILVER BOW CONSOLIDATED CORP., a Montana
corporation; BLACK ROCK MINING CO., a Montana corporation;
YANKEE MINING CO., a Montana corporation; WABASH MINING CO.,
a Montana corporation; EUREKA MINING CO., a Montana corporation;
ORIGINAL BUTTE MINING CO., a Montana corporation; MOUNTAIN
CON MINING CO., a Montana corporation; WESTERN AND PACIFIC
RESOURCES CORP., a British Columbia corporation; ALLAN FERGUSON;
S. DAVID ANFIELD; STEVEN A. SANDERS; RICHARD M. CAWOOD;
and JACOBS, PERSINGER & PARKER, a business association,
Defendants and Appellants.
v.
FRANK CROWLEY,
Plaintiff and Respondent.
APPEAL FROM: District Court of the Second Judicial District,
In and for the County of Silver Bow,
The Honorable James E. Purcell, Judge presiding.
COUNSEL OF RECORD:
For Appellants:
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (1 of 13)4/17/2007 4:25:09 PM
97-142
Joan E. Cook, Attorney at Law, Great Falls, Montana
For Respondents:
David M. McLean; Knight, Dahood, McLean & Everett;
Anaconda, Montana (for C. Haydon Ltd. and Dr. K. M. Clews)
Greg J. Skakles and Patrick T. Gallagher, Skakles & Gallagher,
Anaconda, Montana (for Frank Crowley)
Submitted on Briefs: November 20, 1997
Decided: December 16, 1997
Filed:
__________________________________________
Clerk
Justice Terry N. Trieweiler delivered the Opinion of the Court.
K. Malcom Clews commenced this action in the District Court for the Second
Judicial District in Silver Bow County to recover damages from the defendant, Montana
Mining Properties Incorporated (MMPI), for breach of contract. MMPI filed a third-
party complaint against Frank Crowley and William Murray for common law fraud,
conspiracy, and breach of fiduciary duty. William Murray was dismissed by order of
the
District Court and Crowley filed a counter claim against MMPI. Following a jury
trial,
judgment was entered against MMPI on November 7, 1996. The jury verdict awarded
Clews $298,275.33 for breach of a written agreement for his consulting services, and
$8,268,851.78 for breach of MMPIþs promise to deliver stock. The jury verdict also
awarded Crowley $2,000,000 for breach of MMPIþs promise to deliver stock. On
November 18, 1996, MMPI filed a motion for new trial or in the alternative to alter
or
amend judgment. On January 10, 1997, the District Court denied MMPI's motion.
MMPI filed its notice of appeal on February 7, 1997. We affirm the jury's verdict
and
the judgment of the District Court.
The issues on appeal are:
1. Did the District court err when it excluded evidence related to Clews' and
Clive Smith's pending criminal charges of fraud and conspiracy?
2. Did the District Court err when it allowed testimony from another trial,
regarding the agency relationship between Clive Smith and MMPI, as admissions against
interest, and when it offered a jury instruction which characterized this testimony
as a
judicial admission?
3. Did the District Court err when it failed to give MMPI's jury instruction
regarding subsequent contracts?
4. Was there sufficient evidence to support the jury's verdict?
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (2 of 13)4/17/2007 4:25:09 PM
97-142
5.
Did the District Court err when it denied MMPI's motion for a new trial?
FACTUAL BACKGROUND
Historically, the Anaconda Company owned a large block of mineral interests in
Butte, Montana, which it sold to the Atlantic Richfield Company (ARCO). ARCO
subsequently disposed of all these mineral interests to Dennis Washington. An
option to
acquire these mineral rights was given to two Australian men, Laith Reynolds and
Kerry
Harmanis. Reynolds and Harmanis sought financial backing and entered into a joint
venture agreement with named Clive Smith, a citizen of England, who became the
financier of the joint venture. The members of the joint venture decided to form a
series
of Montana corporations to provide ownership vehicles to which they could transfer
various mining claims, equipment, etc. One corporation, Montana Mining Properties,
Incorporated (MMPI), was formed to act as agent for the other corporations.
On January 27, 1987, the members of the joint venture, Smith, Reynolds, and
Harmanis, acting through MMPI, signed a contract with Dennis Washington to buy
mineral rights and properties, and to obtain certain other benefits. Over the next
two
years, other Montana corporations were formed to provide ownership vehicles for
various
mining claims or equipment. All of these corporations specifically authorized MMPI
to
act as their agent and to provide management. That was the only reason for MMPI's
corporate existence.
The joint venture consisting of Smith, Reynolds, and Harmanis owned and
controlled all of the stock in the mining corporations through companies formed in
the
Jersey Isles called the "Limiteds," in proportion to their ownership percentages in
the
joint venture. Although the percentages of ownership in the joint venture were in a
constant state of flux between the three men and a new stock holder, Robertson
Research
Limited, Smith eventually obtained the majority of the shares in the venture and
absolute
control over it and MMPI.
In an earlier lawsuit filed against MMPI by Dennis Washington, Smith indicated
that he personally acted on behalf of MMPI on major matters; that he had procured all
of the funding for MMPI acquisitions; and that he had personally caused $25 million
to
be expended in connection with the MMPI properties. He also testified on behalf of
MMPI that all assets of MMPI were beneficially owned by the members of the joint
venture. While on the witness stand, evidence was presented through Smith's testimony
and his attorney's statements to the court, that Smith owned 77.5 percent of MMPI,
and
was the controlling person in that company.
In 1986, prior to the formation of the MMPI joint venture, Reynolds contacted
Frank Crowley to inquire about valuable mineral deposits in Butte. Crowley has
intimate
knowledge about the mines on the Butte Hill and, at the time, had a lease arrangement
with ARCO. As part of this lease arrangement, Crowley obtained a wealth of valuable
geological and mining information which the Anaconda Company had accumulated over
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (3 of 13)4/17/2007 4:25:09 PM
97-142
a period of 100 years. He referred to these records as the "golden records."
Crowley
informed Reynolds that the mineral deposit on the Butte Hill was extremely valuable
and
very promising. Reynolds and Harmanis continued to solicit information from Crowley,
who shared his opinions on the mineral deposits and the wealth of geological
information
found in the "golden records."
Soon after, Reynolds and Harmanis purchased the property as part of the joint
venture with Clive Smith. During the entire process of negotiation with Dennis
Washington, Crowley provided his advice and opinions at the request of Reynolds and
Harmanis. As a result of the purchase, MMPI owned, through the other twelve
corporations, several mining blocks on the Butte Hill, along with a considerable
amount
of valuable mining equipment, including hoists, head frames, and compressors. Smith,
Reynolds, and Harmanis requested that Crowley assist them with the management and
development of the properties. They orally promised Crowley that they would pay his
fees, expenses, and give him a management position in the new company and a
substantial block of stock.
Sometime after the purchase of the mining interests on the Butte Hill, a dispute
arose between Reynolds, Harmanis, and Smith which eventually led Reynolds and
Harmanis to relinquish their interest in the joint venture. Smith then assumed the
management and sole right to control and direct the MMPI operations.
During this time period, in April 1988, Smith, on behalf of MMPI, approached
Malcom Clews and offered him employment with MMPI. At the time, Clews was
associated with Robertson Research, one of the four parties who held stock in MMPI.
Clews entered into an oral agreement to work for MMPI pursuant to Smith's request.
Initially he was to be paid a daily consulting fee, his out-of-pocket expenses, and
was
promised an executive position in any public company formed upon MMPI's
þrealization,þ along with a block of stock in the public company. Clews sent monthly
invoices to MMPI in Butte, in accordance with the terms of this agreement.
In 1989, Clews and MMPI modified the oral agreement to require that Clews forgo
his daily fee in return for a larger block of stock in the public company. Clews
gave a
credit against his monthly invoices for the daily fees charged from September 1988 to
January 1989. The remainder of the original agreement was unchanged.
In March 1990, Clews and MMPI made a second modification to the oral
consulting agreement. According to this modification, Smith, on behalf of MMPI,
promised Clews a monthly consulting fee of œ5000 (pounds sterling). The remainder of
the original oral agreement was unchanged.
In May 1990, a potential realization on the American Stock Exchange looked
promising for MMPI. During that time, an attorney who worked for the joint venture
reduced to writing the portions of Clews' and Crowley's oral consulting agreements
which dealt with fees and expenses. As a result, Crowley's general manager
agreement,
which had previously been oral, was reduced to writing, as was Clews' consulting
agreement. The remaining portions of their oral agreements were unchanged. After
these agreements were reduced to writing, both Clews and Crowley were made officers
and directors of the various corporations constituting MMPI, and were listed on the
vendors' list as shareholders in the MMPI group of companies.
After several failed merger attempts, MMPI's realization finally occurred. In
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (4 of 13)4/17/2007 4:25:09 PM
97-142
1991, a new company called Newco No. 393497 was specifically created to hold the
assets and stock of the MMPI Butte mining corporations. Clews and Crowley were
listed
on the schedule of stockholders of this numbered company. This company was then
merged with an existing British Columbian corporation called Nor Quest, which
produced
Western and Pacific Resources Corporation (k/n/a/ Synergy). Western and Pacific
Resources Corporation owns 87.5 percent of MMPI stock and is publicly traded on the
Vancouver and NASDAQ stock exchanges. The remaining 12.5 percent of stock was,
and still is, held by Robertson Research Limited. Western and Pacific Resources
Corporation is, and has been since the time of the merger, a publicly held
corporation
with an independent Board of Directors duly elected by the thousands of members of
the
public who hold stock shares.
Clews and Crowley testified at trial that MMPI's oral promises of stock were not
premised on being made subject to any pooling agreement, and neither the vendors list
nor the subsequent schedule of stock holders in the numbered company indicated any
pooling agreement restrictions. Clews and Crowley testified that they performed
their
services and remained with MMPI as consideration for the unrestricted stock promises,
fees, expenses, and positions as directors and executives of MMPI.
Following the execution of the written contracts with MMPI, Clews continued to
send monthly invoices for his services to MMPI. Many of the invoices were formally
approved by Crowley in his role as general manager of MMPI and officer and director
of the Montana corporations. However, Clews has yet to be paid for a large portion
of
his services to MMPI. His last bill to MMPI shows a cumulative total owing of
œ107,275.04 for his consulting fees and expenses. Additionally, after the
realization
occurred, Clews' and Crowley's requests for the stock they were promised were
ignored,
as were those of others. To date, no stock has ever been delivered to Clews or
Crowley.
ISSUE 1
Did the District court err when it excluded evidence related to Clews' and Clive
Smith's pending criminal charges for fraud and conspiracy?
We review discretionary trial court rulings to determine whether a district
court
has abused its discretion. See May v. First Nat'l Pawn Brokers, Ltd. (1995), 270
Mont.
132, 134, 890 P.2d 386, 388. In Montana Rail Link v. Byard (1993), 260 Mont. 331,
337, 860 P.2d 121, 125, we held that "[t]he standard of abuse of discretion is
applied to
discretionary rulings, such as trial administration issues, post-trial motions and
similar
rulings." (Citing Steer, Inc. v. Department of Revenue (1990), 245 Mont. 470, 474,
803
P.2d 601, 603-04.) The test for abuse of discretion is whether the trial court acted
arbitrarily without employment of conscientious judgment or exceeded the bounds of
reason resulting in substantial injustice. See Davis v. Davis (1996), 277 Mont.
188, 190,
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (5 of 13)4/17/2007 4:25:09 PM
97-142
921 P.2d 275, 277. We will not substitute our judgment for the District Court's
unless
it clearly abused its discretion. See Gaustad v. City of Columbus (1995), 272 Mont.
486,
488, 901 P.2d 565, 567.
According to MMPI, as set forth in its motion in limine, on May 26, 1995, the
British Security Office in England arrested Clews and Smith and charged them with
conspiring to defraud in connection with the sale of stock in Butte Mining PLC, a
United
Kingdom Company. MMPI claims that the charge alleged that the claimed value of the
stock of Butte Mining PLC far exceeded the value of the company's assets. According
to these facts, Clews and Smith currently await trial.
Prior to trial in this matter, the District Court granted Clews' motion in
limine to
exclude evidence of any pending charges in England for the reason that they are
irrelevant
to any issue in this case. MMPI maintains that these charges are relevant to Clews'
credibility, as well as to the relationship between Clews and Smith. MMPI's theory
is
that any promises for shares of stock made by Smith to Clews were in his individual
capacity, and not as an agent of MMPI. Thus, the nature of Clews' and Smith's joint
venture and the fact they are facing criminal fraud charges together is relevant.
MMPI
contends that the evidence would show that Clews is not an innocent victim who was
defrauded out of payment for services rendered, but rather that he is a savvy
businessman
who knew exactly the type of arrangement into which he entered. MMPI cites a number
of criminal cases in support of its contention that, because Clews allegedly brought
forth
his credibility as an issue at trial, MMPI should have the opportunity to rebut that
evidence with evidence of Clews' criminal activity.
Clews, on the other hand, contends, first, that his credibility and character
were
never an issue at trial, and second, that the criminal charges in England were only
pending; there has been no conviction. Therefore, Clews argues that according to
Article
II, Section 17, of the Montana Constitution, and õõ 26-1-602 and 26-16-204, MCA, he
should be presumed innocent until proven guilty. Clews maintains that an examination
of Rules 401, 402, 403, 404, and 609, M.R.Evid., mandate that this type of evidence
be
excluded because the potential for prejudice far outweighs its probative value.
Clews also contends that MMPI did not give the notice required by Rule 404(b),
M.R.Evid., and State. v. Just (1979), 184 Mont. 262, 602 P.2d 957, that other crimes
or wrongful acts would be introduced for the purpose of proving motive, opportunity,
preparation, plan, knowledge, or identity.
The District Court granted Clews' motion in limine and excluded evidence of the
pending criminal charges on relevancy grounds pursuant to Rules 401 and 403,
M.R.Evid. We agree with the District Court and disagree with MMPI's contention that
it is necessary that these charges be admitted to demonstrate Clews' lack of
character and
credibility.
We also disagree that this evidence is necessary to demonstrate the type of
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (6 of 13)4/17/2007 4:25:09 PM
97-142
relationship between Clews and Smith. The fact that they are both facing fraud
charges
is not probative of the relationships between the two men. In fact, unproven
charges do
not prove anything.
Moreover, even if this evidence was relevant pursuant to Rule 401, M.R.Evid.,
we agree with the District Court that pursuant to Rule 403, M.R.Evid., its probative
value is substantially outweighed by the danger of unfair prejudice. We therefore
conclude that the District Court did not abuse its discretion when it granted Clews'
motion in limine and excluded evidence of Clews' pending criminal charges.
ISSUE 2
Did the District Court err when it allowed testimony from another trial,
regarding
the agency relationship between Clive Smith and MMPI, as admissions against interest,
and when it offered a jury instruction which characterized this testimony as a
judicial
admission?
On appeal, MMPI contends that the District Court erroneously held that MMPI
was collaterally estopped from asserting that Smith did not bind MMPI with his
promises
of stock to Clews and Crowley. It further contends that the District Court erred
when
it offered as a jury instruction a statement made by the former attorney for MMPI
which
establishes the agency relationship between MMPI and Smith, as a judicial admission
which concedes the truth of the attorney's statement.
We will first address MMPI's claim that the District Court collaterally estopped
it from rebutting the claim that Smith is an agent for MMPI. Our review of the
record
gives no indication that the District Court ever made such a ruling. We conclude
that
there was nothing done by the District Court to prevent MMPI from presenting evidence
that Smith did not bind MMPI with promises of stock to Clews and Crowley.
On September 9, 1996, the District Court held a pretrial hearing to determine
what
exhibits could be used at the trial without objection. MMPI objected to a series of
exhibits that were offered by Clews and Crowley. These exhibits included previous
rulings and court orders in another lawsuit involving MMPI, as well as certain
decisions
arising from an MMPI lawsuit in England. Clews and Crowley had marked as exhibits
portions of the transcript from those earlier hearings which described testimony
given by
Clive Smith and statements made by the attorney for MMPI. Crowley moved that the
exhibits be admitted pursuant to the doctrines of collateral estoppel, judicial
estoppel, or
judicial notice. Clews moved that the exhibits be admitted because the statements
were
admissions by a party-opponent. At the conclusion of the arguments, the District
Court
indicated that the statements made by Smith and his attorney, in the other
proceeding,
were admissions by a party-opponent and, for this reason, certain portions of the
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (7 of 13)4/17/2007 4:25:09 PM
97-142
transcript could be read into evidence. The District Court made no ruling with
regard
to Crowley's argument that the statements should be admitted based on collateral
estoppel, judicial estoppel, or judicial notice. The District Court indicated that
the
transcript provisions were sufficient and that the decisions of the other courts
could be
left out of the trial. The attorney for MMPI indicated that she would have no
problem
with the limited introduction of that testimony. Nothing in the record suggests
that the
ruling made by the District Court in any way prevented MMPI from introducing
evidence
that Clive Smith did not bind MMPI with his promises to Clews and Crowley.
Rule 801(d)(2), M.R.Evid., governs admissions by a party-opponent. That rule
provides that a statement is an admission by a party-opponent and is not hearsay if:
[t]he statement is offered against a party and is (A) the party's own
statement, in either an individual or a representative capacity, or (B) a
statement of which the party has manifested an adoption or belief in its
truth, or (C) a statement by a person authorized by the party to make a
statement concerning the subject, or (D) a statement by the party's agent or
servant concerning a matter within the scope of the agency or employment,
made during the existence of that relationship, or (E) a statement by a
coconspirator of a party during the course and in furtherance of the
conspiracy.
We conclude that all of the elements contained within this rule of evidence are
met
in this case and that the earlier testimony of Smith and the attorney for MMPI are
not
hearsay. The statements were offered against MMPI, and the statements regarding
MMPI and Smith's agency relationship were made by MMPI's attorney and Smith
himself. Both Smith and his attorney, on the record, testified as to Smith's
absolute
ownership and control over MMPI.
With regard to the jury instruction which MMPI appeals, we conclude that the
District Court did not commit reversible error by giving that instruction to the
jury. The
instruction which MMPI appeals addresses the fact that the attorney for MMPI, in a
prior
action, stated that Smith was the owner of 77.5 percent of the stock in MMPI and, as
such, was the person with ultimate control of the affairs of MMPI. Although the
District
Court mischaracterized this statement as a judicial admission of fact, rather than
as an
admission by a party-opponent, that characterization, by itself, had no significance
to the
jury. The court correctly instructed the jury that the statement is binding on MMPI
and
requires no further proof. We conclude that the effect and intent of the
instruction was
the same as if the instruction characterized the statement as an admission by a
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (8 of 13)4/17/2007 4:25:09 PM
97-142
party-
opponent, and that the mischaracterization of the statement was, at most, harmless
error.
Accordingly, we conclude that the District Court did not collaterally estop MMPI
from asserting that Smith did not bind MMPI with his promises of stock to Clews and
Crowley; that the District Court did not preclude MMPI from calling witnesses or
presenting exhibits to prove that the promises of Smith did not bind it; and that the
statements made by Smith and MMPI's former attorney are admissible pursuant to Rule
801(d)(2), M.R.Evid., as admissions by a party-opponent. Moreover, we conclude it
was not reversible error for the District Court to mischaracterize these statements
as
judicial admissions, rather than as admissions by a party-opponent.
ISSUE 3
Did the District Court err when it refused to give MMPI's jury instruction
regarding subsequent contracts?
We have held that "[i]t is not reversible error for a district court to refuse
an
offered instruction unless the refusal affects the substantial rights of the party
who
proposed the instruction." Lacock v. 4Bþs Restaurants, Inc. (1996), 277 Mont. 17,
21,
919 P.2d 373, 375.
MMPI contends that the District Court committed reversible error when it refused
to give the following instruction regarding the statutory language of õ 28-2-904,
MCA.
The execution of a contract in writing, whether the law requires it
to be written or not, supersedes all the oral negotiations or stipulations
concerning its matter which preceded or accompanied the execution of the
instrument.
The District Court indicated that MMPI could submit the instruction, but only of it
was
in writing. MMPI did not do so prior to the completion of settling jury
instructions.
It is unclear whether the instruction regarding the statutory language of õ 28-
2-904,
MCA, was ever submitted by MMPI. However, had MMPI submitted that instruction
and the District Court refused to give it to the jury, the District Court's refusal
would not
have been reversible error. According to the facts of this case, each of the
contracts
between MMPI and Clews were fully performed successive contracts. In exchange for
his services, Clews was to receive stock in MMPI's public company, Western and
Pacific
Resources Corporation, a position as the director and executive of the company, and
fees
and reimbursement for his expenses. The fees and expenses portion of the contract
was
later made into a written agreement, and the directors and officers of Western and
Pacific
Resources Corporation listed Clews as the director and chief executive of the
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (9 of 13)4/17/2007 4:25:09 PM
97-142
company.
Moreover, stock in Western and Pacific Resources Corporation was issued to Clews.
Because each successive contract varied from the previous contract, the
contracts
may have appeared to be modifications of one another and, as MMPI contends, only
negotiations leading up to the final written contract. They were, however, separate
contracts that both parties executed and performed. The final written contract was
not
intended to merge the previous contracts between the parties into one written
agreement.
It related to only that portion of the parties' agreement which dealt with Clews'
consulting
services and his fees and expenses.
In the case of Crowley, his written general manger contract incorporated
entirely
the oral consulting agreement between the parties. The oral consulting agreement, as
referenced in the general manager contract, provided that in exchange for Crowley
providing management and knowledge of the Butte area claims, geology, and community,
as well as his assistance in bringing the MMPI project to fruition, Crowley was to
receive
his fees, expenses, a substantial block of stock, and a director position. As such,
MMPI's appeal on this issue has no application to Crowley. Crowley's written general
manager contract fully incorporated any prior contracts between the parties.
Accordingly, we conclude that the District Court did not err by refusing to
instruct
the jury regarding the statutory language of õ 28-2-904, MCA
ISSUE 4
Was there sufficient evidence to support the jury's verdict?
The standard of review of a jury's verdict is whether there is substantial
credible
evidence in the record to support it. See Tanner v. Dream Island, Inc. (1996), 275
Mont. 414, 422, 913 P.2d 641, 646; Barthule v. Karman (1994), 268 Mont. 477, 485,
886 P.2d 971, 976. See also Interstate Prod. Credit Ass'n v. DeSaye (1991), 250
Mont.
320, 322-23, 820 P.2d 1285, 1287. In Baird v. Norwest Bank (1992), 255 Mont. 317,
323, 843 P.2d 327, 331, we held that
[s]ubstantial evidence is that evidence that a reasonable mind might accept
as adequate to support a conclusion; it consists of more than a mere
scintilla of evidence but may be somewhat less than a preponderance.
Although it may be based on weak and conflicting evidence, in order to rise
to the level of substantial evidence it must be greater than trifling or
frivolous.
(Citations omitted.) In Lackey v. Wilson (1983), 205 Mont. 476, 479, 668 P.2d 1051,
1053 we held that an attack upon a jury verdict as not supported by the evidence is
proper
only when there is a complete absence of any credible evidence in support of the
verdict.
All evidence and all inferences drawn therefrom must be considered in a light most
favorable to the adverse party.
MMPI contends that the jury verdict should be reversed for lack of substantial
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (10 of 13)4/17/2007 4:25:09 PM
97-142
evidence. It argues that there is not sufficient evidence for the jury to have
found that
Smithþs promises of stock to Clews and Crowley, in exchange for their services, rose
to
the level required to hold MMPI liable for these promises. Our review of the record,
however, indicates that there was substantial evidence to establish that MMPI,
through
its agent Smith, did in fact promise and issue unencumbered stock to Clews and
Crowley.
The facts of this case demonstrate that Clews and Crowley were both issued stock
in MMPI's public company, Western and Pacific Resources Corporation. The stock
which they held in that company was based upon stock that Clews and Crowley held in
Newco No. 393497. Clews and Crowley held stock in Newco No. 393497 because they
were stockholders in MMPI. They owned stock in MMPI because Smith divided up his
ownership interests in MMPI in the vendorþs lists prior to the formation of Newco No.
393497. All of these facts were presented to the jury and the jury agreed with
Clews and
Crowley that Smith, on behalf of MMPI, promised them stock in the public company.
MMPI also appeals the jury's decision that the stock issued to Clews and Crowley
was not subject to a pooling agreement of which Clive Smith was the majority
shareholder. MMPI argues that the stock was issued to Clews and Crowley but that the
pooling agreement, which contractually combined and controlled the stock of several
shareholders of Western and Pacific Resources Corporation and prevented its members
from freely selling their stock, had nothing to do with MMPI or their parent company
Western and Pacific Resources Corporation. According to MMPI, Clews and Crowley
entered into the pooling agreement with Smith alone and, therefore, MMPI cannot be
held liable for the fact that Clews and Crowley cannot sell their pooled stock.
At trial, Clews and Crowley both maintained that they were not subject to the
pooling agreement because they had never given their consent. MMPI claims that Clews
and Crowley are bound by the pooling agreement because they acted as if they were
bound by it when they unsuccessfully attempted to acquire their stock pursuant to the
terms of the agreement. According to MMPI, because Clews and Crowley are bound by
the pooling agreement made with Smith, MMPI cannot be held liable for Clews and
Crowley's inability to sell their stock. We disagree.
Throughout the trial of this matter, Clews and Crowley exhaustively provided
evidence that Smith was in control of MMPI and that he acted on behalf of MMPI as its
agent. Through Smith, MMPI promised stock to Clews and Crowley which was not
subject to any pooling restrictions. It was only after the stock was issued that
the pooling
agreement appeared. Based upon this evidence, the jury determined that MMPI's oral
promises of stock to Clews and Crowley were not subject to the pooling agreement.
The
jury did not hold MMPI liable for the pooling agreement due to an agency relationship
between Smith and MMPI, but rather that Clews' and Crowley's stock was not subject
to the pooling agreement at all.
Accordingly, we conclude that there exists substantial credible evidence in the
record to support the jury's verdict that MMPI failed to deliver Clews' and Crowley's
stock as promised.
ISSUE 5
Did the District Court err when it denied MMPI's motion for a new trial?
The standard of review of a district court's denial of a motion for a new trial
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (11 of 13)4/17/2007 4:25:09 PM
97-142
is
manifest abuse of discretion. See Baxter v. Archie Cochrane Motors, Inc. (1995), 271
Mont. 286, 287-88, 895 P.2d 631, 632 ("[t]he decision to grant or deny a new trial is
within the sound discretion of the trial judge and will not be disturbed absent a
showing
of manifest abuse of that discretion"). See also Rasmussen v. State Comp. Mut. Ins.
Fund (1995), 270 Mont. 492, 496, 893 P.2d 337, 339; Jim's Excavating Serv., Inc. v.
HKM Assoc. (1994), 265 Mont. 494, 512, 878 P.2d 248, 259.
MMPI contends that the District Court should have granted a new trial because
the
jury awarded excessive damages to Clews. MMPI argues that the jury erroneously
awarded consulting fees to Clews beginning in October 1988, more than a year prior to
the effective date of the written consulting contract. MMPI further contends that
the jury
verdict erroneously awarded damages to Clews for services that were to be paid for in
pounds sterling by converting those damages to United States' dollars on each monthly
"payday" throughout the term of Clews' consulting agreement. MMPI maintains that
this
method of converting pounds sterling to dollars unfairly takes advantage of the
historically high conversion rates which were in excess of those in effect on the
day the
verdict was rendered. According to MMPI, any damages awarded to Clews as a result
of a breach of his consulting agreement with MMPI should have been awarded in pounds
sterling and converted to dollars on the date the judgment was entered.
Clews, on the other hand, argues that the jury verdict was not in error and
that the
damages were not excessive. According to Clews, the first month that Clews billed
for
any consulting fees was the month of October 1990. The only charges for previous
months were charges for out-of-pocket expenses incurred by Clews which were
specifically authorized by his written agreement. The written contract required MMPI
to pay Clews a retainer of œ5,000 per month commencing February 1, 1990, until the
expiration of the contract. Clews contends that the undisputed facts at the trial
demonstrated that Clews had been providing services to MMPI since September 1988
and, therefore, a bill for expenses from September 1988 through January 1992 was
proper. With regard to the conversion of the pounds sterling to dollars, Clews
argues
that he was entitled to the jury's award which was computed on a month-by-month basis
because this was a sum certain case.
We agree with Clews that the record demonstrates that he began providing
services
to MMPI in September 1988 and, thus, the jury's award of expenses and fees from that
date through January 1992 was proper. With regard to MMPI's allegation that the jury
erroneously calculated the exchange rate from pounds sterling to U.S. dollars on a
monthly basis instead of on the day the judgment was entered, we conclude that MMPI
cannot raise this alleged error for the first time on appeal. The record in this
case
indicates that MMPI failed to make a timely or specific objection to the manner in
which
the jury calculated the conversion rate for Clews' damages. In State v. Huerta
(Mont.
1997), St. Rep. 1139-40, 197 WL 687379, we held that where the appellant failed to
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (12 of 13)4/17/2007 4:25:09 PM
97-142
object at the time the court made the alleged error, the objection was not timely.
See
also State v. Hofman (1996), 275 Mont. 455, 913 P.2d 1256; City of Forsyth v. Allison
(1995), 274 Mont. 246, 908 P.2d 205; State v. Walter (1994), 266 Mont. 429, 880 P.2d
1346; State v. Smith (1986), 220 Mont. 364, 715 P.2d 1301; State v. Close (1981), 191
Mont. 229, 623 P.2d 940.
In addition to requiring a timely objection, we have held that the objection
must
be specific in order to preserve the issue for appeal. In State v. Loh (1996), 275
Mont.
460, 479, 914 P.2d 592, 603-04, we held that a trial objection that is very general
in
nature and which does not specify what authority, rule, statute, or constitutional
provision
might be violated by the court's decision, is insufficient to preserve that issue on
appeal.
In State v. Weeks (1995), 270 Mont. 63, 85, 891 P.2d 477, 490-91, we further held
that
an objector has an obligation to make the basis and grounds for his or her objection
clear
to the court so that the district court is given an opportunity to correct itself
and that
broad, general objections do not suffice.
MMPI's only objection to the manner of calculating damages was a general
objection to the foundation of several exhibits, one of which was the calculation
sheet for
Clews' damages which included the conversion tables used by the jury. MMPI's claim
on appeal that the jury erroneously converted the exchange rate of Clews' damages
each
month, rather than on the day the judgment or payment was made, is an argument which
it did not make to the District Court at the time the conversion tables were offered
or
admitted. We conclude that because MMPI's objection was not timely or specific, it
did
not preserve the issue for our consideration on appeal.
For these reasons, we affirm the jury's verdict and the judgment of the District
Court.
/S/ TERRY N. TRIEWEILER
We Concur:
/S/ J. A. TURNAGE
/S/ JAMES C. NELSON
/S/ JIM REGNIER
/S/ WILLIAM E. HUNT, SR.
file:///C|/Documents%20and%20Settings/cu1046/Desktop/opinions/97-142%20Opinion.htm (13 of 13)4/17/2007 4:25:09 PM