Larry C. Iverson, Inc. v. Bouma

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: September 1 6 , 1 9 8 1

Decided: ]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 adjudging documents comprising an
installment contract naming Larry C. Iverson, Inc., 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 judg-
ment. The court reporter's notes containing the order as
announced from the bench were discovered missing following a
break-in of her automobile before the notes were tran-
scribed. 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 February 1980, following entry of the summary

judgment 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 granted in an o r d e r of t h i s Court dated

February 2 9, 1980, deferring prosecution 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. N o t i c e of e n t r y of

judgment w h given 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 when the Larry C. Iverson Corporation,

hereinafter called "the corporation," was incorporated on

July 17, 1964. The c o r p o r a t i o n is a Montana 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 value. It was

organized to be governed in its business by a board of

directors of three persons empowered 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 named

persons i n c e r t i f i c a t e s a s follows:

Stockholder Cert. # No. o f
Shares

Larry C. Iverson
L i n d a M. I v e r s o n
Mabel I v e r s o n
 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:
Issued to No. of
Stockholder Cert. No. Replace Shares
Irene A. Keierleber 11 5 300
Mabel Iverson 12 3 58
Carl 0 . lverson 13 10 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 it went into receivership in November
1970. 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 Irene Keierleber were adjudicated bankrupt on

January 24, 1966. As a result, the trustee i n bankruptcy,

Stanley M. Swaine, became the owner of the Keierlebers'

stock--that i s , S t a n l e y 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, 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 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

Narch 1 6 , 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 300
bankruptcy of t h e e s t a t e of
Irene Keierleber

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)

LARRY C .IVERSON, I N C . , (as
treasury stock)

'Total 2,523

F a r m e r s S t a t e Bank, 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 certificates to them, but these
demands w e r e r e f u s e d . This resulted i n s t a t e court actions,
Nos. 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 . The D i s t r i c t C o u r t f o u n d f o r
t h e F a r m e r s S t a t e Bank, the 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 to the defendants-

a p p e l l a n t s Bouma i n J u l y 1 9 6 8 . From t h e f i n d i n g s o f fact
and c o n c l u s i o n s o f l a w o f Cause Nos. 8 2 2 1 and 8 0 7 3 , i t was

found t h a t a p u r p o r t e d m e e t i n g of 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, 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
Treadaway, 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 the

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 . No c o n s i d e r a -
t i o n was g i v e n f o r t h e 2,595 s h a r e s "created," and 2,477

s h a r e s were " g i v e n " t o K r u l l and Treadaway. 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 . In July

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 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, etc., is necessary t o provide
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. I t is important

t o k e e p i n mind, while reading the following factual sum-

mary, that 76 p e r c e n t of the corporation was "owned" by

F a r m e r s S t a t e Bank of Conrad, United Bank o f Pueblo, and

S t a n l e y Swaine, t r u s t e e i n bankruptcy f o r 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 price of $734,500. Bouma made a partial

downpayment to the corporation in the form of a t r a d e of

1,440 acres of land located in Teton County (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 .

Though n o t i m m e d i a t e l y r e l e v a n t , i t was f o u n d from t h e D i s -

t r i c t Court's f i n d i n g s of f a c t and c o n c l u s i o n s o f law t h a t

s i x weeks a f t e r the sale, t h e Agawam p l a c e was resold by

Krull and Treadaway, acting for the corporation, to 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. The parties involved at the meeting were Treadaway,
Krull 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 pro-
ceedings and no resolution authorizing sale was made with
the Pondera County clerk and recorder. Further, no Montana
attorney was retained during the 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). In 1969 United Bank of Pueblo commenced an
action for similar relief and for corporate dissolution
(Cause No. 8221). 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 the re-
covery of the acreage. The present stockholders reorganized
the corporation under the directive of Judge Thomas and con-
tinued the action (Cause No. 8509) as a partially reconsti-
tuted 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 cor-
poration 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 dis-
covered missing following a break-in of her automobile
before they were transcribed. 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 the accounting decree the Boumas were allowed

credit for two-thirds of the crop harvested 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 of the accounting hearing which closed May 14,

1980, together with interest on each annual crop from

September 30 o f each year. As a result of this 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, t h e c o u r t a l s o allowed t h e

Boumas credit totaling $264,074 for 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 t h e p r o p e r t y r e s u l t i n g from t h e improve-

ments. That is a s f o l l o w s :
 Improvement P e r Cost or C r e d i t Court
Accounting Decree Replacement Allowed
Page 6 C o s t Per Bouma
Bouma A c c t -
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 $106,352 $154,500

R e s t o r a t i o n of a c r e a g e 4,000 38,000

Totals $110,352 $192,500

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 in the landowner's oil and gas

royalty interest which it now has." Later, for credit

against his running account at $1 per 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 the

Iverson farm to Bouma. When Bouma was shown to have

received $34,748 i n o i l revenue from t h e 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. The trial judge reversed himself and

deleted from credits awarded the corporation the sum of

$41,215.46, being the $34,748 oil revenue with accrued

interest.

In February 1980, following entry of the summary
judgment for the corporation and denial of Boumas' motions
pursuant to Rules 52 and 59, M.R.Civ.P., the Boumas filed
notice of appeal to this Court. 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 ( e l (a)
laches, (b) estoppel, (c) ratification, (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 its accounting

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 . That
is h i s r i g h t . 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 to this
Court. 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 ' "style," a s they
have continued over the years to 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 the

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 seeking

to intervene in a case in which they alleged they were

entitled to be interested parties. The C o u r t said: "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 'C' to their brief on a p p e a l . " 509 P.2d a t 841. The

Court added, "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 and assessed
&y$Q
damages o f $ 1 , 0 0 0 u n d e r R u l e 3 2 , M.R.Civ.P., 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 of in the law and set forth

twenty-eight counts of error that were termed frivolous,

impertinent, and i m m a t e r i a l . The C o u r t s t a t e d : "Specific

instances shall go uncited at this time, however it is
apparent t h a t i n t h e p a s t Mr. Bouma h a s u s e d his lack of

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." 520 P.2d a t 1075. The C o u r t f u r t h e r s t a t e d :

"In so ruling, the Court has attempted to retain its
objectivity, continuing 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 task considering the motion is

absurd i n nature, 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

vituperative 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 . " 520 P.2d a t 1 0 7 8 . It

is apparent t h a t t h e a p p e l l a n t s do n o t t a k e heed o f this
Court's warnings b u t continue t o p r e s e n t frivolous, scan-
dalous, burdensome, 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 r u l i n g was b a s e d on o n l y o n e
narrow i s s u 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 affidavits, depositions, documents, court decrees,
orders and findings of fact and conclusions of law from

c o n s o l i d a t e d c a u s e s 8221/8073, 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 . Though t h e r e may h a v e
b e e n numerous m a t e r i a l s p r e s e n t e d 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 f a c t and c o n c l u s i o n s o f law o f
c a u s e s 8221/8073, 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 in Dillon, Montana, on
J a n u a r y 30, 1967. 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 the later contract
from b e i n g v o i d . 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 . S e c t i o n s 15-908 and

15-909, R.C.M. 1947, which were then in effect, required

that, for t h i s type of bylaw t o be effective, 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 t h e county clerk and recorder,

Gladys Mortenson, both establish that no 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 is further case l a w and encyclopedia law t o

support the judge's ruling. In the c a s e of 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 accumu-
l 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. 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
that: " 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 charter or s t a t u t o r y regula-
tions." The law i s c l e a r on t h i s p o i n t . 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 real asset, without following the requisite

statutes, u n l e s s t h e r e i s a bylaw p r o v i s i o n 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 t h e Bouma con-
tract, August 1968, were w i t h o u t authority t o act for the

corporation. Thus, t h e p e o p l e who p u r p o r t e d to represent
the corporation lacked the capacity to contract. Worman

Motor Co. v. H i l l (1939), 54 A r i z . 227, 94 P.2d 865; 17

C.J.S. Contracts, § 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 of its 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 act on behalf of their principal without

authority. 1 9 Am.Jur.2d 5 963 a t 441; H o t a l i n g v . H o t a l i n g
(1924), 193 C a l . 368, 224 P. 455, 56 A.L.R. 734. In

Hotaling, a board of 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 were

required t o follow s t r i c t s t a t u t o r y procedure to sell the

farmland to the appellants. In pertinent part section

1 5 - 9 0 1 , R.C.M. 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
of any s t o c k c o r p o r a t i o n . . .
s h a l l have
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
c a p i t a l s t o c k o u t s t a n d i n g and . . .
entitled
. . . 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
 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 dis-
p 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 afore-
s 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
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 . . . The
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 prop-
e 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 ) con-
s 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
appointed f o r s a i d meeting . . . i f stock-
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 con-
veyance 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 codi-
fied 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 stock-
holder, 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
---------- -----------already within the
authorizinq sales not
powers of the board of directors because not
in the furtherance and in the ordinary course
of the corporation's established business.
- any event- is apparent from the record
In it-
that both transactions involved all, of the
--- ----- assets and greatly affected the
corporate
established corporate business, and therefore
came well within the class-- transactions
of
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 -
u r ------_--------------------------
~ -- ~ o r t e to authorize it were held on
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. 1030, 1036, the court came to a
similar conclusion:
 "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
meeting' [of s t o c k h o l d e r s ] ; 'and shall
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
Company ( C . C . A . 7 t h C i r . ) 1 1 5 F . 7 0 7 , 708;
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 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

that 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 , not

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 1 2 9 7 , and

can e a s i l y be d i s t i n g u i s h e d . There is a d i s c u s s i o n i n t h i s

s e c t i o n of when 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. However, t h e s e c t i o n draws a d i s t i n c t i o n

where a corporation is selling i t s o n l y major asset and

holds that in those circumstances shareholder approval is
necessary. 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 law in causes 8221/8073, 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, t h e y a l s o had t o be a s t o c k h o l d e r . None o f the
parties present at the Phoenix "directors" meeting were

stockholders. That is, Mabel and Carl I v e r s o n had lost

their 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 t h e stockholders meeting

was even g i v e n , contrary t o Chapter 9, Title 15, of the
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 . A l s o no p r o v i s i o n
was made f o r p r o t e c t i o n o f 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. No p u b l i c a t i o n o f n o t i c e

or f i l i n g of 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, and no f i l i n g o f t h e c e r t i -

f i c a t e s of 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 shareholders who were
p r e s e n t were t h e s h a r e h o l d e r s of r e c o r d and t h a t , Farmers
S t a t e Bank, U n i t e d Bank o f P u e b l o and S t a n l e y S w a i n e w e r e

n o t s h a r e h o l d e r s of record and, therefore, not entitled t o
notice. 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 any-
thing, 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 trans-
action. 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 the established corporate business and,
therefore, came well within that class of transactions
necessitating compliance with the statute. 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 t h e c o r p o r a t i o n , were n o t
notified and not represented. 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 ". . . i f the pleadings,
depositions, answers t o i n t e r r o g a t o r i e s , 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 is e n t i t l e d to judgment as a matter of law
. . ." R u l e 5 6 ( c ) , M.R.Civ.P.

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 summary j u d g m e n t m o t i o n b e c a u s e

t h e r e were m a t e r i a l i s s u e s of f a c t t h a t were p r e s e n t and
m u s t be a d j u d i c a t e d by a t r i a l . 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 , that
the judge's misquotation of their 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.

C h e y e n n e W. Bank v . Young ( 1 9 7 8 ) , 1 7 9 Mont. 492, 587 P . 2 d
401, 35 S t . R e p . 1806. The c a s e law i n Montana i s c l e a r o n
this issue and has been repeated and discussed numerous
times. I n F l a n s b e r g v . Montana Power Co. ( 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 substan-

t 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 . They f a i l e d t o d o s o .

The c a s e law 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. Anderson ( 1 9 7 6 ) , 1 6 9 Mont. 447, 548 P.2d 613;
Taylor v. Anaconda F e d e r a l C r e d i t Union ( 1 9 7 6 ) , 1 7 0 Mont.

5 1 , 540 P.2d 1 5 1 ; Rumph v . D a l e E d w a r d s , Inc. (1979),
Mont . , 600 P.2d 163, 36 S t . R e p . 1022; 6 Moore's Fed.

Prac. 756.16. In State ex rel. Burlington Northern v.
District Court (1972), 1 5 9 Mont. 295, 496 P.2d 1152, we

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
 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, supra, t h e Court held that
once t h e burden h a s s h i f t e d , 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 for reversal that

a p p e l l a n t s argued ( i . e . , r e s j u d i c a t a , contract voidability,
etc.) were not presented in a 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, appellants argue that the judgment from
c a u s e s 8221/8073 s h o u l d n o t be u s e d (res judicata) against
them. 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. 511, 12 Cal.3d 229, 524 P.2d 1295.
First, the issue 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 judgment of another court on the same
factual issues. Finally, the contract was void ab initio in
August 1968, and the contract remains so today.

Issue 3: Are any of the appellants' "defenses" suf-
ficient to warrant a reversal of the sum-
mary 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. In the previous
discussion the basis for granting summary judgment was
presented. Appellants had the burden at the time of the
motion in the District Court to present material and sub-
stantial 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 rati-
fied or enforced and that the incapacity to contract cannot
be removed by estoppel. Granzow v. Village of Lyons (7th
Cir. 1937), 89 F.2d 83.
 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 recog-
nized. 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. Also, appellants
could not have expected respondent to file sooner than
December 10, 1971, because the corporation was 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 substi-
tuting 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. Reickoff v. Consolidated Gas Co.

( 1 9 5 0 ) , 1 2 3 Mont. 555, 217 P.2d 1 0 7 6 .

The District Court ruled that appellants were

e n t i t l e d t o $819,321.08 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 . I n an

accounting action, the court is s i t t i n g i n e q u i t y and c a n
d e t e r m i n e from t h e f a c t s presented, t h e t e s t i m o n y and the

circumstances which awards are the most equitable. The

appellants did not act in good faith in their effort to

acquire the land i n question. T h e r e is l i t t l e d o u b t t h a t

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 own s i n c e 1 9 6 8 . To

d e p r i v e p e r s o n s of their e f f o r t s and t o s a y t h a t t h e y d i d

not actually "keep" 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 any r e i m b u r s e m e n t

for the caretaking of the farm. The D i s t r i c t Court was

proper in ruling that the appellants should receive two-

thirds of the crop share, $819,321.08, if for no other

reason than i t was f a i r and e q u i t a b l e . 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 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

policy. 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 with
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. 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 this a c t i o n should not be compensated

for. However, 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 than the c o s t of the improve-
ments. 42 C . J . S . Improvements, § 7 a t 436-437, 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 v. Paige ( 1 9 8 0 ) , 1 0 1 I d a h o 294, 612 P.2d
137. 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 . Improvements, S

7 a t 438, by s t a t i n g , ". . . 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 appel-
lants 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 improve-
ments) 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 corporation farmland during the
accounting period. Boumas received "title" to the oil and
gas rights through the void contract. The corporation,
represented by Krull and 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.