Case Title: MGTC, Inc. v. Northern Utilities, Inc.

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 1987-03-06T00:00:00Z

Document:
MGTC, Inc. v. Northern Utilities, Inc.1987 WY 26733 P.2d 607Case Number: 86-244Decided: 03/06/1987Supreme Court of Wyoming
MGTC, INC., A WYOMING 
CORPORATION, APPELLANT (PLAINTIFF),

 
 
v.

 
 
NORTHERN UTILITIES, INC., 
A WYOMING CORPORATION, AND NORTHERN GAS COMPANY, A WYOMING CORPORATION, 
APPELLEES (DEFENDANTS).

 
 
Appeal from the 
DistrictCourtofNatronaCounty, Dan Spangler, 
J.

 
 
Richard Barrett and Rick 
A. Thompson of Hathaway, Speight, Kunz, Trautwein & Barrett, Cheyenne, for appellant 
(plaintiff).

 
 
J. Nicholas Murdock of 
Reeves & Murdock, Casper, Robert L. Morris and P. Kathleen Lower, of Morris 
& Lower, Denver, Colo., and T.J. Carroll, Lakewood, Colo., for appellees 
(defendants).

 
 
Before BROWN, C.J., and THOMAS, CARDINE, URBIGKIT 
and MACY, JJ.

 
 

BROWN, Chief 
Justice.

 
 

[¶1.]     This is an appeal from 
an order granted in favor of appellees Northern Utilities, Inc. and Northern Gas 
Company against appellant MGTC, Inc., dismissing appellant's action. The 
district court dismissed the case finding appellant's action was barred by the 
statute of limitations, § 34-21-299.5, W.S. 1977.

 
 

[¶2.]     Appellant urges only 
one issue on appeal:

 
 
"Did the district court 
err by failing to apply a statutory savings clause exception to the statute of 
limitations?"

 
 

[¶3.]     We will 
affirm.

 
 

[¶4.]     In August, 1969, 
appellant MGTC, Inc. (formerly McCulloch Gas Transmission Company), a Wyoming corporation, entered into a gas sales contract 
with appellee Northern Utilities, Inc., also a Wyoming corporation. This contract was later 
assigned to appellee Northern Gas Company, also a Wyoming corporation. In 
September 1974, all the shares of stock in Northern Utilities and Northern Gas 
were acquired by K-N Energy, Inc. (formerly Kansas-Nebraska Natural Gas 
Company), a Kansas corporation.

 
 

[¶5.]     A dispute arose over 
the sales contract in 1974 and continued through 1979. In March 1980, appellant 
sued K-N in Wyoming federal district court alleging that 
K-N and its subsidiaries were alter egos and that K-N had breached the contract. 
The jurisdiction of the federal court was based upon diversity. Apparently 
appellant chose not to sue Northern Gas or its predecessor in interest, Northern 
Utilities, because this would destroy diversity and prohibit suit in federal 
court. K-N sought to join Northern Gas and Northern Utilities in the suit which 
appellant successfully opposed.

 
 

[¶6.]     Suit in the federal 
district court in December 1981, resulted in a judgment for appellant. The court 
pierced the corporate veil between K-N and its subsidiaries and found K-N liable 
for the alleged contractual breach. Appeal to the 10th Circuit resulted in a 
reversal in favor of K-N on July 29, 1985. The appellate court found against 
appellant on the issue of whether the federal district court had properly 
pierced the corporate veil. The appellate court did not reach the merits of 
appellant's breach of contract action.

 
 

[¶7.]     Appellant subsequently 
filed suit against Northern Gas and Northern Utilities in Wyoming district court on 
December 17, 1985. The district court held that the suit was barred by the 
statute of limitations, § 34-21-299.5, W.S. 1977, which 
reads:

 
 
"(a) An action for breach 
of any contract for sale must be commenced within four (4) years after the cause 
of action has accrued. By the original agreement the parties may reduce the 
period of limitation to not less than one (1) year but may not extend 
it.

 
 
"(b) A cause of action 
accrues when the breach occurs, regardless of the aggrieved party's lack of 
knowledge of the breach. A breach of warranty occurs when tender of delivery is 
made, except that where a warranty explicitly extends to future performance of 
the goods and discovery of the breach must await the time of such performance 
the cause of action accrues when the breach is or should have been 
discovered.

 
 
"(c) Where an action 
commenced within the time limited by subsection (1) [subsection (a)] is so 
terminated as to leave available a remedy by another action for the same breach 
such other action may be commenced after the expiration of the time limited and 
within six (6) months after the termination of the first action unless the 
termination resulted from voluntary discontinuance or from dismissal for failure 
or neglect to prosecute.

 
 
"(d) This section does 
not alter the law on tolling of the statute of limitations nor does it apply to 
causes of action which have accrued before this act * * 
*."

 
 

[¶8.]     The district court 
found that appellant failed to meet its burden of proving that appellant fell 
within the exception found in § 34-21-299.5(c) cited above. The court also found 
that there was not a sufficient identity of parties for appellant to 
prevail:

 
 
"The parties agree, that 
in order for plaintiff to fall within the exception, there must be an identity 
of parties in the two actions. The parties in this case are not identical with 
the party in the federal court action. A corporation is generally considered to 
be an entity separate from its shareholders. The issue in the federal court case 
was whether the corporate identity of Northern Utilities could be disregarded. 
The 10th Circuit held that it could not. Thus, Northern Utilities and 
Kansas-Nebraska Energy are separate entities and cannot be considered identical 
parties."

 
 

[¶9.]     In determining whether 
the savings clause is applicable, it is generally recognized that there must be 
a substantial identity of parties between the original action and the subsequent 
action. 51 Am.Jur.2d Limitation of Actions § 318, pp. 820-821 (1970); and 54 
C.J.S. Limitations of Actions § 293, pp. 362-363 (1948).

 
 
"Each case involving the 
disregard of the separate entity doctrine must be governed by the special facts of that case. And, of course, 
determinations of fact are within the province of the trier of facts. * * *" 
Opal Mercantile v. Tamblyn, 
Wyo., 616 P.2d 776, 778 
(1980).

 
 

[¶10.]  We have previously recognized that 
ordinarily a corporation is a separate entity from its stockholders and the two 
must be considered separately. In Kloefkorn-Ballard Construction and 
Development, Inc. v. North Big Horn Hospital District, Wyo., 683 P.2d 656, 661 
(1984), we stated:

 
 
"Ordinarily, a 
corporation is a separate entity distinct from the individuals comprising it. 
State ex rel. Christensen v. Nugget Coal Co., 60 Wyo. 51, 144 P.2d 944 (1944). This is true 
even though a majority of the corporate stock is owned by a single individual. 
W.D. Miller Lumber Corporation v. Miller, 225 Or. 427, 357 P.2d 503, 100 
A.L.R.2d 376 (1960); and Durlacher v. Frazer, 8 Wyo. 58, 55 P. 306 (1898). Before a 
corporation's acts will be considered to be those of a specific stockholder, it 
must be made to appear that the corporation is not only influenced and governed 
by that stockholder, but that there is such a unity of interest and ownership 
that the individuality or separateness of the corporation and stockholder has 
ceased. See AMFAC Mechanical Supply Co. v. Federer, supra; and Arnold v. Browne, 27 Cal. App. 3d 386, 103 Cal. Rptr. 775 (1972). The facts of each case involving the 
disregard of a corporate entity must lead us to the conclusion that adherence to 
the separate existence of the corporation would sanction a fraud or promote 
injustice. See AMFAC Mechanical Supply Co. v. Federer, supra; and Arnold v. 
Browne, supra."

 
 

[¶11.]  With those principles in mind, we agree 
with the trial court in finding that appellant failed to meet its burden of 
showing that there was a substantial identity of the parties between the 
original action and subsequent action. It is true that K-N acquired all the 
stock in Northern Gas and Northern Utilities. But this fact alone, without more, 
is insufficient to disregard the time-honored maxim that a corporation is a 
separate entity from its stockholders.

 
 

[¶12.]  Affirmed.