Case Title: MYHRE v MYHRE

Citation: 

Docket Number: 

State: montana

Court: Montana Supreme Court

Date: 1976-09-01T00:00:00Z

Document:
No. 13291 I N THE SUPREME C O U R T O F T H E STATE O F F I O N T A N A 1976 ERIC MYHRE, P l a i n t i f f and Respondent, -vs - T H O R M Y H R E and GERTRUDE MYHRE, Defendants and Appellants. Appeal from: D i s t r i c t Court of t h e Eighth J u d i c i a l District, Honorable Paul G. H a t f i e l d , Judge presiding. Counsel of Record : For Appellants : Anderson, Syrnrnes, Forbes, Peete and Brown, B i l l i n g s , Montana Raymond K. Peete argued, B i l l i n g s , Montana Robert Gabriel appeared, Great F a l l s , Montana For Respondent : Hutton, Sheehy and Cromley, B i l l i n g s , Montana John C. Sheehy appeared, B i l l i n g s , Montana James, Sogard & Fopp, Great F a l l s , Montana Bruce A. MacKenzie argued and Ted James appeared, B i l l i n g s , Montana Submitted: June 1, 1976 Decided $EP I j$'[G F i l e d : SEP 1 !$ii$ p - *44Tt h;PR/jnTia; . 8 Clerk Hon. Gordon Bennett, D i s t r i c t Judge, s i t t i n g i n place of M r . J u s t i c e John Conway Harrison, delivered t h e Opinion of t h e Court. This is an appeal by defendants from a judgment entered i n t h e d i s t r i c t c o u r t i n Cascade County. P l a i n t i f f cross-appealed from a p o r t i o n of t h e judgment a s w i l l h e r e i n a f t e r be developed. Appellants ask r e v e r s a l of a judgment d i r e c t i n g a p p e l l a n t Gertrude Myhre t o s p e c i f i c a l l y perform her agreement t o t r a n s f e r 407 shares of stock i n an a d v e r t i s i n g company t o her son, t h e respondent; d i r e c t i n g a p p e l l a n t Thor Myhre t o t r a n s f e r 108 shares of company stock t o h i s wife, a p p e l l a n t Gertrude Myhre; enjoining Thor Myhre from removing h i s son, respondent, a s v i c e p r e s i d e n t of t h e company; granting respondent a money judgment a g a i n s t h i s f a t h e r f o r damages occasioned by t h e f a t h e r ' s removal of t h e son from t h e v i c e presidency; r e s t r a i n i n g a p p e l l a n t s from s p e c i f i e d a c t i v i t i e s r e l a t e d t o t h e corporation and awarding c o s t s a g a i n s t a p p e l l a n t s . I n a cross-appeal, respondent a s k s r e v e r s a l of a p a r t of t h e judgment t h a t d i r e c t s a l l p a r t i e s t o c a r r y o u t a retirement plan f o r a p p e l l a n t Thor Myhre approved by t h e company board of d i r e c t o r s . The c o u r t found t h a t Myhre Advertising was a Montana corporation, t h e stock ownership of which was l a r g e l y i n t h e Myhre family. O n J u l y 1, 1968, a p p e l l a n t s had an argument i n t h e i r B i l l i n g s home. H e accused her of marrying him f o r h i s money. Angered and confused a s t o her own i n t e n t i o n s with regard t o t h e t r a n s f e r of ownership, she took c e r t i f i c a t e No. 10 of t h e cor- poration, representing 108 shares of stock, from t h e family s a f e , endorsed it over t o him and handed it t o him. H e l a i d it on a nearby t a b l e and apparently d i d not g i v e t h e matter f u r t h e r con- s i d e r a t i o n a t t h a t t i m e . A few days l a t e r she returned t h e c e r t i f i c a t e t o t h e family s a f e , where it remained u n t i l December 3 0 , 1970. H e d i d not p r e s e n t t h e c e r t i f i c a t e f o r t r a n s f e r on t h e corporation books, nor d i d he ask h i s wife, a s corporation s e c r e t a r y , t o do so. N o consideration w a s tendered o r accepted f o r t h e endorsement. N o f e d e r a l g i f t t a x r e t u r n was f i l e d with r e s p e c t t o t h e purported t r a n s f e r . The corporate records show a c a n c e l l a t i o n of t h e c e r t i f i c a t e on December 30, 1970, and t h e t r a n s f e r of t h e 108 shares of stock, by new c e r t i f i c a t e s , t o a p p e l l a n t s ' four c h i l d r e n and t o M r s . Myhre, who received a c e r t i f i c a t e f o r 38 shares. The f a c e of c e r t i f i c a t e No. 10, which remains i n t h e corporate records, shows M r s . Myhre's notation: "Cancelled 12/30/70." The word "Cancelled", without d a t e , i s w r i t t e n a c r o s s t h e endorsement t o Thor Myhre on t h e r e v e r s e s i d e . Appellants made g i f t t a x r e t u r n s showing t h e t r a n s f e r s t o t h e c h i l d r e n i n t h e calendar year 1970. The corporate records be- tween December 30, 1970, and June 6 , 1974, r e f l e c t t h e t r a n s f e r made on t h e former d a t e . The minutes of subsequent stockholders' meetings, signed by both a p p e l l a n t s , show stock ownership, f o r voting purposes, based on t h e 1970 t r a n s f e r . A t t h e i r J u l y 3, 1972 meeting, t h e board of d i r e c t o r s discussed and approved " t h e l e g a l i n t e n t " of a f u t u r e compensa- t i o n and retirement plan f o r Thor Myhre. The p e r t i n e n t f a c t s a s d i s c l o s e d by t h e record w i l l be more f u l l y d e t a i l e d a t a l a t e r point i n t h i s opinion. O n April 30, 1973, p l a i n t i f f and h i s mother, t h e a p p e l l a n t Gertrude Myhre, signed an option agreement wherein she agreed t o t r a n s f e r t o him 407 s h a r e s of t h e c o r p o r a t i o n ' s stock upon h i s e x e r c i s e of t h e option. The signing was i n t h e presence of her a t t o r n e y , who notarized it June 30, 1973. O n J u l y 11, 1973, t h e a t t o r n e y , who had r e t a i n e d possession of t h e document, d e l i v e r e d it t o t h e p l a i n t i f f , having been authorized t o do so by Gertrude, who had received valuable consideration i n t h e form of a $50 pay- ment from p l a i n t i f f . A t t h e t i m e she signed t h e agreement and had it delivered she was f u l l y knowledgeable a s t o its provisions. She had conferred with a banker about some of i t s p r i n c i p l e t e r m s . She had a l s o conferred with her lawyer. She was f u l l y competent mentally and acted without r e s e r v a t i o n , h e s i t a t i o n o r question. There was no showing of undue influence o r duress. O n August 1, 1973, Thor f i l e d f o r a divorce from Gertrude. O n December 11, 1973, during t h e pendency of t h e divorce pro- ceedings and t h r e e years a f t e r t h e c a n c e l l a t i o n of c e r t i f i c a t e No. 1 0 and t h e d i s t r i b u t i o n of t h e 108 shares represented thereby, Thor made w r i t t e n demand upon Gertrude f o r t h e t r a n s f e r t o him of t h e 108 shares on t h e b a s i s of t h e 1968 endorsement. Gertrude's a t t o r n e y advised her t h e purported t r a n s f e r by endorsement w a s i n v a l i d and unenforceable. The demand was r e j e c t e d . May 29, 30 and 31, 1974, w e r e busy days f o r t h e Myhre's. O n May 29, E r i c , through counsel, wrote Gertrude's a t t o r n e y a l e t t e r , with a copy t o Gertrude, advising he exercised h i s option t o purchase 407 shares of company stock and enclosed a c a s h i e r ' s check f o r $5,000 and a promissory note f o r t h e balance, a l l i n accordance with t h e April 30, 1973, agreement. Gertrude's a t t o r - ney received t h e s e documents t h e following day and Gertrude re- ceived her copy on t h e 31st. O n t h e 30th t h e a p p e l l a n t s had m e t without counsel and agreed i n w r i t i n g t o t h e t r a n s f e r by Gertrude of 108 of her shares i n t h e company t o Thor a s p a r t of t h e divorce property settlement agreement, and Thor had agreed t o hold her harmless f o r any s u i t s o r a c t i o n s a r i s i n g o u t of t h e t r a n s f e r . The agreement was e f f e c t u a t e d on June 6 , 1974, s i x days a f t e r Gertrude had received n o t i c e of E r i c ' s e x e r c i s e of h i s option, by c a n c e l l a t i o n of stock c e r t i f i c a t e No. 3, held by Gertrude and representing 407 shares ( t h e exact number f o r which E r i c held an option t o purchase) and issuance of two new c e r t i f i c a t e s : No. 33 f o r 108 shares t o Thor and No. 34 f o r 299 shares t o Gertrude. The t r a n s f e r w a s made on t h e corporate books t h e same day, June 6th, and t h e new c e r t i f i c a t e s w e r e signed by Thor and Gertrude a s corporate o f f i c e r s . A t t h e t i m e of t h e t r a n s f e r agreement and i t s implementation both a p p e l l a n t s w e r e aware of t h e stock option agreement and t h a t t h e t r a n s f e r made it impos- s i b l e f o r Gertrude t o c a r r y it out. A t a l l times s i n c e May 29, 1974, E r i c has o f f e r e d t o c a r r y o u t h i s p a r t of t h e option agree- ment and Gertrude has refused t o c a r r y o u t hers. The 407 s h a r e s of stock withheld by Gertrude, together with o t h e r shares he now holds, would give E r i c over 51 percent of t h e c o r p o r a t i o n ' s stock, o r e f f e c t i v e stockholder c o n t r o l . O n October 23, 1974, Thor, being p r e s i d e n t of t h e company, f i r e d E r i c a s an employee, removed him from h i s d u t i e s and c u t and f i n a l l y eliminated h i s s a l a r y and p e r q u i s i t e s . E r i c a t t h a t t i m e was a l s o an o f f i c e r of t h e company, a v i c e p r e s i d e n t , and t h e company bylaws provide t h a t o f f i c e r s o r agents may be removed by board a c t i o n only. I n dismissing E r i c , Thor acted on h i s own and without any o f f i c i a l a c t i o n on t h e p a r t of t h e board. These f a c t s g i v e rise t o s e v e r a l p r i n c i p a l questions, t h e f i r s t of which is whether t h e purported 1968 t r a n s f e r of 108 shares of company stock from Gertrude t o Thor Myhre was v a l i d and enforceable. A l l p a r t i e s r e c i t e Baird v. Baird, 125 Mont. 1 2 2 , 134, 232 P.2d 348, a s t h e i r r e s p e c t i v e gospels and agree it l a y s t h e ground r u l e s f o r our consideration. That c a s e holds, i n t e r a l i a , t h a t a t r a n s f e r between spouses is presumed t o be a g i f t , absent consideration. It i s s a i d t h e r e t h a t t o overcome t h e presumption t h e evidence must be " * * * c l e a r , convincing and p r a c t i c a l l y f r e e from doubt. * * *I' F i n a l l y , t h e c a s e sets f o r t h t h e horn-book requirements f o r a g i f t : d e l i v e r y , donative i n t e n t and acceptance. (See a l s o Detra v. B a r t o l e t t i , 150 Mont. 210, 433 P.2d 485.) The testimony given a t t r i a l leaves l i t t l e doubt t h a t t h e r e was physical d e l i v e r y and acceptance. Gertrude endorsed c e r t i f i c a t e No. 1 0 , handed it t o Thor and he took it i n t o h i s hand. But what of t h e accompanying donative i n t e n t ? The ex- p e r t on t h i s matter should be t h e purported donor, Gertrude. Her p i v o t a l testimony l e f t t h e matter i n s e r i o u s doubt: "Q. And what d i d you do with t h e c e r t i f i c a t e a t t h a t t i m e , t h a t is, when you had it i n your physical possession? A. I signed it on t h e back, over t o him, and gave it t o him. "Q. And by 'over t o him, ' d i d you show him as assignee of t h a t stock? A. Y e s . "Q. And w i l l you t e l l us what your purpose was a t t h a t time i n giving it t o him? A. W e l l , w e had had an argument, and I was mad. "Q. Is it f a i r t o say t h a t you wanted t o settle a bone of contention a s between t h e two of you a t t h a t p o i n t , by giving him t h e stock? A. Oh, I d o n ' t r e a l l y know. It was j u s t a n argument, and it was a spur of t h e moment t h i n g t h a t I d i d , when I was j u s t mad. "Q. Were you t r y i n g t o make peace with him? A. You might say t h a t . "Q. And w a s it your i n t e n t i o n a t t h a t t i m e t o give him a b s o l u t e l y and completely t h e ownership of Stock C e r t i f i c a t e No. l o ? A. Well, I d o n ' t know. A s I say, I j u s t d i d it w a s a spur of t h e moment kind of t h i n g , and argumentative manner, and I d i d it, and I j u s t f o r g o t about it a f t e r - wards. "Q. You d i d , i n e f f e c t , d e l i v e r t h e stock t o him, i s t h a t r i g h t ? A. Y e s . " Q . You signed it over t o him, and you d e l i v e r e d it t o him? A. Yes, I d i d . " ~ u t subsequent occurrences unquestionably gave t h e c o u r t sub- s t a n t i a l grounds f o r concluding t h a t t h e presumption was overthrown c l e a r l y , convincingly and p r a c t i c a l l y f r e e from doubt. One f a c t i s p a r t i c u l a r l y compelling. Two and a half years a f t e r t h e pur- ported t r a n s f e r of c e r t i f i c a t e No. 1 0 t o Thor Myhre, t h a t c e r t i f - i c a t e was cancelled on i t s f a c e and on t h e books of t h e corpora- t i o n and f i v e new c e r t i f i c a t e s representing t h e same 108 s h a r e s of stock were issued t o t h e four c h i l d r e n (70 shares i n a l l ) and t o M r s . Myhre (38 s h a r e s ) . One might discount t h i s on t h e grounds, urged by a p p e l l a n t s , t h a t M r s . Myhre kept t h e corporate records and Thor Myhre was not aware of them. However, on t h e same day, Thor Myhre's c e r t i f i c a t e No. 11, representing 109 shares was s i m i l a r l y cancelled and new c e r t i f i c a t e s w e r e issued i n t h e same manner t o t h e c h i l d r e n and Thor Myhre. This, together with t h e subsequent f i l i n g of j o i n t g i f t t a x r e t u r n s and t h e voting of t h e stock i n accordance with t h e new d i s t r i b u t i o n , is highly persuasive evidence t h a t both a p p e l l a n t s understood t h e J u l y 1, 1968, t r a n s a c t i o n w a s a n u l l i t y f o r lack of any r e a l in- t e n t i o n on t h e p a r t of e i t h e r t h a t t i t l e was t o pass. There being s u b s t a n t i a l evidence t o support t h e determination of t h e c o u r t t h a t t h e purported g i f t was incomplete, we must s u s t a i n t h a t de- termination. The second p r i n c i p a l question i s whether t h e option agree- ment of April 30, 1973, between E r i c and h i s mother, Gertrude, f o r t h e t r a n s f e r of 407 of her shares of company stock i s v a l i d and enforceable by s p e c i f i c performance. The f a c t s i n t h i s re- gard, set o u t above, leave l i t t l e room f o r doubt t h a t t h e r e was a v a l i d , s u b s i s t i n g c o n t r a c t a t t h e inception; E r i c performed according t o t h e terms of t h e c o n t r a c t , and h i s mother refused t o . The requirements of b a s i c c o n t r a c t law were m e t , t h e r e was mutual a s s e n t , o r t h e "meeting of minds", and consideration. There were t h r e e conditions i n t h e option: annual payments, w r i t t e n n o t i c e of acceptance, and tender of a s p e c i f i e d down payment within a set t i m e . A 1 1 conditions w e r e s a t i s f a c t o r i l y m e t , i n s o f a r a s E r i c was a b l e t o do so. The f i r s t annual payment was made. It became f u t i l e t o make a d d i t i o n a l annual payments when Gertrude refused t o perform. The o r i g i n a l n o t i c e of accep- tance was s e n t t o Gertrude's a t t o r n e y , who should be viewed as her a g e n t , and a copy went t o Gertrude; t h e s p e c i f i e d down payment w a s n o t only tendered b u t accepted w i t h i n t h e required t i m e . I n subsequent a c t i o n s and appearances before t h i s Court, w e have been made aware of t h e f a c t t h a t subsequent t o t h i s appeal Gertrude has now confirmed and a c t e d on t h e o p t i o n agree- ment t o E r i c . Appellants urge f i v e grounds f o r i n v a l i d i t y a r e : (1) undue in£ luence, (2) unconscionability, (3) i m p o s s i b i l i t y due t o a r e s t r a i n i n g o r d e r issued i n connection with t h e d i v o r c e , ( 4 ) E r i c ' s l a c k of s u f f i c i e n t funds t o c a r r y o u t t h e c o n t r a c t , and (5) Gertrude's i n a b i l i t y t o d e l i v e r because of t h e 1968 t r a n s f e r of 108 s h a r e s of s t o c k t o Thor. A l l l a c k m e r i t . Grounds (1) and ( 2 ) a r e n o t c l e a r l y supported by t h e record and t h e d i s t r i c t c o u r t had ample s u b s t a n t i a l evidence t o a r r i v e a t a c o n t r a r y conclusion. The r e s t r a i n i n g o r d e r might have i n h i b i t e d t h e t r a n s f e r during t h e pendency of t h e d i v o r c e , b u t it could n o t p r o h i b i t Gertrude from e n t e r i n g i n t o t h e o p t i o n agreement, nor from t r a n s f e r r i n g t h e optioned stock once t h e r e s t r a i n i n g o r d e r was l i f t e d . The l a c k of funds argument was n o t proven f a c t u a l l y , nor can it be s u s t a i n e d l e g a l l y a s a reason f o r r e f u s a l t o per- form on a c o n t r a c t , u n l e s s such l a c k of funds r e s u l t s i n a c t u a l nonperformance. F i n a l l y , we have concluded above, a s t h e d i s t r i c t c o u r t d i d , t h a t t h e purported t r a n s f e r of 108 s h a r e s i n 1968 w a s i n v a l i d . Furthermore, even i f t h e t r a n s f e r was v a l i d , it would n o t r e l i e v e Gertrude of her l i a b i l i t y t o t r a n s f e r a s many s h a r e s a s s h e could i n f u l f i l l m e n t of t h e o p t i o n agreement. A s pointed o u t by defendants, t h e g r a n t i n g of s p e c i f i c performance i s d i s c r e t i o n a r y with t h e c o u r t . See Babcock v. Engel, 58 Mont. 597, 194 P. 137. The d i s t r i c t c o u r t has ordered s p e c i f i c performance of t h e o p t i o n agreement and, based on t h e f a c t s i n t h i s case, w e f i n d no abuse of d i s c r e t i o n . C l e a r l y t h e awarding of damages would not have been appropriate because they would not have been ascertainable without the wildest specula- tion. The stock in question had no recognized market value. Its value will depend on the performance of the company in a highly competitive field. Acquisition of the stock will, it appears, give Eric Myhre operating control of the company. This is a highly intangible factor contingent upon innumerable and indeterminate events. Given these circumstances, or lack of definable circumstances, it would seem to have been an abuse of discretion on the part of the court to fail to decree specific performance. To implement the specific performance decree, the district court, at its own instance, directed Eric to deliver an executed agreement pledging the stock to be received under the option as security for full payment of the agreed-upon stock price. No ob- jection to this requirement was raised on appeal, it was within the court's equitable powers to establish it, and it would appear to be an effective way to assure performance on the part of the plaintiff. To further implement its specific performance order, the court also ordered Thor Myhre to do whatever was necessary to transfer back to Gertrude the 108 shares of company stock he acquired from her in the divorce settlement agreement of May 30, 1974. This would enable her to fulfill her commitment under the option agreement. Including Thor Myhre in the specific perform- ance order seems appropriate in view of his involvement in the transaction calling forth the order. His inclusion seems to have legal sanction for two reasons: First, he knew of Gertrude's commitment under the option at the time the transfer was made to him. He knew that she could not meet that commitment without at least part of the 108 shares he had acquired from her. The board, t h a t ran from May I, 1973 t o April 30, 1974, but t h e r e is no evidence of renewal. I n h i s letter dismissing E r i c from employment by t h e corporation, Thor made it clear he w a s not attempting t o a l t e r E r i c ' s s t a t u s a s e i t h e r a v i c e p r e s i d e n t o r a member of t h e board. There is no evidence of a w r i t t e n c o n t r a c t o r agreement between E r i c and t h e board as t o E r i c ' s employment by t h e com- pany. Uncontradicted testimony and pleadings by E r i c e s t a b l i s h he d i d not r e c e i v e any compensation a s v i c e p r e s i d e n t o r d i r e c t o r ; he was employed a s manager of t h e G r e a t F a l l s o f f i c e and i n t h e year 1974 h i s s a l a r y w a s increased by Thor without board a c t i o n . The whole record shows t h i s was a c l o s e l y held family corporation with Thor a c t i n g a s head of t h e corporation a s w e l l as t h e family and carrying on t h e corporate operations p r e t t y much a s he wished with t h e approval of t h e board. F i n a l l y , t h e owners of a major- i t y of t h e stock w e r e aware of Thor's move, both before and a f t e r it w a s made, and they r a t i f i e d it a t t h e next board of d i r e c t o r s meeting. W e conclude from t h i s t h a t E r i c wore t h r e e h a t s viv-a-vis t h e corporation: he was a d i r e c t o r , an o f f i c e r and an employee. ( A s t o d i v i s i b i l i t y of s t a t u s , see 2 F l e t c h e r Cyclopedia Corporations, Section 266, p. 15, PermEd., 1969. H e w a s discharged a s an em- ployee and not as d i r e c t o r o r o f f i c e r . A s an employee, he had no enforceable c o n t r a c t of employment with t h e board. A s p r e s i - d e n t , a c t i n g f o r t h e chairman of t h e board, Thor Myhre had auth- o r i t y t o h i r e and f i r e employees. H i s dismissal of E r i c w a s informally approved a t t h e time by d i r e c t o r s with c o n t r o l of a majority of t h e c o r p o r a t i o n ' s stock and formally r a t i f i e d a t t h e next meeting of t h e board of d i r e c t o r s . Where t h e d i r e c t o r s of a corporation a r e t h e only stockholders, they may a c t f o r t h e corporation without formal meetings. Formal meetings can a l s o be waived by custom o r general consent, r u l e seems t o be t h a t one who acquires o r purchases property, knowing t h a t t h e property is s u b j e c t t o a c o n t r a c t t o be sold t o another, may be compelled t o perform t h e c o n t r a c t i n t h e same manner and t o t h e same e x t e n t as h i s grantor would have been l i a b l e t o do had t h e grantor not made t h e t r a n s f e r t o him. Moore v. Crawford, 130 U.S. 122, 32 L.Ed. 878, 9 S.Ct. 447; 71 Am J u r 2d S p e c i f i c Performance. Second, a s noted above, t h e t r a n s f e r agreement provided E r i c would save Gertrude harm- less from any a c t i o n t h a t might a r i s e as a r e s u l t of t h e agree- ment. This i s t h a t a c t i o n . It does n o t appear from t h e f a c t s t h a t it would be necessary t o t r a n s f e r t h e e n t i r e 108 s h a r e s back t o Gertrude Myhre i n order t o f u l f i l l her commitment t o d e l i v e r 407 s h a r e s under t h e option. She had, i n a d d i t i o n t o t h e 407 shares i n c e r t i f i c a t e No. 3, a t l e a s t 38 shares from t h e d i s t r i b u t i o n of c e r t i f i c a t e No. 1 0 on December 30, 1970. (See above.) Thus, it would seem t h e order o f t h e d i s t r i c t c o u r t should be modi- f i e d t o d i r e c t Thor Myhre t o r e t u r n t o Gertrude Myhre a s u f f i c i e n t number of s h a r e s of company stock t o meet her commitment under t h e option agreement with E r i c Myhre. The d i s t r i c t c o u r t held, as a matter of law, t h a t t h e p l a i n t i f f , E r i c Myhre, could be r e l i e v e d of h i s d u t i e s and s a l a r y from t h e corporation only by a c t i o n of t h e Board of d i r e c t o r s , t h a t t h e bylaws of t h e corporation e s t a b l i s h a c o n t r a c t u r a l r e l a t i o n s h i p between t h e o f f i c e r and t h e corporation, and t h a t Thor Myhre wrongfully removed E r i c " * * * from t h e d u t i e s of h i s o f f i c e i n charge of s a l e s * * *." O n t h i s b a s i s , t h e c o u r t awarded damages a g a i n s t Thor Myhre f o r E r i c ' s l o s s of wages and and permanently enjoined Thor from removing E r i c " * * * from t h e d u t i e s of h i s o f f i c e and p o s i t i o n a s v i c e p r e s i d e n t i n charge of s a l e s * * *." When Thor f i r e d E r i c on October 23, 1974, he was p r e s i d e n t of t h e corporation, having been e l e c t e d a s such a t t h e J u l y 2 , 1974 board of d i r e c t o r s meeting. A t t h e same meeting, t h e board had adopted new bylaws, which provided f o r a chairman of t h e board who was t o be t h e p r i n c i p a l executive o f f i c e r of t h e corporation and e x e r c i s e general supervision and c o n t r o l over a l l t h e business a f f a i r s of t h e corporation. The new bylaws made t h e p r e s i d e n t t h e p r i n c i p a l operation o f f i c e r of t h e cor- poration who was t o e x e r c i s e general o p e r a t i o n a l c o n t r o l of t h e day-to-day business and a f f a i r s of t h e corporation. They f u r t h e r provided : "In t h e absence of t h e chairman of t h e board of d i r e c t o r s , o r i n t h e event of t h e d e a t h of s a i d chairman, o r i n a b i l i t y and r e f u s a l t o a c t , t h e p r e s i d e n t s h a l l perform t h e d u t i e s of s a i d c h a i r - man, and when so a c t i n g s h a l l have a l l of t h e powers of and be s u b j e c t t o a l l of t h e restric- t i o n s upon s a i d chairman." A t t h e same meeting, t h e board had voted t o leave t h e o f f i c e of t h e chairman of t h e board vacant u n t i l t h e next annual meeting of t h e board. Thus, under t h e new bylaws and a s a r e s u l t of t h e a c t i o n of t h e board a t t h e 1974 meeting, Thor Myhre had, on October 2 3 , 1974, f u l l executive a u t h o r i t y t o run t h e company a s both chairman and president. The new bylaws a l s o provided f o r "one o r more" v i c e p r e s i - dents and d i d not specify any p a r t i c u l a r d u t i e s f o r them o t h e r than standing i n f o r t h e p r e s i d e n t i n h i s absence and "such o t h e r d u t i e s a s from t i m e t o time may be assigned" by t h e chairman of t h e board, by t h e p r e s i d e n t o r by t h e board of d i r e c t o r s . The board, a t t h e 1974 meeting, e l e c t e d one v i c e p r e s i d e n t E r i c Myhre, without any f u r t h e r t i t l e s p e c i f i c a t i o n o r assignment of duty. The minutes of t h a t meeting include t h e following entry: "Action on t h e employment c o n t r a c t and com- pensation plan of E r i c Myhre w a s delayed u n t i l a f u t u r e meeting." There had been an employment compensation plan, approved by t h e which seems t o have been t h e c a s e with t h e Myhre corporation. See 2 Fletcher Cyclopedia Corporations, Section 394 a t pp. 236, 237 and discussion and cases 19 Am J u r 2d Corporations, 55 1 1 2 1 and 1122. For t h e above reasons, t h e award of damages t o t h e p l a i n t i f f should be set a s i d e , a s should t h e i n j u n c t i o n a g a i n s t removal of E r i c from employment. Turning now t o t h e cross-appeal of E r i c , t h e minutes of t h e J u l y 3, 1972, annual meeting of t h e c o r p o r a t i o n ' s board of d i r e c t o r s includes t h i s entry: "A compensation plan w a s discussed a t g r e a t l e n g t h f o r t h e p r e s e n t President, Thor Myhre. It w a s moved by Harry Batty and seconded by Fred Marble t h a t t h e d i r e c t o r s approve t h e l e g a l i n t e n t of t h i s plan. "The plan is t o be d r a f t e d i n l e g a l form and submitted t o t h e Board of D i r e c t o r s f o r study. The b a s i c plan t o be: From May 1, 1972 t o April 30, 1975 Thor Myhre w i l l r e c e i v e $36,000.00 annually. From May 1, 1975 t o A p r i l 30, 1980, as Chairman of t h e Board he w i l l r e c e i v e $30,000.00 annually, as compensation from May 1, 1980 u n t i l h i s death, Thor Myhre w i l l r e c e i v e $20,000.00 annually and i n c a s e of h i s d e a t h Gertrude Myhre, h i s widow, w i l l r e c e i v e $20,000.00 annually u n t i l her re-marriage o r death." (This Court has added t h e comma between t h e words "$30,000.00 annually" and "as compensation" i n o r d e r t o make t h e second paragraph comprehensible, both p a r t i e s agreeing t h a t i t s omission was a c l e r i c a l e r r o r . ) The d i s t r i c t c o u r t ' s judgment d i r e c t e d : "That t h e plan of retirement approved by t h e Board of Directors of Myhre Advertising i n i t s Annual Meeting of 1972, be adhered t o by a l l p a r t i e s t o t h i s a c t i o n while a c t i n g as stock- holders, d i r e c t o r s and o f f i c e r s of s a i d corpor- a t i o n . " A t t h e t i m e of t h e 1972 board meeting, t h e c o r p o r a t i o n ' s bylaws c a l l e d f o r annual meetings of stockholders t o elect d i r e c - t o r s . Directors held o f f i c e u n t i l t h e next annual meeting. Of- f i c e r s w e r e t o be e l e c t e d annually by t h e board a t a meeting held immediately after the stockholder's meeting. Officers held office until their successors were elected. Officers could be removed by the board at any time. At the next annual meeting, on July 2, 1973, the so-called employment contract was discussed again and it was resolved to analyze the plan as proposed (apparently the draft called for in the 1972 resolution) and a report be made on it at the next meet- ing. At the next meeting on August 27, 1973, a plan for Thor Myhre's employment contract was tabled after Thor objected it did not conform to the principles for the plan approved in 1972. At the next meeting, on January 30, 1974, a member of the board presented a resolution for study which resolution stated the corporation had an employment agreement with Thor Myhre under consideration. At its annual meeting in July, 1974, action was delayed by the board on the employment contract "until a future meeting. " The basic plan, approved by the board in 1972, was beyond the powers of the board. It made him chairman of the board for five years and set his annual compensation for his service as such. Even though the bylaws at that time did not provide for a chairman of the board, the board could have created that position because they were authorized to elect or appoint "Such other officers and assistant officers as may be deemed necessary * * *." And we see no obstacle in the bylaws as they then existed to the board setting a compensation plan for a period longer than a year. But clearly the bylaws did not permit them to elect an officer to serve between 1975 and 1980 by a resolution of the board in 1972. Thus, even if the plan had been adopted, it could not be carried out by the board over the objection of any stockholder. Nor can the plan be enforced on a contractual basis. The minutes of subsequent meetings all too vividly reveal the board never agreed on t h e d e t a i l s of t h e plan, much l e s s d i d they r a t i f y o r approve of any p a r t i c u l a r plan o r t h e d e t a i l s t h e r e o f . Equity can enforce c o n t r a c t s but n o t i d e a s f o r c o n t r a c t s . Equity can enforce provisions of c o n t r a c t s but it cannot supply them. Even i f t h e 1972 r e s o l u t i o n could be c a l l e d an agreement t o agree, e q u i t y cannot be c a l l e d upon t o d r a f t t h e agreement and t o execute it f o r t h e p a r t i e s . While t h e r e appear t o be numerous and most compelling e q u i t a b l e reasons f o r t h e awarding of a job s e c u r i t y and retirement plan f o r Thor Myhre, apparently t h e c h i e f a r c h i t e c t and b u i l d e r of t h e company, t h e r e a r e very d i s t i n c t l i m i t s on t h e e q u i t a b l e powers of t h e c o u r t s , and t h e judgment of t h e d i s t r i c t c o u r t exceeds them. Its o r d e r with regard t o t h e retirement plan must be reversed. 2 F l e t c h e r Cyclopedia Corporations, B 392 a t p. 227 (Perm. Ed. 1969); E l e c t r i c a l Products Consolidated v. E l Campo, Inc., 105 Mont. 386, 73 P.2d 199; 1 Corbin Contracts, B 29, pp. 84, 85; 1 W i l l i s t o n on Contracts, 3rd Ed, Section 45; Esselystyn v. Meyer & Chapman S t a t e Bk., 63 Mont. 461, 208 P. 910; P h i l l i p s & Easton Sup. Co., Inc. v. Eleanor I n t e r n a t ' l , Inc., 212 Kan. 730, 512 P.2d 379, 383; 27 Am J u r 2d, Equity, 5 70, p. 593; Autry v. Republic Productions, 30 Cal.2d 1 4 4 , 180 P.2d 888, 893; Thisted v. Tower Management Corp., 147 Mont. 1, 409 P.2d 813. The d i s t r i c t c o u r t judgment includes an order r e s t r a i n - ing defendants from ( a ) t r a n s f e r r i n g o r encumbering corporation stock, (b) spending corporate funds f o r noncorporate purposes, (c) s e t t i n g new s a l a r i e s , (d) a l t e r i n g , amending o r changing t h e corporate records, and (e) disposing of corporate a s s e t s except i n t h e r e g u l a r course of company business. This i s very s t r o n g e q u i t a b l e medicine t o apply t o a going concern, even though con- d i t i o n s i n t h e firm a r e a c u t e l y aggravated and unstable, a s s e e m s t o be t h e case here. I n any event, t h e t i m e has come t o release t h e s e c o n s t r a i n t s , and t h e d i s t r i c t c o u r t should do s o without delay. Appellants o b j e c t on t e c h n i c a l grounds t o t h e assessment of c o s t s a g a i n s t them. W e a f f i r m t h e judgment of t h e d i s t r i c t c o u r t i n t h i s regard. The cause i s remanded t o t h e d i s t r i c t c o u r t f o r f u r t h e r proceedings i n accordance with t h i s opinion. c- -** Hon. Gordon Bennett, D i s t r i c t Judge, s i t t i n g i n p l a c e of M r . J u s t i c e John C. Harrison. / (#hie£ J u s t i c e _----_----_-______-__------------ J u s t i c e s I N T H E SUPREME COURT O F T H E STATE O F M O N T A N A No. 13291 ERIC M Y H R E , r, .- - P l a i n t i f f and Respondent, r! i ' . VS. T H O R MYHRE and GERTRUDE M Y H R E , Defendants and Appellants. La , . " -. - a " ; ; - * ; -i ' i . $ O R D E R I n t h i s cause a p e t i t i o n f o r rehearing was f i l e d by a p p e l l a n t s ; o b j e c t i o n s t h e r e t o f i l e d by respondents. While t h e Court does n o t o r d i n a r i l y have an argument by counsel on t h e m e r i t s of p e t i t i o n s f o r rehearing, i n t h i s i n s t a n c e we ordered such an argument. It has been held, counsel presented t h e i r p o s i t i o n s and t h e matter w a s taken under ad- visement. The Court having now considered t h e arguments of counsel and t h e documents f i l e d by t h e p a r t i e s d e n i e s t h e p e t i t i o n f o r rehearing. Let r e m i t t i t u r i s s u e forthwith. D A T E D t h i s 1 0 t h day of December, 1976. Hon. Gordon Bennett, D i s t r i c t Judge, s i t t i n g f o r M r . J u s t i c e John Conway Harrison, who i s d i s q u a l i f i e d .