Title: J Bar H, Inc. v. Johnson

State: wyoming

Issuer: Wyoming Supreme Court

Document:

J Bar H, Inc. v. Johnson1991 WY 165822 P.2d 849Case Number: 90-253Decided: 12/19/1991Supreme Court of Wyoming
J 
BAR H, INC., A WYOMING CORPORATION, AND DONALD K. HARGER AND IRENE F. HARGER, 
DERIVATIVELY ON BEHALF OF J BAR H, A WYOMING CORPORATION, APPELLANT 
(PLAINTIFF),

v.

JOANNA 
JOHNSON, APPELLEE (DEFENDANT).

Appeal from the District Court, 
TetonCounty, D. Terry Rogers, 
J.

 Bret 
F. King of King & King, Jackson, and Kenneth M. McLaughlin, argued, Student 
Intern, for appellant. 

Juline 
Christofferson, argued, Jackson, for 
appellee.

Before URBIGKIT, C.J., CARDINE and MACY, 
JJ., and SPANGLER and TAYLOR, District Judges.

CARDINE, 
Justice.

 [¶1.]     This case presents a 
textbook example of oppression and deadlock in a small, closely-held 
corporation. The trial court ordered the corporation dissolved and a receiver 
appointed. It found that money loaned to the corporation by appellants was not a 
valid debt of the corporation. It also refused to order relief in the 
corporation's derivative action against appellee for starting a competing 
business.

 [¶2.]     We affirm the trial 
court's order. Since some of the issues in this case have not yet been 
determined by the trial court, we consider only the issues presented for review 
and remand for further proceedings.

 [¶3.]     Appellants phrase the 
issues on appeal as follows:

"I. 
Whether the trial court erred in granting appellee's motion to amend the 
pleadings to conform to the evidence?

"II. 
Whether the trial court erred in finding that certain money loaned to the 
corporation by appellants Donald and Irene Harger is not a valid debt of the 
corporation?

"III. 
Whether the trial court erred in failing to grant appellants' motion for summary 
judgment?

"IV. 
Whether the trial court erred in failing to award damages to the 
appellants?"

 [¶4.]     Appellee states similar 
issues:

"I. 
Whether the trial court abused its discretion in granting appellee's motion to 
amend the pleadings to conform to the evidence?

"II. 
Whether the trial court erred in finding that an unauthorized and unratified 
promissory note signed by Donald K. Harger in behalf of the corporation, to 
himself and Irene Frances Harger, is not a valid debt of the 
corporation.

"III. 
Whether the trial court erred in failing to grant appellants' motion for summary 
judgment.

"IV. 
Whether the trial court erred in finding that a fiduciary duty was owed to the 
corporation by appellee, and failing to award damages to the 
appellants."

 [¶5.]     Appellee Joanna Johnson 
created J Bar M, a game processing business, in 1976. J Bar M was formed as a 
sole proprietorship. Later, Johnson sold J Bar M to appellant Donald Harger and 
a partner. It went bankrupt. Donald Harger then persuaded Johnson to associate 
in the formation of J Bar H to purchase J Bar M's assets at the foreclosure 
sale.

 [¶6.]     Appellants Donald K. 
Harger and Irene F. Harger formed J Bar H on November 18, 1983. The articles of 
incorporation made the Hargers its sole directors. At the organizational 
meeting, the corporation sold and transferred to the Hargers all 2,000 of its 
authorized shares of stock.

 [¶7.]     At the first meeting of 
shareholders, the Hargers' initial stock certificate was canceled and Joanna 
Johnson and the Hargers were each issued half (1,000 shares) of J Bar H. The 
articles of incorporation were not amended, however. The Hargers and Ms. Johnson 
executed a shareholders' agreement which made Donald Harger president and 
treasurer of J Bar H and Joanna Johnson its vice president and secretary. The 
corporate bylaws provided that the president of the corporation would be its 
chief executive officer.

 [¶8.]     The shareholders' 
agreement allowed Harger and Johnson to hold their offices until the 
shareholders unanimously agreed to their successors. In the agreement, Mr. and 
Mrs. Harger were again named directors of the corporation, and Ms. Johnson was 
added as a third director. Ms. Johnson was also given the right to name a fourth 
director who would serve so long as she was a shareholder.

 [¶9.]     The shareholders' 
agreement also apportioned managerial duties between Mr. Harger and Ms. Johnson. 
The two had very different backgrounds and experience. Mr. Harger had a master's 
degree in business administration and had been involved in management of several 
multi-million dollar corporations. Ms. Johnson had experience in game processing 
but had never previously served on a corporate board. The agreement provided 
that Harger and Johnson were to co-manage the corporation during its first two 
years of operation. Each would receive a salary for doing so. It set forth with 
some specificity the managerial duties of each party. After the end of the 
two-year period, each party was free to continue employment with the corporation 
but was not obligated to do so. The agreement also contained a restriction on 
transfer of shares and a clause providing for arbitration in the event of 
deadlock.

 [¶10.]  For the first two years, Don Harger and 
Joanna Johnson co-managed the business as provided in the shareholders' 
agreement. However, J Bar H had financial troubles from the very beginning. It 
is clear from the record on appeal that these troubles contributed to the 
conflict which soon arose between Johnson and the Hargers.

 [¶11.]  Between 1984 and 1988, J Bar H held no 
formal directors' or shareholders' meetings, nor were any consent minutes signed 
and filed. By the end of the 1986 game season, Donald Harger began to squeeze 
Johnson out of management. He exercised increasing, unilateral control of the 
day-to-day business of J Bar H. In the face of multiplied managerial conflicts, 
Harger sent Johnson a letter in June 1987 in which he informed her that she was 
no longer an employee of J Bar H and as a shareholder she had no active role or 
operational responsibilities within the corporation. Mr. Harger claimed he had 
the authority to make this decision inherent in his position as president and 
chief executive officer of J Bar H.

 [¶12.]  In Spring or early Summer of 1987, Harger 
changed the locks on the business and instructed employees not to allow Johnson 
to enter the business. Harger stated at trial that he locked Johnson out because 
Johnson was writing checks and giving herself distributions from the corporation 
at a time when it was facing foreclosure. The locks to the business were changed 
two more times, first by Johnson and then by Harger.

 [¶13.]  At the beginning of the Fall, 1987 game 
season, when Ms. Johnson arrived to begin work with her usual crew of 
meatcutters, Harger's new manager barred them from entry. A confrontation 
ensued, and after Mr. Harger arrived, he called the police. Subsequently, on 
September 17, 1987, Harger applied for a temporary restraining order to prevent 
Johnson from interfering with the business. Johnson then filed suit against 
Harger in district court. This suit was dismissed in December 1987, and the 
parties were ordered to undergo binding arbitration pursuant to the terms of the 
shareholders' agreement.

 [¶14.]  The Board of Arbitrators of Teton County 
found that Don Harger should manage the day-to-day affairs of the corporation. 
The Board recommended that "the corporation be liquidated or the parties work 
together to turn the corporation around to make it profitable, under Mr. 
Harger's management."

 [¶15.]  Mr. Harger apparently took the Board's 
decision as a mandate to shut Ms. Johnson completely out of the management of 
the corporation. He instructed Johnson that she was to have no further 
involvement whatsoever in the operation of the company. Without consulting Ms. 
Johnson, he designated Ronald Woodward "vice president" of the corporation. 
Harger removed Johnson's name from the corporation's bank signature card and 
substituted that of Woodward, as "Vice President and Asst. General Manager" of J 
Bar H.

 [¶16.]  On May 25, 1988, the Hargers executed a 
corporate resolution allowing the corporation to borrow money from themselves. 
The Hargers did not tell Ms. Johnson about this resolution. Don Harger then 
borrowed $290,000.00 on his personal assets and loaned the corporation 
$247,402.07. He executed, as president of J Bar H, a promissory note to the 
himself and Irene Harger from the corporation in that amount plus twelve percent 
interest.

 [¶17.]  In May 1988, Donald Harger listed J Bar H 
for sale with Real Estate of Jackson Hole. The listing contract showed Mr. 
Harger as the owner of record of the corporation. Mr. Harger also wrote a letter 
to Douglas Herrick, the president of Real Estate of Jackson Hole, in which 
Harger stated: "The Company is now available for sale as a result [of] a 
favorable Arbitration Hearing assigning control to me."

 [¶18.]  Ms. Johnson, frustrated at her lack of 
control over J Bar H, set up another meat processing business under the name 
"Game Processing." She sent a letter soliciting business from many of the 
outfitters who were or had been customers of J Bar H. The corporation filed suit 
for damages and injunctive relief against Joanna Johnson and Wendell Campbell, 
one of her game processors, on September 20, 1989. Wendell Campbell was later 
dismissed from the suit. The Hargers later amended the complaint to allege a 
shareholder's derivative suit by themselves on behalf of the corporation against 
Joanna Johnson.

 [¶19.]  While the suit was pending, the directors 
of J Bar H held an annual board of directors meeting on June 4, 1990. The 
minutes of this meeting reveal that the corporation was deadlocked on nearly 
every issue of importance. The Hargers voted one way, and Joanna and her 
designated director, the opposite.

 [¶20.]  Trial was held on the Hargers' complaint 
on July 16-18, 1990. At the conclusion of both parties' cases in chief, Johnson 
moved to amend the pleadings to conform to the evidence. The trial court granted 
the motion to amend the pleadings, over appellants' objection. The Hargers then 
called two rebuttal witnesses. Johnson also took the stand for herself as a 
rebuttal witness. At the close of all the evidence, the trial court gave the 
parties thirty days in which one or the other could buy the other party out. The 
parties reached no settlement during this thirty-day 
period.

 [¶21.]  On September 11, 1990, the trial court 
announced its decision. It found that Johnson's actions in operating a competing 
business were a breach of her fiduciary duty to J Bar H. However, the court 
found this breach was caused by the Hargers having locked Johnson out of the 
business and therefore the court refused to award any damages to the Hargers or 
the corporation. The trial court further ordered that the Hargers' derivative 
suit be dismissed and that Johnson be granted the prayer of her complaint, i.e., that the corporation be dissolved. 
The court appointed a receiver to wind up the affairs of the corporation. The 
Hargers have appealed from this order.

 [¶22.]  Although in its order, the trial court 
found that the Harger's loan to the corporation was not a valid debt of J Bar H, 
it did not enter any order providing that the Hargers' debt not be recognized. A 
hearing on this issue was scheduled for December 20, 1990, in the trial court, 
well after this appeal was filed. The record does not disclose whether the 
hearing was held. Counsel at oral argument indicated that no hearing had been 
held because the trial court had decided it no longer had jurisdiction because 
of the appeal pending in this court. Therefore, we do not have a final order on 
all issues before us because, inter 
alia, the issue of the recognition of the Hargers' debt has not been 
resolved below.

 [¶23.]  Normally, a litigant may not appeal to 
this court from an order which is not final as to all issues unless the trial 
court makes a determination that there is no just cause for delay. W.R.C.P. 
54(b). However, we have in the past, on occasion, considered cases as upon a 
writ of certiorari, where judicial economy and justice required or where there 
had been procedural default by counsel. Bland v. State, 803 P.2d 856 (Wyo. 1990) was such a 
case in which the appeal was dismissed for untimely filing but the case was 
reinstated on a writ of certiorari. In this case, it seems clear that the trial 
court intended a final order but mistakenly failed to make the order final as to 
one, and possibly more, of the issues. Judicial economy and speedy resolution of 
disputes would best be served by our considering this appeal at this time. 
Accordingly, we will treat this case as appropriate for certiorari and consider 
the justiciable issues presented for review. See In re General Adjudication of All Rights to 
Use Water in Big HornRiver System, 803 P.2d 61, 67 (Wyo. 1990); W.R.A.P. 
13.01.

Amendment of Pleadings to Conform to the 
Evidence

 [¶24.]  Appellants' first issue is whether the 
trial court erred in granting Johnson's motion to amend the pleadings to conform 
to the evidence. The trial court granted Johnson's motion, at the close of the 
evidence, as to six new issues. Appellants now claim unfair prejudice from this 
amendment.

 [¶25.]  Wyoming Rules of Civil Procedure 15(b), 
which governs amendment of the pleadings to conform to the evidence presented, 
states as follows:

"(b) 
Amendments to conform to the 
evidence. - When issues not raised by the pleadings are tried by express or 
implied consent of the parties, they shall be treated in all respects as if they 
had been raised in the pleadings. Such amendment of the pleadings as may be 
necessary to cause them to conform to the evidence and to raise these issues may 
be made upon motion of any party at any time, even after judgment; but failure 
so to amend does not affect the result of the trial of these issues. If evidence 
is objected to at the trial on the ground that it is not within the issues made 
by the pleadings, the court may allow the pleadings to be amended and shall do 
so freely when the presentation of the merits of the action will be subserved 
thereby and the objecting party fails to satisfy the court that the admission of 
such evidence would prejudice him in maintaining his action or defense upon the 
merits. The court may grant a continuance to enable the objecting party to meet 
such amendment."

 [¶26.]  Appellants argue that the trial court was 
bound by its pretrial order which set forth the issues to be tried and which 
therefore superseded the issues raised in the pleadings. Appellants rely on 
W.R.C.P. 16, which states in pertinent part:

"[The 
pretrial] order when entered controls the subsequent course of the action, 
unless modified at the trial to prevent manifest 
injustice."

See also Salveson v. Cubin, 791 P.2d 581, 582 (Wyo. 1990); Clouser v. Spaniol Ford, Inc., 522 P.2d 1360, 1364 (Wyo. 1974) (pretrial order supersedes 
pleadings and controls subsequent course of action in a civil 
case).

 [¶27.]  We do not agree that Rule 16 controls the 
amendment issue in this case. A pretrial order is not set in stone but may be 
amended within the trial court's discretion to avoid manifest injustice. 
W.R.C.P. 16. Furthermore, we agree that in some circumstances the policy of 
liberal amendment under Rule 15 should moderate the "manifest injustice" 
standard of Rule 16. Wallin v. 
Fuller, 476 F.2d 1204, 1209 (5th Cir. 1973). Therefore, we apply a Rule 
15(b) standard to the trial court's actions, rather than Rule 16's stricter 
standard, to assess the trial court's exercise of its 
discretion.

 [¶28.]  Under Rule 15(b), where there is consent 
to try an issue, the decision to allow amendment of the pleadings lies within 
the scope of the court's sound discretion. Our review of the trial court's 
exercise of discretion is guided by whether or not the objecting party was 
prejudiced by allowance of the amendment. Hernandez v. Gilveli, 626 P.2d 74, 77 
(Wyo. 1981); Elder v. Jones, 608 P.2d 654, 657 
(Wyo. 1980), citing Rose v. Rose, 576 P.2d 458, 459 
(Wyo. 
1978).

 [¶29.]  Consent to trial of an issue may be 
either express or implied. It is relatively simple to determine whether a party 
has given express consent to the trial of an issue. In this case, for example, 
the parties expressly consented to trial of the issues raised in the pleadings, 
as modified by the pretrial order.

 [¶30.]  The pretrial order shows the issues 
litigated by express consent were the following:

(1) 
Hargers listed the issues as whether Johnson owed a fiduciary duty to J Bar H 
and whether she was liable to plaintiffs for damages for her breach of fiduciary 
duty. 

(2) 
Johnson listed three issues: (a) whether Johnson's fiduciary duty ceased to 
exist once Harger shut her out of corporate management; (b) whether J Bar H, as 
a close corporation, could maintain a suit against Johnson without sanction of 
the board of directors; and (c) whether the parties in interest were de facto partners and whether that 
partnership terminated when the corporation became 
deadlocked.

 [¶31.]  The existence of implied consent is a 
more complex issue, however. Wright, Miller and Kane discuss this issue in their 
treatise on the Federal Rules of Evidence:

"Implied 
consent [under Fed.R.Civ.P. 15(b)], however, is much more difficult to establish 
and seems to depend on whether the parties recognized that an issue not 
presented by the pleadings entered the case at trial. If they do not, there is 
no consent and the amendment cannot be allowed.

"A 
party who knowingly acquiesces in the introduction of evidence relating to 
issues that are beyond the pleadings is in no position to contest a motion to 
conform. Thus, consent generally is found when evidence is introduced without 
objection, or when the party opposing the motion to amend actually produced 
evidence bearing on the new issue." 6A C. Wright, A. Miller and M. Kane, Federal Practice and Procedure: Civil 2d 
§ 1493 at 19-20 (1990) (footnotes omitted).

 [¶32.]  We consider first the amendment which 
allowed the trial court to consider whether the Hargers' loan was a valid debt 
of the corporation. By the explicit terms of the pretrial issues, the 
corporation's indebtedness is not mentioned. Therefore, there was no express 
consent to trial of this issue. We must next search for evidence of implied 
consent.

 [¶33.]  In Johnson's pretrial summary, which was 
incorporated into the pretrial order, she stated the 
following:

"It 
is apparent, that the situation giving rise to Plaintiff's causes of action are 
matters which are deadlocked and which require 
arbitration.

"It 
is Defendant Johnson's intention to immediately file a request with the court 
that the [sic] all issues herein involving the conduct of the corporation[']s 
affairs be submitted to arbitration so that a final resolution of this problem 
can be achieved.

"The number of issues disputed by the parties 
in interest * * * far exceed the issues presently before the Court. 
Resolution of these few issues will only prolong the unsettled and unresolvable 
partnership of these parties. Therefore, it is imperative that the remedy for 
settling differences, as agreed to in the Shareholders Agreement, be immediately 
pursued." (emphasis added)

 [¶34.]  Arbitration was not pursued and, as 
discussed previously, the case went to trial. Donald Harger, when asked on 
direct examination at the very beginning of the trial why he had brought the 
lawsuit, broached the issue of corporate debt when he answered as 
follows:

"Joanna 
Johnson is an officer of the corporation, vice president and secretary, she is a 
director, and has continued to act as such. She's a 50 percent shareholder, and 
stands to gain or lose by the success of the corporation whether she knows it or 
not. We both own 50 percent of something 
that has a considerable amount of debt. She has competed against the 
corporation and taken funds away that would have remained with the corporation 
and I'm specifically talking about the game processing business, none of the 
other aspects.

"On 
the other hand, I've worked since November of '83, no shareholder distributions. 
JoAnna has received $16,379 in shareholder distributions. My wife and I have lent the company on 
numerous, dozens of occasions, working capital. * * * At this point or the end 
of last year the company owed us $11,505. Since that time my wife and I have 
borrowed personally to put another fifteen thousand into the corporation to keep 
it alive." (emphasis added)

Appellee 
objected to this testimony as unresponsive to the question posed. The court 
allowed Harger to complete his explanation.

 [¶35.]  Johnson later introduced the Note itself 
without objection. Brec Cooke, a director of J Bar H, read into the record the 
following statement from the minutes of a J Bar H board of directors' 
meeting:

"`Brec 
made a motion that the Board request all money paid to the Hargers on personal 
loans by the corporation be returned to the corporation and that no further 
amounts be paid on any personal loans of Don's or Fran Harger's by J Bar H, 
Inc.'"

Cooke 
then described how Donald Harger ruled this motion out of 
order.

 [¶36.]  Donald Harger was called as an adverse 
witness for Johnson. During his testimony, he admitted that he had made the loan 
secured by the Note and that it was neither authorized by the board of directors 
nor by Joanna Johnson.

 [¶37.]  After the motion to amend was granted, 
Harger did not ask for a continuance. Instead, he took the stand as a rebuttal 
witness and testified that he had called Joanna to ask for her cooperation in 
borrowing money on behalf of the corporation, and that when she refused her 
cooperation he had consulted his attorney about executing the authorization to 
borrow.

 [¶38.]  These circumstances show implied consent 
of the parties to try the indebtedness issue. Johnson's pretrial memorandum 
stated that there were issues to be resolved in addition to those before the 
court. At trial, Johnson presented considerable testimony concerning the 
indebtedness incurred by the Hargers, including testimony of Mr. Harger himself. 
Harger put the corporate debt at issue with his answer to the very first 
question posed by his counsel. All of these factors show that the issue of the 
corporate indebtedness assumed by the Hargers was actually litigated at trial 
with their implied consent.

 [¶39.]  Hargers argue, nevertheless, that they 
did not object to some of Johnson's evidence because they did not know it would 
be used against them on the indebtedness issue. Given the evidence in this case, 
however, and the way in which it was presented by the parties, we think that 
there was indication that the loan issue was being litigated as a separate 
issue.

 [¶40.]  Appellants also argue that had they known 
that indebtedness was at issue, they could have prepared to meet the issue with 
evidence of their own. Specifically, appellants state that they "could and would 
have introduced evidence regarding the underlying debt which that loan was 
intended to replace, the circumstances in which that underlying debt was 
assumed, and the extent to which the Appellee had known of, consented to, or 
ratified that underlying debt." Appellants do not state whether information as 
to these claims was available to them at trial or has been acquired since then. 
In either case, after Johnson made her motion to amend, Donald Harger did not 
ask for a continuance, but instead took the stand himself and presented rebuttal 
testimony. Any prejudice in presenting their case thus comes from appellants' 
failure to request a continuance.

 [¶41.]  We now consider the remainder of the 
amended issues. One of these was whether the corporation should be dissolved. At 
oral argument before us, the Hargers conceded that the trial court acted 
properly in dissolving the corporation. We will treat this admission as evidence 
of implied consent to trial of the dissolution issue. See Purofied Down Products Corp. v. 
Travelers Fire Ins. Co., 278 F.2d 439, 444 (2nd Cir. 1960); W.R.C.P. 15(b). 
The trial court's amendment of the pleadings to include a request for 
dissolution is therefore affirmed.

 [¶42.]  Johnson also requested that the action be 
treated as a shareholder action by herself to enjoin the corporation from 
bringing this suit. Although it amended the pleadings to consider this issue, 
the trial court did not grant the injunctive relief Johnson requested. Instead, 
it ruled that no damages were due the corporation because Johnson was deprived 
of her earnings from the corporation by the Hargers' misconduct. Since no 
injunctive relief was awarded, the question of whether the complaint was 
properly amended to request injunctive relief is moot.

 [¶43.]  The issue of removal of the directors is 
also moot, since the corporation has been ordered dissolved and placed in 
receivership. As to costs, the propriety of amending the complaint to include 
them is not ripe for review at this time, because the court has entered no order 
relating to costs. It is still possible for the court to hold an evidentiary 
hearing at which both appellants and appellee may present further evidence and 
argument bearing on the costs issue. Appellants will have sufficient time to 
prepare to meet these issues, and therefore, will not be unfairly prejudiced by 
the amendment of the pleadings to add issues relating to costs. See Haught v. Maceluch, 681 F.2d 291, 
306 (5th Cir. 1982) (no prejudice where party has ample opportunity to prepare 
to meet unpleaded issue).

 [¶44.]  Under all the circumstances presented, we 
hold that the pleadings were properly amended to include a request that 
indebtedness incurred by the Hargers during the shut-out be disregarded. The 
remainder of the amended issues are either moot or have not yet been decided by 
the trial court.

 [¶45.]  The trial court has made a finding that 
the $247,000 loan was not a valid debt of the corporation. It has further 
instructed the receiver not to pay the Hargers' debts as secured or priority 
debt. However, no final order has been entered stating that the debt will not be 
recognized. On remand the trial court should conduct further proceedings and 
issue an appropriate order on this question in accordance with this 
opinion.

Validity of Corporate 
Debt

 [¶46.]  Appellants raise three challenges to the 
trial court's finding that the $247,000 Harger loan was not a valid debt of the 
corporation. First, they argue that "the validity of the Note and its underlying 
obligation were so far outside the scope of the pleadings that it was error for 
the court to reach that question." Second, they argue that it was error for the 
trial court to resolve the issue without conducting a hearing. Third, they argue 
that the trial court's finding is not supported by the evidence. We will 
consider each of these arguments in turn.

 [¶47.]  Appellants' first argument is identical 
to that disposed of in our discussion of their first issue. This issue having 
been resolved by our previous discussion, we move on.

 [¶48.]  Appellants' second argument concerns 
their due process right to a hearing prior to a determination on the loan 
recognition issue. We have stated that due process requires that a party called 
upon to answer a complaint be furnished notice of the allegations against him 
and a meaningful opportunity to be heard on the issues. Goss v. Goss, 780 P.2d 306, 310 
(Wyo. 1989). 
We will allow these fundamental due process rights to be infringed only to the 
extent permitted by legislative or judicially promulgated procedural rules. 
Id. In this 
case, the requirement of notice and a hearing has been satisfied by the 
litigation which was had on this issue at trial and by the trial court's 
compliance with the requirements of W.R.C.P. 15(b). Accordingly, we find no 
denial of due process.

 [¶49.]  Appellants next claim that the trial 
court's finding that the Harger loan was not a valid debt of the corporation is 
unsupported by the evidence. When reviewing a challenge to the evidence 
supporting the decision of a trial court, we accept the evidence of the 
prevailing party as true, leaving out entirely the consideration of evidence in 
conflict with it and giving every favorable inference which may fairly and 
reasonably be drawn from the prevailing party's evidence. Scaling v. Scaling, 805 P.2d 866, 869 
(Wyo. 
1991).

 [¶50.]  Appellants claim that because they had no 
opportunity to present evidence, there was insufficient evidence before the 
court to render its decision. We have already discussed their opportunity or 
lack thereof in other portions of this opinion. The real question, given our 
standard of review, is: Could the trial court rule as it did based on the 
evidence it did have before it. We 
believe that it could, and so affirm the trial court's order. 

 [¶51.]  The trial court had before it Donald 
Harger's own statement that Joanna Johnson did not authorize the corporation to 
incur the debt and, further, that the Board of Directors had not authorized the 
loan. The Note which Donald Harger signed as president of J Bar H was admitted 
into evidence. Also entered into evidence was a copy of the "Certified Copy of 
Corporate Resolutions" allowing the corporation to borrow money from the 
Hargers. This document was signed in the space provided for the secretary of the 
corporation by Mrs. Harger, when in fact Joanna Johnson was the corporation's 
secretary.

 [¶52.]  Wyoming Statute 17-16-801(b) (Dec. 1989 
Repl.) states that "[a]ll corporate powers shall be exercised by or under the 
authority of, and the business and affairs of the corporation managed under the 
directorship of, its board of directors, subject to any limitation set forth in 
the articles of incorporation." Applying this law to the facts presented at 
trial, we affirm the trial court's finding that the loan was not a valid debt of 
the corporation.

Denial of Summary 
Judgment

 [¶53.]  Appellants next contest the trial court's 
denial of their motion for summary judgment. Denial of summary judgment is not a 
final, appealable order. Flying J, Inc. 
v. Booth, 773 P.2d 144, 146 (Wyo. 1989); Thompson v. State ex rel. Wyoming Workers' Comp. Div., 768 P.2d 600, 603 
(Wyo. 1989); 
W.R.A.P. 1.05. Furthermore, although we consider this appeal as a petition for 
certiorari because of the lack of a final order, we will not expand the scope of 
certiorari to consider whether summary judgment was properly denied when the 
issues have already been tried on their merits. We therefore affirm the trial 
court's denial of summary judgment for appellants.

Failure to Award Damages to the 
Corporation

 [¶54.]  Appellants contend that since the trial 
court found that Johnson violated her fiduciary duty to the corporation, it 
abused its discretion by failure to award damages for the breach. The trial 
court refused to award damages because it held that Mr. Harger caused the breach 
by shutting Ms. Johnson out of the corporation. Appellants argue that the trial 
court had to award damages against Johnson to the corporation regardless of any 
misconduct by Mr. Harger. We disagree.

 [¶55.]  Corporate officers and directors have a 
fundamental duty of loyalty and fiduciary responsibility to the corporation they 
manage. Squaw Mountain Cattle Co. v. 
Bowen, 804 P.2d 1292, 1296 (Wyo. 1991); Lynch v. Patterson, 701 P.2d 1126, 1132 
(Wyo. 1985). 
In the small, closely-held corporation, this duty is also reciprocal between the 
officers/directors of the corporation. The Hargers violated their fiduciary duty 
to Johnson when they performed a classic "squeeze-out" against Johnson's 
interests in the corporation. In their treatise on oppression of minority 
shareholders, O'Neal and Thompson describe some of the harms which a minority 
shareholder may endure when "squeezed out" of participation in a closely-held 
corporation:

"The 
losses which a minority shareholder suffers in a squeeze-out are sometimes 
catastrophic. He may be deprived of any effective voice in the making of 
business decisions. Not only that, he may be locked out of the company's 
premises; and majority participants may be able to withhold from him information 
on the affairs of the business and on policies being adopted and decisions being 
made." 1 F.H. O'Neal & R. Thompson, O'Neal's Oppression of Minority 
Shareholders § 1:03 at p. 4 (2nd ed. 1991) (footnote 
omitted).

 [¶56.]  Although in this case, Joanna Johnson 
could not technically be considered a "minority shareholder," since she held 
fifty percent of the shares, and although the corporation was not technically a 
statutory close corporation, since its Articles of Incorporation did not say 
that it was, Johnson's position as detailed in the shareholders' agreement, the 
restrictions placed on sale of her shares, and her lack of business acumen 
relative to that of Don Harger allowed the Hargers to practice just the sort of 
oppression described in the treatise. (See Matter of Villa Maria, Inc., 312 N.W.2d 921 (Minn. 1981), for a similar pattern of abuse by a fifty percent 
shareholder/corporation president.)

 [¶57.]  O'Neal and Thompson go on to say 
that

"Quite 
commonly when a participant invests in a close corporation he expects to work in 
the business on a full-time basis. He may put practically everything he owns 
into the business and expect to support himself from the salary he receives as a 
key employee of the company. Whenever a shareholder is deprived of employment by 
the corporation (as he frequently is in these squeeze plays) he may be in effect 
deprived of his principal means of livelihood." O'Neal and Thompson, § 1:03 at 
p. 4.

 [¶58.]  The question is whether this "squeeze 
out" performed against Joanna Johnson had any bearing on her fiduciary duty to 
the corporation. First, we detail the scope of her fiduciary duty. It has been 
generally held that in the absence of a contractual provision to the contrary, 
corporate fiduciaries, including directors and officers, are free to resign and 
form a competing enterprise. They must not, however, form a competing enterprise 
while serving as directors. Furthermore, they must not make use of confidential 
information particular to the corporation's business which they have acquired 
therefrom. See e.g. Steelvest, Inc. v. 
Scansteel Service Center, Inc., 807 S.W.2d 476, 483 (Ky. 1991); Parsons 
Mobile Products, Inc. v. Remmert, 216 Kan. 256, 531 P.2d 428, 432 (1975). This case 
is subtle, because although Johnson was nominally an officer and director of J 
Bar H when she began her competing business, she had also been squeezed out of a 
managerial role. We must therefore analogize to several cases along these lines 
from other jurisdictions.

 [¶59.]  In Tulumello v. W.J. Taylor Int'l Constr. Co., 
Inc., 84 A.D.2d 903, 446 N.Y.S.2d 673 (1981), an employee of a close 
corporation who was only nominally an officer of the corporation was fired after 
he announced that he would be purchasing a competing business. The sole 
stockholder, president, treasurer and director of the corporation, William J. 
Taylor, Jr., then sued the employee/officer for diversion of corporate 
opportunity. The New York Supreme Court, Appellate Division, in refusing 
Taylor's claim 
for damages and injunctive relief, stated as follows:

"Public policy strongly militates against 
sanctions which limit a person's right to earn a livelihood. Considering 
that Taylor Co. was a close corporation completely run by Taylor and that Tulumello 
was only a nominal officer thereof, we find no basis to subject him to the 
strict fiduciary duty of a responsible officer. There is no evidence of 
disloyalty by Tulumello. Thus, before the close of his employment, he could 
properly purchase the rival business incorporated upon termination of 
employment. There is no evidence that Tulumello solicited customers for such 
rival business before the end of his employment. Also we find nothing in the 
nature of his employment establishing a fiduciary relationship which prevented 
subsequent competition, especially in a business where the Dodge Reports 
acquaint all of potential customers." Tulumello, 446 N.Y.S.2d  at 674 (emphasis 
added and citations omitted).

 [¶60.]  In Voss Engineering, Inc. v. Voss Industries, 
Inc., 134 Ill. App.3d 632, 89 Ill.Dec. 711, 481 N.E.2d 63 (1985), a father who owned a majority interest in two small, family-held 
corporations fired his son, who was a corporate director and was employed by one 
of the corporations as general manager. After his firing, the son arranged with 
other employees of the corporation to start a competing business, Voss 
Industries, Inc. The son did not resign as director of his father's corporations 
until after his own business was underway. The father filed suit which charged 
the son with breach of fiduciary duty to the corporations. The Appellate Court 
of Illinois affirmed the trial court's finding that the son had breached no 
fiduciary duty to his father's corporations. The Court of Appeals stated as 
follows:

"James 
Voss [the son] * * * never returned to his position at Voss Engineering 
subsequent to his father's pronouncement. Moreover, he never performed any directorial duties, 
attended any corporate meetings, or acted for plaintiff corporation in any 
capacity subsequent to his termination. His only connected action was to use 
the company credit cards and car, an action completely justified by his family 
status alone and enjoyed by other non-employee members of the Voss 
family.

"James 
testified that he believed his directorship had been terminated along with his 
position as manager and officer of plaintiff corporation. We too find that 
Robert Voss' termination of his son 
served not only to fire him from his position as officer and manager but also to 
effectively remove him from his role as corporate director. * * 
*

"Because 
James Voss was effectively removed in September 1980, prior to the time he began 
operating a competing corporation, he owed no fiduciary duty to plaintiff." Voss, 
481 N.E.2d  at 67 (emphasis added).

 [¶61.]  In Walter E. Zemitzsch, Inc. v. Harrison, 
712 S.W.2d 418 (Mo. App. 1986), the Missouri Court of Appeals refused to hold 
that the vice-president of a closely-held corporation breached his fiduciary 
duty when he discussed with the corporation's largest customer the possibility 
that he would leave the corporation to start a competing business. The customer 
did not give or promise any business to the vice-president prior to the time he 
left the corporation. The court further noted that, nominally, as an officer, 
the vice-president had only limited authority in the 
corporation.

"He 
was never furnished with the company's profit statement; he had never been 
informed of any executive salaries; he was not informed of personnel on the 
payroll; and he was not authorized to sign the company's checks. Unlike the 
situation in Opie Brush [Co. v. Bland, 409 S.W.2d 752 (Mo. App. 
1966)], he was not a director or stockholder. * * * [He] was not in possession 
of any confidential information." Zemitzsch, at 422.

 [¶62.]  None of these cases is directly on point 
with the facts in the present case. However, we think the principle to be 
extracted from them is that the fiduciary 
duty not to compete depends on the ability to exercise the status which creates 
it. It is not stretching this principle too far to hold that where a 
shareholder/director/employee of a close corporation has been wrongfully 
terminated from employment with the corporation and has been unjustly prevented 
from fulfilling her function as a director or officer, she can no longer be 
considered to act in a fiduciary capacity for the 
corporation.

 [¶63.]  Johnson did not begin her competing 
business until August of 1988, seven months after the Board of Arbitration 
decision assigned control of the business to Mr. Harger and over a year after he 
informed her that she was no longer employed at J Bar H and had no active role 
or operational responsibility for the corporation. Although Johnson had not 
resigned as director or officer of J Bar H at the time she began her competing 
business, and although she did assert her authority as a director with regard to 
meetings and obtaining copies of business records subsequent to the squeeze-out, 
she was not allowed any meaningful participation in the management of the 
corporation during this time period and was improperly shut out of corporate 
employment. Her position as vice-president and secretary of the corporation had 
been usurped by others.

 [¶64.]  From an equitable standpoint, we must 
treat this case as if Johnson had resigned her offices in the corporation when 
she was shut out of the exercise of them. As a "former" director and officer, 
Johnson was under no obligation not to compete when she formed her 
business.

 [¶65.]  Furthermore, there was not a sufficient 
showing at trial that Johnson had made use of confidential information that she 
acquired while a part of J Bar H management. Appellants have claimed that 
Johnson improperly appropriated the customer list for J Bar H. However, the 
testimony at trial showed that it was Johnson's experience and reputation as a 
game processor which brought in customers to J Bar H in the first place. Many, 
if not most, of the customers she solicited had known her for many years before 
J Bar H was ever formed. There was not a sufficient showing that Johnson used 
any confidential customer list to recruit her customers. We therefore affirm the 
trial court's decision denying recovery to J Bar H of sums earned by Johnson's 
competing firm.

 [¶66.]  Hargers argue that since it is the 
corporation which is entitled to recover moneys from Johnson and not the Hargers 
themselves, their misconduct should not foreclose recovery against Johnson. This 
argument does not convince us. The corporation was run by the Hargers as virtual 
sole proprietorship during the time period in question. It cannot now be purged 
of the taint of the Hargers' mismanagement and unfair practices. It is 
unfortunate that creditors of the corporation may suffer, but we cannot 
exonerate the corporation without also unfairly exonerating the Hargers. This we 
will not do. Cf. Lynch v. Patterson, 
701 P.2d  at 1130-31 (corporate recovery in close corporation would return funds 
to control of wrongdoers).

CONCLUSION

 [¶67.]  At oral argument, counsel for Joanna 
Johnson noted that she has filed a second suit against Mr. Harger seeking 
payment of money allegedly due her out of the sale of J Bar M in the early 
1980's. Counsel for Ms. Johnson then requested that we consolidate the remainder 
of issues to be considered in this action with the action arising out of J Bar 
M. We decline to do so. Consolidation of actions at the trial court level is a 
function properly left in first instance to the trial 
court.

 [¶68.]  The trial court's order is affirmed and 
this case is remanded for determination of the remaining issues and for further 
proceedings consistent with this opinion.

URBIGKIT, 
Chief Justice, concurring in part and dissenting in part.

 [¶69.]  I generally concur with the decision and 
the court's opinion except in one aspect with which I cannot agree. That subject 
is characterized in the majority as "Validity of Corporate 
Debt."

 [¶70.]  My review of the entire record and proper 
understanding of the proceeding determines that, except for the separately 
defined dispute about the validity of a promissory note as to legality of 
execution, the parties here neither tried nor did the trial court decide what 
amounts in liquidation either litigant may be entitled to be repaid as corporate 
advances from loans and what amounts will constitute investment as a purchase of 
equity.

 [¶71.]  This significant discord is created by 
our difference of opinion about what the trial court decided in paragraph 
twenty-five of its Findings of Fact, Conclusions of Law, Judgment and Order 
Appointing Receiver:

On 
or about May 26, 1988, Donald K. Harger executed a Promissory Note, * * * in the 
principal amount of $247,402.07 as President of the Corporation, obligating the 
Corporation to pay the amount of the Promissory Note to Donald K. and Irene 
Frances Harger of Jackson, Wyoming. The execution of this Note and any other 
documents in conjunction therewith was not authorized by the Board of Directors 
of the Corporation and therefore it is not a valid debt of the Corporation and 
the Corporation is not obligated on said Promissory Note to Donald K. Harger and 
Irene Frances Harger.

The 
difference is whether the trial court only invalidated the promissory note or 
also determined the invalidity of any claimed debt in whatever amount that might 
have been owed to appellants for loans advanced to the corporation for 
operational funding.

 [¶72.]  The litigation pathway of this case was 
unusual. What we now address is essentially what has been done to date by the 
trial court and what remains to be determined in the future by additional 
hearings and a future trial court decision. The strangeness of this adjudicatory 
pathway is now matched by the confusion we now find at this way station in 
progression toward an ultimate conclusion. 

 [¶73.]  This lawsuit started with a complaint 
filed by the "closed corporation" essentially owned by two shareholders, Donald 
K. Harger and Irene F. Harger (Hargers), appellants, against shareholder Joanna 
Johnson (Johnson), appellee. The complaint in essence addressed a claim of a 
fiduciary duty violation by Johnson in engaging in a competitive wild game 
processing business which was the same business in which this corporation, J Bar 
H, Inc., was involved. Remedies requested in the complaint included accounting, 
damages from lost profit and injunction. The answer alleged shareholder/director 
exclusion by lockout and, by general denial and affirmative allegation, claimed 
absence of any violation of the claimed fiduciary duty to the corporation in 
which Johnson was a shareholder and a director. Johnson first filed a motion for 
summary judgment.

 [¶74.]  Pursuant to an order for pretrial 
conference, both litigants filed pretrial memoranda asserting issues presented 
and their posture relative thereto. The Hargers restated their thesis of the 
original complaint asserting shareholder/director Johnson's violation of a 
fiduciary duty. Johnson summarized in her pretrial submission a posture defined 
in the original answer and she rejected any litigable fiduciary duty violation. 
The pretrial order granted leave to the Hargers to add a shareholders' 
derivative action to the complaint since by that time the question had been 
raised as to whether the proper party should be the corporation under the 50-50 
share ownership division or whether a shareholder's derivative action might be 
appropriate.

 [¶75.]  The amended complaint adding the 
shareholders' derivative element was duly filed essentially continuing the same 
theory of recovery originally presented. The Hargers then followed with their 
own summary judgment motion. Johnson reciprocated with another motion for 
summary judgment and the Hargers filed a revised amended complaint which still 
did not essentially change the case theory or their 
strategy.

 [¶76.]  A first complexity was then introduced by 
the responsive pleading filed by Johnson entitled "Answer to Second Amended 
Complaint." Johnson continued the thesis of shareholder/director exclusion and 
lockout and restated as an affirmative defense that the litigation was ultra 
vires. Then within the "answer," she alleged and prayed in 
part:

22. 
Complete relief cannot be accorded between the Plaintiff corporation and 
Defendant Johnson without the joinder of Donald K. Harger and Irene Frances 
Harger as directors, officer and shareholders of Plaintiff, pursuant to Rule 19 
of the Wyoming Rules of Civil Procedure.

23. 
Donald K. Harger and Irene Frances Harger have been omitted from this lawsuit 
because they are the directors, officer and shareholders who initiated the 
lawsuit on behalf of the Plaintiff corporation against Defendant 
Johnson.

WHEREFORE, 
Defendant prays that:

1. 
Donald K. Harger and Irene Frances Harger be joined as third-party defendants 
herein, and judgment be rendered against them for all wrongs alleged against 
Defendant Joanna Johnson; or in the alternative;

2. 
That the Complaint of Plaintiffs and all causes of action herein be 
dismissed.

3. 
That Plaintiff corporation be ordered to pay all costs of 
suit.

4. 
That Plaintiff corporation be ordered to pay such further sum as the Court may 
deem reasonable for attorney fees for services in this 
action.

5. 
And for such other and further relief as this Court deems 
proper.

 [¶77.]  On the date of filing the answer, Johnson 
also filed a motion to dismiss the amended complaint. The argument was presented 
by the motion that filing by the corporation was ultra vires while the 
shareholders' derivative segment of the complaint was attacked for procedural 
noncompliance. W.S. 17-16-740; W.R.C.P. 23.1. The trial court denied that 
motion.

 [¶78.]  The case was scheduled for trial on the 
merits and the trial court followed with an order denying all pending motions by 
a finding in part that issues of fact existed. Before trial, Johnson filed a 
trial brief which again restated her litigative status that her right to compete 
was validated by a breach of her interest as a shareholder/director by the 
exclusion and lockout.

 [¶79.]  This sequential analysis of the pleadings 
demonstrates that the trial commenced on the closely defined issue last outlined 
by Johnson's trial brief. Opening argument was not reported and the first notice 
that the case was faced with a metamorphosis occurred when Johnson had rested 
and the following colloquy ensued:

[DEFENDANT'S 
COUNSEL]: The defense rests, and I have a motion to amend the pleadings to 
conform to the evidence.

THE 
COURT: All right. State your motion then, please.

[DEFENDANT'S 
COUNSEL]: My motion is to amend the pleadings to conform to the evidence in this 
case. And the motion is that this action be treated as a shareholders action by 
JoAnna Johnson for the purpose of enjoining the corporation first of all from 
bringing this action; and second of all, asking that all reasonable costs be 
paid as a result of this action having been brought.

I 
further ask, Your Honor, that the pleadings be amended to ask for removal of 
Donald and Irene Harger as directors pursuant to Wyoming Statute 17-16-809, and 
I also ask, Your Honor, that this corporation be dissolved pursuant to 
17-16-1430(a)(ii).

I'm 
also asking, Your Honor, that the personal loan and any acts which have caused 
indebtedness or potential liability on behalf of the corporation taken during 
the time that JoAnna Johnson has been locked out of the corporation be set 
aside, and that the parties, Irene Harger and Donald Harger, be held responsible 
for those actions pursuant to 17-16-304(c). And that any costs that have 
resulted from their actions in bringing this matter, this case against JoAnna 
Johnson, be deemed ultra vires pursuant to that section of the law, and that all 
costs that have been incurred including attorney's fees as a result of that, of 
their actions, be ordered to be paid back to the 
corporation.

THE 
COURT: All right. [Plaintiffs' counsel], you wish to 
respond?

[PLAINTIFFS' 
COUNSEL]: Yes, sir. Your Honor, I believe the defendant's motion is 
inappropriate and out of line in the sense, number one, they're asking for 
things that are beyond the jurisdiction of the Court and outside the scope of 
the pleadings such as dissolution of the corporation; that the act taken by Mr. 
Harger be declared ultra vires; that Don and Irene declared to be personally 
responsible for these and that costs of the action be awarded. Did I miss 
any?

THE 
COURT: They asked for six things.

[PLAINTIFFS' 
COUNSEL]: Cost of the action.

THE 
COURT: They addressed costs twice.

[PLAINTIFFS' 
COUNSEL]: Lastly, if I understood their motion, they're asking JoAnna Johnson be 
indemnified, I think that was part of the motion, since this was brought against 
her as director. And the statute, Wyoming Statute 17-16-852 which was cited does 
provide for indemnification of a director when they're acting as a director. And 
the intent of that here is that it encourages people to act as directors. For 
instance, I sit as a director on the * * *. For people to serve as directors of 
private corporations there has to be some protection for them for liability. The 
statute does not contemplate indemnifying directors when they are doing actions 
against the interests of the corporation and actions brought by the corporation 
such as performing a competing business.

THE 
COURT: Yes. I understand your position in that regard, [Plaintiffs' counsel]. I 
don't understand the issue of indemnification raised by their motion before the 
Court at this time. I understand their motion to amend the pleadings to conform 
to the proof, and so that's what I'm asking you to speak towards. 

[PLAINTIFFS' 
COUNSEL]: All right. I don't mean to look lost, but I'm lost. They ask the 
pleadings be amended in what way? First of all, to dissolve the 
corporation?

THE 
COURT: That's correct. To state a cause of action for dissolution of the 
corporation.

[PLAINTIFFS' 
COUNSEL]: Well, Your Honor, we haven't prepared our case along those lines. 
We're without notice and I don't think the proof is such that that's what should 
be done. In fact, what has been done here has been allowed by 
arbitration.

I 
think Mr. Harger has performed in good faith and there are numerous, numerous 
issues that have not been brought before the Court that need to be taken care of 
before we can get to the dissolution.

THE 
COURT: All right. Well, the motion is granted. The pleadings are amended to 
conform to the proof, and the Court deems that there has been a case stated 
regarding dissolution and perhaps some of these other matters, and the Court is 
going to consider those in arriving at its judgment.

[DEFENDANT'S 
COUNSEL]: Thank you, Your Honor.

THE 
COURT: All right. Do you have anything in rebuttal, [Plaintiffs' 
counsel].

[PLAINTIFFS' 
COUNSEL]: Yes, sir. For clarification, did I understand what the Court's ruling 
was. All six things that they asked for ha[ve] been 
granted?

THE 
COURT: The pleadings are amended to request those things. I haven't granted the 
relief at all. I've just amended the pleadings so that they state a cause of 
action and request that relief, * * *. That's where we're at 
there.

 [¶80.]  Immediately following conclusion of the 
trial, the trial court issued a standstill thirty-day order leaving the decision 
in abeyance while the parties were given time to negotiate a buy out settlement. 
Lacking consummation of any settlement within the limited time, the trial 
court's decision came by a "Findings of Fact, Conclusions of Law, Judgment and 
Order Appointing Receiver" in September 1990 from which this appeal is taken. In 
addition to the contested paragraph twenty-five of the findings quoted earlier, 
the trial court adjudged and decreed:

IT 
IS HEREBY ORDERED, ADJUDGED AND DECREED AS FOLLOWS:

1. 
Plaintiffs' Complaint be and it is hereby dismissed and Plaintiffs shall take 
nothing thereby.

2. 
Defendant Johnson is hereby granted judgment upon her orally amended Complaint 
praying for dissolution of the Corporation.

3. 
Notice is hereby given of the intention of the Court to appoint a Receiver to 
wind up and liquidate the Corporation's business and affairs. The person the 
Court intends to appoint as the Receiver is George L. Thompson, 
CPA.

4. 
A hearing with regard to the appointment of George L. Thompson as the Receiver 
in this case shall be held in the Courtroom of the Teton County Courthouse, 
Jackson, Wyoming on the 18th day of September, 1990 at 
9:30 a.m.

5. 
The Court reserves the right to enter such further orders, judgments or decrees 
as may be appropriate in this matter until such time as the Corporation is fully 
dissolved.

 [¶81.]  The Hargers, individually and through the 
corporation, filed a notice of appeal September 26, 1990, the trial court 
appointed the receiver on October 4, 1990, and then on December 13, 1990, the 
Hargers filed a motion for hearing concerning resolution of the debts of the 
corporation which was set for hearing by order of the trial court. That hearing 
was apparently not held until this appeal can be resolved.

 [¶82.]  It is concluded from a review of the 
record and careful consideration of the text of the transcript that validity of 
the note of $247,402.07 could have been considered to have been properly 
litigated and decided.1 In no context, however, have debts 
of either shareholder due from the corporation for advances been litigated or 
determined in the proceedings. As a matter of fact, until defense counsel moved 
to dissolve the corporation at the close of Johnson's evidence, the issue of 
dissolution had never been presented as a subject for consideration by the trial 
court. It seems doubly clear that the trial court was similarly directed as to 
the scope of initial decision when it granted the Hargers' motion to set a 
hearing on this specific subject of 
corporate debts to the shareholders after entry of the decision from which 
appeal was taken.

 [¶83.]  I write this detailed exception to the 
majority's opinion to make clear that no preclusion from law of the case concept 
should offend the trial court's further proceedings for corporate dissolution 
and settlement of asset distribution based upon an adequate hearing directed 
specifically to provide justice to all shareholders. Repayment for advances and 
a division of equity are clearly issues that remain unresolved and available for 
further evidentiary presentation.

 [¶84.]  The issue addressed in the note 
validation to the contrary was totally distinct from questions of the existence 
of a debt from the corporation for any shareholder advanced funds. Within the 
closed corporation structure, the execution of a promissory note to the 
shareholder was properly subjected to attack to have its validity determined 
adversely to the executing shareholder who became the note payee. The note was 
put into evidence by Johnson without objection by the Hargers and was before the 
trial court during trial development of issues about its validity. Under 
admitted facts, the validity of the note was determinable as a principle of 
corporate law. This is what the trial court proceeded to do in its findings and 
decision.

 [¶85.]  The same concept regarding the case trial 
presentation and evidentiary status as a principle of accounting cannot be 
applied to any contended debt from the corporation to a shareholder. The only 
real connection between the two issues was the apparent expectancy of the 
Hargers to prove the note and, consequently, have no further obligation to prove 
the debt itself. Invalidation of the note by virtue of its method of execution 
did not determine what advances had been made and what rights were reserved for 
repayment by either shareholder.

 [¶86.]  If it is to be considered that the trial 
court determined that the Hargers made no advances to the corporation and 
consequently are entitled to no reimbursement, then the decision is totally 
contrary to the significant amount of disconnected evidence which is a matter of 
record. Obviously and without question, the Hargers made advances to the 
corporation for business operation. This second subject of accounting, 
liquidation and dissolution was not directly addressed in trial evidence because 
dissolution was not actually considered until the motion was made and the trial 
court's decision was rendered in recognition of the deadlocked management and 
shareholder status. It is clear to me that the trial court was careful in 
reserving rights to a fair hearing on issues remaining in some future contested 
evidentiary development within which the accounting and debt obligations of the 
corporation to the shareholders would clearly occupy a prominent 
place.

 [¶87.]  I only concur with the majority on the 
basis that equity and debt resolution within the corporate dissolution has yet 
to be determined. Otherwise, any decision is improperly emplaced in a record 
without appropriate pleadings or any real opportunity for either litigant to 
address the subject by evidentiary presentation. If it is to be considered that 
the Hargers are foreclosed a right to prove their advances as is Johnson, then I 
would dissent on the basis in this case that the issue was not a pleaded 
controversy, was not tried and whatever evidence there is certainly demonstrates 
existence of some advances and 
perhaps by both shareholders. How advanced, in what amounts, and with what 
rights of repayment are simply issues not yet tried. It is my observation that 
the trial court made that clear by the text of its order in limiting it strictly 
to the validity of the note and reserving rights for further proceedings in 
order to decide remaining subjects required throughout the corporate liquidation 
process.

 [¶88.]  It is noteworthy that this confusion was 
created by briefing when the Hargers stated their issue 
as:

II. 
Whether the trial court erred in finding that certain money loaned to the 
corporation by appellants Donald and Irene Harger is not a valid debt of the 
corporation?

Johnson 
conversely stated:

II. 
Whether the trial court erred in finding that an unauthorized and unratified 
promissory note signed by Donald K. Harger in behalf of the corporation, to 
himself and Irene Frances Harger, is not a valid debt of the 
corporation.

What 
we give Johnson by this decision is relief which she never claimed through 
written pleadings, in appellee brief or during oral argument. I agree with her 
concept of the stated issue and, accordingly, concur in this decision to affirm 
the trial court for what it actually did. However, this court should not 
consider on appeal questions not properly raised in the trial court. Matter of Estate of McCue, 776 P.2d 742 
(Wyo. 1989); ABC Builders, Inc. v. 
Phillips, 632 P.2d 925 (Wyo. 1981); Boley v. Sears, Roebuck and Co., 582 So. 2d 562 (Ala. Civ. App. 1991); Pepsi-Cola Bottling Co. of Dothan, Ala., 
Inc. v. Colonial Sugars, a Div. of Borden, Inc., 423 So. 2d 190 (Ala. 1982). 
A liberal interpretative construction should not expand what the trial court 
neither did nor could do within the scope of the pleadings and documentary 
record developed thus far in the case.

FOOTNOTES

1 The promissory note, its validity 
and invalidity, was the subject of trial evidence; the instrument itself was 
handed to counsel for Johnson, who then tendered it for admission into evidence 
which was done without objection. The document and its relation to the Hargers' 
conduct of the corporation was before the trial court.