No. 88-627 IN THE SUPREME COURT OF THE STATE OF MONTANA

DOUGLAS E. DANIELS, Plaintiff and Respondent,

THOMAS, DEAN & HOSKINS, INC., a corporation, THOMAS and DEAN PROPERTIES, INC., a corporation, T.H. THOMAS, an individual and as President and Director, Defendants and Appellants.

APPEAL FROM: District Court of the Eighth Judicial District, In and for the County of Cascade, The Honorable Joel G. Roth, Judge presiding.

COUNSEL OF RECORD: For Appellants: William Conklin, Conklin, Nybo and LeVeque, P.C., Great Falls,Montana For Respondent: Joe Bottomly, Bottomly Law offices, Great Falls, Montana Monte Beck, Beck Law Offices, Bozeman,Montana

Filed: Submitted: March 22, 1990 Decided: December 21, 1990

LJustice Diane G. Barz delivered the Opinion of the Court.

The District Court of the Eighth Judicial District, Cascade County,JudgeJoelG. Rothpresidingwithout a jury,concludedthat Daniels, a minority shareholder in T & D Properties,was entitled to $53,128 for his shares inT & D Properties. The District Court based this conclusion on breach of fiduciary duty, oppressive negotiation tactics, constructive fraud, and the presence of a contract between Daniels and Thomas in which Thomas allegedly promised to pay Daniels fairmarket value for his shares in T & D Properties. The court then granted Daniels his costs in this matter, which included his costs of hiring an appraiser. The court,however,did not finda contractual or statutoryrightwhich would allow Daniels to recover his attorney's fees. Defendants appeal. We reverse. The following issues are raised on appeal: 1. Whether the filing of Danielstmotion for substitutionof judge divestedJudgeRoth of thepower torender a judgment on this matter. 2. Whether theDistrictCourt erred inrulingthat a contract existedwhichrequiredT & DPropertiestopurchase Danielstshares 

### in T & D Properties. 3. Whether the District Court erred in ruling that Daniels

was entitled under Montana law to have his shares in T & D Properties appraised and purchased. 4. Whether the pleadings fairly apprised the defendants of the nature of the claims against them.5. Whether the judgment rendered by the District Court properly liesagainst all three defendants,TD & HIa corporation, T.H. Thomas, an individual, and T & D Properties, a corporation. 6. Whether the District Court erred in awarding Daniels his appraisal fees. 7. Whether the restrictive covenant in the TD & H buy-sell agreement isvoid under 

### 5 28-2-703, MCA. On cross-appeal, Daniels raises the following issue: Whether the District Court erred by not awarding Daniels his attorney's fees. Thomas, Dean & Hoskins, Inc. (TD & H)

## , a defendant, is an engineering firm founded in 1965. TD & H's principal place of business is in Great Falls with branch offices in Kalispell and Bozeman. Thomas & Dean Properties, Inc. (T & D Properties), also

adefendant inthis lawsuit, is a separate corporation fromTD & H. T & D Propertieswas formed in 1970 for the purpose of developing real estate and for the purpose of holding real and personal property. This property is then leased to TD & H. T & D Properties has never paid dividends, but instead pays "management fees1'to TD & H. These fees are then generally distributed as bonuses to TD & H's employees and shareholders. T.H. Thomas, another defendant, is the president and a director of both TD & H and T & D Propertiesand also amajor shareholder inboth of these corporations. Douglas 

### E. Daniels, the plaintiff, is a civil engineer who began working for TD & H in 1969. In 1976, Daniels began purchasing stock in TD & H. TD & H employees who purchased stockin TD & H were also initially expected to purchase an identical proportion of stocks in T & D Properties, however, the TD & H shareholder agreement that was signed in 1979 abolished this requirement. The shareholder agreement also contained a buy-sell agreement for TD & 

### H stock upon the voluntary or involuntary termination fromTD & H. Theagreement establisheda formulaprice for thepurchase of the TD & H stocks, a timeperiod inwhich they will be paid, and a restrictive covenant. No buy-sell agreement

was established for the T & D Properties stock. In 1985, Danielswas living in Bozeman and managing TD & H's branch office in Bozeman. Upon Dean's retirement from TD & H in 1986, Thomas requested that Danielsmove to Great Falls to manage the Great Falls office. Danielshad just built a home in Bozeman and therefore requested that alternatives to his moving to Great Fallsbe considered. Inmid-February 1986,Thomas and Danielsmet to discusspossible alternatives. The parties agreed to a threemonth trial period beginning February 18, 1986, whereby Daniels lived in Bozeman and commuted to Great Falls. On April 16, 1986, two months after the three-month trial period began, Thomas and Daniels met again at Thomas1request to review the situation. The meeting did not go well. Daniels then suggested that they discuss a termination agreement and Thomas agreed to prepare a proposed termination agreement. The termination agreement was drafted by an attorney for TD & H and mailed to Daniels onApril 18, 1986. Besidesproviding for the termination of Daniels1 employment with TD & H, the termination agreement also provided for the purchase of Daniels'T & D Properties stock. A disagreement arose over the valuation of Daniels'T & D Propertiesstock. Daniels thereforedid not sign the agreement. On May 13, 1986, Daniels and Thomas met and attempted tonegotiatethevalue of theT & D Properties stock, but without success. On September 17, 1986, in response to a letter written by Daniels, Thomas offered to settlethedispute through negotiations with Jack Holland, an employee of TD & H. On September 24, 1986, Daniels was advised that Jack Holland had been authorized by each corporationto settleDaniels1claims againstthe corporations with Daniels separately. Holland met with Daniels for two days in September but the negotiations were unsuccessful. The relationship between Daniels and Thomas continued to deteriorate and onMarch 27, 1987,Daniels filed a complaint in the District Court of the Eighth Judicial District, Cascade County, alleging bad faith and wrongful termination against TD & H and fraud, breach of fiduciary duty, undue influence, and negligent misrepresentation against Thomasandboth corporations. Alongwith the complaint, Daniels filed a motion for substitution of judge. The case was never transferred to another judge. Justprior to the trial, on June 10, 1988, JudgeRoth brought theparties1attention to the motion. At that time, the parties1 attorneys stipulated that Judge Roth may sit as trial judge in the case. This case was bifurcated into two separate actions over vigorous objection by defendants. The action involving legal claims of wrongful termination and breach of good faith and fair dealing in an employment situationwaspostponed until a later date

### for a jury. The action in equity involving whether Daniels was entitled to an appraisal remedy in regard to his T & 

### D Properties stockwas then tried without a jury on July 6, 7 and 8, 1988. The trial was recessed until August 15, 1988 when testimony was completed. Earlier, on July 5, 1988, the District Court had grantedDaniels'motion forpartial summaryjudgment,ordering that the restrictive covenant found in the 1979 shareholder agreement

was an unreasonable burden on the employee and ordered the provision void under 5 28-2-703, MCA. 

### The District Court rendered its judgment on September 14, 1988,concluding that T & 

### D Propertiesentered into an enforceable contract to pay Daniels, a minority shareholder, for his T & D 

### Properties stock; that Thomas, as president of both TD & H 

### and T & 

### D Propertiesviolated his fiduciary duty by inducing Daniels to leave his employment andby his adversarial negotiation stance; that Daniels,as aminority shareholder, demonstrated an equitable right to have his stocks in T & 

### D Properties appraised and purchased by T & 

### D Properties because of Thomas1 oppressive negotiation tactics; and that Thomas1attempts to gain an unfair advantageover Danielsamountedto constructivefraudunderMontana law. The court then concluded that the valuation method used by T & 

### D Properties was unfair and therefore adopted the net asset approach as a reasonable method for determining the value of the corporate stockownedby aminority shareholder. Thecourtordered that under thismethod Daniels' T & 

### D Properties stocks wereworth $53,128. Thecourtalso concluded that Danielswas entitled tohis costs in this matter, which included his cost of hiring anappraiser. The court,however, also concluded that no contractual or statutory right existed for ~aniels to recover his attorney's fees from the defendants. Defendants appeal,and plaintiff crossappeals, raising the following issues. The first issue this Court will address on appeal is whether the filing of Danielsvmotion for substitution of judge divested Judge Roth of the power to render a judgment on this matter. Defendants cite 5 3-1-804,MCA (1987), to argue that Danielsv filing of themotion for substitution of judgedivested JudgeRoth of thepower to decide the case. This statute states inpertinent part that:After a timely motion has been filed, the substituted judge shall have no power to act on the merits of the cause and shall call in another judge.

Section 3-1-804(1)(a)

## , MCA (1987)

# . However, Daniels motion for substitution of judge was filed on March 27, 1987. The law 

### in effect on that date provided inpertinent part that: A motion for substitution of a judge shall be made by filing a written motion for substitution reading as follows: "The undersigned hereby moves for substitutionof another judge forJudge in this cause.If The clerk of court shall immediatelygivenotice thereof to all parties and to the judge named in the motion. Upon filing this notice, the judge named in the motion shall have no further power to act in the cause other than to call in another judge, which he shall do forthwith, and to set the calendar. Section 3-1-802,MCA (1985). The record indicates that the clerk of court did not give notice to either the judge or the opposing parties nor was a notice of this substitution filed as required by5 3-1-802, MCA (1985). Because the requirements of the 1985 statute were not followed,.Judge Roth retained jurisdiction of the

case. We also note, however, that contrarytowhat Danielsattempts to assert, a judge could not obtain jurisdiction through the consent of the parties in this case. See, e.g., Corban v. Corban

(1972), 161 Mont. 93, 96, 504 P.2d 985, 987; In re WoodsideFlorence IrrigationDist. (1948), 121Mont. 346, 352, 194 P.2d 241, 244. The parties' stipulation was therefore not effective in allowing Judge Roth to retain jurisdiction of the case. If the motion was filed only three months later, the pertinent law in effect would have been the 1987 statute,and Judge Roth would not have retained jurisdiction.ofthe case. However, in light of the unique set of facts in this case Judge Roth did retain jurisdiction. The second issue raised on appeal is whether the District Court erred in ruling that a contract existed which required 

### T & D Properties to purchase Daniels1shares in T & 

### D Properties. In spite of the absence of a written agreement, the District Court concluded that 

### T & D Properties entered into an enforceable contract to pay Daniels for his stock in T & D Properties. The court stated that Thomas1 testimony at trial indicated that he promised to pay fair market value for Daniels1 stock. The testimony the District Court apparently relied upon to find a contractbetween Daniels and Thomas stated that: Q: (ByMr. Lynch) What promise was made to him about purchasing the stock at the fair market value?A: We said that we would be willing to negotiate that separate from 

### T, D & 

### H to negotiate a reasonable settlement and that we would be willing to prepare--pay fair market value, and with that the way it had to be an agreement thatwasmade thathewaswilling to take it, and we made no suarantee we would reach an asreement with him or pay him whatever [he]wanted. (Emphasisadded.) TheDistrictCourtalso justified itspositionby stating that this Court indicated that the district courts are to look beyond the statutory criteria and I1into the equities of the situationl1 (citing Maddox v. Norman (1983), 206 Mont. 1, 11, 669 P.2d 230,

All contracts must contain four essential elements. These elementsare: (1) identifiable parties capable of contracting, (2) the partiesfconsent, (3) a lawful object, and (4) consideration. Section 28-2-102, MCA;ModernMachinery v. Flathead County (1982), 202 Mont. 140, 144, 656 P.2d 206, 209. In the present case, the purported contract fails for a lack of consent. To have consent, there must both offer and acceptance that offer. Modern Machinery, 202 Mont. at 144, 656 P.2d at 209. Thomas1 testimony that the District Court apparently relied upon to conclude that an agreement existed between Daniels and Thomas for the purchase of Danielsf stock in T & D Properties was not sufficient to establish that Thomas made an offer to Daniels for the stock. In addition, no evidence exists that Daniels ever accepted any offer that was purportedly made by Thomas. The Restatement (Second) of Contracts, 9 24 defines an offer as:

### [tlhe manifestation of willingness to enter into a bargain, somade as to justify another person in understanding that his assent to thatbargain is invited and will conclude it. In thepresent case, Thomasttestimony does not rise to the level of an offer. Although Thomasdid testify that hewould be willing to pay fairmarket value for Danielsvstock in T & 

### D Properties, Thomas also clearly stated that "wewould be willing to negotiate



# . 

# . . a reasonable settlement" and that "wemade no guarantee we would reachan agreement withhim orpayhimwhatever [he]wanted." Thomas1testimony on which the District Court relied upon is merely evidence of the negotiations that occurred between Thomas and Daniels and not an offer made by Thomas. The District Court had previously recognizedthatno agreement existedwhen it denied defendants1motion fordirectedverdict, stating that It[t]herewas

a promise made topay fairmarket value of the T & D 

### [Properties] stock and theparties havebeen negotiating but have never reached an agreement and they areat adefinite impasse.It Inaddition,the District Court's reliance upon Maddox to justify ignoring the statutory criteria and to look into the equities of the situation is not appropriate under these set of facts. As this Court has previously stated I1[e]quitycanenforce provisions of contractsbut it cannot supplythem.l1 

### Myhrev. Myhre (1976)

## , 170

### Mont. 410,

### 424, 554 P.2d 276, 283. 

### Thomasvtestimony does not contain language that rises to an offer and therefore equity cannot be relied upon to create an offer. The third issue that will be addressed on appeal is whether the District Court erred in ruling that Danielswas entitled underMontana law to have his stock in T & D Properties appraised and purchased. T & D Properties is a closely held corporation but has not elected to become a statutory close corporation under the Montana Close Corporation Act, 

### 5 35-9-101 et seq., MCA. Therefore, Danielsf claims are governed by the provisions of the Montana Business Corporation Act, 5 35-1-101 et seq., MCA. The District Court concluded that Danielswas entitled to $53,128 for his three and one-half shares of T & D Properties. The court based its conclusion on findingsof a breach of a fiduciaryduty, oppression of a minority shareholder and constructive fraud. In light of these findings,the District Court apparently concluded that under 55 35-1-810, 35-1-921, MCA, and case law that itwas empowered to appraise the stock of a minority shareholder and order T & D Properties to purchase Daniels1stock in T & D Properties for the sum of $53,128. The proceedings in the District Court were of a broad equitable nature. Furthermore,many issues raised on appeal are mixed questions of law and fact. This Court'sduty upon reviewof equity cases and proceedings of an equitable nature is to review all questions of fact arising upon the evidence presented in the record,whether the evidence is alleged to be insufficientor not, and to determine the same, as well as questions of law. Section 3-2-204(5), MCA. "There is in that statutory requirement for our appellate review a measure of protection for the losing party coming to us on appeal, at least in equity cases such as this." Sawyer-Adecor Intll,Inc. v. Anglin (1982), 198 Mont. 440, 447, 646 P.2d 1194, 1198. We recognize that Rule 52(a), M.R.Civ.P. requires findings of fact made by the district court to be upheld unless they are clearlyerroneous and that Rule 52(a) doesnotmake any distinction between cases of an equitable nature and cases at law. However, this Court has stated that we will review both questions of law and questions of fact but will not reverse the trial court in an equity case on questions of fact unless there is a decided preponderance of the evidence against those findings.Sawyer-Adecor, 646 P.2d at 1199;Boz-Lew Buildersv. Smith (1977), 174 Mont. 448, 452, 571 P.2d 389, 391. After reviewing the record

we hold there is a preponderance of the evidence in the record against the findings the District Court. A. Dissenter's Riqhts The District Court found that one of the bases of Daniels1 right to an appraisalwas a corporate resolution topay Daniels for his shares, thus, triggering the following provision: Any shareholderof a corporation shallhave the right to dissent from and to obtain payment forhis shares in the event of any of the following corporate actions:

(e) any other corporate action taken pursuant to a shareholder vote with respect to which the 

## . 

# . . resolution of the board of directors directs that dissenting shareholders have a right to obtain payment of their shares. Section 35-1-810(1)(e), MCA. The District Court's ruling is unsupported by the evidence presented. No such corporate resolution was entered into the record. Thomas testified that he was authorized to offer up to $35,000 for Daniels1stock,but therewas no testimony that Thomas

was directed to purchase the stock. Exhibit 19c is a stockholder letter dated September 24, 1986, authorizing Jack Holland, an employee of TD & HI to settle any and all claims against T & D Properties. It is not a board resolution directing purchase of Daniels

### ' stock. Moreover, the requirements of 5 35-1-810(e)

## , MCA,

were not satisfied. This section clearly contemplates corporate action pursuant to a shareholder vote from which a shareholderdissents, followed by a resolution of the board of directors directing that such dissenter has a right to withdraw his investment and obtain payment for his shares. That is not what occurred in this case. B. Fiduciary Duty In the present case, Thomas' actions do not rise--either statutorily or in equity--to the level in which a court should interfere with a close corporation's business affairs. In its conclusionsof law, the District Court first found that Thomas had breached his fiduciaryduty to Daniels. Inparticular, the court found thatThomas: (1)inducedDanielsto leavehis employment; (2) represented that Danielswould receive 100% of his TD & H stock and "fairvalue1'forhis T & D Properties stock; (3) failed to disclose material facts relating to his interpretation of the fair market value of the T & D Properties stock; (4) attempted Iftoforcet1 Daniels to accept an unfair price for the T & D Properties stock in order for Daniels to receive full value for the TD & 

### H stock; (5) took an adversarial negotiation stance; (6) did not fully disclose thevalue of the stock when consideringhis highest offer of $25,000 and the court's subsequent valuation of the stock at $53,128; (7)refused to share the costof an independentappraiser; (8)refused to take the suggestionsby Daniels for a resolution for the dispute; and (9)attempted to use his accountant's analysis of

some property in an unfair manner. In findingthat Thomasbreachedhis fiduciary duty toDaniels,

a minority shareholder, the District Court primarily relied upon this Court's decisions in Skierka v. Skierka Bros., Inc. (1981),192 Mont. 505, 629 P.2d 214; Deist v. Wachholz (1984), 208 Mont. 207, 678 P.2d 188; and Dunfee v. Baskin-Robbins (1986), 221 Mont. 447, 720 P.2d 1148. In each of these three cases, fiduciary duties were addressed. However, the relationship between the parties inthose cases are substantially different fromthepresent case, and therefore the court's reliance on them for defining Thomas1fiduciary duty was not appropriate. In Deist, this Court determined that the unique relationship between a bank's agent and a customer created a fiduciary duty running from the agent to the customer. Deist, 208 Mont. at 219- 20, 678 P.2d at 194-95. This Court in Dunfee determined that it did not have to decidewhether the special factsand circumstances of that case gave rise to a fiduciary duty. Dunfee, 221 Mont. at 452, 720 P.2d at 1151. Neither of these two cases addressed the unique relationship between shareholders of a close corporation. While the facts of Skierka involved shareholders of a close corporation, the relationship between the shareholders in Skierka consisted of special circumstances that are not necessarily found between all shareholders of 

### a close corporation. The trust relationship between the shareholders that this Court focused on in Skierka was that of an executor's trusteeship over the assets of thedecedent'sestate for thebenefit of thedevisees. Skierka, 192 Mont. at 513, 629 P.2d at 218. This Court therefore relied completely on the trustee's statutes--§§72-20-201 through -211, MCA (1979). These statutes are not applicable when the relationship between the two close corporation's shareholdersdoes not involve an executor of an estate and the beneficiaries.This Courthaspreviously noted that the relationshipbetween close corporations closely approximates the relationship between partners. Fox v. 7L Bar Ranch (1982), 198Mont. 201, 212-13, 645 P.2d 929, 935. This Court, however, has never elaborated on the fiduciaryduty between shareholders in a close corporation when no other type of relationship between the shareholders existed. The Supreme Judicial Court of Massachusetts in Donahue v. Rodd Electrotype Co. of New England, Inc. (Mass. 1975), 328 N.E.2d 505, has addressed the fiduciary duty in such a relationship. In Donahue,theMassachusetts courtheld that shareholders in a close corporation have a duty to act in the I1utmostgood faith and loyaltyw to one another. Donahue, 328 N.E.2d at 515-17. The Massachusetts court further stated that "[tlhey may not act out of avarice, expediency or se1.f-interestin derogation of their duty of loyalty to the other stockholders and to the cor~oration." - (Emphasisadded.) Donahue, 328 N.E.2d at 515. See also, Solomon

v. Atlantis Development, Inc. (Vt. 1986), 516 A.2d 132; Jones 

### v. H.F.Ahmanson & Co. (Cal. 1969), 460 P.2d 464;Fixv. Fix Material Co., Inc. (Mo. Ct. App. 1976), 538 S.W.2d 351;Baker 

### v. Commercial Body Builders, Inc. (Or. 1973), 507 P.2d 387. The Massachusetts court subsequently refined this duty in Wilkes v. Springside Nursing Home, Inc. (Mass. 1976), 353 N.E.2d 657. InWilkes, the court acknowledged that the controlling group in a close corporationhave certain rights towhat has been termed "selfish ownershipI1in the.corporation which need to be balanced against their fiduciary obligation to minority stockholders and stated:Therefore, when minority stockholders in a close corporation bring suit against the majority alleging a breach of the strictgood faith duty owed to themby the majority,we must carefully analyze the action taken by the controlling stockholders in the individual case. It must be asked whether the controlling group can demonstratea legitimate business purpose for itsaction.



# . . 

# . In asking this question, we acknowledge the fact that the controlling group in a close corporation must have some room to maneuver in establishing the business policy of the corporation. 

# . . . If called on to settle a dispute, our courtsmust weigh the legitimate business purpose, if any, against the practicability of a less harmful alternative. (Citationsomitted.) Wilkes, 353 N.E.2d at 663. We determine that the reasoning of theMassachusetts court is persuasive and also hold that the fiduciary duty between stockholders of a close corporation is one of the "utmost good faith and loyalty." However, the controlling group should not be stymied by a minority stockholder's grievances if the controlling group can demonstrate a legitimate business purpose and the minority stockholder cannot demonstratea lessharmful alternative. The facts of the present case, as set forth above in the District Court's findings,donot exhibitabreach of the fiduciary duty by Thomas to the shareholders of T & D Properties. The evidence demonstrates that there were five shareholders in T & D Properties. Besides Daniels, who had three and one-half shares, the other shareholdersare listed as Duanne C. Dean,with eighteen and one-half shares,Marilyn P. Thomaswith eighteen and one-half shares, Sandra K. Cummings, with three and one-half shares, and Dorothy 

### E. Lorang, who held three shares. Duanne Dean, Marilyn Thomas and Sandra Cummings received their shares from their husbands, WayneDean,T.H. ThomasandJames~ummings, respectively.Dorothy Lorang, the TD & 

### H office manager, held her T & D properties stock inher own name. Daniels initially had his three and one-half shares in his.wifels name, but received it back in a dissolution settlement in 1980. Although Thomas1wife held his eighteen and one-half shares of T & 

### D Properties, neither party disputesThomas1real interest inT & D Properties. Rather,Thomas testified that he controlled the eighteen and one-half shares of the forty-seven shares of T & D Properties, or approximately thirty-nine percent. We therefore determine that Thomas was a majority shareholder in T & D Properties for the purpose of this appeal. To hold otherwise would ignore the realities of the situation in this close corporation and rely merely upon technicalities. When negotiating for thepurchase of Daniels1shares of T & D Properties, Thomas1 fiduciary duty of the I1utmostgood faith and loyaltyI1was to 

### all of the shareholders of T & D Properties, not just toDaniels. And as the evidence demonstrates,Daniels was not the only minority shareholder, Lorang and Cummings were also minority shareholders. When applying the balancing test,we hold that Thomas successfullydemonstrated that his duty to these other shareholders was not topay Daniels a price for Daniels1three and one-half shares that the corporationcould not afford so as not to harm the other shareholders or the corporation. Daniels, however, failed to demonstrate the practicability of a less harmful alternative,hemerely insistedthatthecorporationbuy his shares at the price he named. This Court is not in a position to make a corporationlsbusiness decision when the controlling group candemonstratea legitimate business purpose for its decision and the minority shareholder cannot demonstrate the practicability of a lessharmful alternative. Additionally, theevidence demonstrates that Thomas offered to step aside and let Jack Holland handle the negotiations with Daniels, thereby eliminating any potential conflict of interest or undue influence. Thomas was also a director of T & D Properties, therefore Thomasf actions must also be measured by the ffbusiness judgment rule.If In Ski Roundtop, Inc. v. Hall (1983), 202 Mont. 260, 658 P.2d 1071, this Court adopted the business judgment rule. This Court recognized that when a reasonable basis exists to indicate that the directors of a corporation acted in good faith, the directors are immunized from liability for honest errors. 

### Ski Roundtop, Inc., 202Mont. at 273, 658P.2d at 1078. Daniels failed to offer proof that Thomas' actionswere unreasonable in that they would not have been taken by "'an ordinarily prudent man 

# . 

# . . in the management of his own affairs of like magnitude and importance.fff Alaska Plastics, Inc. v. Coppock (Alaska 1980), 621 P.2d 270, 278 (quoting Nanfito v. Tekseed Hybrid Co. (D. Neb. 1972), 341 F.Supp. 240, 244). Judges are not business experts and therefore should not substitute their judgment for the judgment of the directors. Alaska Plastics, Inc., 621 P.2d at 278. We hold that Thomas acted prudently and in accordance with the business judgment rule. C. Oppression The District Court also found that ithad thepower in equity to liquidate the corporation's assets or require the purchase ofaminority shareholderls shares for fair market valuewhenever the acts of those that control the corporationls actions are illegal, oppressiveor fraudulent (citing5 35-1-921,MCA;Maddox, 206Mont. 1, 669 P.2d 230; and Skierka, 192 Mont. 505, 629 P.2d 214). The District Court then found that Thomas1negotiation tactics with Daniels were oppressive to Daniels. In particular, the District Court found that Thomas1 actions were oppressive when he (1) attempted to force Daniels to accept his valuation of stock in T & D Properties by tying Daniels1 acceptance of the T & D Properties stock to the TD & 

### H shareholder agreement; (2) refused to waive the anti-competition clause unless Daniels would accept Thomas1$20,458 offer forhis T & D Properties stock; (3)used his position aspresident of TD & 

### H to influence the negotiationswith Daniels and T & D Properties; and (4)mentioned to Daniels in the May 13, 1986 meeting that if Daniels did not sell his stock in T & D Properties that TD & 

### H could, in effect, bleed the assets fromT & D Properties. The court therefore determined that Thomas used unfair negotiation tactics and that he unfairly used his positions with TD & 

### H and T & D Properties to influence the negotiations with Daniels. The court found theseactionsby Thomas were oppressive and rose to the level in which the court could require T & 

### D Properties to purchase Daniels1three and one-half shares. This Court has held that oppressionmay be more easily found in 

### a close corporation than a larger,public corporation because shares in a closely held corporation are not offered for public sale. 

### Fox, 198 Mont. at 209, 645 P.2d at 933; Skierka, 192 Mont. 19at 519, 619 P.2d at 221. We have also held that when addressing these type of cases,wewill proceed on a case-by-case basis. 

### Fox, 198 Mont. at 210, 645 P.2d at 933; Skierka, 192 Mont. at 519, 629 P.2d at 221. While the DistrictCourt correctly cited 5 35-1-921, MCA, as the statute that allows a court to dissolve a corporation upon a showing of oppression, we hold, as discussed below, that Thomas' actions did not rise to the level thatwould allow a court to take the drastic remedy of dissolution or to require a close corporation to purchase a minority shareholder's stock. A review of the other Montana decisions addressing closely held corporations and oppressive behavior by the controlling shareholders ishelpful. InSkierka,the finding of oppressionwas based on the exclusion of the minority shareholder from participation in the operation of the corporation. Skierka, 192 Mont. at 518, 629 P.2d at 221. In 

### Fox, we upheld the district court which found that the controlling shareholders' conduct revealed a calculated and oppressive plan designed to deprive the minority shareholder of his rightful portion of the corporate holdings andprofitsbymaking surehedid not have access to them. 

### Fox, 198Mont. at 210, 645 P.2d at 933. The district court in

### Fox further found that the minority shareholder had been effectively deprived of any voice in management. 

### Fox, 198 Mont. at 210, 645 P.2d at 934. This Court then held that these actions by the controlling shareholders violated the minority shareholder's reasonable expectations of realizing monetary remuneration and of having a voice inmanagement. 

### Fox, 198Mont. at 210, 645 P.2d at 934. On the other hand, the district court in Maddox found thatalthough the controlling shareholders' conduct Itwasnot per forma

as to corporate law or the corporation'sby-laws, 'its informality was not oppressive toward the plaintiff, nor was she defrauded."' Maddox, 206 Mont. at 9, 669 P.2d at 234. This Court therefore affirmed the district court's conclusion in Maddox of denying liquidation. Maddox, 206 Mont at 13, 669 P.2d at 236. Inthepresent case,Thomas' actionsweremore consistent with negotiation tacticsthanoppressive actions. Merelybecause Thomas attached conditionsto his offer does notnecessarilymean that his actions were oppressive. Additionally, the District Court's finding that Thomas attempted to force Daniels to accept a settlementby tying in the TD & H shareholder agreement completely ignores the evidence that Thomas stepped aside in the negotiations and Jack Holland took over and attempted to settle the claims against the corporations separately. The court's finding that Thomas made a statement inwhich he threatened to bleed the assets fromT & D Properties also does not rise to the level of oppressive conduct thatwould warrant the ordering of T & D Properties to buy Daniels1 shares. Possible future oppressive actions are not sufficientto invoke § 35-1-921, MCA. On the other hand, if Thomas

were to carry through with his threats, Danielsmay then have had a legitimate cause of action in which he could allege that Thomas

was engaging in oppressive actions against him as a minority shareholder. However, the mere possibility of oppression is not sufficient to warrant the remedy the District Court ordered here. In addition, Thomas offered Daniels up to $25,000 for his shares in T & D Properties. Although Thomas also seemingly

21attached other conditions to this offer, Daniels did not have to accept the offer. In fact,Daniels rejected all of Thomas' offers. The SupremeCourt ofAlaska addressed a similar situation inAlaska Plastics, Inc. 

### v. Coppock (Alaska 1980), 621 P.2d 270. Alaska Plastics, Inc. involved the rights of a minority shareholder in a close corporation. Inparticular, theminority shareholder,Muir, held one-sixth of the Alaska Plastics, Inc. shares. The controlling shareholders consistently failed to inform Muir of shareholdermeetings or informed her only a few hours before the meetings. In 1971 and 1972, the controlling group also traveled to Seattle for a shareholder's meeting and brought their spouses at the company's expense even though therewas nobusinesspurpose for doing so. The controlling shareholders also voted themselves each an annual $3,000 director fee, however they never paid dividends. Coincidentally, Muir was the only shareholder who was not a director. Muir never received any money from the corporation. In May, 1974, the controlling shareholders offered Muir $15,000 forher shares inAlaska Plastics,Inc. Muir rejected and subsequently hired an accountant to investigate the company's books. The accountant estimated thevalue ofMuir's stockbetween $23,000 and $40,000. In 1975, Muir offered her stock to the corporation for $40,000. The board subsequently offered her $20,000which she again rejected. Muir then filed a complaint. In its findings of fact and conclusions of law, the district court concluded that: [Tlhecontinued retentionby Plaintiff [Muir] of one-sixth of the shares inAlaska Plastics, Inc. 

# . . . was oppressive to Plaintiff and

# ...an appropriateremedy would be todirect the transfer of PlaintiffIs shares to Alaska Plastics, Inc. in exchange for a fair and equitable value. 

# . . .11 Alaska Plastics,Inc., 621P.2d at 273. The courtthen ordered the corporation to purchase ~uirls shares for $32,000. The Alaska Supreme Court rejected the lower courtlsconclusion that once the corporation made an offer to Muir it was under an obligation to purchase her stock at a "fairMprice, regardless of the price the corporationhad initiallyoffered. Alaska Plastics, Inc., 621P.2d at 276. Likewise, merely because T & D Properties had made an offer for Daniels1stock and merely because Thomas testified that they

were willing to pay fair market value if they could agree to the terms,doesnot obligatethecorporationtopurchase Daniels1T & D Properties stock. The record also demonstrates that theminority shareholder, Lorang, had also wanted to sell her shares in T & D Propertiesto the corporation,but the corporationdid not have the funds to purchase them. Daniels1insistence that the corporation should nonetheless purchase his shares in T & D Properties merely because of possible future oppression by the controlling shareholders is not persuasive. Furthermore, we agree with the court in Alaska Plastics, Inc. in which it stated that: We are not aware of any authority which would allow a court to order specific performance on thebasis of anunaccepted offer,particularly on terms totally different from those offered. Such a rule would place a court in the impossible position of making and enforcing contracts between unwilling parties. Alaska Plastics, Inc., 621 P.2d at 276.We hold that Thomast actions were not so oppressive as to warrant the appraisal remedy ordered by the District Court. D. Constructive Fraud The District Court concluded Thomasv attempts to gain an unfair advantage over Danielsconstituted constructive fraudunder § 28-2-406, MCA. Section 28-2-406, MCA, provides that: Constructive fraud consists in:

(1) any breach of duty which, without an actually fraudulent intent,gainsan advantage to the person in fault or anyone claiming under him by misleading another to his prejudice or to the prejudice of anyone claiming under him; 

# . .

# . As already determined above, Thomas did not breach his fiduciary duty to Daniels. In addition, Thomas did not mislead Daniels to his prejudice. Thomasv actions were not misleading but merely negotiation tactics. Daniels rejected all of Thomas' offers, and then failed toprove how he was thusprejudiced. We hold that the District Court erred in granting Daniels an appraisal remedy under 5 35-1-921, MCA. In light of our above holdings in this case, this Court does not need to address the following three issues raised on appeal:

(1) whether the pleadings fairly apprised the defendants of the nature of the claims against them; (2) whether the judgment rendered by the District Court lies against all three defendants

(TD & 

### H, T.H. Thomas and T & D Properties); and (3) whether the District Court erred in awarding Danielstappraisal fees. The last issue raised on appeal is whether the restrictive covenant clause in the TD & H buy-sell agreement is void under§ 28-2-703,MCA. The District Court found that as a matter of law, the restrictive covenant found in the buy-sell agreement at paragraph seventeen was void pursuant to 28-2-703, MCA. Paragraph seventeen of theAgreement states that: Inasmuch as a shareholder has access to confidential information concerning the corporatebusiness, it ismutually agreed that the compensation for a terminated shareholder who obtains employment with a competitive firm or enters any form of business in competition with the corporation shall be paid for his stock at the rate of seventy-five percent (75%)of the fair value. We disagreewith the District Court on this issue. Section 28-2-703, MCA, states that "Contracts in restraint of trade [are] generally void. contract by which anyone is restrained from exercising a lawfulprofession, trade, or business of any kind, otherwise than is provided for by 28-2-704 or 28-2- 705, is to that extent void." (Emphasis added.) The two exceptions allow parties to agree that upon either the sale of goodwill of a business or the dissolution of a partnership, one or more of the parties will refrain from carrying on a similar business within a narrow designated area. Sections 28-2-704 and -705,MCA. The contract in this case isa sharepurchase agreement. This Courthas applied § 28-2-703, MCA, toboth employment contractsand to a lease which prohibited a competing full service restaurant within the same building. See, State Medical Oxygen and Supply, Inc. v. American Medical Oxygen Co. (1989), 240Mont. 70, 782 P.2d 1272; Dobbins, DeGuire & Tucker 

### v. Rutherford, MacDonald & Olson(1985),218Mont. 392, 708 P.2d 577;OINeillv. Ferraro (1979), 182 Mont. 214, 596 P.2d 197. Since 5 28-2-703, MCA, applies to

## anv contract, the statute would also apply to a share purchase agreement. However,under certain factualcircumstancesa covenant restraining a lawful profession, trade orbusiness of any kindmay be acceptable if it passes a three part test of reasonableness. Under this test, a covenant not to compete is reasonable if it is:

(1)limited in operation either as to timeor place; (2)based upon

somegood consideration;and (3)affords reasonable protection for and not impose an unreasonable burden upon the employer, the employee, or the public. State Medical Oxygen and Supply, Inc., 240 Mont. at 74, 782 P.2d at 1275; Dobbins, 218 Mont. at 396-97, 708 P.2d at 580. Defendants in this case assert that the agreement does not violate 5 28-2-703, MCA, and therefore they have the burden of showing that the agreement does not violate the statute. State Medical Oxygen and Supply,Inc., 240Mont. at 74, 782 P.2d at 1275; First American Ins. Agency v. Gould (1983), 203 Mont. 217, 223, 661 P.2d 451, 454. Defendants did not assert nor prove that the sale of goodwill of a business or the dissolution of a partnership occurred. Therefore,neither of the statutory exceptions--§§28- 2-704 or -705,MCA--apply. This Court must next apply the three part test to determine whether the covenant is reasonable. The first essential criterion that the defendants must demonstrate is that the covenant is limited in operation either astotime orplace. Defendants assert that paragraph sixteen of the TD & H share purchase agreement 26

### satisfies the time criterion. Paragraph sixteen states that: A shareholder who voluntarily or involuntarily terminates employment except for purposes of retirement,death, or disability, shallbepaid forhis shares at the fairvalue at the time of terminationon a pro ratabasis between the audits prior to and after termination. Paymentwill bemade onehundred twenty (120) days after the audit following date of termination, but in no case sooner than two hundred forty (240) days after the date of termination. While paragraph seventeen specifies how much a terminated shareholder will be paid under certain conditions, paragraph sixteen specifies when the payment will be made. The agreement must be read as awhole. Section 28-3-202, MCA; St. Paul Fire and Marine Ins. Co. v. Cumiskey (1983), 204 Mont. 350, 363, 665 P.2d 223, 229. Upon reading theagreement,the restrictive covenant is definitely limited as to time. The second criterion that the defendants must demonstrate is that the restrictive covenant is based upon some good consideration. The consideration flowing to Daniels under this covenantwashis accessto confidential information concerning the corporate business. The corporation's consideration under this covenant was requiring the corporation to pay only seventy-five percent (75%)of the fair marketvalue of the shareholder's stock. Defendantsthereforedemonstratedthattherestrictivecovenant was based upon some good consideration. The third and last criterion that the defendants must demonstrate is that the covenant affords reasonable protection for and not impose an unreasbnable burden upon the employer, theemployee, or the public. The covenant affords the corporation reasonable protection by deterring, but not prohibiting, competitionwith them for a period not to exceed two hundred forty (240) days. Deterring competition for this amount of time or requiring the terminated shareholder to take only seventy-five percent (75%)of the stock's fair market value does not impose an unreasonable burdenon thecorporation,theterminatedshareholder,

or the public. On cross-appeal, Daniels raises the issue of whether the District Court erred by not awarding Daniels his attorney's fees. However, in light of our holdings in this case, we do not need to address this issue. Reversed and remanded for proceedings consistent with this opinion.

We concur:

JusticesJustice John C. Sheehy, dissenting:

Themajority opinion is completely out of focus with the case which was tried in the Cascade County District Court, and onwhich the District Court entered judgment. For example, an essential element of the District Courtls findings is that on April 16, 1986, at a meeting between Thomas,

as president of T & D Properties, and Daniels, Thomas agreed that T & D Properties would purchase Daniels1stock (3% shares) in T & D Propertiesat fair market value. Themajority opinion sets that finding aside. The majority opinion relies in part portion of Thomaslstestimony, withoutany referenceto the othertestimony in the record which supports the District Court finding. In setting aside theDistrict Courtlsfinding that Thomashad agreed tobuy theT & D Properties stock from Daniels, no reference mention ismade by themajority opinion of a second findingmade by the District Court that on May 13, 1986, the parties met, and asain asreed on themethod tobeused todeterminethevalue of the T & D Properties stock. The District Court found: 23. On May 13, 1986, Daniels and his accountant, Dan Eigenman, met with Thomas and his accountants, Dale Grabofsky and Curt Ammundson, at the offices of Hamilton and Misfeldt in Great Falls. The only disagreement with regard to the terminationagreementwas thevalue of the T & D stock. The dispute centered around the value of certainrealproperty includingthe landknownasWestern Properties and the Great Falls office building. There was no major disagreement about the value of the other assets of T & D. Both parties agreed to use the method of determining the assets less liabilities, with a net asset value to be divided by the total issued shares of T & D and that figure multiplied by Daniels1three and 

### 4 shares.On April 16, 1986 (the District Court stated the date to be April 17, 1986) Thomas and Daniels met in Great Falls and there entered into a mutual agreement for Daniels to terminate his employment. In that meeting, they mutually concluded what would happen with respect with the T D & H stock owned by Daniels, and also the T & D Properties stock which he owned. The evidencewith respect to that conversation from Daniels is: Q. Well, let's tell the court thenwhat Mr. Thomas said to you with regard to your leaving the employment. A. Well, one of my concerns, you know, was that my training and everythingwas in engineering,my education and allmy experience,and Imentioned,youknow, how are we going to resolve the issues,you know, that needed to be resolved. And, Tom offered first of all, you know, as far as T D & H stock, he would waive the clause that requires Ionly get 75% of the stock. And, he said,you know, you have been a good employee for a long time. We have had a good relationship. He saidwe can close this out, you know, we can get any information we need from you on jobs that are ongoing. If you cooperate, you know, and take care of those loose ends, we will waive that clause. Q. All right. What did he say? A. We discussedverybriefly theT & D Property,we also touched on retirement plans. 

### T & D Properties said we will pay full fair market value for that. We will turn the pension plans over to you whatever you wish to do. 

### I think we mentioned insurance that I would have an option to pick that up on my own. (Emphasisadded.) The majority opinion recites that there was no offer and no acceptance but the testimony is contrariwise. Mr. Thomas testified: Q. (ByMr. Lynch) Now, Mr. Daniels,you agreed to leave an employment with the firm of Thomas, Dean & Hoskins, did you not? A. Based on the conditions that were discussed on the 16th of April. (Emphasisadded.)Following the April 16, 1986 meeting, Thomas met with his attorney for the purpose of making up a formal written agreement that related to thatmeeting. However in that agreement, instead of providing for fair market value for the T & D Properties stock, Thomas inserted a figureof $20,428. Thathad notbeen agreedupon by the parties at theApril 16 meeting. In connection with that, Daniels testified: Q. Did Mr. Thomas, before sending you this check, ever consult with you or talk with you about the results of the stock? A. It was discussed on the 16th of April. Q. And what was your impression at that time? Q. That I would be paid a fair market value for the stock. The majority opinion to the contrary notwithstanding, there

was adequate, substantial and competent evidence to support the findingsof theDistrictCourt that agreementhad been reached that Daniels would receive fair market value for the T & 

### D Properties stock. The ~istrictCourt also determined that that agreement included: I1Determining the fair market value of the 

### T & D Properties stock contemplated theuse of an appraiser tovalue the assets (real property) of T & D.I1 Thomas refused to get an appraiser, to pay for an appraiser, and told Daniels that if an appraiserwas obtained,hewould not regard it or rely on it. Thus Thomas led Daniels tobelieve at theApril 16meeting thathewould receive fairvalue for his T & D Properties stock,as a part of thetermination agreement, but later refused to perform that part of the agreement by any reference to a fair appraisal of what the market value of the T & D stock should be. When 

### I say that themajority opinion is out of focuswith the case that was tried in ~istrict Court, Imean that the opinion as promulgated has no relation to the situation faced by the District Court upon which it made a judgment. For that reason, I will discuss what the District Court found, and the implications that arise from the legal relationships that the court found. Thomas, as president and director of T & D Properties, owed Daniels, a minority stockholder, a fiduciary obligation. At all times at trial, Thomas recognized he was a fiduciary. There was no argument on that subject. Out of the fiduciary relationship, the ~istrict Court concluded that Thomas, as fiduciary,was bound to act in the "highest good faith towards his beneficiary and not to obtain any advantage therein over Daniels by the slightest misrepresentation, concealment, threat or adverse pressure of any kind." Skierka v. Skierka Brothers, Inc. (1981), 192 Mont. 505, 629 P.2d 214; Section 72-20-201, MCA (Repealed, 1989). The fiduciarywas bound not tohave or acquire an interest which would be adverse to the interestsof his beneficiary without immediately informing him of it and removing himself if requested. The fiduciaryhad an affirmativeduty tomake surethat thebeneficiary retained a position of equity; and the fiduciary was obligated in all transactions with his beneficiary to refrain from any unfair persuasion for the purpose of obtaining an advantage over hisbeneficiary. The majority state that the trustee statutes are not applicable to a fiduciary when a relationship between two close corporation shareholdersdoesnot involvean executor of an estate of the beneficiaries. That is entirely an incorrect statement of law. When a fiduciary relationship exists, the lawsapplicable to the fiduciary are those relating to constructive fraud. Bradbury

v. Nagelhus (1957), 132 Mont. 417, 319 P.2d 503. The statute states that constructive fraud involves Ifany breach of duty which, without an actually fraudulent intent, gains an advantage to the person at fault or anyone claiming under him by misleading another to hisprejudice. Section 28-2-406 (1) 

### ,MCA. Thus,a constructive trust arises under operation of law and is valid. Section 72-33- 208(3), MCA; B 72-33-220, MCA. When the majority state that the fiduciary duty between stockholders of a close corporation is one of the Ifutmost good faithand loyaltyIf1 themajority inrealityare stating theduties of a trustee in a constructivetrust. There can be no argument in this case that a fiduciary relationship exists betweenThomas,thecorporation,and theminority shareholder. The proposed findingsof fact submittedby Thomas in this case accepted thepremise that Thomas was a fiduciary. No issue of any kind was raised in the case that his statuswas any less than a fiduciary. The parties agreed a fiduciary relationship existed. When the majority then insert the Ifbusinessjudgmentff rule, they erroneously mix two incongruent concepts. The 'fbusiness judgmentff rule applies to the acts of directors and officers tohold them free from liability for honest errors, for mistakes of judgment, when they act without corrupt motive and in good faith, that is formistakes thatmay properlybe classifiedunder thehead of honest mistakes. Ski Roundtop, Inc. v. Hall (1983), 202 Mont. 260, 658 P.2d 1071, 1078 (1983). The ttbusiness judgmentt1 rule applies to officers and directors acting in a corporate capacity, when no fiduciary relationship is involved. When a fiduciary status is established, the actions of officers and directors are examined,notunder the Itbusinessjudgmentrulef1 but rather whether the fiduciary exercised the utmost good faith and loyalty, in this case towards all of the shareholders of T & D Properties. The majority resort to a "balancing test,Itcontending that Thomas1duty was to protect the other shareholders by not paying Daniels a price for his shares that the corporation could not afford so asnot toharm the other shareholdersof the corporation. There is absolutely no proof of this in the record. In any event, there could not be any such proof because a fair market value of Danielststockwould likewise be a fair market value of all of the other shareholders' stock. Themajority talk about balance; it is a see-saw, tipped on one end against Daniels. Thomas breached the duties of a fiduciary. The court concludedhehad violated his duty by inducingDaniels to leave his employment through representationsthat Daniels would be paid 100 percent of the value of his stock in the T D & H corporation,and the "fairvalueI1ofhis stock for theT & D Properties corporation. Thomas intended to force Daniels to accept an unfair price forhisT & D Properties stock in order for ~aniels to receive the full value of the T D & H stock. (Thomas had written that the T D & H stock anti-competition clause would be waived if Daniels would accept Thomas1valuation of the T & D properties stock.) Although Thomas had authority from his board of directors to offer $35,000 for the T & D Properties stock to Daniels, he never transmitted that offer to Daniels and adamantly stayed on the $25,000 figure. Thomas stood tobenefit fromhis dealings with Daniels, because he owned 39percent of the stock in T & D properties. For a fiduciary to gain any advantage through breach of a duty constitutes constructive fraud. Deist v. Wachholz (1984), 208 Mont. 207, 678 P.2d 188, 193;Ryckman v. Wildwood (1982),197Mont. 154, 641 P.2d 467, 472. The District Court found that at the April 16, 1986 meeting, Thomas had agreed to waive the anti-competition provision of the share-purchase agreement that applied to the T D & H stock. The District Court further found that Daniels, relying upon the statements made by Thomas concerning the waiver, began an engineering business in Belgrade on July 1, 1986. Thereafter Thomaswould not authorize a waiver of the anti-competition clause unless Daniels agreed to accept the valuation of the T & D Properties stock provided by Thomas. Indeed, by letter dated September 17, 1986, Thomas informed Daniels that the full payment of the value of Daniels1 T D & H stock was contingent on his accepting Thomas1value of Daniels' T & D Properties stock. From all of the problems facing Daniels, the District Court found thathe was stranded in a closely-held situation which was hostile and adverse tohim as aminority shareholder. TheDistrict Court found that T & D properties and Thomas agreed to pay fair market value to Daniels for Daniels1 shares of stock in the corporation, but that Thomas1refusal until the time of trial to use an appraiser

or recognize one was oppressive and in violation of Thomas' fiduciary duty. It was on that premise that the ~istrict Court found that the only remedy proper was to order the corporation to purchase Daniels1 stock at fair market value. Such a purchase would not result in any disruption of the corporate business nor any injury to the public, and would promote the best interest of T & D Properties. Themajority opinion intimatesthat neithertheDistrict Court

nor this Court can grant an equitable remedy to a minority shareholder in a close corporationunless theminority shareholder has asked for liquidation. That intimation is an unnecessary extension of corporate law and has no basis in the case which the majority cited in support. For example, in Maddox 

### v. Norman

(1983), 206 Mont. 1, 669 P.2d 230, the minority shareholder petitioned for liquidation,but the District Court found and this Court agreed that the equitiesdid not support his contention that liquidation is a proper remedy. Instead, this Court stated that the equitable powers of district courts in disputes among shareholders of close corporations allowed the court to fashion reasonable equitable remedies. This Court said: Ourprior decisionshaverecognizedthegeneral equitable powers of district courts over disputes arising among 36shareholders of close corporations (citing authority). In ~histed, we recognized that power to choose from a broad rangeof equitable remedies isnecessarytoresolve disputes of this nature: "[bly [their] very nature, intracorporate problems arising in a close corporation demand the unusual and extraordinary remedies available only ina court of equity1'147Mont. 14, 409 P.2d at 820. Accordingly, a court sitting in equity is empowered to determine the questions involved in a case 'land do complete justice.'' (Citing authority.) This includes thepower to fashionan equitable result. Rasev. Castle Mountain Ranch, Inc. (1981)

### , -Mont. 

### , 631P.2d 680, 687, 38 St.Rep. 992, 1000. 206 Mont. at 14, 669 P.2d at 237. Thus the right of the minority shareholder to get equitable relief from oppressive conduct by controlling shareholders is not dependent on a request for liquidation, but whether equity is necessary to fashion a just resolution. The view of this Court expressed inMaddox, Skierka, and other cases, is in tunewith the Montana Close Corporation Act, adopted in 1987 (3 35-9-101 et seq.). That Act provides, in 3 35-9-501, MCA, that a shareholder in a statutory close corporationcould petition the district court fora corporate purchase ofhis shares if thedirectors who control the corporation have acted in a manner that was "illegal, oppressive, fraudulent,orunfairly prejudicial to thepetitioner. 

### See Bahls and Quist,TheABA Model Statutory Close CorporationAct: A New Opportunitv for "Made inMontana1ICorporations, Mont

# . Law ~eview, page 66,et seq. I would therefore affirm the District Court's holding that Daniels is entitled to have his shares purchased at fair market value and that the fair market value is that foundby the District Court. I would make the judgment effective against T. H. Thomasindividually and T & D Properties, and not against the other corporation, would find error in awarding Daniels his appraisal fees. I would deny Daniels' cross-appeal for attorneys fees. Next comes the question of how Daniels ought to be paid for his T D & H stock (a separate corporation). Themajority opinion finds that the restrictive agreement in the share-purchase agreement adopted by T D & H does not violate the anti-competitive provisions of Montana law. That portion of the majority opinion is clearly wrong. We repeat the pertinent provision of the shareholder agreement: Inasmuch as a shareholder has access to confidential information concerning the corporate business, it is mutually agreed that the compensation for a terminated shareholder who obtains employment with a competitive firm or enters any form of business in competition with the corporation shall be paid for his stock at the rate of 75% (seventy-five percent) of the fairvalue.

Under Montana law (5 28-2-703, MCA) any contract by which anyone is restrained from exercising a lawfulprofession, trade or business of any kind is to that extent void, subject to certain exceptions not pertinent here. The provision above quoted of the share-purchase agreement restrains Daniels from his lawful profession as an engineerby penalizing him up to 25% of thevalue of his T D & H stock. The District Court found that "there is no limitation in the anti-competition provision therein as to the duration of its prohibition or the territorial scope of his prohibition. The provision, read literally, prohibits theplaintiff from competingwith the defendants anywhere in theworld and until the end of time." Clearly, theDistrict Courtunderstood what it read in the provision. The majority opinion contends that the anti-competition provision is limited as to time because another provision of the share-purchase agreementprovides that payment for stock shall be made to a shareholder 120 days after the audit following the date of termination, but inno case sooner than 240 days after thedate of termination. Obviously, as the District Court found, that provision relates to when payment is to be made and not to the duration of the anti-competition provision. Two things militate against the majority opinion'sposition: (1) At the time of the trial, more than 240 days followingthetermination,Thomaswasnot willing to waive the anti-competition petition provision, and pay Daniels 100 percent of the value of his stock; and (2) if the anti-competition provision is valid, as the majority opinion contends, it could be specifically enforced even after payment for the stock that had been made under the other provision of the share-purchase agreement. We should declare the anti-competition provision of the share-purchaseagreement void. Dobbins, DeGuire & Tuckerv. Rutherford,MacDonald and Olson (1985), 218Mont. 392, 708 P.2d 577;J T Miller Companyv. Made1 (1978), 176Mont. 49, 575 P.2d 1321. At the outset, I stated that themajority opinionwas out of focus. The majority have set aside the District Court's findings of fact without finding them clearly erroneous; and, they havefound valid a clearly anti-competitive provision of the sharepurchase agreement. On these points the majority have diverged fromratherthanconverged onpreviousdecisionsand statutorylaw, and made vague and blurry for future cases the position of this Court on these points.

Justice

I concur in the foregoing dissent of Justice John C. Sheehy.

Justice