NO. 83--141 

IN THE SUFREME COURT OF THE STATE OF MONTANA 

1983 

FAYE ANN PrlADDOX, 

Plaintiff and Appellant, 

FRANK A. NO~~IAN, JR. , and GLORIA E . NORMAN I & NORMAN RANCIJES INC. , 

Defendants and Respondents. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin, 

The Honorable Thomas Olsen, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

Berg, Coil, Stokes & Tollefsen; Ben Berg, 

Eozeman, 14ontana 

For Respondents : 

Moore, Rice, O'Connell & Refling; Ferry J. Moore, 

Bozeman, Montana 

Submitted on Briefs: May 26, 1383 

Decided r 

SEP - 8 

Clerk 
Mr. Justice Fred J. Weber delivered the Opinion of the Court. 

Plaintiff appeals from the judgment of the Eighteenth 

Judicial District Court, Gallatin County, ordering her to 

transfer to Norman Ranches, Inc. her 75 shares of stock in 

that corporation in return for $20,000 and 20 acres of land. 

We affirm in part, reverse in part, and remand for further 

proceedings. 

The issues are: 

(1) Should the District Court have appointed a receiver 

to liquidate the corporate assets and distribute the 

proceeds ? 

(2) Did the District Court have power to compel 

plaintiff to sell her stock? 

(3) Were the findings of the District Court supported 

by substantial evidence? 

The Norman family ranch was incorporated in 1961. No 

assets were transferred to the corporation until December 20, 

1963, when Frank Norman, Sr. (Frank Sr.) deeded approximately 

1140 acres of land to the corporation. The ranch belonged to 

and had been operated by the Norman family for nearly 100 

years. Frank Sr., who died July 28, 1980, was the father of 

defendant Frank Norman, Jr. (Frank Jr, plaintiff Faye 

Maddox (Faye) , and T. Donald Norman (Donald) . Donald was 

originally a plaintiff in this action, but after settling 

with defendants was dismissed as a party. Frank Jr. 's wife, 

Gloria Norman (Gloria), is also a defendant. 

Originally, Frank Sr. held 997 of 1000 outstanding 

shares of Norman Ranches stock, and Frank Jr., Donald and 

Gloria each held one share. In 1970 Frank Sr. gave an 

additional 410 shares to Frank Jr., 75 shares to Faye, and 74 

shares to Donald. At the same time, Frank Sr. executed a 

contract to sell his remaining 438 shares to Frank Jr. 
Those shares were transferred to Frank Jr. on February 13, 

1980, after the purchase price had been fully paid. At the 

commencement of this action, ownership of Norman Ranches was: 

Frank Norman, Jr. 849 shares 

Gloria Norman 1 share 

Faye Maddox 75 shares 

T. Donald Norman 75 shares 

Faye and her husband lived and worked on the Norman 

ranch in 1946 and 1947, but in 1948 left the ranch and the 

state because they "couldn't make a living." Frank Sr. moved 

to Bozeman in 1968 and to Lacey, Washington in 1974. Faye 

testified that Frank Sr. was not involved in the ranch 

operation after leaving the ranch in 1968, but Frank Jr. 

testified that Frank Sr. continued to control the operation, 

returning in the summers to do light work and otherwise 

phoning weekly to discuss ranch decisions. Although after 

1974 Frank Sr. and Faye both lived in Washington and had 

"very close contact," Faye was not informed until 1979 that 

her father had given her 75 shares of corporate stock. 

Beginning in 1978, the ranch affairs were handled by a 

new accountant and a new attorney. Frank Jr. and Gloria 

testified they had previously depended on the corporation 

accountant to prepare tax returns and the corporation 

attorney to prepare and mail the required notices. Faye, 

however, did not receive any notice regarding corporate 

matters. When Frank Jr. and Frank Sr. applied for a 

corporation loan in 1970, Faye was listed on the application 

as a shareholder. In November, 1979 Faye received her first 

annual shareholders' meeting notice. In 1979 and each 

successive year, she attended annual corporation meetings. 

No separate corporate records were kept by defendants 

prior to 1978. No separate journals, ledgers, balance sheets 
or bank accounts were prepared or maintained. On advice of 

the new accountant in 1978, a separate corporate checking 

account was established and separate corporate accounting 

mechanisms were adopted. The new accountant testified that a 

very thorough ledger had been kept in which all transactions 

were posted, but this ledger did not distinguish corporate 

from personal transactions. This ledger was not introduced 

at trial by either party. The accountant did testify there 

had been no apparent attempt to conceal any financial 

matters. However, no records were introduced at trial to 

account for corporate transactions from 1970 to 1978. 

In 1970 the Federal Land Bank loaned Norman Ranches 

$80,000 to pay for cattle, land and operating expenses. 

Proceeds of the loan were in part applied to repay the 

balance of a loan used to purchase the "Gervais" section. 

Title to this parcel of land passed to Frank Jr. rather than 

to the corporation. Frank Jr. testified that the corporation 

had merely loaned him that amount, but no evidence of such a 

loan was presented. Corporate lands originally were subject 

to a mortgage on the $80,000 loan, although they were later 

released from the mortgage. Loan payments were not in 

default, but it was not shown if payments were made with 

Frank Jr.'s personal funds or with corporate funds. Most of 

the balance of the $80,000 was used to purchase yearling 

heifers in Frank Jr. 's name. From 1971 to 1979 calves were 

sold and proceeds were deposited in the account of Frank Jr. 

and Gloria, or Frank Sr. No showing was made of 

reimbursement to the corporation for the money used to 

purchase the yearling heifers. 

Beginning in 1966, corporate lands were farmed by Frank 

Jr. under a 1/3 - 2/3 crop share agreement. From its 1/3 

share of the crop, the corporation was responsible for 
payment of real estate taxes on corporate land, 1/3 of the 

seed grain planted, 1/3 of the fertilizer, 1/3 of the weed 

control, and all material for repair or construction of 

fences. In addition to providing the balance of seed, 

fertilizer and weed control, Frank Jr. as lessee provided all 

machinery for cultivation and harvesting. He was required to 

deliver all grain to the elevator. No showing was made that 

the corporation received its share of hay or grain. Frank 

Jr. kept no separate records of corporate shares of grain or 

hay. Proceeds from the sale of crops were deposited to the 

personal account of Frank Jr. and Gloria, or Frank Sr. From 

1966 to 1977 no money was deposited in any corporate account. 

No amounts were entered in any separate ledger for grain or 

hay production under the crop share agreement. A summary of 

net lease income, based upon estimates prepared by the 

corporation's accountant in 1979, showed the corporate net 

lease income for that period as $76,744 or $48,257, depending 

on tax treatment. 

Further, two houses on a portion of the ranch known as 

the "Gray place" were rented beginning about 1977. Rent 

income was deposited in Frank Jr. ' s account. No showing was 

made that the corporation received any of the rent income. 

Faye attended the December 6, 1979 annual shareholders' 

meeting for Norman Ranches. At the meeting, Faye demanded 

an accounting for the income and expenses of the corporation 

from its beginning to date. At the February 1, 1980 meeting, 

Faye and Donald each received certificates representing their 

shares. The summary of net lease income was presented for 

examination and Frank Jr. briefly described the nature and 

cost of various corporation improvements. Faye's attorney 

requested that a detailed written statement be submitted and 

that defendants provide a detailed written accounting for the 
$80,000 loan proceeds. No accounting was made. At the next 

annual meeting on April 2, 1981, Faye requested and it was 

agreed that an appraisal be made of the corporate ranch 

property, the Gervais section and items of equipment and 

machinery belonging to Frank Jr. The appraisal valued the 

ranch property and improvements at $640,000, the Gervais 

section at $l6O,OOO, and items belonging to Frank Jr. at 

$46,008. The appraisal detailed the character and use of 

ranch lands. Based expressly upon present agricultural use 

and inclusion in the ranch unit, the appraiser set per-acre 

values for each type of ranch land. The appraisal was not of 

the corporation as a whole, but included primarily the ranch. 

None of the corporate liabilities or other assets were 

mentioned. In fact, the overall financial position of the 

corporation has not been established. 

The parties met on September 30, 1981 to discuss 

settlement of the dispute and possible purchase of 

plaintiffs' shares by the corporation. An agreement was 

reached by which defendants agreed to pay $175,000 for the 

150 shares owned by Faye and Donald. The payment was 

contingent upon defendants obtaining financing within 30 

days. They could not, and the agreement lapsed. 

Plaintiffs filed suit on November 2, 1981. Plaintiffs 

alleged misapplication and waste of corporate funds in that 

Frank Jr. and Gloria had used corporate assets for "personal 

benefit and gain." Plaintiffs asked the Court to appoint a 

receiver to liquidate the corporate assets and distribute the 

proceeds. On November 24, 1981, a hearing was held to allow 

defendants to show cause why a receiver should not be 

appointed. The Court issued findings and conclusions on 

December 30, 1981, finding that defendants' conduct "in the 

past disposition of the corporate share of hay and grain 
crops and the proceeds of calves and cattle constitutes a 

possible misapplication and waste of corporate assets." The 

Court conditionally accepted ("unless evidence indicates 

otherwise") the $175,000 settlement figure as fair value of 

plaintiffs' 150 shares. The Court allowed the parties until 

July 12, 1982 to reach a purchase agreement, otherwise a 

receiver would be appointed. 

At a second hearing on August 2, 1982 the parties sought 

court approval of a new settlement agreement between 

defendants and plaintiff Donald. Faye was not involved in 

the agreement. The Court had ordered that any transaction 

involving corporate assets must have prior court approval. 

The settlement agreement provided that Donald would transfer 

his 75 shares to the corporation in return for $20,000 and 20 

acres of land. The agreement was negotiated for Donald by 

his son Ted Norman, to whom Donald had given power of 

attorney. A prior offer of $30,000 had been rejected. After 

hearing testimony that the agreement was fair, reasonable, 

and voluntarily and knowingly entered into, the Court 

approved the agreement and dismissed Donald as a party. 

At a third and final hearing on December 7, 1982, the 

Court heard defendants' motion to amend the findings and 

conclusions of December 30, 1981. Defendants presented 

evidence that the $175,000 settlement agreement had been 

contingent upon defendants obtaining financing. Defendants 

also presented evidence of specific 20-acre tracts comparable 

in value and aesthetics to the tract conveyed to Donald. 

Faye presented evidence of tracts valued around $87,500, half 

the $175,000 settlement agreement. In findings and 

conclusions dated December 30, 1982, the Court found that the 

$175,000 agreement had been contingent upon financing and 

"was nullified" by unavailability of financing; that 
defendants had settled with Donald, but Faye had refused the 

same settlement offer; that Faye's stock, being "closely 

held, seldom sold, [and] unlisted," was difficult to value, 

but that the settlement wit11 Donald was a "strong indication" 

of the fair market value of the stock. The Court found two 

specific tracts comparable in value and aesthetics to 

Donald's tract, and found that a settlement similar to 

Donald's was an equitable resolution for Faye. Finally, the 

Court found that although defendants' conduct was not per 

forma as to corporate law or the corporation's by-laws, "its 

informality was not oppressive toward the plaintiff, nor was 

she defrauded." Furthermore, the Court did not "find the 

misapplication of this personal-ranch corporation's assets 

nor waste of them." The Court refused to liquidate, 

reasoning that the "prodigal in this instance must defer to 

the one who stayed at home, built the ranch, worked with the 

father and struggled to a successful ranch unit. " The Court 

ordered that Faye transfer her 75 shares of stock to Norman 

Ranches in exchange for $20,000 and a 20-acre tract of land 

comparable to that received by Donald Norman. Plaintiff 

appeals. 

Plaintiff in substance argues that upon a bare showing 

of misapplication or waste of corporate assets, the District 

Court is required by section 35-1-921, MCA to appoint a 

receiver to liquidate the corporate assets and distribute the 

proceeds. Plaintiff maintains that because such a showing 

was made, the District Court erred in refusing to appoint a 

receiver. We do not agree. 

The Montana Business Corporation Act provides that 

"[tlhe district courts shall have full power to liquidate the 

assets and business of a corporation . . . when . . . the 
corporate assets are being misapplied or wasted." Section 

35-1-921 (1) (a) (iv) , MCA. The comments on the statute suggest 

that this section was intended to clarify the dissolution 

powers of the district courts: 

"Cases differ as to whether a court has power on 

petition of a sFarxolder to dism ax l-ate 

for deadlock, fraud or mismanagement, in the 

absence of a statute giving the court such a power. 

"When there is a statutory grant of such a power 

there are still two factors with which one seeking 

dissolution must contend: (1) Courts have tended to 

construe the statutes as discretionary rather than 

mandatory, even though the language of the 

particular statute may appear to make it mandatory. 

(2) Courts have tended to look beyond the language 

of the statute and into the equities of the 

situation. 

"This section provides discretionary authority to 

the district court to liquidate - the assets and 

business of a corporation upon the petition of a 

shareholder. . . . " Official Comment, Annot. to 

section 35-1-921, MCA (emphasis added). 

These comments indicate the drafters of the statute intended 

to remove existing uncertainty about whether the courts have 

any dissolution powers and to allow discretionary exercise of 

those powers. The statute is clearly couched in permissive 

language. To require dissolution on a showing of bare 

statutory grounds would be manifestly unjust, because it 

would dictate the harsh remedy of dissolution regardless of 

the facts of the case or the consequences. 

Liquidation is an extraordinary remedy and the power of 

the court to appoint a receiver must be exercised with 

extreme caution. Thisted v. Tower Management Corp. (1966), 

147 Mont. 1, 14, 409 P.2d 813, 821. Traditionally, 

liquidation has been viewed as a remedy of last resort. This 

view was restated in State ex rel. Iverson v. District Court 

(1965), 146 Mont. 362, 406 P.2d 828: 

"The demand of any party for appointment of a 

receiver is generally very carefully considered by 
the courts, for this is a 'drastic' remedy which 

deprives the lawful owner of property the right to 

manage and control his own interests. As a result, . . . power to appoint a receiver is to be 

exercised sparingly and not as of course. A strong 

showing should be made and even then the authority 

must be exercised with conservation and 

caution . . . [citations omitted] The general 

rule is also stated that if the desired outcome may 

be achieved in any other way, rather than through 

the appointment of a receiver, then this course 

should be followed." Iverson, 146 Mont. at 371, 

406 P.2d at 832-33, quoting Brown v. 

Erb-Harper-Rigney Co. (1913), 48 Mont. 17, 27, 133 

P. 691, 694. 

See also OINeal, Close Corporations S9.27 (Supp. 1982) ; 19 

C.J.S. Corporations §I454 (Supp. 1979). 

We hold that section 35-1-921, MCA is permissive rather 

than mandatory, and that district courts are empowered, but 

not required, to liquidate when corporate assets have been 

rr~isapplied or wasted. 

As noted in the Official Comment to section 35-1-921, 

MCA, courts look beyond the statutory criteria and "into the 

equities of the situation." This Court has held that "in 

addition to the bare statutory requirements, there is a 

further burden of proving equitable grounds for dissolution." 

FOX v. 7L Bar Ranch Co. (1982), Mont . , 645 P.2d 

929, 935, 39 St.Rep. 862, 871. We reaffirm that holding. In 

- Fox, we affirmed the dissolution of a close corporation, 

finding that deadlock and oppression, two of the statutory 

grounds, were present and that the equities clearly favored 

dissolution. We emphasized that the dissolution issue is to 

be decided on a case-by-case basis. In affirming 

dissolution, - Fox held there was no adequate alternate remedy: 

"As we have stated, technical satisfaction of the 

deadlock requirements is not enough to warrant 

dissolution. Therefore, regardless of 

[plaintiff's] motives for seeking a dissolution, 

dissolution could not be ordered absent the 

underlying equitable Founds. 

"On the other hand, to disallow a division would 

greatly harm [plaintiff] by making him the victim 
of corporate formalities. There -- is no alternative 

adequate remedy. - Fox, 645 P.2d at 936, 39 St.Rep. 

at 871-72 (emphasis added) . 

The equitable factors found persuasive in Fox were (1) 

demonstrated inability of the parties to get along, (2) 

reasonable expectations of the shareholders, (3) lack of 

disruption of a going business, (4) lack of injury to the 

public, (5) harm to shareholders from refusal to liquidate, 

and (6) lack of adequate alternative remedies. This list is 

not exhaustive, nor is each of these factors necessarily 

required in every case. Dissolution actions must be resolved 

on a case-by-case basis, balancing the underlying equities 

and eschewing rigid, predetermined rules. This approach is 

consistent with our prior decisions. As we have noted before 

in the corporate dissolution context, " [c] ourts of equity 

are not bound by cast-iron rules. The rules by which they 

are governed are flexible and adapt themselves to the 

exigencies of the particular case." Thisted, 147 Mont. at 

We employed essentially the same flexible approach in 

Skierka v. Skierka Bros., Inc. (1981) , Mont . , 629 

P.2d 214, 38 St.Rep. 754. There we affirmed the District 

Court's conditional liquidation order, holding that the 

Court's finding of oppression was clearly supported by the 

evidence and that fraud and mistake were also present. 

Applying Thisted, we deferred to the equitable discretion of 

the District Court. The equities in Skierka clearly 

supported liquidation. There, due to actions of the 

controlling shareholder, plaintiff's reasonable expectations 

were frustrated, plaintiff was effectively excluded from 

corporate management, and the shareholders were unable to get 

along. Even though the equities supported the liquidation 

remedy, the District Court ordered that liquidation occur 
only if the parties failed to agree on a division of the 

corporate assets. Skierka, 629 P.2d at 215-17, 38 St.Rep. at 

755-58. 

The equities in this case do not support plaintiff's 

contention that liquidation of Norman Ranches is the proper 

remedy. Plaintiff claims to have established statutory 

grounds for dissolution, but has not demonstrated underlying 

equities which demand the harsh liquidation remedy. Even 

assuming misapplication or waste, the record contains 

substantial evidence in support of the trial court's refusal 

to liquidate. Norman Ranches appears to be a solvent and 

going business. Frank Jr. and Gloria would be unjustly 

harmed by liquidation of assets they have worked long and 

hard to improve. Together they own over 90% of the corporate 

shares. Moreover, liquidation would not be likely to benefit 

Faye in a manner consonant with her apparent expectation to 

get her money out of the corporation quickly. She clearly 

does not wish to remain in Montana and participate in the 

ranch operation. The parties are clearly unable to work 

together. Liquidation of ranch property might take years and 

might yield a much less satisfactory result than other 

available remedies. Alternative remedies exist which would 

resolve the dispute without the adverse consequences 

liquidation promises to all concerned. Finally, Faye 

requested in open court a remedy other than dissolution. 

We will not disturb the trial court's determination of 

the dissolution issue unless it is "clearly erroneous." 

Skierka, 629 P.2d at 222, 38 St.Rep. at 764. We affirm the 

District Court's refusal to liquidate the assets of Norman 

Ranches, Inc. 
Plaintiff challenges the power of the District Court to 

compel her to sell her stock. She argues that the sole issue 

before the District Court was whether to dissolve the 

corporation, but that the Court, in an effort to compromise, 

imposed an unwanted agreement upon the parties. We reject 

this argument. 

Our prior decisions have recognized the general 

equitable powers of district courts over disputes arising 

among shareholders of close corporations. Thisted, 147 Mont. 

at 14-15, 409 P.2d at 820-21; Skierka, 629 P.2d at 221-22, 38 

St.Rep. at 764; - Fox, 645 P.2d at 936, 39 St.Rep. at 871-72. 

In Thisted, we recognized that power to choose from a broad 

range of equitable remedies is necessary to resolve disputes 

of this nature: "[bly [their] very nature, intracorporate 

problems arising in a close corporation demand the unusual 

and extraordinary remedies available only in a court of 

equity." 147 Mont. at 14, 409 P.2d at 820. 

Accordingly, a court sitting in equity is empowered to 

determine the questions involved in a case and "do complete 

justice. " Sawyer-Adecor International, Inc. v. Anglin 

(1982) Mont. , 646 P.2d 1194, 1202, 39 St.Rep. 

1118, 1127; Link v. State (1979), 180 Mont. 469, 483, 591 

P.2d 214, 222. This includes the power to fashion an 

equitable result. Rase v. Castle Mountain Ranch, Inc. 

(1981), Mont. , 631 P.2d 680, 687, 38 St.Rep. 992, 

1000. 

Plaintiff argues that the District Court converted this 

action to dissolve and liquidate a corporation into something 

akin to specific performance of a contract contrived by the 

Court. We do not agree. Although the District Court may 

have improperly relied upon the settlement figure reached by 
defendants and Donald, as determinative of the value of 

plaintiff's 75 shares, the District Court did not make a 

contract for the parties. Plaintiff cites Horst v. Staley 

(1936), 101 Mont. 543, 54 P.2d 876, for the rule that courts 

may not make contracts for the litigants. But in Horst the 

dispute was whether the parties had made a certain agreement. 

Plaintiff claimed they had; defendant denied that any 

agreement had been reached. In attempting to compromise the 

positions of the parties, the trial court disregarded the 

allegations and the parties' proof and created an agreement 

with terms midway between the parties' positions. Horst, 101 

Mont. at 548-49, 54 P.2d at 878. Here, plaintiff asked the 

District Court to order the stock sale. The Court simply 

assigned a value to the shares that was unsatisfactory to the 

plaintiff. Although plaintiff's argument begins with the 

assertion that the District Court is powerless to compel the 

stock sale, her argument does not address that issue. 

Instead, it is aimed at undermining the District Court's 

valuation of her stock. The District Court did not impose a 

"contrived" contract upon the plaintiff. 

Although this Court has never ruled directly upon the 

question, the decisions of other jurisdictions have 

recognized and approved the fashioning of equitable remedies 

less drastic than dissolution, including but not limited to 

ordered sales of stock at a fair price. Fix v. Fix Material 

Co., Inc. (Mo. 1976), 538 S.W.2d 351, 357; Baker v. 

Commercial Body Builders, Inc. (Or. 1973), 507 P.2d 387, 

395-96; Alaska Plastics, Inc. v. Coppock (Alaska 1980), 621 

P.2d 270, 274-75. In Coppock, the plaintiff sought 

dissolution but the trial court ordered defendants to 

purchase plaintiff's shares. The Alaska Supreme Court 

summarized the case law on this issue and restated the 
rationale supporting the fashioning of equitable remedies 

less drastic than liquidation: 

"Liquidation is an extreme remedy. In a sense, 

forced dissolution allows minority shareholders to 

exercise retaliatory oppression against the 

majority. Absent compelling circumstances, courts 

often are reluctant to order involuntarv 1 

dissolution. [citations omitted] As a result, 

courts have recognized alternative remedyes based 

upon their inherent equitable powers. Thus in 

Baker, interpreting a statute substantially similar 

to AS 10.05.540, the court authorized numerous 

alternative remedies for oppressive or fraudulent 

conduct by the majority. Among those would be: 

'An order requiring the corporation or a 

majority of its stockholders to purchase 

the stock of the minority shareholders at 

a price to be determined according to a 

specified formula or at a price 

determined by the court to be a fair and 

reasonable price.' (footnote omitted). 

Baker, 507 P.2d at 396. The same court applied 

that remedy in Delaney v. Georgia-Pacific Corp., 

278 Or. 305, 564 P.23 277, 288-89 (1977) ." 

Coppock, 621 P.2d at 274-75 (emphasis added). 

The Court found however that the stock purchase remedy was 

not appropriate under the facts of that case. 

The stock purchase remedy was applied in Delaney, where 

the Oregon court found that remedy appropriate in light of 

" 'the facts of the case and the nature of the problem 

involved. . . '" Delaney, 564 P.2d at 288, quoting Baker, 507 

P. 2d at 395. The case was remanded for a proper 

determination of value. These cases clearly support the 

power of the District Court on appropriate facts to order the 

purchase or sale of minority shares. We are persuaded by the 

rationale and holdings of these decisions. Plaintiff has not 

cited, nor does our independent research disclose, any 

authority to the contrary. Indeed, the cases cited do not 

seriously question that courts have such power, only whether 

its exercise is appropriate in the particular case. 

We hold that the District Court had power to order the 

purchase and sale of Faye's stock. 
Plaintiff and defendants are clearly unable to cooperate 

in the management of Norman Ranches. It does not appear from 

the record that Faye desires any participation in the ranch 

operation. Faye asked the District Court to award her money 

and land in exchange for her shares. She has not expressed 

any desire to remain a shareholder or participate in the 

ranch operation, except insofar as necessary to withdraw her 

share from the corporation. Norman Ranches appears to be a 

successful family ranch and, barring dissolution, is likely 

to remain so. The stock purchase by defendants allows Faye 

her rightful share of the corporation. It also allows the 

ranch to continue operating without unfair interruption. It 

allows defendants to enjoy the rightful fruits of their 

labors on the ranch while still allowing a full accounting 

for corporate funds. In short, the stock sale remedy answers 

the equities and demands of the case. We affirm the District 

Court's use of the stock sale remedy in this case. 

The final issue is whether there was substantial 

evidence to support the findings of the District Court upon 

which judgment was entered ordering Faye to transfer her 75 

shares of stock in return for $20,000 and 20 acres of land. 

The record does not show all assets and liabilities of the 

corporation. While the District Corut found that corporate 

assets were appraised at $640,000, the record shows that this 

value is limited to the corporate real property. The record 

does not disclose the net value of the corporation. Section 

35-1-812(6) (c) , MCA, in providing a method for dissenting 

shareholders to force a purchase of shares, requires as a 

part of the value determination that the corporation provide 

a balance sheet showing assets and liabilities. Such 

information is no less crucial in the present case. 
Determination of the assets of the corporation also 

requires an accounting by Frank, Jr. for corporate funds from 

1970 to the date of valuation. No accounting is shown of 

corporate rental income, lease proceeds or loan proceeds. 

Liabilities of the corporation, if any, must also be shown by 

appropriate evidence. It may be that defendants have some 

claim in that regard for labor and improvements. 

Next, we note that the District Court relied upon 

defendant's settlement with Donald as determinative of the 

value of Faye's shares, rejecting the earlier $175,000 

valuation by agreement. While the $175,000 agreement lapsed 

for lack of financing, it does not eliminate that agreed 

value as a factor to be considered in determining share 

value. Defendants argue that reliance on Donald's settlement 

to determine value was proper, relying on cases treating 

arms-length transactions in the normal course of business as 

the basic criterion of market value. The record raises a 

question as to whether or not the settlement with Donald was 

an arms-length transaction, since it involves a participant 

in the court action. It appears that the agreed value of 

$175,000 for all the shares or $87,500 for Faye's shares was 

evidence which should have been considered by the District 

Court. 

Finally, the record fails to show the value of the 20 

acres of land ordered to be exchanged. The initial appraisal 

was based upon a value per acre for an operating 1,140-acre 

ranch. That appraisal expressly stated that the values were 

applicable only under the existing program of farm use and 

were invalid for use in connection with any other appraisal. 

As a result, the record fails to show the value of the 20 

acres which the defendant proposed to transfer along with 

$20,000 to Faye and also fails to show the value of the lands 
which Faye proposed to be transferred to her at a value of 

$87,500. On further consideration, the District Court should 

require appropriate evidence to establish the value of any 

land which is ordered to be exchanged. 

The case is remanded for further proceedings consistent 

with this opinion. 

We concur: 

S'\