No. 93-315 IN THE SUPREME COURT OF THE STATE OF MONTANA 1994

BRETT A. BOEDECKER and BOEDECKER, 

# 8-{ ,<<.ill.< RESOURCES, INC., a Montana corporation, '.* ,,.-. ,..<. .A> 6;~~~!( 05 ~:,,!;+;.i:I::'COEJRT SYATg OF Mai,:'r.2<eL:3 Defendants and Appellants.

APPEAL FROM: District Court of the Eleventh Judicial District, In and for the County of Flathead, The Honorable Joseph B. 

### Gary,Judge presiding.

COUNSEL OF RECORD: For Appellants: Loren J. OtToole11, OIToole& OIToole, Plentywood, Montana For Respondents: James

### A. Manley, Manley Law Office, Polson,Montana (forMartha Berlin) Douglas 3. Wold, Wold Law Firm, Polson, Montana (for Donald J. Peterson)

Filed: Submitted on Briefs: March 10, 1994 Decided: June 30, 1994'

ClekkJustice William E. Hunt, Sr., delivered the opinion of the Court. Defendants Brett A. Boedecker and Boedecker Resources, Inc., appeal from a judgment of the Eleventh Judicial District Court, Flathead County, granting respondents Martha Berlin and Donald Peterson damages for their losses in two overriding royalty purchases, and finding that Brett Boedecker breached the parties' oral contract and his fiduciaryduty to respondents,and piercing the corporateveil. We affirm. The parties raise the following issues: 1. Was respondents' action barred by the doctrine of res judicata? 2. Was respondents' action barred by the doctrine of collateral estoppel? 3. Was respondents' action barred by the statute of limitations? 4. Were the District Court's findings of fact supportedby substantial credible evidence? 5. Was respondents' action barred by accord and satisfaction? 6. Did the District Court err when itpierced the corporate veil?In May 1984, respondent Martha Berlin and her husband, Joe Berlin, lived in Lake County. Martha had investment assets for which Joe acted as her agent. Joe had significant investment experience, but he and Martha had limited experience withinvestments in oil and gas interests. Previously, the couple had invested in oil wells in Texas. Also at this time, respondent Donald Peterson lived in Flathead County and worked mostly as a fireman. He had substantial experience as a part-time realtor. Previously, Peterson invested in real estate and western art, but had not invested in oil and gas interests. Appellant Brett Boedecker lived in Glendive and operated through a corporate entity known as Boedecker Resources, Inc.

(corporation),a Montana corporation with its principle place of business in Glendive. Brett was an experienced and active investment counselor, landsman, and broker in the field of oil and gas investment interests. He owned approximately 97percent of the corporation and completely controlled it. On December 13,1983, Brett met and entertainedthe Berlins in Glendivewith dinner athis home. Brett's home contained fine art and projected the appearance of wealth and success. There Brett told the Berlins of his vast experience in the oil and gas business. Brett also stated, "I am Boedecker resource^.'^ The next day, Brett took the Berlins to his office and displayed maps and charts indicatinghis knowledgeand associations in the oil and gas industry. Brett discussed with the Berlins the possibility of purchasing net overriding royalties. Respondents testifiedthatBrett representedthese investmentsasmore valuable than producing wells or wells being drilled because the investor could avoid responsibility for development costs.Brett disclosed his past close working relationship with Comdisco, Inc., a New York stock exchange corporation with considerable gas and oil holdings. Brett explained that Comdisco would have first option on any properties or leases available throughhis or the corporation's services. He also explained that if Comdisco did not exercise its complete option,he could sell or broker the opportunitiesto other persons or companies. Brett also represented to the Berlins that he had extensive knowledge of Williston Basin and Sceptre Field in Valley County and believed that those areas had the greatest potential for oil discovery and production. However, at the time of the parties' first meeting, the wells underproduction from the SceptreFieldshad been sold to Comdisco. InNovember 1983,Brett had negotiated and transacted a sale from Exok, Inc., to Comdisco for almost all of the producing oil and gas interests in the Exok properties located in Valley County. Brett did not disclose this fact to the Berlins. The Berlins and Peterson had expressed their interest to Brett for reasonably short-term investments and production of wells. Respondents entered into four transactions with Brett and the corporation. However, only two formed the basis of this action. The firstof the twodisputed transactions was the Exok transaction which involvedthepurchase of certain overriding royalty interests from a Canadian oil and gas company. Brett was to act as respondents' agent to negotiate the investment. In 1983, Brett's brother, Brooks Boedecker, was one of several landsmen and employees who received part of a package (the Sceptrepackage) ofundivided royalty interests from Sceptre Resources, Inc., the Canadian oil and gas company. In 1983, that company went out of business and gave overriding royalty interests located in several western states to its landsmen as severance payments. Certain of those employees sold their interests, comprising 70percent of the package, to Exok for $600,000. Brett knew of this saleprice, but did not tell respondents of it. IntheExoktransaction,Brett representedtorespondents that he could purchase 1400 prime net royalty acres of overriding royalties out of 700,000gross acres and 45,000net royalty acres from the Sceptrepackage. Brett represented that he was informed of the most valuable 1400 royalty acres, and that if respondents purchased an interest immediately, they would have severalmonths to choose the most valuable 1400 royalty acres out of the 45,000 net acres available. In this transaction, Brett also served as Comdisco'sagent to locateandnegotiate oil and gas interests,for which Comdisco paid Brett a commission. On December 21, 1983,Brett entered the respondents intowhat the District Court foundwas a "secretagreementg* with Exok for the purchase of some of the undivided interests in overriding oil and gas royalties of the Sceptre package. Under the agreement, respondents purchased a 1/6 interest in the Exok interests for $53,666, and Brett received a six percent commission. Brett had made this agreement prior to locating respondents as the buyers. The agreement provided, in part, that if Brett could sell by April 8, 1984, for $322,000, Exok would transfer to Brett20 percent of all their royalties within the State of Michigan. Thereafter,Exokwould assignto Brett another 20percent of 1/2 of the remaining assigned royalties, giving Brett a total of 33.5 percent of all the interests. Subsequently, Brett assigned his interests in the Exok overriding royalties to his corporation, effectiveMay 1, 1984. OnJune 20, 1985, the corporationperformed the December 21, 1983, secret agreementwhen Brett,as their agent, entered respondents into the agreement with Exok. Because of the assignment by Brett to the corporation, Brett was to receive 8280 net royalty acres and some Michigan royalty acres. In total fromthis transaction,Brett received 5850net royaltyacresof the original Exokpurchase,where respondents received only 90 royalty

acres. Brett did not reveal this discrepancy to respondents. Evidence at trial showed that respondents had relied completely upon Brett's advice, counseling, and negotiation to theirprejudice. The evidence also showed that respondentsdidnot realize the value or potential losses of the interests Brett was buying for them. The court found that Brett received commissions from respondents, as their agent, and from Exok, the seller. In addition, the court found that Brett had a fiduciaryduty as their agent to fully disclose the material facts and considerations to respondents,aspurchasers of the Exok interests. The court found that Brett's transaction with Exok, on behalf of respondents, constituted a clear conflict of interest. The court also found that Brett had determined respondents'purchase price based onhisown need under his agreement with Exok, not by an appraisal and investigation of its fair market value. The court reasoned that Brett failed touse reasonable care in investigatingand evaluating the investment or give competent, reliable, and accurate information about the assets. Finally, the court found that Brett's breach of his fiduciary duty to respondents resulted in their loss of compensatory damages in the amount of $53,666, less $1000 they recovered in royalties. The second transaction was the Brooks Boedecker transaction which involved respondents'purchase of certain royalty interests from Brett's brother, Brooks. At the parties' originalmeeting in Glendive, Brett introduced respondents to Brooks. Brooks owned a ten percent interest in the Sceptre package, which was worth $100,000at the time of its transfer tohim. After Brett purchased an interest for respondents inExok, respondents came into contact with Brooks in Denver, Colorado. Respondents and Brooks entered intoan agreement topurchase certain of Brooks' royalty interests. Testimony conflictedas towhether Bretthad advised respondentsto contact Brooks. Brooks offered to sell respondents his Sceptre package interest for $500,000. Unaware of the package's real value, respondents agreed to purchase only 1/2 of the interest for $250,000. The court found that between the time of the original Exok transfer on October 8, 1983, and the time Brett purchased respondents' Exok interest, no producing wells had been drilled. Meanwhile,Brett had entered into the secretagreement with Brooksand others. The court found that the saletorespondentsby Brooks aided in completing the Exok agreement managed by Brett, thereby meeting its time table. As a result of the Brooks transaction, Brooks received the Michigan overriding royalties and Brett received a commission from respondents in the amount of $15,000. Respondents did not know that Brooks had paid Brett a $15,000 commission for the Brooks transaction. The court found that Brett and/or the corporation failed to advise respondents that theamount of interest theywerepurchasing for $250,000--onlya five percent interest intheSceptrepackage-- sold several months previously for $50,000, five times less than what they had paid. In addition, the court found that Brett had 

### a conflict of interest by reason of the execution of the secret agreement of December 21, 1983. There Brett stood to make a pecuniary gain through the agreement. The court also found that Brett demanded a $15,000 commission from Brooks, knowing that respondents had paid a highly inflated price for the Exok transaction. Thereby, Brett improperly had ratified the Brooks transaction without his full involvement in the transaction, as respondents' agent. Finally, the court found that Brett breached his contractual obligationand fiduciary duty asrespondents' agent to properly advise them of true and material facts. The court found that respondents were prejudiced. The Brooks transaction produced no overriding royalties for respondents and they lost $229,233--$214,233 in cash and art, and $15,000 as a commission to Brett. However, the court found that because

### respondents entered into the contractwith Brooks

### without at least fully

### consultingBrett, 50percent ofthedamages

### were attributable 

### to their own actions. 

### The court apportioned 1/2 

### the damages, or $114,616.50, to 

### Brett and/or the company for the Brooks transaction. The court also found that the facts required piercing of the corporate veil 

### of Boedecker Resources, Inc. The court found Brett and the corporation jointlyand 

### severallyliable. The total amount of respondents

## ' judgmentwas $167,282.50, plus their costsof suit. The 

### court did not award punitive damages against Brett. ISSUE 3 

### Was respondentsf action barred by 

### the doctrine of 

### res judicata? Appellant argues that res judicata should have barred litigation of 

### the action below because the two disputed transactions were the same subject matter of certain testimony by respondent, Peterson, and by respondent Martha Berlin's husband, 

### Joe Berlin, 

### in a 

### prior trial between the 

### parties. Appellant asserts 

### that respondents already had 

### the opportunity to litigate 

### the two transactions in the prior case, and 

### should not have been allowed to 'lrelitigate*l the transactions in the present action. Res judicata is 

### in the 

### nature of claim 

### preclusion and is 

### a remedy where a claim has been previously litigated. Lancaster v. 

### Department ofJustice,Div. 

### of Motor

### Vehicles (1985)

### , 218

### Mont. 97, 99, 

### 706 P.2d 126, 128. 

### This Court recently reaffirmed its long-time holding that a 

### claim may be 

### barred on the 

### basis of 

### the

9doctrine of res judicata if the following elements are present: (1) the parties or their privies are the same; (2) the subject matter of the action is the same; (3) the issues are the same and relate to the same subject matter; and (4) the capacities of the persons are the same in reference to the subject and to the issues between them. Davis v. Church of Jesus Christ (1993), 258 Mont. 286, 301-02, 852 P.2d 640, 650. In its order on appellant's motion for summary judgment and respondents' motion to amend the complaint, the court found that "for all practical purposes, the parties or their privies were the

same and the capacities of the persons were the same in reference to the subjectmatter and the issues between them." In addition, the court found that the second and third elements of the Davis test were lacking. The court reasoned that the subject matter in the two actionswas not the same,and the issues were not the same

or related to the same subject matter. Specifically, the court found that the subject matter of the earlier action between the parties was a written and express contractual relationship pertaining to 

### a Dawson County acquisition program. On the other hand,the court found that the subjectmatter of thepresent action

was Itanoral agreementwhereby [appellant]was to act asan advisor

or agent [for respondents] for investments in the oil and gas industry generally, and specifically, as to a portion of the Sceptre Package in May of 1984." For res judicata to bar a subsequentaction,theremust be 

### aprecise identity of the issues. In re Marriage of Stout (1985), 216 Mont. 342, 701 P.2d 729.The subject matter of the Dawson County action was the parties' fourth transaction which involved a lease play contract occurring entirely in that county inApril through August 1984. At issue in that action was whether appellant, as an individual and corporate officer, breached the parties' Letter Agreement of July 5, 1984. In addition, that suit alleged that appellant committed fraud and breached his fiduciaryduty to respondents. In contrast, the present action involved the first and third of the parties' four transactions. The contracts in the two actions were separate and the contracts' values differed. The locations of the oil and gas interests in the contracts also differed. Finally, the tortious conduct alleged by appellants in the present action differed from that in the fourth transaction, involving a different fraudulent scheme. Respondent chose not to join the actions, pursuant to Rule 18(a)

## , M.R.Civ.P., and both actions were litigated simultaneously. Appellant did not move to dismiss the Flathead County action. Only after success in the Dawson County suit did appellant argue that judgment affected or barred the Flathead County suit. In the Dawson County suit, appellant objected to respondent Peterson's and Joe Berlin's testimony about the prior transactions,the subjectof thepresent suit,on the grounds that it was irrelevant. However, on appeal appellant argues that this testimony raised the issues presented in the present suit,which amounted to actual litigation of these issues. In essence, appellant now argues that the testimony in the Dawson County suitwas clearly relevant to the present suit. Appellant's argument that the Dawson County suit testimony amounted to an opportunity for respondents to litigate the subject matter of the present action is without merit. The court allowed the testimony because itprovided abackground on theparties1seriesof transactionsand their relationship. In like manner, appellant argues that the issues presented in this action are the samebecause the jury was asked to determine a breach of contract, breach of a fiduciary duty, breach of an implied covenant of good faith and fair dealing, and fraud. Although these theories of recoverywere the same as those used in the Dawson Countyaction,theywere not related to the same subject matter. The two actions were relevant to one another, however, the issues were not precisely the same. Therefore,thedoctrine of res judicata does not apply. We agree with the District court and hold that respondents' present action was not barred by res judicata. ISSUE 2 Was respondents' action barred by the doctrine of collateral estoppel? Appellant argues that the issues inthe DawsonCounty case and this case are identical, and that the parties1 or their privies previously had full opportunity to litigate them, and in fact did litigate them. Therefore,he argues that respondents should have been barred from relitigating the issuesbased an the doctrine of collateral estoppel.Collateral estoppel is in the nature of issue preclusion. Collateral estoppel may bar an action if: (1) the issue has been decided in a prior adjudication and is identical to the one presented; (2) a final judgment on the merits was issued; and

(3) the party against whom the plea is asserted was a party or in privitywith aparty to the prior adjudication. Andersonv. State

(1991), 250Mont. 18, 21, 817 P.2d 699, 701. We have said that of thecriteria requiredtoestablish collateral estoppel, identityof issues is themost importantand requiresthat the precise question has been litigated in the prior actions. Stapleton

### v. First Sec. Bank (1983), 207 Mont. 248, 258, 675 P.2d 83, 89. The court determined that the issues and theunderlying facts raised in the two actionswere not identical. The court reasoned that there "can be no question that the transaction forming the basis of the Dawson County case is separate from the "Sceptre Package" and "Br~oks~~ transactions 

# . . . [because] those transactions and underlying facts were not necessary to a determination of the Dawson County litigation." We agree. The record shows that the subject matter of the two actions and the relationship of the issues to the subject matter were not the same. The Dawson County case involved a written and express contractual relationship pertaining to a Dawson County acquisition program. On the other hand, the subject matter of the present actionwas an oral agreement between the parties that appellantwas to act as respondents' agent for the investment of theirmonies in certain oil and gas overriding royalty interests. This agreementaffected the Sceptre or Exok transaction of May 1984, and the Brooks transaction,not the Dawson County action. Although theparty againstwhom respondentspled was the same party in both actions, we conclude that the issue presented here was not identical to the one in the Dawson County case. A final judgment on the merits of this case did not occur there. We hold that respondentstaction was not barred by collateral estoppel.
ISSUE 3 Was respondentstactionbarred by the statute of limitations? Appellant argues that theDistrictCourt erredwhen it allowed joinder of Boedecker Resources, Inc., to the suit, 7%years after the transactionsinquestion. Appellant asserts thatno statute of limitations exists that could relateback that far inthis causeof action. Finally, appellant asserts that because this was respondents*third suitagainstBrett Boedecker,therewasnovalid reason for respondents tohave failed to join BoedeckerResources, Inc., as a party so late. The transactions and their corresponding activities occurred in 1984 and 1985. On December 1, 1986, respondents filed their complaint in this action. On January 6, 1992,-three weeks after Brett's deposition, respondents moved for leave to join the corporation as an additional defendant, pursuant to Rule 15(c), M.R.Civ.P. On February 19, 1992, the District Court allowed the joinder of Boedecker Resources, Inc., as a defendant.The Montana Rules of Civil Procedure include a relation-back doctrine for the amendment of complaints.

. - See Rule 15(c), M.R.Civ.P. 

### A party may amend a complaint to change the party against whom the claim is asserted, and the claim will relateback whenever: (1) the claim or defense asserted inthe amended pleading arose out of the conduct, transaction,or occurrence set forth or attempted to be set forth in the original pleading, and within the period provided by law for commencing the action against the party tobe brought in by amendment; (2) thatparty has received such notice of the institution of the action that theparty will not be prejudiced in maintaining a defense on the merits; and

(3) the party knew or should have known that,but for a mistake concerning the identityof theproper party, the action would have been brought against the party. Rule 15(c), M.R.Civ.P. In addition, "[plarties may be dropped or added by order of the court on motion of any party of its own initiative at any staqe of the action and on such terms as are just." Rule 21,M.R.Civ.P. (Emphasisadded)

# . We have said that joinder is to be liberally allowed under Rule 21, M.R.Civ.P. White v. Lobdell (1984), 208 Mont. 295, 306,

Respondents' amendment to join the corporation satisfied Rule 15(c), M.R.Civ.P. The joined party was involved in the transactionsat issue in this action. Brett, acting as Boedecker Resources, Inc., represented that he would be respondents1agent for purposes of investing their monies in oil and gas interests. Respondents filed their original action within the period provided by law for commencingthe action against theparty tobe brought in by amendment--thecorporation. Brett,acting for himself and asanagent for Boedecker Resources, Inc., received notice of the institution of the action, and therefore, was not prejudiced in maintaining a defense on the merits. Because Brett was already a party/defendant, he knew of the lawsuit. The corporation's dealings with respondents put Brett on notice that the corporation was potentially liable. Brett was on notice'that, but for a mistake concerning the identity of the proper party, the action would havebeen brought against the corporation. Bretthad stated to respondents on their first meeting, "Iam BoedeckerResources." The District Court found Brett's representation was accurate and that respondents had relied on that statement. The record shows that Brett had intermingled the corporation's assets extensively with his own after entering into the Sceptre package transaction with respondents. Joinder of the corporation was proper because the amendment related back to the date of the filing of the action, in accord with Rule E(c), M.R.Civ.P. Therefore, we hold that the joinder and the action was not barred by the statute of limitations. ISSUE 4 Were the District Court's findings of fact supported by substantial credible evidence? Appellant seems to argue that substantial credible evidence was notpresented at trial to supportthe trial court's findingsof fact regarding the following: (1)The "secret agreement", wherein Brett was to receive an overriding royalty interest in the remaining acreage of theExok purchase; (2)The failureof Brett and/or the corporation to disclose the sale of production toComdisco: (3) Thatappellantsdidnotuse reasonable care in evaluating and investigating the Exok interests or in advising respondents;and (4)Brett's alleged failure to consult respondents in the Brooks transaction. These contentions involve almost all the issues raised at trial. Our standard of review of a trial court's findings of fact is whether the findings are clearly erroneous. Further, we will examine whether: (1) the findings are supported by substantial credible evidence; (2)whether the trial courtmisapprehended the effect of the evidence;and (3) whetherwe are leftwith adefinite and firm conviction that amistake has been committed. Interstate Prod. Credit Ass'n v. DeSaye (1991),250 Mont. 320, 323, 820 P.2d 1285, 1287. In addition, we will give due regard to the opportunity of the trial court to judge the credibility of the witnesses. The court's finding that respondents were unaware of the "secret agreementu is supported by substantial credible evidence. Martha Berlin and Don Peterson each testified thatyears after the transaction they found out that Brett was to receive an overriding royalty interest in the remaining acreage of the Exok purchase. They also testified that each would not have entered into the agreement had they known that Brett would 'have received a substantial windfall from Exok by selling them a small package in

a short period of time. The court was entitled to judge respondentsfcredibility. Rule 52,M.R.Civ.P. Substantial credible evidence supports the court's finding that Brett and/or the corporation failed to disclose the sale of production to Comdisco. This non-disclosure was evidenced by thetestimony of Berlin and Peterson. Again, the court was permitted to judge their credibility. Substantial credible evidence supports the court's finding that Brett did not use reasonable care in evaluating and investigating the Exok interests or in advising respondents. Two of Brett's witnesses testified that he used reasonable care in evaluating and investigating the Exok interests or in advising respondents. However, documentary evidence presented at trial showed that Brett conducted no evaluation or process of selection for the acreage he was to purchase for respondents. The record shows that the acreage Brett sold to respondents was pre-selected before Brett became involved in the resale of the Sceptre package to Comdisco and respondents, and that he did not have the opportunity to select the best acreage for respondents. Finally, substantial credible evidence supported the court's finding that Brett failed to consult respondents in the Brooks transaction. The record shows that inOctober 1983,severalof the other owners of the 1/10 interest in the Sceptrepackage had sold their interests for $100,000. The record reflects conflicting testimony as to whether Brett advised respondents to seek out Brooks in Denver for a possible investment. However, respondents testified that Brooks did not inform them of the price for which the other owners of the Sceptrepackage had sold their interests. Brooks proceeded to offer his 1/10 interest to respondents for $500,000. Respondents purchased 1/2 of Brooksv interest for $250,000. The record also shows that Brett received commissionpayments from Brooks as a result of this transaction. The court found that neither Brooks nor Brett, as respondents' agent, disclosed the interest's real value to them. Berlin and Peterson testified that had they known of its fair value, they would not have purchased Brooks' interest. The evidence supports the District Court's findings. Review of the record also shows that the court did not misapprehend the effect of the evidence, and we are not left with

a definite and firm conviction that a mistake has been committed. We hold that the District Court's findings of fact are supportedby substantial credible evidence on these issuesand are not clearly erroneous. ISSUE 5 Was respondents' action barred by accord and satisfaction? During trial, appellant made a motion based on accord and satisfaction, and the court denied the motion. On appeal, appellant argues that because in 1985 Brooks and respondents had renegotiatedthe $250,000purchase in the 1984 Brooks transaction, respondents cannot now maintain a suit against Brett or the corporation regarding that transaction because of an accord and satisfaction between them and Brooks. In 1985, Brooks and respondentsrenegotiatedtheBrookstransaction whereby respondents

were to receive all of Brooks' interest, excluding his Michigan interests, for $214,233. An accord and satisfaction extinguishes only the obligation between theparties to the agreement. 

### See 55 28-1-1401 and -1402,MCA. Accord and satisfaction in the Brooks transaction occurred between Brooks and respondents in 1984, and again in 1985, upon modification of their contract. The accord and satisfaction occurred only for that transaction,but did not serve to release Brett fromhispotential liabilityto respondentsas their agent in either the Sceptre or Brooks transactions. Appellant's argument has no merit. We hold that respondentst action was not barred by accord and satisfaction. ISSUE 6 Did theDistrict Court errwhen itpierced the corporateveil? Appellant asserts that the District Court erredwhen it found that Brett Boedecker was the alter ego of the corporation. Appellant argues thathedid notmake the corporate decisionsalone on all the issues, but collaborated with his wife, who was secretary for Boedecker Resources. We have defined a two-prong test for piercing the corporate veil. First the trier of fact must find that the defendant was either the alter ego, instrumentality, or agent of thecorporation. Drilcon, Inc. v. Roil Energy Corporation, Inc. (1988), 230 Mont. 166, 176, 749 P.2d 1058, 1065. Second,the trier of factmust find evidence that the corporate entity was used as a "subterfuge to defeat public convenience, justify wrong, or perpetrate fraud." Drilcon, 749 P.2d at 1065. The District Court found that the actions of the corporation and Brett were interchangeable, as the corporation's assets were constantly intermingledwith Brett's individualassets. The courtfound that Brett owned 97percent of the corporate stock,was its president,and completely controlledthe corporation. As a result, the court found that respondents' remedy was for joint and several liability of the corporation and Brett. The record shows that the royalties in the Exok transaction

were to be assigned to Brett, but the actual royalties became assigned to the corporation. In another transaction, Brett transferred certain Flathead County property from the corporation to himself and his wife for no consideration. In addition, Brett told respondents at their first meeting, 

### "I am Boedecker Resources." The record shows that Brett executed all relevant documents regardingthetransactions betweenthe parties, where his wife was involved in none of them. Generally, the record shows that Brett had a continuous course of dealing with respondents where he was in complete control of the corporation, and the gain was forhim individually,not forthe corporation. The evidence is substantial that Brett was the alter ego of Boedecker Resources, Inc., in all his transactions with respondents. Finally, the evidence showed that Brett used the corporate entity of Boedecker Resources as a subterfugeto justify wrong and perpetrate fraudagainstrespondents. Fromhis firstdealings with respondents while entertaining them inhishome,andhis impressive display of maps, charts, and associations in the oil and gas industry, Brett perpetrated fraud against respondents. We agree with the District Court that these actions by Brett

were 'sufficient enough todemonstrate to [respondents]that Brettand/or the Corporation had not only extensive, but impressive knowledgeand association,inthe oil and gas industryandwas such

[as] to justify an expectation of trust and confidence in Brett's success, knowledgeandreliability." Brettmademisrepresentations to respondents that he could choose the most valuable 1400 acres available fromthe Sceptrepackage. Hemisrepresented that thenet royalty interests purchased by respondents would be valuable investments. Brett failed to reveal the discrepancy between the 5850 net royalty acreshe was to receive from the Exok transaction, and the 90 royalty acres respondents were to receive. Finally, Brett did not disclose to respondents the full value or potential problems and losses of what they were buying. The record contains substantial credible evidence upon which the District Court concludedthatBrettwas the corporationls alter ego and that Brett used the corporate entity to perpetrate fraud against respondents. The courtproperly determined that Boedecker Resources1 corporate veil should be pierced and that the corporation and Brett should be jointly and severally liable. We hold that the District Court did not err when it pierced the corporateveil. Affirmed.

We concur:June30, 1994 CERTIFICATEOFSERVICE Ihereby certify thatthefollowing certifiedorderwaisentby United Statesmail,prepaid,tothe followingnamed:

LorenJ.O'Toole, I1 O'Toole & O'Toole P.O. Box529 Plentywood,MT 59254-0529 JamesA. Manley ManleyLawOffice 201FourthAve.E. Polson,MT 59860 DouglasJ.Wold Wold Law

### Fi P.O. Box 1212 Polson,MT 59860 

### EDSMITH CLERKOFTHESUPREMECOURT !;TATEOFMONTANA