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. OtToole 11, OIToole & OIToole, 

Plentywood, Montana 

For Respondents: 

James A. Manley, Manley Law Office, 

Polson, Montana (for Martha Berlin) 

Douglas 3. Wold, Wold Law Firm, Polson, 

Montana (for Donald J. Peterson) 

Filed: 

Submitted on Briefs: March 10, 1994 

Decided: June 30, 1994' 

Clekk 
Justice 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 fiduciary duty to respondents, and piercing 

the corporate veil. 

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 supported by 

substantial credible evidence? 

5. Was respondents' action barred by accord and 

satisfaction? 

6. Did the District Court err when it pierced 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 with 
investments 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 97 percent of the 

corporation and completely controlled it. 

On December 13, 1983, Brett met and entertained the Berlins in 

Glendive with dinner at his 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 indicating his knowledge and associations 

in the oil and gas industry. Brett discussed with the Berlins the 

possibility of purchasing net overriding royalties. Respondents 

testified that Brett represented these investments as more 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 

through his or the corporation's services. He also explained that 

if Comdisco did not exercise its complete option, he could sell or 

broker the opportunities to 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 under production from the Sceptre Fields had been sold to 

Comdisco. In November 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 first of the two disputed transactions was the Exok transaction 

which involved the purchase 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 Sceptre package) of 
undivided 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 70 percent of the 

package, to Exok for $600,000. Brett knew of this sale price, but 

did not tell respondents of it. 

In the Exoktransaction, Brett represented to respondents that 

he could purchase 1400 prime net royalty acres of overriding 

royalties out of 700,000 gross acres and 45,000 net royalty acres 

from the Sceptre package. Brett represented that he was informed 

of the most valuable 1400 royalty acres, and that if respondents 

purchased an interest immediately, they would have several months 

to choose the most valuable 1400 royalty acres out of the 45,000 

net acres available. In this transaction, Brett also served as 

Comdisco's agent to locate and negotiate oil and gas interests, for 

which Comdisco paid Brett a commission. 

On December 21, 1983, Brett entered the respondents into what 

the District Court found was a "secret agreementg* 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 Brett 
20 percent of all their royalties within the State of Michigan. 

Thereafter, Exok would assign to Brett another 20 percent 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, 

effective May 1, 1984. On June 20, 1985, the corporation performed 

the December 21, 1983, secret agreement when 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 

from this transaction, Brett received 5850 net royalty acres of the 

original Exok purchase, 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 

their prejudice. The evidence also showed that respondents did not 

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 fiduciary duty as their 

agent to fully disclose the material facts and considerations to 

respondents, as purchasers 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 on his 
own need under his agreement with Exok, not by an appraisal and 

investigation of its fair market value. The court reasoned that 

Brett failed to use reasonable care in investigating and 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' original meeting in 

Glendive, Brett introduced respondents to Brooks. Brooks owned a 

ten percent interest in the Sceptre package, which was worth 

$100,000 at the time of its transfer to him. After Brett purchased 

an interest for respondents in Exok, respondents came into contact 

with Brooks in Denver, Colorado. Respondents and Brooks entered 

into an agreement to purchase certain of Brooks' royalty interests. 

Testimony conflicted as to whether Bretthad advised respondents to 

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 secret agreement with Brooks 
and others. The court found that the sale to respondents by 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 the amount of interest they were purchasing 

for $250,000--only a five percent interest in the Sceptre package-- 

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 obligation and fiduciary duty as respondents' 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 contract with Brooks without at least 

fully consulting Brett, 50 percent of the damages 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 jointly and severally liable. The total amount 

of respondents ' judgment was $167,282.50, plus their costs of 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 of Justice, 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 

9 
doctrine 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 subject matter 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 actions was 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 subject matter of the present action 

was Itan oral agreement whereby [appellant] was to act as an 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 

subsequent action, there must be a precise 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 in April 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 fiduciary duty 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 subject of the present 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 suit 
was 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 

it provided a background on the parties1 series of transactions and 

their relationship. 

In like manner, appellant argues that the issues presented in 

this action are the same because 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 recovery were the same as those used in 

the Dawson County action, they were not related to the same subject 

matter. The two actions were relevant to one another, however, the 

issues were not precisely the same. Therefore, the doctrine 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 in the Dawson County 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 issues based 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 

privity with a party to the prior adjudication. Anderson v. State 

(1991), 250 Mont. 18, 21, 817 P.2d 699, 701. We have said that of 

the criteria requiredto establish collateral estoppel, identity of 

issues is the most important and requires that 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 the underlying facts 

raised in the two actions were 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 

action was an oral agreement between the parties that appellant was 

to act as respondents' agent for the investment of their monies in 

certain oil and gas overriding royalty interests. This agreement 
affected the Sceptre or Exok transaction of May 1984, and the 

Brooks transaction, not the Dawson County action. 

Although the party against whom respondents pled 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 respondentst action was not barred by collateral 

estoppel. 

ISSUE 3 

Was respondentst action barred by the statute of limitations? 

Appellant argues that the District Court erred when it allowed 

joinder of Boedecker Resources, Inc., to the suit, 7% years after 

the transactions in question. Appellant asserts that no statute of 

limitations exists that could relate back that far in this cause of 

action. Finally, appellant asserts that because this was 

respondents* third suit against Brett Boedecker, there was no valid 

reason for respondents to have failed to join Boedecker Resources, 

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 relate back 

whenever : 

(1) the claim or defense asserted in the 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 to be brought in 

by amendment; (2) that party has received such notice of 

the institution of the action that the party 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 identity of the proper 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. (Emphasis added) . 

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 

transactions at issue in this action. Brett, acting as Boedecker 

Resources, Inc., represented that he would be respondents1 agent 

for purposes of investing their monies in oil and gas interests. 

Respondents filed their original action within the period provided 

by law for commencing the action against the party to be brought in 

by amendment--the corporation. Brett, acting for himself and as an 
agent 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 have been brought against the corporation. Brett had stated 

to respondents on their first meeting, "I am Boedecker Resources." 

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 not presented at trial to support the trial court's findings of 

fact regarding the following: 

(1) The "secret agreement", wherein Brett was to receive 

an overriding royalty interest in the remaining acreage 

of the Exok purchase; (2) The failure of Brett and/or the 

corporation to disclose the sale of production to 
Comdisco: (3) That appellants did not use 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 court misapprehended the 

effect of the evidence; and (3) whether we are left with a definite 

and firm conviction that a mistake 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 that years 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 

respondentsf credibility. 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 the 
testimony 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 in October 1983, several of the 

other owners of the 1/10 interest in the Sceptre package 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 Sceptre package 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 commission 
payments 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 

supported by substantial credible evidence on these issues and 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 

renegotiated the $250,000 purchase 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 

respondents renegotiatedthe Brooks transaction 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 the parties 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 from his potential liability to respondents as 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 the District Court err when it pierced the corporate veil? 

Appellant asserts that the District Court erred when it found 

that Brett Boedecker was the alter ego of the corporation. 

Appellant argues that he did not make the corporate decisions alone 

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 the corporation. 

Drilcon, Inc. v. Roil Energy Corporation, Inc. (1988), 230 Mont. 

166, 176, 749 P.2d 1058, 1065. Second, the trier of fact must 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 intermingled with Brett's individual assets. The court 
found that Brett owned 97 percent of the corporate stock, was its 

president, and completely controlled the 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 regarding the transactions between the 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 for him individually, not for the 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 subterfuge to justify wrong and 

perpetrate fraud against respondents. From his first dealings with 

respondents while entertaining them in his home, and his 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 to demonstrate to [respondents] that Brett 
and/or the Corporation had not only extensive, but impressive 

knowledge and association, in the oil and gas industry and was such 

[as] to justify an expectation of trust and confidence in Brett's 

success, knowledge and reliability." Brettmade misrepresentations 

to respondents that he could choose the most valuable 1400 acres 

available from the Sceptre package. He misrepresented that the net 

royalty interests purchased by respondents would be valuable 

investments. Brett failed to reveal the discrepancy between the 

5850 net royalty acres he 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 concluded that Brett was the corporationls alter 

ego and that Brett used the corporate entity to perpetrate fraud 

against respondents. The court properly 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 corporate veil. 

Af firmed. 

We concur: 

June 30, 1994 

CERTIFICATE OF SERVICE 

I hereby certify that the following certified order wai sent by United States mail, prepaid, to the 

following named: 

Loren J. O'Toole, I1 

O'Toole & O'Toole 

P.O. Box 529 

Plentywood, MT 59254-0529 

James A. Manley 

Manley Law Office 

201 Fourth Ave. E. 

Polson, MT 59860 

Douglas J. Wold 

Wold Law Fi 

P.O. Box 1212 

Polson, MT 59860 

ED SMITH 

CLERK OF THE SUPREME COURT 

!;TATE OF MONTANA