No. 86-591 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

MERIDIAN MINERALS COMPANY, 

VS. 

NICOR MINERALS, INC., and NICOR MINERAL VENTURES, INC., 

~efendants/Respondents, 

and COSTAIN HOLDINGS, INC., 

~ntervenor/Respondent. 

APPEAL FROM: District Court of the Eighteenth Judicial District, 

In and for the County of Gallatin 

The Honorable Joseph B. Gary, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

GOUGH, SHANAHAN, JOHNSON & WATERMAN; Ronald Waterman, 

Helena, Montana. 

For Respondent: 

GARLINGTON, LOHN & ROBINSON; Gary Graham, 

Missoula, Montana, 

GOETZ, MADDEN & DUNN; James H. Goetz, 

Bozeman, Montana, 

MAYER, BROWN & PLATT; Thomas P. Johnson, 

Denver, Colorado. 

Submitted: June 8, 1987 

Decided: September 3, 1987 

Filed: 

SEP 3 - 1987 

%/U # 

Clerk 
Mr. Justice John C. Sheehy delivered the Opinion of the 

Court. 

Meridian Minerals Company (Meridian) appeals an adverse 

declaratory judgment entered in the District Court, 

Eighteenth Judicial District, Gallatin County. Meridian 

brought suit against Nicor Minerals, Inc. (Minerals) and 

Nicor Mineral Ventures (Ventures) for a declaration that the 

proposed transaction by Minerals to merge Ventures into a 

subsidiary of Costain Holdings, Inc. (Costain) triggered 

preemptive right and resignation provisions of a venture 

agreement between Meridian and Ventures. Costain intervened 

in the action, which was tried without a jury. The District 

Court entered judgment in favor of Minerals, Ventures and 

Costain. Meridian appeals from that judgment. We affirm. 

In early 1984, Meridian, a wholly-owned subsidiary of 

Burlington Northern (BN) , and Ventures, a wholly-owned 

subsidiary of Minerals (in turn a subsidiary for Nicor, Inc., 

a holding corporation for Northern Illinois Gas Company) 

entered into a venture agreement to develop a talc mine in 

Madison County, Montana. Although BN owned the talc site, it 

leased the mineral interest to Ventures and authorized 

Meridian to explore and develop the property with Ventures on 

BN's behalf. Meridian and Ventures were the only parties to 

the agreement, each with a 50% interest in the venture. 

In spring, 1985, Minerals began negotiations to merge 

its subsidiary, Ventures, with a subsidiary of Costain. 

Meridian learned of the deal and filed for a declaratory 

judgment from the District Court protecting what Meridian 

thought to be its preemptive right under the terms of the 

venture agreement. At issue here is the District Court's 

interpretation of that right. 
The agreement negotiators used a Rocky Mountain Mineral 

Law Foundation model form for their mining venture agreement. 

The form language of the agreement gave each participant a 

preemptive right to purchase the other participant's interest 

in the agreement, before the other participant could transfer 

those interests to a third party. A clause was added by 

Meridian to the preemptive right provision form language 

which specifically brought within the limitations a transfer 

of protected interests effected by transfers of stock. 

There were two other sections of this agreement central 

to this case. One, the agreement specifically excluded from 

the preemptive right a corporate merger of a participant. 

Second, it designated Ventures as the operator, but provided 

that a transfer by Ventures of its interest in the agreement 

would be deemed an offer to resign as operator. 

The actual language of the contract foll.ows: 

ARTICLE XV 

Transfer of Interest 

15.1 General. A Participant shall have the right 

to transfer, grant, assiqn, encumber, - pledse - or 

otherwise commit or dispose of (transfer) to any 

third party all or any part of its interest in or 

to this Agreement, its Participating Interest, or 

the Assets. 

15.2 Limitations on Free Transferability. The 

transfer riqht of a Partici~ant in Section ~ 15.1. -- - - 

expressly including a trani fer of an interest 

effected b~ a transfer of stock, shall-be subject 

to the folrowinq terms'- and conditions: (New 

language emphasized. ) 

(i) Such transfer shall be subject to a preemptive 

right in the other Participant as provided in 

Section 15.3. 
15.3 Preemptive Right. Except as otherwise 

provided in Section 15.4, if a Participant desires 

to transfer all or any part of its interest in this 

Agreement, any Participating Interest, or the 

Assets, the other Participant(s1 shall have a 

preemptive right to acquire such interests as 

provided in this Section 15.3. 

15.4 Exceptions to Preemptive Right. Section 15.3 

shall not apply tothe following transfers: 

(a) Transfer by a Participant of all or any 

part of its interest in this Agreement, any 

Participating Interest, or the Assets to an 

Affiliate; 

(b) Incorporation of a Participant, or 

corporate merger, consolidation, amalgamation or 

reorganization of a Participant by which the 

surviving entity shall possess substantially all of 

the stock, or all of the property rights and 

interests, and be subject to substantially all of 

the liabilities and obligations of that 

Participant; and (Emphasis ours.) 

(c) The grant by a Participant of a security 

interest in any interest in this Agreement, any 

Participating Interest, or the Assets by mortgage, 

deed of trust, pledge, lien or other encumbrance. 

8.4. Resignation; Deemed Offer to Resign. The 

Operator may resiqn upon two monthr~rior notice to 

the ~ana~eient itte tee, in which -case, if there 

is only one other Participant, such Participant may 

elect to become the new Operator by notice to the 

Management Committee within 30 days after the 

notice of resignation. If upon such resignation 

there are more than two Participants, the new 

Operator will be selected by the Management 

Committee, with only the nonmanaging Participants 

entitled to vote. If any -- of the following shall 

occur, the Operator ~Tall be deemed -- to have offered 

- to resign, which offer shall be accepted by the 

other Participant(s) by notice to the Operator, if 

at all, within ninety days following such deemed 

offer: 
(h) the 

transfers its 

properties to 

Participant 

interests in 

a third pa 

acting as 

the venture 

.rty that i 

Operator 

and in the 

s not an 

Affiliate. (Emphasis ours.) 

In spring, 1985, Nicor, Inc. decided to divest itself of 

its mineral interests, including the talc operation. The 

following October, Meridian found out about the proposed 

divestiture and wrote Ventures asserting the applicability of 

the Section 15.3 preemptive right. The president of Ventures 

responded that any contemplated transfer was not within the 

scope of the preemptive right because the right was 

restricted only to "participants," and the transfer 

contemplated by Nicor, Inc., and Minerals was a transfer of 

shares by Minerals, not Ventures, and was therefore not 

restricted by the Ventures agreement. 

Meridian's response was to file an action for 

declaratory judgment in the District Court. Meridian's 

argument was that insofar as the talc operation was 

concerned, the proposed merger was within the scope of the 

Section 15.3 Preemptive Right and Section 8.4 Deemed 

Resignation provisions. 

In February, 1986, Minerals went one step further with 

the proposed merger, through a letter of intent with Costain. 

Under the terms of this letter the parties agreed that 

Minerals would surrender its shares in Ventures to Costain 

for cash or other consideration and that Ventures would be 

the surviving corporation to the merger. The parties further 

agreed that Ventures would retain all of its pre-merger 

assets and liabilities and would be bound by all of its 

pre-merger contracts. Ventures only change after the merger 

would be that its stock would be owned by Costain, not 

Minerals. The negotiations for the merger were exclusively 

between Costain and Minerals. Ventures did not participate 
in these negotiations, nor was its director/president 

informed of the plans to merge until after the decision was 

made by Nicor, Inc. and Minerals. 

After Minerals and Costain entered into the February, 

1986, letter of intent, Meridian amended its complaint to 

specifically address that transaction and sought further 

declaration that the Costain merger would constitute a deemed 

offer by Ventures to resign as operator (under Section 8.4). 

The Meridian suit was brought against Minerals and Ventures. 

Costain has intervened on Minerals' and Ventures' behalf. 

Minerals, Ventures and Costain contend that the Costain 

merger did not trigger either the preemptive right or deemed 

resignation clauses of the Ventures agreement on the claim 

that the merger was a divesture by Minerals of its interest 

in Ventures. The clauses were not enforceable, they argue, 

simply because Minerals was not a "participant" to the 

Ventures agreement. They also assert their right to avoid 

the preemptive right provision under the exception in the 

venture agreement providing that a corporate merger would not 

trigger Meridian's preemptive rights. 

Meridian's position is that their specific addition of 

the qualifying phrase "expressly including a transfer of an 

interest effected by a transfer of stock," was meant to 

prevent avoidance of the preemptive right by use of stock 

maneuvers. It further asserts that the qualifying phrase of 

Section 15.2 was also meant to modify the Section 15.4 merger 

exception, so the preemptive right merger exception would not 

apply to mergers transferring ownership of either party's 

interest to an unaffiliated third party. In either case, 

Meridian asserts that this Court should not, in equity, allow 

the Nicor parties to use the merger form of the transaction 

as a device for avoiding the preemptive right. Finally, 

Meridian contends that the merger transaction constituted a 
deemed offer by Ventures to resign as operator under Section 

8.4. 

Issues raised on appeal are: 

1. Was the District Court correct in determining that 

Minerals and Ventures were separate and distinct corporate 

identities and that Minerals was not bound by the preemptive 

right provision of the venture agreement between Ventures and 

Meridian? 

2. Was the District Court correct in refusing to find 

that the qualifying language added to the preemptive portion 

of the venture agreement applied to the merger transaction 

between Minerals and Costain, as Meridian argued? 

3. Was the District Court correct in holding that the 

proposed merger negotiated between Minerals and Costain 

properly fell within the merger exception of the venture 

agreement? 

4. Was the District Court correct in finding that the 

merger did not trigger the deemed offer to resign as operator 

clause of the venture agreement? 

Trial was held on July 10 and 11, 1986. On October 2, 

1986, after extensive post-trial briefing and oral arguments 

by counsel, the District Court entered its Findings of Fact, 

Conclusions of Law and Memorandum, denying the relief sought 

by Meridian. 

The District Court first held that Minerals was not a 

"participant" under the venture agreement and thus the 

Costain merger did not trigger either the preemptive right or 

the deemed resignation clauses. The court found that under 

the express terms of the venture agreement only Meridian and 

Ventures were "participants"; Minerals was not. Further the 

District Court found: 
5. That from the following evidence the Court 

finds that Minerals and Ventures are separate and 

independent corporations; 

A. Ventures makes its own corporate 

decisions including budgets, venture 

agreements, and personnel matters. 

B. Ventures complies with all statutory 

requirements for corporate operations 

including Articles of Incorporation and 

By-Laws . 

C. Minerals and Ventures both have separate 

bank accounts. 

D. Ventures does not accept responsibility 

for Minerals' debts. 

E. The business records are separate. 

F. The activities of the corporations are 

different and Ventures engages in exploration 

and development while Minerals is an 

investment company. 

G. Ventures' principle offices are in 

Colorado and Minerals' are in Illinois. 

H. Neither corporation has publicly 

represented that they are one and the same. 

I. The Boards of Directors are not 

identical. 

J. The presidents are different. 

K. Corporate funds have not been co-mingled 

nor has credit been used interchangeably to 

obtain Loans. 

The District Court held: 

4. That insufficient evidence was presented 

to this Court to conclude there was such a 

commonality of interests between the parent and 

subsidiary such that the parent Minerals can be 

considered the same as Ventures, thus allowing the 

Court to pierce the corporate veil and designate 
Minerals to be a participant in the Venture 

Agreement between Meridian and Ventures. 

5. That because Minerals was not a 

participant with Meridian, their negotiation with 

Costain does not trigger the preemptive clause to 

which Ventures and Meridian originally agreed. 

The District Court noted that the foregoing findings and 

conclusions, alone, were sufficient to defeat Meridian's 

claims. Nonetheless, the District Court additionally held 

that the Costain merger was within the "corporate merger" 

exception to the preemptive right clause. The District Court 

found : 

17. That the transaction between Costain and 

Minerals would leave Ventures in the same condition 

as present except that Costain rather than Minerals 

would be the owner of the stock. 

18. That after the proposed transaction Ventures 

would continue to possess the same property rights 

and interests as present, and continue to be 

subject to all present liabilities and obligations. 

19. That Ventures' assets are more extensive than 

the Venture Agreement with Meridian, and included 

considerable other assets such as mining claims, 

other mineral rights, and operations, and that all 

of these assets will remain in Ventures, which fact 

is important to conclude that a true merger was 

affected, and not a sale of the Talc Agreement. 

20. That the contemplated transaction contains the 

elements of a legal merger, and as such fits within 

the exception to the preemptive rights defined in 

15.4. 

The District Court held: 

6. That the Venture Agreement between Ventures and 

Meridian is clear and unambiguous, and introduction 

of par01 evidence did not modify the unambiguous 

term "merger" in the joint venture agreement. 

7. That the Court finds no wrongful purpose behind 

the contemplated merger since the original 
Agreement specifically stated that a merger was an 

exception to the preemptive clause, which was 

bilaterally available to both parent corporations. 

8. That while the contemplated transaction 

involved the transfer of stock ownership in return 

for consideration, the survival of the entity with 

all its assets and liabilities indicates it can 

nevertheless meet the elements of a merger, as 

opposed to a sale, and fit within the parameters of 

the Venture Agreement exception. 

9. That because Ventures will maintain its 

interest in the Agreement, and maintain its assets 

and liabilities, this contemplated transfer would 

not involve the Section 15.3 elements of "interest" 

in the Agreement, "Participating Interest," or 

"Assets. " 

10. That the evidence presented by the Plaintiff 

does not prove a "deemed offer to resign" as 

Operator, under Article 8.4. 

Pursuant to its Findings of Fact and Conclusions of Law 

and Memorandum, the District Court entered judgment denying 

the relief requested by Meridian and granting the defendants' 

request for a declaration that the Costain merger would not 

fall within the preemptive right or deemed resignation 

clauses of the Venture Agreement. 

Meridian's principal contention is that Minerals should 

not, in equity, be permitted to rely on the "legal fiction" 

of its subsidiary, Ventures' separate existence to avoid the 

contractually obligatory preemptive right. Meridian urges 

this Court to reexamine the facts and exercise its equitable 

powers to pierce the corporate veil between Minerals and 

Ventures. Meridian asserts that the District Court's failure 

to recognize the corporate fiction permits Ventures to take 

unfair advantage of Mineral's insulation from the venture 

agreement. In support of its assertion that Minerals and 

Ventures are abusing their corporate privileges, Meridian 
argues that: 1) Three officers of Nicor, Inc. control the 

Board of Directors of both Minerals and Ventures; 2) That 

Minerals and Ventures share common board members, with the 

exception of one person; 3) That they share six common 

officers; 4) That Ventures' operating funds are provided by 

Minerals, whose funds are in turn covered by Nicor, 

Inc. ; 5) That when in need of funds, Minerals and Ventures 

merely issue stock to their parent corporation; 6) That 

Ventures and Minerals have expenditure limits which cannot be 

exceeded without consent of the parent corporation; 7) That 

Minerals has no operating assets, no separate offices and no 

separate employees from Nicor, Inc.; 8) That meetings of the 

boards for Minerals and Ventures were customarily one after 

another, and in one instance, simultaneously; 9) That 

Minerals and Ventures were subject to uniform operating 

procedures imposed by Nicor, Inc.; and, 10) That Minerals 

had knowledge of the preemptive right burden on the talc 

interest. In light of these facts, Meridian asserts, 

separate corporate identities should not be maintained. (We 

note, in passing, that points numbered 7 and 9 pertain to the 

relationship between Nicor, Inc. and its subsidiaries, 

Minerals and Ventures. At issue here is the relationship 

only between Minerals and Ventures.) 

Meridian contends that the District Court operated under 

the misunderstanding that, in order to justify disregard of 

the corporate entity, the evidence must show that Minerals 

and Ventures were one and the same. Meridian further argues 

that the District Court's findings (set out in the fact 

section of this opinion) merely reflect matters which can be 

arranged to create the appearance of separateness without 

infringing on the control of a subsidiary by a parent. 

Hence, it asserts, those facts should be given little weight 

in determining the applicability c?f the equitable identity 
theory. Meridian cites S 3-2-204(5), MCA, as the standard of 

review supporting its position that equity regards the 

totality of the circumstances, and will permit piercing of 

the veil without imposition of strict checklists: 

In equity cases and in matters and proceedings of 

an equitable nature, the supreme court shall review 

all questions of fact arising upon the evidence 

presented in the record, whether the same be 

presented by specifications of particulars in which 

the evidence is alleged to be insufficient or not, 

and determine the same, as well as questions of 

law, unless for good cause a new trial or the 

taking of further evidence in the court below be 

ordered. Nothing herein shall be construed to 

abridge in any manner the powers of the supreme 

court in other cases. 

While 3-2-204 (5) , MCA, provides the applicable 

standard of review, it does not, as Meridian advocates, 

entitle Meridian to a -- de novo review of the evidence. This 

Court's function in reviewing findings of fact in a civil 

action tried by a district court without a jury is not to 

substitute its judgment in place of the trier of facts but 

rather it is confined to determining whether the findings of 

fact are clearly erroneous. Rule 52(a), M.R.Civ.P. Although 

conflicts may exist in the evidence presented, it is the duty 

and function of the trial judge to resolve such conflicts. 

His findings will not be disturbed on appeal where they are 

based on substantial though conflicting evidence. Olson v. 

Westfork Properties, Inc. (19761, 171 Mont. 154, 557 P.2d 

821; Bender v. Bender (1965), 144 Mont. 470, 397 P.2d 957. 

Further, there is a presumption when this Court reviews 

the evidence, that the trial court's judgment is correct, and 

that any conflicting evidence must be resolved in favor of 

the ruling: 

Although this is an equity case and this court is 

bound to review all questions of law and fact 

raised on appeal,. . . nevertheless we are guided 
in our review by certain presumptions and rules of 

law. First, in entering upon a review of the 

evidence on appeal, this court indulges the 

presumption that the judgment of the trial court is 

correct, and will draw every legitimate inference 

therefrom to support the presumption. (Citation 

omitted.) Second, it is the trial court's office 

to resolve inconsistencies in the testimony, and 

where the evidence, fully considered, furnishes 

reasonable grounds for different conclusions, the 

findings of the trial court will not be disturbed. 

Havre Irrigation v. Majerus (1957), 132 Mont. 410, 414, 318 

P.2d 1076, 1078. 

Not only must conflicting evidence be resolved in favor 

of the District Court's ruling, but Meridian must shoulder 

the burden of proving that the evidence preponderates against 

the finding. Thomas v. Ball (1923), 66 Mont. 161, 213 P. 

597. Hence, to pierce the corporate veil Meridian is 

obligated to prove that Minerals and Ventures had no separate 

identity - and that the corporate form was used as subterfuge 

to defeat a public convenience, justify a wrong or to 

perpetrate a fraud. 

Central to addressing the issue of whether there are 

separate identities is the fact that Minerals was not a 

participant to the venture agreement. As defined by the 

agreement, a "participant" meant the people or entities that 

from time to time had "participating interests." A 

"participating interest" meant the percentage interest 

representing the operating ownership interest of a 

participant in the assets and other rights and obligations 

under the agreement. The agreement stated that the 

"participants" were Meridian and Ventures, each holding a 

participating interest of 50%. Clearly, under these 

definitions neither Nicor, Inc. nor Minerals were 

participants bound by the contract. 
There is no precise formula used to determine if a 

corporation is the alter-ego of its shareholder. However, in 

Comment, Piercing the Corporate -- Veil in Montana (1983), 44 

Mont.L.Rev. 91, 95-97, the author identified the fourteen 

factors which this Court has relied on in past decisions: 

1. Whether the shareholder owns all or most of the 

corporation's stock. 

2. Whether the shareholder is a director and/or 

the president of the corporation. 

3. Whether the shareholder makes all corporate 

decisions without consulting the other directors or 

officers. 

4. Whether the shareholder, officers and/or 

directors fa-il to comply with the statutory 

requirements regarding operation of the 

corporation. 

5. Whether the shareholder's personal funds are 

commingled with the corporation's funds. 

6. Whether the shareholder's personal credit and 

corporation's credit are used interchangeably to 

obtain personal and corporate loans. 

7. Whether the shareholder's personal business 

records are not kept separate from corporation's 

business records. 

8. Whether the shareholder and corporation engage 

in the same type of business. 

9. Whether the shareholder and corporation have 

the same address which is the address of 

shareholder's personal residence. 

10. Whether the shareholder admits to third parties 

that the shareholder and the corporation are one 

and the same. 

11. Whether the corporation's profits and earnings 

are distributed through means other than dividends. 

12. Whether the corporation is undercapitalized. 
13. Whether the parent and subsidiary have the same 

name. 

14. Whether the parent and subsidiary have the same 

directors and officers. 

The District Court did not strictly adhere to this 

formula but nonetheless made eleven specific findings of fact 

which supported its ultimate finding that Minerals and 

Ventures were separate and distinct corporations. These 

findings are listed in the statement of facts portion of this 

Opinion. 

The trial court examined the evidence listed by Meridian 

and concluded that the evidence did not establish a 

commonality of interests between Minerals and Ventures 

sufficient to justify disregard of their corporate 

separateness. This Court is bound to uphold the trial court 

where its findings are not clearly erroneous. Rule 52(a), 

M.R.Civ.P. 

Second, Meridian's argument fails because it claims that 

because Minerals was the sole shareholder of Ventures, it 

exercised complete control over Ventures. 

Under Montana law, control over a corporation by a 

single shareholder is not, by itself, enough to warrant 

piercing the corporate veil. State ex rel. Monarch ~irst 

Ins. Co. v. Holmes (1942), 113 Mont. 303, 308-309, 124 P.2d 

994, 996. 

A mere showing that one corporation is owned by 

another, or that the two share interlocking 

officers or directors is insufficient to support a 

finding of alter ego. 

Bonanza Hotel Gift Shop, Inc. v. Bonanza No. 2 (Nev. 1979), 

596 P.2d 227, 229. 

Before the corporate cloak will be disregarded "it 

must appear not only that the corporation is 

controlled and influenced by one or a few persons, 
but, in addition, it is necessary to demonstrate 

that the corporate cloak is utilized as a 

subterfuge to defeat public convenience, to justify 

wrong, or to perpetrate fraud." 

State ex rel. Monarch Fire Insurance Co. v. Holmes (19421, 

113 Mont. at 308, 124 P.2d at 996. See also ECA 

Environmental Management Services, Inc. v. Toenyes (~ont. 

1984), 679 P.2d 213, 41 St.Rep. 388. 

[0] rganization of one company by another, or 

ownership of all stock of one company by another, 

or common officers and directors, or all these 

elements combined, are not sufficient to defeat 

separate corporate entity. 

Gillis v. Jenkins Petroleum Process Co. (9th Cir. 1936), 84 

F.2d 74, 79. 

We also note that Meridian failed to assert at trial 

that the corporate form had been used for some subterfuge. 

In the entire trial, the only "wrongful" conduct asserted by 

Meridian was that Minerals fashioned the Costain transaction 

as a merger in order to avoid the preemptive right clause. 

As the District Court did not find this conduct wrongful, 

Meridian failed to prove the second of the necessary elements 

justifying piercing the veil. 

Meridian's second assertion is that the District Court 

failed to construe properly the qualifying phrase "expressly 

including a transfer of an interest effected by a transfer of 

stock" in the venture agreement. Meridian asserts that this 

phrase means only one thing: that no interest in the venture 

agreement could be transferred to a third party, in avoidance 

of the preemptive right, by conveying to a third party the 

stock of the corporation which owned the interest. Meridian 

argued, using par01 evidence, that the language was intended 

to apply the preemptive right provision to transfers by 

parent corporations. They argue that this intent should have 
been obvious given the circumstance where both of the 

signatory corporations were wholly-owned subsidiaries of 

corporate parents. They assert that the model form's 

preemptive right provided little security because it was 

easily circumvented by passing the transfer of one 

corporation up the line. Their solution for this problem was 

to add a qualifying phrase which did not specify - who was 

bound, but what was covered: any transfer, even one 

accomplished through a transfer of stock. 

Minerals and Costain respond, and we agree, that 

Meridian's argument attempts to create ambiguity where none 

exists. The unambiguous language of Section 15.3 requires a 

transfer by a "participant" to trigger the preemptive rights 

provision. Further, the unambiguous language of other 

sections of the agreement, Sections 1.17, 1.18 and 6.1 

provide that the only "participants" to the agreement were 

Ventures and Meridian. Meridian's witnesses admitted that 

Section 15.3 explicitly applied only to transfers of stock by 

participants. Thus, the agreement cannot be construed as 

expressing a contractual intent to expand the preemptive 

right to transfers by Venture's corporate parent. 

As its third issue, Meridian asserts that the only 

reason Minerals fashioned the Costain transaction as a merger 

was to avoid the preemptive rights clause. Hence, it argues, 

the merger was a sham and should be disregarded in equity. 

Our conclusion is that Minerals was not a participant to the 

venture agreement and our holding is that the findings of 

sufficient corporate separateness are not clearly erroneous. 

We uphold the District Court's refusal to pierce the 

corporate veil which negates the need for this Court to 

address the issues relating to the merger. 

The venture agreement designated Ventures as operator, 

the entity responsible for the venture. Section 8.4 of the 
agreement recites circumstances under which the operator is 

deemed to have resigned. Section 8.4 (h) provides that a 

participant resigns when "the participant acting as an 

operator transfers its interests in the venture and in the 

properties to a third party that is not an affiliate." 

Meridian contends that the Minerals-Costain merger was a 

transfer under Section 8.4 and that the District Court should 

have found that Ventures was deemed to have resigned as 

operator. 

Meridian's argument fails for the simple reason that 

neither Costain nor Minerals were participants acting as 

operator. Ventures was the only participant acting as an 

operator and it did not transfer its interests in the venture 

or in the properties. Hence, the plain language of the 

deemed offer provision was inapplicable under the 

circumstances. 

Affirmed. f-7 

We Concur: R 

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