No 

No. 97-415

IN THE SUPREME COURT OF THE STATE OF MONTANA

1998 MT 260N

BLUE DANE SIMMENTAL, INC., et al.,

Plaintiffs, Counterdefendants,

Appellants, and Cross-Respondents,

v.

AMERICAN SIMMENTAL ASSOCIATION,

Defendant, Counterplaintiff, 

Respondent, and Cross-Appellant.

APPEAL FROM: District Court of the Eighteenth Judicial District,

In and for the County of Gallatin,

The Honorable Thomas A. Olson, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

David H. Hahn, Hahn Law Office; Lincoln, Nebraska

Karl Knuchel, Attorney at Law; Livingston, Montana

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For Respondent:

James H. Goetz and Robert K. Baldwin; Goetz, Madden & Dunn, P.C.;

Bozeman, Montana

V. Gene Summerlin and Krista Kester; Ogborn & Summerlin, P.C.;

Lincoln, Nebraska

Submitted on Briefs: July 16, 1998

Decided: November 5, 1998

Filed:

__________________________________________

Clerk

Justice Jim Regnier delivered the opinion of the Court.

¶1. Pursuant to Section I, Paragraph 3(c), Montana Supreme 

Court 1996 Internal Operating Rules, the following decision 

shall not be cited as precedent but shall be filed as a 

public document with the Clerk of the Supreme Court and 

shall be reported by case title, Supreme Court cause number, 

and result to the State Reporter Publishing Company and to 

West Group in the quarterly table of noncitable cases issued 

by this Court.

¶2. Appellants ("the Members") brought a dissolution action 

against the respondent corporation, the American Simmental 

Association ("ASA"), in the Eighteenth Judicial District, 

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Gallatin County, pursuant to the Montana Nonprofit 

Corporation Act. They alleged that the ASA fraudulently 

registered certain cattle as full-blood Simmentals, and 

requested that the ASA corporation be dissolved or be 

subject to any reasonable alternative under § 35-2-728, MCA. 

The District Court found in favor of the ASA, and the 

Members appeal. Upon our review, we uphold the District 

Court's decision, but remand the ASA's argument for attorney 

fees for the District Court's consideration.

¶3. This Court finds the following issues dispositive on 

appeal:

¶4. 1. Did the District Court properly find that the ASA was 

not involved in illegal, oppressive, or fraudulent conduct 

under § 35-2-728(1)(b)(ii), MCA?

¶5. 2. Did the District Court provide the Members a fair 

trial? 

¶6. 3. Should either party be awarded costs and attorney 

fees?

FACTUAL BACKGROUND

¶7. The American Simmental Association is a nonprofit 

corporation with its principal place of business in Bozeman, 

Montana. The primary purpose of the ASA, according to its 

bylaws, is to "maintain the standards for eligibility of 

simmental . . . cattle prior to entering them into the . . . 

herdbook registry." Pursuant to its purpose, the ASA 

maintains a formal registry and registration procedures. 

¶8. The ASA registry provides for a special classification 

of "full-blood" Simmental cattle, bred wholly from European 

Simmental stock. In 1988, the ASA's registration procedure 

required that an applicant show proof of a full-blood 

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animal's ancestry back to Simmental herdbooks in France, 

Germany, Austria, or Switzerland. In response to the 

membership's concerns that this did not guarantee an 

animal's genetic integrity because cattle registered in 

Simmental herdbooks may have been bred from other cattle to 

upgrade certain marketing traits, the ASA Board stated a 

policy that only animals whose genetic background completely 

traced back to Simmental cattle could receive the special 

full-blood classification. Animals with other cattle breeds 

in their ancestry could not be classified as full bloods. 

However, the ASA did not modify its registration procedure 

until 1994 to guarantee this. In 1992, the ASA implemented a 

policy to require that an applicant provide a copy of a 

registration certificate from a recognized Simmental 

registry that indicated that an animal's ancestry originated 

from one of the four specified countries. Ultimately, in 

1994, the ASA required that an applicant provide a 

certificate of registration going back five generations into 

the animal's ancestry, plus satisfactory evidence that the 

registered animal had no known ancestry of another cattle 

breed. The 1994 rule contained a grandfather clause which 

stated that "[a]ll existing Herdbook entries in the ASA 

Registry that currently are designated as Fullblood shall 

retain that status."

¶9. The ASA also required that registered animals used in 

embryo transfer programs be bloodtyped. This is a scientific 

process used to verify an animal's parental lineage which, 

thereby, allows breeders and cattle buyers to investigate 

the performance data of the animal's ancestry. In some 

cases, a registered animal and its parents were bloodtyped. 

However, when bloodtyping information on the animal's 

parents could not be obtained, the ASA staff routinely 

registered animals with bloodtyping information only on the 

animal itself. The staff used computer codes to identify 

what bloodtyping information was available for each animal. 

They used code Z-8 to denote when neither parent was 

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bloodtyped, just the registered animal.

¶10. Mr. Risinger, a Simmental cattle breeder, was an ASA 

member who, in 1991, served on the ASA's board and executive 

committee and in 1994, served as the ASA's president. In 

1991 and 1992, Mr. Risinger registered a total of nineteen 

cattle ("the Risinger animals") as full-blood Simmentals. 

Even though he did not own the cattle or even have 

possession of them, he held exclusive rights to their semen 

and embryos. The cattle were otherwise owned by Mr. Raby, 

who imported the cattle from Germany to England and kept the 

cattle in England. Hence, when Mr. Risinger registered the 

cattle with the ASA, he produced copies of registration 

certificates from German herdbooks. 

¶11. Two of the bulls that Mr. Risinger registered had the 

unique trait of being homozygous polled--that is, they had a 

favored market quality of being genetically hornless. The 

parties stipulate that a grandsire of these bulls had three 

percent Angus genetics, leaving the registered bulls with 

approximately 0.75 percent Angus genetics. The bulls were 

registered as full-blood Simmentals with the ASA, 

nonetheless. 

¶12. Twelve of the Risinger animals did not have parental 

bloodtyping before they were registered. Instead, the ASA 

staff obtained bloodtyping information only on the animals 

themselves and coded them Z-8.

¶13. The Members expressed concerns over the registration of 

these animals to the ASA. In response, the ASA scheduled a 

hearing to investigate the registration; however, the 

Members boycotted the hearing, so it was not held. The 

Members, thereafter, commenced litigation in the Eighteenth 

Judicial District, Gallatin County, in April 1994 and filed 

a formal compliant with the ASA Board. The ASA Board 

appointed two former trustees to investigate the complaint 

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and make recommendations to an executive committee. On 

April 24, 1995, the executive committee held a hearing 

involving all concerned parties, and decided that no action 

was warranted in the best interests of the ASA. The District 

Court issued its findings on January 3, 1997, concluding 

that the ASA made its decision in good faith and that it did 

not act illegally, oppressively, or fraudulently.

STANDARD OF REVIEW

¶14. The standard of review of a district court s findings 

of fact is whether they are clearly erroneous. See Daines v. 

Knight (1995), 269 Mont. 320, 324, 888 P.2d 904, 906 (citing 

Columbia Grain Int'l v. Cereck (1993), 258 Mont. 414, 417, 

852 P.2d 676, 678). To determine whether the findings are 

clearly erroneous, we apply a three-part test: (1) the Court 

will determine whether the findings are supported by 

substantial evidence; (2) if the findings are supported by 

substantial evidence, the Court will determine if the trial 

court has misapprehended the evidence; and (3) if the 

findings are supported by substantial evidence and that 

evidence has not been misapprehended, this Court may still 

conclude that "[a] finding is clearly erroneous when, 

although there is evidence to support it, a review of the 

record leaves the court with the 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 (citing United States v. United States 

Gypsum Co. (1948), 333 U.S. 364, 68 S. Ct. 525, 92 L. Ed. 

746); see also Daines, 269 Mont. at 325, 888 P.2d at 906.

¶15. The standard of review of a district court s 

conclusions of law is whether the court s interpretation of 

the law is correct. See Carbon County v. Union Reserve Coal 

Co., Inc. (1995), 271 Mont. 459, 469, 898 P.2d 680, 686 

(citing Steer, Inc. v. Department of Revenue (1990), 245 

Mont. 470, 474-75, 803 P.2d 601, 603-04). See also Kreger v. 

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Francis (1995), 271 Mont. 444, 447, 898 P.2d 672, 674. In 

this case, however, the Members do not raise the District 

Court's interpretation of the law as an issue. 

ISSUE 1

¶16. Did the District Court properly find that the ASA was 

not involved in illegal, oppressive, or fraudulent conduct 

under § 35-2-728(1)(b)(ii), MCA?

¶17. Pursuant to the Montana Nonprofit Corporation Act, § 35-

2-728, MCA, the Members ask us to dissolve the ASA 

corporation or, in the alternative, strictly enforce the 

ASA's written registration procedure and cause the Risinger 

animals to be removed from the ASA registry. However, we 

recognize the inherent limitations a court has in corporate 

matters. Under § 35-2-728(1)(b)(ii), MCA, a court can 

dissolve a corporation only if "the directors or those in 

control of the corporation have acted, are acting, or will 

act in a manner that is illegal, oppressive, or fraudulent." 

Section 35-2-728(2)(a), MCA, allows other judicial action, 

such as removing the Risinger animals from the ASA registry, 

as a reasonable alternative to a corporate dissolution.

¶18. The District Court correctly stated that it will not 

intervene in the internal affairs of the corporation and 

second-guess the judgment of corporate officials. Other 

state courts that have reviewed breed associations' registry 

decisions also have refrained from intervening in such 

decisions. See, e.g., Jackson v. American Yorkshire Club (N.

D. Iowa 1971), 340 F. Supp. 628 (holding such decisions rest 

with the board of directors so long as the decision is 

vested with the necessary legalities); McCreery Angus Farms 

v. American Angus Ass'n (S.D. Ill. 1974), 379 F. Supp. 1008, 

aff'd without op., (7th Cir. 1974), 506 F.2d 1404 (limiting 

its review to the association's procedure). We agree that 

the role of the courts is not to hold a breed association 

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strictly to its registration procedure, but only to assure 

that the association applies its procedure without illegal, 

oppressive, or fraudulent motives. If, for example, the 

association follows a common practice that is not consistent 

with its written procedure, we will conclude that its 

motives are, nonetheless, in accordance with the law. 

¶19. To determine the ASA's common practice and written 

procedure at the time it registered the Risinger animals, 

the District Court correctly looked to the 1988 procedure in 

regard to the animals registered in 1991, and the 1992 

procedure in regard to the remaining animals registered in 

1992. Also, the District Court correctly rejected the 

Members' contention that the grandfather clause in the more 

stringent 1994 procedure represented the ASA Board's 

intention that all animals previously registered as full 

bloods should have already met the genetic integrity 

requirement. To the contrary, the record establishes that 

the ASA used the 1994 grandfather clause to avoid the costs 

of investigating the genetic background of all previously 

registered animals and the complications of expunging 

animals from the full-blood registry. The ASA was well aware 

that its 1988 and 1992 procedures did not guarantee genetic 

integrity.

¶20. For this reason, we do not agree with the Members' 

argument that the two Risinger bulls should not have been 

registered as full bloods because they had Angus genetics. 

In our review, the Angus genetics are not controlling.

¶21. By the terms of the 1988 and 1992 procedures, the ASA 

should have required Mr. Risinger to show proof of his 

animals' ancestry back to Simmental herdbooks in France, 

Germany, Austria, or Switzerland and, for the animals registered in 1992, copies of 

registration certificates from a recognized Simmental registry indicating that the 

animals' ancestors originated from one of the four specified countries. The Members 

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contend that the German herdbook used for the Risinger animals was not a qualified 

herdbook and that the registration certificates were not adequate. The Members 

further argue that the District Court abused its discretion when, at trial, it refused to 

receive expert testimony from Richard Tetherow, a former ASA trustee and past 

president, who could identify a qualified herdbook. The District Court allowed the 

Members to make an offer of proof, then determined that the information sought 

from Mr. Tetherow was highly specialized and required intimate knowledge with the 

various German herdbooks, which he did not have. We have held that the 

determination of the qualification of an expert witness is a matter of discretion for 

the trial court, and that, absent a showing of abuse of discretion, we will not disturb 

the district court's decision. See In re Marriage of Lee (1997), 282 Mont. 410, 422, 

938 P.2d 650, 658. By the facts of the record, we conclude that the German herdbook 

and the registration certificates that the ASA used to register the Risinger animals 

were not inconsistent with the ASA's common practice in registering full-blood 

animals. Therefore, the ASA did not act illegally, oppressively, or fraudulently.

¶22. The Members draw our attention to an additional fact 

that Mr. Risinger signed the registration papers for the 

animals even though he was not their owner. There is ample 

evidence, however, that the ASA had a long-standing, common 

practice of allowing owners of semen or embryo rights of 

animals to register the animals.

¶23. Next, the Members focus on the issue of bloodtyping. 

The relevant ASA bloodtyping provision states:

All sires used in an embryo transfer program or whose semen is frozen for the first time 

for A.I. use and any donor dams placed in embryo transfer for the first time, along with 

their parents, must be bloodtyped at the owner's expense to confirm both sire and dam 

parentage. The results must be filed with the Association prior to the distribution of semen 

or the performing of any embryo transplant procedures. (ASA reserves the right to grant 

exceptions if the dam or sire is dead or is located in a foreign country).

The Members allege that the ASA fraudulently failed to enforce bloodtyping requirements 

on the Risinger animals and their parents when the animals were registered. The record 

does not support this allegation, however. The facts of the record strongly suggest that the 

ASA routinely registered animals with bloodtyping information only on the animals 

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themselves.

¶24. The Members also contend that the ASA staff did not 

have authority to waive the bloodtyping requirements when it 

registered the Risinger animals. The Members interpret the 

bloodtyping provision to mean that only the ASA's executive 

committee had such authority. We conclude that the record 

adequately shows that waivers were routinely granted by the 

staff, despite conflicting testimony. Where there is 

conflicting evidence, it is within the province of the trier 

of fact to weigh the evidence and determine the credibility 

of witnesses; we will not substitute our judgment for that 

of the trier of fact on such matters. See Garrison v. 

Averill (1997), 282 Mont. 508, 518-19, 938 P.2d 702, 708.

¶25. Finally, the Members advance a theory that Mr. Risinger 

was treated with preference because he was a corporate 

insider. They allege that only insiders, like Mr. Risinger, 

knew about the opportunity to receive bloodtyping waivers. 

They also allege that the ASA protected the Risinger 

animals' registration by offering misleading information 

about the animals to ASA members in exchange for Mr. 

Risinger's support of the 1994 grandfather clause and a 

salary increase for staff. This theory is unsubstantiated by 

the facts of the record.

¶26. In conclusion, we hold that the ASA acted in accordance 

with its common practices when it registered the Risinger 

animals. There is substantial evidence to support the 

District Court's findings that the ASA was not involved in 

illegal, oppressive, or fraudulent conduct. Furthermore, the 

District Court did not misapprehend the evidence or make a 

mistake. 

ISSUE 2

¶27. Did the District Court provide the Members a fair 

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trial? 

¶28. The Members argue that the District Court violated 

their constitutional rights because it did not afford them a 

fair trial. They make three allegations in this regard. 

First, they allege that the District Court prevented them 

from consulting with their attorneys. Second, they allege 

that the District Court inappropriately based a significant 

portion of its ruling on the findings of the ASA's executive 

committee. Third, they contend that the District Court judge 

was biased against them. We consider each of these 

allegations independently.

¶29. The Members argue that the District Court prevented 

them from consulting with their attorneys because the 

District Court excluded them temporarily from the courtroom 

when certain evidentiary documents were discussed and, 

thereafter, prevented them from reviewing the documents by 

putting the documents under seal. Finally, the District 

Court forbade the Members from discussing the documents with 

their attorneys by putting the contents of the documents 

under protective order. The documents at issue include 

certain meeting minutes from the ASA's executive committee 

that involve requests for Z-8 bloodtyping waivers, and a 

computer printout showing the names of approximately 2200 

animals that received such waivers. The District Court 

determined that these documents should be kept confidential 

to prevent potential harm to cattle owners who obtained Z-8 

waivers and who otherwise would have no chance to defend 

themselves or their business interests in the proceedings. 

Accordingly, when the documents were used in the courtroom, 

nonattorneys were instructed to leave the courtroom. Only in 

some instances were witnesses who were being questioned and 

ASA representatives allowed to remain. 

¶30. We have recognized that when the public's right to know 

collides with the right to protect certain private 

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information, a balancing of rights is necessary and a 

protective order may be fashioned to achieve this. See 

Montana Human Rights Div. v. City of Billings (1982), 199 

Mont. 434, 448-49, 649 P.2d 1283, 1291. We hold that the 

District Court appropriately achieved a balance of these 

interests by keeping confidential the names of cattle owners 

who obtained Z-8 waivers.

¶31. The Members further allege that the District Court 

violated its own protective order by specifically naming 

some of the animals registered with the Z-8 waiver in its 

findings of fact and conclusions of law. We do not agree. 

The record shows that the animals named by the District 

Court were already publicly known to have Z-8 waivers.

¶32. In their second allegation, the Members argue that the 

District Court inappropriately based a significant portion 

of its ruling on the findings of the ASA's executive 

committee. However, we hold that the Members fail to 

substantiate their claim. The District Court did not use the 

committee's findings or determinations when it made its own 

conclusions. The District Court judge stated that he was 

"not going to be bound by the Special Litigation Committee's 

finding" and that he would "make [his] own findings." We 

conclude that he did just that. 

¶33. In regard to the Members' third argument, that the 

District Court Judge was biased against them, we look to § 3-

1-805, MCA, for the procedure under which we can remove a 

district court judge for personal bias or prejudice. Section 

3-1-805, MCA, requires that counsel file an affidavit 

alleging facts showing the judge's personal bias or 

prejudice thirty days in advance of trial. See In re 

Marriage of Eklund (1989), 236 Mont. 77, 78, 768 P.2d 340, 

341; State v. Langford (1994), 267 Mont. 95, 104, 882 P.2d 

490, 495, cert. denied, (1995), 513 U.S. 1163, 115 S. Ct. 

1128, 130 L. Ed. 2d 1090. In the case before us, the Members 

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did not file an affidavit thirty days in advance. Instead, 

they suggest that they were not aware of the judge's 

possible bias until nearly four months after the District 

Court issued its findings of fact and conclusions of law. At 

that time, they filed the necessary motion and supporting 

affidavit. Regardless of the thirty-day requirement, we hold 

that the Members' motion falls short of alleging facts to 

support their argument that the judge was biased.

¶34. In the alternative, the Members suggest that we should 

apply the cumulative error doctrine, under which the 

cumulative effect of several errors could result in an 

unfair trial. However, we have previously stated that this 

Court applies the doctrine of cumulative error exclusively 

in criminal cases. See Baxter v. Archie Cochrane Motors, 

Inc. (1995), 271 Mont. 286, 289, 895 P.2d 631, 633. We 

conclude that the Members received a fair trial.

ISSUE 3

¶35. Should either party be awarded costs and attorney fees?

¶36. We do not agree with the Members' contention that they 

should be awarded attorney fees under § 35-2-1306(1), MCA. 

This statute requires a corporation to pay the complainants' 

attorney fees, even if the complainants are not wholly 

successful in their claims, if the proceedings result in a 

substantial benefit to the corporation. Not only does it 

appear that the Members failed to plead this before the 

District Court, we hold that the Members' actions have not 

resulted in a substantial benefit to the ASA. The parties 

recognize two benefits: one, the ASA obtained more thorough 

bloodtyping information on the Risinger animals; and two, 

the ASA executive committee, instead of the ASA staff, now 

decides all Z-8 waiver requests. These benefits are not 

substantial.

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¶37. The District Court awarded the ASA costs as the 

prevailing party pursuant to § 25-10-103, MCA. However, it 

denied the ASA its attorney fees pursuant to § 35-1-547, 

MCA, holding that this action was not commenced for an 

improper purpose. More properly, the District Court should 

not have awarded the ASA attorney fees pursuant to § 35-2-

1306(2), MCA, which is the applicable provision pertaining 

to nonprofit corporations.

¶38. The ASA also urged the District Court to award it 

attorney fees under the terms of its own bylaws. The ASA's 

bylaws state:

Although the right or privilege of a member or non-member to seek judicial review of 

previous Association decisions or actions is recognized, that member . . . does thereby 

agree, if unsuccessful in the attempt to overturn Association decisions, actions, rules or By 

Laws, to reimburse the Association for its reasonable attorney fees, court costs and other 

expenses in defense of such suit. 

Under the American Rule, a party in a civil action is generally not entitled to fees absent a 

specific contractual or statutory provision. See Montana Health Care Ass'n v. Board of 

Directors of State Comp. Mut. Ins. Fund (1993), 256 Mont. 146, 157, 845 P.2d 113, 120. 

This Court has recognized that a corporate bylaw serves as a contractual provision. See 

Appeal of Two Crow Ranch, Inc. (1972), 159 Mont. 16, 23, 494 P.2d 915, 919.

¶39. On several occasions, including the pretrial order, the 

ASA suggested that any arguments regarding costs and fees 

should be addressed separately after the dissolution 

proceedings. Although the District Court adequately 

addressed other arguments of costs and fees in its findings 

of fact and conclusions of law in the dissolution 

proceedings, it did not address the ASA's argument for 

attorney fees under the terms of its own bylaws. For that 

reason, we remand to the District Court for consideration of 

the ASA's argument for attorney fees under the bylaw 

provision. Should the District Court determine that the ASA 

is entitled to attorney fees under its bylaws, then a 

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hearing should be conducted to determine the amount.

/S/ JIM REGNIER 

We Concur:

/S/ J. A. TURNAGE

/S/ KARLA M. GRAY

/S/ WILLIAM E. HUNT, SR.

/S/ W. WILLIAM LEAPHART

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