No. 90-437 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

PORTABLE EMBRYONICS, INC., 

Plaintiff and Respondent, 

VS. 

J. P. GENETICS, INC. , ALTON JAMES 

and GARY A. PORTER, 

Defendants and Appellants. 

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 Appellant: 

John C. Hoyt, argued; Hoyt & Blewett, Great Falls, 

Montana 

For Respondent: 

James H. Goetz, argued; Goetz, Madden & Dunn, 

Bozeman, Montana 

Submitted: March 7, 1991 

Decided: May 3, 1991 

Filed: 
Justice John Conway Harrison delivered the Opinion of the Court. 

This is an appeal from the District Court of the Eighteenth 

Judicial District. Plaintiff brought this action alleging breach 

of employment contracts and related tortious conduct by defendants. 

Following a bench trial the District Court entered judgment and 

awarded damages in favor of the plaintiff. From this judgment and 

order, defendants appeal. We reverse. 

The following issues are presented by appellants for review: 

1. Did the District Court err in denying defendants judgment 

as a matter of law based on illegality of the employment contracts? 

2. Did the District Court err in denying defendants judgment 

as a matter of law based on provisions within the employment 

contracts that unlawfully restrain trade? 

3. Did the District Court err in concluding that a factual 

basis existed for finding against defendants? 

4. Did the District Court err by awarding damages contrary 

to the facts of this case? 

At the time of the alleged breach of contract, plaintiff 

Portable Embryonics, Inc. (Portable) was in the business of 

performing nonsurgical bovine embryo transfers in Montana and other 

states. Dr. Albert C. Mills, 111, (Mills) and his wife are the 

sole shareholders of Portable. Defendants Gary Porter (Porter) 

and Alton James (James) were employed by Portable from 1977 until 

1988. Porter and James terminated their employment with Portable 

in February of 1988 and, within a few days, formed defendant J.P. 

Genetics, Inc., a Montana corporation. J.P. Genetics, Inc. also 

2 
$ 

performs nonsurgical bovine embryo transfers. 

The first step of the nonsurgical embryo transfer begins with 

a superior cow, the donor, which is selected by the rancher. The 

cow is given a fertility drug which induces the ovulation of 

multiple eggs. These eggs are then fertilized either by artificial 

or natural insemination. Approximately one week later the 

fertilized eggs are removed from the donor cow by a process called 

I1flushing.l1 Next, the technicians identify, with the aid of a 

microscope, the fertilized eggs as embryos, and then either implant 

the embryos into recipient cows, which serve as surrogate mothers, 

or freeze them for later use. The removal, identification, and 

implantation or freezing of the embryos are performed by embryo 

transfer technicians such as Mills, Porter and James. 

In the spring of 1980, Portable prepared an employment 

contract which contained provisions for the protection of trade 

secrets and restrictions concerning employees who would depart the 

company. James signed the contract on April 17, 1980 and Porter 

signed on May 6, 1980. 

Due to alleged problems with the business, Porter terminated 

his employment with Portable on February 20, 1988. The next day, 

James informed Dr. Mills that he was also quitting. Shortly 

thereafter, Mills discovered that Porter and James had already 

formed their new embryo transfer business--J.P. Genetics, Inc. As 

a result, Mills travelled to Montana to discuss business with the 

Montana ranchers who had been regular clients of Portable. During 

his travels, he learned that Porter and James sent out a letter on 

February 18, 1988 soliciting business from Portable Embryonics 
clients: "It is with enthusiasm that I announce my partnership with 

Sonny James in a new company: J.P. Genetics, Inc.I1 He also found 

that all the Montana clients intended to stay with Porter. 

Portable filed suit in March, 1989, alleging breach of 

contract, breach of loyalty, fraud and bad faith. On October 19, 

1989, defendants filed a motion for summary judgment, arguing that 

the underlying contract was for an illegal purpose and constituted 

an unlawful restraint on trade. The District Court denied that 

motion by order dated February 28, 1990. Following a bench trial 

in March, 1990, the District Court concluded that actual and 

constructive fraud, breach of the duty of loyalty and the covenant 

of good faith and fair dealing existed in Porter's and James' 

actions to steal Portable's business from the Montana clients. 

The District Court was particularly interested in evidence 

which tended to show that the plans of Porter and James to compete 

with Mills were formed and furthered while Porter and James were 

still employed by Portable. The District Court, in its findings 

of fact, listed various sales slips and invoices, which 

demonstrated that Porter and James, while still employed by 

Portable, planned for and implemented purchases for their new 

business. The District Court found that Porter and James set up 

their business in Montana in advance of informing Portable that 

they were leaving and that Porter and James harmed Portable by 

concealing these plans. Based on findings of fact and conclusions 

of law generally favorable to Portable, the District Court entered 

judgment against defendants in the amount of $75,000. 
I 

The first issue presented for review is whether the District 

Court erred in denying defendants judgment as a matter of law based 

on illegality of the employment contract. 

Defendants contend that the purported employment agreements 

were contracts for an illegal purpose in Montana and are therefore 

unenforceable--the illegal purpose being the practice of veterinary 

medicine without a license. Based on our reasoning set out below, 

we hold that the contract is void for an illegal purpose. 

Section 28-2-601, MCA defines the object of a contract as "the 

thing which it is agreed on the part of the party receiving the 

consideration to do or not to do.'' Based on this statute and the 

evidence in the record, we find that the underlying and primary 

object of the subject employment contract was to perform embryo 

transfers on livestock in Montana. ~ccording to 5 28-2-701, MCA, 

the object of the subject employment contract is not lawful if it 

is "contrary to an express provision of law.'' Prior to 1989, 

during the period of time that Portable employed Porter and James 

as its embryo transfer technicians, 5 37-18-102 (1) (f) , MCA, 

characterized ''ova or embryo transfer1' on animals as the practice 

of veterinary medicine. Section 37-18-501, MCA, assigns a 

misdemeanor violation to any person who practices veterinary 

medicine without a license. We find that none of the parties were 

trained or licensed veterinarians during the time that Portable 

contracted with Porter and James to perform embryo transfers in 

Montana. Therefore, we conclude that the object of the contract 

was unlawful at the time the contract was entered into and 
performed. This conclusion becomes the minor premise of the 

episyllogism whose major premise is found in 5 28-2-603, MCA, which 

provides: "When contract wholly void. Where a contract has but a 

single object and such object is unlawful, whether in whole or in 

part, . . . the entire contract is void.I1 We therefore conclude, 

as a necessary result based on deductive reasoning, that the entire 

employment contract is resultingly void. 

It is clear that a party to an illegal contract cannot use the 

courts of this state to enforce the agreement. 

No principle of law is better settled than that a party 

to an illegal contract cannot come into a court of law 

and ask to have his illegal objects carried out, nor can 

he set up a case in which he must necessarily disclose 

an illegal purpose as the groundwork of his claim . . . . The law, in short, will not aid either party to an 

illegal agreement. It leaves the parties where it finds 

them. Therefore, neither a court of law nor a court of 

equity will aid the one in enforcing it, or give damages 

for a breach of it, or set it aside at the suit of the 

other, or, when the agreement has been executed in whole 

or in part by the payment of money or the transfer of 

other property, lend its aid to recover it back. 

Glass v. Basin & Bay State Mining Co. (1904), 31 Mont. 21, 33, 77 

P. 302, 305 (quoting 9 D. Lawson, Cyclopedia of Law and Procedure 

546). Accord McManus v. Fulton (1929), 85 Mont. 170, 182-83, 278 

P. 126, 131; McPartlin v. Fransen (1982), 199 Mont. 143, 146-47, 

648 P.2d 729, 730-31; MPH Company v. Imagineering, Inc. (1990), 

243 Mont. 342, 349, 792 P.2d 1081, 1086. 

In the alternative, Portable asserts that even if the 

employment contracts are unenforceable based on illegality, the 

District Courtls findings and conclusions were proper since they 

were based on tort and, therefore, do not depend at all on the 

enforceability vel non of the employment contract. Portable argues 
that its claim is based upon the implied covenant of good faith and 

fair dealing and upon breach of fiduciary duties and is independent 

of the illegality issue of the written employment contracts. To 

the contrary, whether characterized as arising from the written 

contract or from the employment relationship, each and every 

allegation Portable has asserted in its claim against defendants 

is based upon an agreement, the object of which was illegal under 

Montana law. No matter how Portable wishes to portray its case, 

it is inarguable that Portable's entire suit is grounded in 

defendants1 alleged breach of an employment contract; a contract 

which was void based on its illegal purpose. 

We hold that the object of the contract in question, according 

to the laws of this state as they existed during pertinent times, 

was for an illegal purpose and that the contract is therefore void. 

Neither party may now come into our courts and seek damages for 

breach of that agreement. We need not consider the other issues 

presented since our holding on this issue is dispositive of this 

appeal. 

The judgment of the District Court is reversed. 

We concur: 

Chief Justice d 
Justices '4' 
Justice Terry N. Trieweiler specially concurring. 

I concur with the opinion of the majority that the employment 

agreements which the plaintiff sought to enforce were for an 

illegal purpose and therefore, unenforceable. I also concur in the 

majorityls result which denied recovery to the plaintiff, pursuant 

to its theories grounded in tort. However, I would deny recovery 

in tort because there is an absence of proof of damages flowing 

from the facts which plaintiff alleges were tortious. 

Plaintiff alleged that it was damaged when it lost clients due 

to the departure of the defendants. However, in its Finding 

No. 63, the District Court stated: 

Plaintiff relied solely on Mills1 testimony regarding 

damages. Plaintiff presented no testimony from any 

former client regarding whether they would have continued 

to use plaintiff's services if Porter and James 

terminated their employment with plaintiff but did not 

continue to do embryo transfer work in Montana. 

Defendants called two former Portable Embryonics 

customers to testify at trial. Both testified that they 

did not like the treatment by Mills of their cows, and 

would not have continued to use Mills or plaintiff for 

their embryo transfer work after Porter and James 

terminated employment with plaintiff. . . . 

In its Finding No. 64, the District Court also pointed out 

that of the ten ranches to whom plaintiff provided embryo transfer 

work prior to the departure of the defendants, all have either 

discontinued that kind of work, gone out of business, hired inhouse technicians, or substantially reduced their requirements. 

Plaintiff also sought recovery for miscellaneous items of 

damage, including the training of new people to replace the 

defendants. However, in Finding No. 65, the District Court found 
that the plaintiff failed to prove the dollar amount associated 

with these miscellaneous expenses. 

On appeal, plaintiff contended that he was damaged by the 

defendantst departure without notice because it left him unprepared 

to service clients in the southern part of the country later on in 

the spring of 1988. However, defendants testified that they would 

have continued to assist the plaintiff, had he not insisted that 

they terminate employment immediately, and the District Court 

found, in Finding No. 41, that plaintiff did not ask for assistance 

from the defendants after they left his employment. 

After all of these findings, the District Court concluded, as 

a matter of law, that plaintiff was entitled to damages in the 

amount of $75,000 without indicating any objective basis for those 

damages. 

I would agree that in commercial transactions of this type 

the finder of fact should be given wide latitude in arriving at an 

award of damages. However, there has to be some objective basis 

for the damage award, and in this case it was totally unsupported 

by any evidence. 

For these reasons, I would reverse the judgment of the 

District Court and deny recovery, pursuant to the plaintiff's 

claims grounded in tort, regardless of the relationship of those 

claims to an illegal contract. I 
Justice William E. Hunt, Sr.: 

I concur in the special concurring opinion of Justice 

Trieweiler. 

Justice