NO. 91-071 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1991 

RICHLAND NATIONAL BANK & TRUST, a National Banking Corporation, 

Plaintiff and Respondent, 

ROBERT A. SWENSON and JUDY A. SWENSON, husband and wife, and B & 

J DRILLING, INC., a Corporation, 

Defendants and Appellants, 

RICHLAND NATIONAL BANK & TRUST, a National Banking Corporation, 

Plaintiff and Respondent, 

-v5- 

B & J DRILLING, a Corporation, also known as B & J Drilling, INC., 

Defendant and Appellant. 

APPEAL FROM: District Court of the Seventh Judicial District, 

In and for the County of Richland, 

The Honorable Dale Cox, Judge presiding. 

COUNSEL OF RECORD: 

For Appellant: 

L. Randall Bishop; Jarussi & Bishop, Billings, 

Montana. 

For Respondent: 

Thomas M. Monaghan; Lucas & Monaghan, Miles City, 

AUG 8 - 1997 Submitted on briefs: May 31, 1991 

d 

Clerk 
Justice R. C. McDonough delivered the Opinion of the Court. 

The defendants Robert A. Swenson, Judy A. Swenson, and B & J 

Drilling, Inc., (B & J) appeal the orders of the Montana Seventh 

Judicial District Court, Richland County, granting summary judgment 

to the plaintiff Richland National Bank and Trust (the Bank) on 

the defendants' counterclaims for breach of fiduciary duty, 

negligence, fraud, tortious interference with business relations 

and bad faith against the Bank in its action to collect on certain 

promissory notes executed by the Swensons to the Bank. We affirm. 

The defendants raise several issues on appeal, which we 

restate as follows: 

(1) Did the District Court err in concluding that there was 

insufficient evidence to raise a genuine issue of material fact 

regarding the defendants' counterclaims of breach of fiduciary 

duty, negligence, fraud, tortious interference with business 

relations and bad faith? 

(2) Are the default and default judgment entered against B 

& J void for lack of personal jurisdiction? 

(3) Did the District Court err in holding that the Swensons 

did not have standing to present claims for wrongs to themselves 

because such claims are the claims of B & J, a corporation of which 

the Swensons are the sole shareholders? 

(4) Did the District Court err in concluding that the 

plaintiff's counterclaims were compulsory and thus barred by Rule 

13(a), M.R.Civ.P.? 

(5) Did the District Court err in concluding that the 

2 
Swensons were not the real party in interest for prosecuting any 

claim against the Bank because under 11 U. S . C. 541 (a) (1) the 

alleged counterclaims became the property of the Swensons 

bankruptcy estate? 

In March of 1975, the Swensons went into the seismic drilling 

business. They incorporated their business under the name of B & 

J Drilling in March of 1979 and are the sole stockholders. The 

Swensons began doing business with the Bank in the fall of 1977 

when they purchased a home in Sidney with financing arranged 

through the Bank. Early in 1978 the Swensons began borrowing money 

from the Bank for various business purposes. These were short term 

loans and were regularly paid in full. 

On December 29, 1980, Mr. Swenson borrowed $60,000 from the 

Bank evidenced by a note for one year, to purchase an auger drill 

and truck. The drill was not transferred to B & 3; it remained a 

personal asset of the Swensons. On December 29, 1981, the note was 

renewed in the amount of $54,600 for another year. On February 

14, 1983, the note was renewed in the amount of $64,650.07, with 

a final maturity date of June 30, 1984. On August 6, 1984 the 

promissory note was renewed in the amount of $65,545.43, with a 

final maturity date of September 28, 1987. The Swensons' last 

renewal promissory note number 33-4946 provided for monthly 

payments of $2,338.65 beginning on October 28, 1984, and was signed 

by both the Swensons. B & J made seventeen monthly payments on 

this note beginning on November 6, 1984 and continuing through 

March 10, 1986. 

In May of 1985, the Swensons borrowed $7,091.87 to purchase 
a 1981 Ford truck. They executed to the Bank promissory note 

number 70-7686 in that amount and gave the Bank a security interest 

in the truck as collateral. B bc J Drilling made nine monthly 

payments on this note beginning on July 8, 1985 and continuing 

through March 10, 1986. 

On November 15, 1982, B & 5 began borrowing from the Bank for 

operating expenses. All of the notes were short term notes. 

In November of 1985, B & J borrowed $63,632.49 from the Bank 

and executed and delivered its promissory note number 33-9670. 

This note represented the renewal of two prior promissory notes 

which totaled $43,632.49 and an advance of $20,000. The note was 

due November 12, 1986, and it was secured under a security 

agreement of the same date by accounts receivable, equipment, 

machinery and tools belonging to B & J. The Bank also requested 

B & J to sign a guaranty for the debts of the Swensons, including 

note number 33-4946, and to sign a security agreement securing 

payment of such debts. The security agreement gave the Bank a 

security interest in various types of collateral, including its 

accounts receivable from Reliable Exploration, Inc. (Reliable). 

Reliable was B & J's only customer. B & J had no other source of 

income, 

In November of 1985, B & J received $23,452.50 from Reliable 

in payment of its August invoice and applied the full amount to 

promissory note number 33-9670, the operating note. On December 

5, 1985, B & J received $21,900 from ~eliable for its September 

invoice. 3 & J applied only $1,900 to the operating promissory 
note and deposited the remaining $20,000 in its own checking 

account. That day the Bank wrote to B & J and informed them that 

In the past we have advanced up to 100% of the current 

month's invoices for operating. All future borrowings 

against accounts receivable will be limited to a maximum 

of 75% of the current month's invoices. 

On December 20, 1985, B & J requested and received an 

operating loan of $20,000. This loan raised the principal of note 

33-9670 to $58,744.60. 

In January of 1986, B & J received $37,145 from Reliable for 

its October invoice; it applied the full amount to note 33-9670. 

Later in January, B & J received $19,013.62 from Reliable for its 

November invoice. B & J applied $12,000 to the note and used the 

remainder of the check from Reliable for a transmission 

replacement. 

In February of 1986, B & J requested and received an operating 

loan from the Bank of $25,000. This raised the principal of note 

33-9670 to $35,180.71. 

On March 7, 1986, B & J received $32,670 from Reliable and 

applied it to the operating note. It then requested and received 

an advance of $20,000 and deposited it into its checking account. 

The principal of note 33-9670 then totaled $23,006.06. 

On April 23, 1986, B & J requested a loan of $8,400. The Bank 

refused the request. Mr. Swenson then contacted Reliable and 

requested a direct payment of money in order to keep operating. 

Reliable sent a check for $12,652.50. B & J deposited this check 

directly into its checking account and never informed the Bank of 

this payment. Mr. Swenson testified that he "slid this one by them 

5 
without them knowing about it right away." B & J made no further 

loan requests of the Bank. 

On August 14, 1986, Mrs. Swenson brought a check to the Bank 

in the amount of $4,404. In her deposition she explained her 

actions: 

I owed the bank money, which I owed other people money, 

too; but in my mind I hated to run to the bank and say, 

"I want all of that money. You guys aren't getting any 

of this," like they did to me. 

So I think I probably was fair enough to say, 

"Garth, would you please just give me half of it. You 

can have half of it. Because I do know I owe you money. 

Because I've always paid you your money, and I do 

probably owe you some." 

The Bank followed Mrs. Swenson's request and applied 

approximately half of the check to the Swensons' debt and deposited 

the remainder in B & J's checking account. Shortly thereafter, the 

Swensons moved to California leaving behind the auger drill 

personally owned by them and all the equipment owned by B & J. 

Before leaving Sidney, Mr. Swenson removed the conventional drill 

rig belonging to his corporation from the truck upon which it was 

mounted and substituted it with an inoperative one. He stored the 

conventional rig on his brother-in-law's place near Richland, 

Montana. When the Bank inquired about the rig, Mr. Swenson would 

not answer the inquiries. From January until March of 1987 the 

Bank sold the collateral belonging to the Swensons and B & J. 

The Bank filed suit (Civil No. 15,694) on April 3, 1987 to 

recover the money owed by the Swensons on notes number 33-4946 and 

70-7686 and by B & J on note 33-9670. The Swensons filed a 

bankruptcy petition on May 7, 1987 protecting them from any 
judgment in that suit. In the bankruptcy, the Swensons did not 

list any contingent claims against the Bank. On September 18, 

1987, the United States Bankruptcy Court entered its discharge of 

the Swensons. 

B & J failed to respond to the summons and complaint and a 

default judgment was entered against it on June 15, 1987. The Bank 

purchased the account receivable owed B & J by Reliable at a 

subsequent sheriff's sale. On December 16, 1988, B & J moved to 

set aside its default and the judgment entered against it. On 

December 19, 1988, the Swensons filed their separate answer and 

counterclaim in Civil No. 15,694. On February 2, 1989, the 

District Court entered its order setting aside the default 

judgment. On February 10, 1989, B & J filed its separate answer 

and counterclaim. 

On November 2, 1987, the Bank filed a second suit (Civil No. 

15,915) against B & J seeking to collect the unpaid principal and 

interest on promissory note 33-4946 and to foreclose the 

corresponding security agreement. B & J answered and counterclaimed against the Bank. 

On April 17, 1989, the parties stipulated to consolidate the 

suits. The parties conducted extensive discovery and submitted 

their respective motions for summary judgment. The court granted 

summary judgment to the Bank on May 1, 1990, concluding that (1) 

there were no facts to support the counterclaims of B & J and the 

Swensons against the Bank: (2) the default judgment against B & J 

was erroneously set aside, thus the counterclaim of B & J was a 
compulsory counterclaim in the first suit and failure to assert it 

precluded assertion of it in the second suit; (3) the counterclaims 

of the Swensons failed to state a claim because B & J's corporate 

right of action cannot be asserted by its stockholders; and (4) the 

counterclaims arose out of events taking place before the filing 

of bankruptcy and thus became the property of the bankruptcy 

estate, thereby precluding the Swensons from personally maintaining 

the counterclaims. On February 2, 1990, the defendants filed a 

motion to amend their counterclaims. Pursuant to the District 

Court's order of May 7, 1990, the defendants amended and 

consolidated their counterclaims and the Bank again moved for 

summary judgment. The court granted the Bank's motion, holding 

that the amended counterclaims only stated one additional count not 

considered in its first order, tortious interference with business 

relations and that there were no facts to support such claim. The 

Swensons and B & J now appeal raising the aforementioned issues. 

STANDARD OF REVIEW 

In order for summary judgment to issue, the movant must 

demonstrate that there is no genuine issue as to all facts deemed 

material in light of the substantive principles entitling the 

movant to judgment as a matter of law. Rule 56(c), M.R.Civ.P. ; 

Frigon v. Morrison-Maierle, Inc. (1988), 233 Mont. 113, 117, 760 

P.2d 57, 60; Cerek v. Albertson's, Inc. (1981), 195 Mont. 409, 411, 

637 P.2d 509, 511. If the movant meets this burden, the burden 

then shifts to the non-moving party to demonstrate a genuine issue 
of material fact. Friaon, 760 P.2d at 60. "Mere denial or 

speculation will not suffice, the non-moving party must show facts 

sufficient to raise a genuine issue." Friqon, 760 P.2d at 60; 

Gamble Robinson Co. v. Carousel Properties (1984), 212 Mont. 305, 

312, 688 P.2d 283, 287. As will be discussed below, B & J and the 

Swensons have failed to demonstrate evidence sufficient to raise 

a genuine issue of material fact in light of the substantive 

principles of law. 

I. 

Did the District Court err in concluding that there are no 

facts supporting the counterclaims of B & J Drilling or the 

Swensons ? 

The defendants counterclaimed against the Bank alleging 

negligence, breach of fiduciary duty, fraud, tortious interference 

with business relations and bad faith. The District Court 

concluded that there were no facts to support these claims and 

granted summary judgment to the Bank. We agree with the District 

Court's conclusion. 

It is well settled in Montana that "[tlhe relationship between 

a bank and its customer is generally described as that of debtor 

and creditor . . . and as such does not give rise to fiduciary 

responsibilities." Lachenmaier v. First Bank Systems, Inc. (Mont. 

1990), 803 P.2d 614, 618, 47 St.Rep. 2244, 2246; Deist v. Wacholz 

(1984), 208 Mont. 207, 216, 678 P.2d 188, 193; Simmons v. Jenkins 

(1988), 230 Mont. 429, 433, 750 P.2d 1067, 1070. There is a 

limited exception to this general rule upon proof of "special 
circumstances," as, for example, where a bank is "thrust beyond the 

role of a simple creditor into the role of an advi~or.'~ 

Lachenmaier, 803 P.2d at 618, Deist, 678 P.2d at 193. The security 

agreements entered into between the Bank and B & J and the Bank and 

the Swensons were entered into as part of the debtor/creditor 

relationship. The Bank merely exercised rights it had acquired by 

security agreement and law when it foreclosed on the collateral. 

There is no evidence that the Bank asserted any influence in the 

defendantst business. Even assuming that the Bank owed a fiduciary 

duty, there could be no breach of such duty when the Bank acted for 

legitimate business reasons in accordance with the security 

agreements. Lachenmaier, 803 P.2d at 619; see also Tresch v. 

Norwest Bank of Lewistown (1989), 238 Mont. 511, 778 P.2d 874. 

The Swensons also argue that the Bank was negligent in 

structuring the $60,000 loan for purchase of the auger drill in 

December of 1980. However, the Swensons cite no authority to 

support the proposition that a negligence action may be based upon 

a repayment term of a lawful contract bargained between two 

parties. Absent the existence of a fiduciary duty, the law does 

not support such a claim. 

Mrs. Swenson also contends that a fraud was committed upon 

her, and as a result upon B & J, when she signed a security 

agreement in blank with the Bank. She alleges that the Bank's 

officer Lied to her about what terms would be placed in the 

security agreement. The Bank admits that the agreement was signed 

in blank and then completed by the Bank and mailed to B & J. It 
denies that any fraud or misrepresentation occurred regarding the 

terms of the agreement. The record indicates that Mrs. Swenson and 

B & J had the security agreement in their possession in December 

of 1985, thus she had the means to discover the alleged fraud at 

that time. The counterclaim of the Swensons was not filed until 

December 19, 1988. Thus, any action for fraud is barred by the two 

year statute of limitations. Mobley v. Hall (1983) , 202 Mont. 227, 

232-3, 657 P.2d 604, 606-7. 

The defendants' amended counterclaim also alleges that the 

Bank tortiously interfered with the Swensons' and B & J's existing 

and prospective business relationship with Reliable. Defendants 

contend that this interference occurred when the Bank notified 

Reliable that it had a specific assignment of accounts receivable 

from B & J and requested that Reliable issue future payments and 

drafts with both the Bank and 3 & J named as payee. The Bank 

notified Reliable of this prior to notifying B & J that it was 

exercising this assignment under the security agreement. 

The defendantst contention is without merit. In order to 

establish a prima facie case of tortious interference with business 

relations, the pleader must show that the acts (1) were intentional 

and wil3fuZ; (2) were calculated to cause damage to the pleader in 

his or her business; (3) were done with the unlawful purpose of 

causing damage or loss, without right or justifiable cause on the 

part of the actor; and (4) that actual damages and loss resulted. 

Bolz v. Meyers (19821, 200 Mont. 286, 295, 651 P.2d 606, 611. 

Thus, in order to establish a cause of action, it must be shown 
that the actor intentionally committed a wrongful act without 

justification or excuse. Lythgoe v. First Security Bank of Helena 

(1986), 222 Mont. 163, 165, 720 P.2d 1184, 1185. Here, the Bank 

was merely exercising its rights to notify account debtors under 

the security agreement: 

Notwithstanding Secured Party's rights under Section 4 

with respect to any and all . . . accounts. . . Secured 

Partv mav at anv time (both before and after the 

occurrence of an Event of Default) notifv - any - account 

debtor . . . that such . . . account . . . has been 

assiclned or transferred to Secured Party for securitv 

and shall be paid directlv to Secured Partv. If Secured 

Party so requests at any time, Debtor will so notify such 

account debtors and other obligors in writing and will 

indicate on all invoices to such account debtors or other 

obligors that the amount due is payable directly to 

Secured Party. [Emphasis added.] 

The language of the security agreement did not require the Bank to 

first notify B & J in advance of any notice to Reliable. The 

District Court did not err in concluding that there were no facts 

to support the defendants' claim of tortious interference with 

business relations. 

The defendants also argue that the trial court improperly 

denied their motion for leave to amend their counterclaims to state 

a cause of action in contract for breach of the implied covenant 

of good faith and fair dealing. The defendants point out that the 

trial court essentially concluded that the amendment would be 

futile and denied the motion, in effect converting the motion into 

one for summary judgment. 

This Court recently defined the scope of the implied covenant 

of good faith and fair dealing in Story v. City of Bozeman (1990), 

242 Mont. 436, 791 P.2d 767. We held that the implied covenant 

12 
exists in every contractual relationship. A breach of the covenant 

is a breach of the contract. The standard of compliance is 

"honesty in fact and the observance of reasonable commercial 

standards of fair dealing in the trade." Section 28-1-211, MCA; 

Storv, 791 P.2d at 775. We further held that 

[elach party to a contract has a justified expectation 

that the other will act in a reasonable manner in its 

performance or efficient breach. When one party uses 

discretion conferred by the contract to act dishonestly 

or to act outside of accepted commercial practices to 

deprive the other party of the benefit of the contract, 

the contract is breached. 

Storv, 791 P.2d at 775. Thus, a breach of the covenant may be 

found when the Itdiscretion conferred by the contractg1 has been 

misused to deprive the other party of the benefit of the bargain. 

See e.g. Nicholson v. United Pacific Insurance Co. (1985), 219 

Mont. 32, 710 P.2d 1342 

According to the Bank, it refused B & J's April 23, 1986, 

$8,400 loan request because B & J's only customer and sole source 

of income for repayment of the loan, Reliable, was 84 days late in 

its payments to B & J and appeared incapable of paying its bills. 

Therefore, the Bank believedthat sound business judgment warranted 

that it not make the loan. Had the loan been granted, it would 

have been under the terms of an existing line of credit as 

evidenced by the promissory note from B & J to the Bank dated 

November 12, 1985, that provided: 

All advances including readvances of all sums repaid 

hereunder, now or hereafter made by Bank Payee shall be 

evidence [sic] by this note or a similar note. This note 

does not constitute a commitment by the Bank to make 

readvances or future advances, but may be done at Bank's 

discretion. 
The plain language of the note gave the Bank the discretion to deny 

future loan requests and there is no evidence that such discretion 

was misused to deprive the Swensons and B & J of the benefit of 

their agreement. 

In Story we noted that while the damage award in the seminal 

case of Nicholson was excessive in the typical contract case, its 

reasoning was still sound. Storv, 791 P.2d at 775. In Nicholson, 

the parties entered a lease agreement which provided that the 

plaintiff would remodel an office to the defendant's satisfaction. 

During the remodeling the defendant decided to forego the new 

office and attempted to force the plaintiff to breach by repeatedly 

denying satisfaction with the remodeling rather than efficiently 

breaching the lease agreement and paying the plaintiff contract 

damages. While the tort damages awarded in Nicholson are now 

controlled by Storv, the case is a good example of breach of the 

honesty in fact standard. The distinctions between the case at bar 

and Nicholson are clear. Here the allegations of breach of the 

implied covenant of good faith and fair dealing are purely 

speculative. There is no evidence of another motive for the Bank 

to deny the loan other than sound business reasons. 

The District Court granted summary judgment in favor of the 

Bank on defendants' counterclaims on May 7, 1990. The court had 

granted the defendants leave to amend their counterclaims on May 

1, 1990. The defendants moved to amend their counterclaims a 

second time to state a cause of action pursuant to Story on June 

7, 1990, after the court had issued its first order on the original 
counterclaims. The court issued its second order granting the Bank 

summary judgment on the amended counterclaims on October 18, 1990, 

along with an order and supplemental memorandum denying leave to 

file a second amended counterclaim stating a cause of action under 

Story. 

Rule 15 (a) , M.R.Civ.P., instructs a district court that leave 

to amend the pleadings shall be freely given when justice so 

requires. The rule has been interpreted liberally, allowing 

amendment of pleadings as the rule and denying leave to amend as 

the exception. Priest v. Taylor (1987), 227 Mont. 370, 377-8, 740 

P.2d 648, 653. One exception to the general rule is when the 

amendment would be subject to dismissal. Wafstad v. Norwest Bank 

of Great Falls (l989), 240 Mont. 322, 324, 783 P.2d 1325, 1326. 

Here the defendants, after discovery, failed to raise sufficient 

facts under Stow to withstand a motion for summary judgment. The 

District Court did not abuse its discretion in denying the 

defendants leave to amend their counterclaims under Story. 

11. 

Are the default and default judgments entered against B & J 

void for lack of personal jurisdiction? 

On April 15, 1987, Robert A. Swenson was the registered agent 

for service of process for 3 & J. He had moved his domicile to 

California. On that day he was personally served with process by 

a deputy sheriff of Sacramento County, California. The sheriff's 

return shows the Swensons had been sewed only as individual 

defendants; it does not indicate that B & J or an agent thereof was 
served. Nevertheless, the District Court concluded that 3 & J was 

properly sewed with process and it failed to enter the required 

appearance within the time specified by law. Its default was 

entered. 

B & 3 alleges that the judgments against it are void because 

of lack of personal jurisdiction over the corporate entity. It 

relies on Shields v. Pirkle Refrigerated Freight Lines, Inc. 

(lgi'g), 181 Mont. 37, 591 P,2d 1120, and Sink v. Squire (l989), 236 

Mont. 269, 769 P.2d 706. The facts of these cases are 

distinguishable from the case at bar. Shields involved failure by 

a party to properly carry out tfsubstituted serviceqf upon the 

secretary of state. Sink involved failure to comply with mandatory 

service requirements applicable to the contents and form of a 

summons. On the other hand, this case involves an alleged fatal 

defect in the return executed by a sheriff acting as a process 

server. 

Rule 4D, M.R. Civ. P. , governs service of process on defendants. 

It provides several methods of serving a corporation. The fact 

that the registered agent cannot be found in Montana does not 

require use of substituted service. lVWhere service upon any person 

cannot, with due diligence, be made personally within this state, 

service of summons and complaint may be made by service outside 

this state in the manner provided for service within this state, 

with the same force and effect as though service had been made 

within this state.'$ Rule 4D(3), M.R.Civ.P. One such method of 

effecting service upon a domestic corporation is by delivering a 
copy of the summons and complaint to the registered agent of the 

corporation named in the records of the secretary of state or an 

agent authorized by the corporation to accept service of process. 

Rule 4D(2) (e) , M.R.Civ.P. 

We conclude that there was no error in service of process in 

this case. The sheriff or other process server does not determine 

a defendant's capacity to receive process. Here, Mr. Swensonfs 

capacity as the registered agent of the corporation exists as a 

result of law (see § 35-1-305, MCA) and B & J's designation and his 

consent to act as its registered agent. Moreover, it is the fact 

of service rather than the proof of service that is the focus of 

a determination of personal jurisdiction: 

Indispensable to the timely prosecution of an action is 

the service of the summons and complaint. Service of 

the summons is the means by which the district court 

acquires personal jurisdiction over the defendant. 

Clinton v. Miller (lgsl), 124 Mont. 463, 478, 226 P.2d 

487, 495; Hassertv v. Sherburne Mercantile Co. (1947) , 120 Mont. 386, 392, 186 P.2d 884, 889. Service is also 

essential to due process as it notifies the defendant of 

the pendency of an action against him thereby giving him 

the opportunity to defend himself or his property. 

 linto on, 124 Mont. at 478, 226 P.2d at 495; Hassertv, 

120 Mont. at 396-97, 186 P.2d at 891. 

Filing the return, on the other hand, is simply a 

ministerial act. The return itself is merely evidence 

of service of the summons and complaint, Clinton, 124 

Mont. at 479, 226 P.2d at 495. It is filed with the 

court only to document on the record the fact that 

service has been completed. 

[Olther rules governing proof of service provide that 

"[fJailure to make proof of service does not affect the 

validity of the service. Rules 4D(8) (e) and 5 (f) , M.R.Civ.P. 

Livingston v. Treasure County (1989), 239 Mont, 511, 513, 781 P.2d 
1129, 1131. 

In the case at bar, the District Court adopted the reasoning 

in the case of Fisher v. Crest Corp. (Idaho App. 1987), 735 P.2d 

1052. In Fisher, a default judgment was obtained against a 

corporation and a subsequent motion to set the default aside was 

denied. The district court reversed and set the default aside. 

The Idaho Court of Appeals reversed the district court. It held 

that service of process was adequate to confer jurisdiction over 

the defendant corporation even if only one copy of the documents 

had been served upon the defendant corporate officer as both an 

individual and defendant corporate officer. Fisher, 735 P.2d at 

1055. We find the holding of Fisher persuasive. As in Fisher 

there are no allegations or record of the corporate officer being 

misled by the service. We conclude that the District Court had the 

necessary personal jurisdiction over the defendant B & J to enter 

its default. 

111. 

Did the District Court err in holding that the Swensons did 

not have standing to present claims for wrongs to themselves when 

those claims are the claims of B & J, a corporation of which the 

swensons are the sole shareholders? 

The Swensons contend that they are entitled to present claims 

on behalf of their sole proprietorship. They argue that they were 

doing business with the Bank in a personal as well as a corporate 

capacity. The District Court concluded that such claims were 

essentially those of their corporation and held that the Swensons 
as individual shareholders could not prosecute the claims of the 

corporation. 

We agree. Montana law is clear that the stockholders and 

guarantors of a corporation do not have the right to pursue an 

action on their own behalf when the cause of action accrues to the 

corporation. Bottrell v. American Bank (1989) , 237 Mont. 1, 26- 

7, 773 P.2d 694, 709-10; Walstad, 783 P.2d at 1328; Moats Trucking 

Co., Inc. v. Gallatin Dairies, Inc. (1988) , 231 Mont. 474, 477, 753 

P. 2d 883, 885. Here, B & J borrowed operating funds from the Bank; 

the Swensons as individuals did not borrow operating funds but had 

borrowed from the Bank to purchase a truck. Nor did the Swensons 

as individuals request a loan related to the auger rig since it 

was refinanced in 1984. The corporate entity, B & J Drilling, was 

requesting an advance for operating funds under its promissory note 

33-9670. The Bank properly exercised its contractual right and 

refused this requested advance. The District Court correctly 

concluded that the Swensons as individuals are precluded from 

asserting any cause of action arising from this refusal by the Bank 

to continue financing B & J. 

IV . 

Finally, our affirmation of the District Court on the above 

issues is sufficient to uphold the District Court's grant of 

summary judgment to the Bank. Because the Swensons have failed to 

present evidence sufficient to raise a genuine issue of material 

fact regarding their counterclaims, we need not determine whether 

the Swensons are the real party in interest to assert those 
counterclaims or whether such counterclaims are compulsory and thus 

barred under Rule 13(a), M.R.Civ.P. 

The order of the District Court is 

AFFIRMED. 

We concur: 

Chief Justice 
August 8, 1991 

CERTIFICATE OF SERVICE 

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

following named: 

L. Randall Bishop 

JARUSSI & BISHOP 

P.O. Box 3353 

Billings, MT 59103-3353 

Thomas M. Monaghan 

LUCAS & MONAGHAN, P.C. 

P.O. Box 728 

Miles City, MT 59301 

ED SMITH 

CLERK OF THE SUPREME COURT 

STATE OF MONTANA 

BY \k 

Depu