Title: SKIERKA v SKIERKA BROTHERS INC
Citation: N/A
Docket Number: 80-176
State: Montana
Issuer: Montana Supreme Court
Date: May 20, 1981

No. 80-176 IN THE SUPFIEME COURT OF THE STATE OF MONTANA JEANNE SKIERKA and ANNETTE SKIERKA, Plaintiffs and Respondents, SKIERKA BROTHERS, INC., a Corporation, JOHN SKIERKA and BERNICE SKIERKA, Defendants and Appellants. Appeal from: District Court of the Twelfth Judicial District, In and for the County of Liberty. Honorable B. W . Thomas, Judge presiding. Counsel of Record: For Appellants: Church, Harris, Johnson & Williams, Great Falls, Montana Douglas C. Allen arged and Donald A. LaBar arqued, ~ d r Respondents: .Donald R. Marble, Chester, Montana Jardine, Stephenson Law Firm, Great Falls, Montana John D. Stephenson argued, Great Falls, Montana Submitted: March 24, 1981 Decided: May 20, 1981 Filed: 2 0 1981' I/ A . Clef k M r . J u s t i c e Fred J. Weber delivered t h e opinion of t h e Court. John Skierka (defendant John) and Bernice Skierka (de- fendant erni ice), husband and wife, and defendant Skierka Brothers, Inc. ( c o r p o r a t i o n ) , a close-held family corpora- t i o n , appeal from the judgment of t h e D i s t r i c t Court of t h e Twelfth J u d i c i a l D i s t r i c t , Liberty County, the Honorable B. W. Thomas, presiding. A f t e r t r i a l without a jury, the D i s t r i c t Court concluded t h a t Jeanne Skierka ( p l a i n t i f f Jeanne) and Annette Skierka ( p l a i n t i f f Annette) had e s t a - blished t h e i r r i g h t t o rescind t h e i r t r a n s f e r of a s s e t s t o t h e corporation, made i n exchange f o r stock, on the b a s i s of fraud and mutual mistake. The D i s t r i c t Court a l s o concluded t h a t t h e p l a i n t i f f s had e s t a b l i s h e d t h e i r r i g h t t o have t h e corporation l i q u i d a t e d under s e c t i o n 35-1-921 (1) ( a ) (i:i.) , MCA, because of oppressive a c t s by defendant John Skierka, who i s i n c o n t r o l of t h e corporation. The judgment orders t h e corporation t o t r a n s f e r back t o the p l a i n t i f f s whatever property and a s s e t s they have t r a n s f e r r e d t o the corporation i n exchange f o r stock, together with a d d i t i o n a l property and a s s e t s representing one half (50%) of t h e f a i r market value of the o t h e r corporate a s s e t s on the d a t e of t r a n s f e r , o r , i n t h e a l t e r n a t i v e , t o t r a n s f e r t o the p l a i n t i f f s o t h e r property and a s s e t s of equivalent value, a s the p a r t i e s may agree. I f the p a r t i e s f a i l t o agree within a reasonable t i m e a s t o the o t h e r a s s e t s t o be t r a n s f e r r e d t o t h e p l a i n - t i f f s , then the judgment decrees t h a t the c o u r t w i l l d i s - s o l v e the corporation i n accordance with s e c t i o n 35-1-922, MCA . ~ p p e l l a n t s / d e f e n d a n t s p r e s e n t t h e following i s s u e s f o r review: 1. Is p l a i n t i f f s ! a c t i o n barred by t h e applicable s t a t u t e of l i m i t a t i o n s ? 2. id t h e D i s t r i c t Court e r r i n concluding t h a t de- fendant John S k i e r k a ' s a c t s a s executor and a s surviving p a r t n e r cons ti t u t e d a fraud? 3 . Did t h e D i s t r i c t Court e r r i n concluding t h a t t h e p a r t i e s acted under mutual mistake a t the t i m e of p l a i n t i f f s ' t r a n s f e r of a s s e t s t o t h e corporation? 4. Did t h e D i s t r i c t Court err i n decreeing t h a t the corporation may be l i q u i d a t e d on t h e grounds of oppression? W e a f f i r m the D i s t r i c t Court's f i n d i n g s and conclusions on a l l i s s u e s . Albert Skierka and t h e defendant John were brothers. A l b e r t died, leaving h i s widow p l a i n t i f f Jeanne, and h i s daughter, p l a i n t i f f Annette, surviving. For a number of years before h i s death, Albert had con- ducted a ranching and farming business a s a n equal p a r t n e r with defendant John under t h e p a r t n e r s h i p name Skierka Brothers. Portions of t h e land used by the p a r t n e r s h i p were owned s e p a r a t e l y by John and Bernice Skierka and Albert and Jeanne Skierka. N o land was owned i n t h e p a r t n e r s h i p name. The land which was used by the p a r t n e r s h i p and owned separ- a t e l y had been acquired by the two f a m i l i e s i n a check- erboard fashion. During A l b e r t ' s l i f e t i m e , he and defendant John d i s - cussed the d e s i r a b i l i t y of incorporating i n order t o i n s u r e c o n t i n u i t y of management and t o plan f o r minimizing taxes. Much of the preliminary incorporation work w a s completed by t h e d a t e of A l b e r t ' s death, February 5, 1973. A l b e r t l e f t a w i l l leaving h i s e s t a t e t o h i s widow, p l a i n t i f f Jeanne, and naming h i s b r o t h e r , defendant John, a s executor without bond. A s executor, defendant John f i l e d h i s f i r s t and f i n a l account and p e t i t i o n f o r d i s t r i b u t i o n on June 26, 1974. A l l of A l b e r t ' s property was d i s t r i b u t e d t o p l a i n t i f f Jeanne. O n May 1, 1973, while defendant John w a s serving a s executor of h i s b r o t h e r ' s e s t a t e , a meeting was held between p l a i n t i f f s Jeanne and Annette and defendants John and Bernice f o r the purpose of discussing incorporation of the ranching and farming business. A n a t t o r n e y and an accountant, each of whom had been consulted i n t h i s matter, were a l s o i n attendance. A t t h e conclusion of t h e meeting, s e v e r a l documents w e r e signed by t h e p a r t i e s , which r e s u l t e d i n t h e following: 1. A l l property owned by p l a i n t i f f Jeanne and used i n t h e p a r t n e r s h i p operation, a s well a s her family residence, were transf e r r e d t o the new corporation, Skierka Brothers, Inc., i n exchange f o r 12,318 shares of i t s c a p i t a l stock. 2. A l l property owned by defendants John and Bernice and used i n the p a r t n e r s h i p , a s w e l l a s t h e i r family resi- dence, were a l s o t r a n s f e r r e d t o t h e corporation b u t i n exchange f o r 12,682 shares of i t s c a p i t a l stock. '(John received 7,502 shares and Bernice 5,180 shares.) Defendant John's family thereby acquired 364 shares more than p l a i n t i f f Jeanne's family, r e s u l t i n g i n voting c o n t r o l which became the c r i t i c a l i s s u e . The a t t o r n e y i n attendance had advised the p a r t i e s t o t r a n s f e r a l l r e a l property holdings, whether personal residence o r farming property, t o the corporation i n ex- change f o r stock holdings i n order t o secure c e r t a i n tax advantages. During t h e May meeting t h e a t t o r n e y and t h e accountant explained t h a t Jeanne would r e c e i v e s l i g h t l y less than 50 percent of the stock because her personal residence was worth l e s s than the defendants' personal residence, both of which were t r a n s f e r r e d t o the corporation i n exchange f o r stock . The stock issued t o the p a r t i e s i s s u b j e c t t o r e s t r i c - t i o n s contained i n t h e bylaws of t h e corporation. These r e s t r i c t i o n s provide t h a t the stock can only be t r a n s f e r r e d by w r i t t e n consent of the holders of a majority of the stock. I n the absence of such consent, the shareholder d e s i r i n g t o s e l l i s t o give w r i t t e n n o t i c e of h i s i n t e n t i o n s t o the s e c r e t a r y of the corporation. The corporation then has a 90-day option t o purchase t h e stock a t a p r i c e set by a vote of t h e holders of a majority of t h e stock. I n t h e event the corporation e l e c t s not t o purchase t h e stock, t h e o t h e r stockholders have a 90-day option t o purchase a t t h e p r i c e s e t by t h e holders of a majority of the stock. The a r t i c l e s of incorporation provide t h a t t h e t e r m of t h e corporation i s "perpetual". These r e s t r i c t i - o n s on stock t r a n s f e r and t h e s i g n i f i c a n c e of her minority shareholder s t a t u s were never explained t o Jeanne Skierka a t t h e meeting. I n f a i r n e s s t o a l l , we p o i n t o u t t h a t t h e evidence i n d i c a t e s t h a t none of t h e p a r t i e s appreciated t h e s i g n i f i c a n c e of t h e c o n t r o l which t h e defendant John's family obtained. The d i r e c t o r s of the new corporation were defendants John and Bernice, and p l a i n t i f f Jeanne. Following t h e organizational meeting p l a i n t i f f Jeanne made g i f t s of stock t o p l a i n t i f f Annette. P l a i n t i f f Annette w a s made a d i r e c t o r a t the next annual meeting of t h e corporation i n 1974. For a year o r more a f t e r the incorporation, t h e personal r e l a t i o n s h i p s between t h e p a r t i e s remained c o r d i a l and f r i e n d l y . Their r e l a t i o n s s t a r t e d t o d e t e r i o r a t e when p l a i n t i f f Jeanne, a f t e r consulting with her own a t t o r n e y on May 29, 1975, came t o a r e a l i z a t i o n of her p o s i t i o n a s a minority stockholder and of the r e s t r i c t i o n s on t h e sale of her stock. Her a t t o r n e y wrote a l e t t e r t o t h e c o r p o r a t i o n ' s a t t o r n e y requesting t h a t Jeanne' s stock i n t e r e s t be made equal t o t h a t of John and Bernice Skierka. N o a c t i o n was taken on t h i s r e q u e s t , b u t it r e s u l t e d i n an open break between t h e two f a m i l i e s . A t a l l of t h e corporation meetings through 1976, t h e p a r t i e s unanimously agreed on the stock valuations. After 1976, p l a i n t i f f s Jeanne and Annette voted a g a i n s t t h e stock valuations upon advice of counsel, based upon a claim of in- s u f f i c i e n t value. I n an e f f o r t t o remedy the unequal stock i n t e r e s t and t o give p l a i n t i f f Jeanne an equal voice with defendant John i n the conduct of t h e corporation, Jeanne c a l l e d f o r a s p e c i a l meeting of t h e corporation. This meeting was held on April 27, 1977, and a l l d i r e c t o r s were present. Motions t o amend t h e bylaws t o c r e a t e an o f f i c e of executive v i c e p r e s i d e n t having equal power and a u t h o r i t y with t h a t of t h e p r e s i d e n t and t o e l e c t p l a i n t i f f Jeanne t o t h a t o f f i c e w e r e moved by p l a i n t i f f s Annette and by Jeanne, who voted i n favor of each. Defendants John and Bernice voted a g a i n s t t h e motions. Each of the r e s o l u t i o n s f a i l e d f o r lack of a majority vote. Shortly t h e r e a f t e r , on April 29, 1977, p l a i n t i f f s Jeanne and Annette f i l e d a complaint seeking t o d i s s o l v e t h e corporation. The p l a i n t i f f s alleged fraud and oppressive conduct on the p a r t of defendant John and h i s family, waste of corporate a s s e t s , and t h a t the corporation was deadlocked. After t r i a l , t h e D i s t r i c t Court found the evidence in- s u f f i c i e n t t o support the a l l e g a t i o n t h a t t h e corporation was deadlocked. It d i d f i n d t h a t defendant John, by per- m i t t i n g himself t o be placed i n c o n t r o l of the corporation, v i o l a t e d t h e f i d u c i a r y d u t i e s of a t r u s t e e , i n h i s c a p a c i t y as executor of h i s deceased b r o t h e r ' s e s t a t e and a s h i s deceased b r o t h e r ' s surviving p a r t n e r , and therefore, acted f r a u d u l e n t l y under s e c t i o n 72-20-207, MCA. The c o u r t a l s o found t h a t the p a r t i e s , i n t r a n s f e r r i n g t h e i r a s s e t s t o t h e corporation, made t h e t r a n s f e r i n the mistaken b e l i e f t h a t each family would have equal ownership and equal voice i n t h e management of the business. Last, t h e c o u r t found t h e a c t s of defendant John i n c o n t r o l l i n g t h e corporation w e r e oppressive. A s a r e s u l t , t h e c o u r t ordered t h a t t h e trans- a c t i o n by which p l a i n t i f f Jeanne t r a n s f e r r e d property t o t h e corporation be rescinded, and t h a t one half of t h e corpora- t i o n ' s o t h e r a s s e t s be t r a n s f e r r e d t o Jeanne, o r e l s e t h e c o u r t would l i q u i d a t e t h e corporation i t s e l f . ISSUE #1: STATUTE O F LIMITATIONS Former s e c t i o n 93-2607(4), R.C.M., 1947, now s e c t i o n 27-2-203, MCA, s e t the following period of l i m i t a t i o n : "Two-year l i m i t a t i o n . Within two years: " 4 . A h a c t i o n f o r r e I i e f on the ground of fraud o r mistake, t h e cause of a c t i o n i n such c a s e n o t t o be deemed t o have accrued u n t i l the discovery by t h e aggrieved p a r t y of t h e f a c t s c o n s t i t u t i n g the fraud o r mistake." Defendants argue t h a t any fraud o r mistake occurred on o r p r i o r t o May 1, 1973, t h e d a t e of p l a i n t i f f Jeanne's t r a n s f e r of property i n exchange f o r stock, s o t h a t t h e above s t a t u t e b a r s t h i s a c t i o n which was f i l e d over t h r e e years l a t e r . Defendants f u r t h e r argue t h a t the running of t h e s t a t u t e was n o t t o l l e d pending p l a i n t i f f Jeanne ' s a c t u a l discovery of her i n f e r i o r p o s i t i o n , because she could o r should have discovered her p o s i t i o n i n 1973 when t h e d i f f e r - ence i n stock ownership w a s explained t o her, and a l l t e r m s and bylaws of the corporation were set f o r t h i n t h e documents which she executed a s s e c r e t a r y - t r e a s u r e r . Defendants c i t e Kerrigan v. O'Meara (1924), 71 Mont. 1, 227 P. 819, a s support f o r t h e i r contentions. However, t h a t case p o i n t s o u t the reason f o r d i s t i n g u i s h i n g it from t h i s appeal: ". . . Unless t h e r e is some r e l a t i o n of t r u s t o r -- confidence between t h e p a r t i e s which imposes upon a defendant t h e duty of making a f u l l d i s c l o s u r e - --- - - of t h e f a c t s , t h e r e must be some a c t i v e af firma- t i v e concealment of t h e fraud, something s a i d o r done t o continue t h e deception o r t o prevent i n q u i r y and l u l l p l a i n t i f f i n t o a sense of se- c u r i t y , i n order t o postpone t h e running of t h e s t a t u t e . " Kerrigan, 71 Mont. 7, 227 P. 821. (Em- phasis added.) The c o u r t i n Kerrigan found no r e l a t i o n of t r u s t o r confidence which would impose a duty t o d i s c l o s e upon t h e defendant. The c o u r t then found t h a t t h e s t a t u t e had n o t been t o l l e d , and t h e p l a i n t i f f was barred from a s s e r t i n g h i s claim. The r u l e a s s t a t e d i n Kerrigan was r e s t a t e d by t h i s Court i n Anderson v. Applebury (1977), 173 Mont. 4 1 1 , 419-420, 567 Although Kerrigan d i d not concern a s i t u a t i o n wherein t h e defendant had held a p o s i t i o n of t r u s t and confidence i n r e l a t i o n t o the p l a i n t i f f , t h a t p a r t of t h e s t a t e d r u l e i s supported by o t h e r a u t h o r i t y . See 54 C. J.S. Limitation - of Actions, S194; 37 Am.Jur.2d -- Fraud and ~ e c e i t , S409. Here, defendant John d i d occupy a p o s i t i o n of t r u s t and confidence i n r e l a t i o n t o p l a i n t i f f Jeanne, a s discussed below. H e was executor of h i s b r o t h e r ' s e s t a t e a t t h e t i m e of incorporation. Also, he was p a r t n e r t o h i s brother a t t h e d a t e of death; t h a t s t a t u s imposed upon defendant John t h e d u t i e s of a t r u s t e e . See former s e c t i o n 91-3205, R.C.M., 1947, now s e c t i o n 72-12-704, MCA. Such r e l a t i o n s h i p s may have t e c h n i c a l l y ended when the e s t a t e was closed and t h e p a r t n e r s h i p ceased t o function, b u t t h e e f f e c t of t h e confi- d e n t i a l r e l a t i o n s h i p d i d n o t cease u n t i l May 29, 1975, t h e d a t e on which the t r i a l c o u r t found t h a t p l a i n t i f f Jeanne f i r s t discovered her i n f e r i o r p o s i t i o n . This a c t i o n was f i l e d on April 29, 1977, so it comes within the two-year s t a t u t e of l i m i t a t i o n s . ISSUE #2: F R A U D The D i s t r i c t Court concluded t h a t p l a i n t i f f Jeanne had e s t a b l i s h e d her r i g h t t o rescind her p a r t of t h e t r a n s a c t i o n which created the corporation, a s follows: "1. P l a i n t i f f s have e s t a b l i s h e d t h e i r r i g h t t o have the t r a n s a c t i o n whereby P l a i n t i f f , Jeanne Skierka, and Defendant, John Skierka, t r a n s f e r r e d a s s e t s t o Skierka Brothers, incorporated, [ s i c ] i n exchange f o r stock rescinded on the b a s i s t h a t t h e a c t s and f a i l u r e s t o act of t h e Defendant, John Skierka, who was then a t r u s t e e i n each of h i s cap- a c i t i e s a s executor of h i s deceased b r o t h e r ' s e s t a t e and a s surviving p a r t n e r , r e s u l t e d i n placing him i n c o n t r o l of s a i d corporation and a r e , a s a conse- quence, fraudulent pursuant t o Section 72-20-207 of t h e Montana Code." That conclusion i s based upon t h e t r i a l c o u r t ' s f i n d i n g s t h a t t h e two brothers had been equal p a r t n e r s i n t h e ranch business; t h a t defendant John was executor of h i s b r o t h e r ' s e s t a t e ; t h a t a t t h e t i m e the incorporation took place, a l l p a r t i e s believed c o n t r o l would be and was divided equally; b u t t h a t , a s a r e s u l t of t h e accountant's v a l u a t i o n of t h e two houses, defendants John and Bernice ended up i n c o n t r o l of t h e corporation. P a s t Montana cases have assumed, without e x p l i c i t l y s t a t i n g , t h a t an executor of a decedent's e s t a t e occupied a p o s i t i o n of t r u s t e e s h i p over t h e a s s e t s and i n favor of t h e devisees. See I n re Jennings' E s t a t e (1925), 74 Mont. 449, 461-462, 2 4 1 P. 648, 652; I n re Eakins' E s t a t e (1922), 64 Mont. 84, 93, 208 P. 956, 960. (The Montana Probate Code now s p e c i f i c a l l y places a l l t h e d u t i e s of a t r u s t e e upon personal r e p r e s e n t a t i v e s . Section 72-3-610, MCA.) 3 0 r The t r u s t e e s t a t u t e s , s e c t i o n s 8 6 4 , e t seq., R.C.M., 9 o/ 1947, now s e c t i o n s 72-20-%@0, e t seq., MCA, provide a s follows: "Trustee's o b l i g a t i o n -- of good f a i t h . I n a l l m a t t e r s connected with h i s t r u s t , a t r u s t e e i s bound t o a c t i n t h e highest good f a i t h toward h i s beneficiary and may n o t o b t a i n any advantage t h e r e i n over t h e l a t t e r by t h e s l i g h t e s t misrepresentation, concealment, t h r e a t , o r adverse pressure of any kind. (72-20-201, MCA. ) "Trustee's influence n o t t o be used f o r h i s advantage.. ------ A t r u s t e e may n o t use the influence which h i s p o s i t i o n g i v e s t o him t o o b t a i n any advantage from h i s bene- f i c i a r y . (72-20-202, MCA.) "Duty t o d i s c l o s e adverse i n t e r e s t . I f a t r u s t e e ac- -- - q u i r e s any i n t e r e s t o r becomes charged with any duty adverse t o t h e i n t e r e s t of h i s b e n e f i c i a r y i n t h e s u b j e c t of t h e t r u s t , he must immediately inform t h e l a t t e r thereof and may be a t once removed. (72-20-206, MCA. ) "Violation of o b l i g a t i o n s a s fraud. Every v i o l a t i o n of the provisions of t h e preceding s e c t i o n s of t h i s chapter is a fraud a g a i n s t t h e beneficiary of t h e t r u s t . (72-20-207, MCA.) "Presumption a g a i n s t t r u s t e e s . A l l t r a n s a c t i o n s be- tween a t r u s t e e and h i s beneficiary during t h e ex- i s t e n c e of t h e t r u s t o r while t h e influence acquired by t h e t r u s t e e remains by which he o b t a i n s any ad- vantage from h i s beneficiary a r e presumed t o be en- t e r e d i n t o by t h e l a t t e r without s u f f i c i e n t consider- a t i o n and under undue influence." (72-20-208, MCA;) I n i t s Memorandum on Order Denying P o s t - t r i a l Motions, t h e D i s t r i c t Court gives i t s reasons f o r finding fraud: ". . . A t t h e t i m e t h e corporation was c r e a t e d and t h e a s s e t s of t h e p a r t i e s were t r a n s f e r r e d t o it, John Skierka stood i n a t r u s t r e l a t i o n s h i p t o Jeanne Skierka, both a s t h e surviving p a r t n e r and a s exe- cutor. More than t h a t , he stood i n a r e l a t i o n s h i p of t r u s t and confidence t o Jeanne a s one t o whom she could look and d i d look f o r guidance and advice on business a f f a i r s . The evidence f u r t h e r shows t h a t a t t h i s time Jeanne was s t i l l d i s t r a u g h t over her husband's death and was n o t paying c l o s e a t t e n t i o n t o business d e t a i l s , although d e s i r o u s of carrying o u t her l a t e husband's d e s i r e t o convert t h e partner- s h i p t o a corporation. I n the view of t h i s Court, John Skierka had an a f f i r m a t i v e duty t o see t h a t he and Jeanne r e t a i n e d p o s i t i o n s of e q u a l i t y upon crea- t i o n of t h e corporation, and it was a breach of h i s duty t o permit a r e s u l t which placed him i n a superior p o s i t i o n , i n c o n t r o l of t h e corporation and t h e d i s - p o s i t i o n of t h e stock. Although defendants argue t h a t t h e t r a n s a c t i o n occurred i n t h e presence of an inde- pendent a t t o r n e y and accountant who explained t h e s i g n i f i c a n c e of t h e t r a n s a c t i o n t o Jeanne Skierka, t h e a t t o r n e y and accountant admit t h a t they t o l d Jeanne t h a t the unequal stock ownership was n o t r e a l l y i m - p o r t a n t and they f a i l e d t o d i s c u s s with her t h e by-law provision which r e s t r i c t s the sale of stock o r t o advise her what e f f e c t t h i s could have on her a s a minority stockholder. So it i s c l e a r t h a t t h e f u l l s i g n i f i c a n c e of t h e t r a n s a c t i o n was n o t explained t o Jeanne. I n t h e Court's view t h i s s i t u a t i o n comes within t h e d e f i n i t i o n of c o n s t r u c t i v e fraud: 'Any breach of duty which, without an a c t u a l l y fraudulent i n t e n t , g a i n s an advantage t o t h e person i n f a u l t o r anyone claiming under him by misleading another t o h i s prejudice . . .' Section 28-2-406, MCA." Because t h e r e s u l t of the incorporation is t o g i v e defendants John and Bernice c o n t r o l over t h e a s s e t s which p l a i n t i f f Jeanne acquired by w i l l from her l a t e husband, t h e t r u s t e e s t a t u t e s have c l e a r l y been v i o l a t e d , r e g a r d l e s s of John's good i n t e n t i o n s . Defendants c i t e t h e case of Boatman v. Berg (1978), 176 Mont. 208, 577 P.2d 382, a s support f o r t h e i r argument t h a t some wrongful a c t must be shown before a t r u s t e e can be found t o have committed fraud upon h i s bene- f i c i a r y . Boatman, t h i s Court found wrongful a c t , because it was c l e a r t h e r e t h a t the t r u s t e e had given good and adequate consideration f o r a l l of t h e property which the p l a i n t i f f had t r a n s f e r r e d t o him; t h e t r u s t e e d i d not b e n e f i t a t t h e expense of t h e beneficiary. Here, defendant John personally benefited a t the expense of p l a i n t i f f Jeanne when he gained t h e power t o value Jeanne's stock and t o con- t r o l corporate operations. That condition w a s n o t p r e s e n t i n Boatman. The evidence does show t h a t Jeanne, s i n c e t h e d a t e of incorporation, has been a b l e t o withdraw a l l t h e money she has needed and t h a t John has managed t h e corporation competently and e f f i c i e n t l y . However, competent management does n o t c o r r e c t the i n i t i a l wrong: defendant John obtained an advantage over p l a i n t i f f Jeanne without having f u l l y disclosed the consequences. ISSUE # 3 : MISTAKE A s an a l t e r n a t e ground i n support of p l a i n t i f f Jeanne's r i g h t t o rescind her t r a n s f e r of property, t h e D i s t r i c t Court found t h a t t h e r e was a mutual mistake by t h e p a r t i e s i n t h e i r b e l i e f t h a t t h e unequal stock ownership would make no r e a l d i f f e r e n c e s o f a r a s c o n t r o l of t h e corporation w a s concerned. If t h e f a c t s were understood, then a t l e a s t t h e p a r t i e s were mistaken a s t o t h e i r l e g a l e f f e c t . See conclu- s i o n no. 2 of f i n d i n g s of f a c t and conclusions of law; Memorandum on Order Denying P o s t - t r i a l Motions, p. 2. Finding of f a c t no. 1 2 s t a t e s : ". . . A t the t i m e , no one considered t h a t t h e unequal stock d i v i s i o n was of any p a r t i c u l a r l e g a l o r p r a c t i c a l s i g n i f i c a n c e . U p t o t h e t i m e of t h i s meeting, it was always considered by the p a r t i e s t h a t t h e corporation would continue t h e 50-50 ownership and management r e l a t i o n s h i p which e x i s t e d under t h e partnership." That f i n d i n g of t h e c o u r t i s not disputed. Rather, de- fendants claim t h a t no mistake can be found under t h e law because t h e widow f a i l e d i n her l e g a l duty t o f u l l y read t h e incorporation and conveyance documents before signing, c i t i n g former s e c t i o n 13-313, R.C.M., 1947, now s e c t i o n 28- 2-409, MCA. A s previously pointed o u t , the duty was n o t so much on t h e widow t o discover a s it was on t h e t r u s t e e t o f u l l y d i s c l o s e . I n t h e t r i a l c o u r t ' s view, the f a c t t h a t no d i s c l o s u r e was made by defendant John i n d i c a t e s t h e mistake under which the p a r t i e s w e r e a c t i n g . Findings of f a c t should not be set a s i d e unless c l e a r l y erroneous. Rule 5 2 ( a ) , M.R.Civ,P. W e f i n d no such c l e a r e r r o r . ISSUE #4: OPPRESSION Section 35-1-921, MCA, provides a s follows: "Power of c o u r t t o l i q u i d a t e a s s e t s and business of - corporation--venue. (1) The d i s t r i c t c o u r t s s h a l l have f u l l power t o l i q u i d a t e t h e a s s e t s and business of a corporation: " ( a ) i n an a c t i o n by a shareholder when it i s es- t a b l i s h e d t h a t : " (ii) - t h e ' a c t s of the-di.rec€ors o r those i n c o n t r o l of t h e corporation a r e i l l e g a l , oppressive, o r fraudulent . . ." The D i s t r i c t Court s p e c i f i c a l l y found t h a t no deadlock e x i s t e d i n the corporation (finding of f a c t no. 23) and t h a t defendant John i s a competent operator, managing t h e business competently and e f f i c i e n t l y (finding of f a c t no. 1 7 ) . The c o u r t ' s conclusion no. 3 s t a t e s : " P l a i n t i f f s have e s t a b l i s h e d t h e i r r i g h t t o have t h e a s s e t s and business of Defendant Skierka Brothers, Incorporated, l i q u i d a t e d pur- suant t o t h e provisions of Section 35-1-921 (1) (a) (ii) of t h e Montana Code on t h e b a s i s t h a t the a c t s of Defendant John Skierka, i n c o n t r o l of t h e corporation, a r e oppressive." The c o u r t ' s conclusion was based upon t h e following findings: "16. Annual meetings of the stockholders and d i r e c t o r s of Skierka Brothers, Incorporated, have been held every year . . . A t t h e meetings through 1976, a l l p a r t i e s unanimously agreed on t h e stock valuations. After 1976, Jeanne and Annette Skierka voted a g a i n s t t h e valuations e s t a b l i s h e d upon advice of counsel. I n 1979, the meeting was held by unani- mous consent. "18. Since i t s incorporation, Defendant John Skierka, a s p r e s i d e n t , has operated Skierka Brothers, Incorpor- a t e d , as he has seen f i t , carrying on farm and ranch operations a t t i m e s and i n manners t h a t he determined, including the s e l l i n g o r s t o r a g e of g r a i n crops, t h e purchase of equipment, the purchase and s a l e of l i v e - stock and t h e i r operations, t h e h i r i n g of employees, including members of h i s family, and t h e wages and s a l a r i e s paid, whether i n cash o r g r a i n shares o r both, the r i g h t t o use corporate equipment and supplies, including g a s o l i n e and o i l , and i n general a l l opera- t i o n s whatsoever. "21. O n A p r i l 27, 1977, a s p e c i a l meeting of t h e board of d i r e c t o r s of Skierka Brothers, Incorporated, was held a t t h e l a w o f f i c e s of J a r d i n e , Stephenson, Blewett and Weaver i n Great F a l l s . Present a t t h e meeting were a l l of the d i r e c t o r s , Jeanne Skierka, Annette Skierka, John Skierka and Bernice Skierka. Also p r e s e n t were John Weaver and John Stephenson, counsel f o r Jeanne Skierka and Annette Skierka, and Don LaBar and Paul C. Bunn, counsel f o r Skierka Brothers, Incorporated. The motion t o c r e a t e an executive vice-presidency with power equal t o t h e p r e s i d e n t was defeated, a s w e l l a s a motion t o ex- pand the board of d i r e c t o r s from four t o f i v e . "22. The a c t s of Defendant John Skierka have been and a r e oppressive i n t h a t he has run t h e corporation a s President a s he has seen f i t and s i n c e e a r l y i n 1974 has denied t h e P l a i n t i f f s , Jeanne Skierka and Annette Skierka, any p a r t o r voice i n t h e operation, e i t h e r a s d i r e c t o r s o r a s minority stockholders, except f o r p a r t i c i p a t i o n i n the annual meeting. " I n its Memorandum on Order Denying P o s t - t r i a l Motions, t h e c o u r t s t a t e d : "As f a r as t h e i s s u e of oppression i s con- cerned, t h i s Court has taken a broad view of the a p p l i c a t i o n of t h i s p r i n c i p l e t o a closely-held corporation. The finding of oppression here i s based on t h e exclusion of t h e minority stockholders from p a r t i c i p a t i o n i n t h e operation of t h e corporation, and n o t on a lack of p r o b i t y on the p a r t of t h e majority." Under s e c t i o n 35-1-921, MCA, t h e c o u r t may l i q u i d a t e t h e corporation where the a c t s of those i n c o n t r o l a r e oppressive. Two key a r e a s of oppression may be mentioned. The f i r s t is t h e a c t i o n by defendant John and h i s family of f i x i n g the stock valuation a t which p l a i n t i f f Jeanne's family may s e l l . The second is the d e f e a t i n g by defendants John and Bernice of t h e motion t o c r e a t e an o f f i c e giving t o p l a i n t i f f Jeanne power equal t o t h a t of defendant John. Model Business Corporation Act Annotated second e d i t i o n , s e c t i o n 97 a t p. 554, p o i n t s o u t a s follows with regard t o t h e h i s t o r i c a l r i g h t of t h e c o u r t t o l i q u i d a t e t h e a s s e t s of a corporation: "American jurisprudence has c r e a t e d two c a t e g o r i e s of exceptions t o the r u l e t h a t an e q u i t y c o u r t has no inherent r i g h t t o l i q u i d a t e t h e a s s e t s and busi- ness of a corporation. The f i r s t i s i n a s u i t i n e q u i t y by shareholders who a r e s u f f e r i n g a s a r e s u l t of t h e conduct of t h e business of t h e corporation i n such a way t h a t they can have no e q u i t a b l e r e l i e f without l i q u i d a t i o n of the assets and business of t h e corporation. The second i s i n a b i l l i n - e q u i t y by a c r e d i t o r who can have no r e l i e f unless t h e a s s e t s and business of the corporation a r e con- verted t o cash and operations ceased." The Model Business Corporation Act as adopted i n Montana has extended the r u l e s f o r involuntary d i s s o l u t i o n . A s pointed o u t i n Model Business Corporation Act Annotated a t p. 554: "The Model Act provides r u l e s t o cover involuntary d i s s o l u t i o n s by shareholders by d e f i n i n g four fac- t u a l s i t u a t i o n s i n which t h e c o u r t s w i l l have t h e power t o l i q u i d a t e t h e a s s e t s and business of t h e corporation . . . Second, t h e c o n t r o l l i n g d i r e c t o r s o r managers a c t i n g i n an i l l e g a l , oppressive o r fraudulent manner. While the terms ' i l l e g a l ' , 'op- p r e s s i v e ' o r ' f r a u d u l e n t ' a r e s u b j e c t t o j u d i c i a l i n t e r p r e t a t i o n , they have somewhat limited d e f i n i - t i o n s within a l l j u r i s d i c t i o n s . " A leading case i n t h e i n t e r p r e t a t i o n of the Model Act (Mo . App . i s Fix v. Fix Material Co. Inc. / 1 9 7 6 ) , 538 S.W.2d 351, i n which t h e c o u r t makes the following observations: "The I l l i n o i s c o u r t s made it c l e a r , when construing t h e I l l i n o i s S t a t u t e ( t h e Model f o r s351.485 [ t h e Missouri s t a t u t e ] ) , t h a t 'oppression' is, i n and of i t s e l f , an independent ground f o r r e l i e f n o t re- q u i r i n g a showing of fraud, i l l e g a l i t y , mismanage- ment, wasting of a s s e t s , nor deadlock, though t h e s e f a c t o r s a r e frequently p r e s e n t . . . " I t has o f t e n been s t a t e d t h a t oppression suggests . . . ' a v i s i b l e departure from t h e standards of f a i r dealing, and a v i o l a t i o n of f a i r play on which every shareholder who e n t r u s t s h i s money t o a company i s e n t i t l e d t o r e l y . ' ' . . . Such d e f i n i t i o n s a r e suggested perimeters of the broad t e r m r a t h e r than narrow d e f i n i t i o n s which would tend t o rob t h e t e r m of i t s u s e f u l f l e x i b i l i t y . A s we read the s t a t u t e , it i s intended t h e c o u r t s w i l l proceed on a case-by case-basis.'" Oppression may be more e a s i l y found i n a close-held, family corporation than i n a l a r g e r , p u b l i c corporation. A s t h e c o u r t s t a t e d i n Thisted v. Tower Management Corporation (1966), 147 Mont. 1, 409 P. 2d 813: "It i s t o be noted t h a t a c l o s e corporation i s one i n which management and ownership a r e ' s u b s t a n t i a l l y i d e n t i c a l t o t h e e x t e n t t h a t it i s u n r e a l i s t i c t o b e l i e v e t h a t t h e judgment of t h e d i r e c t o r s w i l l be independent of t h a t of t h e stockholders.' 52 North- western L.R. 345. By i t s very nature, i n t r a c o r p o r a t e problems a r i s i n g i n a c l o s e corporation demand t h e unusual and extraordinary remedies a v a i l a b l e only i n a c o u r t of equity." 147 Mont. 1 4 , 409 P.2d 820. "'Courts of e q u i t y a r e not bound by c a s t - i r o n r u l e s . The r u l e s by which they a r e governed are f l e x i b l e and adapt themselves t o t h e exigencies of t h e p a r t i c u l a r case. Relief w i l l be granted when, i n view of a l l the circumstances, t o deny it would permit one of t h e p a r t i e s t o s u f f e r a gross wrong a t t h e hands of t h e other p a r t y who brought about t h e condition . . . 1 I1 147 Mont. 15, 409 P.2d 821. The extensive and d e t a i l e d f i n d i n g s of f a c t of t h e D i s t r i c t Court d i s c l o s e f a c t s c l e a r l y s u f f i c i e n t t o support a conclusion of oppression under t h e foregoing s t a t u t e and a u t h o r i t i e s . The t r i a l of t h i s matter l a s t e d two and one- half days. The t r i a l c o u r t had ample opportunity t o observe t h e witnesses and l e a r n of t h e i r problems. The t r i a l c o u r t ' s f i n d i n g s should n o t be disturbed unl-ess w e f i n d they a r e " c l e a r l y erroneous". W e do not so find. W e do note t h a t t h e t r i a l c o u r t w i l l n o t l i q u i d a t e t h e corporation because of oppression unless t h e p a r t i e s a r e unable t o agree upon t h e property d i v i s i o n and t r a n s f e r t o be made t o the p l a i n t i f f s . CONCLUSION W e a f f i r m t h e D i s t r i c t C o u r t ' s conclusions on a l l i s s u e s , and remand the case f o r proceedings i n accordance with t h a t c o u r t ' s judgment . I . " Y . We concur: