Opinion ID: 1153554
Heading Depth: 1
Heading Rank: 7

Heading: What is oppressive conduct for the purposes of ORS 57.595.

Text: In considering the meaning and application of the term oppressive conduct it is first to be noted that by the very terms of ORS 57.595 conduct need not be fraudulent or illegal to be oppressive within the meaning of that statute. [8] While general definitions of oppressive conduct are of little value for application in a specific case, perhaps the most widely quoted definitions are that oppressive conduct for the purposes of such a statute is: `burdensome, harsh and wrongful conduct; a lack of probity and fair dealing in the affairs of a company to the prejudice of some of its members; or a visual departure from the standards of fair dealing, and a violation of fair play on which every shareholder who entrusts his money to a company is entitled to rely.' [9] We agree, however, that the question of what is oppressive conduct by those in control of a close corporation as its majority stockholders is closely related to what we agree to be the fiduciary duty of a good faith and fair dealing owed by them to its minority stockholders. [10] Thus, an abuse of corporate position for private gain at the expense of the stockholders is oppressive conduct. [11] Or the plundering of a close corporation by the siphoning off of profits by excessive salaries or bonus payments and the operation of the business for the sole benefit of the majority of the stockholders, to the detriment of the minority stockholders, would constitute such oppressive conduct as to authorize a dissolution of the corporation under the terms of ORS 57.595. [12] On the other hand, it has been said that a single act in breach of such a fiduciary duty may not constitute such oppressive conduct as to authorize the dissolution of a corporation unless extremely serious in nature [13] and that even a continuing course of oppressive conduct may not be sufficient for that purpose unless it appears that, as a result, there has been a disproportionate loss to the minority [14] or that those in control of the corporation are so incorrigible that they can no longer be trusted to manage it fairly in the interests of its stockholders. [15] In other words, although a showing of imminent disaster is not required, liquidation is not available upon a showing of mere vague apprehensions of possible future mischief or injury or to extricate minority stockholders from an investment that turns out to be a bad bargain. [16] We also reject the concept that a close corporation is like a partnership to the extent that a minority stockholder should have the same right as a partner to demand a dissolution of the business upon substantially the same showing as may be sufficient for the dissolution of a partnership. [17] After all, the remedy of a forced dissolution of a corporation may equally be oppressive [18] to the majority stockholders. It has also been said that the decision by a court whether or not to require dissolution of a corporation for oppressive conduct requires an appraisal of the future of the corporation and that if the future appears to hold no hope or if the majority is incorrigible dissolution may be an appropriate remedy. [19] In any event, and as previously stated, while a showing of oppressive conduct may be sufficient to confer jurisdiction upon the court under ORS 57.595, such a showing does not require the court to exercise the power conferred upon it by that statute to require either the dissolution of a corporation or any other alternative equitable remedy. [20] We thus come to the question of what, if any, other remedies may be appropriate in such a case as an alternative to the forced dissolution of a corporation.