Court Opinion

ID: 9514659
Source: CourtListenerOpinion
Date Created: 2023-08-06 22:50:56.881707+00
Date Added: 2024-06-11T09:06:19.747146
License: Public Domain

AMUNDSON, Justice
(concurring in part, dissenting in part).
[¶25.] How can we find that fraud is speculative as to A & B Welding, but not with regard to Dakota Welding? I would hold that we cannot, and would affirm the trial court’s decision granting summary judgment.
[¶ 26.] The essential elements of fraud are:
[T]hat a representation was made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made; that it was made with intent to deceive and for the *711purpose of inducing the other party to act upon it; and that he [or she] did in fact rely on it and was induced thereby to act to his [or her] injury or damage.
Stene v. State Farm Mut. Ins. Co., 1998 SD 95, ¶ 27, 583 N.W.2d 399, 404; Dahl v. Sittner, 474 N.W.2d 897, 900 (S.D.1991); Holy Cross Parish v. Huether, 308 N.W.2d 575, 576 (S.D.1981). We have previously stated, “ ‘allegations of fraud and deceit without specific material facts to substantiate them will not prevent summary judgment.”’ Stene, 1998 SD 95, ¶26, 583 N.W.2d at 404 (quoting Taggart v. Ford Motor Credit Co., 462 N.W.2d 493, 498 (S.D.1990)); see also Western Cas. & Sur. Co. v. Gridley, 362 N.W.2d 100, 102 (S.D. 1985).
[¶ 27.] Plaintiff bases allegation of fraud on one statement regarding the buy-sell agreement which states: “This would be a continued agreement that was lost by Harold P. Elliott in the Rapid City flood.” This one sentence in the corporate minutes does not rise to the level of establishing fraud. Accepting Plaintiffs argument would require a jury to guess and speculate as to whether Fredris heard this statement prior to entering the agreements, and that she would not have entered the agreements absent the statement. As this Court recently stated, when opposing a motion for summary judgment, the nonmoving party “must substantiate his allegations with ‘sufficient probative evidence [that] would permit a finding in [his] favor on more than mere speculation, conjecture, or fantasy.’ ” Himrich v. Carpenter, 1997 SD 116, ¶ 18, 569 N.W.2d 568, 573 (citing Moody v. St. Charles County, 23 F.3d 1410, 1412 (8th Cir.1994) (citations omitted)). The plaintiff has failed to substantiate its allegation of fraud with sufficient facts.
[¶ 28.] In Matter of Estate of Elliott, 537 N.W.2d 660, 664 (S.D.1995) (Elliott I), we found Fredris to be a person who is very strong willed, and not easily influenced. In Elliott I, we accepted testimony from Fredris’ long-time friend and neighbor who “described her as a very controlling and manipulative person with a strong will who would distance herself from those she could not control[,]” and that, “Fredris could not be easily influenced.” Id. at 664. This Court determined that the record reflected, “[S]he ultimately made up her own mind and did whatever she wished.” Id. at 663. Further, “evidence of Fredris’ ‘mental strength’ and independence was offered by Donald Elliott and by Fredris’ attorney, Mr. Thorstenson, both of whom testified Fredris was of sound mind and competent at all relevant times.” Id. at 665-66. Testimony from Robert Elliott during deposition was that, “his mother knew ever penny she had even up until her death and that she was ‘sharp in numbers.’ ” Id. at 666.
[¶ 29.] Here is a person who was clearly found to be in control of her assets and not susceptible to undue influence in Elliott I, but now we are to believe she was defrauded.
[¶ 30.] Fredris was an active participant in the family’s welding businesses and the stockholders’ meetings almost up until her death. Elliott I, 537 N.W.2d at 661. The record discloses Fredris was present at the corporate meetings, where they adjusted the valuation of the buy-sell agreement, and at no time expressed displeasure with such valuation. Further, Fredris was aware of the practice of owning cylinders and, in fact, received rental income from the cylinders.
[¶ 31.] As stated above, allegations of fraud are insufficient to withstand a motion of summary judgment, there must be material facts to substantiate such allegations. Stene, 1998 SD 95, ¶ 26, 583 N.W.2d at 404. This record is devoid of such facts.
[¶ 32.] Raymond D. Elliott, the executor, testified under oath that he had no problem with the buy-sell agreement contained in the corporate records. Numerous courts have held that buy-sell agreements contained in by-laws, on stock certificates, and made among shareholders are valid *712and enforceable, especially in a close corporation.* This witness further testified that his dissatisfaction was with the methodology used in valuing the stock under the buy-sell agreements. This is the first time in twenty years there has been such a claim. It is obvious Fredris did not object to valuation. There has been no showing that the methodology or formula used was fraudulent. Mere dissatisfaction, based on hindsight, does not carry plaintiffs burden to show fraud.
[¶ 38.] The trial court, in granting the summary judgment motion, laid to rest this family war. I would affirm, so that it could remain in such posture.
[¶ 34.] I am authorized to state that Justice GILBERTSON joins in this special writing.

 See Miller Waste Mills, Inc. v. Mackay, 520 N.W.2d 490, 494 (Minn.Ct.App.1994) (stating, "A corporation’s right to repurchase shares upon a shareholder's death is a common transfer restriction that many courts have upheld.”); Dixie Pipe Sales, Inc. v. Perry, 834 S.W.2d 491, 493-94 (Tex.Ct.App.1992) (upholding a restriction on the transfer of stock in a closely held corporation); Bruns v. Rennebohm Drug Stores, Inc., 151 Wis.2d 88, 442 N.W.2d 591, 595-96 (Wis.Ct.App.1989) (ruling that a right of first purchase of stock in a closed corporation should be enforced); Sorlie v. Ness, 323 N.W.2d 841, 844-47 (N.D. 1982) (writing that a first-refusal option, which may be granted to the corporation, to its shareholders, or to both, is universally accepted as legally valid); F.H.T., Inc. v. Feuerhelm, 211 Neb. 860, 320 N.W.2d 772, 776-77 (1982) (ruling that a stock transfer restriction requiring shareholders to first offer their shares to the company at book value was valid); Rowland v. Rowland, 102 Idaho 534, 633 P.2d 599, 606-07 (1981) (finding reasonable a by-law requiring shareholders to first offer stock to the corporation at book value); Ginter v. Palmer & Co., 39 Colo.App. 221, 566 P.2d 1358, 1360 (1977) (upholding a provision in the articles of incorporation requiring that the corporation have the option to purchase stock at book value upon the death of a shareholder), rev’d on other grounds, Ginter v. Palmer & Co., 585 P.2d 583 (Colo. 1978); In re Estate of Brown, 130 Ill.App.2d 514, 264 N.E.2d 287, 291 (1970) (enforcing shareholder agreement granting companies first option to purchase stock upon death of shareholder at book value); Allen v. Biltmore Tissue Corp., 2 N.Y.2d 534, 161 N.Y.S.2d 418, 141 N.E.2d 812, 815-16 (1957) (recognizing that courts have uniformly held valid charter and by-law provisions requiring stockholder to first offer stock to corporation and other shareholders).