Court Opinion

ID: 878329
Source: CourtListenerOpinion
Date Created: 2013-06-04 22:33:55.849029+00
Date Added: 2024-06-11T13:02:04.332864
License: Public Domain

No. 84-231

                IN THE SUPREME COURT OF THE STATE OF MONTANA

                                          1984

DELBERT S. BOWMAN and PATRICIA BOWMAN,
                   Plaintiffs and Defendants,

JOHN R. PRATER, GERI PRATER, ELMER G.
SPIDEL & AVIS SPIDEL,
                   Defendants and Appellants.

APPEAL FROPI:      The District Court of the Sixteenth Judicial District
                   In and for the County of Prairie,
                   The Honorable A. B. Martin, Judge presiding.

COUNSEL OF RECORD:

         For Appellant:
                   Wright, Tolliver   &   Guthals; Joel E. Guthals, Billings,
                   Montana
         For Respondent:
                    Ira D. Eakin, Baker, Montana

                                          Submitted on Briefs: Aug. 30, 1984
                                           Decided: December 4, 1984

Filed:    i j i 11 . '2 1984

                                          Clerk
Mr. J u s t i c e John Conway H a r r i s o n d e l i v e r e d t h e O p i n i o n o f t h e
Court

         The d e f e n d a n t s a p p e a l from a n i n j u n c t i o n p e n d e n t e l i t e

order      of       the     District           Court        of     the        Sixteenth          Judicial

District,            Prairie           County,             enjoining               defendants            from

t r a n s f e r r i n g o r encumbering a s s e t s owned by t h e c o r p o r a t i o n .

         The        plaintiffs           are        bee     keepers         residing            in   Terry,

Montana.            The p a r t i e s     formed s e v e r a l c o r p o r a t i o n s w i t h t h e

desire      of       marketing         bee         pollen.         Three          corporations         were

formed :             Bowman           Apiaries,            Inc.,        Prairie           County       Land

Developers,               Inc.   ,      (P.C.L.D. )             and      Bee         Made        Products

Laboratories, Inc.

          In     return       for      capital        stock        in    the       corporation,          the

p l a i n t i f f s c o n t r i b u t e d l a n d w i t h a s e r v i c e s t a t i o n on i t , a s

well      as        their        labor        in     running          the         pollen       production

business.            Additionally,             the        plaintiffs          contributed            28,000

pounds      of      pollen,          3 1 honey drums,              and a          250 pound p r o p a n e

bottle.          The p l a i n t i f f s a l s o c o - s i g n e d       a n $89,000 p r o m i s s o r y

note.          The     proceeds          of    the        loan     were       used        to    acquire    a

t a b l e t i n g m a c h i n e , g r i n d e r and p r e s s and o t h e r e q u i p m e n t f o r

the     production           and       marketing           of    pollen.             The       defendants

contributed           a r e n t a l h o u s e and o f f i c e b u i l . d i n g i n e x c h a n g e

f o r c a p i t a l stock i n t h e venture.

          On May 8 , 1 9 8 2 , t h e d e f e n d a n t s t r a n s f e r r e d t i t l e o f t h e

rental           property             from         P.C.L.D.             Inc   .      to        defendants

individually.                The       defendants            also       mortgaged              the   office

b u i l d - i n g and. r e n t a l p r o p e r t y t o s e c u r e a p e r s o n a l l o a n i n t h e

amount         of    $1.09,000         without            the    knowledge           or        consent    of

plaintiffs.             The p l a i n t i f f ,      Mrs.       Bowman,       testified that the

defendant            used            corporate            funds         without            consent        or

a u t h o r i z a t i o n t o pay f o r h i s s o n ' s p e r s o n a l l i v i n g expenses.
The testimony further established that the defendant took the
tableting    and     grinding machines          to    Colorado without      the
knowledge or consent of the plaintiffs.                      The plaintiffs
repeatedly requested to examine the financial records of the
corporation, but were refused.             No payments have been made on
the $89,000 loan, as a result, the plaintiffs credit rating
has been ruined.
      On July 22, 1983, plaintiffs filed an action against
defendants claiming corporate mismanagement and breach of
fiduciary      duty     as      corporate       officers.           Defendants
counter-claimed         for     breach     of        settlement     agreement,
interference with contractual relations, breach of fiduciary
duties, and defamation of character.
      On March        26, 1984, the plaintiffs petitioned                for a
preliminary injunction to enjoin defendants from transferring
corporate money and property.            An order to show cause hearing
was held on April 20, 1984.          The injunction was granted.            It
is from the injunction pendente lite order of the District
Court which the defendants appeal.
      Two issues are before this Court:
      (1)     Whether     the    District       Court    erred     in   issuing
plaintiff's     preliminary         injunction          without     defendants
presenting evidence at the show cause hearing.
      (2) Whether the findings of fact and conclusions of law
in   support    of     the    preliminary       injunction        are   clearly
erroneous.
      Injunction proceedings are prescribed and regulated by
Chapter      19, Title        27,   of   the Montana        Code Annotated.
Section      27-19-301,       MCA    and     section        27-19-303,     MCA
correspondingly provide:
                "27-19-301.   Notice of application -
                hearing. (1) No preliminary injunction
                may be issued without reasonable notice
                to the adverse party of the time and
                place of the making of the application
                therefor.
                "(2) Before granting an injunction order,
                the court or judge shall make an order
                requiring cause to be shown, as a
                specified time a.nd place, why        the
                injunction should not be granted, and the
                adverse party may in the meantime be
                restrained as provided in 27-19-314.
                "27-19-303. Time of granting injunction,
                evidence required.    (1) The injunction
                order may be granted after the hearing at
                any time before judgment.
                "(2) Upon the hearing each party may
                present affidavits or oral testimony. An
                injunction order may not be granted on
                affidavits unless:
                " (a) they are duly verified; and
                "(b) the material allegations of the
                affidavits setting forth the grounds for
                the order are made positively and not
                upon information and belief.
                " (3) Upon the hearing of a contested
                application for an injunction order, a
                verified answer has the effect only of an
                affidavit. "
In the instant case, notice of the hearing on the preliminary
injunction was given to defendants.              An order to show cause
hearing was had.        The counsel of both parties were present.
The defendants submit that the court granted the injunction
after hearing only the plaintiffs' side of the case.                    The
defendants claim they were not given any                   opportunity to
present evidence as to why the preliminary injunction should
not be issued as provided by section 2 7 - 1 9 - 3 0 3 ( 2 ) ,   MCA.

       The     District     Court      record     indicates      otherwise.
Following a presentation of evidence the court asked if there
was   "anything further?"           The plaintiffs sumrna.rized their
position to the court.          The defendants remained silent.          It
is a t       this     p o i n t t h e c o u r t r u l e d and r e q u e s t e d p l a i n t i f f s

c o u n s e l t o submit proposed f i n d i n g s o f                   f a c t and c o n c l u s i o n s

of    law.        Moreover, t h e D i s t r i c t C o u r t r e c o r d i n d i c a t e s t h a t

defendants d i d not r a i s e an objection o r request t o provide

an    offer          of     proof      at    the     close        of     the     hearing.           The

d e f e n d a n t s simply f a i l e d t o r a i s e t h i s i s s u e i n t h e D i s t r i c t

C o u r t . W h o l d t h i s i s s u e c a n n o t b e ra.ised f o r t h e f i r s t t i m e
             e

on a p p e a l .          W have r e p e a t e d l y s t a t e d t h a t t h i s C o u r t w i l l
                           e

not     consider             questions        of     claimed         error      not       raised      or

presented            to     the    trial      court.            Northern        Plains      Resource

Council         v.        Board     of      Natural      Resources           and      Conservation

( 1 9 7 9 ) , 181 Mont. 500, 594 P.2d 297; Hayes v . J. M.                                 S . Const.

( 1 9 7 8 ) , 176 Mont. 513,     579 P.2d 1225; Kearnes v.            McIntyre

C o n s t . Co.      ( 1 9 7 7 ) , 173 Mont. 239, 567 P.2d 433.

          The d e f e n d a n t s a r g u e on a p p e a l t h a t t h e D i s t r i c t C o u r t

failed        to      exercise         independent          judgment           by    adopting       the

p l a i n t i f f s 1 proposed f i n d i n g s .        S p e c i f i c a l l y , t h e defendants

claim        the      District         Court        erred       in     making       the    following

findings :

           (1) The p l a i n t i f f s and d e f e n d a n t s w e r e i n c o r p o r a t o r s of

t h e corporation i n question;

           ( 2 ) The p l a i n t i f f s were d i r e c t o r s o f t h e c o r p o r a t i o n ;

           ( 3 ) The d e f e n d a n t s t r a n s f e r r e d ownership o f t h e r e n t a l

owned      by      P.L.C.D.,          Inc.     to    John       R.     Prater       and    Geraldine

Prater;

           ( 4 ) The t a b l e t i n g machine and g r i n d e r were removed t o

Colorado by John P r a t e r ;

           ( 5 ) The d e f e n d a n t s s u r r e n d e r e d p o s s e s s i o n of t h e o f f i c e

building;

           ( 6 ) The d e f e n d a n t s      f a i l e d t o show t h e p l a i n t i f f s t h e

c o r p o r a t i o n ' s f i n a n c i a l r e c o r d ; and
        (7) No payments have been made to the plaintiffs on a
promissory note, as a result their credit rating has been
ruined.
        The plaintiffs claim the District Court's findings are
supported by the record.             We agree.
        The standard for review of findings made by a district
court is the same whether the district court has prepared
them    or     has    adopted       a    party's   proposed     findings      and
conclusions.          Goodmundson v.        Goodmundson     (1982), 655 P.2d
509, 39 St.Rep. 2295; In re the Marriage of LeProuse (Mont.
1982), 642 P.2d 526, 39 St.Rep. 1053;                   City of Billings v.
Public Service Commission                (Mont. 1981), 631 P.2d 1295, 38
St.Rep.      1162.     "Although the practice is disapproved, the
fact    that    the    District         Court   substantially      adopted    the
findings proposed by respondent's counsel does not change the
standard of review by this Court."                    In re the Marriage of
Hunter (Mont. 1982), 639 P.2d 489, 39 St. Rep. 59.                     We must
ascertain whether the "clearly erroneous standard of Rule
52 (a) supports the findings on appeal."                      Speer v.     Speer
(Mont. 1982), 654 P.2d 1001, 39 St.Rep.        2204; In re the
Marriage of Jensen            (Mont. 1981), 631 P.2d 700, 38 St.Rep.
1109.        Rule     52(a)    M.R.Civ.P.       provides,     in   part,      that
"findings of         fact shall not be           set aside unless clearly
erroneous, and due regard shall be given to the opportunity
of   the     trial    court    to       judge of the credibility of the
witnesses."           This    rule       reiterates   our   function     as    an
appellate court.         In General Mills Inc. v. Zerbe Bros., Inc.
(Mont. 1983), 672 P.2d 1109, 40 St. Rep. 1830, we defined
this function:
                 "We cannot deviate from our function as
                 an appellate court and reverse the
                 District Court's decision. Our functions
                  do not include a retrial of the case. We
                  will not substitute our judgment for that
                  of the trial court. We are 'confined to
                  determining whether there is substantial
                  credible evidence to support the findings
                  of fact and conclusions of law' Cameron
                  v. Cameron (1978), 179 Mont. 219, 227 587
P.2d 939, 344; In the Matter of the
                  Estate of LaTray (1979), 183 Mont. 141,
                  598   P.2d   G19;   Olson   v.   Westfork
                  Properties, Inc. (1976), 171 Mont. 154,
                  557 P.2d 821; Hornung v. Estate of
                  Lagerquist (1970), 155 Mont. 412, 473
P.2d 541.''

         We    disagree   with   defendants '    contention   that    the
findings and conclusions adopted by the District Court as a
result of the hearing are clearly erroneous.             Specifical-ly,
the record supports the District Court's findings that the
defendants as well as the plaintiffs were incorporators a.nd
served as directors of the corporation.            The plaintiff, Mrs.
Bowman        testified   that   her   husband     and   herself     were
incorporators of all three corporations.             She also claimed
she was a director.       The Bowmans' testimony likewise supports
the remaining findings made by the trial court.           The findings
are further substantiated by plaintiffs' warranty deed and
quit claim deed exhibit evincing the transfer of the rental
house from P.L.C.D. , Inc. , to the defendants.           The evidence
will he viewed in the light most favorable to the prevailing
party.        Cameron v. Cameron (1978), 179 Mont. 219, 587 p.26
939.     We hold substantial, credible evidence supports the
District Court's findings.          The issuance of the injunction
was proper.        The order of the District Court is affirmed.
We concur: