Bowman v. Prater

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: