Gamble Robinson Company v. Carousel Properties

Citation41 St.Rep. 1757,688 P.2d 283,212 Mont. 305
Decision Date13 September 1984
Docket NumberNo. 84-43,84-43
PartiesGAMBLE ROBINSON COMPANY, a Corporation, Plaintiff and Respondent, v. CAROUSEL PROPERTIES, et al., Defendants and Appellants.
CourtUnited States State Supreme Court of Montana

Page 283

688 P.2d 283
212 Mont. 305
GAMBLE ROBINSON COMPANY, a Corporation, Plaintiff and
CAROUSEL PROPERTIES, et al., Defendants and Appellants.
No. 84-43.
Supreme Court of Montana.
Submitted on Briefs June 28, 1984.
Decided Sept. 13, 1984.

Page 284

[212 Mont. 307] Zane K. Sullivan, Missoula, for defendants and appellants.

John Warren, Schulz, Davis & Warren, Dillon, for plaintiff and respondent.


[212 Mont. 308] This action was brought in the District Court of the Fifth Judicial District, in and for the County of Beaverhead, Montana, on an account due. Respondent received summary judgment for $4,414.76 plus interest and costs. Appellants contest the lower court's ruling, and ask this Court to grant summary judgment in their favor. We reverse and remand.

On June 20, 1978, Walter W. Deines, Alan M. Hart, Carroll M. Hart, Ray L. Ingalls and Harry M. Opsahl, all of Missoula, Montana, agreed to form a partnership called Crosswinds Enterprises. Article 1.4 of the Partnership Agreement set out the

Page 285

purpose of the partnership, "... the ownership and operation of one or more restaurants and any other businesses related thereto, and such other business as the partners shall determine." In addition, the partners, in Article 4.1 of the agreement, contemplated that "... the partnership intends to enter into a separate contract of employment with Harry M. Opsahl regarding the full time operation and management of the partnership's initial restaurant venture." Until then the Agreement gave Harry Opsahl the specific authority to manage the restaurant as a partner and employee, "which said authority shall include, but not be limited to the powers to ... (ii) borrow monies for operating expenses of the partnership business ... [and] (iii) expend sums for the payment of ordinary business expenses, purchase of inventory, supplies, or other consumables ..." The Agreement otherwise limited all of the partners' authority, including Harry Opsahl's, to those specifically granted. Crosswinds Enterprises filed a registration of trade name on June 16, 1978.

In July of 1978, Crosswinds Enterprises acquired real property in Dillon, Montana on which it intended to begin restaurant operations. A Notice of Purchasers Interest in the name of Crosswinds Enterprises, a partnership, was filed with the Beaverhead County Clerk and Recorder at that time.

Little apparently happened until March of 1979. On [212 Mont. 309] March 1, the five partners joined in amending the partnership agreement. The name of the partnership was changed to Carousel Properties, and the provision in the Agreement giving Harry Opsahl general managerial powers was deleted. The purposes clause of the partnership was not amended. On March 30, Carousel Properties filed notice with the Secretary of State that it was assigning all of its rights in its old name, Crosswinds Enterprises, to a corporation formed that same day. All five principals in the partnership were equal shareholders in the new corporation, which took as its name Crosswinds Enterprises. The purpose of the corporation was the "operation and management" of the Crosswinds Restaurant. That same day, the partnership also filed a notice of name change.

On April 1, 1979, the partnership (Carousel Properties) leased to the corporation (Crosswinds Enterprises) the real property it had aquired the year before. On June 1, 1979, Harry Opsahl entered into a written agreement with the corporation to be general manager of the Crosswinds Restaurant. The restaurant opened for business on June 9, 1979.

Sometime early that June, Ken Marsh, a sales representative for respondent, Gamble Robinson Company, visited the Crosswinds Restaurant to solicit orders for bulk foodstuffs. Between June 11 and June 22, the restaurant ordered $582.15 worth of food from Gamble Robinson Company. The first order was billed to "Crosswinds Restaurant; Dienes, Opsahl, Hart and Hart," and was paid on July 14. All subsequent orders were billed the same way. In late June or early July, Ken Marsh and Harry Opsahl met to discuss the credit arrangement between Crosswinds and Gamble Robinson. The details of this conversation are unclear. Marsh has not testified, and Opsahl's recollection is equivocal at best. Gamble Robinson alleges that during this conversation, Opsahl represented to Marsh that the restaurant was owned and operated by a partnership. Regardless, what apparently came out of this conversation was a credit [212 Mont. 310] application that Marsh filed sometime in July with Gamble Robinson Company's branch manager. The application listed the restaurant's owner as a partnership of Dienes, Opsahl, Ingalls, Hart and Hart. It was not signed by Opsahl or any of the purported partners. A line of credit was approved and operations began on that basis.

In 1982, managerial and financial difficulties beset the restaurant. Harry Opsahl was fired as manager in April, and by October, Crosswinds was unable to pay its bills. The account with Gamble Robinson

Page 286

went unpaid from August 3 to October 16, when the line of credit was rescinded. Crosswinds then owed Gamble Robinson $4,414.96, the amount at issue in this action.

In January of 1982, Crosswinds Enterprises effected a bulk transfer of all of its corporate assets to Snowden Enterprises, Ltd. Snowden was a newly formed corporation with only one shareholder, Iris Hart, the wife of Carrol Hart (one of the partners and shareholders in the other two entities). Gamble Robinson Co. received a notice of bulk transfer, and indicated in a letter dated January 27, 1982 that it would file a claim as a corporate creditor. Following the bulk transfer, Carousel Properties transferred the lease from Crosswinds Enterprises to Snowden. On February 18, 1983, Crosswinds Enterprises filed a petition in United States Bankruptcy Court. Gamble Robinson, an unsecured creditor, received nothing.

On February 24, 1983, Gamble Robinson filed this action for the unpaid account against "Crosswinds Enterprises, a partnership consisting of Walter W. Dienes, Alan M. Hart and Ray L. Ingalls, also known as Crosswinds Restaurant." Harry Opsahl was not named in the original complaint, apparently because he had left the partnership at the same time he was fired from his post as manager. Defendant moved to dismiss under the name "Carousel Properties, a partnership formerly known as Crosswinds Enterprises, a partnership consisting of Walter W. Dienes, Harry Opsahl, Allan W. Hart, Carrol M. Hart and Roy L. Ingalls; also [212 Mont. 311] known as Crosswinds Restaurant." The motion to dismiss was denied, and it is under that name this action has proceeded. Following a hearing, the Honorable Frank E. Blair, District Judge, authorized a writ of attachment to issue against Carousel Properties.

This cause was heard on December 8, 1983, before the Honorable Frank M. Davis, District Judge, on cross-motions for summary judgment. At the hearing, Carousel Properties withdrew its motion and Gamble Robinson's motion was then granted. Judge Davis found this case to be appropriate for summary judgment because there were no genuine issues of material fact that the debt at issue belonged to the partnership, Carousel. This ruling was based upon: (1) the stated general purpose of the partnership; (2) the apparent authority of Opsahl to bind the partnership; (3) Opsahl's alleged representation to Marsh that he was dealing with a partnership; (4) the record title of the real estate was in the partnership name; and (5) the deceptive similarity of the various entities. The court also intimated that, although it was not strictly necessary for its decision, this case was ripe for the application of the doctrine of piercing the corporate veil.

Appellant presents the following issues on appeal:

(1) Was summary judgment properly granted?

(2) Did the District court err in its analysis of the record in determining the facts before the court?

(3) Is the doctrine of piercing the corporate veil applicable?

Was Summary Judgment Proper?

Summary judgment is not a substitute for trial, Baylor v. Jacobson (1976), 170 Mont. 234, 552 P.2d 55. Rule 56(c) Mont.R.Civ.P. permits summary judgment to issue only when there is no genuine issue of material fact, and the moving party is entitled to the judgment as a matter of law. Reaves v. Reinhold (Mont.1980), 615 P.2d 896, 37 St.Rep. 1500. In Cereck v. Albertson's, Inc. (1981), 195 [212...

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