Golden v. Oahe Enterprises, Inc., s. 11224

Citation240 N.W.2d 102,90 S.D. 263
Decision Date25 March 1976
Docket NumberNos. 11224,11511,s. 11224
PartiesWarren GOLDEN, Plaintiff and Appellant, v. OAHE ENTERPRISES, INCORPORATED, a corporation, et al., Defendants and Respondents. Warren GOLDEN, Plaintiff and Appellant, v. OAHE ENTERPRISES, INC., a South Dakota Corporation, et al., Defendants and Respondents.
CourtSupreme Court of South Dakota

Ronald G. Schmidt, of Schmidt & Schroyer, Pierre, for plaintiff and appellant.

David L. Bergren, of Bergren & Duffy, Fort Pierre, for defendants and respondents Oahe Enterprises, Inc., Donald F. Emmick and Robert Emmick.

Thomas C. Adam, of May, Porter, Adam, Gerdes & Thompson, Pierre, William J. Rawlings, of Kindig, Beebe, McCluhan, Rawlings & Nieland, Sioux City, Iowa, for defendant and respondent Charles A. Cannon, III.

Edward M. Blando, Special Stanley County State's Atty., Pierre, for defendant and respondent Ruth Johnson (successor in office to Eleanora LaRoche).

WILDS, Circuit Judge.

This case presents a consolidated appeal of the dismissal of two actions revolving around the exchange of personal property for shares in a corporation engaged in farming and ranching in Hughes County. Appeal No. 11224 arises from the dismissal of a replevin action venued in Stanley County. The second appeal, No. 11511, was instituted in Hughes County and is based on a sale of corporate assets and the alleged misuse of funds by corporate officers. The record is a complicated combination of files from four actions brought by these parties since January of 1968.

The plaintiff and appellant in this action is Warren Golden. Pursuant to an agreement with Oahe Enterprises, Inc., and its president Donald Emmick, defendants and respondents, Mr. Golden transferred personal property consisting of farming and ranching equipment to the respondent corporation in early January of 1967. In exchange for these assets, he was to receive stock in the corporation. Golden was elected to the office of secretary-treasurer of Oahe Enterprises, Inc., on January 20, 1967. He became a director of the corporation shortly thereafter. The January 24, 1967 minutes of the corporation's stockholders' meeting state in part that '378 (sic) shares of stock were issued to Warren J. Golden * * *.' On July 24, 1967, stock certificate #5, representing three hundred eighty-seven shares in the name of Warren Golden was executed. The certificate was never delivered to Golden; it remained a part of the corporate records and was later marked 'void.' All parties have agreed that this first certificate represented an incorrect number of shares.

In mid-July of 1967, Golden, through his attorney, tendered his resignation from the On January 31, 1968, Oahe Enterprises, Inc., commenced the first action against Warren Golden. In this Stanley County suit the corporation alleged fraud, mistake, failure of consideration and failure to provide good title and sought a rescission of the contract or, in the alternative, a reformation of the contract to conform to the evidence. It requested that the circuit court determine the price originally agreed to or that it set a reasonable price. Golden entered a general denial and a cross-claim for the delivery of stock in the amount of $16,922.32. The trial of this action commenced in the summer of 1968 and was submitted to Circuit Judge Fred Winans in March of 1970.

offices he held in the corporation and expressed his desire to withdraw as a stockholder. In November of the same year, his attorney made demand on the corporation for $19,352.32 in payment for the personal property he had transferred to the corporation. The corporation's Board of Directors authorized an offer to return the property to Golden and to negotiate a fair rental price for the use of the equipment or, in the alternative, corporate stock in the amount of $16,922.32. On December 28, 1967, stock certificate #8 representing 338.446 shares in the name of Warren Golden was executed. This certificate was also retained by the corporation.

In December of 1969, the Board of Directors of Oahe authorized President Emmick to sell the corporate holding for $175 per acre. Emmick was at that time engaged in negotiations for merger and/or sale with Charles Cannon, a respondent in this action, who owned land adjacent to that held by Oahe. In January of 1970, Cannon loaned Donald Emmick $150,000. The stated purpose of the loan was to enable Emmick to buy out the interests of all the other shareholders in Oahe. On March 16, 1970, a special meeting of stockholders in Oahe was held at which Emmick was authorized to enter into an agreement for the sale of real estate owned by the corporation. Warren Golden was given no notice of the meeting. Emmick and Cannon executed a contract for the sale of the corporation's real property on March 23, 1970; the agreement was adopted and ratified at a Board of Directors meeting the next day. The agreement provided that Cannon was to assign the $150,000 promissory note he obtained from Emmick to the corporation as partial payment for the property. In April of 1970, the sale agreement was recorded in the offices of the Register of Deeds for Hughes and Sully Counties. The deed and bill of sale covering real and personal property purchased by Cannon were recorded in the same offices in September.

In a letter of November 25, 1970, Circuit Court Judge Winans advised the parties of his decision to deny the claims of Oahe and to enter findings of fact and conclusions of law in favor of Golden. He specifically found that the sale was at arms length, that the sale was not contingent upon Golden's furnishing depreciation schedules and that Golden was at all times ready and willing to perform. The trial court concluded that Golden was entitled to the immediate issuance of shares in the amount of $16,922.32. Judgment was entered on December 23, 1970.

On January 15, 1971, Golden informed the Security National Bank of Sioux City, which was acting as escrow pursuant to the sale agreement, and Cannon's attorney that he was a stockholder in Oahe Enterprises and of the December 23, 1970 judgment. Eleven days later the corporation tendered stock certificate #37 representing 150 shares and, alternatively, $16,922.32 cash in settlement of the December 1970 judgment. Golden rejected both and maintained that the judgment awarded him shares in the amount of $16,922.32 based on the value per share on January 6, 1967, the date of execution of the bill of sale covering the property which Golden transferred to the corporation. On January 29, 1971, Golden filed a motion in circuit court requesting an order amending the findings of fact and conclusions of law to conform to the above contention.

On February 5, 1971, which Golden's motion was pending, the corporation obtained On March 10, 1971, Judge Miller denied Golden's motion for an amendment of the judgment entered by Judge Winans in December of 1970. Two days after Judge Miller denied this request, Donald Emmick placed $16,922.32 plus $200 in court costs in escrow to be delivered to Warren Golden in satisfaction of the 1970 judgment. A second application for amendment of the judgment or in the alternative for a new trial was also denied by Judge Miller in December of 1971. An appeal from this denial was taken to this court thereafter. The appeal was dismissed by this court on May 31, 1974, upon a determination that the motion was one for a new trial and that an appeal from the denial of such a motion would not lie. Oahe Enterprises, Incorporated v. Golden, S.D., 218 N.W.2d 485.

a temporary restraining order restraining Golden from interfering in the business affairs of Oahe, particularly the sale of assets to Cannon. A hearing on the corporation's request for a preliminary injunction was set for February 19, 1971. The record is devoid of any indication that the hearing was held as scheduled or at any time thereafter. The preliminary injunction was neither granted nor denied.

On April 24, 1972, Golden instituted a replevin action against Oahe, Donald Emmick and Eleanora LaRoche, the Clerk of Courts of Stanley County. He sought possession of stock certificate #8 representing 338.446 shares or in the alternative $150,000, the cash value thereof. Treating the defendants' motion for dismissal as one for summary judgment, the trial court dismissed the replevin action on August 11, 1972. This dismissal is one of two consolidated in this appeal.

On May 20, 1974, the main action currently on appeal was commenced by Golden against Oahe, Donald Emmick, Robert Emmick and Charles Cannon. Golden requested a judgment setting aside the sale of corporate assets to Cannon, appointing a judicially supervised receivership for all corporate assets, ordering production of all corporate records and an accounting by the Emmicks, payment to the corporation by the Emmicks for loss occasioned by their misconduct, and actual and punitive damages. Golden also sought and received temporary restraining orders to prevent the respondents from interfering with, distributing, transferring or disposing of corporate assets or funds and restraining Cannon from making any further payments pursuant to the sale agreement and from assigning or transferring the promissory note he obtained from Emmick. A temporary restraining order was issued and a hearing on the request for a preliminary injunction was set for June 10, 1974.

On June 5, 1974, Cannon filed a motion for dismissal and affidavits in support thereof. Additional supporting affidavits were filed two days later. A hearing on the motion was set for June 10, 1974, the day also set for hearing on the request for a preliminary injunction.

Judge Miller dismissed Golden's suit against all defendants by memorandum opinion of July 3, 1974. His decision was based on findings consistent with six contentions raised by the defendants. No formal findings of fact and conclusions of law were entered. The informal findings were: (1) Golden's...

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