Kuhns v. Koessler
| Decision Date | 13 October 1994 |
| Docket Number | No. 93-480,93-480 |
| Citation | 880 P.2d 1293,266 Mont. 339 |
| Parties | Eldon E. KUHNS, a/k/a E.E. Kuhns, Plaintiff, Appellant, and Cross-Respondent, v. James H. KOESSLER, Defendant, Respondent, and Cross-Appellant. |
| Court | Montana Supreme Court |
J. Reuss, Wright, Tolliver & Guthals, Billings, for appellant.
Sam E. Haddon, Dean A. Stensland, Boone, Karlberg & Haddon, Missoula, for respondent.
Eldon E. Kuhns (Kuhns) appeals the Thirteenth Judicial District Court, Yellowstone County, order which granted summary judgment dismissing Kuhns' claims on three promissory notes executed to Kuhns by James H. Koessler (Koessler). Koessler cross-appeals the District Court's grant of summary judgment on his RICO-based counterclaim.
We reverse the District Court's dismissal of Kuhns' promissory note claims, and remand to the District Court for a determination of the validity of the notes. We also reverse the District Court's dismissal of Koessler's RICO-based counterclaim and remand to the District Court.
In May, 1983, Koessler was hired by Rocky Mountain Capital, a business partnership. Kuhns owned eighty-five percent of Rocky Mountain Capital, and the remaining fifteen percent was owned by Robert M. Brown. As compensation, Koessler was to receive fifteen percent of future profits in addition to a salary.
The partnership was incorporated as Rocky Mountain Capital, Ltd. (RMC) in June 1983. All of the partnership assets were transferred to RMC and stock was issued in exchange. Kuhns transferred his eighty-five percent interest in the partnership to RMC and received 7,000 shares or seventy percent of the stock. Brown transferred his fifteen percent ownership in the partnership to the corporation and received 1,500 shares or fifteen percent of the stock. Koessler received 1,500 shares or fifteen percent of the stock, but did not transfer assets or otherwise pay the corporation for the stock. Kuhns contends that the 1,500 shares transferred to Koessler were the shares to which he was entitled and which were issued direct to Koessler.
The RMC minutes of a special meeting of the board of directors and stockholders of June 14, 1983, constitute the organizational minutes of RMC. The following paragraphs are contained in those minutes:
A list of proposed assets was presented to the meeting.... The respective asset owners, E.E. Kuhns and Robert M. Brown, each offered the noted property in exchange for common stock of the company.
It was then observed by Mr. Kuhns that James H. Koessler had no asset to contribute to the company, but that because of his expertise in the field of finance, he was valuable to the company and should be a shareholder. After discussion, it was agreed Mr. Koessler would execute a promissory note to Mr. Kuhns [original text "the company" crossed out here and initialed and dated 6/14/83], in the form attached hereto ... and in exchange therefore receive the same number of shares as Mr. Brown.
After discussion relative to the merits of the above, upon motion duly made and seconded, the following resolution was unanimously adopted:
"WHEREAS, Eldon E. Kuhns and Robert M. Brown are the owners of assets consisting of those items represented by Exhibit A ... and that James H. Koessler would execute a promissory note [original text "to the company" crossed out here and initialed and dated 6/14/83] in the form of Exhibit B....
BE IT RESOLVED, that the Board of Directors and Officers of this corporation be, and they are hereby authorized and empowered to accept the above offer and to consumate [sic] the transfer of the assets described on Exhibit A ... the Board of Directors and Officers are authorized to issue shares of the capital stock of this corporation as follows:
Eldon E. Kuhns 6,997 shares
Robert M. Brown 1,500 shares
James H. Koessler 1,500 shares."
Koessler subsequently executed the promissory note payable to Kuhns which is referenced in the minutes. Thereafter, he executed two additional promissory notes payable to Kuhns.
Koessler was employed at RMC from June 14, 1983, through July 31, 1986. However, he transferred his entire 1,500 shares of stock, fifteen percent of the corporation, back to Kuhns on July 22, 1986. As of July 29, 1986, after that transfer, Koessler was no longer an officer or director of the company.
On September 23, 1986, Kuhns filed a petition for bankruptcy. On July 10, 1989, Kuhns filed his complaint against Koessler, requesting payment on the three promissory notes executed by Koessler. Koessler counterclaimed for violation of the civil RICO statute, basing his claim on certain predicate acts allegedly committed by Kuhns during the course of Kuhns' bankruptcy proceedings. Koessler also counterclaimed for fraud, breach of contract, breach of fiduciary duty and punitive damages. The District Court reserved its ruling on these claims, and pursuant to Rule 54(b), M.R.Civ.P., the District Court certified these issues:
1. Did the District Court err in granting summary judgment against Kuhns, thereby dismissing Kuhns' claims for collection on the three promissory notes executed by Koessler?
2. Did the District Court err in granting summary judgment against Koessler, and by dismissing Koessler's RICO-based counterclaim for lack of standing?
Did the District Court err in granting summary judgment against Kuhns, thereby dismissing Kuhns' claims for collection on the three promissory notes executed by Koessler?
In reviewing a grant of summary judgment, our standard of review is identical to that of the trial court. Minnie v. City of Roundup (1993), 257 Mont. 429, 431, 849 P.2d 212, 214. If, after an examination of the record, we determine that there are no genuine issues of material fact, we then determine whether the moving party is entitled to judgment as a matter of law. Minnie, 849 P.2d at 214. Here, however, we conclude that genuine issues of material fact exist as to whether there was valid consideration for the three promissory notes.
As previously stated, promissory note no. 1 was executed by Koessler to Kuhns in exchange for 1,500 shares of RMC stock. Koessler contends that...
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Weldon v. Montana Bank
..."In reviewing a grant of summary judgment, our standard of review is identical to that of the trial court." Kuhns v. Koessler (1994), --- Mont. ----, ----, 880 P.2d 1293, 1295. We examine the record to determine whether genuine issues of material fact exist and whether the moving party is e......