Nelson v. WEB Water Development Ass'n, Inc.

NELSON, Jr., Plaintiff J. Willis Appellant, DEVELOPMENT ASSOCI-

WEB WATER INC., Fischbach, ATION, Edwin Robert Johnson, Knickrehm, D. Oscar William Thomas, Howard Defen- E. Jeschke Appellees. dants and

No. 17966. Dakota. Supreme Court South Argued Jan. 1993. Decided Oct. 1993. meeting January public

At a fire a motion made to Nelson. job performance was then dis- Nelson’s cussed; he was the motion carried and fired day. against filed and Nelson suit WEB alleging directors as individuals breach of contract, defamation, salary, conversion good faith and breach of covenant of fair dealing, fiduciary duty, negligent breach of distress, or intentional infliction of emotional contract, conspiracy to interfer- breach relationship expectan- ence with business damages. cy, requesting punitive and WEB granted judgment; Nelson summary ap- was peals.

Subsequent arguments oral to the be court, this motion was made Nelson fore judicial article X of to take notice of WEB’s Apparently, incorporation. articles of lawyers previously court and un trial were of article X. We find that court’s aware proper. judicial notice of the article is Nau Nauman, Margo- Kornmann and Susan 662 Charles B. man v. 336 N.W.2d Groseclose, Nauman, lies, Richardson, Kornmann and In we stated: Aberdeen, Wyly, appellant. and 19-10-2(2) statute, By both and SDCL 19-10-3, law, though and it case even be a L. Piersol and Marie E. Hov- Lawrence possess not fact of which the court does land, Evans, Smith, and Davenport, Hurwitz Larson, knowledge, present State actual Falls, appellees. and Sioux for defendants (1965), 540, judicial 81 S.D. 138 N.W.2d may public or official notice be taken WUEST, Justice. Hudson, City records. Walz (Nelson) appeals J. from a Willis Nelson (S.D.1982); Elfring v. Pater- N.W.2d judgment summary granting decision (1939).... son, 458, 66 S.D. 285 N.W. Development Association WEB . Water remand be an idle act to It would (WEB). part, part in reverse in We affirm know, and can proceedings find what we and remand. accept, as factual. Nauman, This au- at 664-65. N.W.2d FACTS of the WEB thority judicial allows notice WEB, manager of hired as was filed with Secre- incorporation articles of non-profit develop- for water corporation Dakota. tary for the of South of State State 1989, ment, August In March 1988. WEB OF REVIEW STANDARD signed and Nelson reviewing employ agreed WEB Nelson for 15-6-56(c) we must judgment under years. new three On December moving party has determine whether Board of Directors members of the WEB issue (Board) genuine elected, there is no had demonstrated three whom were fact he is entitled change management material and campaigned that a 17, 1990, v. Great North January a matter of law. as Wilson needed at WEB. On Co., authorization, N.W.2d Ry. full ern S.D. without Board settlement Tenneco, Int’l, Inc. Groseth resign if he would as was offered to Nelson Breen N.W.2d manager. He refused. officers, appoint all b. To select N.W.2d Joint Gear & v. Dakota Corporation agents, employees must be “The evidence employees agents or remove all such nonmoving par favorably to the most viewed Board, pleasure Corporation, at the should be resolved ty doubts and reasonable designate prescribe such duties and to Groseth, 410 moving party.” against powers be consistent with such Wilson, (citing 157 N.W.2d at 164 By-Laws, compensation fix their thesе Pac., Inc., 21; 390 N.W.2d Trapp v. Madera [Emphasis pay for faithful services. (S.D.1986)). if proper Affirmance is added.] trial support exists which would basis Breen, at 223 ruling. court’s ARTICLE XVI Loan Ass’n, First Fed. Sav. & Blote v. altered, may Uken v. By-Laws be amended [T]hese (S.D.1980)). Sloat, by majority ‍​​​​​‌​‌‌​‌​​‌‌‌‌​‌​‌‌‌‌​‌​​​‌‌​​‌​‌‌‌‌‌‌​​‌​‌​​‍of the members repealed a or meeting, provided any regular special

at or meeting shall have con- the notice of such ANALYSIS alternation, copy proposed of the tained a repeal.... Changes the amendment or I. OF EMPLOYMENT VALIDITY by the Board By-Laws may proposed be CONTRACT BETWEEN WEB subject approval to review and of Directors AND NELSON. special membership any annual or of the Board bylaws provide the The WEB Proposed changes by the Board meeting. authority discharge with the to of Directors included in the notice of Directors must be pleasure of the Board. employee at the meeting. of the otherwise valid con asserts that its The court held there was no enforce- circuit it was tract Nelson was void because with and WEB be- able contract between Nelson expressed beyond power of the Board as the entering specified a cause into a contract for bylaws corporation to enter a in the of the bylaws by of the the term was an amеndment specified employment contract for a valid Board. Da term. claims that because South part: provides, SDCL 47-22-33 power to gives corporations kota the law alter, repeal power to amend or the The contracts, possessed the Board the enter into bylaws adopt bylaws shall be vest- or new authority employment con to enter valid unless other- ed in the board of directors authointy independent from its to ter tracts incorpo- provided in articles of wise the thus, his contract is minate bylaws may bylaws. The ration or the valid. regulation any provisions for the contain bylaws Cоrporation pro- The of the WEB corpo- management affairs of a of the in part: vide inconsistent with law or ration not

incorporation. articles of

ARTICLE XIII parties Unfortunately, trial court and X of article laboring without the benefit were 1. The Board of Directors sub- Section incorporation. As shall be of the articles law, ject to the restrictions of the seen, apparent there is an conflict between By-Laws, Incorporation, and Articles of X bylaws and article article of the WEB XVI powers shall exercise all of the bylaw incorporation. The the articles of to, Corporation. prejudice or Without XVI to the effect that provision of article powers, upon, general their it is limitation bylaws is may alter or amend the members hereby provided Board expressly that the X of the clearly in with article disaccord have, given, power full shall and are incorporation provides articles of authority perform the duties func- empowered Directors “shall be the Board of forth, [Em- set to wit: tions hei’einafter By-Laws, from time repeal or to amend phasis added.] vote, time, by of a 66% favorable means n 47- n n Directors.” SDCL n n n proper after notice to # cases, corporation nonprofit charterеd under South part: “In all other provides, in 22-34 provides: incor- Dakota law. SDCL 47-22-59 provision a of the articles whenever bylaw, poration power is with corporation inconsistent Each shall have liabilities, incorporation shall provision of articles of make and incur contracts bor- as controlling.” money row at such rates interest determine, notes, corporation its issue brief, au it conceded that In WEB’s bonds, obligations, and other and secure upon Nelson stand for relied thorities any by mortgage obligations of its bylaw empowering the proposition that pledge its property, of all fran- remove director board of directors [Emphasis chises and income. added.] corporation authorize does not officer clearly provides 47-22-59 that WEB with one to terminate a contract the board authority had the to enter into valid con- term. they employed for definite whom had authority tracts. The to enter into valid Rubber & Short Columbus Gasket See power includes the to enter contracts em- (Miss.1988); Cuppy v. 65-66 So.2d ployment contracts. Bros., 216 N.Y. 111 N.E. Stollwerck corporation only through can Since a act Producers and Consum United acting agents corpo- individuals for the (9th Held, Coop. v. 225 F.2d ers ration, corporation may it follows that Cir.1955); Corp., 90 In re Paramount Publix employ agents for it.... officers and to act Cir.1937). (2d 441, especial This is F.2d The of directors the ultimate board case, present ly in a like the true situation body corporation governing the has the of power to of has the where board directors employment authority to make contracts of corporation. bylaws the of the amend ratify all or to such contracts made kinds authority holding that provides brief WEB’s by others. have corporation’s board of directors where Fletcher, Cyclopedia authority bylaws, a 19 William M. Fletcher exprеss to amend the the Corporations § 3:38 employment valid of the Law of Private for a term of is contract 1988). See, vol. XIII of (perm. ed. rev. Article e.g., Hernandez and enforceable. Americas, 552, bylaws to exer- WEB authorized Board 116 Ariz. de Banco las corporation. of powers cise Dixie Glass Co. P.2d Pollak, (Tex.Civ.App. S.W.2d Further, provides: 47-23-25 SDCL 1960); Montgom Acceptance Corp. v. Realty appointed Any agent officer or elected or (3d Cir.1930); Mag ery, F.2d 637-38 may by persons authorized removed Magnus Organ Corp., N.J.Super. nus appoint whenever in to elect or such officer (Ch.Div.1962). As stated A.2d of judgment their the best interests briеf, clearly cases show “[t]hese in WEB’s thereby. corporation The will be served that, employment regardless of an whether agent or shall be an removal of officer oral, of is a contract written contract rights, prejudice to the contract without if op specified period employment for a could any, removed. Election or so officer by an rescission of a erate as amendment or agent appointment of an officer or shall authorizing the removal an officer law rights. [Em- create contract not of itself pleasure at the board employee i/such рhasis added.] by was made a board directors contract is clear —a non- language The of this statute by power to or rescind the having amend may officer or corporation remove an profit corporationf.]” power This of the laws board, but the pleasure of the director at to the WEB bylaws granted is amend may not officer or director removal of such X in of the WEB articles Board article rights. The any existing prejudice Thus, Di incorporation. Board of the WEB adoption is consis- legislature’s statute a valid authority had to enter into rectors employment contracts tent with the view thаt specified term. employment contract for corporation designed to benefit both the are Paramount, 90 F.2d 47-22-2, employee. 47- and the See chapters all of Under corpora- (stating that to allow either apply nonprofit corpora- at 443 through 47-28 eon- ignore employment employee organized Dakota. is a tion South tions disruptive explicit agreement The trial tracts would be modern busi- court found no Likewise, by discharge employees practice). the Arizona Su- WEB to for cause ness only. sufficiently that enactment of Nor did the court find a preme Court found state’s grounds employee detailed to SDCL 47-23-25 was an list dis- a statute similar charge specific procedure aor which the adoption of the idea “that modern business employer required imply was to follow to parties must be bound mandates agreement discharge employees they for cause contracts enter into absent fraud or Hernandez, only. agree. Nothing employee We in the duress.” 570 P.2d 498. discharge manag- handbook created a contract of of Nelson as WEB WEB’s Summary judg- WEB and rights not affect his under a valid between Nelson. er did on trial ment this issue is affirmed. employment contract.1 We reverse the cоurt on this issue. III.CONVERSION OF NELSON’S

II.EFFECT OF WEB EMPLOYEE SALARY AND BENEFITS. MANUAL. PERSONNEL granted summary The trial court employee claims the WEB alleg for WEB on Nelson’s claim discharge a contract to handbook created ing salary that WEB converted his and bene only. cause WEB claims the handbook did opinion It fits. is our that this action lies apply manager not to Nelson as a and fur breach contract and not conversion. See ther, that the book neither detailed nor Clapp Edge v. Gilt Consol. Mines specific enough (1913). to create contract. 128-29, S.D. N.W. person may greater No recover a amount in provides employ- Dakota law South damages obligation for the breach anof than having specified ment no term be termi- gained by he could performance have full party. nated at the will either SDCL 60- statutory exemplary both sides absent dam exceptions 4-4. We have carved out two to ages. may SDCL 21-1-5. Nelson not recov employment-at-will doctrine in cases damages er injury simply twice for the same implied through where arise contracts pleads legal because he two theories —one in employee Osterkamp use of handbooks. v. breach of contract and one in tort. Green Inc., Mfg., Alkota 332 275 N.W.2d Ranches, wood Inc. v. Skie Constr. 629 exceptiоns clearly The two have been defined (8th 518, Cir.1980) F.2d (applying 521 South by this court: law, holding Dakota that First, agreement may such an be found separate damage was not entitled to a award explicitly provides, where the handbook in where each simply cause of action was an comparable language, the same or that theory seeking alternate relief for the same discharge only.” can occur “for cause Bank, wrong); Security Hoovestol v. State Second, only” 854, (N.D.1992) agreement a “for cause 479 (holding N.W.2d 862 that may implied where the con- party may handbook a not recover twice fоr the same grounds injury simply tains a detailed list of exclusive legal because he has two theo and, ries). employee Therefore, discipline discharge a we affirm the trial court’s mandatory specified procedure which summary judgment on the claim of employer agrees prior to to follow conversion. employee’s termination. IV.INTENTIONAL OR NEGLIGENT S.D., 437 Citibank N.W.2d

Butterfield PUBLICATION OF STATEMENTS 857, short, 859 “In the handbook DEFAMING NELSON. language indicating must contain in- a clear employer’s part tention on the to surrender Nelson next claims that WEB caused statutory injured power employ- published its terminate its statements to be at ees Id. defamed him. asserts thаt Nelson is a will[.]” setting provisions 1. The contract contains no dismiss Nelson remains for determination on re- possible grounds forth for termination. The is- mand. prove just sue of whether WEB can cause to

697 therefore, WEB, controversy pertaining limit- public figure; he was a purpose limited convincing purpose .public figure. “clear and evi ed must show acted “actual malice” that WEB with dence” public figure may A recover dam ‍​​​​​‌​‌‌​‌​​‌‌‌‌​‌​‌‌‌‌​‌​​​‌‌​​‌​‌‌‌‌‌‌​​‌​‌​​‍prevail a action. in order libel ages alleged only upon for defamation a Inc., Liberty Lobby, 477 U.S. Anderson showing of “actual malice.” New York 2508, 242, 244, 2505, L.Ed.2d 106 S.Ct. 91 Times, 285-86, 729, 11 376 at U.S. 84 S.Ct. at 202, (citing 209 New York Times Co. v. 254, 279-80, 710, requires L.Ed.2d at 710. Actual mаlice a Sullivan, 84 376 U.S. S.Ct. 686, showing 725-26, (1964)); actually the defendant knew 11 L.Ed.2d 706 Curtis Butts, 130, defamatory that the statements false or were Publishing Co. v. 388 U.S. 1975, (1967), disregard reh’g acted with reckless of the truth. 18 L.Ed.2d 1094 S.Ct. Times, denied, 889, 11, 287, York at New 376 U.S. at 389 U.S. 88 S.Ct. 19 L.Ed.2d S.Ct. (1967). 730, 11 at 710-11. The has L.Ed.2d Court standard, New stat clarified the York Times public figure person is a Whether ing: initially a purposes of a libel action is ruling court on a motion for [A] question of law for the trial court. Rosen guided by must be York New Baer, 88, 669, 75, blatt v. 383 U.S. 86 S.Ct. evidentiary convincing” “clear 597, Times 677, 15 L.Ed.2d Bufalino determining genuine standard in 766, whether Magazine, Mich. Detroit is, (1989). issue of malice exists—that whether Additionally, a court N.W.2d presented is reason- evidence such person find that a loses the status an jury might able find that actual malice had ordinary public citizen and becomes a limited convincing clarity. been shown with figure purpose of in which for the the action controversy arose. Gertz v. Robert Anderson, 477 U.S. at S.Ct. at 2514- Welch, 323, 351, Inc. U.S. S.Ct. 217; Viking 91 L.Ed.2d See Janklow v. (1974). Gertz, L.Ed.2d Press, (S.D.1990) volun the Court held that individual who Times). Anderson and New York tarily par injects himself or is drawn into a The trial court found the record void of pub public controversy may ticular become proof that WEB made with statements figure range a limited lic issues. Id. falsity. knowledge disregard of or reckless previously have determined that We agree. Nelson failed meet his burden We pur public сorporation not a for WEB was convincing of clear presenting evidence applying poses of SDCL 5-19-3. Dahme malice; of is affirmed on Ass’n, v. WEB Dev. Constr. Co. Water this issue. (S.D.1989) (holding N.W.2d subject to public is not control suffi THE V. BREACH OF COVENANT require application cient to of South Dakota’s FAITH AND FAIR statute). OF GOOD public preference in How DEALING. ever, finding is not of the determinative pur a question of whether Nelson is limited Independent of A. Contract public figure purposes defama pose of tion. clearly re explicitly, have We peatedly adopt new cause of declined to a The circuit court found that Nelson was implied in of cove action tort for breach figure. purpose public limited It determined good dealing indepen faith and fair nant large, nonprofit corporation that WEB is BankWest, 459 dent of contract. Garrett v. importance many great South Dakotans (S.D.1990); Peterson v. Glo N.W.2d corporation. of the It who are members Falls, ry House Sioux N.W.2d found the media has shown a continued inter- Breen, 433 N.W.2d at 224. in of WEB and est the activities that Nelson Summary judgment proper on the issue was newspaper himself authored articles about implied good faith of an covenant Accordingly, the court found that breach WEB. Nelson, dealing independent by becoming public fair of contract. involved in a Taggart

B. Within Contract benefit.” another’s v. Ford Motor (S.D.1990) Credit N.W.2d Garrett, “Every In this court stated: 55-7-2(2)). (citing SDCL We have further implied good contract contains covenant of explained concept: this dealing prohibits faith and fair either injur contracting party preventing from party One cannot transform business ing party’s right the other to receive the relationship fiduciary into one which is Garrett, agreed contract.” benefits merely by placing nature trust and confi- (Sec (citing 459 N.W.2d at 841 Restatement party. dence the other There must ond) (1981)). § of Contracts We went on circumstances, relationship additional or a say, “good duty faith is not a limitless trusting party that induces the to relax the obligation. implied obligation The ‘must vigilance care and which he would ordinari- language arise from the used or it must be ly protection. exercise for his own indispensable to effectuate the intention of S.D., Ainsworth v. First Bank ” Garrett, parties.’ N.W.2d at 841 Sessions, Morton, Inc. v. 491 F.2d trial court found no facts which (9th Cir.1974)). The supported special Nelson’s contention that a haveWe determined that a valid contract fact, relationship existed In with WEB. existed between WEB and Nelson. There- experienced court found Nelsоn was more fore, summary judgment on the issue of business than the individual members of the good breach of contractual faith and fair placed Board. “pe Nelson failed to show he dealing is reversed and this issue is remand- culiar confidence” in WEB or to establish ed. duty primarily WEB had a act for his Accordingly, summary judgment benefit. VI. BREACH OF FIDUCIARY DUTY. proper on this issue. fiduciary duty The existence of a scope duty questions of that are of law VII. INTENTIONAL INFLICTION Garrett, 839; for the court. 459 N.W.2d at OF EMOTIONAL DISTRESS. (S.D. Lavielle, Erickson v. 1985); Lalley Safway Scaffolds, Steel This court has set forth the ele Garrett, 364 N.W.2d 139 necessary prima ments to establish a facie quoted court Supreme the Kаnsas Court’s case for intentional infliction of emotional fiduciary characterization of a relationship: distress: fiduciary A relationship imparts position (1) amounting an act defendant to ex- peculiar placed by one indi- confidence conduct'; outrageous treme and fiduciary person vidual in another. A is a part intent on the of the defendant to duty

with a pnmarily to act benefit distress; cause severe emotional fiduciary another. A position ‍​​​​​‌​‌‌​‌​​‌‌‌‌​‌​‌‌‌‌​‌​​​‌‌​​‌​‌‌‌‌‌‌​​‌​‌​​‍is in a (3) the defendant’s conduct was the cause exercise, have and and does have and exer- distress; plaintiffs in-fact of cise fiduciary over another. A influence (4) plaintiff suffered an extreme dis- relationship implies superi- a condition of abling response emotional to defendant’s ority parties one over the other. of conduct. Generally, in fiduciary relationship, a property, authority interest or of the other (S.D. McDougal, Tibke v. 479 N.W.2d 898 placed charge is in the fiduciary. 1992) (citations omitted). outrageous The Garrett, (citations giving omit- conduct rise to the tort must be con ted) (quoting Denison State Bank v. Ma- duct usually which exceeds “all bounds toler deira, 230 Kan. by society P.2d 1241 ated decent and which is of a (1982)). cause, We have stated that South Dakota especially nature calculated law cause, reflects “the traditional view that fiducia- very does mental distress of a serious ry Tibke, (citations duties are not inherent in normal arm’s- kind.” 479 N.W.2d at 907 length omitted). relationships, only business and arise The initial determination of wheth when one primarily undertakes to act enough er the defendant’s conduct is extreme Out, 380, 385 belongs court. N.W.2d Time recovery to the trial permit (Second) alleged we between the of Torts found discussion Id. Restatement (d)). conspirators more than com- “evidenced little § 46 comment Here, dur- mon sense.” discussion business determined, agree, judgе The we trial management ing changing the election about not do deposition and affidavit that Nelson’s about at WEB was similar —a discussion genuine facts to create a set forth sufficient business, conspiracy. a not Summary jury. for a material fact issue of judgment affirmed on this issue. is Board was constitut Once the WEB ed, the actions of the individuals became INFLICTION VIII.NEGLIGENT whole, entity. corporate action of the EMOTIONAL DISTRESS. OF conspiracy conspiratorial if the is no “[T]here Dakota, negli the tort of In South essentially challenged single a act conduct is requires gent of emotional distress infliction exclusively single corporation acting a Wright symptoms. physical manifestation directors, through own officers and em its Bottling Sys., 414 N.W.2d v. Coca Cola his ployees, acting scope within the each (S.D.1987). Further, there must be Moore, employment.” [or her] Herrmann the distress causal nexus between some (2nd denied, 453, 459 Cir.1978), cert. 576 F.2d injury. Wright Id. that physical held S.Ct. 58 L.Ed.2d U.S. physical some when a establishes (1978) (holding faculty and that the vote of injury, degree injury question is a professor discharging trustees was essential Wright, 610. jury. 414 N.W.2d at for the by corporation). agree ly single a act We reasoning with of the Second Circuit case, in his In this admitted Appeals Court of and find injured physically deposition that he wаs not conspiracy commit when Board could not Later, in an affida by the actions of WEB. entity. trial acting corporate The as vit, unex he a visit a doctor for described summary judgment is af court’s law pains. It is settled plained abdominal conspiracy. firmed the issue jurisdiction claim party that a cannot favor of the facts more benefit of version gave in his his contentions than he

able to INTERFERENCE WITH X.TORTIOUS Dewey testimony. own sworn Waddell OR RELATIONSHIP BUSINESS Bank, n. 3 County 471 N.W.2d EXPECTANCY. Scaffolds, Lalley Safway Steel the trial court Nelson further claims granting erred in indi his claim that the directors finding that WEB on agree with the trial court’s We relationship in his business of viduals interferеd genuine issue Nelson failed establish Tibke, set expectancy. In we damaged his be- fact as to a causal connection material of the claim forth the essential elements pains tween abdominal and the emotional with relation interference business Summary judgment is tortious he suffered. stress ships expectancy: issue. affirmed on this

(1) rela- valid business the existence TERMINATE TO IX.CONSPIRACY expectancy; tionship or AND BREACH THE EMPLOYMENT re- knowledge by the interferer of the EMPLOYMENT CONTRACT. lationship expectancy; genuine are is Nelson asserts there (3) unjustified and act an intentional indi of material fact as to whether the sues part of the interfеr- interference on conspired to terminate vidual defendants er; his contract. and breach (4) caused the pro.of that interference previously This has affirmed a directed court sustained; and harm alleging in an action verdict for defendants relationship party damage his to the whose conspiracy expel to from Out, Karras, disrupted. expectancy or v. 469 business. Time Inc.

Tibke, corporate Miller action under 479 N.W.2d at 908 would be suable Co., Tams, allegations Neb. in Chem. v. some such as are made ” (1982); Co., complaint.’ v. Fisher & Nesler (Iowa 1990)). We 452 N.W.2d 191 have nev- Bossuyt, (quoting N.W.2d at 779 Rhine question before decided the whether a er Sanders, Ga.App. 110 S.E.2d corporation may оr director officer of a (1959)). Bossuyt quoted: As the court liable for tortious interference of business dangerous “To hold otherwise would be doc- expectancy discharging or in an em- trine, subject corporate would officers ployee. continually liability corpo- and directors to on overwhelming The trial court found the go rate contracts and far toward undermin- majority jurisdictions to hold a refuse ing ‍​​​​​‌​‌‌​‌​​‌‌‌‌​‌​‌‌‌‌​‌​​​‌‌​​‌​‌‌‌‌‌‌​​‌​‌​​‍liability limitation of which is one of directors, corporation’s employees or officers objects principal corporations.” [sic] corpo liable for tortious interferencе with a Bossuyt, (quoting In N.W.2d at 779 re they expectancy rate contract or as are con Mills, 276 A.D. Brookside 94 N.Y.S.2d parties acting to while sidered the contract (1950)). corporate serve the interests within the reasoning is This consistent with South scope authority. Nordling of their v. North gives corporations Dakota law which Co., (Minn. ern States Power 465 N.W.2d 81 officers, indemnify directors, power to em- App.1991); Bossuyt Osage Farmers Nat’l agents ployees corporation of the cor- or for Bank, (Iowa 1985); 360 N.W.2d 769 Dzierwa porate they performed acting actions in while Co., Michigan Mich.App. Oil good against faith and not the best interests Fisсher, N.W.2d 610 Thomas G. An corporation. 47-22-65.1 SDCL notation, Director, Liability Corporate Of through -65.5. ficer, Employee Tortious for Interference Another, Corporation’s With With Contract Dakota, In South no cause of action (1989). A.L.R. 4th for tortious interference with contract Nordling, In Ap- Court of Minnesota against corporate be maintained officer peals grant summary judgment affirmed a who, acting scope within the of his her corporate to the defendant on a officer claim authority, discharges employee. an The trial of tortious interference with contract where summary judgment court’s is af personal capacity the officer had no to dis- firmed this issue. charge employee. an corpo- “The acts of a rate officer scope within the of his or her XI. PUNITIVE DAMAGES. corporation, duties constitute the acts of the Dakota, punitive damages In South personal officer is from thus shielded only permitted are where stat authorized liability for tortious interference with con- damages ute. 21-1-4. Punitive are SDCL Nordling, tract.” 86-7. In ordinarily in not available breach of contract Bossuyt, Supreme Court Iowa af- 21-3-2; claims. Cross SDCL O’Neill v. Blue summary judgment firmed for a bank officer (S.D. S.D., W. Iowa 366 N.W.2d 816 acting in capacity, reasoning: his official 1985); Family v. American Thu Ins. (defendants) “[T]hey right had while (S.D.1980). However, N.W.2d 109 60- acting corporate agents as officers 11-7, pled which Nelson in his com amended counsel and advise with the defendant cor- plaint, permits wages double to be awarded poration as to management of its af- if damages employer’s pay refusal corpora- fairs all matters with which the wages oppression, arises to the level of fraud tion was concerned without the risk of provides: or malice. SDCL 60-11-7 rendering personally themselves liable to parties third regard their acts in if action for obli- the breach of an they ‘Any pay shоuld err. gation wages, private other rule would em- where a impossible fraudulent, make it corporate ployer oppressive, business has been malicious, to be except peril carried on pay wages at all at the his refusal to due every agent that concerning employee, damages who advised to the the measure of wages question majority’s which I that amount of for assertion is double X, incorporation giving is article Board employer liable. power bylaws, bylaw to amend the and arti Therefore, if the trial court determines XVI, giving power cle similar to mem WEB breached its contract with that WEB remand bers, principles conflict. The same Nelson, guilty is Nelson must show WEB govern govern the construction of contracts or malice recover double oppression, fraud to interpretation corpo and construction provides for dou- damages. Where statute John’s, 679, bylaws. St. rate 90 S.D. damages damages, punitive further are ble that, principle at 475. such is N.W.2d One Ranch, Inc. Jensen v. not recoverable. possible, provisions whenever contractual will Marsden, K 440 N.W.2d given harmoniously be construed and effect Mayer, E Inc. v. & Land & Cattle GMS, provisions. to Inc. v. all Deadwood The trial court’s N.W.2d (S.D. Inc., Club, Sоcial 333 N.W.2d damages summary judgment grant 1983). Therefore, provisions the two should under 60-11-7 is reversed. providing by means separate read as grant the trial court’s As have affirmed we membership which either the Board summary judgment on all tort Nelson’s bylaws. Phillips amend WEB See claims, judg- the court’s Ass’n, Trappers 407 N.W.2d National damages punitive all is (Iowa ment on tort-based App.1987) (holding valid an amend affirmed. incorporation ment to articles of which creat

ed two methods which members could bylaws). amend JJ., AMUNDSON, and HENDERSON concur. SABERS, (concurring specially). Justice SABERS,

MILLER, C.J., J., concur specially. point II specially I out that Issue write (Conversion Handbook),

(Employee III Issue (Breach Salary),' V of Covenant Issue MILLER, spe- (concurring Chief Justice Contract), all within Is- Within are included cially). dealing employment sue I with breach of point out specially I write Therefore, damages arising contract. there- bylaws by implication, amending from, I any, if should be included in Issue required to follow Board Directors was recovery. prevent Greenwood double procedures statutory law and set forth both Ranches, Hoovestol, 518; 629 F.2d by incorporation in its articles own 854. Hosp. laws. John’s Medical St. ‍​​​​​‌​‌‌​‌​​‌‌‌‌​‌​‌‌‌‌​‌​​​‌‌​​‌​‌‌‌‌‌‌​​‌​‌​​‍St. Staff VII, specially on Issue Intentional I write Ctr., Regional 90 S.D. John Medical Distress, point Emotional out Infliction of 674, 681, (holding 245 N.W.2d resulting in it includes reckless conduct pro specific that failure to follow amendment Valley emotional distress. Petersen Sioux attempted amendment of cedures rendered (S.D. Ass’n, Hospital 491 N.W.2d void). bylaws null has no There been Knudson, 1992); Wangen v. bylaw by impli claim that amendment of the incor cation violated statute. Article of poration required X at least a 66% favorable by amend the

vote for WEB Board to five only laws. As one of at least directors necessary quorum against for a voted Nel contract, employment necessary

son’s bylaw by vote 66% favorable amended implication.*

* manager. previous specified appears term with a former It from the record that a signed Board also

Case Details

Case Name: Nelson v. WEB Water Development Ass'n, Inc.

Court Name: South Dakota Supreme Court

Date Published: Oct 27, 1993

Citation: 507 N.W.2d 691

Docket Number: 17966

Court Abbreviation: S.D.