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Hayes v. Northern Hills General Hospital3/10/1999
rt." Landstrom, 1997 SD 25 at § 84, 561 NW2d at 18 (citing Garrett v. BankWest, Inc., 459 NW2d 833, 839 (SD 1990)). We have said: "corporate officers and directors are held to a high degree of diligence and due care in the exercise of their fiduciary duties to shareholders." Case v. Murdock, 488 NW2d 885, 889-890 (SD 1992) (citing Mobridge Community Industries v. Toure, 273 NW2d 128, 133 (SD 1978)). Corporate directors hold a fiduciary position in respect to the shareholders and are required to exercise good faith in all corporate transactions. Id. (citing Schurr v. Weaver, 74 SD 378, 384, 53 NW2d 290, 293 (1952)).
[ ] We have recognized that officers and directors have a fiduciary duty when dealing with minority shareholders. See Case, 488 NW2d at 889-890 (officers and directors of a corporation owe a fiduciary duty to shareholders). This same rationale supports the adoption of a fiduciary duty between dominant shareholders and minority shareholders. See Linge v. Ralston Purina Co., 293 NW2d 191, 194 (Iowa 1980).
[ ] " n almost every state, majority, dominant, or controlling shareholders, or a group of shareholders acting together to exercise effective control, are held to owe a fiduciary duty to minority shareholders." Moore v. Maine Industrial Services, Inc., 645 A2d 626, 628 (Me 1994) (citation & internal quotation omitted) (emphasis added). Clearly, our case law has established there was a fiduciary duty owed to Hayes by the corporate defendants.
[ ] ii. Partners fiduciary duty
[ ] We have said that the duty between partners is "characterized by a loyalty of the highest order." Glanzer v. St. Joesph Indian School, 438 NW2d 204, 211 (SD 1989).
"A fiduciary duty is an obligation arising from the intimacy of the parties' relationship, and it is owed from a general partner to a limited partner ... . When acting for the partnership and the limited partners, the general partner, as a fiduciary, must walk a moral path above that tread by other members of the economic marketplace. The general partner thus shoulders a heavy burden." Id. at 211 (internal citation omitted). See also Pear v. Grand Forks Motel Associates, 553 NW2d 774, 783 n6 (ND 1996). ("The relationship between partners is confidential and fiduciary; they are trustees for each other, and they bear the obligation of the utmost good faith and integrity in their dealings with one another.")
[ ] There is a long-established rule in South Dakota that partners are in a fiduciary relationship to each other. Betts v. Letcher, 1 SD 182, 197, 46 NW 193, 198 (1890). Application of these principle presents a question of fact as to whether the defendants breached their fiduciary duty as partners.
[ ] iii. Conclusion
[ ] As there was a fiduciary duty owed Hayes by both the shareholders and the partners, we find there is a material question of fact whether this duty was breached. For example, there is evidence the defendants' conducted a secret meeting to devise a method of ridding themselves of Hayes and evidence that they interfered with Hayes' attempt to re-locate his practice. Viewing the facts in the light most favorable to Hayes we find a genuine issue of material fact. We reverse and remand to the trial court.
[ ] d. Breach of contract
[ ] On July 2, 1992, the BHMC board of directors, except for Hayes, voted unanimously to terminate the medical services contract of Hayes, P.C. Hayes, P.C.'s original medical service contract provided in part that each party would have the right to terminate the contract by giving sixty-days prior written notice and the president of BHMC would have the power to terminate the contract with the ind
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