may not be cited except as provided by
Minn. Stat. § 480A.08, subd. 3 (1996).
STATE OF MINNESOTA
IN COURT OF APPEALS
Craig T. Seifert,
Donald L. Todd, et al.,
Filed January 5, 1999
Hennepin County District Court
File No. 976101
Donald M. Lewis, Joseph G. Schmitt, Halleland, Lewis, Nilan, Sipkins & Johnson, P.A., Suite 600, 220 South Sixth Street, Minneapolis, MN 55402 (for respondents)
Considered and decided by Halbrooks, Presiding Judge, Kalitowski, Judge, and Holtan, Judge.
Appellant Craig Seifert challenges the district court's conclusion that, because Minn. Stat. § 319A.11 precludes nonprofessionals from having an ownership interest in professional corporations, the purchase agreement through which appellant acquired an ownership interest in respondent's chiropractic corporation was void. We affirm the summary judgment.
Before taking a position as executive director of Occupational Rehabilitation Center (ORC), a professional medical and chiropractic association, appellant met with ORC's owner, Donald Todd, D.C., to discuss the terms of his employment. The two of them agreed that appellant would be paid a $45,000 salary and be entitled to purchase a 30% ownership share of the corporation. Their purchase agreement provided that appellant's 30% share would cost $300,000, $50,000 of which would be payable from proceeds from a personal injury action in which appellant was involved and $250,000 in the form of a promissory note. The promissory note would be paid off out of quarterly bonus payments that appellant was to receive from the corporation. Appellant would pay 75% of his quarterly bonus to pay down the promissory note and retain the other 25% of the bonus. Appellant drafted the purchase agreement and the employment agreement.
Appellant commenced work at ORC in September 1994, and continued working there until December 4, 1996. During appellant's employment with ORC, he was paid two quarterly bonuses. In June 1995, appellant was paid a $30,154.93 bonus. Pursuant to their purchase agreement, respondent retained $22,616.19 of this bonus to pay down appellant's promissory note. The second bonus distribution of $31,607.40 was in October 1995. Again, respondent retained 75% ($23,705.55), pursuant to the parties' agreement.
Appellant commenced this lawsuit in January 1997, and in April 1997, moved for partial summary judgment. The district court denied appellant's motion in June 1997. In November 1997, respondents moved for summary judgment. In January 1998, the district court entered an order partially granting respondents' motion and setting the case for trial. The parties held a settlement conference in February 1998. Final judgment granting respondent's motion for summary judgment was entered on March 31, 1998, and appellant filed a notice of appeal on June 23, 1998.
Approximately $20,000--the proceeds of a personal injury lawsuit that was settled on December 16, 1996--is currently being held in an escrow account, pending further action of the trial court.
On an appeal from summary judgment, this court asks two questions: (1) whether there are any genuine issues of material fact and (2) whether the lower court erred in its application of the law. State by Cooper v. French, 460 N.W.2d 2, 4 (Minn. 1990).
1. Withheld Bonuses
Appellant contends that, notwithstanding the void purchase agreement and promissory note, he is nevertheless entitled to recover past bonuses. "Whether a contract is entire or divisible depends on the intent of the parties; it must be determined by considering the language used, the subject matter of the contract, and how the parties themselves treated it." Anderson v. Kammeier, 262 N.W.2d 366, 370 (Minn. 1977).
Appellant acknowledges that Minn. Stat. § 319A precludes his ownership of ORC, making the ownership provisions of the purchase agreement void. See Minter Bros. Co. v. Hockman, 231 Minn. 156, 163, 42 N.W.2d 562, 566 (1950) (contracts contrary to a statute are void unless the legislature did not so intend). Appellant also acknowledges that the promissory note is void for lack of consideration. However, relying on Anderson, appellant argues that the bonus provisions of the purchase agreement are severable from the void sections of the purchase agreement because they were supported by independent consideration: appellant's work for ORC in exchange for the bonuses. If this were the parties' intent, it would have been most clearly expressed by including the bonus provisions in the employment contract along with the salary provisions. The right to bonuses and the scheme for using the bonuses to pay off the promissory note are inextricably linked to the parties' purchase agreement. We therefore conclude that the trial court was correct in its determination that the bonuses were not severable from the void purchase agreement.
2. Breach of Fiduciary Duty
Alternatively, appellant contends that respondents owed him a fiduciary duty and that respondents breached that duty by mistreating appellant while he was employed by ORC, diverting ORC's funds to Dr. Todd's personal use, refusing to pay bonuses, and terminating appellant in bad faith.
The provisions naming appellant secretary and treasurer are contained within the void purchase agreement. Nothing in the employment agreement notes anything other than the general duties to be performed by appellant while at ORC, and nothing within the employment agreement suggests that appellant was an officer of ORC. Because of this, respondents are correct in asserting that Todd owed no fiduciary duty to appellant. See Harris v. Mardan Bus. Sys., Inc., 421 N.W.2d 350, 353 (Minn. App. 1988) (shareholders in a closely held corporation do not owe a duty to employees).
3. Minn. Stat. §§ 181.03, .13
Appellant also argues that Minn. Stat. §§ 181.03 and .13 govern this situation. Minn. Stat. § 181.03 (Supp. 1997) provides that employers may not fraudulently create the appearance that an employee has been paid an amount greater than he has actually been paid. Minn. Stat. § 181.13 (Supp. 1997) provides that when an employee is discharged, any "wages or commissions actually earned and unpaid at the time of the discharge are immediately due and payable upon demand of the employee." Appellant's only claims for unpaid "wages" that would trigger either of these statutory provisions are the bonuses contained within the purchase agreement. Because the purchase agreement is void and the bonus provisions are not severable, this argument also fails.
4. Escrow Funds
The funds from appellant's personal injury lawsuit currently being held in escrow must be returned to appellant, since the underlying contract has been properly determined to be void, and there is, therefore, no consideration for appellant's payment of the funds.
[*] Retired judge of the district court, serving as judge of the Minnesota Court of Appeals by appointment pursuant to Minn. Const. art. VI, § 10.
 Because courts have no prerogative to give effect to a void contract, the trial court properly declined to demand that appellant return the two bonus payments that he received. See American Nat'l Bank v. Helling, 161 Minn. 504, 510, 202 N.W. 20, 22 (1925) (court "will leave the parties [to a void contract] where it finds them").