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and improved it, and then sold the improved realty. To better
track costs, the business of Mary Catherine was divided amongst
three separate companies. In addition to Mary Catherine,
Derekseth Corp. (Derekseth) and Deanne Lynn Realty Co. (Deanne
Lynn Realty) were incorporated. Mary Catherine bought unimproved
land with the intent of making it suitable for housing
construction. Mary Catherine would then sell the improved land
to Derekseth, which in turn would construct houses for sale.
Upon completion, Deanne Lynn Realty would act as Derekseth’s
agent and market the finished houses.
Petitioner was the corporate secretary of Mary Catherine.
In this role, she signed various business documents, including,
but not limited to, corporate resolutions and tax returns.
Corporate documents were prepared by Mary Catherine’s attorneys
or controller. Petitioner relied on explanations provided by Mr.
Pierce as to the content of documents instead of reading them
herself before signing. One such document was a corporate
resolution signed by petitioner on September 15, 1988. The
resolution gave Mr. Pierce the authority to “purchase, sell,
assign, mortgage, lease or convey any and all of the real or
personal property of every kind and description of said
corporation, on such terms as he may deem advisable” and to
“execute all deeds, mortgages, releases, leases, or other
instruments necessary to carry into effect” said transactions.
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