Dreyer Townley v. Midrivers Tele ( 1979 )

No. 14705
IN THE SUPREME COURT OF THE STATE OF MONTANA
1979
ELMO DREYER and JUDSON TOWNLEY, et al.,
Applicants and Appellants,
THE BOARD OF TRUSTEES OF MID-RIVERS
TELEPHONE, INC., et al.,
Respondents and Defendants and
Cross Appellants.
Appeal from: District Court of the Seventh Judicial District,
Honorable L. C. Gulbrandson, Judge presiding.
Counsel of Record:
For Appellants:
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Moses, Tolliver and Wright, Billings, Montana
For Respondents:
Church, Harris, Johnson & Williams, Great Falls, Montana
Submitted on briefs: June 29, 1979
Decided: AUG 1 1979
Filed:
Mr. Justice John C. Sheehy delivered the Opinion of the Court.
This is an appeal by Elmo Dreyer and Judson Townley, the
applicants above named (Dreyer and ~ownley)and a cross-appeal
by the Board of Trustees of Mid-Rivers Telephone Cooperative,
Inc. , and the remaining respondents above named (collectively
"Mid-Rivers") from certain of the orders contained in the
judgment and decree of the District Court, Seventh Judicial
District, McCone County, Montana, dated October 23, 1978.
Mid-Rivers is a rural telephone cooperative incorporated
under the "Rural Electric and Telephone Cooperative Act"
(Ch. 18, Title 35 MCA). The cooperative consists of approxi-
mately 5,000 member-patrons residing in some eighteen counties
of eastern Montana. It is claimed that the cooperative
serves an area of more than 22,000 square miles and is
geographically the largest telephone cooperative in the
world.
Respondents are the trustees of Mid-Rivers, the cooperative
itself, and its individual officers and trustees.
Dreyer and Townley brought an action for themselves in-
dividually, as representatives of and on behalf of themselves
and all other members of Mid-Rivers. In a six-count application
for relief in the District Court of McCone County, they sought
from the District Court :
COUNT I. To redistrict the existing residence
districts of the cooperative used for establishing
the residency qualifications of trustees of the
cooperatives board.
COUNT 11. To require that notice be given of a
special meeting of the members of the cooperative
in response to a petition asking for such a
meeting signed by certain members of the cooperative.
COUNT 111. To require the cooperative to hold an
annual meeting of the membership in Circle, Montana
rather than Winnett, Montana.
COUNT IV. To restrict payment of fees and expenses
paid to the respondent board members for
their attendance at meetings of the board within
or without the state of Montana.
COUNT V. To require the cooperative to conduct
the election of trustees of the cooperative on a
voting district basis.
COUNT VI. To declare the compensation and expenses
previously paid to the respondent board members to
be illegal and to require an accounting in repayment
and the same to the cooperative and to hold that the
1976 and 1977 elections of the trustees were illegal
and that the trustees were illegally elected.
Dreyer and Townley sought a writ of mandamus from the
District Court as to the first five counts. The issues with
respect to count six were reserved by the District Court until
the issues under the first five counts are finally decided. The
October 23, 1978 judgment and decree of the District Court
confirmed the court's earlier dismissal of the application with
respect to counts one and two; kept in force an alternative writ
of mandate with respect to count three; requires the cooperative
to hold its annual meetings at Circle, Montana, until such time
as its bylaws are amended; and dismissed the application with
respect to counts four and five.
Dreyer and Townley appeal from the adverse rulings on counts
four and five. Mid-Rivers appeals from the adverse ruling on
count three. Under Rule 23(h), Mont.R.App.Civ.P., Dreyer and
Townley are regarded as appellants before this Court and Mid-Rivers
collectively as respondents.
After the start of the lawsuit by Dreyer and Townley, Mid-
Rivers did on the 91st day before the planned 1978 annual meeting,
redistrict the five areas in an attempt to correct the inequities
as to the number of members represented in each district. The
redistricting was done through the use of telephone exchanges
(telephone prefix numbers). The District Court ruled that Mid-
Rivers had complied with the applicable provision of the bylaws
and dismissed count one. Dreyer and Townley do not appeal
from that decision.
As to the second count, on the contention of Dreyer
and Townley that Mid-Rivers had failed to call a special meeting
when petitioned by more than 200 of its members, it was found
that a bylaw provision of Mid-Rivers which allowed for the
calling of a special meeting on a petition of more than 200
member~~conflicted
with a state statute which required that
such a meeting could only be called by 10% of the members on
petition. Ten percent of Mid-Rivers' members exceeds 200.
Mid-Rivers took the position that they were therefore not required
to call a special meeting as requested by the petition. Dreyer
and Townley agreed with this position. The District Court
dismissed count two, and no appeal was taken therefrom.
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COUNT FOUR
Dreyer and Townley appeal from the order of-the District
Court dismissing their application and refusing mandamus relief
as to count four. The contention of Dreyer and Townley on
this count is that, contra to section 35-18-311 MCA, the trustees
of Mid-Rivers, under Art. V, Section 7 of its bylaws, have
authorized for themselves a $75 fee each plus expenses for
attendance at all board meetings held within and outside of
the State of Montana.
The applicable bylaw provides as follows:
"Section 7. Compensation. Directors [trustees]
shall not receive any salary for their services
as directors, except that by resolution of the
Board a reasonable fixed sum per diem and expenses
of attendance, if any, may be allowed for attendance
at each meeting of the Board and for attendance at
state, area, regional, national and other meetings
on behalf of the c'ooperative where attendance is
authorized by the Board. No director shall receive
compensation for serving the Cooperative in any
other capacity, nor shall any close relative of a
director receive compensation for serving the
Cooperative, unless the payment and amount of
compensation shall be specifically authorized
by a vote of the members or the service of
such director or close relative shall have been
certified by the Board as an emergency measure.
Close relatives shall be deemed to include, but
not necessarily limited to spouse, parent,
children, brothers and sisters."
The pertinent statutory provision is section 35-18-311(2)
MCA which provides:
"(2) Without approval of the membership, trustees
shall not receive any salaries for their services
as trustees and, except in emergencies, shall
not be employed by the cooperative in any capacity
involving compensation. The bylaws may, however,
provide that a fixed fee and expenses of attendance,
if any, may be allowed for attendance at each meeting
of the board of trustees."
The District Court found on this point that at the annual
meeting of September 21, 1977, an auditor's report was
presented to the members which included the per diem and
expenses paid to the trustees during the years 1976 and 1977
and that these financial reports were approved by a motion
duly seconded and carried. The court found as a fact that
the $75 per diem rate had been established under Art. V, Section
7 of the bylaws of the cooperative and approved by the
members of the 1977 annual meeting as a proper payment.
Dreyer and Townley, in their appeal, do not quarrel
with the idea that the past expenses or per diem paid to the
trustees may have been ratified by the membership. They
contend that prospective payments do not have the prior
approval of the membership and that accordingly they are
entitled to a mandate forbidding such possible prospective
payments.
A careful reading of section 35-18-311(2) MCA discloses
that (1) without approval of the membership, the trustees
are not allowed to receive salaries for their services; but
(2) an exception to the approval requirement occurs when the
bylaws provide that a fixed fee and expenses of attendance
may be allowed the trustees.
The language of the statute does not necessarily mean
that the "fixed fee" must be set forth in the bylaw itself.
Thus, if the bylaws of a telephone cooperative had provided,
with respect to trustees, that "a fixed fee and expenses of
attendance, if any, may be allowed for attendance at each
meeting of the Board of Trustees," without more, such a
provision could not be attacked as being against the statute
because obviously it is in the language of the statute, even
though the fixing of the fee would have to be done by the
trustees, through a resolution. That is really what the
situation is in this case. Art. V, Section 7 of the bylaws
provides that "by resolution of the Board, a reasonable
fixed sum per diem and expenses of attendance if any may be
allowed for attendance at each meeting . . ." By that
provision, the bylaws have provided for a "fixed fee and
expenses of attendance." The further provision of the
bylaws that such items should be fixed "by resolution of the
Board" is simply a method for providing such fixed fees. We
do not find therefore, that the bylaw provision offends
section 35-18-311 (2) MCA.
Thus, there is no clear legal duty on the part of the
trustees to procure the prior approval of the membership to
the resolution for reasonable fixed fees, since the bylaw
provision of the statute is an exception to the approval
requirement of section 35-18-311(2) MCA. Without a clear
legal duty, mandamus does not lie. Cain v. Department of
Health, Etc. (1978), Mont . , 582 P.2d 332, 35
St.Rep. 1056.
COUNT FIVE
Under this issue, Dreyer and Townley contend that
instead of cooperative-wide voting for trustees at any
election, the cooperative should permit only voting for the
respective trustees in voting districts, that is, district-
wide voting.
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Art. V, Section 1 of the bylaws of the cooperative
provided for five districts, with each district to be represented
by two trustees. The same section of the bylaws also provided
that anytime not less than 90 days before any meeting of the
members at which trustees were to be elected, the Board
could redistrict or reconstitute the districts to make them
nearly equal in number.
At the meeting of the Board of Trustees, on June 27,
1978, the Board redistricted the districts according to
telephone exchanges (decided by prefix numbers). The court
found that the redistricting had occurred 90 days before the
proposed election of September 27, 1978.
Mid-Rivers contends that under the bylaws, a district
plan is established to permit nominations of trustees from
the respective districts, two for each district, but that
voting for the trustees after the nominations have been made
is to be on a cooperative-wide basis.
Dreyer and Townley contend that under the provisions of
section 35-18-313 MCA, when the cooperative is divided into
districts, these are "voting districts" and as such the
statute requires that the trustees from each district shall
be elected by the members residing therein.
The District Court concluded that section 35-18-313 MCA
was not mandatory. It concluded that the districts were
established as a means of enforcing the residence qualification
of trustees or directors, and that section 35-18-313 MCA is
not intended to mandate an exclusive manner in which districts
can be used by a cooperative in the selection process of
qualified trustees.
We conclude that the District Court was correct on this
point. The statute involved is not mandatory by its terms.
Section 35-18-313 MCA provides in pertinent part:
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"Notwithstanding any other provisions of this
chapter, the bylaws may provide [for voting
districts] . . .
and that in respect to each
such voting district:
"(a) a designated number of trustees shall
be elected by the members residing therein;
. . . II
The permissive words "may provide" of the foregoing
statute applies "in respect to each such voting district."
No clear mandatory duty arises out of the language of the
statute. The District Court buttressed its conclusion by
referring to section 35-18-103 MCA, which provides that the
chapter respecting cooperative utilities is to be construed
liberally and that "The enumeration of any object, purpose,
power, manner, method, or thing shall not be deemed to
exclude like or similar objects, purposes, powers, manners,
methods, or things."
Further, we note that section 35-18-207 MCA, with
respect to the bylaws of such a cooperative, states that the
bylaws "may contain other provisions for the regulation and
management of the affairs of the cooperative not inconsistent
-- chapter
with this . . ." A bylaw which is at variance with
a permissive provision of the statutes is not "inconsistent"
so as to require voiding the bylaw provision.
We have found no case law directly in point with respect
to these matters, nor has counsel for either side directed
us to specific case law authority. The statutes in themselves
are clear enough so that our interpretation of the wording
appears to be sound, and within the statutory direction for
construction under section 35-18-103 MCA.
COUNT THREE
With respect to count three, Mid-Rivers is the cross-
appellant, contending that the District Court erred in
requiring meetings of the cooperative to be held in Circle,
McCone County, Montana.
Here again, we face a matter of statutory interpretation.
Section 35-18-303(3) MCA provides:
"Meetings of members shall be held at such
place as may be provided in the bylaws. In
the absence of any such provision, all meetings
shall be held in the city or town in which
the principal office of the cooperative is
located. "
The principal office of the cooperative in this case is
in Circle, Montana. The trustees proposed to hold the
meeting of September 27, 1978 in Winnett, Petroleum County,
Montana. Dreyer and Townley contend that this was improper.
The District Court found such a proposed meeting place was
improper and we agree.
Art. IV, Section 1 of the cooperative bylaws does not
name the town in which the annual meeting of the members is
to be held but does provide that the annual meeting shall be
held at such place in the project area as shall be determined
by the Board of Trustees. The District Court concluded that
because the bylaws failed expressly to name the place in
which the annual meeting is to be held, the statutory provision
controls the place of meeting and it must therefore be held
in Circle, Montana. Section 35-18-303 ( 3 . ) IICA,.,supra.
The District Court is correct on this point. As the
District Court stated in its conclusions, nothing prevents the
members of the cooperative from amending the bylaws so as to
provide specifically for other places for the annual meeting.
The appeals of Dreyer and Townley are denied; the cross-
appeal of Mid-Rivers is denied. No costs to either party.
We Concur:
Chief Justice