In re Stueven Charitable Foundation , 304 Neb. 140 ( 2019 )


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  • Nebraska Supreme Court Online Library
    www.nebraska.gov/apps-courts-epub/
    12/13/2019 12:06 AM CST
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    Nebraska Supreme Court A dvance Sheets
    304 Nebraska R eports
    IN RE STUEVEN CHARITABLE FOUNDATION
    Cite as 
    304 Neb. 140
    In The Stueven Charitable Foundation,
    re
    Nebraska nonprofit corporation.
    a
    The     Stueven Charitable Foundation and K risty Cavanaugh,
    appellees, v. Delbert Stueven, by and through
    Shelley Stueven M allory, his Guardian
    and Conservator, appellant.
    ___ N.W.2d ___
    Filed September 27, 2019.   No. S-18-1110.
    1. Statutes: Appeal and Error. Statutory interpretation presents a ques-
    tion of law, which an appellate court reviews independently of the lower
    court’s determination.
    Appeal from the District Court for Hall County: Teresa K.
    Luther, Judge. Vacated and remanded for further proceedings.
    Thomas A. Wagoner for appellant.
    John Matson, James Tews, and Matthew Maser, of Koley
    Jessen, P.C., L.L.O., for appellees.
    Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.
    Freudenberg, J.
    INTRODUCTION
    The district court for Hall County granted the petition of
    The Stueven Charitable Foundation (Foundation) seeking the
    appointment of four members to its board of directors. Delbert
    Stueven (Delbert)—by and through his guardian and conserva-
    tor, Shelley Stueven Mallory (Shelley)—appeals. We vacate the
    district court’s appointment of directors and remand the matter
    to the district court for further proceedings.
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    IN RE STUEVEN CHARITABLE FOUNDATION
    Cite as 
    304 Neb. 140
    BACKGROUND
    Delbert and his wife incorporated the Foundation in 1990
    as a charitable nonprofit corporation. Delbert’s wife has since
    passed away. The current directors of the Foundation are
    Delbert, president; Kristy Cavanaugh, secretary; and Robert
    Burkhardt, treasurer (incorrectly referred to as “Bernhardt”
    in some pleadings). Delbert has since been found incompe-
    tent. His daughter, Shelley, was appointed as his guardian
    and conservator.
    The Foundation and Cavanaugh filed a petition on
    September 18, 2018, seeking the appointment of additional
    directors. The Foundation’s amended petition alleged that
    the Foundation failed to make the required 2016 calendar
    year donation to a qualified charity and that another distribu-
    tion was due before the end of 2018. The Foundation further
    alleged that Cavanaugh had attempted to contact Burkhardt for
    the purpose of holding a meeting of the board of directors, but
    was unable to reach him. The Foundation alleged that because
    of Delbert’s incapacity and Burkhardt’s failure to respond,
    the board lacked a quorum to take any actions. As such, the
    Foundation sought an order from the district court appointing
    two new directors.
    Delbert, acting through Shelley, filed a motion on October 11,
    2018, seeking the dismissal of “the action of . . . Cav[a]naugh.”
    In that motion, Shelley objected to the appointment of further
    directors, arguing that there was no vacancy on the board.
    On October 29, 2018, Cavanaugh, acting in her capacity as a
    director of the Foundation, retained separate counsel and filed
    an answer and a cross-complaint that contained allegations
    similar to those made by the Foundation and sought essentially
    the same relief as the Foundation, except that Cavanaugh asked
    for the appointment of four, not two, additional directors.
    A hearing on this motion was held on October 30, 2018.
    There was no testimony at the hearing, and no evidence was
    offered. The articles of incorporation and certain amendments
    had been attached to the initial petition filed by the Foundation.
    And those same articles with some amendments, minutes from
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    IN RE STUEVEN CHARITABLE FOUNDATION
    Cite as 
    304 Neb. 140
    various board meetings, and the Foundation’s bylaws were
    attached to Cavanaugh’s answer and cross-complaint.
    On November 2, 2018, the district court granted the
    Foundation’s petition in part and Cavanaugh’s petition in its
    entirety, appointing four new directors to the board. Shelley,
    acting as Delbert’s guardian and conservator, appeals.
    ASSIGNMENTS OF ERROR
    Shelley assigns that the district court erred (1) in appoint-
    ing members to the board of directors and (2) in failing to find
    that Shelley could act as Delbert’s representative on the board
    of directors.
    STANDARD OF REVIEW
    [1] Statutory interpretation presents a question of law, which
    an appellate court reviews independently of the lower court’s
    determination.1
    ANALYSIS
    The primary issue on appeal is whether the district court
    erred in naming four new directors to the board of directors for
    the Foundation. Shelley argues that the district court’s appoint-
    ment of directors was contrary to the Foundation’s bylaws,
    was beyond the statutory authority of the court, and was not
    supported by the evidence. Relatedly, Shelley asserts that as
    Delbert’s guardian and conservator, she could serve as his rep-
    resentative on the board.
    Waiver and Authority to Act.
    Before we reach Shelley’s assignments of error, we address
    a few preliminary matters. First, Cavanaugh argues that Shelley
    has waived most of her arguments on appeal, because she did
    not object to the authority of the district court to appoint the
    directors in question, but instead took issue only with the quali-
    fications of two of the four directors suggested by Cavanaugh
    and ultimately appointed by the court.
    1
    Randy S. v. Nicolette G., 
    302 Neb. 465
    , 
    924 N.W.2d 48
    (2019).
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    IN RE STUEVEN CHARITABLE FOUNDATION
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    A review of the record shows that Shelley’s motion to dis-
    miss specifically noted that there was no vacancy on the board,
    and as such, that the Foundation’s motion seeking the appoint-
    ment of directors should be dismissed. Counsel renewed this
    argument at the hearing, but also responded to the court’s
    direct questioning about whether it had “any particular problem
    with those individuals [that were being recommended as direc-
    tors].” On these facts, we conclude that Shelley has not waived
    these arguments on appeal.
    In addition, Shelley contends that Neb. Rev. Stat. § 30-2653
    (Reissue 2016) authorizes her to act on Delbert’s behalf. We
    decline to address this contention, because it was not addressed
    by the district court.
    Appointment of Directors.
    Shelley argues on appeal that the district court was not
    authorized by the Nebraska Nonprofit Corporation Act or by
    the Foundation’s bylaws to appoint additional directors. A
    review of the pertinent language from both the Foundation’s
    bylaws and articles and the act is helpful.
    According to the articles of incorporation and their amend-
    ments, the Foundation’s board of directors must have an odd
    number of directors, numbering at least three and no more than
    nine. Each director must reside in Hall County and cannot be
    a lineal descendant of Delbert or his wife or be a spouse of
    such descendant.
    A quorum of the board is two directors. The bylaws also
    require an annual meeting and provide for regular meetings to
    be called by the board. In addition, special meetings may be
    called by the president, by the secretary-treasurer, or by two
    nonofficer members.
    Directors may resign or may be removed from office for
    abandonment of duties of the office, for committing an act of
    moral turpitude against the Foundation, or for failure to meet
    residency or vocational requirements for the position held.
    “[R]emoval may be accomplished by resolution of the remain-
    ing directors or director, if only one,” after notice is given.
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    IN RE STUEVEN CHARITABLE FOUNDATION
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    The articles of incorporation provide that “[f]or so long
    as he remains in office as a Director of this Foundation, any
    vacancy occurring in the office of Director shall be filled by
    appointment made by [Delbert, who is] the Surviving Stueven
    Family Director,” but that
    [a]fter the death, resignation or removal of the Surviving
    Stueven Family Director from the office of Director of
    this Foundation, the remaining Directors or Director, if
    there is only one, shall have the authority to elect the
    replacement for the Surviving Stueven Family Director
    and thereafter the incumbent Directors, or incumbent
    Director if there is only one, shall have the authority
    to elect the replacement necessary to replace any other
    Director whose office is vacated for any reason.
    The articles also provide:
    Any vacancy . . . which is caused by there being no quali-
    fied appointee or the failure of a qualified appointee to
    accept the appointment or by the failure of the [board
    of] Directors to appoint an Appointed Director within
    sixty (60) days after a vacancy occurs . . . may be filled
    by appointment of a Hall County resident made by the
    Hall County District Court in an action brought by the
    Foundation for that purpose and to prevent the dissolution
    of the Foundation.
    With respect to vacancies, the bylaws provide that “[a]ny
    vacancy occurring in the board of directors may be filled as
    provided in the Articles of Incorporation of the Foundation.”
    Moreover, “[i]f all of the directors shall die, resign, or other-
    wise become disqualified, then any interested person acting for
    and on behalf of the Foundation may petition to the District
    Court of Hall County, Nebraska, for the appointment of suc-
    cessor directors.”
    As relevant to this assertion, Neb. Rev. Stat. § 21-1917
    (Reissue 2012) provides:
    (a) If for any reason it is impractical or impossible
    for any corporation to call or conduct a meeting of its
    members, delegates, or directors, or otherwise obtain their
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    consent, in the manner prescribed by its articles, bylaws,
    or the Nebraska Nonprofit Corporation Act, then upon
    petition of a director, officer, delegate, member, or the
    Attorney General, the district court may order that such
    a meeting be called or that a written ballot or other form
    of obtaining the vote of members, delegates, or directors
    be authorized in such a manner it finds fair and equitable
    under the circumstances.
    (b) The district court shall, in an order issued pursuant
    to this section, provide for a method of notice reasonably
    designed to give actual notice to all persons who would
    be entitled to notice of a meeting held pursuant to the
    articles, bylaws and the act, whether or not the method
    results in actual notice to all such persons or conforms to
    the notice requirements that would otherwise apply. In a
    proceeding under this section the district court may deter-
    mine who the members or directors are.
    (c) The order issued pursuant to this section may dis-
    pense with any requirement relating to the holding of
    or voting at meetings or obtaining votes, including any
    requirement as to quorums or as to the number or percent-
    age of votes needed for approval, that would otherwise be
    imposed by the articles, bylaws, or the act.
    (d) Whenever practical, any order issued pursuant to
    this section shall limit the subject matter of meetings
    or other forms of consent authorized to items, includ-
    ing amendments to the articles or bylaws, the resolution
    of which will or may enable the corporation to continue
    managing its affairs without further resort to this section.
    An order under this section may also authorize the obtain-
    ing of whatever votes and approvals are necessary for the
    dissolution, merger, or sale of assets.
    (e) Any meeting or other method of obtaining the vote
    of members, delegates, or directors conducted pursuant to
    an order issued under this section, and that complies with
    all the provisions of such order, is for all purposes a valid
    meeting or vote, as the case may be, and shall have the
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    IN RE STUEVEN CHARITABLE FOUNDATION
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    same force and effect as if it complied with every require-
    ment imposed by the articles, bylaws, and the act.
    We find no authority either under the Foundation’s bylaws
    and articles or under § 21-1917 for the district court to appoint
    new directors in the situation presented by this case. The
    articles allow the Foundation to seek the appointment of direc-
    tors to fill any vacancy which is “not filled by appointment
    and acceptance . . . within ninety (90) days after the vacancy.”
    A vacancy is deemed to have occurred when a director dies or
    resigns, or where a director is removed from the board. Those
    things did not occur here: neither Delbert nor Burkhardt has
    died or resigned. Nor was either removed as a director from
    the board.
    And § 21-1917(a) allows the court to call a meeting of the
    board of directors only when “for any reason it is impractical
    or impossible for any corporation to call or conduct a meet-
    ing of its . . . directors, or otherwise obtain their consent, in
    the manner prescribed by its articles, bylaws, or the Nebraska
    Nonprofit Corporation Act.” There is nothing in this language
    that suggests that the district court can appoint directors.
    The bylaws and articles allow the district court to appoint
    new directors only when there was a vacancy on the board.
    Section 21-1917 does not independently authorize a district
    court to appoint new members to the board of a nonprofit
    corporation. As such, we find merit to Shelley’s assignment of
    error on this point.
    CONCLUSION
    The district court lacked the authority to appoint new direc-
    tors. Accordingly, we vacate the district court’s order appoint-
    ing new directors and remand the matter to the district court for
    further proceedings.
    Vacated and remanded for
    further proceedings.
    Heavican, C.J., and Miller-Lerman, J., not participating.
    

Document Info

Docket Number: S-18-1110

Citation Numbers: 304 Neb. 140

Filed Date: 9/27/2019

Precedential Status: Precedential

Modified Date: 12/13/2019