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

Nebraska Supreme Court Online Library
www.nebraska.gov/apps-courts-epub/
10/25/2019 01:06 AM CDT
- 140 -
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.
- 141 -
Nebraska Supreme Court A dvance Sheets
304 Nebraska R eports
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
- 142 -
Nebraska Supreme Court A dvance Sheets
304 Nebraska R eports
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).
- 143 -
Nebraska Supreme Court A dvance Sheets
304 Nebraska R eports
IN RE STUEVEN CHARITABLE FOUNDATION
Cite as 304 Neb. 140
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.
- 144 -
Nebraska Supreme Court A dvance Sheets
304 Nebraska R eports
IN RE STUEVEN CHARITABLE FOUNDATION
Cite as 304 Neb. 140
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
- 145 -
Nebraska Supreme Court A dvance Sheets
304 Nebraska R eports
IN RE STUEVEN CHARITABLE FOUNDATION
Cite as 304 Neb. 140
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
- 146 -
Nebraska Supreme Court A dvance Sheets
304 Nebraska R eports
IN RE STUEVEN CHARITABLE FOUNDATION
Cite as 304 Neb. 140
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.