Adams v. Flora MacDonald College

111 S.E.2d 859 (1960)

251 N.C. 617

Mrs. Raymond ADAMS, Dr. C. T. Johnson, H. D. Jones and Miss Mary McEachern, Individually and as Trustees of Flora Macdonald College, a corporation, v. FLORA MACDONALD COLLEGE, a corporation.

No. 740.

Supreme Court of North Carolina.

January 14, 1960.

*861 Varser, McIntyre, Henry & Hedgpeth, Lumberton, and Douglass & McMillan, Raleigh, for plaintiffs, appellants.

Smith, Leach, Anderson & Dorsett, Raleigh, for defendants, appellees.

BOBBITT, Justice.

If the Consolidation Agreement is valid, upon the filing thereof on May 28, 1958, in the office of the Secretary of State, the separate existence of each of the three consolidating (predecessor) corporations terminated. G.S. § 55A-42.

The Consolidation Agreement contains this provision: "Until such time as the Consolidated Presbyterian College shall be opened to students the consolidated corporation shall continue to operate Flora Macdonald College, Peace College, and Presbyterian Junior College for Men, at their present locations and under their present names; and for this purpose the present Board of Trustees of each of said Institutions shall be constituted as a Board of Managers for each respective institution to operate said institutions in accordance with powers and authority delegated by the Board of Trustees of the consolidated corporation." (Our italics.) If, as defendants assert, the Consolidation Agreement is valid, the plaintiffs, by virtue of the quoted provision, are presently members of the Board of Managers of Flora Macdonald College.

Prior to the filing of the Consolidation Agreement the plaintiffs were four of the thirty-eight members of the Board of Trustees of Flora Macdonald College, a corporation.

When the prior appeals were heard, the plaintiffs were seeking to enjoin a consolidation they alleged to be materially different from the consolidation contemplated by the Synod's resolutions of July 13, 1955, and of June 26, 1957, and thereafter ordered by the Fayetteville, Orange and Wilmington Presbyteries.

This Court, on first appeal, said: "The complaint and exhibits show that, while legal title to the property vests in defendant, the Fayetteville, Orange and Wilmington Presbyteries of the North Carolina Synod of the Presbyterian Church in the United States are the beneficial owners of defendant, and through trustees elected by them are in possession and control of its property and assets. As to this, plaintiffs' Exhibit D is explicit; and we find nothing in plaintiffs' allegations or exhibits in conflict therewith. No facts are alleged to support a contention that the defendant, its officers or trustees have any legal rights they may assert against the owning and controlling Presbyteries." Again: "* * * the three Presbyteries, not the Synod, own and control Flora Macdonald College."

When the former appeals were heard, the owning and controlling Presbyteries were not parties to the action. Plaintiffs, who derive their status as trustees from said Presbyteries, were seeking to enjoin Flora Macdonald College, a corporation, its trustees, officers, etc., from effecting a consolidation alleged to be materially different from that authorized and directed by the *862 three Presbyteries. This Court recognized plaintiffs' legal capacity as trustees to assert such rights in behalf of said Presbyteries.

Whether the consolidation effected by the Consolidation Agreement is materially different from the consolidation originally contemplated by the Synod and by the three Presbyteries, on account of provisions relating to Peace College or otherwise, is now academic. At the hearing below, it was stipulated that the following resolution was adopted by the Fayetteville Presbytery on February 17, 1959, by the Wilmington Presbytery on February 19, 1959, and by the Orange Presbytery on February 20, 1959:

"Resolved, that this Presbytery does hereby expressly approve, ratify and affirm that agreement of consolidation which was executed by Peace College, Inc. on December 17, 1957, by Flora Macdonald College on May 7, 1958, by Presbyterian Junior College for Men, Inc. on May 12, 1958, and which was filed in the office of the Secretary of State of North Carolina on May 28, 1958, a certified copy of said executed agreement of consolidation being presented to this meeting. "Resolved Further, that this Presbytery does hereby specifically approve and affirm the right and authority of the Trustees and officers of Flora Macdonald College to execute said agreement of consolidation and does agree that such action was taken pursuant to and in compliance with the authority and instruction of a resolution adopted by this Presbytery (July 25, July 26, September 8) 1955."

Thus, each of the three owning and controlling Presbyteries has expressly approved, ratified and affirmed the specific Consolidation Agreement now challenged by plaintiffs. Moreover, they do so in their answer herein.

This Court, on first appeal, said: "Suffice to say, whether the consolidation presently authorized or any other consolidation that may be authorized is wise or prudent is for determination by the three controlling Presbyteries, not by the court." Indeed, the three controlling Presbyteries, if they determined it was wise or prudent to do so, could have directed a consolidation, on such terms as they deemed appropriate, of Flora Macdonald College and Presbyterian Junior College for Men, excluding Peace College altogether.

Plaintiffs contend the Consolidation Agreement was not legally authorized by the Board of Trustees of Flora Macdonald College, a corporation, or properly executed in its behalf. In this connection, plaintiffs cite G.S. § 55-171. It is noted that Section 1 of the "Non-Profit Corporation Act," S.L. of 1955, c. 1230, effective July 1, 1957, provides: "All provisions relating to non-profit corporations appearing in Chapter 55 of the General Statutes of North Carolina, as the same appears in Volume 2B and all supplements thereto, except as they apply to hospital service corporations regulated by Chapter 57, are hereby repealed and the following new Chapter, to be designated as Chapter 55A, is hereby inserted immediately following Chapter 55, and shall read as follows:" The Consolidation Agreement refers specifically to G.S. § 55A-39 through G.S. § 55A-42.

It appears that the Consolidation Agreement was executed on behalf of Peace College, Inc., on December 17, 1957, the date it bears. There was a meeting of the Board of Trustees of Flora Macdonald College on February 11, 1958, the day after the present action was commenced, attended by twenty-four of the thirty-eight trustees, including three of the plaintiffs. The minutes show the adoption of a resolution which, omitting recitals, provided:

"That the Board take prompt and vigorous action to defend the suit seeking to set aside the will of Presbyteries and Synod; "That the Board affirm its purpose and intent to comply with the direction *863 and expressed wills of Orange, Fayetteville and Wilmington Presbyteries and the Synod of North Carolina as soon as the way may be cleared."

Flora Macdonald College was then temporarily restrained. "The meeting recessed to convene on three days notice at the call of the Chairman." The judgment (considered on second appeal) dissolving the temporary restraining order was signed March 22, 1958. Formal execution of the Consolidation Agreement was authorized at a "Recessed Meeting" held May 7, 1958. Thereupon, on May 7, 1958, the Consolidation Agreement was executed in the name of Flora Macdonald College, by Marshall Scott Woodson, as President, and by Charles W. Worth, as Secretary. The written consent of twenty-four of the thirtyeight trustees of Flora Macdonald College is attached to the Consolidation Agreement. Fourteen, including Halbert M. Jones, who presided at said meeting, signed such written consent on May 7, 1958. Each of the other ten signed within a few days thereafter. In a separate paper, these ten trustees specifically approved the resolution voted for by the fourteen at the meeting of May 7, 1958.

Plaintiffs, directing attention to the "Recessed Meeting" of May 7, 1958, contend that only sixteen trustees were present, including two of the plaintiffs; that only fourteen, less than a majority, voted for the resolution; and that no legal significance should be attached to the subsequent approval by the additional ten trustees. If the resolution adopted at the meeting of May 7, 1958, were the sole authority for the Consolidation Agreement, technical questions as to its authorization would be presented; but (apart from subsequent ratificacation by the Presbyteries) we think the consolidation had been sufficiently authorized by the Board of Trustees of Flora Macdonald College at the meeting of February 11, 1958, and at prior meetings.

Finally, plaintiffs assert the Consolidation Agreement is invalid because the document is executed on behalf of Flora Macdonald College by Marshall Scott Woodson, as President. One of the plaintiffs testified that Woodson was President of the College but that Halbert M. Jones was President of the corporation. The minutes show that Jones was Chairman of the Board of Trustees. It appears that Woodson had executed legal documents in behalf of Flora Macdonald College, including notes and a deed, as President thereof. In any event, it appears that Halbert M. Jones signed the Consolidation Agreement on May 7, 1958; and the irregularity, if any exists, is technical rather than substantial.

It is quite evident that a majority of the Board of Trustees of Flora Macdonald College, at duly constituted meetings and otherwise, have approved the consolidation effected by the Consolidation Agreement. The trustees, including plaintiffs, as recited in the resolution adopted at their meeting on February 11, 1958, were "appointed by and responsible to" the Presbyteries which owned and controlled Flora Macdonald College. These three Presbyteries, as set forth above, have fully ratified the Consolidation Agreement as executed and filed. Such ratification suffices to cure technical irregularities, if any, in respect of the authorization and execution thereof by the Board of Trustees and officers of Flora Macdonald College.

Plaintiffs' contributions to Flora Macdonald College, whether in gifts or in service, their attachment to its traditions, and their desire that it continue to operate at Red Springs without involvement in the program of consolidation recommended by the Synod and directed by the Presbyteries, afford no basis for their prosecution of this action. They have no legal right to challenge a consolidation agreement fully ratified and approved by the Presbyteries which appointed them and to which they owe allegiance. In short, plaintiffs are not real parties in interest (G.S. § 1-57), either individually or as trustees. Their status does not permit them to prosecute this action. *864 As stated on first appeal, they do not have any legal rights "they may assert against the owning and controlling Presbyteries." Hence, the judgment of involuntary nonsuit will be affirmed.

Affirmed.