His Way, Inc. v. McMillin

909 So. 2d 738, 2005 WL 1870012
CourtCourt of Appeals of Mississippi
DecidedAugust 9, 2005
Docket2004-CA-00133-COA
StatusPublished
Cited by7 cases

This text of 909 So. 2d 738 (His Way, Inc. v. McMillin) is published on Counsel Stack Legal Research, covering Court of Appeals of Mississippi primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
His Way, Inc. v. McMillin, 909 So. 2d 738, 2005 WL 1870012 (Mich. Ct. App. 2005).

Opinion

909 So.2d 738 (2005)

HIS WAY, INC., Cynthia L. Brunson and Gloria Moore, Appellants
v.
Malcolm McMILLIN, D. Ann Neal and Sam Sumrall, Appellees.

No. 2004-CA-00133-COA.

Court of Appeals of Mississippi.

August 9, 2005.

*740 Todd W. Hood, Oxford, Mark C. Baker, James A. Bobo, Brandon, attorneys for appellants.

C. Victor Welsh, III, Crymes G. Pittman, Danny E. Cupit, Jackson, attorneys for appellees.

Before KING, C.J., GRIFFIS and BARNES, JJ.

BARNES, J., for the Court.

¶ 1. Cynthia Brunson, Cole Parkin, and His Way, Inc. filed a complaint for injunctive and other relief in the Chancery Court of Rankin County, Mississippi against Malcolm McMillin, D. Ann Neal, Sam Sumrall, and Ora Reed. The chancery court denied and dismissed the plaintiffs' complaint. Aggrieved, Cynthia Brunson and Gloria Moore, who intervened on post-trial motions, appealed, claiming membership in and control of the charitable corporation with assets of approximately two million dollars. This case turns on whether the chancellor had substantial evidence to support the finding that there were no members of the corporation. If there were no members of the corporation, the board of directors had the authority to elect Malcolm McMillin, D. Ann Neal, Sam Sumrall, and Ora Reed as board members, and under Miss.Code Ann. § 79-11-237(2) (Rev.2001), the board became self-perpetuating. Finding substantial evidence to support the chancellor's findings that there were no members of the corporation and the McMillin board was the true board of directors, we affirm.

FACTS

¶ 2. His Way Homes, Inc. (His Way)[1] was incorporated by Robert Earl Williams, Noel Tyrone Williams and Niccola Ann Williams (the Williamses), in 1986, as a non-profit corporation with its principal place of business in Rankin County, Mississippi. The original bylaws of His Way, dated September 28, 1986, outlined how the corporation was to operate.[2] The corporation's *741 community involvement and activity diminished, and, after January 1, 1989, no activity was recorded for almost two years. Cynthia Brunson testified that the corporation was "dormant" and was "not operating at the present time." However, on December 10, 1991, an annual meeting of directors and members was held, and Steven Hieronymus was elected chairman, president, treasurer, and director; Cynthia Brunson was elected vice president and director, and Gloria Moore was elected secretary and director. Brunson first testified that she was a member of the corporation prior to the meeting and came to the meeting as a member. She subsequently testified, however, that she "was elected as a voting member at the meeting." The minutes do not reflect that any members were ever elected at that or any other meeting.

¶ 3. At a special meeting of directors, held May 1, 1992, the bylaws were amended to create two classes of members: voting members consisting of those who were members as of May 1, 1992, and non-voting members being all members who subsequently joined. Sometime during 1992, the Williamses resigned as voting members of His Way. Their resignation was not documented or discussed in any of the corporate minutes. Also in 1992, the corporation began conducting charity bingo operations in Meridian, Mississippi. Over the next several years, His Way made substantial donations to many charitable organizations including the Institute for Creative Media, Reach Out Services, Inc., Faith Haven, Inc., Art Beats, Inc., French Camp, Southern Christian Services, Alpha House, Heritage School, Make a Wish Foundation, Magnolia Speech School, Epilepsy Foundation, New Stage Educational Touring Company, and Christians in Action.

¶ 4. At the 1994 annual meeting of directors and members, Hieronymus was, once more, elected president, treasurer, and director. Moore was elected director, and Brunson was elected secretary and director. Two months later, Hieronymus unexpectedly resigned, and in response, a special meeting was held on July 18, 1994, at which Brunson was elected president and treasurer, Moore was elected secretary, and Beth Taylor was elected vice-president. Taylor was also elected to fill Hieronymus' term as a director.

¶ 5. At the 1995 annual meeting of His Way, Ora Reed, Grace Lawyer and Clinnon Alexander were elected as directors and officers. Two new positions were created, executive director and controller; a special called meeting of the directors was subsequently held to "set the duties and compensation of the two positions which had been created," at which time Brunson was named executive director and Taylor was named controller. At the 1996 annual meeting, the same officers and directors were elected for another year, and the charity's bingo operation was moved from Meridian to Tupelo, Mississippi. For the first time in the corporate minutes, Brunson was identified as a member; the signature line read "Cynthia L. Brunson, member," and she signed her name thereto.[3]

*742 ¶ 6. The same officers and directors were elected annually until March 31, 2001, when Grace Lawyer resigned as secretary, treasurer and director. At the 2001 annual meeting, Petra Kay was introduced as the new deputy director for His Way; she immediately informed the board of "deplorable conditions of certain areas of the company," including overpaying taxes for the year 2000 by $100,000.

¶ 7. Malcolm McMillin testified that he was approached with regard to becoming an officer of His Way, by Brunson and Scott Levanway, the company's attorney. He testified that Levanway requested that he serve on the board several times, telling him that Brunson was "in the ditch and that she needed some assistance." At a special called meeting, held June 19, 2002, the board of directors elected a new board. "Malcolm McMillin and Sam Sumrall were elected to fill vacancies on the board of directors, there being no voting members of record of His Way Homes, Inc. to fill such vacancies." McMillin was elected president, and Sumrall was elected treasurer. The directors voted to amend the bylaws to require quarterly board meetings, and also voted to create the executive committee, comprised only of the president of the board of directors, to act on behalf of the board between meetings. According to the testimony of both Brunson and McMillin, Brunson was present at the meeting and made no objection to the method by which the directors were elected.

¶ 8. At the first quarterly meeting, held October 22, 2002, the size of the board was increased from three to five, with William Gowan and Ann Neal elected to fill the newly created vacancies. The board also voted to terminate Kay's employment and transferred the duties of the president, which were vested in the executive director, back to the president. The next board meeting was held November 4, 2002, at which the board of directors voted to terminate Brunson as executive director, effective November 8, 2002. Brunson was given four months' pay as severance. On November 12, 2002, the Secretary of State's Office sent His Way, via McMillin, a deficiency letter which listed seventeen "items" which were inadequate and requested written explanations to the questions raised.

¶ 9. On April 14, 2003, in what appears to be an attempt to gain control of the corporation and its two million dollars in assets, Brunson and Moore, acting as the "sole voting members of His Way, Inc.," signed consent minutes which appointed and elected Cole Parkin to hold office as a voting member of His Way, Inc.[4]

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Bluebook (online)
909 So. 2d 738, 2005 WL 1870012, Counsel Stack Legal Research, https://law.counselstack.com/opinion/his-way-inc-v-mcmillin-missctapp-2005.