Lain v. Credit Bureau of Baton Rouge, Inc.

637 So. 2d 1080, 93 La.App. 1 Cir. 1166, 1994 La. App. LEXIS 910, 1994 WL 140901
CourtLouisiana Court of Appeal
DecidedApril 8, 1994
DocketCA 93 1166
StatusPublished
Cited by7 cases

This text of 637 So. 2d 1080 (Lain v. Credit Bureau of Baton Rouge, Inc.) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Lain v. Credit Bureau of Baton Rouge, Inc., 637 So. 2d 1080, 93 La.App. 1 Cir. 1166, 1994 La. App. LEXIS 910, 1994 WL 140901 (La. Ct. App. 1994).

Opinion

637 So.2d 1080 (1994)

James M. LAIN, et al.
v.
The CREDIT BUREAU OF BATON ROUGE, INC.

No. CA 93 1166.

Court of Appeal of Louisiana, First Circuit.

April 8, 1994.
Rehearing Denied June 27, 1994.

*1081 Gordon A. Pugh, Emile C. Rolfs, III, Breazeale, Sachse & Wilson, Baton Rouge, for defendant-appellant The Credit Bureau of Baton Rouge, Inc.

Jerry F. Davis, Mr. J. Peyton Parker, Jr., Baton Rouge, for plaintiffs-appellees James M. Lain, et al.

Before CARTER, LeBLANC and WHIPPLE, JJ.

WHIPPLE, Judge.

This case is before us on appeal from a summary judgment granted in favor of plaintiffs, James M. Lain, A.L. Bryan, Capital American Acceptance Corporation, Economy Financing, Inc., Purvis Credit, Inc., Cooper Credit Corporation, Inc., Gibson Credit, Inc., and Union Credit Corporation of Louisiana (hereinafter referred to collectively as plaintiffs), and against defendant, The Credit Bureau of Baton Rouge, Inc. (hereinafter referred to as the Credit Bureau). For the following reasons, we affirm.

FACTS AND PROCEDURAL HISTORY

On February 11, 1992, plaintiffs initiated these proceedings by filing a petition against the Credit Bureau seeking to nullify amendments to and a restatement of the articles of incorporation of the Credit Bureau. Plaintiffs' petition sought to have the articles of *1082 incorporation, as amended and restated by a resolution adopted at a special membership meeting on April 30, 1991, declared null and void and of no effect. The petition also sought attorney's fees and legal expenses. In their petition, plaintiffs alleged that the notice of the special meeting wherein the resolution was adopted amending the articles of incorporation was not sent to all members; that the notice was untimely; that the notice was defective and insufficient; that the amendment to the articles of incorporation deprived former members of property interests and valuable rights in a manner contrary to law and equity; and that a quorum was not present at the membership meeting. The Credit Bureau answered the petition, generally denying the allegations contained therein, and asserting that the amendments were validly and legally adopted, and remained in full force and effect.

The Credit Bureau filed a motion for summary judgment, relying on numerous depositions and affidavits of the board of directors and employees of the Credit Bureau. Plaintiffs also filed a motion for summary judgment, relying on the articles of incorporation as they existed from 1980 until purportedly amended and restated on April 30, 1991; the amended and restated articles of incorporation purportedly adopted on April 30, 1991; the by-laws of the Credit Bureau; an affidavit of plaintiff, James M. Lain; and the affidavits previously filed by the Credit Bureau in support of its motion. Following a hearing on the opposing motions for summary judgment, the trial court denied defendant's motion and granted summary judgment in favor of plaintiffs.

The record herein establishes the following undisputed facts. The Credit Bureau was originally incorporated in 1923. The original articles of incorporation contained provisions regarding membership in the corporation, as well as provisions for amendment of the articles of incorporation. The Credit Bureau's articles were amended several times, in 1948, 1963, 1970, and 1980. The 1980 version of the articles was in effect when the 1991 amendments, which are the subject of this litigation, were purportedly adopted.

The articles of incorporation of the Credit Bureau, as they existed following the 1980 amendments, provided for membership in the corporation as follows:

Any person engaged in retail business, merchandise or service, shall be eligible for membership in this Corporation, and may be admitted to membership pursuant to the provisions and conditions established by the Board of Directors pursuant to By-Laws duly adopted.

The 1980 articles of incorporation also provided for the amendment of the articles, as follows:

These Articles may be amended or altered pursuant to a resolution duly adopted at a special meeting of the membership called for that purpose. No proxies will be allowed to vote at said special meeting. Each member shall be entitled to one (1) vote on the issue of amendment or alteration of the corporate charter.

In 1990, the board of directors of the Credit Bureau retained the services of Mr. Gordon A. Pugh, an attorney with the law firm of Breazeale, Sachse & Wilson, to study the corporate charter and by-laws and to make recommendations to the board of directors regarding any changes which should be made to the charter or bylaws. On March 5, 1991, the board of directors held a meeting and discussed the recommendations and proposed amendments made by Mr. Pugh. Mr. Pugh recommended two amendments to the articles of incorporation, namely that membership in the corporation should be limited to directors, and that upon liquidation or sale of the Credit Bureau, the proceeds would be distributed to a tax exempt organization.

At the March 5, 1991 meeting, the board of directors adopted a resolution calling for a special meeting of the general membership to vote on a resolution authorizing amendment of the articles of incorporation. Accordingly, the board of directors called an annual meeting of the general membership, together with a special meeting of the general membership, for April 30, 1991.

A notice of the annual and special meeting of the general membership was prepared by the Comptroller of the Credit Bureau. The notice stated that the purpose of the annual *1083 meeting was to elect directors. The notice also stated that the purpose of the special meeting was to consider a resolution which would provide for amendments to the articles of incorporation. The notice also tracked the precise wording of the proposed amended articles which were set forth as part of a recitation of all of the articles. The notices of the annual and special meeting were mailed to all members of the Credit Bureau on April 15, 1991.

The annual and special meeting of the general membership was held on April 30, 1991. According to the minutes of the meeting, ninety four (94) members were present at the meeting. The Credit Bureau has a general membership of over 1,200. The members in attendance voted in favor of the resolution, which amended the articles of incorporation concerning membership eligibility, to provide as follows:

The members of this Corporation shall be the Directors thereof who are elected in accordance with the By-Laws which are to be adopted by the Board of Directors. Any natural person qualifies as a director-member. There being only one class of membership, director-members may exercise all voting powers and other rights and privileges granted to members of a nonprofit corporation by the laws of the State of Louisiana.

Plaintiffs contend that they were unaware of the true effect of the resolution amending the articles of incorporation until after the vote was taken and certain directors representing a small segment of the prior membership exclaimed that they now owned the Credit Bureau. Upon realizing that the effect of the 1991 amendment was to eliminate over 1,200 members from membership in the corporation, and to vest membership solely in a small number of directors, the plaintiffs expressed their displeasure over the effect of the resolution. This lawsuit followed, in which plaintiffs sought to have the amendments declared null and void.

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Bluebook (online)
637 So. 2d 1080, 93 La.App. 1 Cir. 1166, 1994 La. App. LEXIS 910, 1994 WL 140901, Counsel Stack Legal Research, https://law.counselstack.com/opinion/lain-v-credit-bureau-of-baton-rouge-inc-lactapp-1994.