Meyers v. Lux

75 N.W.2d 533, 76 S.D. 182, 1956 S.D. LEXIS 6
CourtSouth Dakota Supreme Court
DecidedMarch 13, 1956
DocketFile 9498
StatusPublished
Cited by6 cases

This text of 75 N.W.2d 533 (Meyers v. Lux) is published on Counsel Stack Legal Research, covering South Dakota Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Meyers v. Lux, 75 N.W.2d 533, 76 S.D. 182, 1956 S.D. LEXIS 6 (S.D. 1956).

Opinions

ROBERTS, P. J.

Plaintiffs brought this' action to enjoin construction by defendants as directors of the Cherry-Todd Electric Cooperative, Inc. of an office building in Valentine, Nebraska, and for other relief. A temporary injunction was granted and after trial the court rendered and entered judgment enjoining defendants from maintaining the principal place of business in Valentine and the erecting of the proposed office building and also requiring [184]*184them forthwith to issue to the plaintiff Wise a membership certificate in the cooperative. From the judgment, an appeal has been taken to this court by defendants.

The material facts necessary to a decision are not in dispute and are as follows: On September 17, 1948, articles of conversion of the Cherry-Todd Electric Cooperative, Inc., a non-profit and non-stock corporation, were filed under the provisions of Chap. 33, Laws 1947, SDC Supp. 11.22 known as the “Electric Cooperative Law”. This act provides that a South Dakota corporation supplying or having the power to supply electric energy may be converted into a cooperative by complying with its requirements and that articles of conversion shall be deemed to be articles of incorporation. SDC Supp. 11.2220. The assets of the old corporation became the assets of the cooperative and stockholders of the old automatically became members of the converted corporation. Article VI of the articles of conversion provided that the “address of the principal office of the cooperative is Mission, South Dakota”. An amendment of this article, filed March 3, 1950, provides that the “address of the principal office of the Cooperative is Mission, South Dakota. A business office may be located at Valentine, Nebraska, and any meeting of the directors may be held either at said principal office or at said office in the State of Nebraska. The books and records of this corporation may be kept at either office as the directors may find convenient”. The by-laws of the cooperative were at the same time amended to provide that monthly meetings of the board of directors may be held either in Todd County, South Dakota, or Cherry County, Nebraska, as the board shall by resolution provide.

The defendant board called for bids for the construction of an office building in Valentine. The board by a resolution adopted on February 20, 1954, accepted the bid of the Fricke Construction Company subject, however, to the approval of the administrator of the rural electrification administration, Washington, D. C., and the members of the cooperative. A demand in writing by a requisite number of members had previously been made for a special meeting for the purpose of voting upon the question of whether or not an office building be erected in Valentine or elsewhere.

[185]*185A special meeting of members was held in Mission, South Dakota, on April 10, 1954. There were 129 persons living in or near Mission who were qualified to become members and their applications for membership had been pending for more than six months prior to the meeting. The members voted on three separate questions. On the question “Shall the qualified individuals in Mission be accepted at this meeting as members of the cooperative?”, 154 members voted yes and 155 members voted no. There were 192 affirmative and 117 negative votes on the question “Shall the cooperative erect a permanent office building?”. On a vote being taken on the third question “Shall the cooperative business office be moved?”, 84 members voted yes and 216 members voted no.

Many questions or different phases of the same question are discussed in the briefs, but the crucial question before us is whether it was mandatory upon the cooperative to admit to membership the 129 applicants.

SDC Supp. 11.2202 provides that a cooperative, nonprofit, membership corporation may under the “Electric Cooperative Law” be organized “for the purpose of supplying electric energy and promoting and extending the use thereof, in rural areas.” SDC Supp. 11.2223 provides that a “cooperative shall be operated on a non-profit basis for the mutual benefit of its members and patrons.” SDC Supp. 11.2204(4) provides that a cooperative shall have power to “dispose of electric energy to its members, to governmental agencies and political subdivisions, and to other persons not in excess of ten per centum of the number of its members, and, provided, further, that a cooperative which acquires existing electric facilities may continue service to persons, not in excess of forty per centum of the number of its members, who are already receiving service from such facilities, without requiring such persons to become members but such persons shall have the right to become members upon such terms as may be prescribed in the by-laws”. SDC Supp. 11.2209 provides that “Each incorporator of a cooperative shall be a member thereof, but no other person may become a member thereof unless such other person agrees to use electric energy furnished by the the cooperative when it is [186]*186made available through its facilities. * * * The by-laws may prescribe additional qualifications and limitations in respect of membership.”

The by-laws of the cooperative provide: “Any person, firm, association, corporation, or body politic or subdivision thereof may become a member of Cherry-Todd Electric Cooperative, Incorporated, (hereinafter called the ‘Cooperative’) by: (a) Making a written application for membership therein; (b) agreeing to purchase from the Cooperative electric energy as hereinafter specified; (c) agreeing to comply with and be bound by the articles of incorporation and by-laws of the Cooperative and any rules and regulations adopted by the Board of Directors; and (d) paying the membership fee hereinafter specified; provided, however, that no person, firm, association, corporation or body politic or subdivision thereof shall become a member unless and until he or it has been accepted for membership by the Board of Directors or the members. No member may hold more than one membership in the Cooperative, and no membership in the Cooperative shall be transferable, except as provided by these by-laws. At each meeting of the members held subsequent to the expiration of a period of six months from the date of incorporation of the Cooperative, all applications received more than ninety days prior to such meeting which have not been accepted or which have been rejected by the Board of Directors shall be submitted by the Secretary to such meeting and, subject to compliance .by the applicant with the requirements hereinabove set forth, any such application may be accepted by vote of the members. The Secretary shall give each such applicant at least ten days written notice of the date of the members’ meeting to which' his application will be submitted and such applicant, shall be entitled to be present and heard at the meeting.”

Defendant directors on behalf of themselves and the cooperative argue that the refusal of membership is a matter within the control of the cooperative having authority to accord or withhold membership. In 18 C.J.S., Corporations, § 478, the general rule pertaining to the granting or rejection of memberships is stated as follows: “A corporation has inci[187]*187dental power to admit new members. In the absence of charter or statutory restrictions, the matter is left wholly to its determination. * * * A court has no power to compel a corporation to admit a person to membership against the will of those whose consent is, according to the charter or an authorized by-law essential to the eligibility of applicant.

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Meyers v. Lux
75 N.W.2d 533 (South Dakota Supreme Court, 1956)

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Bluebook (online)
75 N.W.2d 533, 76 S.D. 182, 1956 S.D. LEXIS 6, Counsel Stack Legal Research, https://law.counselstack.com/opinion/meyers-v-lux-sd-1956.