Nakakuni v. Towse

34 Haw. 897, 1939 Haw. LEXIS 31

• Court: Hawaii Supreme Court
• Decided: February 6, 1939
• Docket: No. 2357.
• Status: Published

Opinions

OPINION OF THE COURT BY

PETERS, J.

This is a bill in equity to restrain a corporate election of officers. The bill discloses the following facts; The corporation involved (hereinafter indiscriminately referred to as “the corporation” or “mission”) is a domestic, private corporation organized to promote religions work and worship based upon the teachings and doctrines of the Shinshiyu sect of Buddhism. It is not organized for private gain or profit and has no shares of stock. Since its organization it has prospered and accumulated property of the approximate value of $6000. Any person, male or female, who believes in the doctrines of the sect of Buddhism and agrees to support the objects and purposes of the mission may he admitted as a general member. Tbe officers to be elected by tbe corporation are a chief priest and sixty members of tbe standing committee as provided by tbe bylaws of tbe mission to serve until tbe next annual meeting of tbe mission. Under tbe bylaws tbe standing committee selects tbe directors and tbe latter in turn appoint certain officers, including two treasurers. A general member of tbe corporation has no power to vote. Only those persons, male or female, whose names are duly enrolled by tbe secretary of tbe mission as “regular contributors” to tbe support of tbe mission are entitled to vote. Tbe election sought to be enjoined was about to be held pursuant to an order entered in quo warranto proceedings pending before a judge of tbe circuit court of tbe first circuit. Tbe quo warranto proceedings had been instituted to try the titles to office in tbe corporation claimed to have been usurped, including the office of director. The election at which tbe defendants in the quo warranto proceedings claimed to have been'duly elected bad been declared void and upon rendering the judgment of ouster, tbe circuit judge ordered tbe corporation to proceed to a new appointment. One of tbe grounds of tbe illegality of tbe election was that members of tbe corporation who were not regular contributing members were permitted to vote at said election. Only four members of tbe corporation were plaintiffs in tbe quo warranto proceedings. Only tbe three officers, the titles to office of whom were in question, were made defendants. Tbe corporation itself was not a party. Tbe plaintiffs did not claim tbe disputed offices for themselves. Nor did they pray that tbe corporation be ordered to proceed to a new appointment. Tbe respondent commissioner herein was appointed by the judge in tbe quo warranto proceedings to conduct tbe election ordered. In tbe order of appointment tbe commissioner was expressly directed to prepare a roll or list of tbe present bona fide voting members of tbe corporation. He reported that tbe secretary of tbe corporation bad failed to enroll regular contributing members during tbe period from July 28, 1934 (the date of tbe election adjudged to have been illegal), to March 6, 1937 (tbe date of his appointment), and that of tbe members of tbe corporation but 156 were regular contributing members and entitled to vote, listing them by name. Tbe result of tbe findings of tbe commissioner was that 118 members of tbe corporation claiming to be regular contributors to and consequently voting members of tbe corporation were omitted from tbe list of bona fide voting members of tbe corporation entitled to vote at tbe new election. But five members of tbe corporation are parties petitioners in tbe instant case. Four of tbe petitioners are included in tbe 118 members excluded from voting and appear as petitioners both in their individual capacity and as representatives of tbe other excluded members of tbe corporation similarly situated. Neither they nor the members of tbe class which they represent, with but one exception, were parties to tbe quo warranto proceedings. One of tbe petitioners, Masao Nakakuni by name, is included in tbe commissioner’s list of bona fide voting members. He admits tbe receipt of certain moneys collected by others from members of tbe mission as regular contributions to tbe mission and their deposit in a bank in trust for tbe mission to await tbe outcome of tbe quo warranto proceedings and tbe selection of legal and lawfully elected officers of tbe mission. In this regard be alleges that tbe statuses of tbe contributors to said fund as regular contributors of tbe mission came into question in tbe quo warranto proceedings and were determined adversely to them in said proceedings. As an additional ground for equitable relief tbe petitioners allege that dissension has arisen among tbe members of tbe mission resulting in tbe formation of two factions, of which they are one; that in tbe quo warranto proceedings tbe presiding judge held, among other things, that tbe petitioners and those whom they represent, with tbe exception of Nakakuni, were not regular contrib uting members of the mission, their contributions not having been made to a de jure treasurer of the corporation, and hence not entitled to vote at elections of officers thereof and that the members of the opposing faction were regular contributing members to the mission and entitled to vote at elections of officers thereof; that many of the persons whose names have been included by the commissioner in the list of bona fide voting members of the corporation comprise the opposing faction, and the petitioners and those whom they represent, with the exception of Nakakuni, are those who have been excluded from his list of bona fide voting members of the mission; that through threats of the use of force and violence the opposing faction has usurped the possession of the mission, its property, books and records and the petitioners and those whom they represent have been wrongfully and fraudulently prevented from using the mission premises for religious worship or other functions connected with the mission and have been compelled to carry on their meetings and services at the private homes of members; that if the proposed new election is held it will result in the election of a standing committee and the appointment by it of a board of directors representing the opposing faction; that the opposing faction has incurred considerable expenses in the mandamus proceedings and the directors selected by the standing committee to be elected will, unless restrained, reimburse the opposing faction from funds to be secured by the directors by the pledge and hypothecation by them of the property of the mission. The bill concludes with the usual general averments of the absence of a plain, adequate and complete remedy at law, that an injunction will avoid a multiplicity of suits and circuity of action and that the present suit is the only means by which petitioners can prevent irreparable injury and the deprivation of their legal right to vote at the new election.

In compliance with the terms of the temporary restraining order, the new election, as ordered by the circuit judge in the mandamus proceedings, has been indefinitely postponed. The quo warranto proceedings are still pending and have not proceeded to final judgment. Demurrers to the bill in the instant case were filed by the respondent commissioner and certain “intervenors.” The demurrers were sustained by the circuit judge upon the ground that petitioners’ rights were pending before the circuit court at law in the quo warranto proceedings and that they had an adequate remedy at law. The petitioners, except Nakakuni and the class they represent, will hereinafter be referred to as the “petitioners.”

The determination of petitioners’ rights as electors of the corporation is not before the circuit court at law in the quo warranto proceedings further than they affected the titles of the defendants in that proceeding to the respective offices claimed by them in the corporation.

Private individuals in this jurisdiction have a right of action in the nature of quo warranto to try title to office in a private corporation. (B. L. 1935, §§ 4258-4266.) “Private corporations,” as that term is used in the statute, obviously includes private corporations organized for religious purposes. The right of stockholders of a private corporation, title to office in which has come into question, to invoke the provisions of the statutes has been repeatedly recognized by this court. (Canairo v. Se rao, 11 Haw. 22; Yong Kwong Tat v. Yee Mun Wai, 22 Haw. 604; Chinese Society v. Yee Yap, 24 Haw. 377.) Jurisdiction over the statutory action in the nature of quo warranto is vested in the circuit judges at chambers. But the action is essentially one at law. (Jones v. McElreath, 167 Ga. 833, 146 S. E. 734, 736; State ex inf. Thompson v. Bright, 298 Mo. 335, 250 S. W. 599, 601; State v. Hall, 228 S. W. [Mo.] 1055, 1057; People v. Albany & Susquehanna R. R. Co., 57 N. Y. 161, 171; Att. Gen’ral v. Utica Ins. Co., 2 Johns. Ch. [N. Y.] 288, 291.) Title to the office in dispute need not, under the statute, be in the plaintiff to entitle him to bring the action. His interest as a member of the corporation is sufficient. (Canairo v. Serrao, supra; Yong Kwong Tat v. Yee Mun Wai, supra.) Where, in an action in the nature of quo warranto, the sole question in issue is title to office in a private corporation, ordinarily the only necessary party defendant is the person who, it is alleged, is in possession of and usurps the office in question. (51 C. J., T. Quo Warranto, § 15, p. 341; State v. Kohnke, 109 La. 838, 33 So. 793, 807; State v. Riordan, 75 N. J. L. 16, 69 Atl. 494, 496; Foard v. Hall, 111 N. C. 369, 16 S. E. 420, 422.) The judgments which may be entered in actions in the nature of quo warranto are prescribed by sections 4262, 4263 and 4264, R. L. 1935. These sections are quoted in the margin. 1 The judgment of ouster is against the usurper and not against the corporation, office in which he is alleged to have usurped. (The People v. Bartlett, 6 Wend. 422, 423.) Where the sole question in issue is title to office in a private corporation, the judgment is conclusive only against the parties to the proceedings or their privies. (Peo ple ex rel. Gilchrist v. Murray, 73 N. Y. 535, 538; Modlin v. State, ex rel., 175 Ind. 511, 94 N. E. 826, 28 Am. & Eng. Ann. Cas. [1913C] 669.) Under the provisions of sections 4262 and 4263, where onster from office in a private corporation is the subject of the judgment, whether the judgment is on default or on the merits, the court may direct the corporation to proceed to a new appointment. And the additional express authority thereby conferred has been considered sufficient to include “authority to require the performance of all acts preliminary or incidental to the accomplishment of the ultimate object,” including the appointment of a commissioner clothed with power and authority to prepare a roll or list of members of the society entitled to vote at the election ordered. (Chinese Society v. Yee Yap, supra.) Obviously, any new election that may be ordered by the circuit judge must be confined and/limited to the election of officers of the corporation made legally necessary by the judgment of ouster.

Sufficient has been said to formulate the conclusion that where, in proceedings in the nature of quo warranto to try title to office in a private corporation, the corporate election upon which title to office is predicated is declared void upon the ground that certain members of the corporation who voted at said election were not contributing members of said corporation and hence not qualified as electors, under the bylaws, to vote at said election, the judgment of ouster is not conclusive except as to the parties to the proceedings and their privies; and those members of the corporation, the determination of whose qualifications as electors was adverse, if not parties to the quo warranto proceedings, nor in privity with any of the persons who were parties to those proceedings, may subsequently assert their qualifications as electors of the corporation in any legal proceedings to which they may be parties and in which their qualifications as such may come in issue.

Four of the petitioners were not parties to the quo warranto proceedings nor in privity with any person who was a party thereto. Hence, the judgment of ouster in the quo warranto proceedings is not res adjudicata against them as to their alleged disqualifications as regular contributing members of the mission. And they may assert their qualifications as electors of the corporation in the instant proceedings provided the bill shows a case of equitable relief and they have no plain, adequate and complete remedy at law. For it is not alone the general rule in equity but it is expressly provided by statute that jurisdiction in equity may not be invoked where there is a plain, adequate and complete remedy at law. (R. L. 1935, § 4701.)

In our opinion the bill states facts sufficient to entitle petitioners to equitable relief.

In the absence of. statutory, charter or bylaw restrictions the right to vote at elections of directors or officers of a corporation organized for profit is ordinarily an incident to ownership of shares of stock of the corporation and to deprive a stockholder of the right to vote at such elections is to deprive him of an essential attribute of his property, which is not permissible. Moreover, the threatened deprivation of the incidental right of ownership of stock of a private business corporation to vote at elections of directors or officers of the corporation creates remedial rights as between the aggrieved stockholder on the one hand and the corporation or its officers and agents on the other. In private corporations organized for religious purposes, however, where its members have no beneficial ownership of nor personal or private interest in the property of the corporation, the rights of members to vote for officers and directors of the corporation depend entirely upon the statutory, charter or bylaw provisions of their organization. If electors, the remedial rights, however, of the aggrieved electors are the same.

The rules generally governing meetings of stockholders of commercial corporations apply to meetings of members of incorporated religious societies. (2 Thompson, Corporations [3d ed.], § 931, pp. 295, 296; People v. African Wesleyan M. E. Church, 141 N. Y. S. 394, 396; Vargo v. Vajo, 76 N. J. Eq. 161, 73 Atl. 644, 647.) Section 6738 provides that at any meeting of any corporation it shall be lawful for the members in the transaction of business to vote either in person or by proxy. While members of an incorporated religious society are not stockholders in the technical sense, yet under statutory or individual organic laws or rules usually obtaining they are members of the society in the sense that stockholders are members of a business corporation in respect to elections of officers and directors of the society. (54 C. J., T. Religious Societies, § 38, p. 22; The State v. Crowell, 9 N. J. L. 390, 411; Wiswell v. The First Congregational Church, 14 Ohio St. 31; Keith v. Howard, 24 Pick. 292, 294.) The local statutes under which religious societies may incorporate are silent as to the qualifications of members as electors. The charter of the mission is not before us. The bylaws of the mission, quoted in the margin, 2 prescribe the qualifications of electors. There are two. An elector must be a member and he must also be a regular contributor to the mission. The petitioners allege that they and the members of the class they represent are both. Upon demurrer this allegation must be accepted as true. Hence, the petitioners and the members of the class they represent as members of and as regular contributors to the mission were, under the bylaws of the mission, entitled to vote at elections of the mission for officers and directors thereof. (The People v. Tuthill, 31 N. Y. 550, 559.) And this right includes the right to vote at an election ordered by the court. An election of officers of a corporation is a corporate function. (2 Fletcher Cyc., Corporations, § 283.) That the new election had been ordered by a court and that the presiding officer thereof is a commissioner appointed by a court as a substitute for those officers of the corporation to whom is committed, by the bylaws, the power to hold elections, is immaterial. It is, nevertheless, a corporate election.

The holding of an election of officers of a business corporation will rarely be enjoined. (32 C. J., T. Injunction, § 380; Hooe v. Hall, 4 Ohio Circ. 547.) And it is only where an aggrieved stockholder may suffer irreparable injury that equity will interfere. (2 Thompson, Corporations [3d ed.], § 1055; 2 High, Injunctions [2d ed.], § 1230, p. 804; 5 Fletcher Cyc., Corporations, §§ 2071, 2072; 32 C. J., T. Injunctions, § 377, p. 239; Granite Brick Co. v. Titus, 226 Fed. 557, 566; Brown v. Pacific Mail Steamship Co., 4 Fed. Cas. [No. 2025], pp. 420, 423; Supreme Lodge v. Simering. 88 Md. 276, 40 Atl. 723, 725, 71 Am. St. Rep. 409.)

But the bill discloses, as a concomitant to the interference with the legal right of the petitioners to vote at the new election of officers of the corporation, the invasion of the equitable right of the petitioners to enforce the trust with which the property of the corporation is impressed and to prevent its diversion directly or indirectly from the purposes for which it was organized. We refer specifically to the alleged interference with the use by the petitioners of such of the mission property as is devoted to church purposes, the deprivation of the petitioners’ right of access to the books and records of the trust and the threatened diversion of the proceeds of the pledge or hypothecation of the property of the mission. Enforcement of a trust for religious purposes and the prevention of its misuse or abuse are within the exclusive jurisdiction of equity.

The jurisdiction of equity - to supervise and control a trust for religious purposes is well-settled. Title to the mission property is in the mission. (People v. Braucher, 258 Ill. 604, 101 N. E. 944, 946.) The corporate organization of the mission impresses its property with a trust for religious purposes. (St. Michael’s etc. Ch. v. St. Michael’s etc. Ch., 288 Mass. 258, 192 N. E. 628, 630.) There are cases which hold that corporations organized for religious purposes and not for profit are public charities. (People v. Braucher, supra; McNeilly v. First Presbyterian Church, 243 Mass. 331, 137 N. E. 691, 694.) Nothing appearing to the contrary, it will be presumed that the property of the mission is held by the mission for the purposes for which it was incorporated. (McNeilly v. First Presbyterian Church, supra.) Further, it will be presumed upon demurrer that these purposes are lawful and not contrary to public policy. Equity has extensive jurisdiction of uses and trusts for religious purposes not only to uphold them but also to protect them, prevent their misuse or abuse and enforce their execution. (11 C. J., T. Charities, § 73, p. 356; Mt. Zion Church v. Whitmore, 83 Iowa 138, 49 N. W. 81; VonHoven v. Presbyterian Church, 108 La. 274; 32 So. 389, 390. See also People v. Braucher, supra.) A religious corporation has a double aspect, one spiritual and the other temporal, and with regard to the latter, the directors thereof have the same status as the directors of a business corporation and are subject to judicial supervision and control. (Koch v. Estes, 262 N. Y. S. 23, 26.) When a religious society acquires a legal status by incorporation the courts may deal with it the same as with any other person or sui juris entity in respect to its property and with rights of its members considered as property. (Brown v. Protestant Episcopal Church, 8 F. [2d] 149, 150.)

Courts of equity afford equitable relief to restrain interference with tbe right of members of a religious society to use the property of the society devoted to religious purposes. (Manning v. Yeager, 201 Ala. 599, 79 So. 19.) Similarly to prevent the threatened diversion of the property owned by such society. (Mt. Zion Church v. Whitmore, supra; VonHoven v. Presbyterian Church, supra; Hansel v. Purnell, 1 F.[2d] 266, 269.) Nor is there any question of the right of a member of such society to invoke the jurisdiction of equity upon such grounds. (VonHoven v. Presbyterian Church, supra.)

The only proceedings at law available to petitioners are proceedings in the nature of quo warranto when and if the election ordered by the court shall have been held and finally confirmed by the court. From the possibility that the petitioners may eventually litigate at law in proceedings in the nature of quo warranto their right to vote as electors of the corporation, of which they are members, it does not necessarily follow that they must pursue that remedy. If the relief which they could obtain in those proceedings would not be plain, adequate and complete, they are entitled to pursue their remedy in equity. (Makainai v. Lalakea, 24 Haw. 268.) The statutory provision that suits in equity, including injunction, shall not be sustained in any case where there is a plain, adequate and complete remedy at law is declaratory and does not exclude the circuit judges from any part of the field of equitable remedies. (Dow v. Berry, 18 Fed. 121, 125.) It seems to be the rule that to oust the jurisdiction in equity the remedy at law must be as efficacious as that in equity. (21 C. J., T. Equity, § 28, p. 52.)

The instant case is not a mere matter of establishing a legal right to vote at a corporate election. It seeks to pro tect and enforce the execution of a trust for religious purposes and to prevent its misuse and abuse. While awaiting the final outcome of the pending quo warranto proceedings, the opposing faction may continue to prevent the petitioners from using and enjoying the property of the mission devoted to religious purposes and continue to force and compel them to carry on their meetings and services at the private homes of the members and deprive them of access to the books and records of the mission. The disposition of the contributions accepted by Masao Nakakuni will remain undecided. The persons to whom contributions may be legally made will remain in doubt. It was upon the legal status of those who had accepted contributions on behalf of the mission that the legality of the election, at which the defendants in the quo warranto proceedings were elected, primarily depended. The existing confusion will naturally and necessarily discourage contributions. The mission depends for its existence upon the contributions of members. And the decrease in or the discontinuance of contributions seriously affects the ability of the mission to perform the religious functions for which it was organized. Moreover, if representatives of the opposing factions are elected at the new election ordered by the court, they will, as alleged, resort to the property of the mission for reimbursement of personal expenses incurred by them. The election, the legality of which came into question in the quo warranto proceedings, was held July 28, 1934. The quo warranto proceedings were instituted a month later. More than four years of internal strife and dissension has been the history of the mission and the settlement of its temporal affairs is not yet in sight. This is not alone a case in which the remedy at law is not plain, adequate and complete but one in which, if equitable relief is not promptly granted, the purposes for which the mission is organized may be submerged if not defeated.

It -should be borne in mind that there were subject to review by this court only those grounds of demurrer passed upon by the court below. Whether or not all necessary parties to the proceedings have been made parties petitioners or respondents has not been presented for determination and we expressly refrain from passing upon any question of misjoinder or nonjoinder of parties.

W. O. Moore for petitioners. Respondent in person. Murakami & Marumoto for intervening respondents.

Consistent with the views herein expressed, the decree appealed from is reversed and the cause remanded for further proceedings consistent with this opinion.

Circuit Judge Matthewman: I am obliged to dissent from the foregoing opinion. My views upon the case will be expressed later.

1 “Sec. 4262. Judgment on default. If tlie person to whom the order is directed does not answer within the time allowed, the judge shall declare him not qualified to fill the office of which he performs the duties; shall forbid him to perform them any longer; shall condemn him to pay the costs; and shall direct the corporation to proceed to a new appointment.

“Sec. 4263. Judgment on answer. But if the person to whom the order is directed answers within the time allowed, judgment shall be pronounced upon the answer in a summary manner. After hearing the parties, if the judge who issued the order thinks that the person to whom the mandate was directed has usurped the office which he holds, or that he continues in it unlawfully, judgment shall be rendered against him in the manner provided in the preceding section; otherwise, the petition shall be dismissed with costs to be paid by the applicant.

“Sec. 4264. Judgment according to nature of complaint. In all cases contemplated by sections 4258-4266, judgment shall be given according to the nature of the complaint made; provided, however, that in the event of the application being dismissed the attorney general shall not be ordered to pay costs.”

2 “Section 1. General Members. Any person, male or female, who believes in tbe doctrines of tbe SHINSHÍTT SECT OP BUDDHISM, and agrees to support tbe objects and purposes of tbe Mission may be admitted as a general member. A general member shall bave no power to vote.

“Section 2. Voting Members. Any person, male or female, whose name is duly enrolled by tbe Secretary of tbe Mission as a regular Contributor to tbe support of tbe Mission shall become a voting member of tbe Mission.”