Schexnayder v. Vacherie Volunteer Fire Dept. No. 1.

491 So. 2d 1322, 1986 La. LEXIS 6769
CourtSupreme Court of Louisiana
DecidedJune 23, 1986
DocketNo. 86-C-0266
StatusPublished
Cited by2 cases

This text of 491 So. 2d 1322 (Schexnayder v. Vacherie Volunteer Fire Dept. No. 1.) is published on Counsel Stack Legal Research, covering Supreme Court of Louisiana primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Schexnayder v. Vacherie Volunteer Fire Dept. No. 1., 491 So. 2d 1322, 1986 La. LEXIS 6769 (La. 1986).

Opinions

CALOGERO, Justice.

Should plaintiffs and a class of minority members in the non-profit corporation succeed in their effort to liquidate and dissolve the Vacherie Fire Department No. 1? Were plaintiffs and the class illegally expelled from this non-profit corporation?

The trial judge, whose judgment was affirmed by the Court of Appeal, dismissed the petition for liquidation and dissolution and held that the minority members were legally expelled.

For the reasons which follow we determine that plaintiffs and the class were not legally expelled. Nonetheless, the courts below were not wrong in refusing liquidation and dissolution of the corporation.

Vacherie Fire Department No. 1 is a non-profit corporation conducting its affairs in St. James Parish. It was created in 1959 for the primary purpose of furnishing fire protection in that portion of St. James Parish which is on the West Bank of the [1323]*1323Mississippi River.1 The corporation apparently operated successfully for some 19 years, when in 1978 a rift in the membership developed over locating the Fire Department’s main fire house in North Vach-erie.2 Preceding 1978, over a period of years, the membership rolls were about evenly divided between members who resided in South Vacherie and those who resided in North Vacherie. By 1978, however, there were just thirty-six members who resided in South Vacherie and 195 who resided in North Vacherie. In February of 1978, and while the mentioned controversy continued, the South Vacherie group formed a new nonprofit corporation called the South Vacherie Volunteer Fire Department, Inc.3 Meanwhile meetings of the Vacherie Volunteer Fire Department No. 1 were ridden with strife. At the March 6, 1978, meeting, efforts at settling differences between the two competing factions failed by a vote of 60-47. At that meeting, the membership voted down a proposed resolu-

tion which would have authorized amendment of the charter to reduce the area to be served by Vacherie Volunteer Fire Department No. 1 conditioned upon formation of a new legally chartered South Vacherie Volunteer Fire Department.4

Efforts at amicable settlement having failed, a meeting of the general membership was called for January 15,1979, for the sole purpose of amending the charter to reduce or limit the area to be served by the corporation to areas of the West Bank of St. James Parish lying north of Highway 3127 (North Vacherie).5 The membership voted at that meeting 60-0 with 6 abstentions, in favor of amending the charter. This charter amendment would effectively, have expelled all members residing in South Vacherie. On that same evening of January 15, 1978, following the membership meeting, the Board of Directors met and passed a resolution along the same lines.6 It established the corporation’s [1324]*1324“membership boundaries,” thereby excluding from the corporation all members who did not live in North Vacherie, except those South Vacherie residents who owned businesses in North Vacherie. Notwithstanding that no amicable settlement had been achieved, the Vacherie Volunteer Fire Department transferred to the South Vacherie Fire Department the fire house, the land on which it was situated and the lease of an adjacent tract of land, all located in South Vacherie.

On April 18, 1980 four members of the defendant non-profit corporation, all residents of the South Vacherie area, filed this lawsuit, and later converted it to a class action. They contended that the action of the membership and the Board of Directors discussed above adversely affected the rights of those members thereby excluded from further participation in the corporation, that the resolutions were passed illegally, that the Board of Directors breached their fiduciary duty to the corporation, and that the object of the corporation had wholly failed and had been abandoned. Their prayer sought liquidation and dissolution of the Vacherie Fire Department No. 1 as well as “a sum to compensate them for losses sustained by the actions described in petition.” They sought this liquidation and dissolution under La.R.S. 12:251.

Neither in the petition, nor in any supplemental or amended petition, nor with the stipulated assent of defendants did plaintiffs seek to invoke receivership under R.S. 12:258. For these reasons we will not in the remainder of the opinion address the matter of receivership.

After trial the district court rendered a judgment which by its terms 1) was in favor of plaintiffs in that it decreed the membership action to limit the area to be served, to have been improper and of no force and effect, 2) was in favor of the Vacherie Volunteer Fire Department No. 1, Inc. and against plaintiffs in that it decreed the action of the Board of Directors at the January 15, 1979, meeting to limit those eligible for membership to have been proper and binding, and 3) was in favor of the Vacherie Volunteer Fire Department against plaintiffs in that it dismissed with prejudice any and all other claims raised in plaintiffs’ petition.

The district judge’s reasons in support of that judgment were fairly simple. They did not specifically address the right to dissolution (nor the right to receivership). The trial judge determined that the membership resolution was illegal, essentially because the members were not given the 30 days notice required by R.S. 12:237(E)(2) “when a meeting to amend the articles is called.”7 The reasons went on to recite, however, that the Board of Directors’ resolution restricting membership was legal, that it was not fraudulent or a breach of trust, and that the action taken by the Board of Directors was in good faith.

The trial court therefore denied all of the relief sought, which in plaintiffs’ petition was simply for liquidation and dissolution and damages.

The Court of Appeal affirmed the trial court judgment. In its opinion the court addressed plaintiffs’ right to receivership, and alternatively, dissolution. They con-[1325]*1325eluded that receivership was not in order because there had not been proved an unjustified effort to disenfranchise minority shareholders; that the Board of Directors had done its best to resolve a bad situation. They also noted with respect to dissolution, that R.S. 12:251 permits but does not mandate a court's ordering dissolution, even where one or more of the requirements of R.S. 12:251 are met. And they approved the trial judge’s refusal to permit dissolution of the corporation for similar reasons as those noted above and because the object of the corporation had not wholly failed.

The primary question which we must resolve is whether the lower courts erred in denying to plaintiffs a liquidation and dissolution of the corporation. An ancillary question which could bear upon whether to order dissolution relates to the conduct of the corporate affairs by the membership and the Board of Directors, including the Board of Directors’ resolution of January 15, 1979, reducing the “membership boundaries,” an action which effectively expelled from membership those members who resided in South Vacherie.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Leary v. Foley
978 So. 2d 1018 (Louisiana Court of Appeal, 2008)
Lain v. Credit Bureau of Baton Rouge, Inc.
637 So. 2d 1080 (Louisiana Court of Appeal, 1994)

Cite This Page — Counsel Stack

Bluebook (online)
491 So. 2d 1322, 1986 La. LEXIS 6769, Counsel Stack Legal Research, https://law.counselstack.com/opinion/schexnayder-v-vacherie-volunteer-fire-dept-no-1-la-1986.