Wier v. Howard Hughes Medical Institute

404 A.2d 140, 1979 Del. Ch. LEXIS 335
CourtCourt of Chancery of Delaware
DecidedJune 26, 1979
StatusPublished
Cited by3 cases

This text of 404 A.2d 140 (Wier v. Howard Hughes Medical Institute) is published on Counsel Stack Legal Research, covering Court of Chancery of Delaware primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Wier v. Howard Hughes Medical Institute, 404 A.2d 140, 1979 Del. Ch. LEXIS 335 (Del. Ct. App. 1979).

Opinion

MARVEL, Chancellor:

The amended complaint herein alleges that since the death of its founder and original Trustee, Howard R. Hughes, the defendant Howard Hughes Medical Institute has been improperly managed and controlled by a so-called Executive Committee notwithstanding the fact that its certificate of incorporation requires that such corporation is to be “* * * managed and controlled by a Trustee.” Plaintiffs accordingly ask.this Court to appoint such a Trustee to succeed the late Howard R. Hughes and manage and control the affairs of such corporation. Also sought is an accounting of the financial affairs of the defendant Institute since the death of Mr. Hughes.

The defendant Institute’s answer raises several affirmative defenses in addition to denying that it is required by its charter to be managed solely by a Trustee, such answer having been later amended to allege that the defendant Institute is, in any event, being managed in a proper manner.

After the filing of such responsive pleading, Robert L. Shevin, Attorney General of Florida, filed the pending motion for leave to intervene, said movant taking the primary position that he should be allowed to intervene in this case as a matter or right pursuant to the terms of Rule 24(a) of this Court because as such Attorney General he has an interest in the matter in issue which cannot be properly represented without his presence in that as Florida’s Attorney General he is obliged to protect the interests of a charitable trust such as defendant and that, in any event, he also has the duty to protect the interests of the University of Miami Medical Center, which has for a substantial period of time been the recipient of generous gifts from the defendant Institute.

In the alternative movant argues that he should be permitted to intervene in this action under the provisions of Rule 24(b) in that he, as well as the Attorney General of Delaware, is seeking to ensure that the defendant Institute operates under the direction of a qualified Trustee, that his motion is timely and should be granted under the discretionary powers of the Court.

The defendant Institute has responded to the motion of the Attorney General of Florida by making the following objections to his application for leave to intervene in this litigation, namely:

[142]*142“(1) Some issues he seeks to litigate are not presently before the Court and would unduly broaden the scope of this action; (2) to the extent that he seeks to litigate matters which are presently before the Court, any interest he claims in such matters is adequately represented by an existing party, the Attorney General of the State of Delaware; (3) the intervention of the Florida Attorney will not contribute to the prompt and fair adjudication of the rights of the existing parties and instead will unduly delay or prejudice such an adjudication and (4) no statute confers any right upon Mr. Shevin to intervene in these proceedings.”

The basic facts here involved are as follows. The Howard Hughes Medical Institute was founded1 in 1953 as a non-profit Delaware corporation, having as its avowed purpose the advancement of human knowledge within the confines of the established sciences and the application of such knowledge to the improvement of mandkind. The defendant Institute at present carries on medical research in laboratories and the like which are associated with twelve prominent university hospitals and employs more than 275 persons. The Institute’s medical research activities have grown significantly over the years since its inception in terms of the number of personnel employed and money budgeted and spent in research. projects.

The Institute’s Medical Advisory Board provides medical research guidance to the Institute. It consists of seven nationally known physician-scientists who either head or hold senior positions in leading medical schools. Such board works closely with the Institute’s director of medical research and its Executive Committee to recruit, select and supervise the work of members of the Institute’s research staff and to formulate and review, on a continuing basis, the Institute’s research projects.

In addition to overseeing the medical research functions of the Institute, as outlined above, its Executive Committee has also allegedly assumed the responsibility for overseeing the handling of the Institute’s endowment fund, the growth in the value of which has allegedly permitted the Institute to expand its medical research activities.

The Institute’s Executive Committee was established by Mr. Hughes on December 17, 1953, the same day that the Institute was incorporated. Originally, the Executive Committee, by Mr. Hughes’ direction, was intended to “* * * have and exercises such powers, duties, and authorities as the Trustee may from time to time designate.” On July 3, 1968, however, Mr. Hughes allegedly caused to be adopted the following so-called “Resolutions of Trustee.”

“RESOLVED that except as may be otherwise provided in the Certificate of Incorporation or in further resolutions of the Trustee, there is hereby delegated to the Executive Committee all of the duties and powers to manage the affairs of the corporation which Delaware law had conferred upon the boards of directors of corporations organized for profit.”

As noted above, however, the certificate of incorporation of the Institute provided that the Institute was to be managed and controlled by a Trustee to be named by the incorporators, and on December 17, 1953, such incorporators had selected Howard R. Hughes as such Trustee, a position he continued to fill until his death on April 5, 1976.

Such certificate of incorporation further provided that successor Trustees were to be chosen either by an incumbent Trustee or in the manner designated by the original Trustee. Inasmuch as Mr. Hughes died without naming a successor Trustee or designating a means of selecting such official, the affairs of the Institute have in recent years been basically controlled by Mr. F. W. Gay and Mr. Chester C. Davis, majority members of the so-called Executive Committee of the corporation.

[143]*143On July 10, 1978, the Executive Committee of the Institute, under the aforesaid alleged domination of Messrs. Gay and Davis, purported to amend defendant’s original certificate of incorporation and corporate by-laws so as to abolish the powers, duties, and office'of the Trustee and to vest the authority of such office in themselves and Mr. George W. Thorn, as a so-called Executive Committee.2

The narrow question before the Court for decision at the present time is that raised by the motion of the Attorney General of Florida for leave to intervene in this action, namely, whether or not movant has shown, as required by Rule 24, that the representation of movant’s interest by existing parties is or may be inadequate after determining just what such interest is, Schiff v. RKO Pictures Corporation, Del. Ch., 136 A.2d 193 (1954).

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Bluebook (online)
404 A.2d 140, 1979 Del. Ch. LEXIS 335, Counsel Stack Legal Research, https://law.counselstack.com/opinion/wier-v-howard-hughes-medical-institute-delch-1979.