Summary
The Nebraska Supreme Court considered whether a district court had authority to appoint additional directors to The Stueven Charitable Foundation when existing directors had not died, resigned, or been removed. The court held that the foundation’s governing documents and Neb. Rev. Stat. § 21-1917 did not authorize the appointment under the circumstances, vacated the order, and remanded for further proceedings.
Topics
Practice areas
Questions Presented
- Whether the Hall County District Court had authority under the Foundation's articles, bylaws, or the Nebraska Nonprofit Corporation Act to appoint new directors when no existing director had died, resigned, or been removed.
- Whether Neb. Rev. Stat. § 21-1917 independently authorized the district court to appoint new directors rather than merely to order a meeting or another method of obtaining the directors' consent.
- Whether Shelley waived her challenge to the district court's authority to appoint directors.
- Whether Shelley could act as Delbert's representative on the Foundation's board under Neb. Rev. Stat. § 30-2653.
Holdings
- Shelley did not waive her challenge because her motion to dismiss asserted that there was no vacancy on the board and counsel renewed that argument at the hearing.
- The district court lacked authority to appoint new directors because the Foundation's governing documents authorized court appointment only to fill a vacancy, and no vacancy existed.
- Neb. Rev. Stat. § 21-1917 does not independently authorize a district court to appoint new members to the board of a nonprofit corporation.
- The court declined to address whether Shelley could act as Delbert's representative because the issue had not been addressed by the district court.
Key quotations
“Section 21-1917 does not independently authorize a district court to appoint new members to the board of a nonprofit corporation.” (146)
“The district court lacked the authority to appoint new direc- tors.” (146)
Factual background
Delbert Stueven and his wife incorporated the Stueven Charitable Foundation as a charitable nonprofit corporation in 1990. Delbert, the president and a director, was later found incompetent, and his daughter Shelley was appointed his guardian and conservator; another director, Robert Burkhardt, could not be reached to convene a board meeting. The Foundation alleged that the board lacked a quorum and had failed to make a required charitable donation, and sought appointment of additional directors. The articles and bylaws provided mechanisms for filling vacancies and permitted court appointment in specified circumstances, but no director had died, resigned, or been removed.
Procedural history
The Stueven Charitable Foundation petitioned the Hall County District Court for appointment of additional directors, asserting that the board lacked a quorum because of Delbert Stueven's incapacity and another director's failure to respond. Kristy Cavanaugh filed a cross-complaint seeking appointment of four directors. The district court granted the Foundation's petition in part and Cavanaugh's petition in full, appointing four new directors. Delbert, acting through his guardian and conservator, appealed.
Remand instructions
The district court's order appointing new directors was vacated, and the matter was remanded for further proceedings.