Title: Commonwealth v. The JOCO Foundation

State: virginia

Issuer: Virginia Supreme Court

Document:

PRESENT:  Carrico, C.J., Lacy, Keenan, Koontz, Kinser, and 
Lemons, JJ., and Compton, S.J. 
 
COMMONWEALTH OF VIRGINIA, EX REL. 
THE HONORABLE RANDOLPH A. BEALES, 
ATTORNEY GENERAL, ET AL.  
 
OPINION BY 
SENIOR JUSTICE A. CHRISTIAN COMPTON 
v.  Record No. 011794 
 
January 11, 2002 
 
THE JOCO FOUNDATION, ET AL. 
 
 
FROM THE CIRCUIT COURT OF BEDFORD COUNTY 
James W. Updike, Jr., Judge 
 
 
The question presented in this appeal is whether the 
circuit court has subject matter jurisdiction over this suit 
instituted by the Attorney General of Virginia, in the name of 
the Commonwealth.  The suit involves a Virginia corporation duly 
established by the State Corporation Commission under the 
Virginia Nonstock Corporation Act, Code §§ 13.1-801 through -944 
(the Act).  The crux of the question is whether the State 
Corporation Commission is the proper forum for decision of the 
matters raised in the suit, or whether the Attorney General may 
proceed in the circuit court under some "inherent power" of the 
circuit court or under the common law to obtain the relief 
requested. 
 
This proceeding is one of a series of lawsuits stemming 
from the 1996 death of Reid Jones, Jr., a philanthropist of 
Moneta, Virginia. 
 
In January 2001, the Attorney General filed this suit in a 
pleading labeled "Bill of Complaint for Reformation and Removal 
of Directors."  Among the defendants are The JOCO Foundation, 
Dianne E. H. Wilcox, Judy Jarrells, William John Killinger, 
SunTrust Bank, SunTrust Securities, Inc., and the Phoenix 
Foundation, Inc. 
 
In the bill, the Attorney General asserts that he sues "in 
his official capacity . . . as legal representative of the 
charitable beneficiaries of the JOCO Foundation, Inc., a 
charitable foundation established under the will of Reid Jones."  
He asserts that "under the common law and by statute," he "is 
the legal representative of the beneficiaries of all charitable 
trusts and charitable assets in the Commonwealth."  According to 
the pleading, the "Attorney General possesses the common law 
authority to act on behalf of the public in matters involving 
charitable assets." 
 
Further, the Attorney General asserts that The JOCO 
Foundation "is a Virginia corporation organized under 
§ 501(c)(3) of the Internal Revenue Code to benefit community 
organizations and created under" the Jones will.  He alleges 
that defendants Wilcox, Killinger, and Jarrells are JOCO's 
corporate directors, residing in Bedford County. 
 
The bill of complaint states that the SunTrust defendants 
are named parties "because they currently hold the assets" of 
 
2
JOCO.  The Attorney General alleges that, "on behalf of the 
intended beneficiaries" of JOCO, "he asserts this claim to the 
assets of the Foundation held by SunTrust to ensure that those 
assets are distributed as Reid Jones, Jr., intended when he 
created JOCO Foundation." 
 
Additionally, the Attorney General alleges that "The 
Phoenix Foundation Inc., is a non-stock corporation created by 
Wilcox as a charitable foundation under her control and funded 
by money transferred from the JOCO Foundation.  [Defendants] 
Wilcox, Killinger and Jarrells are all directors of the Phoenix 
Foundation, Inc.  The Phoenix Foundation is an offshoot or 
'alter ego' of the JOCO Foundation." 
 
Also, the Attorney General asserts that he is "informed and 
believe[s]" that the individual defendants "have breached their 
fiduciary duties owed to the JOCO Foundation by acts of self-
dealing, by engaging in actions which create conflicts of 
interest, by accepting and/or paying excessive fees for services 
rendered, and by taking actions and using assets of the JOCO 
Foundation for non-charitable purposes and/or purposes that 
conflict with the stated intentions of the testator, Reid Jones, 
Jr., all to the detriment of the intended beneficiaries of the 
JOCO Foundation." 
 
Additionally, the Attorney General alleges that "the 
actions and/or inaction" of the individual defendants "have 
 
3
caused the assets of the JOCO Foundation to be jeopardized and 
threaten to frustrate the stated intent" of Jones. 
 
The Attorney General further alleges that the "original 
Articles of Incorporation of the JOCO Foundation reflect . . . 
Jones' express intention to use Foundation proceeds to benefit 
existing charities in the United States and particularly 
charities in the Roanoke, Virginia community."  Instead, 
according to the allegations, the individual defendants have 
removed JOCO's assets from the United States to the Dominican 
Republic, either directly or by channeling the assets through 
the Phoenix Foundation, Inc. 
 
Also, the Attorney General alleges that the individual 
defendants have authorized unnecessary or excessive expenditures 
of JOCO assets both in the United States and in the Dominican 
Republic, and that they will continue to remove assets "to be 
used, among other things for construction of a school in the 
Dominican Republic." 
 
Continuing, the Attorney General lists certain conduct of 
the individual defendants under the heading "Breaches of 
Fiduciary Duties and Acts of Self Dealing."  Included in the 
list are:  Appointing JOCO directors "who are closely related to 
or are indebted to Wilcox or subject to her control;" employing 
Killinger and his company to perform construction work for JOCO, 
and using JOCO assets to pay Killinger fees and costs in excess 
 
4
of the market rate for services or materials provided; "hiring 
family members or friends to perform unnecessary services" for 
JOCO, and paying those persons with JOCO funds; creating in 1999 
the Phoenix Foundation for the purpose of using JOCO assets "to 
travel to and spend time at a resort in the Dominican Republic 
and to build a school" there, thus contravening Jones' intent in 
establishing JOCO to benefit existing charities in the United 
States and in the Roanoke area; and, amending the JOCO articles 
of incorporation "to delete the geographic limitation . . . and 
give the Board of Directors nearly unlimited discretion in 
distributing the funds of the JOCO Foundation." 
 
In the prayer for relief, the Attorney General specifically 
seeks:  Removal of the individual defendants as JOCO directors 
and replacement with "new, independent directors;" rescission or 
reformation of the JOCO articles of incorporation; appointment 
of a receiver to conduct audits of JOCO's and Phoenix's 
financial records; an injunction against SunTrust from releasing 
or distributing corporate funds; an injunction against the 
individual defendants prohibiting distribution of Phoenix funds; 
and, an order requiring Phoenix "to return all funds transferred 
to it or 'donated' to it by the JOCO Foundation." 
 
In the prayer, the Attorney General also asks the court to 
"order such terms and conditions as it deems appropriate to 
 
5
protect the public's interest in the charitable assets of the 
JOCO Foundation." 
 
In "Answer[s] and Grounds of Defense," the individual 
defendants, JOCO, and Phoenix generally deny "that the relief 
requested in the Complaint is justified under the facts of this 
case." 
 
In an answer, the SunTrust defendants admit holding "the 
assets of The JOCO Foundation, Inc.," and state that the court's 
permission to interplead the assets has been sought in a 
separate proceeding.  SunTrust asks that it be dismissed from 
this suit and that the court grant its request for interpleader, 
"which will satisfy the Plaintiffs' goal of preventing SunTrust 
from releasing or distributing the funds of The JOCO Foundation 
(except as authorized by further decree or order of this 
Court)." 
 
The Attorney General then filed a motion "for entry of a 
preliminary injunction to be entered against defendants Wilcox, 
Jarrells and Killinger enjoining them from taking any action 
with respect to the funds and assets of The JOCO Foundation, 
Inc., or the Phoenix Foundation, Inc., until the claims in this 
case are resolved, and for a further Order appointing a Special 
Receiver to manage and operate The JOCO Foundation, Inc. and the 
Phoenix Foundation, Inc., while this litigation is pending."  
With a memorandum supporting the motion, the Attorney General 
 
6
filed 14 pages of exhibits.  In response, defendant Wilcox filed 
an extensive memorandum, with 33 exhibits. 
 
During an April 2001 hearing on the motion, at which no 
evidence was heard, the trial court considered argument of 
counsel.  The Attorney General represented to the court:  "Our 
main objective in this instant action is to preserve the 
charitable assets until there has been a review of the financial 
position of the foundation. . . ."  He argued that the trial 
court has "inherent authority" to appoint a receiver under these 
circumstances, and that "the common law" relating to the 
fiduciary duties of corporate directors applies to enable the 
court to grant the motion. 
 
During the hearing, the trial court inquired about "the 
authority of the Court to grant the relief requested." 
Addressing that inquiry, Wilcox argued:  "Corporations are a 
creature of statute.  JOCO and Phoenix are both non-stock 
corporations governed by the Virginia Non-stock Corporation Act 
and not by common law.  All of the authority cited by 
petitioners are trust cases, have no applicability whatsoever."  
She contended that the Attorney General must seek relief through 
statutes dealing with corporations. 
 
Upon consideration of the bill of complaint, the memoranda 
of the parties, and counsel's argument, the trial court ruled in 
a May 2001 order "that it lacks subject matter jurisdiction over 
 
7
the Commonwealth's claims seeking appointment of a receiver and 
a preliminary injunction" against corporate directors "because 
the Commonwealth's exclusive remedy to address alleged breaches 
of fiduciary duties owed by these . . . directors" is set forth 
in Title 13.1 of the Code of Virginia, "which gives exclusive 
jurisdiction to the State Corporation Commission."  
Subsequently, the trial court denied the Attorney General's 
motion for reconsideration and denied his request for a 
temporary injunction pending appeal. 
 
In September 2001, we awarded the Attorney General this 
appeal from the May 2001 order, having previously ruled that the 
order "disposes of the matter and, consequently, is a final 
order subject to appeal under Code § 8.01-670." 
 
Upon appeal, we shall consider only the procedural 
circumstances of the suit, about which there is no dispute; we 
shall not consider the myriad facts disclosed by the parties' 
memoranda.  From the standpoint of the individual defendants, 
however, it must be noted that they deny all the Attorney 
General's factual allegations of breach of fiduciary duties.  
Those defendants contend they performed properly in an effort to 
fulfill Jones' wish "of building an elementary school for 
impoverished residents of one of the poorest neighborhoods in 
the Dominican Republic."  Wilcox asserted that this controversy 
is generated by Jones' "disgruntled heirs." 
 
8
 
In his assignments of error, the Attorney General contends 
the trial court erred when it denied his motion for an 
injunction and appointment of a receiver on the ground that the 
court "lacks subject matter jurisdiction over claims for an 
accounting, removal of directors and other equitable relief 
asserted by the Commonwealth against directors of a charitable 
foundation . . . based upon allegations that the directors 
engaged in self-dealing, wasted foundation assets and breached 
fiduciary duties owed to the foundation." 
 
On brief, the Attorney General argues that the circuit 
court sitting in equity possesses subject matter jurisdiction 
"over the Commonwealth's suit for an accounting and equitable 
relief against directors of a charitable foundation organized as 
a Virginia non-stock corporation."  Citing general statutory 
authority, he says that Virginia circuit courts have broad 
equity power over individuals and corporations, including the 
power to grant injunctions.  He argues the jurisdiction of the 
State Corporation Commission is limited to the administration 
and enforcement of laws dealing with corporations. 
 
According to the Attorney General, "In numerous cases 
decided by this Court, circuit courts have exercised subject 
matter jurisdiction over claims challenging the conduct of 
individual corporate directors." 
 
9
 
Taking an alternative position, the Attorney General argues 
that the circuit court "has the power to grant some if not all 
of the relief requested by the Commonwealth."  He acknowledges 
it is generally held that the power of courts in reviewing the 
internal management or policies of corporations is limited in 
scope, citing Gottlieb v. Economy Stores, Inc., 199 Va. 848, 
857, 102 S.E.2d 345, 352 (1958). 
 
He also acknowledges that generally only members or 
shareholders of a corporation have standing to challenge 
internal management decisions of a corporation.  However, he 
argues, this rule does not apply "where the Corporation is also 
a charitable foundation."  The Attorney General principally 
relies upon Tauber v. Commonwealth, 255 Va. 445, 499 S.E.2d 839 
(1998), as authority for the latter proposition.  He opines that 
"[i]nasmuch as JOCO is a charitable foundation, it is 
essentially a trust as well as a non-stock corporation," and 
that he has the common law authority to act on behalf of the 
public in such a case. 
 
Summarizing, the Attorney General argues that the circuit 
court has the authority to consider claims brought by the 
Commonwealth against directors of a charitable foundation, 
organized as a nonstock corporation, alleging the directors have 
breached fiduciary duties, engaged in acts of self dealing, and 
wasted foundation assets.  The court has the power, the argument 
 
10
continues, to order an accounting to ensure the funds are being 
distributed in a way that satisfies the charitable purposes set 
forth in the original articles of incorporation.  Also, the 
Attorney General contends, the circuit court "has inherent 
ancillary authority" to award injunctive relief and appoint a 
receiver. 
 
Finally, the Attorney General argues that if "Dianne Wilcox 
and the other individual directors of JOCO breached their 
fiduciary duties when they amended the original Articles of 
Incorporation to delete the geographic restriction on charitable 
donations," the circuit court "may enter an order striking the 
amendment and restoring the original Articles of Incorporation." 
 
We do not agree with the Attorney General.  We hold that 
the trial court correctly ruled that it lacked subject matter 
jurisdiction over the matters raised in this suit. 
 
Initially, applicable general principles should be 
reviewed.  The phrase "subject matter jurisdiction" means the 
power of a court to adjudicate a specified class of cases.  
Subject matter jurisdiction is granted by constitution or 
statute, and cannot be waived.  Nelson v. Warden, 262 Va. 276, 
281, 552 S.E.2d 73, 75 (2001).  Whether a plaintiff has a common 
law remedy is a question of subject matter jurisdiction.  Counts 
v. Stone Container Corp., 239 Va. 152, 153 n.1, 387 S.E.2d 481, 
482 n.1 (1990). 
 
11
 
A circuit court has "original and general jurisdiction of 
all cases in chancery" except for cases "assigned to some other 
tribunal."  Code § 17.1-513.  Every circuit court has 
jurisdiction to award injunctions.  Code § 8.01-620. 
 
Among the powers and duties of the State Corporation 
Commission (Commission) is the "duty of administering the laws 
made in pursuance of [the Constitution of Virginia] for the 
regulation and control of corporations doing business in this 
Commonwealth."  Va. Const. art. IX, § 2.  "No court within or 
without Virginia, except the Supreme Court by way of appeal as 
authorized by law, shall have jurisdiction to review, reverse, 
correct or annul any action of the Commission, within the scope 
of its authority, . . . or to enjoin, restrain or interfere with 
the Commission in the performance of its official duties."  
Code § 13.1-813, a part of the Act.  "In the administration and 
enforcement of all laws within its jurisdiction, the Commission 
shall have the power . . . to issue temporary and permanent 
injunctions."  Code § 12.1-13. 
 
As we commence the analysis of the issue presented, certain 
basic, undisputed circumstances should be made clear.  First, 
there has been no dissolution of either JOCO or Phoenix.  
According to this record, those domestic corporations, duly 
established by the Commission, are lawful, viable entities with 
 
12
full power to operate within the authority granted by the 
Commission. 
 
Second, the gist of the plaintiffs' claim is an attempt to 
inject the circuit court at the behest of the Attorney General 
into the operating machinery of established corporate entities.  
While the General Assembly, in Code § 55-532, has authorized the 
Attorney General to "exercise his common law and statutory 
authority" regarding certain nonprofit health care entities, and 
to become involved in the disposition of assets, no such 
specific power has been granted by the legislature regarding 
nonprofit corporations devoted to charitable purposes. 
 
Third, and to state the obvious, this suit is brought by 
the Attorney General, and not by any director or other person or 
entity with statutory standing having the authority to tinker 
with corporate machinery. 
 
And, fourth, the Attorney General's contention that the 
circuit court has subject matter jurisdiction in this matter 
advances the theory that a Virginia nonstock corporation devoted 
to charitable purposes "essentially" is a charitable trust.  No 
direct authority is cited for this proposition and we have found 
none.  See generally IVA Austin Wakeman Scott & William Franklin 
Fratcher, The Law of Trusts § 348.1, at p. 23 (4th ed. 1989) 
("The truth is that it cannot be stated dogmatically that a 
charitable corporation either is or is not a trustee"); Edith L. 
 
13
Fisch et al., Charities and Charitable Foundations § 134, at p. 
132 (1974) ("Despite its fundamental importance no clear answer 
or decisive criterion exists for resolution of the question 
. . . whether any particular asset of a charitable corporation 
or association is held absolutely or in trust"). 
 
We shall now turn to the Attorney General's prayer for 
relief and will demonstrate that the General Assembly has 
decided that the forum for each type of relief sought is in the 
Commission, and not the circuit court. 
 
Significantly, the bill is labeled "Bill of Complaint for 
Reformation and Removal of Directors," and the plaintiffs pray 
for an order granting reformation and removal.  Specifically, 
the bill asks "that the current Articles of Incorporation of the 
JOCO Foundation be rescinded and reformed. . . ," and "that the 
court remove . . . Wilcox, Killinger and Jarrells as directors 
of the JOCO Foundation and replace them with new, independent 
directors." 
 
The Act, in Code § 13.1-860, sets forth detailed procedures 
for removal of directors, and the General Assembly has not 
authorized the Attorney General to participate in that exercise 
by prosecuting a suit in a circuit court.  Code § 13.1-861 
permits any member or director, not the Attorney General, to 
contest an election of directors in an appropriate circuit 
court.  Code § 13.1-874 provides for removal of officers of 
 
14
nonstock corporations, without any mention of the participation 
of the Attorney General.  Code §§ 13.1-884 through -893 control 
the amendment of articles of incorporation, including addition 
or deletion of provisions, under the supervision of the 
Commission, without any participation in such reformation in a 
circuit court at the relation of the Attorney General. 
 
The prayer for relief also asks for appointment of a 
receiver to conduct an accounting and to manage JOCO and Phoenix 
until this suit is resolved, and for injunctive relief.  In Code 
§ 13.1-909, the General Assembly has given circuit courts 
subject matter jurisdiction in the process of the dissolution of 
nonstock corporations, but only after termination of corporate 
existence.  A circuit court has "full power to liquidate the 
assets and business of the corporation at any time after the 
termination of corporate existence . . . upon the application of 
any person, for good cause, with regard to any assets or 
business that may remain."  § 13.1-909(B).  In a proceeding 
brought to dissolve such a corporation, a court "may issue 
injunctions, appoint a receiver or custodian pendente lite with 
such powers and duties as the court may direct, take other 
action required to preserve the corporate assets where located, 
and carry on the business of the corporation until a full 
hearing can be held."  § 13.1-909(E).  Of course, in this case 
there has been no termination of corporate existence, according 
 
15
to the statutes providing for dissolution, to furnish the 
predicate for appointment of a receiver to conduct the corporate 
affairs. 
 
The corporate existence of a nonstock corporation may be 
terminated involuntarily by order of the Commission "when it 
finds that the corporation (i) has continued to exceed or abuse 
the authority conferred upon it by law. . . ."  Code § 13.1-915.  
Before entering such order, the Commission must issue a rule to 
show cause against the corporation.  The Commission may issue 
the rule on its own "or on motion of the Attorney General."  Id.  
Of course, that has not happened here. 
 
But, as we have said, the Attorney General maintains that a 
proper forum for the relief he seeks in the prayer of the bill 
is in the circuit court, principally relying on Tauber.  In that 
case, we said, "This Court long ago recognized the common law 
authority of the Attorney General to act on behalf of the public 
in matters involving charitable assets."  255 Va. at 451, 499 
S.E.2d at 842.  There, we held that the Attorney General could 
properly assert jurisdiction in a circuit court over assets 
located in Virginia held by trustees in dissolution of a foreign 
charitable corporation.  The trustees had been directors of the 
corporation, which operated a hospital in the Commonwealth. 
 
In that case, the charter of a Maryland charitable 
corporation had been revoked by that state, which converted its 
 
16
directors by operation of law to trustees in dissolution.  Id. 
at 455, 499 S.E.2d at 844.  Because the charter revocation 
terminated the entity's corporate existence, it could no longer 
function as a corporation.  The corporate assets, located in 
Virginia, had automatically transferred to the directors as 
trustees.  Id., 499 S.E.2d at 845.  There, unlike this case, 
charitable assets were abroad in this State in the hands of 
individuals who were trustees in dissolution; those assets were 
not being held, as here, by a viable, lawful Virginia 
corporation.  Thus, we decided the Attorney General could act on 
behalf of the public regarding the Tauber assets. 
 
Addressing another issue in Tauber, we rejected the 
defendants' contention that the litigation, dealing with 
appropriation of charitable assets by directors for their 
personal gain, involved impermissible interference by Virginia 
with the internal affairs of a foreign corporation.  Id. at 455-
56, 499 S.E.2d at 845.  In that context, we said, quoting 
Hanshaw v. Day, 202 Va. 818, 824, 120 S.E.2d 460, 464 (1961), 
that contributions made to a charitable corporation and "the 
assets realized therefrom were dedicated to those purposes and 
stamped with a public interest by the charter, the laws of this 
State, sound reason and public policy."  255 Va. at 455, 499 
S.E.2d at 845.  We also stated that "[t]he members acquired no 
property rights in, nor were they equitably entitled to such 
 
17
assets, either during the lifetime of the corporation or upon 
dissolution."  Id.  "To hold otherwise," we said, "would convert 
the public nature and purpose of the corporation into a vehicle 
for the personal pecuniary gain of the members."  Id.
 
Contrary to the Attorney General's argument, the fact that 
members of a charitable corporation have no personal property 
rights in corporate assets is not authority for permitting the 
Attorney General, in a circuit court suit like this, effectively 
to penetrate the corporate veil of an existing Virginia 
corporation, or as the Attorney General urges, "to disregard, to 
some extent, the corporate form." 
 
As we have said, the Attorney General relies upon 
"numerous" other cases decided by this Court in which he points 
out "circuit courts have exercised subject matter jurisdiction 
over claims challenging the conduct of individual corporate 
directors."  None of those cases is controlling here; we shall 
address only several. 
 
In Feddeman & Co. v. Langan Assocs., 260 Va. 35, 41, 530 
S.E.2d 668, 672 (2000), a corporation brought a damage suit in a 
circuit court against one of its competitors and against some of 
its former directors for, among other things, breach of 
fiduciary duties, a case wholly unlike the present case. 
 
In Giannotti v. Hamway, 239 Va. 14, 28, 387 S.E.2d 725, 733 
(1990), minority stockholders of a Virginia corporation sued in 
 
18
a circuit court for liquidation of the corporation and 
appointment of a receiver, alleging breach of fiduciary duties 
by directors.  That judicial proceeding, unlike the present 
suit, was specifically authorized by former Code §§ 13.1-94 and 
-95, predecessors to present Code § 13.1-748, a part of the 
Virginia Stock Corporation Act.  239 Va. at 17, 18, 387 S.E.2d 
at 726, 727.  Adelman Assocs. v. Goldsten, 209 Va. 731, 737, 167 
S.E.2d 104, 108 (1969), is a suit similar to Giannotti. 
 
Finally, the Attorney General relies upon Stewart v. Lady, 
251 Va. 106, 465 S.E.2d 782 (1996), for the proposition that the 
circuit court has subject matter jurisdiction over this claim 
challenging the conduct of directors.  Actually, the case stands 
for the opposite proposition. 
 
In a dispute between two sets of directors of a nonstock 
corporation, the Court held that election of directors was 
governed by Code § 13.1-855(D) of the Act, and that the circuit 
court had no jurisdiction to elect or appoint directors.  We 
rejected "the respondents' argument that the chancellor, 
exercising his equitable jurisdiction, is empowered to declare 
the respondents the lawful directors.  Under the facts and 
circumstances of this case, the chancellor has no statutory 
authority to elect directors."  251 Va. at 114, 465 S.E.2d at 
786. 
 
19
 
In sum, the General Assembly has provided in Code § 13.1-
813 that "[n]o court within or without Virginia . . . shall have 
jurisdiction to review, reverse, correct or annul any action of 
the Commission, within the scope of its authority . . . or to 
enjoin, restrain or interfere with the Commission in the 
performance of its official duties."  If circuit courts, at the 
request of the Attorney General, are to have subject matter 
jurisdiction over claims like those made in this suit, the 
General Assembly has the power to so provide, as it did in Code 
§ 55-432 when it authorized the Attorney General to exercise his 
common law authority regarding certain nonprofit health care 
entities.  Under the existing common law and present statutory 
scheme, however, the circuit court lacks subject matter 
jurisdiction over this suit. 
 
Consequently, finding that the trial court did not err in 
denying the plaintiffs' motion for a preliminary injunction and 
appointment of a receiver, the May 2001 order will be affirmed.∗
Affirmed. 
JUSTICE LEMONS, with whom JUSTICE KOONTZ and JUSTICE KINSER, 
join dissenting. 
                     
 
∗ We have not overlooked that the chancellor, at the urging 
of all parties, reluctantly indicated that he would order an 
accounting, noting that such action could be viewed as 
inconsistent with his ruling on jurisdiction.  No accounting is 
provided for in the May 2001 order, nor do we find any such 
written order in this record.  Therefore, the effect, if any, of 
such a ruling on the issue we have decided is not before us, and 
we express no opinion on it. 
 
20
 
 
Because I believe that the circuit court has subject matter 
jurisdiction over this controversy, I respectfully dissent. 
 
The majority opinion holds that the circuit court would 
have jurisdiction over this action brought by the Attorney 
General if the entity involved were a trust rather than a 
corporation.  However, it is the nature of the claim not the 
form of the entity involved in the claim that is dispositive.  
The public interest in the proper disposition of charitable 
assets is the same irrespective of the form of the entity 
entrusted with the assets.  Furthermore, we have previously 
stated that a charitable corporation in this context is, 
essentially, a trust.  Finally, while the State Corporation 
Commission may have jurisdiction over some of the claims in this 
action, its jurisdiction is not exclusive. 
 
In Tauber v. Commonwealth, 255 Va. 445, 499 S.E.2d 839 
(1998), we stated in broad terms the authority of the Attorney 
General to proceed in precisely the manner chosen in this case.  
Although the Tauber case involved the assets of a dissolved 
corporation, we stated the holding in terms of the nature of the 
claim rather than the form of the entity: “This court long ago 
recognized the common law authority of the Attorney General to 
act on behalf of the public in matters involving charitable 
assets.”  Id. at 451, 499 S.E.2d at 842. 
 
21
 
The reason for such broad language is found in the cases 
cited by the Court in Tauber.  In Hanshaw v. Day, 202 Va. 818, 
120 S.E.2d 460 (1961), the Court noted: 
The corporation was organized for charitable or 
benevolent or literary purposes.  Contributions 
made to it and the assets realized therefrom 
were dedicated to those purposes and stamped 
with a public interest by the charter, the laws 
of this State, sound reason and public policy.  
The members acquired no property rights in, nor 
were they equitably entitled to such assets, 
either during the lifetime of the corporation 
or upon dissolution.  To hold otherwise would 
convert the public nature and purpose of the 
corporation into a vehicle for the personal 
pecuniary gain of the members. 
 
Id. at 824, 120 S.E.2d at 464, quoted with approval in Tauber, 
255 Va. at 455, 499 S.E.2d at 845. 
 
Also cited favorably by the Court in Tauber was the prior 
decision in Clark v. Oliver, 91 Va. 421, 22 S.E. 175 (1895).  In 
that case dealing with funds diverted from one charitable cause 
to another charitable cause, we rejected a claim by a 
contributor and stated: 
[W]hatever jurisdiction is thereafter 
entertained by the courts with respect to the 
disposition and control of this fund, must be 
called into active exercise either by the 
Attorney General, acting upon behalf of the 
public, or by the trustees charged with its 
custody and  administration, or by some person 
having a beneficial interest in the object of 
the trust. 
 
Clark, 91 Va. at 427-28, 22 S.E. at 177. 
 
22
 
The majority opinion states that Code § 55-532 authorized 
the Attorney General to exercise his common law and statutory 
authority regarding certain nonprofit health care entities and 
further states that “no such specific power has been granted by 
the legislature regarding nonprofit corporations devoted to 
charitable purposes.”  The interpretation misreads the plain 
import of the statute.  The common law right of the Attorney 
General to act in matters involving charitable assets is so well 
accepted that the General Assembly recognized the right when it 
enacted Code § 55-532 concerning the disposition of assets by 
certain nonprofit health care entities.  1997 Va. Acts ch. 615.  
In the section involving notice of intent to dispose of assets, 
the statute provides in part: “The notice shall be given at 
least sixty days in advance of the effective date of such 
proposed transaction in order that the Attorney General may 
exercise his common law and statutory authority over the 
activities of these organizations.”  Far from limiting the 
Attorney General’s rights, this statute refers to and affirms 
the broad power of the Attorney General irrespective of the form 
of the entity.  Certainly, such a construction of the statute is 
required by the language of Code § 1-10 which provides: “The 
common law of England, insofar as it is not repugnant to the 
principles of the Bill of Rights and Constitution of this 
Commonwealth, shall continue in full force within the same, and 
 
23
be the rule of decision, except as altered by the General 
Assembly.”  Although the General Assembly may abrogate the 
common law, its intent to do so must be plainly manifested.  
Wackwitz v. Roy, 244 Va. 60, 65, 418 S.E.2d 861, 864 (1992).  
The language of Code § 55-532 does not plainly manifest an 
intent to abrogate the common law.  To the contrary, it refers 
to and affirms the broad powers of the Attorney General at 
common law to act in matters relating to the disposition of 
charitable assets irrespective of the form in which they are 
held. 
 
Additionally, we have recognized that legislative 
enactments concerning director liability do not abrogate common 
law duties of the director.  See Simmons v. Miller, 261 Va. 561, 
577, 544 S.E.2d 666, 676 (2001); Willard v. Moneta Building 
Supply, Inc., 258 Va. 140, 151, 515 S.E.2d 277, 284 (1999).  
Considering Code § 1-10 and the Court’s holdings in Miller and 
Willard, and the plain meaning of the language of § 55-532, it 
is clear that the General Assembly did not intend § 55-532 to be 
limiting in nature. 
 
The majority opinion limits the subject matter jurisdiction 
of the circuit court to the disposition of charitable assets 
held in the particular form of a trust.  Rejecting the Attorney 
General’s assertion that a nonstock corporation devoted to 
charitable purposes is essentially a charitable trust, the 
 
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majority states that: “No direct authority is cited for this 
proposition and we have found none.”  Apparently, the majority 
has failed to recall the following statement of the law of the 
Commonwealth in Tauber: “Under Maryland law, property of a 
charitable corporation is held in trust for the public.  
Inasmuch Gospel Mission, Inc. v. Mercantile Trust Co. of 
Baltimore, 184 Md. 231, 40 A.2d 506, 510 (Md. 1945).  Virginia 
law is the same.”  Tauber, 255 Va. at 455, 499 S.E.2d at 845. 
 
Additionally, the majority holds that Code § 13.1-813 
provides exclusive jurisdiction in the State Corporation 
Commission over the claims involved in this case.  The cited 
provision states as follows: 
No court within or without Virginia, except the 
Supreme Court by way of appeal as authorized by 
law, shall have jurisdiction to review, 
reverse, correct or annul any action of the 
Commission, within the scope of its authority, 
with regard to any articles, certificate, 
order, objection or petition, or to suspend or 
delay the execution or operation thereof, or to 
enjoin, restrain or interfere with the 
Commission in the performance of its official 
duties. 
 
Code § 13.1-813. 
 
The plain language of this statute neither establishes the 
Commission’s jurisdiction over the claims in this case nor 
divests the circuit court of its common law jurisdiction.  The 
statute by its terms prevents any other court, except the 
Supreme Court upon appellate review, from altering action the 
 
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Commission has taken.  If the Commission has jurisdiction over 
the claims in this case, it is concurrent with the circuit 
court. 
 
The circuit court has subject matter jurisdiction over 
matters pertaining to charitable assets, and the Attorney 
General has standing to seek judicial intervention to protect 
the public’s interest. Code § 17.1-513 grants the circuit court 
jurisdiction over chancery matters.  Code § 8.01-620 gives the 
circuit court jurisdiction to grant injunctive relief.  It is 
unnecessary in this dissent to address whether each form of 
relief requested by the Attorney General is authorized by law. 
 
The majority holds that the trial court did not err in its 
determination that it did not have subject matter jurisdiction 
over this controversy. I disagree and respectfully dissent. 
 
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