Title: Boys & Girls Clubs of South Alabama, Inc. v. Fairhope-Point Clear Rotary Youth Programs, Inc.

State: alabama

Issuer: Alabama Supreme Court

Document:

Rel: 10/19/12
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334)
229-0649), of any typographical or other errors, in order that corrections may be made
before the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
 OCTOBER TERM, 2012-2013
_________________________
1110843
_________________________
The Boys & Girls Clubs of South Alabama, Inc.
v.
Fairhope-Point Clear Rotary Youth Programs, Inc., and Ruff
Wilson Youth Organization, Inc.
Appeal from Baldwin Circuit Court
(CV-10-900712)
WOODALL, Justice.
The Boys & Girls Clubs of South Alabama, Inc. ("the
Club"), a nonprofit corporation, appeals from a judgment in
favor of the Fairhope-Point Clear Rotary Youth Programs, Inc.
("Rotary Inc."), and the Ruff Wilson Youth Organization, Inc.
1110843
("Wilson Inc."), in their action against the Club seeking
declaratory and injunctive relief.  We vacate the judgment and
dismiss the case and the appeal.
I. Factual and Procedural Background
The dispositive facts are undisputed.  The Club, which 
was incorporated in 1958,  has its headquarters in Mobile.  It
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currently operates several facilities in Mobile County to
promote, as stated in its certificate of incorporation, "the
health, social, educational, vocational, and character
development" of youth in Baldwin and Mobile Counties.  In
1996, it was also operating facilities in Baldwin County.  In
particular, it operated a facility in Fairhope sometimes
referred to as the "Fairhope Boys and Girls Club" ("the
Fairhope Club").  It operated another such facility in Daphne
sometimes referred to as the "Daphne Boys and Girls Club"
("the Daphne Club").  The Fairhope Club and the Daphne Club
had no legal existence apart from their affiliation with the
Club.
On November 13, 1996, B.R. Wilson, Jr., one of the 
incorporators of the Club and a principal benefactor, 
executed
Throughout its history, the Club has undergone a series
1
of name changes, which are not here pertinent.
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a "gift deed," transferring to the Club approximately 17 acres
of real estate ("the property"). Contemporaneously with the
execution of the deed, Wilson gave a letter to the Club ("the
letter"); that letter stated:
"Gentlemen:
"I am giving to you the property, located in
Point Clear, known as my 'Stables.'  This gift is
totally unrestricted.  The property is presently
occupied by Bill Adams, who is operating the
stables, mostly for use by Grand Hotel guests and
other 'paying customers.'  I believe that he is
technically 'holding over on a month to month basis'
since his written leases expired some time ago.  He
has been working with the [Club] in the past and
wants to work with you in the future, not only as a
tenant, but also to allow your members to use the
facilities on some mutually agreeable basis.  I
understand that you intend to attempt to work out a
mutually satisfactory arrangement with Bill Adams. 
I appreciate that; but it is not a condition of this
gift.
"I understand that you hope to continue the use
of 
my 
son's 
name 
in 
connection 
with 
these
facilities, or some other facility in the Fairhope-
Point Clear area.  I also appreciate that; but it is
not a condition of this gift.  I will also again
confirm to you that you are free to ultimately
dispose of this property if, in your judgment, it is
in the best interest of the [C]lub to do so.  It is
my desire and understanding that you will use the
proceeds from any such disposition for the [C]lub's
facilities and/or activities in the Fairhope-Point
Clear area."
Wilson died in 1997.
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In March 2000, the Club sold the property and deposited
the proceeds into three separate accounts, two of which were
separately earmarked for the Daphne Club and for the Fairhope
Club.  However, on May 31, 2009, the Club discontinued its
operations 
in 
Daphne 
and 
Fairhope, 
citing 
"operating 
deficits"
as a contributing factor.  It transferred the remainder of the
proceeds from the sale of the property to an account in the
Community Foundation of South Alabama ("the bank").
On June 1, 2009, the facilities in Daphne and Fairhope
were reopened by volunteers and former Club personnel, who
began operating the youth centers under their own independent
management 
structures. 
 
Subsequently, 
some 
of 
these
individuals incorporated Rotary Inc. and Wilson Inc., under
which they continued to operate the facilities in Fairhope and
Daphne, respectively.
Rotary Inc. and Wilson Inc. sued the Club, seeking
declaratory and injunctive relief.  They alleged that the Club
"ha[d] used," or, perhaps, was "anticipat[ing] using," the
proceeds for its own operations, rather than for the use of
the facilities then being operated by Rotary Inc. and Wilson
Inc.  They sought a judgment (1) declaring that the "desire
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and understanding" of B.R. Wilson expressed in the letter
controlled the disposition of the funds, and (2) enjoining the
use of the proceeds for anything but the benefit of the youth
facilities as operated by Rotary Inc. in Fairhope and by
Wilson Inc. in Daphne.  
After a bench trial, the trial court entered a judgment
setting forth its findings of fact and conclusions of law. 
More specifically, it considered the letter and testimony of
witnesses regarding B.R. Wilson's intent and found that it was
his intent that the property or proceeds from the sale of the
property would "be held in trust for the operation of the
Baldwin County facilities," and that the bank was holding the
funds in trust as trustee for the "exclusive benefit of the
[youth facilities in Fairhope and Daphne]."  
(Emphasis added.) 
It concluded that "because entities [(Rotary Inc. and Wilson
Inc.)] now exist which are capable of receiving and
administering the sales proceeds for the benefit of the
Fairhope and Daphne clubs, there is no further purpose for the
continued existence of the trust."  (Emphasis added.)  The
court ordered the termination of the "trust" and the disbursal
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of the remainder of the proceeds, namely, $893,377.02 and
$210,704.76, to Rotary Inc. and Wilson Inc., respectively.  
The Club appealed, challenging, among other things, the
standing of Rotary Inc. and Wilson Inc. to sue over
distribution of the proceeds of the sale of the property.  In
particular, the Club contends that the entities that may sue
a nonprofit corporation are defined by the Alabama Nonprofit
Corporation Act, Ala. Code 1975, §§ 10A-3-1.01 through 10A-3-
8.02, Ala. Code 1975 ("the Act"),  and that Rotary Inc. and
2
Wilson Inc. are not included in that roster of entities. 
According to Rotary Inc. and Wilson Inc., there is a "special
standing 
rule 
[that] 
applies 
to 
challenges 
to 
the
administration of a public charitable trust as is at issue
here."  Rotary Inc. and Wilson Inc.'s brief, at 36.  Because
standing is the dispositive and threshold issue and because
the facts pertinent to that issue are undisputed, our standard
of review is de novo.
II. Discussion
The provisions of the Act apply to "[a]ll nonprofit
2
corporations organized hereunder," and to "[a]ll nonprofit
corporations 
heretofore 
organized 
under 
any 
act 
... 
heretofore
repealed, for a purpose ... for which a nonprofit corporation
might be organized under this chapter." § 10A-3-1.03.  
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"'Standing represents a jurisdictional requirement which
remains open to review at all stages of the litigation.'"  Ex
parte Fort James Operating Co., 871 So. 2d 51, 54 (Ala. 2003)
(quoting National Org. for Women, Inc. v. Scheidler, 510 U.S.
249, 255 (1994)(emphasis added)).  "Like any other fact
essential to recovery, the plaintiff has the burden of proving
standing."  Byrd v. MorEquity, Inc., 94 So. 3d 378, 379 (Ala.
Civ. App. 2012) (plurality opinion).  "'When a party without
standing purports to commence an action, the trial court
acquires no subject-matter jurisdiction.'"  Riley v. Pate, 3
So. 3d 835, 838 (Ala. 2008) (quoting State v. Property at 2018
Rainbow Drive, 740 So. 2d 1025, 1028 (Ala. 1999)).  
"'Standing is "'"[t]he requisite personal interest
that must exist at the commencement of the
litigation."'"'  Cadle Co. v. Shabani, 4 So. 3d 460,
462-63 
(Ala. 
2008) 
(emphasis 
added) 
(quoting
Pharmacia Corp. v. Suggs, 932 So. 2d 95, 98 (Ala.
2005), quoting in turn In re Allison G., 276 Conn.
146, 156, 883 A.2d 1226, 1231 (2005)). ...
"....
 
"This Court has often said that it is '"'duty
bound to notice ex mero motu the absence of subject-
matter jurisdiction.'"'  Riley v. Hughes, 17 So. 3d
643, 648 (Ala. 2009) (emphasis added) (quoting
Baldwin County v. Bay Minette, 854 So. 2d 42, 45
(Ala. 2003), quoting in turn Stamps v. Jefferson
County Bd. of Educ., 642 So. 2d 941, 945 n. 2 (Ala.
1994)).  However, just because the Court is duty
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bound to notice the absence of subject-matter
jurisdiction, it does not follow that it is so bound
to construct theories and search the record for
facts to support the existence of jurisdiction for
plaintiffs ... [whether they are appellants or
appellees].  On the contrary,
 
"'when the parties have not provided
sufficient legal or factual justification
for this Court's jurisdiction, this Court
is not obligated to embark on its own
expedition 
beyond 
the 
parties' 
arguments 
in
pursuit 
of 
a 
reason 
to 
exercise
jurisdiction.  The burden of establishing
the 
existence 
of 
subject-matter
jurisdiction falls on the party invoking
that jurisdiction.  See, e.g., Ex parte
HealthSouth Corp., 974 So. 2d 288 (Ala.
2007) 
(setting 
forth 
the 
plaintiff's 
burden
of demonstrating standing to bring an
action, 
an 
issue 
of 
subject-matter
jurisdiction); ... Ex parte Ray-El, 911 So.
2d 1100, 1104 (Ala. Crim. App. 2004)
(placing the burden to "'justify the
jurisdiction of this court'" on the person
bringing a habeas petition as a "next
friend" (quoting Whitmore v. Arkansas, 495
U.S. 149, 164, 110 S. Ct. 1717, 109 L. Ed.
2d 135 (1990))); cf. Bush v. Laggo Props.,
L.L.C., 784 So. 2d 1063, 1065 (Ala. Civ.
App. 2000) ("Once a party challenges the
trial court's jurisdiction, pursuant to
Rule 12(b)(1), [Ala. R. Civ. P.,] the
burden of establishing jurisdiction is on
the 
plaintiff." 
(citing 
Menchaca 
v.
Chrysler Credit Corp., 613 F.2d 507 (5th
Cir. 1980))).'
"Crutcher v. Williams, 12 So. 3d 631, 635-36 (Ala.
2008)(some emphasis added)."
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Blevins v. Hillview Office Ctr. Owners' Ass'n, 51 So. 3d 317,
321-22 (Ala. 2010) (first emphasis added). 
For the special standing rule advanced by Rotary Inc. and
Wilson Inc., they cite only Jones v. Grant, 344 So. 2d 1210
(Ala. 1977).  Jones "adopt[ed] the rule that beneficiaries
with a sufficient special interest in the enforcement of a
charitable trust can institute a suit as to that trust."  344
So. 2d at 1212 (emphasis added).  The special-interest rule
adopted in Jones is an exception to the general rule that
"mere potential beneficiaries, whose interest is no greater
than the interest of all the other members of a large class of
potential beneficiaries of a charitable trust, have no
standing to maintain an action for the enforcement of the
trust."  Rhone v. Adams, 986 So. 2d 374, 377 (Ala. 2007).
However, the holding in Jones has been superseded by the
Act, as recognized in Cook v. Lloyd Noland Foundation, Inc.,
825 So. 2d 83, 86-87 (Ala. 2001) (noting that "for trusts
incorporated as nonprofit corporations [the Act] superseded
that right as recognized by Jones"), and in Rhone, 986 So. 2d
at 377 n.1.  On the basis of the predecessor of the Act, the
Court in Cook affirmed the trial court's dismissal of an
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action by purported beneficiaries of a charitable trust
incorporated under the Act, which action sought, among other
things, to enjoin a sale contemplated by the corporation. 
Cook, 825 So. 2d at 84.
The Act provides, in pertinent part:
"No act of a nonprofit corporation and no
conveyance or transfer of real or personal property
to or by a nonprofit corporation shall be invalid by
reason of the fact that the corporation was without
capacity or power to do an act or to make or receive
a conveyance or transfer, but lack of capacity or
power may be asserted:
"(1) In a proceeding by a member or a
director against the nonprofit corporation
to enjoin the doing or continuation of
unauthorized acts, or the transfer of real
or personal property by or to the nonprofit
corporation. ...
"(2) In a proceeding by the nonprofit
corporation, whether acting directly or
through a receiver, trustee, or other legal
representative, or through members in a
representative suit, against the officers
or directors of the nonprofit corporation
for exceeding their authority. 
"(3) In a proceeding by the Attorney
General, as provided in this chapter, to
dissolve the nonprofit corporation, or in
a proceeding by the Attorney General to
enjoin the nonprofit corporation from
performing unauthorized acts, or in any
other proceeding by the Attorney General."
§ 10A-3-2.44, Ala. Code 1975 (emphasis added).
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It is undisputed that the Club is a nonprofit corporation
within the purview of the Act, and Rotary Inc. and Wilson Inc.
do not claim, or purport, to be members  or directors of the
3
Club.  Thus, it is clear that Rotary Inc. and Wilson Inc. are
not such persons as are authorized by § 10A-3-2.44 to commence
an action against the Club relating to the transactions
challenged in this case.  In short, having relied for standing
solely on Jones, which is inapposite, Rotary Inc. and Wilson
Inc. have failed to demonstrate that they are proper parties
to sue the Club over the disposition of the proceeds from the
sale of the property.  Consequently, the complaint filed by 
Rotary Inc. and Wilson Inc. failed to invoke the subject-
matter jurisdiction of the trial court.
III. Conclusion
In summary, Rotary Inc. and Wilson Inc. have failed to
show that they have standing to challenge the Club's
disposition of the proceeds of the sale of the property
donated to the Club by B.R. Wilson, Jr.  Therefore, the trial
Section 
10A-3-1.02(5) 
defines 
a 
"member" 
as 
"[o]ne 
having
3
membership rights in a corporation in accordance with the
provisions of its governing documents.  A member may be a
natural person, a partnership, a professional association or
professional corporation, a corporation for profit or a
nonprofit corporation."   
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court's judgment was void for lack of subject-matter
jurisdiction.  "'A judgment entered by a court lacking
subject-matter jurisdiction is absolutely void and will not
support an appeal; an appellate court must dismiss an
attempted appeal from such a void judgment.'  Vann v. Cook,
989 So. 2d 556, 559 (Ala. Civ. App. 2008)."  MPQ, Inc. v.
Birmingham Realty Co., 78 So. 3d 391, 394 (Ala. 2011). 
Accordingly, we vacate the judgment and dismiss the case and
the appeal.
JUDGMENT VACATED; CASE DISMISSED; AND APPEAL DISMISSED.
Malone, C.J., and Bolin and Main, JJ., concur.
Murdock, J., concurs in the result.
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