No. 14705 

IN THE SUPREME COURT OF THE STATE OF MONTANA 

1979 

ELMO DREYER and JUDSON TOWNLEY, et al., 

Applicants and Appellants, 

THE BOARD OF TRUSTEES OF MID-RIVERS 

TELEPHONE, INC., et al., 

Respondents and Defendants and 

Cross Appellants. 

Appeal from: District Court of the Seventh Judicial District, 

Honorable L. C. Gulbrandson, Judge presiding. 

Counsel of Record: 

For Appellants: 

I 1 

. \' . t ..'I $ 

Moses, Tolliver and Wright, Billings, Montana 

For Respondents: 

Church, Harris, Johnson & Williams, Great Falls, Montana 

Filed: 

Submitted on briefs: June 29, 1979 

Decided: AUG 1 1979 
Mr. Justice John C. Sheehy delivered the Opinion of the Court. 

This is an appeal by Elmo Dreyer and Judson Townley, the 

applicants above named (Dreyer and ~ownley) and a cross-appeal 

by the Board of Trustees of Mid-Rivers Telephone Cooperative, 

Inc. , and the remaining respondents above named (collectively 

"Mid-Rivers") from certain of the orders contained in the 

judgment and decree of the District Court, Seventh Judicial 

District, McCone County, Montana, dated October 23, 1978. 

Mid-Rivers is a rural telephone cooperative incorporated 

under the "Rural Electric and Telephone Cooperative Act" 

(Ch. 18, Title 35 MCA). The cooperative consists of approximately 5,000 member-patrons residing in some eighteen counties 

of eastern Montana. It is claimed that the cooperative 

serves an area of more than 22,000 square miles and is 

geographically the largest telephone cooperative in the 

world. 

Respondents are the trustees of Mid-Rivers, the cooperative 

itself, and its individual officers and trustees. 

Dreyer and Townley brought an action for themselves individually, as representatives of and on behalf of themselves 

and all other members of Mid-Rivers. In a six-count application 

for relief in the District Court of McCone County, they sought 

from the District Court : 

COUNT I. To redistrict the existing residence 

districts of the cooperative used for establishing 

the residency qualifications of trustees of the 

cooperatives board. 

COUNT 11. To require that notice be given of a 

special meeting of the members of the cooperative 

in response to a petition asking for such a 

meeting signed by certain members of the cooperative. 

COUNT 111. To require the cooperative to hold an 

annual meeting of the membership in Circle, Montana 

rather than Winnett, Montana. 
COUNT IV. To restrict payment of fees and expenses 

paid to the respondent board members for 

their attendance at meetings of the board within 

or without the state of Montana. 

COUNT V. To require the cooperative to conduct 

the election of trustees of the cooperative on a 

voting district basis. 

COUNT VI. To declare the compensation and expenses 

previously paid to the respondent board members to 

be illegal and to require an accounting in repayment 

and the same to the cooperative and to hold that the 

1976 and 1977 elections of the trustees were illegal 

and that the trustees were illegally elected. 

Dreyer and Townley sought a writ of mandamus from the 

District Court as to the first five counts. The issues with 

respect to count six were reserved by the District Court until 

the issues under the first five counts are finally decided. The 

October 23, 1978 judgment and decree of the District Court 

confirmed the court's earlier dismissal of the application with 

respect to counts one and two; kept in force an alternative writ 

of mandate with respect to count three; requires the cooperative 

to hold its annual meetings at Circle, Montana, until such time 

as its bylaws are amended; and dismissed the application with 

respect to counts four and five. 

Dreyer and Townley appeal from the adverse rulings on counts 

four and five. Mid-Rivers appeals from the adverse ruling on 

count three. Under Rule 23(h), Mont.R.App.Civ.P., Dreyer and 

Townley are regarded as appellants before this Court and Mid-Rivers 

collectively as respondents. 

After the start of the lawsuit by Dreyer and Townley, MidRivers did on the 91st day before the planned 1978 annual meeting, 

redistrict the five areas in an attempt to correct the inequities 

as to the number of members represented in each district. The 

redistricting was done through the use of telephone exchanges 

(telephone prefix numbers). The District Court ruled that MidRivers had complied with the applicable provision of the bylaws 
and dismissed count one. Dreyer and Townley do not appeal 

from that decision. 

As to the second count, on the contention of Dreyer 

and Townley that Mid-Rivers had failed to call a special meeting 

when petitioned by more than 200 of its members, it was found 

that a bylaw provision of Mid-Rivers which allowed for the 

calling of a special meeting on a petition of more than 200 

member~~conflicted with a state statute which required that 

such a meeting could only be called by 10% of the members on 

petition. Ten percent of Mid-Rivers' members exceeds 200. 

Mid-Rivers took the position that they were therefore not required 

to call a special meeting as requested by the petition. Dreyer 

and Townley agreed with this position. The District Court 

dismissed count two, and no appeal was taken therefrom. 

-- COUNT FOUR 

Dreyer and Townley appeal from the order of-the District 

Court dismissing their application and refusing mandamus relief 

as to count four. The contention of Dreyer and Townley on 

this count is that, contra to section 35-18-311 MCA, the trustees 

of Mid-Rivers, under Art. V, Section 7 of its bylaws, have 

authorized for themselves a $75 fee each plus expenses for 

attendance at all board meetings held within and outside of 

the State of Montana. 

The applicable bylaw provides as follows: 

"Section 7. Compensation. Directors [trustees] 

shall not receive any salary for their services 

as directors, except that by resolution of the 

Board a reasonable fixed sum per diem and expenses 

of attendance, if any, may be allowed for attendance 

at each meeting of the Board and for attendance at 

state, area, regional, national and other meetings 

on behalf of the c'ooperative where attendance is 

authorized by the Board. No director shall receive 

compensation for serving the Cooperative in any 

other capacity, nor shall any close relative of a 
director receive compensation for serving the 

Cooperative, unless the payment and amount of 

compensation shall be specifically authorized 

by a vote of the members or the service of 

such director or close relative shall have been 

certified by the Board as an emergency measure. 

Close relatives shall be deemed to include, but 

not necessarily limited to spouse, parent, 

children, brothers and sisters." 

The pertinent statutory provision is section 35-18-311(2) 

MCA which provides: 

"(2) Without approval of the membership, trustees 

shall not receive any salaries for their services 

as trustees and, except in emergencies, shall 

not be employed by the cooperative in any capacity 

involving compensation. The bylaws may, however, 

provide that a fixed fee and expenses of attendance, 

if any, may be allowed for attendance at each meeting 

of the board of trustees." 

The District Court found on this point that at the annual 

meeting of September 21, 1977, an auditor's report was 

presented to the members which included the per diem and 

expenses paid to the trustees during the years 1976 and 1977 

and that these financial reports were approved by a motion 

duly seconded and carried. The court found as a fact that 

the $75 per diem rate had been established under Art. V, Section 

7 of the bylaws of the cooperative and approved by the 

members of the 1977 annual meeting as a proper payment. 

Dreyer and Townley, in their appeal, do not quarrel 

with the idea that the past expenses or per diem paid to the 

trustees may have been ratified by the membership. They 

contend that prospective payments do not have the prior 

approval of the membership and that accordingly they are 

entitled to a mandate forbidding such possible prospective 

payments. 

A careful reading of section 35-18-311(2) MCA discloses 

that (1) without approval of the membership, the trustees 

are not allowed to receive salaries for their services; but 

(2) an exception to the approval requirement occurs when the 

bylaws provide that a fixed fee and expenses of attendance 

may be allowed the trustees. 
The language of the statute does not necessarily mean 

that the "fixed fee" must be set forth in the bylaw itself. 

Thus, if the bylaws of a telephone cooperative had provided, 

with respect to trustees, that "a fixed fee and expenses of 

attendance, if any, may be allowed for attendance at each 

meeting of the Board of Trustees," without more, such a 

provision could not be attacked as being against the statute 

because obviously it is in the language of the statute, even 

though the fixing of the fee would have to be done by the 

trustees, through a resolution. That is really what the 

situation is in this case. Art. V, Section 7 of the bylaws 

provides that "by resolution of the Board, a reasonable 

fixed sum per diem and expenses of attendance if any may be 

allowed for attendance at each meeting . . ." By that 

provision, the bylaws have provided for a "fixed fee and 

expenses of attendance." The further provision of the 

bylaws that such items should be fixed "by resolution of the 

Board" is simply a method for providing such fixed fees. We 

do not find therefore, that the bylaw provision offends 

section 35-18-311 (2) MCA. 

Thus, there is no clear legal duty on the part of the 

trustees to procure the prior approval of the membership to 

the resolution for reasonable fixed fees, since the bylaw 

provision of the statute is an exception to the approval 

requirement of section 35-18-311(2) MCA. Without a clear 

legal duty, mandamus does not lie. Cain v. Department of 

Health, Etc. (1978) , Mont . , 582 P.2d 332, 35 

St.Rep. 1056. 

COUNT FIVE 

Under this issue, Dreyer and Townley contend that 

instead of cooperative-wide voting for trustees at any 

election, the cooperative should permit only voting for the 

respective trustees in voting districts, that is, districtwide voting. 

-6- 
Art. V, Section 1 of the bylaws of the cooperative 

provided for five districts, with each district to be represented 

by two trustees. The same section of the bylaws also provided 

that anytime not less than 90 days before any meeting of the 

members at which trustees were to be elected, the Board 

could redistrict or reconstitute the districts to make them 

nearly equal in number. 

At the meeting of the Board of Trustees, on June 27, 

1978, the Board redistricted the districts according to 

telephone exchanges (decided by prefix numbers). The court 

found that the redistricting had occurred 90 days before the 

proposed election of September 27, 1978. 

Mid-Rivers contends that under the bylaws, a district 

plan is established to permit nominations of trustees from 

the respective districts, two for each district, but that 

voting for the trustees after the nominations have been made 

is to be on a cooperative-wide basis. 

Dreyer and Townley contend that under the provisions of 

section 35-18-313 MCA, when the cooperative is divided into 

districts, these are "voting districts" and as such the 

statute requires that the trustees from each district shall 

be elected by the members residing therein. 

The District Court concluded that section 35-18-313 MCA 

was not mandatory. It concluded that the districts were 

established as a means of enforcing the residence qualification 

of trustees or directors, and that section 35-18-313 MCA is 

not intended to mandate an exclusive manner in which districts 

can be used by a cooperative in the selection process of 

qualified trustees. 

We conclude that the District Court was correct on this 

point. The statute involved is not mandatory by its terms. 

Section 35-18-313 MCA provides in pertinent part: 

-7- 
"Notwithstanding any other provisions of this 

chapter, the bylaws may provide [for voting 

districts] . . . and that in respect to each 

such voting district: 

"(a) a designated number of trustees shall 

be elected by the members residing therein; II ... 

The permissive words "may provide" of the foregoing 

statute applies "in respect to each such voting district." 

No clear mandatory duty arises out of the language of the 

statute. The District Court buttressed its conclusion by 

referring to section 35-18-103 MCA, which provides that the 

chapter respecting cooperative utilities is to be construed 

liberally and that "The enumeration of any object, purpose, 

power, manner, method, or thing shall not be deemed to 

exclude like or similar objects, purposes, powers, manners, 

methods, or things." 

Further, we note that section 35-18-207 MCA, with 

respect to the bylaws of such a cooperative, states that the 

bylaws "may contain other provisions for the regulation and 

management of the affairs of the cooperative not inconsistent 

-- with this chapter . . ." A bylaw which is at variance with 

a permissive provision of the statutes is not "inconsistent" 

so as to require voiding the bylaw provision. 

We have found no case law directly in point with respect 

to these matters, nor has counsel for either side directed 

us to specific case law authority. The statutes in themselves 

are clear enough so that our interpretation of the wording 

appears to be sound, and within the statutory direction for 

construction under section 35-18-103 MCA. 

COUNT THREE 

With respect to count three, Mid-Rivers is the crossappellant, contending that the District Court erred in 

requiring meetings of the cooperative to be held in Circle, 

McCone County, Montana. 
Here again, we face a matter of statutory interpretation. 

Section 35-18-303(3) MCA provides: 

"Meetings of members shall be held at such 

place as may be provided in the bylaws. In 

the absence of any such provision, all meetings 

shall be held in the city or town in which 

the principal office of the cooperative is 

located. " 

The principal office of the cooperative in this case is 

in Circle, Montana. The trustees proposed to hold the 

meeting of September 27, 1978 in Winnett, Petroleum County, 

Montana. Dreyer and Townley contend that this was improper. 

The District Court found such a proposed meeting place was 

improper and we agree. 

Art. IV, Section 1 of the cooperative bylaws does not 

name the town in which the annual meeting of the members is 

to be held but does provide that the annual meeting shall be 

held at such place in the project area as shall be determined 

by the Board of Trustees. The District Court concluded that 

because the bylaws failed expressly to name the place in 

which the annual meeting is to be held, the statutory provision 

controls the place of meeting and it must therefore be held 

in Circle, Montana. Section 35-18-303 (3.) IICA,. ,supra. 

The District Court is correct on this point. As the 

District Court stated in its conclusions, nothing prevents the 

members of the cooperative from amending the bylaws so as to 

provide specifically for other places for the annual meeting. 

The appeals of Dreyer and Townley are denied; the crossappeal of Mid-Rivers is denied. No costs to either party. 

We Concur: 

Chief Justice