CORPORATION "DOES NOT PROVIDE PECUNIARY GAIN, INCIDENTALLY OR OTHERWISE, TO ITS MEMBERS."
TO ADDRESS YOUR QUESTION, THEN, ONE MUST DETERMINE WHETHER THE PROVISIONS OF 18 O.S. 1006(7) WHICH DECLARE THAT A NONPROFIT CORPORATION CANNOT PROVIDE PECUNIARY GAIN, INCIDENTALLY OR OTHERWISE, TO ITS MEMBERS EFFECTIVELY PROHIBITS THE REBATING OF EXCESS REVENUES. THAT IS, ARE REBATES PROHIBITED "PECUNIARY GAIN"?
ALTHOUGH THE OKLAHOMA COURTS HAVE NEVER SPECIFICALLY ADDRESSED THE ISSUE OF WHETHER OKLAHOMA NONPROFIT CORPORATIONS MAY RETURN EXCESS REVENUES IN THE FORM OF REBATES TO ITS MEMBERS, THE OKLAHOMA LEGISLATURE HAS EMPOWERED NONPROFIT CORPORATIONS, FORMED FOR SPECIFIC PURPOSES, TO RETURN EXCESS REVENUES IN THE FORM OF REBATES. THE FIRST EXAMPLE OF THIS LEGISLATIVE EMPOWERMENT CAN BE FOUND IN 2 O.S. 332 (1981). THIS STATUTE PROVIDES FOR THE CREATION OF NONPROFIT ASSOCIATIONS FOR THE MARKETING OF AGRICULTURAL AND HORTICULTURAL PRODUCTS. TITLE 2 O.S. 347 EXPLICITLY PERMITS THESE NONPROFIT ASSOCIATIONS TO REFUND EXCESS REVENUES TO THEIR PATRONS.
AGAIN IN THE RURAL ELECTRIC COOPERATIVE ACT, 18 O.S. 437 ET AL. THE LEGISLATURE PROVIDED FOR THE ORGANIZATION OF COOPERATIVE NONPROFIT MEMBERSHIP CORPORATIONS TO SUPPLY ELECTRICAL ENERGY TO RURAL OKLAHOMA. UNDER 18 O.S. 437.19, THESE NONPROFIT CORPORATIONS ARE MANDATED (UNLESS OTHERWISE VOTED BY THE MEMBERS) TO DISTRIBUTE EXCESS REVENUES AS PATRONAGE REFUNDS PRORATA TO THE MEMBERS.
THE FACT THAT THE LEGISLATURE HAS ACTED IN THE PAST TO CARVE OUT WHAT ARE, IN EFFECT, SPECIFIC AMENDMENTS TO THE POWERS OF NONPROFIT CORPORATIONS FORMED FOR THESE TWO LIMITED PURPOSES OR SPECIFIC EXEMPTIONS FROM THE PROHIBITIONS WHICH GENERALLY APPLY TO NONPROFIT CORPORATIONS WAS REPEATEDLY BROUGHT UP IN CONFERENCE AS A STRONG INDICATION THAT OKLAHOMA'S GENERAL CORPORATE LAW SHOULD BE READ TO PROHIBIT THIS TYPE OF REBATING IN ANY OTHER CIRCUMSTANCES.
ON THE OTHER HAND, IT IS CLEAR THAT COURTS OUTSIDE OKLAHOMA WHICH HAVE HAD AN OPPORTUNITY TO ADDRESS THE NATURE OF PATRON REBATES OF EXCESS REVENUES BY NONPROFIT CORPORATIONS MORE DIRECTLY, ALTHOUGH PRIMARILY IN THE AREA OF COOPERATIVES, HAVE FOUND SUCH REBATES CONSISTENT WITH NONPROFIT CORPORATE STATUS. IN GREENE COUNTY RURAL ELECTRIC COOPERATIVE V. NELSON, 12 N.W.2D 886 (IA. 1944), THE IOWA TAX COMMISSION ATTEMPTED TO COLLECT PROPERTY TAXES FROM RURAL ELECTRICAL COOPERATIVES ORGANIZED UNDER IOWA LAW. THE TRIAL COURT ENJOINED THE IOWA TAX COMMISSION BECAUSE RURAL ELECTRIC COOPERATIVES WERE EXEMPT FROM THE PROPERTY TAX AS NONPROFIT CORPORATIONS. THE IOWA SUPREME COURT HELD THAT THE REBATE OF EXCESS REVENUES DID NOT CHANGE THE RURAL COOPERATIVES' NONPROFIT STATUS, AND STATED
WE ARE SATISFIED THAT THE PLAINTIFFS ARE NOT ORGANIZED OR OPERATED FOR PROFIT. . . . THE INCOME IS THAT RECEIVED FROM BUSINESS DONE WITH THE MEMBERS. ONLY MEMBERS ARE DEALT WITH. ANY NET EARNINGS ARE RETURNED ON THE BASIS, NOT OF MEMBERSHIP OR INVESTMENT, BUT OF BUSINESS DONE. IT IS LITERALLY NO MORE THAN THE RETURN OF AN OVERCHARGE ORIGINALLY ASSESSED TO PROVIDE A MARGIN OF SAFETY IN THE OPERATION OF BUSINESS.
IT APPEARS THAT THERE ARE AT LEAST SOME FACTUAL CIRCUMSTANCES UNDER WHICH OKLAHOMA LAW MIGHT NOT PROHIBIT THIS TYPE OF REBATING OF EXCESS REVENUES. THERE COULD BE SITUATIONS, FOR