Opinion ID: 1805246
Heading Depth: 1
Heading Rank: 3

Heading: Limitations Placed on the Board's Authority by the Corporate Structure of WOI-TV's Ownership.

Text: Having agreed with the district court's conclusions that the challenged transaction was generally within the board's authority to act, we must disagree with its additional conclusion that such authority had been reduced by the board itself in approving the corporate structure for ownership of WOI-TV in 1987. In analyzing this question, we accept petitioners' argument that, having created this corporate structure, the board is bound by all of the legal consequences necessarily resulting therefrom. The Articles of Incorporation for Iowa State University Equities Corporation provide that that corporation cannot approve a sale of assets by the broadcasting corporation, other than in the ordinary course of business, without the consent of Iowa State University and approval of the board of regents. The district court concluded that the legal effect of this provision was to preclude the board from initiating any transaction for a sale of the broadcasting corporation's assets. We disagree. The fact that the board of regents may not have been able to complete the proposed transaction without first securing some required action by other entities did not defeat the board's authority to initiate the transaction. And, because the other entities required to take action in completing the sale did act in the required manner, we need not be concerned with what the result would have been had they not done so. The limitation on the power of the holding company to act in certain transactions without board of regents' approval may not be interpreted as diminishing the authority of the board to act within its own full range of authority. The board's right of approval, by its very nature, placed it in the dominant position with respect to any transaction for which such approval was required. That dominancy was amplified by the control that the board exercised over the board of directors of the holding company. It is not unusual or irregular for an entity that enjoys such a dominant position in a proposed transaction to assume control at some stage of the proceeding. When and where that happens will vary depending upon the nature of the transaction. Here it occurred after the first round of bid solicitation, which had been initiated by Iowa State University and the affected corporations, proved fruitless and the second round of bidding also appeared to have been of no avail. At this point, a cash bid for more than the appraised value of the television station probably seemed too good to be true. That bid offered the board an opportunity to achieve its intended goal if it took prompt action on its own initiative. Under the circumstances with which it was presented, we cannot conclude that the board's action was arbitrary or capricious or otherwise unlawful. We also disagree with the district court's finding that the transaction was invalid because Iowa State University did not consent to the sale of WOI-TV to Citadel's affiliate. In so holding, the district court found that the significant expression of the university's position on this matter was the statement in opposition to the sale made by President Jischke at the May 1992 meeting of the board. Although the district court acknowledged that President Jischke ultimately acquiesced to the completion of the transaction by seeking approval from the corporate boards of directors of the holding company and the operating corporation and by providing his signature on behalf of Iowa State University on the contract documents, the court believed that those actions were the result of coercion. The record reflects that the comments of President Jischke at the May 1992 meeting, which were antagonistic to the proposed sale, occurred before the vote of the board. After the board voted to conditionally accept the Citadel offer, the president's official position was to cooperate in completing that transaction. There is no way to ascertain with certainty what the president's personal beliefs were on this matter, but that is not controlling. It was his official actions following the vote of the board that constituted the voice of Iowa State University in completing the proposed sale. As a general proposition, a public institution speaks through the formal action taken by the person or board empowered to take that action. Stillians v. Iowa State Arts Council, 410 N.W.2d 253, 254 (Iowa 1987). The president was solely empowered to speak for the university on this policy issue. The university's consent to the sale was officially memorialized by President Jischke's signature on the contract documents. With respect to the district court's conclusion that President Jischke was coerced, we believe that the coercion the court perceived flowed entirely from the realities of the institutional setting in which President Jischke found himself. He stood in a subordinate position to the board on this policy matter. Although he perhaps had the power to block the proposed sale, the board had the power to decide who would be president of Iowa State University. The type of coercion which that relationship produces is a fact of life and does not serve to invalidate an election to accede to the will of a superior authority.