Opinion ID: 1596494
Heading Depth: 2
Heading Rank: 3

Heading: Void or Voidable Acts

Text: ¶ 20. Keene argues that the trial court erred by finding that the acts of the Academy Board were voidable and not void. He contends that the Academy Board's actions were ultra vires or outside of its corporate powers. Most of Keene's argument is based on his position that the Academy is a special-purpose corporation and, as such, was prohibited from: (1) forming the Foundation; (2) becoming a holding company in essence; and (3) transferring Academy assets via a lease to the Foundation. ¶ 21. This Court has held that the term `ultra vires' has been used to refer to acts which the corporation's charter does not authorize. Bryant Constr. Co. v. Cook Constr. Co., Inc., 518 So.2d 625, 629 (Miss.1987). Ultra vires also signifies an act that exceeds the powers of the corporation as defined by law. Id. In Burnett's Lumber & Supply Co. v. Commercial Credit Corporation, 211 Miss. 53, 59, 51 So.2d 54, 57 (1951), this Court held that [a]n act of a corporation relating to the subjects within its powers though it should exceed those powers is not void. This Court further held that [i]t is true that the act of a corporation entirely foreign to the purposes for which it was created is void from want of power. Id. ¶ 22. Keene's underlying contention that the Academy Board's actions were ultra vires in nature and, thus void and not voidable, hinges on his position that the Academy is a special-purpose corporation. As addressed in Issue B, the trial court did not err by finding that the Academy was a general-purpose corporation based on the enumerated corporate purposes contained in the articles of incorporation. The articles of incorporation, as previously mentioned, also conferred on the Academy the powers to lease and hold real and personal property. Additionally, section five and seven of the articles of incorporation generally provided that the Academy had all powers conferred by the corporate laws of Mississippi, and [t]o do all and everything necessary and proper for the accomplishment of the objects herein enumerated. Therefore, Keene's contention that Academy Board's actions were ultra vires in nature in forming the Foundation, being a holding company, and in transferring assets via a lease, are without merit, because the actions were within the confines of the power conferred on the Academy. Additionally, the shareholders ratified the actions of the Academy Board in forming the nonprofit Foundation, transferring the educational activities, and entering into a lease with the Foundation. Indeed, in his deposition, Keene stated that he had no problem with the formation of the nonprofit corporation to obtain tax-exempt status; he objected only to not having a vote on the issue. Further, Keene chose not to attend or vote at the meeting which ratified the Academy Board's actions. The trial court did not err in finding that the Academy was a general-purpose corporation. Consequently, none of the Academy Board's actions were ultra vires in nature, and this issue is without merit.