Court Opinion

ID: 9675019
Source: CourtListenerOpinion
Date Created: 2023-08-24 04:39:27.97217+00
Date Added: 2024-06-11T18:16:30.924230
License: Public Domain

SCHLEGEL, Judge
(dissenting).
I respectfully dissent.
I do not believe the position of the majority finds support in the law. At issue is the control and future operation of an Iowa corporation (Not for Pecuniary Profit) formed under the provisions of Iowa Code chapter 504. This corporation, existing under a Constitution providing for its management, elections of officers, and regular and special meetings, is said by the majority to be subject to the will of the Board of Directors of the National Federation of the Blind (NFB) by virtue of its affiliation with that organization.
The majority correctly states the “pivotal question,” but a close examination of the relationship of NFB and NFBI (Iowa Association of the Blind, d/b/a National Federal of the Blind of Iowa) and the distribution of power between the national and state organizations and the degree of autonomy of the latter does not support the majority’s conclusion.
It is correct that NFB’s Constitution • states that any member, local chapter, or state affiliate may be suspended, expelled, or otherwise disciplined for reasons set out therein. It is also correct that the constitution of NFB contains the language: “By a two-thirds vote the Board may reorganize any state or local affiliate.” No article or bylaw of the NFB directs the manner in which such a reorganization should take place, and there is no direction as to how the NFB Board is to comply with the laws of the several states in bringing about that reorganization.
We must look to the organic documents of the Iowa affiliate and the provisions of the Iowa statutes governing such corporations to determine the means by which it may be reorganized. Nowhere in the constitution of the Iowa Association of the Blind d/b/a NFBI does there appear any provision granting to the NFB or its officers the power to call meetings, to elect officers, or to amend the constitution of the Iowa affiliate. The Iowa corporation cannot be altered, or in fact, “reorganized,” except under the procedures set out in its constitution adopted pursuant to law.
I have no difficulty in agreeing that the NFB has the right to demand certain actions by its affiliated state organizations, and that it has a right, under proper circumstances, to oust members from its organization under rules properly adopted, at least where property rights of those members are not involved or are safeguarded. 10 C.J.S. Beneficial Associations § 64 (1938). Thus, I do not quarrel with the right of the board of directors of NFB to expel Sylvester Nemmers, or to declare the affiliation of NFBI terminated. While the board did the former, it did not seek to terminate the affiliation of the Iowa corporation. The majority finds that it is legal and proper for the president of NFB to *842declare the office of president of the state affiliate vacant, and to proceed to cause the election of a totally new slate of officers of the state affiliate, without any requirement that the rules or articles of the state corporation be followed. At best, it can only be said that under Iowa law NFB caused the formation of an unincorporated association, elected officers of that association, and showed an intent to consider it the Iowa affiliate. See Grand Lodge of Massachusetts Loyal Orange Institution v. Snow, 266 Mass. 483, 491, 165 N.E. 479, 482 (1929) (although the [state corporation’s] existence as an instrumentality of government of the order must depend upon its receiving and retaining a charter from the Supreme Grand Lodge of the order, its corporate charter granted by a State cannot be forfeited or suspended by that national body).
The majority holds that the trial court “erred in holding the NFB was without authority to effectively remove Nemmers from the NFBI presidency and reorganize the Iowa affiliate.” Assuming, without agreeing that such authority existed in NFB, the process by which such removal and reorganization would take place cannot violate the constitution and statutory law relating to such matters. To hold that one who has no standing under the constitution or laws applicable to a not-for-profit corporation may carry out such a process is to hold that the duly adopted constitution of the Iowa affiliate, and the Iowa statutes under which it was adopted, are meaningless.
I cannot agree that the provisions contained in the state affiliate’s constitution, when considered with the provisions of the constitution of the NFB constitute a contract between the two, and bind the affiliate to the provisions of the NFB constitution. The majority quotes language from 10 C.J.S. Beneficia] Associations § 60 (1938), as follows: “[t]he charter of a subordinate lodge and the constitution and bylaws of the parent organization constitute a contract between the two,” and from Grand Lodge of Iowa of Independent Order of Odd Fellows v. Osceola Lodge No. 18, Independent Order of Odd Fellows, 178 N.W.2d 362, 367 (Iowa 1970), as follows: “[m]ost, if not all, courts and authorities generally agree that constitutions, charters, and bylaws of charitable fraternal organizations, subscribed to by an affiliate lodge and members, are binding.” (emphasis supplied). In the Odd Fellows case, the sole issue for decision was whether the action commenced by the “parent” organization was barred by the statute of limitations. However, that matter aside, it is obvious from a reading of that case, it involved a fraternal lodge, complete with specific rules for affiliation, and specific provisions respecting the holding of assets. The court refers to documents of the parent lodge which had been subscribed to by the affiliate lodge and the members. Such is not the case in this matter.
The same article at 10 C.J.S. Beneficial Associations § 64 (1938), contains the following language: “If a subordinate lodge is incorporated, its legal existence is not affected by the fact that the supreme authority suspends or dissolves it or declares its charter forfeited, and in such case it is entitled to retain its funds and property as against the supreme body.”
It is apparent from the cases involving fraternal lodges, the affiliates depend, for their very existence, upon the charter issued by the so-called parent organization or Grand Lodge. Such is not the case with Iowa Association for the Blind. It existed as a separate corporate entity before it affiliated with NFB, and it still exists as a separate corporate entity, existing under the provisions of Iowa Code chapter 504. The words “shall be an affiliate of the National Federation of the Blind,” as contained in Article IX, as it appeared before the 1981 amendments, and the words, “to cooperate with the National Federation of the Blind in its various activities” as contained in Article II of the Iowa organization’s constitution, do not create contractual obligations. They are vague statements of intent to work toward the goals of the NFB. They specifically preserve the autonomy of the Iowa corporation.
*843What constitutes a contract between an organization and its affiliate must depend upon the undertakings contained in the constitutions, bylaws, and charters of both organizations. To hold that the obligations of an affiliate may be determined and changed from time to time by unilateral action of the so-called parent organization, is to hold that a contract may be created without any meeting of minds.
The majority despairs of the trial court’s conclusions that a national organization’s power to reorganize its state affiliates and remove their officers must be specifically provided for by statute, and that, absent such authority, affiliation “does not and cannot in law effect a merger of the two corporations.” The majority rejects the trial court’s holding that, at least in this case, affiliation does not affect a merger of the NFB and NFBI. Once again, the cited ease does not stand for authority for the merger of these organizations. United States Jaycees v. San Francisco Junior Chamber of Commerce, 354 F.Supp. 61 (N.D.Cal.1972), aff’d. per curiam, 513 F.2d 1226 (9th Cir.1975), was a case where the issue was whether a seceding local group could continue to use the name “San Francisco Junior Chamber of Commerce,” or some variation of it. Their argument was that since their organization had been formed before the national Jaycees organization, and they had affiliated with the national group later, they should be able to use their former name after secession. The court held that the San Francisco group couldn’t use the name or a similar name to the one of the national organization. The language of the court, quoting the case of Grand Lodge v. Eureka Lodge No. 5, 114 F.2d 46, 48 (4th Cir.1940), was: “Any separate existence which [the seceding local chapter] may have had prior to 1899 [the year of defendant’s affiliation with the plaintiff collective order] was merged with that of the plaintiff on acceptance of the charter.” In that case, there was no discussion concerning the right of the local group to exercise independence from the national group, nor any attempt by the national to exercise control over the local group. It is obvious in those cases that the court held the locals’ right to use the name was the only thing that merged.
It is a basic principle of corporation law, whether they be for profit or not-for-profit, that there is no right of merger, except by statute. No such privilege exists under Iowa Code chapter 504. To merge is said to lose or cause to lose identity by being absorbed, swallowed-up in or within something else. Webster’s New World Dictionary 889 (Second Edition 1974). Such a condition implies an inability to retain a separate identity apart from that with which the merger takes place. Iowa law does not permit a merger without statutory authority. See Millers National Insurance Co. v. Iowa Kemper Mutual Insurance Co., 408 F.2d 534, 536 (8th Cir.1969) (Iowa Code chapter 521 provides for corporation consolidation but makes no specific provision for merger). There is even some question as to whether National Federation for the Blind is authorized to carry on any business in the State of Iowa. Iowa Code §§ 504.28-504.31 (1981). In any event, there was never any intent that the Iowa group should lose its identity or independence to act in cooperation with the national organization. Rather, the Iowa organization continued with projects of its own, a treasury of its own— unaccountable to the national group — and with a constitution providing for the election of officers and the conduct of the affairs of the association. Such is not the procedure of a merged association.
I have no quarrel with the NFB’s right to demand adherence by its affiliates to its principles, in order for the affiliates to retain their affiliate status. I have no quarrel with the right of NFB to oust NFBI from affiliation with that group. I have no quarrel with the right of the NFB to oust any individual member of that organization under the provisions of its constitution. It certainly has a right to choose which organization will be permitted to be known as -an affiliate of NFB. I do not question the good faith of the board of directors of NFB, nor of the officers of that organization in the decisions they made concerning the *844Iowa affiliate. See Vicksburg Lodge, No. 26 v. Grand Lodge of Free And Accepted Persons of Mississippi, 116 Miss. 214, 226, 76 So. 572, 576 (1917) (the parent lodge had the right, if pursued in the proper way and according to its rules and regulations, to sever the relations between it and the subordinate lodge and cancel any rights it had conferred by virtue of the charter granted by it; but it did not have the right to take from the corporations created under the laws of the state its property without due process of law). They are, however, bound to proceed by legal means under the laws of Iowa, to remedy the situation they feel is in need of change. We cannot establish a precedent that allows a national officer of a parent group to carry out a process totally outside the provisions of a constitution of an Iowa corporation, and rule that such proceedings are effective to reorganize an Iowa corporation. Such process can only lead to confusion and anarchy in such organizations.
I believe the trial court was correct in holding that the so-called “Nemmers group” constitutes the duly elected officers of the Iowa Association of the Blind, d/b/a National Federation of the Blind of Iowa. I am in accord with the principle that when and if the Iowa Association of the Blind is ousted as the affiliate of National Federation of the Blind, it shall no longer be entitled to use the name National Federation of the Blind of Iowa, nor any similar name. I point out, however, that such ouster by the NFB Board has not yet occurred. Mr. Nemmers has been expelled as a member of National Federation of the Blind. He is still the president of Iowa Association of the Blind. The governance of the Iowa Association of the Blind, d/b/a NFBI, is still under the constitution and such bylaws as are a part of the rules adopted by the Iowa corporation.
I would affirm the trial court, except that I believe the imposition of the injunction against the use of the name National Federation of the Blind of Iowa was premature, since such organization has not, as of the time of trial, been expelled or ousted as the affiliate in the State of Iowa.
For all of these reasons, I dissent.
SNELL, J., joins this dissent.