4-H Road Community Ass'n v. West Virginia University Foundation, Inc.

• Decision Date: 20 December 1989
• Docket Number: No. 18858,18858
• Citation: 182 W.Va. 434,388 S.E.2d 308
• Parties: , 58 Ed. Law Rep. 789 4-H ROAD COMMUNITY ASSOCIATION v. WEST VIRGINIA UNIVERSITY FOUNDATION, INC.
• Court: West Virginia Supreme Court

Page 308

388 S.E.2d 308

182 W.Va. 434, 58 Ed. Law Rep. 789

4-H ROAD COMMUNITY ASSOCIATION v. WEST VIRGINIA UNIVERSITY FOUNDATION, INC.

No. 18858.

Supreme Court of Appeals of

West Virginia.

Dec. 20, 1989.

Syllabus by the Court

"As a general rule, the general corporation law is the law under which private corporations are organized." Syl. pt. 3, Queen v. West Virginia University Hospitals, Inc., 179 W.Va. 95, 365 S.E.2d 375 (1987).

Tom Rodd, Morgantown, for 4-H Road Community Ass'n.

J. Robert Gwynne, Irene M. Keely, Morgantown, for W. Va. University Foundation, Inc.

PER CURIAM:

This case is before the Court upon the appeal of the 4-H Road Community Association from the February 17, 1988 order of the Circuit Court of Monongalia County on cross motions for summary judgment. The appellant contends that the trial court erroneously granted summary judgment in favor of the appellee, the West Virginia University Foundation (Foundation) by finding that based on the evidence in the record, the Foundation was neither created by state authority nor primarily funded by state authority and therefore is not a "public body," under W.Va.Code, 29B-1-2(3) [1977], subject to the West Virginia Freedom of Information Act, 29B-1-1 to 29B-1-6 [1977] (the West Virginia FOIA). ¹ We affirm.

In August, 1977, the appellant, pursuant to the West Virginia FOIA, requested that the Foundation provide it copies of certain documents pertaining to coal leases to which it holds legal title. Its president, James A. Robinson, denied the request, contending that the Foundation is a private, not-for-profit corporation created for the purpose of assisting West Virginia University (the University), primarily through fund raising, and is not a "public body" subject to the disclosure provisions in the West Virginia FOIA.

Pursuant to the procedures outlined in W.Va.Code, 29B-1-5 [1977], the appellant sought declaratory and injunctive relief in the Circuit Court of Monongalia County, alleging that the Foundation is a "public body" and seeking disclosure of the documents under the FOIA provisions.

The purpose of the West Virginia FOIA is to provide "information regarding the affairs of government and the official acts of those who represent them as public officials and employees." W.Va.Code, 29B-1-1 [1977]. To achieve this purpose, the West Virginia FOIA mandates public inspection and copying of the records of a public body. W.Va.Code, 29B-1-3(1) [1977].

A "public body" is defined in W.Va.Code, 29B-1-2(3) [1977] to mean:

every state officer, agency, department, including the executive, legislative and judicial departments, division, bureau, board and commission; every county and city governing body, school district, special district, municipal corporation, and any board, department, commission, council or agency thereof; and any other body which is created by state or local authority or which is primarily funded by the state or local authority.

(emphasis added).

The appellant contended that the Foundation is a "public body," because it was created by state authority or, in the alternative, that it is primarily funded by state authority.

The following information concerning the Foundation was provided to the court prior to its ruling on cross motions for summary judgment.

The Foundation was chartered as a charitable, educational, not-for-profit corporation, pursuant to the predecessor to the current general corporate laws of the state, W.Va.Code, 31-1-136 to 31-1-158, as amended, on December 3, 1954, by eleven private citizens. Its purpose, as set forth in its corporate by-laws, is to "aid, strengthen and further in every proper and useful way the work and service of West Virginia University."

By statute, any gift made directly to the University, a public institution, must be paid directly into the State Treasury and held in a special account. W.Va.Code, 12-2-2(c) [1983]. In contrast, under its corporate by-laws, the Foundation, manages and holds legal title to only those donations made directly to the Foundation. Foundation support for the University, though extensive, is not a budgeted item of the University. ²

Its Board of Directors consists of 38 private citizens and one ex officio member, who is employed by the state, the president of the University. The president serves by reason of the corporate by-laws, not by legislative mandate. Employees are paid by the Foundation and do not participate in any state benefit or wage payment plans. The Foundation owns its headquarters and is not located on the campus of the University. The by-laws of the Foundation allow it to sue or be sued and its debts are limited to its assets.

One of the documents in the record is a 1984 Board of Regents memorandum entitled "policy statement" regarding gifts to the University, which outlines the manner the University's needs are coordinated with the Foundation's fund raising efforts. ³ The purpose of the Board of Regents' policy statement was to "promote the maximum return from the solicitation of gifts [by avoiding] disruptive and embarrassing competition among the several schools, colleges and units of the University." In listing the roles of all the parties, the Board of Regents referred to the Foundation as "the primary gift solicitation agency for West Virginia University."

Based on all the evidence, the trial court granted summary judgment in favor of the Foundation, concluding that it is not a public body, within the meaning of W.Va.Code, 29B-1-2(3) [1977], as it was neither created by state authority nor primarily funded by state authority, and therefore is not subject to the disclosure requirements of the West Virginia FOIA. ⁴

The appellant contends that the trial court erred when it concluded that the Foundation is not a public body because it was not created by state authority. The appellant relies exclusively on the 1984 Board of Regents policy statement whereby the Board referred to the Foundation as "the primary gift solicitation agency" for the University and the fact that the University president serves as an ex officio member of the Foundation's board of directors.

In Queen v. West Virginia University Hospitals, Inc., 179 W.Va. 95, 365 S.E.2d 375 (1987), we addressed whether the West Virginia University Hospitals (WVUH), a corporation formed to manage a hospital located on University property, was a "public body," subject to the West Virginia FOIA provisions. ⁵ In that case, the sole issue before the Court concerning the West Virginia FOIA statute was whether the trial court properly determined that the WVUH was created by state authority under W.Va.Code, 29B-1-2(3) [1977] and was therefore subject to the disclosure provisions of the statute. Queen, 179 W.Va. at 95, 365 S.E.2d at 382. ⁶

Although the WVUH was incorporated under the general corporate provisions of state law, it was incorporated as such only after the legislature mandated its creation. W.Va.Code, 18-11C-1 to 18-11C-10 [1984]. See Queen, 179 W.Va. at 98, 365 S.E.2d at 378. Under the statute, the former Board of Regents was authorized to transfer the public hospital's assets to the proposed corporate entity that had "statutorily specified purposes and directors [appointed by the Governor and subject to Senate confirmation], primarily public officers [nine of the eighteen directors served by virtue of their positions with the Board of Regents or the University Hospital], who have fiduciary duties to the people of the State of West Virginia [prohibition of mortgaging, public conflict of interest statements and public audits, as mandated in the enabling legislation]." Queen, 179 W.Va. at 99, 365 S.E.2d at 379. The statute further provided that the hospital employees of the former Board of Regents were to remain employed by the corporation without becoming employees of the corporation. Id.

In syllabus point 3 of Queen, 179 W.Va. 102, 365 S.E.2d 375, we held that: "As a general rule, the general corporation law is the law under which private corporations are organized." However, we upheld the trial court's ruling that the entity, though incorporated under the general corporate laws of the state, was nonetheless a "public body" as defined in W.Va.Code, 29B-1-2(3) [1977] because W.Va.Code, 18-11C-1 to 18-11C-10 [1984] represented "the transfer of assets from one mandated entity--the [Board of R]egents--to another mandated entity--WVUH[.]" Queen, 179 W.Va. at 99, 365 S.E.2d at 379. "Unlike the normal corporate entity, the statute was the sine qua non leading to the incorporation of WVUH and that body was, therefore, created by state authority." Queen, 179 W.Va. at 102, 365 S.E.2d at 382.

In the case before the Court today, the Foundation was formed by private citizens pursuant to the general corporate laws of the state. No legislative mandate for such an entity predated its incorporation. It is not located on state property; does not utilize state employees; and selection of its Board of Directors, and their duties, are governed by the corporation's by-laws. While the president of the University serves on the Board of Directors of the Foundation, the president serves by virtue of the Foundation's by-laws, rather than legislative mandate, and serves in an ex officio capacity. ⁷

Thirty years after its incorporation, the Board of Regents, in an effort to coordinate fund raising activities, referred to the Foundation as the University's "primary gift solicitation agency." While this statement may be accurate, it is not tantamount to state authorization for the creation of the entity. To assume such would require a court to ignore the Foundation's thirty prior years of existence. It is also important to note that the policy statement also acknowledged that the University does not exercise any control over the Foundation's decision to commit its fund raising efforts to those activities selected by the University.

The disclosure provisions of the West Virginia FOIA are required...