BD. OF DIRECTORS, WCOA v. Bd. of Trustees, 00-CV-1494.

• Decision Date: 23 May 2002
• Docket Number: No. 00-CV-1494.,00-CV-1494.
• Citation: 798 A.2d 1068
• Parties: BOARD OF DIRECTORS OF THE WASHINGTON CITY ORPHAN ASYLUM, Appellant, v. BOARD OF TRUSTEES OF THE WASHINGTON CITY ORPHAN ASYLUM, Appellee.
• Court: D.C. Court of Appeals

798 A.2d 1068

BOARD OF DIRECTORS OF THE WASHINGTON CITY ORPHAN ASYLUM, Appellant, v. BOARD OF TRUSTEES OF THE WASHINGTON CITY ORPHAN ASYLUM, Appellee.

No. 00-CV-1494.

District of Columbia Court of Appeals.

Argued September 17, 2001.

Decided May 23, 2002.

Jeffrey A. Liesemer, with whom Robert J. Katerberg, Eric A. Rubel, and Robert J. Wagman, Jr., Washington, DC, were on the brief, for appellant.

J. Alan Galbraith, with whom M. Elaine Horn was on the brief, for appellee.

Robert R. Rigsby, Corporation Counsel, Lutz Alexander Prager, Assistant Deputy Corporation Counsel, and Charles L. Reischel, Deputy Corporation Counsel, filed a brief for amicus curiae, the District of Columbia.

Before STEADMAN and WASHINGTON, Associate Judges, and BELSON, Senior Judge.

BELSON, Senior Judge:

I.

This case presented the trial court with the difficult task of construing an 1828 Act of Congress that is far from clear. The statute incorporated a board of five trustees to constitute a corporation known as the Washington City Orphan Asylum, and assigned different authority and responsibilities to that board, appellee here, and to a second board, a board of directors and managers, our appellant. After working in apparent harmony for over a century and a half, the two boards fell into disagreement, with the result that the board of trustees has purported to oust the other board created by Congress. The trial court ruled that appellant board of directors and managers is without standing to sue over its ouster and, largely for that reason, alternatively ruled against that board's various claims on the merits. We hold that the purportedly ousted board has standing to sue, and we therefore remand the case to the trial court for both a further consideration of the appellant's claims on the merits and, incidental thereto, for such further consideration of the legislative history of the statute as available materials permit.¹

II.

In 1815, the First Lady of the United States, Dolley Madison, and other prominent women in the District of Columbia founded the Washington City Orphan Asylum (WCOA) as an orphanage, and operated it in a non-incorporated form for a period of about thirteen years. Legislative history indicates that WCOA's founders attempted to incorporate in 1816, but were unsuccessful because the original proposed incorporators were married women who legally were prohibited from owning property at the time. On May 24, 1828, Congress adopted "[a]n Act to incorporate the trustees of the Female Orphan Asylum in Georgetown, and the Washington City Orphan Asylum in the District of Columbia." 6 Stat. 381, Chap. 88 (1828). The Female Orphan Asylum in Georgetown, created by the same Act of Congress, is an entirely separate entity and is not implicated here. The statute, except for two passages of marginal relevance, is set forth in the footnote.² Section 2 of the 1828 Act identifies five men and constitutes them, as well as their successors, "a corporation and body politic in law." The members of the current Board of Trustees (Trustees) of WCOA assert that they are the successors of the five incorporators. Section 3 prescribes that all property belonging to the unincorporated asylum be vested in the corporation, and authorizes the corporation to buy and sell property and to receive donations. Section 4 grants the corporation the ability "to sue and be sued" and "to appoint a treasurer and secretary, and such other officers as they may deem necessary and proper, to assign them their duties, and fix their compensation ... and to make such by-laws as may be useful for the government of the said asylum...."

Section 6 deals with the appointment and functions of directors, and states in part:

[T]here shall be appointed a first, and a second female directress, and also fifteen female managers; and these directresses and managers, a majority of whom shall be necessary to do business, at such time and place as they may direct, shall appoint a treasurer and secretary, and such other officers; and also perform such other duties as the by-laws may direct....

Section 7 specifically provides to the directors additional authority regarding underage children who were not to leave the asylum without the consent of those directing the institution. The current members of the Board of Directors (Directors) of WCOA assert that they are the successors of the original directors and managers.

In 1927, WCOA began to operate under the name of "Hillcrest, A Children's Village." The only version of the so-called constitution of WCOA (actually by-laws) brought to the attention of this court is the constitution as amended in 1958. The 1958 constitution divided responsibilities between the Trustees and the Directors and provided that changes in the constitution required the concurrence of both boards. In the 1950s, Hillcrest ceased to operate an orphanage and, in 1970, Hillcrest ended its residential program entirely. Thereafter, WCOA continued to provide counseling services to destitute children in the District of Columbia under the name "Hillcrest Children's Center."

Hillcrest Children's Center's current mission is to provide counseling and psychiatric treatment to children and families in the District of Columbia. In March 1998, the Trustees informed the Directors that they would discontinue funding Hillcrest Children's Center and suggested that the Directors incorporate in order to operate it by themselves. By a board resolution of February 25, 2000, the Trustees repealed the constitution of WCOA and replaced it with new by-laws eliminating the role of the Board of Directors entirely.³ The Trustees advised the Directors that funding for Hillcrest Children's Center would be terminated effective June 30, 2000.

On June 19, 2000, the Directors filed a complaint for injunctive relief and enforcement of trust, asserting that the Trustees in their governance of the corporation had engaged in breaches of fiduciary duty, arbitrary and capricious action, diversion of funds, conversion of funds, and ultra vires acts, and demanded an accounting. The Superior Court granted a preliminary injunction requiring the Trustees to continue to fund WCOA at the rate of approximately $20,000 per month. The Trustees then moved for a judgment on the pleadings, asserting that the Directors lacked standing and capacity to bring the action. The trial court granted the Trustees' motion for judgment on the pleadings, concluding that the Trustees constituted the "sole governing board" of WCOA and that, for that reason, the Directors lacked standing to pursue any claims against the corporation. In the alternative, the court granted a judgment for defendant Trustees on the merits which appeared to be a summary judgment because of the language used and because the court considered materials outside the pleadings. This timely appeal followed. Corporation Counsel, as amicus curiae, filed a brief arguing that the dismissal of the complaint for lack of standing should be reversed, but taking no position on the merits.

III.

We turn first to the issue of standing or capacity to bring this action, as this threshold issue must be considered before we turn to the trial court's disposition of the merits. In Speyer v. Barry, 588 A.2d 1147, 1160 (D.C.1991) (citation omitted), we stated that for a court to consider the merits of a case "the `constitutional' requirement of a `case or controversy' and the `prudential' prerequisites of standing" must be present. This court looks to federal standing jurisprudence to assist in the identification of cases and controversies that properly may be considered, although this court is not bound by "case or controversy" requirements set forth in Article III of the Constitution. See Fisher v. Government Employees Ins. Co., 762 A.2d 35, 38 n. 7 (D.C.2000)

; Community Credit Union Servs., Inc. v. Federal Express Servs. Corp., 534 A.2d 331, 333 (D.C.1987) (citation omitted).

"[T]o meet the minimum requirements of a case and controversy, a plaintiff must show that it has suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant... that the injury fairly can be traced to the challenged action, and that it is likely to be redressed by a favorable decision." Community Credit Union, supra, 534 A.2d at 333 (citations and internal quotations omitted). "[U]nder prudential principles of standing, a plaintiff may assert only its own legal rights, may not attempt to litigate generalized grievances, and may assert only interests that fall within the zone of interests to be protected or regulated by the statute or constitutional guarantee in question." Id. (internal quotations omitted) (citing Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 474-75, 102 S.Ct. 752, 70 L.Ed.2d 700 (1982)). Whether appellants have standing is a question of law which we consider on appeal de novo. We review the underlying factual determinations under the clearly erroneous standard. See Gaetan v. Weber, 729 A.2d 895, 897 (D.C.1999)

.

The Directors and Corporation Counsel, as amicus curiae, argue several bases for according the Directors standing. Because it is most clearly dispositive of the issue, we consider first the argument of Corporation Counsel that "when a private person has a special interest in a charitable corporation's conformity with its act of incorporation, that person has standing to sue for enforcement in compelling circumstances, such as when the action threatens to alter the fundamental nature of the institution. In the present case, the board of directors has that special interest and compelling circumstances exist." We note that the Congressional charter, the Act of May 24, 1828, creating the Washington City Orphan Asylum in the District of Columbia, Section 6, specifically confers authority on two female directresses and fifteen female managers, a body which the...