Beale v. Kappa Alpha Order

• Citation: 192 Va. 382,64 S.E.2d 789
• Decision Date: 07 May 1951
• Docket Number: No. 3735,3735
• Parties: C. W. BEALE v. KAPPA ALPHA ORDER AND KAPPA ALPHA ALUMNI FOUNDATION. Record
• Court: Supreme Court of Virginia

Page 789

64 S.E.2d 789

192 Va. 382

C. W. BEALE v. KAPPA ALPHA ORDER AND KAPPA ALPHA ALUMNI FOUNDATION.

Record No. 3735.

Supreme Court of Appeals of Virginia

May 7, 1951.

Christian, Barton, Parker & Boyd, for the plaintiff in error.

Christopher B. Garnett and Orrie P. Stevens, for the defendants in error.

JUDGE: HUDGINS

HUDGINS, C.J., delivered the opinion of the court.

This is an action instituted by Cyrus W. Beale, plaintiff, to compel the Kappa Alpha Order to pay an obligation (now, with interest, totaling more than $100,000) contracted by the Kappa Alpha Holding Corporation. The theory upon which plaintiff bases his demand is that the Kappa Alpha Holding Corporation, hereinafter referred to as 'Holding Corporation,' and the Kappa Alpha Alumni Foundation, hereinafter referred to as 'Foundation,' were so organized and controlled and their affairs so conducted as to make each a mere instrumentality, agent or alter ego of the Kappa Alpha Order, hereinafter referred to as the 'Order.'

The Foundation made no appearance or defense to the action. The demurrer of the Order to the original declaration was sustained. Thereupon, plaintiff, by leave of court, filed an amended declaration to which the Order demurred. Defendant moved to strike certain allegations and to make others more specific. On consideration of these pleadings, the trial court stated 'that the allegations of fact in the amended declaration are so interwoven with allegations constituting conclusions of law that it is difficult to segregate them and that if the attempt to segregate them were made and accomplished it would so destroy the context that it would leave the declaration almost unintelligible.' The court thereupon ordered that the substance of the by-laws of the two corporations and reports of various committees and resolutions mentioned in the amended declaration be made a part thereof, or that such documents be filed as exhibits with the declaration.

Plaintiff elected to file the documents enumerated as exhibits, thus making the charters and by-laws of the three corporations, the reports, resolutions, minutes and publications of the Kappa Alpha Order and the Foundation (covering the period 1921-1933), constituting several thousand pages, a part of his amended declaration.

On consideration of the pleadings and the confusing mass of exhibits, the court held that the factual allegations of the amended declaration, when considered with the numerous exhibits, did not sustain the conclusions of law stated in the declaration, and entered an order dismissing the case from the docket. Plaintiff by this writ of error is seeking to reverse that judgment.

Plaintiff contends that his allegations in the amended declaration, which the demurrer admits to be true, are sufficient to present a jury question. Therefore, the trial court committed error in dismissing the case from the docket.

We shall make no attempt to segregate the factual allegations, plaintiff's interpretation of the documents, and his conclusions of law stated in the amended declaration. We shall confine our discussion to the pertinent facts gathered from the declaration and the documents.

In 1907 the Order, a Greek letter fraternity, founded in 1865, was incorporated under the laws of Virginia as a non-stock corporation. It is stated in the charter that the purpose of the corporation is 'to maintain and establish active Chapters at educational institutions in Virginia, and elsewhere, and in towns and cities Alumni Chapters; to buy, erect, or receive by gift, devise, contract, conveyance or otherwise, property real or personal, at Lexington, Virginia, or elsewhere, within or without the State of Virginia, with grounds and appurtenances to be used as places for meeting, or depositories for archives, records and papers, of the Kappa Alpha Order or any Chapter or officer thereof, and for such other purposes as the hereinafter named Trustees or their Successors may deem proper under suitable rules and regulations to be made by them under the authority of the Convention, constitution or by-laws of the Kappa Alpha Order, the said property and franchises are to be held and used solely for fraternal, benevolent, charitable and literary purposes, according to the principles, usages and teachings of Kappa Alpha Order.'

All the powers of the corporation are vested in a Convention which meets biennially in odd-numbered years. The Convention is composed of delegates elected from the active Chapters, Alumni Chapters, and certain other persons. During the interim of Conventions the executive duties are vested in a board of five trustees elected biennially. The chief executive officer is called the 'Knight Commander,' who is ex officio chairman of the Board of Trustees.

Every person initiated remains a member of the Order for life, or until expelled for cause under rules and regulations prescribed.

The following resolution, offered by plaintiff and adopted at the 1921 Convention which met at Dallas, Texas, is the foundation of his contention that each of the two corporations thereafter created was the instrumentality, agent or alter ego of the Order:

'Whereas, The Kappa Alpha Order has never heretofore as such called upon its alumni members as a whole to contribute materially to any fund towards furthering of interest of the said Order; and

'Whereas, the said Order has never established or attempted to establish a General Headquarters, or owned or occupied a building which was used as a General Headquarters building, and it is in our opinion that a building of suitable size and dignity, located in a proper locality within our chosen limits, in which building the Order may or might have or use as its General Headquarters Offices for the transaction of its business, or any part thereof, if it saw fit to so use said building; and, since this Convention is of the opinion that such a building located and properly equipped in a city located within our chosen limits, to be selected and determined by a committee composed of the General Officers and Province Commanders, (This selection shall be made before March first, 1922) would be of great sentimental and material benefit to the Order, and the alumni of the Order would welcome an opportunity to contribute towards the procuring of such a building and would and should be willing to so contribute; and

'Whereas, such buildings or headquarters are common among other well organized college fraternities, the same being furnished by the alumni of said fraternities, and have seemed to be of great benefit to the respective fraternities so owning or in possession of the same; and

'Whereas, it is the opinion of this Convention of having the Alumni contribute to building, equipment, etc., as above authorized, would be to appoint three Alumni members of the Order in good standing, no one of which shall be a General Officer, as a committee to formulate plans and to solicit funds and to do such other things as may be necessary or advisable to the end that such a building may be procured; and that said Committee should be financed to a greater or less degree by the Order;

'Now, therefore, Be It Resolved: That the K.C. shall appoint forthwith three alumni members of the Order in good standing, not one of whom shall be a general officer, which committee is and shall be authorized, empowered and directed by this, the Thirty-first Convention of the Kappa Alpha Order to take all steps necessary or desirable to raise or to solicit funds from any and all alumni of the Order, and others, for the purpose of acquiring or otherwise securing a suitable building, by purchase, lease or otherwise, in a city located within our chosen limits, to be selected and determined by a committee composed of the General Officers and Province Commanders, such selection to be made before March 1st, 1922, the said building to be held and operated by a corporation governed and controlled as the said committee may provide, all to the end that the Order may have a suitable building in which all or a part of its business may be centered and transacted.

'And Be It Further Resolved, That to the end that the said Committee may more properly function and the solicitation of the alumni may be more successful, this Convention does hereby appropriate the sum of $2,500.00 to be paid to the Committee as follows:

'$1,000.00 on or before July 1, 1922.

'$1,500.00 after July 1, 1922, upon requisition from the Committee; provided, however, that the payment of the said $1,500.00 shall be paid only if the General Officers of the Order shall, after considering the progress of the committee, deem it wise and to the best interest of the Order that the same be paid.

'Resolved, Further, That the Committee when once named, shall have power to increase its number as it may see fit, and to fill any vacancies caused by any increase thus made, and shall also have power to fill any vacancies which shall be caused by resignations or refusal to serve or otherwise.'

Pursuant to this resolution the Knight Commander appointed Cyrus W. Beale Chairman of the General Headquarters Committee and Douglas D. Ellington and Joseph Addison Hagan the other members. After Richmond, Virginia had been selected as the site for the proposed building by a committee composed of the General Officers and Province Commanders for that purpose, the General Headquarters Committee formulated plans for launching a campaign to obtain funds from the Alumni.

On March 29, 1923, plaintiff, J. Addison Hagan and Beverley B. Munford caused the Holding Corporation to be incorporated as a stock corporation, with a capital of not less than $300, nor more than $50,000, divided into shares of stock of the par value of $100 each. The purpose of the corporation stated in the charter was to buy, sell, rent, exchange, encumber and dispose of real and personal property, to buy and sell the assets and stocks of other corporations, and generally to...