Bridegroom v. State Bar

• Decision Date: 09 June 1976
• Docket Number: CA-CIV,No. 2,2
• Citation: 550 P.2d 1089,27 Ariz.App. 47
• Parties: Bruce D. BRIDEGROOM and Bruce F. Rinaldi, Appellants, v. STATE BAR of Arizona and Stanley G. Feldman, a member of the Board of Governors of the State Bar of Arizona, Appellees. 2083.
• Court: Arizona Court of Appeals

Page 1089

550 P.2d 1089

27 Ariz.App. 47

Bruce D. BRIDEGROOM and Bruce F. Rinaldi, Appellants, v. STATE BAR of Arizona and Stanley G. Feldman, a member of the Board of Governors of the State Bar of Arizona, Appellees.

No. 2 CA-CIV 2083.

Court of Appeals of Arizona, Division 2.

June 9, 1976.

Rehearing Denied July 7, 1976.

Bruce D. Bridegroom, Tucson, for appellants

Chandler, Tullar, Udall & Richmond by James L. Richmond, Tucson, for appellees.

OPINION

KRUCKER, Judge.

Appellants, members in good standing of the State Bar of Arizona, filed suit against the State Bar of Arizona and members of its Board of Governors requesting (1) that the result of the November 5, 1974 election with respect to Proposition 108 ¹ be declared null and void, (2) that the defendants be required to render an accounting for all expenditures with respect to Proposition 108 and (3) that the Board members be required to make restitution to the State Bar of Arizona for all expenditures with respect to Proposition 108. The complaint alleged that the State of Arizona was a public corporation and that the expenditures with respect to Proposition 108 were illegal and in violation of Art. 14, § 18 of the Arizona Constitution.

A motion to dismiss for failure to state a claim for relief was filed and after consideration of memoranda submitted by the respective parties, the court granted the motion, expressly finding that the State Bar of Arizona is an integrated Bar Association under Supreme Court rule and not a corporation under any applicable constitution or legislative enactment; that the provisions of Art. 14, § 18 of the Arizona Constitution do not apply to the State Bar; and that the expenditure of funds by the Board of Governors was a proper exercise of its powers and not a breach of a fiduciary duty. An affidavit executed by Eldon Husted, executive director of the State Bar of Arizona, which was filed in court, stated that the State Bar of Arizona had not filed, published, or adopted any Articles of Incorporation, had never issued any stock and had no shareholders, and had never applied for nor been issued a certificate of incorporation from the Arizona Corporation Commission.

Appellants contend the court erred in finding that (1) the State Bar of Arizona is not a corporation, (2) the provisions of Art. 14, § 18 of the Arizona Constitution do not apply to the State Bar of Arizona, and (3) the expenditure of funds by the Board of Governors was a proper exercise of its powers and was not a breach of its fiduciary duty. They also maintain that a material factual issue existed as to whether the State Bar of Arizona is a de facto corporation.

Appellants' position is that the State Bar Act of 1933, A.R.S. § 32--201 et seq. created the State Bar of Arizona as a public corporation. A.R.S. § 32--201 provides:

'A. There shall be a public corporation known as the State Bar of Arizona, designated in this chapter as the state bar, which shall have perpetual succession and a seal and may sue and be sued, and which, for the purpose of carrying into effect and promoting the objects of the corporation, may enter into contracts and acquire, hold, encumber, dispose of and deal in and with real and personal property.

B. The term of existence and the powers of the corporation may be changed or terminated at any time by the legislature.'

In 1973, however, the Supreme Court of Arizona promulgated Supreme Court Rules 27 through 45, which refer to the State Bar as 'an organization'. There is no question but that the Supreme Court has inherent power to integrate the bar of this state. Application of President of Montana Bar Ass'n, 163 Mont. 523, 518 P.2d 32 (1974); In re Integration of Bar of Hawaii, 50 Haw. 107, 432 P.2d 887 (1967).

A state bar association is a Sui generis association, many of whose important functions are directly related to and in aid of the judicial branch of government. State ex rel. Schwab v. Washington State Bar Ass'n, 80 Wash.2d 266, 493 P.2d 1237 (1972). A state bar has been described as 'an administrative arm' of the Supreme Court. Emslie v. State Bar of California, 11 Cal.3d 210, 113 Cal.Rptr. 175, 520 P.2d 991 (1974).

Our Supreme Court has recently held that Art. 14, § 2 of the Arizona Constitution prohibits the creation of public corporations by special acts. See, Fireman's Fund Ins. Co. v. Arizona Ins. Guar. Ass'n, 112 Ariz. 7, 536 P.2d 695 (1975). Therefore, the State Bar Act of 1933 has no viability and the designation of the State Bar of Arizona as a 'public corporation' has no legal efficacy.

We need not, however, concern ourselves with labels since appellants' complaint, on its face, stated no claim for relief. It alleged Expenditure of State Bar funds to promote the passage of Proposition 108. Art. 14, § 18 of the Arizona Constitution provides:

'It shall be unlawful for any corporation, organized or doing business in this State, to make any contribution of money or anything of value for the purpose of influencing any election or official action.'

This constitutional provision does not prohibit the State Bar from Expending money itself in the proper exercise of its authorized activities. La Belle v. Hennepin County Bar Ass'n, 206 Minn. 290, 288 N.W. 788 (1939); Smith v. Higinbothom, 187 Md. 115, 48 A.2d 754 (1946). As stated in the Minnesota case:

'Payment of the expense of conducting the bar poll does not constitute a payment or contribution by defendant within the meaning of the corrupt practices act. This statute is aimed at the evils of excessive expenditures for campaign purposes by political parties, organizations, committees, individuals and the candidates themselves and seeks to prevent such evils by prohibiting the acquisition of...