Hall v. Kansas Farm Bureau

• Decision Date: 12 July 2002
• Docket Number: No. 87,848.,87,848.
• Parties: GARY L. HALL, Appellant, v. THE KANSAS FARM BUREAU and KANSAS FARM BUREAU SERVICES, INC., Appellees.
• Court: Kansas Supreme Court

274 Kan. 263

50 P.3d 495

GARY L. HALL, Appellant, v. THE KANSAS FARM BUREAU and KANSAS FARM BUREAU SERVICES, INC., Appellees.

No. 87,848.

Supreme Court of Kansas.

Opinion filed July 12, 2002.

John J. Miller, of Law Office of John J. Miller, P.C., of Kansas City, Missouri, argued the cause and was on the briefs for appellant.

Edward L. Bailey, of Cosgrove, Webb & Oman, of Topeka, argued the cause, and Carol B. Bonebrake, of the same firm, was with him on the brief for appellees.

The opinion of the court was delivered by

ALLEGRUCCI, J.:

Gary Hall appeals from the decision of the district court granting summary judgment in favor of Kansas Farm Bureau (Farm Bureau), a cooperative marketing association, and Kansas Farm Bureau Services, Inc. (Farm Bureau Services), a general corporation. Hall was removed as president of both Farm Bureau and Farm Bureau Services. He sued, alleging that his termination violated the Kansas Cooperative Marketing Act (KCMA), constituted retaliatory discharge, and breached an implied contract. He also alleged defamation resulting from statements made by defendant's general counsel and that Farm Bureau Services negligently failed to instruct him in acceptable conduct for his employment.

In its order granting summary judgment in favor of Farm Bureau and Farm Bureau Services, the district court made findings of fact. On appeal, Hall has not challenged the district court's findings. Determinations of fact which are not appealed from are final and conclusive. Klose v. Wood Valley Racquet Club, Inc., 267 Kan. 164, 165, 975 P.2d 1218 (1999).

The district court made the following findings of fact:

"1. Plaintiff Gary Hall filed suit against Kansas Farm Bureau and Kansas Farm Bureau Services, Inc. on or about August 14, 2000, alleging: (1) wrongful termination as an officer, (2) wrongful termination of employment; (3) breach of implied contract; (4) defamation; and (5) negligence.

"2. The Farm Bureau was formed, in part, to strengthen, develop, and correlate the work of the County Farm Bureaus in their efforts to promote the development of the most profitable and permanent system of agriculture.

"3. The Farm Bureau was organized pursuant to the Kansas Cooperative Marketing Act, K.S.A. 17-1601 et seq.

"4. The thirteen member Board of Directors is elected by the voting delegates at the annual meeting.

"5. Three of the thirteen directors are elected `at-large' with the recommendation that he or she be elected President, Vice-President, or State Chairman of the Farm Bureau Women by the Board of Directors.

"6. The Board of Directors is charged with electing officers immediately following the annual meeting.

"7. Officers who must be elected by the Board of Directors include: a President, a first Vice-President and a State Chairman of Kansas Farm Bureau Women. The board may also elect an Executive Vice-President, additional Vice-Presidents, a Secretary, a Treasurer, Assistant Secretaries, Assistant Treasurers, a General Counsel, and any other officers deemed necessary.

"8. The duties of the Board of Directors of Farm Bureau are as follows: The Board of Directors shall be responsible for conducting the affairs of the organization. They shall develop, promote and supplement the state Program of Work adopted by the Voting Delegates. The Board shall have the responsibility to review and appraise the service activities and programs of the Association with sufficient regularity to assure that said programs contribute to the overall goals and objectives of the Association.

"9. The Affiliated Companies of the Farm Bureau include: KFB Services, Kansas Farm Bureau Life Insurance Company, Inc., Farm Bureau Mutual Insurance Company, KFB Insurance Company, Inc., FB Services Insurance Agency, Inc. and FB Capital Management of Kansas, Inc.

"10. The Affiliated Companies were organized as for-profit entities pursuant to the Kansas general corporation code.

"11. KFB Services is the organization that services Farm Bureau and the other Affiliated Companies and their employees and employs many of the executive officers for all Affiliated Companies.

"12. The corporate powers, business and property of KFB Services shall be exercised, conducted and controlled by the Board of Directors of KFB Services.

"13. Farm Bureau and each of the other Affiliated Companies pays KFB Services for their respective share of the expenses. Farm Bureau's contribution to KFB Services for such expense is two and one-half percent (2½%).

"14. Farm Bureau and KFB Services have a Board of Directors which elect their own officers every year `out of their number.'

"15. Certain officers, including the president, are required to be a member of the Board of Directors in order to hold these elected positions.

"16. It was the custom of the Board of Directors of Farm Bureau and KFB Services to abide by the officer recommendations of the membership.

"17. The president of KFB Services must be a present member of the Board of Directors of KFB Services.

"18. The president of KFB Services is a full-time employee.

"19. The officers of KFB Services serve on a full- or part-time basis and receive a salary as determined by the Board of Directors.

"20. Gary Hall was elected to a Director-at-Large position in Farm Bureau and KFB Services in 1994, 1996 and 1998 by the voting delegates.

"21. In 1995, 1996, 1997 and 1998, Hall was elected to the office of President by the Boards of Directors of Farm Bureau and KFB Services.

"22. Everything relative to Hall's compensation came from KFB Services.

"23. The Board of Directors, not its members, voted Hall into office as President.

"24. Hall was terminated as President of Farm Bureau and its Affiliated Companies including KFB Services on August 17, 1999 by a vote of eleven in favor to one against with one member absent.

"25. Farm Bureau and KFB Services board member Dale Roberds stated that the issues which led to the Boards' decision to terminate Hall included the inability of Hall to work with management and staff and presenting his own legislative policy instead of the Farm Bureau policy.

"26. Farm Bureau and KFB Services board member Steve Baccus voted to terminate Hall because of the breakdown of relationships between Hall and the corporate officers and staff.

"27. Hall received a document which stated:

`Reasons for Removal of Gary Hall as President Presented at Board of Directors Meeting August 17, 1999

1. Inability to work with staff of the companies, as well as the President's Team and Company Managers.

2. Intentionally not following the directives of the Board of Directors. This occurred in several areas of the organization, but most notably in the Public Policy and Legislative areas.

3. Criticizing staff of the companies outside of State headquarters.

4. Totally disregarding lines of authority and responsibility in the companies at all levels. Attempting to operate the companies based upon his personal agenda, rather than direction of the Board of Directors.

5. Failure to timely pay accounts payable.

6. Overall general problems with the direction and moving the companies forward. Placing road blocks to progress of the companies.'

"28. Farm Bureau was organized pursuant to the Kansas Cooperative Marketing Act (KCMA).

"29. In contrast, the Affiliated Companies, including KFB Services, are for-profit entities organized pursuant to the Kansas general corporation code.

"30. The provisions of the general corporation code are applicable to associations organized under the KCMA except in cases of conflict or inconsistency. K.S.A. 17-1628; K.S.A. 17-6001(c).

"31. The KCMA provides one method for removal of a director or officer. An association member who presents charges in conjunction with a petition signed by ten percent of the members may request removal of a director or officer. K.S.A. 17-1614.

"32. The KCMA does not prohibit other methods of officer removal as found in the general corporation code. Since the general corporation code governs associations organized under the KCMA to the extent it is not in conflict or inconsistent with the KCMA, the additional and alternative methods of removal of an officer are also available. K.S.A. 17-1626; 17-1628; 17-6001(c).

"33. Under the general corporation code, K.S.A. 17-6302(b) states that:

`Officers shall be chosen in such manner and shall hold their offices for such terms as are prescribed by the bylaws or determined by the board of directors ... Each officer shall hold office until such officer's successor is elected and qualified or until such officer's earlier resignation or removal.' (Emphasis added.)

"34. K.S.A. 17-6302(b) and the Farm Bureau Bylaws provide in Article VI, § 4 of the Bylaws, that the Board of Directors is responsible for conducting the affairs of the organization.

"35. Hall owed $5,888.00 to KFB Services for unreimbursed expenses as of August 17, 1999.

"36. Hall owed KFB Services $10,468.00 for unreimbursed expenses as of the audit report date of October 4, 1999.

"37. KFB Services has a policy that all employees are at-will employees.

"38. No special damages were suffered by Hall due to the alleged defamatory statement.

"39. The statement made at the 1999 annual meeting regarding a business and employment matter was given to only those persons who had an interest or duty in the subject matter of the statement.

"40. All persons who were not Farm Bureau Directors, District Administrators, or County Presidents or voting delegates were asked to leave the room before the statement was read to the voting delegates at the closed District Caucuses.

"41. Only the County Presidents, Farm Bureau President Baccus, General Counsel Arthur, and attorney Ed Bailey were present when the statement was read at the County President's meeting.

"42. The District Administrators are employees of Farm Bureau who deal on a day-to-day basis with the County Presidents on Farm Bureau and county farm bureau business and affairs, and are members of a county farm bureau.

"43.

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