Sarkeys v. Independent School Dist. No. 40, Cleveland County

• Citation: 1979 OK 42,592 P.2d 529
• Decision Date: 23 March 1979
• Docket Number: No. 53322,53322
• Parties: S. J. SARKEYS, Jr., Deceased, and Kenneth A. Sarkeys, Non-Intervening Visitor (Appellant), v. INDEPENDENT SCHOOL DISTRICT #40, CLEVELAND COUNTY, Oklahoma, for itself and for all other members of that class constituting beneficiaries of the Sarkeys Foundation, and Sarkeys, Inc., an Oklahoma Corporation, Sarkeys Foundation, an Oklahoma Charitable Corporation, Sabine Corp., a Louisiana Corporation, Verlan W. Harrell, Bill Edwards, Bobby D. Armstrong, Dan Savage, A. R. McCurley, Emmett M. Charles and Thomas F. McIntyre, Appellees, State of Oklahoma ex rel. Larry Derryberry, Attorney General of the State of Oklahoma, Intervenor.
• Court: Supreme Court of Oklahoma

Page 529

592 P.2d 529

S. J. SARKEYS, Jr., Deceased, and Kenneth A. Sarkeys, Non-Intervening Visitor (Appellant), v. INDEPENDENT SCHOOL DISTRICT #40, CLEVELAND COUNTY, Oklahoma,

for itself and for all other members of that class

constituting beneficiaries of the Sarkeys Foundation, and

Sarkeys, Inc., an Oklahoma Corporation, Sarkeys Foundation,

an Oklahoma Charitable Corporation, Sabine Corp., a

Louisiana Corporation, Verlan W. Harrell, Bill Edwards,

Bobby D. Armstrong, Dan Savage, A. R. McCurley, Emmett M.

Charles and Thomas F. McIntyre, Appellees,

State of Oklahoma ex rel. Larry Derryberry, Attorney General

of the State of Oklahoma, Intervenor.

No. 53322.

Supreme Court of Oklahoma.

March 23, 1979.

Appeal from the District Court of Cleveland County; Alma Wilson, judge.

Non-intervening party appearing as visitor (appellant) appeals from a judgment which approved the settlement of the proceeding in the trial court by the parties of record and the Attorney General of the State of Oklahoma as intervenor. The parties of record, appellees, joined in a motion to dismiss the appeal.

APPEAL DISMISSED.

Jopling, Blankenship & McKee by William A. Berry and G. T. Blankenship, Oklahoma City, and Spradling, Stagner, Alpern, Friot & Jones by Delmer L. Stagner, Oklahoma City, for non-intervening visitor (appellant).

Pierce, Couch & Hendrickson, Oklahoma City, and Terry G. Shipley, Noble, and Philip Warren Redwine, Norman by John R. Couch, Oklahoma City, for appellee, Independent School Dist. #40, Cleveland County, Oklahoma.

Crowe, Dunlevy, Thweatt, Swinford, Johnson & Burdick, Oklahoma City, for appellees, Sarkeys, Inc. and Sabine Corp.

Watson, McKenzie & Moricoli by Gregory L. Mahaffey, Oklahoma City, for appellee, Sarkeys, Inc.

Ben L. Burdick, and Gary A. Bryant, Oklahoma City, for appellee, Sabine Corp.

Lee B. Thompson, Oklahoma City, and Doerner, Stuart, Saunders, Daniel & Anderson, Tulsa, by Lee B. Thompson, Oklahoma City, for appellee, Verlan W. Harrell.

Kerr, Davis, Irvine, Krasnow, Rhodes & Semtner, and Francis S. Irvine, Oklahoma City, and Monnet, Hayes, Bullis & Edwards, and John T. Edwards, Oklahoma City, and Lucas & Cate and Lee Cate, Norman, Benedum, Benedum & English and T. R. Benedum, Norman, and Stipe, Gossett, Stipe & Harper, and Gene Stipe, McAlester, by T. R. Benedum, Norman, for appellees, Bill Edwards, Bobby D. Armstrong, Dan Savage, A. R. McCurley and Emmett M. Charles.

Castleberry, Lisle & Kivel and Gene A. Castleberry, Oklahoma City, for appellee, Thomas F. McIntyre.

William C. Anderson, Tulsa, for appellees, Robert S. Rizley, Trustee of Sarkeys Foundation, and Finis A. Crutchfield, Trustee of Sarkeys Foundation and Verlan W. Harrell.

Luttrell, Pendarvis & Rawlinson by Robert L. Pendarvis, Norman, for appellee, Philip C. Kidd, Trustee of Sarkeys Foundation.

John H. Patten, Norman, for appellees, Jack Patten, Charles Nesbitt, Smith Hester, Stanton Young and Frank Seay, Co-Receivers of Sarkeys Foundation.

Turner, Turner, & Green by Charles C. Green, Oklahoma City, for appellees, Dewayne Pitt, Reese Booker, L. M. Nelson, Max W. Barnes, G. Lyndell Buck, Ruth Ann Harris Edwards, Dewight Mitchell, Jerry Hines, Michael Hopkins, Flora Latshaw, Debbie Ogle Davis, Noami Snowden, Ben Gray, Allen Wilwhite, John Thomas, Richard Veal, Harry Goeble and the Sarkeys, Inc. Profit Sharing Trust.

HODGES, Justice.

An appeal was lodged by S. J. Sarkeys, Jr. and Kenneth A. Sarkeys, non-intervening parties appearing as purported visitors, "appellants," the lineal descendents of S. A. Sarkeys, the founder of Sarkeys Foundation, a charitable corporation, ¹ from the judgment of the District Court approving the settlement of the case in the trial court by the parties of record, and the Attorney General of the State of Oklahoma, Larry Derryberry, as intervenor. S. J. Sarkeys, Jr. died after the appeal was commenced. Kenneth A. Sarkeys, the nearest relative of the founder, has displaced his father, S. J. Sarkeys, Jr., as visitor of the Foundation.

This proceeding was instituted by Independent School District No. 40, Cleveland County, Oklahoma, (Class) as a class action on behalf of itself and all of the beneficiaries of Sarkeys Foundation on August 4, 1977. The action was brought against Sarkeys, Inc., Sarkeys Foundation, an Oklahoma charitable corporation, Sabine Corporation, a Louisiana corporation, and Verlan W. Harrell, Bill Edwards, Bobby D. Armstrong, Dan Savage, A. R. McCurley, Emmett M. Charles, and Thomas F. McIntyre. Verlan W. Harrell, Thomas T. McIntyre, Robert Rizley, Finis Crutchfield, and Philip Kidd constituted the Board of Trustees of Sarkeys Foundation. Sarkeys, Inc., is an operating oil and gas company, the stock of which prior to April 29, 1976, constituted the principal asset of Sarkeys Foundation. Bill Edwards, Bobby D. Armstrong, Dan Savage, A. R. McCurley, and Emmett Charles, along with Verlan W. Harrell, were shareholders of Sarkeys, Inc.

Sabine Corporation entered into contracts for the purchase of Sarkeys, Inc., stock from its shareholders in August, 1977. The principal transaction complained of by the Class was a sale in April, 1976, of approximately 81.8% Of the Sarkeys, Inc., stock held by Sarkeys Foundation to Sarkeys, Inc. It was contended that the sale to Sarkeys, Inc., by the Foundation constituted an act of indirect self-dealing.

At the request of the visitors, on October 13, 1977, the Attorney General of the State of Oklahoma intervened as a party plaintiff requesting a determination by the District Court of the propriety of certain transactions involving Sarkeys Foundation and its properties.

Extensive discovery, including interrogatories and depositions, many of which were witnessed in person by S. J. Sarkeys, Jr., was conducted. Neither S. J. Sarkeys, Jr. nor Kenneth A. Sarkeys made any effort to intervene or become a party to the action during the pendency of the litigation.

A Joint Application For Approval of Compromise Settlement was filed by the Class, the Attorney General, the individual and corporate defendants, the Trustee of Sarkeys Foundation, and the Co-Receivers of Sarkeys Foundation who had been appointed on March 16, 1978.

S. J. Sarkeys, Jr. and Kenneth Sarkeys filed an Objection to Approval of Proposed Settlement and appeared in person, as well as by and through counsel. The District Court made no finding that the objectors, S. J. Sarkeys, Jr. and Kenneth A. Sarkeys, had any right, title, interest or standing to file such objection, but permitted them to be heard to inform the District Court as to whether the settlement agreement should be approved. ² No motion to intervene was filed by the visitors. A verbal motion to dismiss the objection was overruled.

The court heard and considered testimony and evidence offered in support of the joint application of settlement including the testimony: of Co-Receivers; of the appraisers employed by the Co-Receivers for the purpose of evaluating the assets and liabilities of Sarkeys, Inc.; and of the independent auditors employed by the Co-Receivers for the purpose of reviewing the financial transactions and financial statements of Sarkeys, Inc. The court reviewed and took evidence and expert testimony concerning the attorneys' fees to be paid by the selling shareholders of Sarkeys, Inc. to the counsel of record for Independent School District No. 40, Cleveland County, Oklahoma. The District Court entered its Journal Entry of Judgment approving the settlement agreement entered into by the parties. ³

I

The decisive issue on appeal is whether "appellant", as visitor of the Sarkeys Foundation, has standing to appeal in the absence of an appeal by the Attorney General. It is argued by appellees that the appeal should be dismissed because: the visitor was not a party or privy to the judgment appealed from; was not aggrieved thereby; did not have a direct pecuniary interest therein; and was not a beneficiary of the trust or a member of the class on whose behalf the action was brought. It is contended by the visitor that the judgment entered by the District Court which approved a settlement of the case by the parties of record should be reversed and the cause remanded for determination on its merits.

Before a court of equity may interfere in the administration and enforcement of a charitable trust, its jurisdiction must be invoked by one who has the right to institute an action. ⁴ A person who is not directly interested in the administration of a trust cannot maintain a legal proceeding to control the actions of the trustees. A private individual must be a party to the trust indenture, the representative of such party, or be interested personally and individually as a beneficiary rather than as a taxpayer, ⁵ or a member of the community before he may attempt to enforce a charitable trust. The beneficial use is not given to individual beneficiaries in a charitable trust, but is devoted to purposes beneficial to the class or community. Because an individual member of the public has no vested interest in the property or funds of the trust, but rather an interest in the charitable use, he has no right of action for mismanagement of the fund. It is generally held that the Attorney General has a preclusive right to maintain proceedings to protect the trust and to prevent a misuse of property devoted to a public charity. ⁶ A number of states have statutes which expressly provide that the Attorney General may enforce charitable trusts. ⁷

In Oklahoma, the authority of the Attorney General to enforce charitable trusts as Parens patriae is derived from the common law and inferred from the statutory language of 60 O.S.1971 § 175.18(B) which requires notice to the Attorney General and provides the Attorney General may intervene in an action concerning performance of a charitable trust. It has long been recognized at common law that the Attorney General has the duty of representing the public interest in securing the enforcement of...