Schell v. Leander Clark College

• Decision Date: 09 February 1926
• Docket Number: No. 61.,61.
• Citation: 10 F.2d 542
• Parties: SCHELL v. LEANDER CLARK COLLEGE et al.
• Court: U.S. District Court — Panama Canal Zone

10 F.2d 542 (1926)

SCHELL v. LEANDER CLARK COLLEGE et al.

No. 61.

District Court, N. D. Iowa, Cedar Rapids Division.

February 9, 1926.

James & Coolidge, of Dayton, Ohio, for plaintiff.

H. E. Spangler, of Cedar Rapids, Iowa, for defendants.

SCOTT, District Judge.

William E. Schell, a citizen of the state of Ohio, filed and exhibited his bill in equity as a member of the Church of the United Brethren in Christ on behalf of himself and other members of that church similarly situated, but too numerous to be joined as plaintiffs, and naming as defendants Leander Clark College, an Iowa corporation, 29 individuals, alleged to be trustees of Leander Clark College, and Coe College, an Iowa corporation. Leander Clark College is alleged to have its principal place of business at Toledo, Iowa, and Coe College, at Cedar Rapids, Iowa, both in the Northern district of Iowa, and all individual defendants are alleged to be residents and citizens of the state of Iowa. The requisite amount in controversy for jurisdictional purposes is also alleged. Plaintiff further in substance alleges:

That the Church of the United Brethren in Christ is an unincorporated association. That it belongs to the "associated class of churches," and is governed by official boards, quarterly conferences, annual conferences, and a general conference, which are subordinate to each other in ascending progression in the order named. That the organic law of the church is embodied in the church discipline, which is subject to amendment only by the General Conference of the church which meets quadrennially. That for over 100 years the Church of the United Brethren in Christ has conducted its religious, benevolent, and educational activities in the United States and foreign countries. As part of its religious, benevolent, and educational work, in the year 1856, it established a church college in the state of Iowa. That college for many years has been located in the city of Toledo, Tama county, Iowa, and since 1903 it has been known as Leander Clark College. Throughout its existence it has been supported by, has acknowledged allegiance to, and has recognized the domination over it of the Church of the United Brethren in Christ, and under the provisions of its articles of incorporation its trustees are elected triennially by the Iowa, Minnesota, Wisconsin, and Illinois Conferences, all annual conferences of the Church of the United Brethren in Christ, and in relation to Leander Clark College, known as "the co-operating conferences." That with reference to church colleges, the organic law of the church — the church discipline — provides for a board of education, same being an Ohio corporation, to which is delegated general supervisory powers over all church schools. It determines to what annual conferences of the church each school shall be tributary. No school or college may be established, discontinued, relocated, or consolidated with any other without its consent. Leander Clark College, throughout its existence, has met with the requirements and regulations and has recognized the authority of said board of education and of the church discipline as adopted by the General Conferences.

That in the year 1917 Leander Clark College was, and theretofore had been, supplying the educational needs of the church of the Mississippi Valley in a satisfactory manner. It had an endowment fund of approximately $200,000, and buildings and equipment adequate to its needs. That in the month of June, 1917, the suggestion had been made that, on account of the war conditions then existing, it would be desirable to consolidate Leander Clark College with Coe College, a neighboring institution of learning, located at Cedar Rapids, Iowa, and such a proposal had been made to the trustees of Leander Clark College. A committee was appointed by said trustee to consider the suggestion, and its report, which was favorable to the plan of consolidation that had been drawn up, was approved by the trustees, who thereupon caused it to be brought before the meetings of the co-operating annual conferences of the church in the fall of that year. With the exception of the Iowa conference, none of the co-operating conferences were favorably disposed or took favorable action thereon. That the board of education of the church absolutely disapproved of the plan, and refused its consent to the merger. That the board of education thereupon drew up a new plan for consolidation with Coe College, which was presented to the various co-operating conferences and was acted upon favorably by all of them. That because of the unsettled effect of the consolidation discussion, and on account of the disturbing conditions existing because of the war, Leander Clark College did not open in the fall of 1918. That, believing the plan proposed by the board of education would be carried through, the co-operating conferences authorized the trustees of Leander Clark College to dispose of the campus property at the college in such manner as they might deem advisable. That the articles of incorporation of Leander Clark College expressly provide that no transfer of campus property shall be valid without authorization of the co-operating conferences.

That Coe College objected to said plan of consolidation, and in November, 1918, the board of trustees of Leander Clark College rescinded all action taken by them, in adopting the board of education's plan, but continued negotiations looking to such consolidation upon a new plan, differing materially from that approved by the co-operating conferences and the board of education. That in the month of April, 1919, the board of education met to consider the new plan, and rejected the same, and Leander Clark College trustees were apprised of this action. That in total disregard of this fact, however, and without the consent or approval of the board of education, Leander Clark College, through its officers and trustees, willfully and wrongfully proceeded to attempt to carry out the merger with Coe College on terms disapproved by the board of education, transferred its endowment fund to H. J. Stiger, defendant herein, and directed him to convey same to Coe College pursuant to the unauthorized merger plan.

That defendant Leander Clark College, through its officers and trustees, purporting to act under authority granted by the co-operating conferences in the fall of 1918, caused its campus property at Toledo, Iowa, to be transferred to the state of Iowa for use as a state institution for destitute orphan children. That the authority to transfer said property had been granted by the co-operating conferences as a part of its action approving the union with Coe College drafted by the board of education, and was intended, as defendant trustees well knew, to authorize them to act thereunder only in connection with the carrying out the consolidation on the terms approved. That such action upon the part of the Leander Clark College trustees is a breach of trust, for which they should be required to make restitution. That following this unauthorized action, in the fall of 1919, the co-operating conferences took formal action disapproving such action of defendant trustees.

That plaintiff is informed and believes that defendant H. J. Stiger is still in possession of the endowment fund of Leander Clark College, turned over to him by the trustees; said fund, as plaintiff is informed, amounting in excess of $200,000. That by reason of the foregoing the Church of the United Brethren in Christ is prevented from carrying out its religious, benevolent, and educational work at Leander Clark College, and Leander Clark College is deprived of the use of its endowment fund. That unless defendant Stiger is enjoined by this court from transferring said endowment to Coe College, and from otherwise disposing of them without the order and approval of this court, both Leander Clark College and said church will be deprived of and will lose both the principal and income of said fund. That plaintiff and the board of education of the church, and other agents and persons interested in the church and its educational institutions, have made frequent demand and effort to induce Leander Clark College and its trustees to take the action necessary to right the wrongs above complained of, but defendants have ignored said demands and refused to take any action in the premises.

Such are in substance the allegations of the plaintiff's bill, and upon these allegations plaintiff prays: (a) That defendant H. J. Stiger may be enjoined from transferring the endowment fund of Leander Clark College, or the income therefrom, to Coe College, and from making any transfer or disposal thereof, except as ordered by this court, and prays for an order directing defendant Stiger to retransfer and deliver to Leander Clark College the endowment fund and the accretions thereto. (b) That defendants herein may be enjoined from taking any further action or proceedings looking towards the carrying out of any plan for merging defendant Leander Clark College with defendant Coe College, which first shall not have had the sanction of the board of education of the church. (c) That defendant trustees (naming 29 of them) may be required to account for and pay over to Leander Clark College the value of the campus property. (d) For general equitable relief.

In pursuance of the filing of this bill, subpœna duly issued and was served upon the corporations Leander Clark College and Coe College, but no service was ever effected upon any of the individuals alleged to be trustees of Leander Clark College, with the exception of G. H. Struble, and that none of such individuals, with the exception of G. H. Struble, who is of counsel for defendant corporations, have ever appeared to or answered said bill.

The defendants Leander Clark College, Coe College, and G. H. Struble appeared and jointly answered the plaintiff's bill. The defendants admit the corporate...