State ex rel. McElhinney v. All-Iowa Agr. Ass'n

• Decision Date: 05 June 1951
• Docket Number: ALL-IOWA,No. 47844,47844
• Citation: 48 N.W.2d 281,242 Iowa 860
• Parties: STATE ex rel. McELHINNEY v.AGRICULTURAL ASS'N.
• Court: Iowa Supreme Court

Page 281

48 N.W.2d 281

242 Iowa 860

STATE ex rel. McELHINNEY v. ALL-IOWA AGRICULTURAL ASS'N.

No. 47844.

Supreme Court of Iowa.

June 5, 1951.

Elliott, Shuttleworth & Ingersoll, V. C. Shuttleworth and Harry Wilmarth, Cedar Rapids, for appellant.

Barnes, Wadsworth, Elderkin & Locher, D. M. Elderkin, and J. J. Locher, Jr., and Howard McLaughlin, Cedar Rapids, for appellee.

Shepard & Shepard, Allison, for Fair Managers Ass'n of Iowa, as amicus curiae.

GARFIELD, Justice.

Defendant, a nonprofit corporation organized under what is now chapter 504, Iowa Code 1950, I.C.A., owns and operates fair grounds known as Hawkeye Downs near the outskirts of Cedar Rapids where the All-Iowa Fair is held each year. By contract with one Gerber made in January, 1950, superseding a prior contract between them made in October, 1949, defendant leased to Gerber its amphitheater and quarter-mile track for the racing season between May 1 and November 1 of each year for five years. Gerber was permitted to hold auto races once each week during such periods or as often as both parties agree. As rental Gerber agreed to pay defendant half the gate receipts above $1,100 at each event. Either party might cancel the agreement on 30 days notice after November 1, 1950.

Relator, who owns and operates an auto race track in Cedar Rapids, brought this equity action in the nature of quo warranto, claiming that defendant exceeded the power conferred upon it by law in making such contract with Gerber and asking that it be held void and defendant enjoined from carrying it out. Following trial such relief was granted and defendant has appealed.

It is not claimed defendant has exceeded the powers contemplated by its articles of incorporation which list among its objects and the general nature of its business: 'to sponsor, * * *, or license, at any fair or other times, * * * automobile racing, * * * and other amusement enterprises.' Nor is it contended chapter 504 under which defendant was incorporated contains any limitation of power which defendant has exceeded. Basis for plaintiff's case is the claim that defendant possesses only such power as granted by Code chapter 174, I.C.A.

Sections 174.1 and 174.2 provide:

'174.1 Terms defined

For the purposes of this chapter:

'1. 'Fair' shall mean a bona fide exhibition of agricultural, dairy, and kindred products, livestock, and farm implements.

'2. 'Society' shall mean a county or district fair or agricultural society incorporated under the laws of this state for the purpose of holding such fair, and which owns or leases at least ten acres of ground and owns buildings and improvements situated on said ground of a value of at least eight thousand dollars. * * *

'174.2 Powers of society

'Each society may hold annually a fair to further interest in agriculture and to encourage the improvement of agricultural products, livestock, articles of domestic industry, implements, and other mechanical devices. It may offer and award such premiums as will induce general competition.'

Plaintiff's basic contention, upheld by the trial court, is in substance that sections 174.1, paragraph 2, and 174.2 define the power defendant and similar corporations may exercise and impliedly prohibit the exercise of other powers. This latter conclusion is reached by application of the principle of statutory interpretation that the mention of one thing implies the exclusion of others--expressio unius est exclusio alterius. See Van Eaton v. Town of Sidney, 211 Iowa 986, 991, 231 N.W. 475, 71 A.L.R. 820, 826, and citations; Hercules Mfg. Co. v. Burch, 235 Iowa 568, 574, 16 N.W.2d 350, 353; 50 Am.Jur., Statutes, sections 244, 429.

The contract between defendant and Gerber is admitted. Plaintiff offered very little evidence. Defendant however offered much evidence, without substantial dispute, that it and other similar corporations for many years have permitted the use of their grounds for hire outside of fair time for races, circuses, carnivals, rodeos, ball games and other entertainment; these practices were well known to administrative officials who never construed the law to prohibit them and never withheld state or county aid from any 'society' which permitted them.

There is also much undisputed testimony that the holding of auto races and other amusements outside of fair time stimulates attendance at the fairs by familiarizing those who attend such amusements with the facilities on the grounds, getting them accustomed to go to the grounds, affording crowds (shown to be as large as 25,000) to whom advertisements of the fairs may be directed, and in other ways.

Defendant's officers testified the receipts from merely holding the fair and from state and county aid are insufficient to meet its expenses and maintain its property, valued at about $374,000. Defendant has about 160 acres of land. The amphitheater seats about 12,000. A manager at $5,000 a year and caretakers are employed on a year-round basis. Insurance on the buildings costs from $3,000 to $5,000 annually.

There is a good deal of evidence too as to the valuable contributions defendant has made to agriculture by permitting use of its grounds throughout the year for cattle, swine and sheep demonstrations of an educational nature, meetings of 4-H Club boys and girls and Future Farmers of America, and for kindred projects.

During the ten years from 1940 to 1949 inclusive defendant received total state aid under Code chapter 174 of $11,354 and county aid of $81,574. It is not claimed any county aid was expended except as required by Code section 174.18, I.C.A., or that any state aid was spent except as contemplated by 174.9.

The above is a sufficient indication of the voluminous evidence upon the trial. We will go more into detail later.

We may observe that since this case was submitted to us Code section 174.2, which, with 174.1, paragraph 2, I.C.A., plaintiff contends limits the powers of defendant and like corporations, was amended by House File 152 of the 54th General Assembly, doubtless as an aftermath of this litigation, by adding thereto:

'In addition to the powers granted herein the society shall possess the powers of a corporation not for pecuniary profit under the laws of this state and those powers enumerated in its articles of incorporation, such powers to be exercised before and after the holding of such fairs.'

This amendment does not take effect until July 4, 1951, is not retroactive and does not relieve us from deciding the case. However the decision seems less important to other fair societies and perhaps to the public because of this amendment.

In general, this amendment to 174.2 declares what defendant contends is already the law. Little if any weight should here be given passage of this amendment. It does not necessarily indicate an intent to change the meaning of the existing law nor amount to legislative recognition that the present section 174.2 means what plaintiff contends. The amendment may have been enacted so the statutes will correspond to what had previously been supposed was the law rather than to effect a change therein. See Hansen v. Iowa Emp. Sec. Comm., 239 Iowa 1139, 1141, 1142, 34 N.W.2d 203, 205, and citations.

As plaintiff argues, a corporation organized under a general law may exercise only such powers as are authorized by the law and those reasonably incident thereto. The provisions of statute enter into and form part of the corporate charter. Articles of incorporation may not clothe the society with powers not authorized by law. In case of conflict in this regard between the statute and the articles, the statute governs. See State ex rel. v. Southern Pub. Ass'n, 169 Tenn. 257, 84 S.W.2d 580, 100 A.L.R. 576, and Anno. 579; People, by Kerner v. United Medical Service, 362 Ill. 442, 200 N.E. 157, 161, 103 A.L.R. 1229, 1236; 19 C.J.S., Corporations, §§ 947b, 948k, pages 377, 383; 13 Am.Jur., Corporations, section 742.

As before stated, it is not contended defendant has exceeded any limitation of powers found in Code chapter 504, I.C.A., under which it was incorporated. The authorities just cited are of no aid to plaintiff unless defendant has only such power as provided by section 174.2, above quoted, to 'hold annually a fair.' We are unable to agree that the statutory powers of defendant are thus limited by section 174.2. We think this section does not prohibit the exercise of corporate powers authorized by the chapter under which the corporation was formed and those reasonably incident thereto that are not in violation of the articles of incorporation. Chapter 174 contains no provision by which a society may be incorporated under that chapter. It does not deal with incorporation. Obviously the society must be incorporated under another chapter of the Code. When defendant was organized under chapter 504 or, as stated in section 504.2, 'upon filing such articles,' certainly it was clothed with the powers enumerated in chapter 504 and those reasonably incident thereto that were not in violation of its articles.

Defendant did not qualify as a society under section 174.1, paragraph 2, merely by its incorporation. It was required also to own or lease 'at least ten acres of ground and' own 'buildings and improvements situated on said ground of a value of at least eight thousand dollars * * *.' Even then it was not entitled to state aid under chapter 174 unless it filed with the state fair board the sworn statement required by section 174.9. Defendant was of course not compelled to qualify for state aid and theoretically might never do so. Clearly until it did so qualify it was clothed with the powers enumerated in the chapter under which it was organized. If it ever lost any of such powers the loss must have occurred when it qualified for or perhaps received state aid under chapter 174.

Implicit in plaintiff's case, it seems to us, is the claim that by qualifying for or accepting state aid under chapter 174 section...