Triplett v. Grundy Elec. Co-op., Inc.

• Decision Date: 05 April 1965
• Docket Number: No. 24135,24135
• Citation: 389 S.W.2d 401
• Parties: William TRIPLETT and Thomas Loughead, Appellants, v. GRUNDY ELECTRIC COOPERATIVE, INC., a corporation, Paul Hiatt, Cliff Stanton, Dale Porter, Albert Reeves, Clem Cleeton, Roger Williams, Charles Mack, and Wayne Rhoades, as members or former members of the Board of Directors of Grundy Electric Cooperative, Inc., a corporation, Respondents.
• Court: Missouri Court of Appeals

Page 401

389 S.W.2d 401

William TRIPLETT and Thomas Loughead, Appellants, v. GRUNDY ELECTRIC COOPERATIVE, INC., a corporation, Paul Hiatt, Cliff Stanton, Dale Porter, Albert Reeves, Clem Cleeton, Roger Williams, Charles Mack, and Wayne Rhoades, as members or former members of the Board of Directors of Grundy Electric Cooperative, Inc., a corporation, Respondents.

No. 24135.

Kansas City Court of Appeals, Missouri.

April 5, 1965.

L. E. Atherton, Milan, for appellants.

Phil Hauck, Pickett, Andereck & Hauck, Trenton, for respondents.

HUNTER, Judge.

Appellants William Triplett and Thomas Loughead, on August 4, 1962, brought a declaratory judgment action against Grundy Electric Cooperative, Inc., and certain members and former members of its Board of Directors asking in Count I that the court determine that certain payments made to the directors are illegal under Section 394.140 RSMo. 1959, V.A.M.S., ¹ and the By-Laws of the Cooperative, and that the Cooperative is without power to continue making such payments. In the second count appellants sought an accounting of these payments to the end that any sums received by respondents be restored.

Respondents filed a motion to dismiss on the ground there was no genuine issue as to any material fact, that the matter was moot and that they were entitled to judgment as a matter of law. As a result of a hearing on that motion the trial court ruled the controversy had become moot, and entered judgment for defendants. This appeal followed.

The pertinent facts as developed by the pleadings and at the hearing on the motion to dismiss are undisputed. Grundy Electric Cooperative, Inc., of Trenton, Missouri, is a rural electric cooperative, deriving its existence from and being subject to the statutory provisions known as 'The Rural Electric Co-operative Law', chapter 394, RSMo. 1959, V.A.M.S. Appellants are two of the many hundred members of the cooperative.

According to the petition for declaratory judgment, 'In 1956 the board of directors * * * voted a $20.00 per diem and expenses when attending meetings of the board of directors or when representing the cooperative at meetings, (of) the Missouri State Rural Electrification Association, the National Rural Electrification Association, or meetings called by the Rural Electrification Administration. * * * The board of directors caused to be paid the expenses and per diem of various directors who attended various meetings other than meetings of the board of directors in Trenton, Missouri, some of which meetings which a portion of the board attended were in Missouri, Arkansas, Oklahoma and Louisiana and expenses of certain of the directors were paid to attend the national meeting of the National Rural Electric Cooperative Association in St. Louis, at Washington, D. C., and in Dallas, Texas * * *.'

Four days after appellants filed their present suit, and in direct response to it, at a regular meeting of respondent Cooperative with a quorum present, the present suit was explained to those attending. We quote from the minutes of that meeting: 'The President continued with the business session of the meeting and advised that recently, a lawsuit in the nature of a Declaratory Judgment action had been commenced by William Triplett and Thomas Loughead in the Circuit Court of Grundy County, Missouri, against the Cooperative and all of the present directors of the Cooperative except Archie Hampton and Byron Grisamore, and including a past director, Clem Cleeton. He explained that the general nature of the litigation was to question the amount of expenses and per diem received by the Directors, since 1956, for the attendance by said Directors, while representing the Cooperative, at meetings called by the Missouri State Rural Electrification Association, the National Rural Electrification Association, regional meetings of the Rural Electrification Association and other related meetings, which require travel to places other than Grundy County, Missouri. He advised that it had been the policy of the Board of Directors since 1956 to receive the sum of $20 per diem and expenses when attending the aforesaid meetings on behalf of the Cooperative.

'At this point, Mr. Glen Daily, a member of the Cooperative who was present at the meeting, obtained the floor and made the following motion:

'RESOLVED: That those persons who are the Directors and employees of the Cooperative are encouraged to attend meetings conducted by the Rural Electrification Administration, and the State, Regional and National Associations with which the Cooperative is associated for the purpose of representing the Cooperative, and to better enable them to carry out their respective duties on behalf of the Cooperative; and

'RESOLVED: That compensation heretofore or hereinafter approved by the Board of Directors for attendance by such persons at such meetings is hereby ratified and authorized by the membership of this Cooperative. Said motion as made was then seconded by Elmer Johnston, a member of the Cooperative who was in attendance at the meeting.

'Mr. Eugene E. Andereck, one of the counsel for the Cooperative, being in attendance at the meeting, was then called upon to explain the significance of the resolution offered by Mr. Glen Daily. He advised that cooperatives throughout the United States were expected to make it possible for Directors and others who were employees of the Cooperative to attend various meetings such as workshops, institutes and Rural Electrification Association meetings, whether on the national, regional or state level; that it was desirable to have representatives of the Cooperative attend said meetings to better enlighten them on the problems pertaining to the affairs of the Cooperative and to be in a better position to serve in their respective positions in dealing with said problems.

* * *

* * *

'The inspectors of election * * * certified that proposition number three, the resolution ratifying and authorizing compensation to Directors and employees of the Cooperative for attendance of meetings conducted by the Rural Electrification Administration, the State, Regional and National Associations with which the Cooperative is associated for the purpose of representing the Cooperative, as heretofore or hereinafter approved by the Board of Directors, was approved and adopted by a majority vote of the members of the Cooperative; the vote being 674 for the resolution and 56 opposed to the resolution.' * * *

'The President further declared that the resolution for compensation of Directors was accepted by a majority of the members of the Cooperative voting at this meeting.'

At the August 2, 1963 Annual Meeting the minutes of the 1962 Meeting were read in full and were approved by the Membership of the Cooperative.

The trial judge in entering judgment for defendants by memorandum stated, 'The purpose of the suit was to have a judicial declaration that the outlay had been made without the approval of the members, and, if so, to require the directors to refund it. Plaintiffs' only legitimate interest in the affair, in other words, was to protect the Co-op's treasury from the drain of unauthorized disbursements. The suit was proper for that purpose. But it did not afford the only means by which that result could be achieved. The members of the Co-op could protect themselves against unauthorized disbursements, and one method of doing so was to supply the necessary authority. That was the method the statute contemplated. No payment complained of here was either violative of public policy or inherently evil; it was simply 'defective from a failure to observe in its execution a requirement of law enacted for the benefit or protection of a certain class,' viz., the members themselves, and 'the parties for whose benefit the requirement was enacted may ratify it.' 19 C.J.S., Corporations, Section 968, p. 424. This they did. Whatever defect may have stemmed from the failure to authorize the outlays in advance was removed by the subsequent approval of them--by the formal ratification of them.

'In effect, therefore--indeed, in fact--there has been what amounts to a full compliance with plaintiffs' demands, or at any rate a complete satisfaction of any proper interest they may have had in the matter, and hence 'no justiciable controversy remains in the case.''

Appellants state the trial court erred in its ruling and that the issues on appeal are (1) in view of Section 394.140 RSMo. 1959, V.A.M.S., and the By-Laws of the Cooperative, does the Board of Directors of the Cooperative have power to compensate the directors for attending meetings other than meetings of the Board held in Trenton, Mo.; and (2) if the Board has such power could the By-Laws be amended to ratify past expenditures for attending such meetings as well as future ones. We address ourselves to these two contentions of appellants.

Section 394.080 sets forth the broad powers of a rural electric cooperative whose function may be generalized as the providing for and the supplying of electric energy and promoting and extending the use thereof in rural areas. Subsections 12, 13, and 14 thereof provide the cooperative is authorized: '(12) To conduct its business and exercise any or all of its powers within or without this state; '(13) To adopt, amend and repeal by-laws; and '(14) To do and perform any and all other acts and things, and to have and exercise any and all other powers which may be necessary, convenient or appropriate to accomplish the...