Veterans' Industries, Inc., In re
| Decision Date | 17 June 1970 |
| Court | California Court of Appeals Court of Appeals |
| Parties | In re Veterans' Industries, Inc., of Long Beach, California, in Voluntary Dissolution. VETERANS' INDUSTRIES, INC., OF LONG BEACH, CALIFORNIA, Petitioner and Respondent, v. Thomas C. LYNCH, as Attorney General of the State of California, Respondent; Disabled American Veterans, California Department, et al., Objectors and Appellants. Civ. 34255. |
McDaniel & Pinney, and Charles A. Pinney, Jr., El Centro, for Disabled American Veterans, Cal. Dept.
Don Edwin Raney, Long Beach, for Military Order of the Purple Heart of the U.S.A., Inc., Dept. of Cal.
Thomas C. Lynch, Atty. Gen., Carl Boronkay, and Joanne M. Condas, Deputy Attys. Gen., for Thomas C. Lynch, Atty. Gen.
No appearance for Veterans' Industries, Inc., of Long Beach, Cal.
The appellants Disabled American Veterans, California Department, a corporation (hereafter 'DAV'), and the Military Order of the Purple Heart of the U.S.A., Inc., Department of California (hereafter 'Purple Heart') 1 appeal from an order of the superior court striking on the Attorney General's motion their objections to a proposed disposition of assets under section 9801 of the Corporations Code 2 by the petitioner Veterans' Industries, Inc., of Long Beach, California (hereafter 'Veterans' Industries' or 'petitioner'), to the Community Rehabilitation Industries, Inc. (hereafter 'Community Rehabilitation'), with the Attorney General's consent. The Attorney General based his motion to strike the objections on the ground that the objectors lacked standing to appear or intervene in the proceedings for the purpose of filing objections.
In this court the Attorney General has moved for a dismissal of the objectors' appeals, contending: (1) the objectors lack standing to appeal; and (2) the appeals are now moot, the superior court's judgment (decree) approving the petitioner's proposed disposition having been rendered and entered with neither appellant having appealed therefrom.
Since the objectors' standing to interpose objections was thought to be dispositive of both the appeals and the motion to dismiss the appeals, the Attorney General and the counsel for DAV and Purple Heart have stipulated that both the motion and the appeals may be considered and determined at the same time.
The question of standing to intervene, however, represents only the exposed portion of an iceberg. In its total aspect, the problem is: What remedy, if any, is available to one who has good cause to believe that a proposed distribution in a section 9801 proceeding will constitute a breach of trust, despite the Attorney General's consent to such distribution, but whose interest in the trust Res rises no higher than that of a possible Cy pres beneficiary? How is the public's paramount interest in the proper discharge of charitable trusts 3 to be protected in such circumstances?
We have concluded that (1) the motion to dismiss the appeals should be denied, (2) the order striking the 'objections' filed by DAV and Purple Heart should be affirmed, and (3) mandamus is a proper remedy under the unusual circumstances reflected by the record in this case. We first set forth the factual and procedural background gathered from the record and then consider the following subsidiary issues: (1) Is the order striking the 'objections' appealable? (2) Has the subsequent entry of the decree of distribution rendered the appeal moot? (3) Is there good cause to believe a breach of trust imminent? (4) Do the objectors have standing to intervene to object to the proposed distribution? (5) Under the overall circumstances reflected by the record and our answers to the preceding questions, is there a remedy to invoke the aid of the appellate courts to protect the interests of the public and of the beneficiaries of the charitable trust in question?
Veterans' Industries petitioned the Superior Court of Los Angeles County for a decree approving its dissolution and proposed disposition of assets pursuant to sections 9800 and 9801 of the Corporations Code. 4 Allegations of the petition pertinent to issues before this court were in substance: Petitioner is a California nonprofit charitable corporation organized for the purposes set forth in the margin. 5
Its assets consist of $113,885.78 cash deposits. Its members, at a special meeting called by the board of directors, unanimously (6 in favor; 0 against) adopted a resolution 'to wind up and dissolve the Corporation, and after paying or providing for all known debts and liabilities, to transfer all remaining assets of the Corporation to Community Rehabilitation Industries of Long Beach * * * or such other Corporation or organizations as may be approved by the Attorney General * * * or by a Decree of the Superior Court * * *, a copy of said Resolution is attached hereto and incorporated herein as Exhibit 'A." 6. Its board of directors had also adopted a resolution to wind up and dissolve the corporation. 7 All steps required by the Corporations Code to effect a winding up and a dissolution had been taken except for obtaining a decree 'directing the manner of disposing of (its) assets * * *' under section 9801. It prayed, inter alia, that the superior court 'enter its decree pursuant to Section 9801 * * * directing that the petitioner's assets be distributed to a suitable successor corporation to be held upon the same trusts as held by petitioner (and) that (the) corporation be dissolved.'
The Attorney General filed a written appearance and consent to the winding up and dissolution of Veterans' Industries and the distribution of its assets remaining after dissolution to Community Rehabilitation for the purposes for which it had been formed, to wit:
'(a) To provide a rehabilitation service to all groups of mentally and physically handicapped persons who can or may benefit through the performance of productive and re(mun)erative employment.
'(b) To assist the handicapped person to develop work habits and skills necessary to meet the demands of competitive employment or to achieve such other goals as may be determined possible.
'(c) To provide a work exploration and orientation service for handicapped persons.
'(d) To provide medical supervision, casework service, and such auxiliary services and therapies as may be necessary to assist the handicapped person to achieve his fullest physical, mental, social, vocational, and economic usefulness.
'Such auxiliary services may be provided directly by the organization or through the cooperation of other community agencies.
'(e) To carry on a program of research and evaluation to determine the types of activities that prove most beneficial, the types of handicaps that can be most effectively served, and to evaluate the results achieved by the workshop program.
'(f) To carry on a program of public education concerning the value of employment of handicapped persons and to join with other organizations in working for improved services and opportunities for the handicapped.
'(g) To undertake such other activities as may be determined to be consistent with the principal objectives of the organization.'
DAV filed its written appearance and objections to the disposition of assets to Community Rehabilitation contending that such a disposition did not comport with the primary purposes for which the assets are held in trust by Veterans' Industries.
DAV also filed a cross-complaint against the Attorney General and Veterans' Industries praying for declaratory relief and enforcement of a charitable trust. The substance of the cross-complaint may be summarized as follows: After detailing the corporate purposes for which Veterans' Industries was organized, it averred that all of the funds and assets of Veterans' Industries were derived from salvageable tangible personal property donated by persons in the Long Beach area upon the specific representation to the donors that the property would be used for the benefit of disabled war veterans. The nomination of Community Rehabilitation as the donee was not that of the membership of the dissolving corporation, but that of a named deputy attorney general. Community Rehabilitation's corporate purposes are 'substantially different and more extensive in scope' than those of Veterans' Industries and it is not an entity organized for the purpose of holding, administering, or distributing 'funds and property for the benefit of disabled war veterans.' The proposed distribution 'is a calculated disregard' of the trust with which the assets are impressed. The Attorney General's consent is the result of hostility and antagonism against DAV entertained by certain members of the Attorney General's staff in charge of charitable trusts due to certain litigation pending in Orange County. Thus the cross-defendants 'have threatened to breach their respective duties with reference to the disposition of the funds and * * * assets' of Veterans' Industries. DAV is a nonprofit California corporation organized at the instance of the Disabled American Veterans, a corporation, and existing by virtue of a Congressional Act, 8 for charitable purposes 'for services to and for the benefit of disabled war veterans.' It has more than 115 chapters and at least 16,313 members in good standing in California. Its membership is restricted to those wounded, gassed, injured, or disabled in line of duty during service in the United States armed forces and who were thereafter honorably discharged or separated from service or who are still in active service. Since the rights of its more than 16,313 members who are beneficiaries of the trust involved are 'in jeopardy of being prejudiced,' it is a proper party to assert and advocate the rights of those beneficiaries. It is ready, willing, and...
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