Decision Number 75

Ruling of Bishop Hazen G. Werner in Ohio Annual Conference with Reference to Election of Trustees for White Cross Hospital

Digest

The Ohio Annual Conference of The Methodist Church, now being the White Cross Hospital Association of Ohio, is the source of ultimate control of the White Cross Hospital and has the right and power at its discretion to change or amend the method of electing the Trustees of the corporation; but, until the Annual Conference changes the method set forth in Art. VI of the present Constitution of said White Cross Hospital Association, it is bound thereby.

Statement of Facts

At the 1950 session of the Ohio Annual Conference of The Methodist Church, the question of the election of Trustees for Methodist Hospitals in the operation of which said Conference participates, came up for consideration. During the discussion concerning the same the presiding Bishop, Hazen G. Werner, made an official ruling as reflected in the following excerpt from the 1950 Journal of the Ohio Annual Conference:
EXTRACT FROM THE, OFFICIAL JOURNAL OF THE OHIO ANNUAL CONFERENCE FOR 1950

"The nominations of Trustees-Charles A. Jones read the list of nominations for Trustees for Christ Hospital. Members of the Conference raised the question as to why there were not more ministers among the nominees, and what percentage were in The Methodist Church. The institutional representatives made satisfactory response to these questions. The question of making nominations from the floor arose. Charles A. Jones quoted from the Constitution of White Cross Hospital, which states that the Trustees are to be nominated by the Board and elected by the Conference. He felt that nominations were not permissible from the floor. The Bishop, however, ruled otherwise: 'Upon the request for theprivilege of nominations in respect to the election of members to the Boards of Trustees of Methodist Hospitals, nominations made from the floor would be in order.'

"Bishop Werner ruled that 'Nominations by other than the Board are in order, and that inherently in the institution of elections is the possibility of choice.'"

(From the Proceedings of the Fourth Day, Saturday, June 10, 1950, Pages 672 and 673).

After this ruling Bishop Werner permitted nominations from the floor for Trustees for White Cross Hospital in addition to the nominations for said Trustees that had been made by the Board of Trustees of White Cross Hospital. The persons nominated from the floor were elected. The hospital has refused to seat those thus elected and maintains that the Annual Conference has no right to use its own judgment with respect to who shall be nominated and elected as Trustees of White Cross Hospital.

Jurisdiction

Division Four, Article II (Paragraph 43 of 1948 Discipline) of the Constitution of The Methodist Church reads in part as follows:
"Art. II-The Judicial Council shall have authority: . . .

"3. To pass upon decisions of law made by Bishops in Annual or District Conferences."

The Journal of the 1950 session of the Ohio Annual Conference shows clearly that such a ruling was made in said Annual Conference by Bishop Werner with respect to the matter here under consideration. Accordingly, we hold that the Judicial Council has jurisdiction to review and pass upon said ruling made by Bishop Werner in the 1950 session of the Ohio Annual Conference.

Decision

On March 16, 1891, nine citizens of the State of Ohio associated themselves together under the name, "Protestant Hospital Association of Columbus, Ohio," and executed and filed with the Secretary of State a charter for a nonprofit corporation bearing the name, "Protestant Hospital Association of Columbus, Ohio." The main purposes of the corporation were stated to be:
"(1) To provide medical and surgical aid for the sick and disabled;

"(2) To train suitable persons in the duties of nursing and attending upon the sick."

The Charter makes no provision for Trustees or Directors. Presumably the method of administering the affairs of the corporation was left to the Association sponsoring the same.

In 1922 the Ohio Annual Conference of the Methodist Episcopal Church became the "Protestant Hospital Association of Columbus, Ohio," with full powers of control over said corporation. This is proclaimed by multiple references in the Journals of the Ohio Annual Conference, by the periodical statements of the Board of Trustees administering the affairs of the corporation, by amendment to the Charter of the Corporation, by the fact that the Annual Conference became joint obligor with the corporation for $750,000 in aid and support of the White Cross Hospital and by other facts hereinafter referred to.

The 1922 amendment to the Charter is most significant. By that amendment the name of the corporation was changed from "Protestant Hospital Association of Columbus, Ohio," to "White Cross Hospital Association of Ohio," the latter being distinctly Methodist nomenclature.

Between 1922 and 1925 two or three different methods of electing Trustees to manage the affairs of the Corporation were experimented with. In 1925, however, a procedure denominated "Constitution and By-Laws of White Cross Hospital Association of Ohio" was adopted by the then Board of Trustees and approved by the Ohio Annual Conference of the Methodist Episcopal Church. The part of this procedure denominated the "Constitution" recognized the ultimate control of the Corporation to be in said Annual Conference and specifically provided that the property of the corporation was being held by Trustees "in trust for the use of the Ohio Annual Conference of the Methodist Episcopal Church and according to the usages and Discipline of the Methodist Episcopal Church."

The Board of Trustees in its reports from time to time have recognized and referred to the White Cross Hospital as an institution of the Ohio Annual Conference. In the presentation of this matter before the Judicial Council it was admitted by all parties concerned that the White Cross Hospital (the corporation and its assets) is the property of the Ohio Annual Conference.

In this "Constitution" adopted by the Ohio Annual Conference in 1925, provisions were made for the election of Trustees as follows:

"ARTICLE VI

"The term of service of Trustees shall be five years, and until their successors are elected and qualified. . . . Election of Trustees shall take place in the following manner. The requisite number to fill the Board annually shall be nominated by the Board of Trustees and elected by the Ohio Annual Conference of the Methodist Episcopal Church. . . . ."

Article X of this "Constitution" gave the Board of Trustees power to fill vacancies until the time for the next annual election of Trustees.

Article XII, relating to amendments to the Constitution, reads as follows:

"ARTICLE XII

"This Constitution may be amended by a two-thirds vote of the Trustees at any regular meeting, provided that such amendment has been presented in writing at a regular meeting one month previous to its adoption, or by a majority of the Trustees at a meeting held for that purpose upon notice given personally to each member; and provided further no amendment shall be made to the Constitution affecting the election or qualification of the Trustees without the approval of the Ohio Annual Conference of the Methodist Episcopal Church."

An interpretation of these provisions of the "Constitution" of the White Cross Hospital Association of Ohio seems necessary to a final decision on the question now before the Judicial Council.

The Articles further proclaim the fact that the residuary control of the Corporation vests in the Ohio Annual Conference of the Methodist Episcopal Church. This Conference delegated to the Board of Trustees of the corporation power to amend the Constitution and the By-Laws, but took particular care to preserve its ultimate control by denying to the Trustees the right to change the method of electing Trustees without the approval of the Annual Conference-the source of ultimate control.

The Annual Conference having become the "White Cross Hospital Association of Ohio" became possessed of full and unrestricted control of the Corporation. Once having obtained that power and still remaining the Association sponsoring the Corporation, it still has that power. In delegating to the Board of Trustees certain privileges it did not surrender its ultimate power of control and by direct action has the right to assert that power at its will.

That the grant of authority to the Trustees to amend the Constitution, as set out in Article XII, is merely permissive and is not a surrender of any power or authority vested in the Annual Conference is clearly shown by the contents of Article XII itself. This Article contains no words or phrases that can be construed to prohibit the Annual Conference from changing the Constitution. The language used definitely establishes the fact that the grant of power to the Trustees to change the Constitution was merely the granting of a privilege and not the surrender of a power or right. Note particularly the use of the word "may" in the first line of that paragraph as contrasted with the double use of the word "shall" in Article VI. This being only a permissive grant of power or privilege, the Annual Conference having the right to grant such power or privilege possesses also the power to make amendments to the Constitution on its own volition. This residual right and power in the Annual Conference to control the provisions of the Constitution is accentuated by the provision of Article XII of the Constitution prohibiting the Trustees from making any change in the method of electing Trustees without the consent of the Annual Conference.

The Annual Conference, however, having itself set up a rule which, by the double use of the word "shall" appears to be mandatory until changed, is bound by such rule and must act in accordance therewith until another rule has been established to take its place. Such an amendment to this rule may and can be made either by action of the Board of Trustees approved by the Annual Conference, or by direct action of the Annual Conference, the ultimate and residual source of all power for the control of the corporation.

Some members of the Council are of the opinion that the action of the Annual Conference in electing Trustees as it did at its 1950 session was the exercise of that residuary power vested in the Annual Conference. The majority of the Council, however, are of the opinion that by the adoption of this method of electing Trustees and emphasizing it by the double use of the word "shall" and by safeguarding the ultimate control of the Corporation by prohibiting the Trustees from changing that method without its approval the Ohio Annual Conference manifested an intention to be bound by that method until the Conference, by direct and unmistakable action, should change that method of electing Trustees.

Some members of the Council believe that the action taken by the Annual Conference in its session, by accepting nominations from the floor in addition to the nominations made by the Board of Trustees, was in effect an exercise by the Annual Conference of its residuary power to change the method of electing its Trustees. The majority of the Council, however, are of the opinion and hold that such action of the Annual Conference at its 1950 session was not intended to constitute a change in the established rule, but was merely the result of an interpretation of the rule as it now exists.

In the opinion of a majority of the Judicial Council the rule under consideration is not subject to the interpretation given to it by Bishop Werner. While Robert's Rules of Order are always acceptable authority on parliamentary procedure where other rules or precedents have not been established, we believe the well-established rules of procedure of The Methodist Church, as manifested in numerous provisions of the Discipline of The Methodist Church, should control here. Many provisions are contained in the Discipline for nominations by one body and election by another body without the requirement that there should be a multiplicity of nominees so as to give the electing body a choice between nominees. In a sense this is a ratification rather than an election, but it is denominated in the Discipline as an election.

Furthermore, where a multiplicity of nominees is required, so as to give the electing body a choice between nominees, specific provision is made therefor. For example see Paragraph 901 of the 1948 Discipline relating to the election of members of the Judicial Council.

Since the rule established by the Ohio Annual Conference for the election of the Trustees of the "White Cross Hospital Association," and followed by it for twenty-five years, did not provide for nominees from the floor, we do not believe that was permissible under such rule.

The majority of the Judicial Council believe and so hold that the Ohio Annual Conference is the "White Cross Hospital Association of Ohio"; that it has full and unrestricted power to control the Corporation by that name and to determine by direct action from time to time as it may deem best the method by which the Trustees of the Corporation may be elected. Until, by direct action of the Annual Conference, the present method of electing such Trustees is changed, it appears that the Annual Conference is bound b the rule set out in Article VI. above quoted and as here interpreted.

In our opinion the major rules for the government of Corporation cannot be ignored at will even by the body that has the power to amend or change those rules merely to sui an occasion. In this case a definite rule has been established for the election of Trustees. All persons interested in the White Cross Hospital have a right to rely upon the rule and regulations as prescribed until a lawful change is made We, a majority of the Council, believe the Ohio Annual Conference is bound by that rule until it makes a change there and that no different method of electing Trustees can be pursued by the Annual Conference until after it has mad such change.

We believe this interpretation is in keeping with th rules and precedents of The Methodist Church, and the corporate statutes of the State of Ohio. It is supported by Decision 38 of this Judicial Council, In Re: Corporate Meetings, Central Kansas Conference.

Accordingly the ruling of the presiding Bishop at the 1950 session of the Ohio Annual Conference of The Methodist Church, to the effect that in the election of Trustee for the White Cross Hospital Association of Ohio nominations from the floor were permissible, is hereby reversed.

J. T. Alton, at his own request, was excused from participating in the discussion and decision of this case, because of his recent membership in the Board of Trustees of White Cross Hospital.

January 3, 1951

Concur In Part and Dissent In Part

The White Cross Hospital Association of Ohio is a nonprofit corporation organized and existing under the Statutes of the State of Ohio, Ohio General Code 8623-97 et seq. The members of the Corporation are members of the Ohio Annual Conference of The Methodist Church. As such members they have all the voting and other rights accorded to members of any Corporation so organized. It is held by the majority opinion of the Judicial Council in this case, however, that by means of a provision contained in the so-called "Constitution and By-Laws" of this association the voting rights of the members may be restricted or entirely abrogated. With this proposition we cannot agree.

We are in accord with the Decision wherein it is held that the members of the Corporation have the right to amend or alter the questionable provision in the "Constitution and By-Laws." But we believe it should be held that the rights of the members are not limited merely to an amendment of by-laws, but may be exercised in the manner which actually took place at the last session of the Ohio Annual Conference.

We should study carefully this provision relied upon by the hospital Trustees. This reads as follows: "Election of Trustees shall take place in thefollowing manner: The requisite number to fill the Board annually shall be nominated by the Board of Trustees, and elected by the Ohio Annual Conference."

It is a general rule of law which applies to all corporate elections, whether same be business corporations with share capital, or non-profit or charitable organizations, that the members thereof at the duly appointed time, under the provisions of statute and such rules and regulations as may have been adopted, have the inherent right of election of Directors or Trustees. To facilitate such elections it is quite customary to provide for a Nominating Committee to suggest a slate of Directors or Trustees. It is not thereby intended that other nominations may not be made at the proper time, nor even to prevent any voting member from casting a ballot for some person not on any nomination list.

To give the provisions of Article VI of the White Cross Constitution and By-Laws the narrow interpretation insisted upon by the hospital Trustees, which in effect would give the hospital Trustees the right to perpetuate themselves, would do violence to a fundamental legal principle as to the control of any subsidiary organization of a religious or charitable body. This is recognized by the majority opinion in this case. If the Annual Conference is to elect, it must in the very nature of things have the right to "select by vote," or "to choose in preference to another or others." The right and duty of the members of the Corporation is not merely to approve the election of a slate submitted to them, but to exercise independent judgment thereon and elect or select from any names that may come before them.

It is to be noted that this is not a provision contained in the Charter and that it is not provided for by any statute. Yet it is contended that this clause granted to the existing Board of Trustees the exclusive right of nomination of successors, thus virtually giving the Board the right of continuing their control indefinitely. At the most all that this clause does is to provide a convenient manner of having names presented for consideration of the members. The use of the word "shall" in the clause is not to be construed as an exclusive method for nominations; but it is to be interpreted as making it mandatory on the Board of Trustees to submit an initial list of candidates for Trustees. In other words, it is the duty of the Trustees to present nominations to the Conference. In case they fail to perform this duty, it is still the right of the members to nominate and proceed to election of Trustees in the usual manner of corporate elections. By no possible grammatical or legal interpretation can the language used in this paragraph be construed to provide an exclusive method of nominations.

It must be clearly kept in mind that when the members of the Ohio Annual Conference were convened to elect Trustees of the White Cross Hospital Association, they were meeting in a corporate capacity as the members of the Corporation, and that the nomination and election of such Trustees must be governed by statutory provisions and applicatory law.

It is argued that in some instances in the Discipline of The Methodist Church provision is made for the selection or appointment of certain Officials or Committees through the medium of a nominating body. However, there is a very vital distinction between such cases involving the appointment of administrative officers or advisory and promotional Boards (even if the designated method of selection by a nominating body be held to be the exclusive method), and the present case which involves the election of the governing body of a Corporation. In other words, no such By-law as in this case can deprive the members-that is, the stockholders-of exercising their franchise in the election of Trustees under the provisions of Charter and statute. To hold otherwise would not be democracy nor good law.

Based upon the foregoing unquestioned legal principles as applied to the facts in this case, we would hold that the ruling of the Presiding Bishop in permitting nominations from the floor at the time of the annual election of trustees of this corporation should be affirmed.

HENRY R. VAN DEUSEN WALTER C. BUCKNER J. ERNEST WILKINS

Dissenting Opinion