Decision Number 38
Corporate Meetings, Central Kansas Annual Conference
In a case where an Annual Conference (as permitted by the Discipline) has been incorporated under the provisions of the Statutes of the State of Kansas, and the corporation has adopted By-laws in statutory form, the corporate sessions must be called in the manner provided by the By-laws; but when the Conference is once in such corporate session, it may exercise all the powers it ever possessed, including the right to amend its By-laws and its Charter.
Statement of Facts
At the seventh session of the Central Kansas Annual Conference of The Methodist Church held at Salina, Kansas, September 26 to 30, 1945, Bishop William C. Martin decided a question of law. The official Record, page 157, reads as follows:
"RULING ON QUESTION PRESENTED BY DR. C. A. KITCH AT THE 1944 SESSION OF THE CENTRAL
"I move that the Bishop be requested to make a ruling as to the necessity of a stockholders, so-called, meeting, in order to make Such business effective. In other words, is the Conference an incorporated body, able to transact all of its business or only part of it?"
"The Central Kansas Conference of The Methodist Church is an incorporated body and is competent in any regular session of the Conference to transact any and all business of a legal nature that may be regularly brought before it."
Carefully prepared briefs were submitted in behalf of the President and Trustees of the Central Kansas Conference (the corporation) by Hon. Jay T. Botts, and Dr. P. L. Mawdsley, and Contra in behalf of the Special Committee of the Conference, by Dr. Chas. E. Schofield; and on hearing before the Council able oral arguments were made by these representatives.
The above quoted ruling of Bishop Martin, made before the 1945 session of the Central Kansas Annual Conference of The Methodist Church, is now properly before the Judicial Council for review.
The ruling of Bishop Martin involves the powers of an Annual Conference, and whether or not an Annual Conference can delegate its powers, through incorporation, to a Board of Trustees so as to deprive itself of its ultimate control in the matter.
Article 11 of Section VII of the Constitution of The Methodist Church (Paragraph 22 of the Discipline), declares that The Annual Conference is the "basic" body in the Church, and that there is reserved to it, certain specified rights, "and such other rights as have not been delegated to the General Conference under the Constitution, etc."
The Constitution does not provide for the incorporation of Annual Conferences, nor does it prohibit such action on the part of an Annual Conference.
Paragraph 625 of the Discipline reads as follows:
"Paragraph 625. Annual Conferences may become severally bodies incorporate, wherever practicable, under the law of the countries, states and territories within whose bounds they are located."
Under this provision of the Discipline, the Central Kansas Annual Conference was incorporated in 1940. The Charter of the corporation contains, among others, the following provisions:
"B. The purposes for which it is formed are ...:
"(4) To receive, hold, manage, control and dispose of by sale and conveyance or otherwise, any and all property of every kind, money, goods, chattels, evidences of debt, things in action, lands, tenements and hereditaments and all rights thereto and interests therein, equitable as well as legal, now belonging to or hereafter acquired by said Central Kansas Annual Conference of The Methodist Church, as said Conference may direct or has directed."
"E. The number of the Trustees shall be nine."
"G. The members of this corporation are the members of the Central Kansas Annual Conference of The Methodist Church. The certificate of its Secretary shall be prima facie evidence as to who are its members." "J. The Discipline of The Methodist Church, so far as applicable, shall apply to and govern in any matter not covered by this Charter or the By-laws that may be enacted by its Trustees for the management of the business and for the conduct of the affairs of this corporation, provided such provisions are not contrary to the laws of the State of Kansas."
"K. The By-laws of this corporation shall be adopted, altered or repealed by its Board of Trustees, at any regular meeting of said Trustees, or at a special meeting thereof called for such purposes."
Counsel challenging the correctness of Bishop Martin's ruling, have furnished to us an article of the Kansas Statutes relating to the making of By-laws for a corporation. This article, as presented to us, reads as follows: "G. S. 1943 Supp. 17-3107. By-laws.
"The articles of incorporation may provide for the manner of and authority for the adoption, alteration and repeal of By-laws. In the absence of such provision, the power to adopt the original By-laws shall be vested in the incorporators or in the stockholders and upon their failure to do so, in the Board of Directors. In the absence of provision in the articles of incorporation to the contrary, the power to amend, alter or repeal the By-laws shall be vested in the Board of Directors, subject to the power of the stockholders to amend, alter, or repeal the By-laws: Provided, however, thatnotice of any such amendment of the By-laws by the Board shall be given to each stockholder having voting rights within ten days after the date of such amendment by the Board. (L. 1939, ch. 152, paragraph 33; L. 1941, ch. 182, paragraph 7; June 30.)"
Under the Constitution of The Methodist Church, as hereinbefore referred to, the Annual Conference is the "basic" body in The Methodist Church, and is the reservoir of all powers not specifically delegated to the General Conference.
No authority is given in the Constitution of the Church for it to delegate its powers in such a manner as to deprive itself of that basic or ultimate power.
It is true that the Central Kansas Annual Conference, in its Charter, did delegate to its Board of Trustees, power to make By-laws. The corporation, however, is the creature of the Conference. No creature is or ought to be, greater than its creator. It follows, therefore, that by delegating to the Board of Trustees power to make By-laws, it did not deprive itself of its fundamental right to make the rules and regulations by and under which its affairs shall be administered. We do not believe this interpretation is in any wise in conflict with the Kansas Statute quoted above. In fact the Kansas Statute above referred to, recognizes the ultimate right of the stockholders (members), over By-laws made by the Trustees.
In regard to the matter of amending its Charter-a matter which seems pertinent to the ultimate decision herein-we call attention again to the fact that the ultimate "governing body" of the Central Kansas Annual Conference Incorporated, is the Central Kansas Annual Conference itself.
This is recognized in the Charter in the provision already cited above, which provision is quoted here again for emphasis:
"The purposes for which it is formed are ...Y
"(4) To receive, hold, manage, control and dispose of by sale and conveyance or otherwise, any and all property of every kind, money, goods, chattels, evidences of debt, things of action, lands, tenements and hereditaments and all rights thereto, and interests therein, equitable as well as legal, now belonging to or hereafter acquired by said Central Kansas Annual Conference of The Methodist Church, as said Conference may direct or has directed."
It is the decision of the Judicial Council, therefore, that the ultimate right of the Central Kansas Annual Conference of The Methodist Church to make and control its By-laws and to amend its Charter, still exists in said Conference.
However, since the Central Kansas Annual Conference, by its own action, delegated to its Board of Trustees power to make By-laws, and failed to exercise its right to make By-laws, it is bound, under its own action, by the By-laws now in existence as to time and manner in which its corporate sessions shall be held. Nevertheless, when the Conference is once again in session, in accordance with its By-laws, it still retains all the rights and powers it ever possessed.
We are unable, therefore, to approve the ruling of Bishop Martin in the language in which it is stated. Our decision is that the corporate sessions must be called in the manner provided by its By-laws, as they now exist, or as they may be hereafter adopted or amended, but that when once in corporate session as provided by its By-laws, said Conference can exercise all the powers it ever possessed with reference both to its By-laws and to its Charter. In such a meeting, it would be "competent to transact any and all business of a legal nature that may be regularly brought before it."