Opinion
Page __
__ Cal.App.2d __259 P.2d 512ERICKSONv.GOSPEL FOUNDATION OF CALIFORNIA et al.Civ. 19346.California Court of Appeals, Second District, Third DivisionJune 22, 1953Rehearing Denied July 13, 1953.
Hearing Granted Aug. 20, 1953.
[259 P.2d 513] John W. Preston, Los Angeles, for appellant.
Gibson, Dunn & Crutcher, Sherman Welpton, Jr., Los Angeles, for respondents.
WOOD, Justice.
Action for declaratory relief. Plaintiff appeals from judgment in favor of defendants.
Mr. A. M. Johnson was the owner of the Death Valley Ranch known as 'Scotty's Castle' (located in Inyo County), the Shadelands Ranch (about 335 acres in Contra Costa County), a large residence at 7333 Franklin Avenue (in Los Angeles), and the Lake Harbor Conference Grounds (in Michigan). Those properties were of a value in excess of a million dollars. In 1946, he formed a corporation known as the Gospel Foundation of California. The persons who signed the articles of incorporation, and who were the first directors, were A. M. Johnson, Mary Liddecoat, and Norman E. Johnson.
The articles of incorporation provided, in part:
'That the purposes for which said Corporation is formed are as follows:
'1. To foster, promote and operate Christian religious, charitable, educational, home and foreign missions, evangelistic and mission enterprises.
'2. * * *
'3. This Corporation is one which does not contemplate pecuniary gain or profit to the members thereof and shall have no capital stock.
'4. Upon dissolution of this Corporation, voluntary or otherwise, no member or director of this Corporation shall receive any portion of any distribution of the real or personal property of this Corporation. In event of dissolution, voluntary or otherwise, the real and personal property of this [259 P.2d 514] Corporation shall be divided in equal parts between the following:
'The Bible Institute of Los Angeles, Incorporated
'The Christian and Missionary Alliance
'Wycliffe Bible Translators, Inc.'
It was also provided in said articles that the number of directors should be three but the number thereof might be changed by a bylaw, but in no event should the number exceed five; that the number of members of the corporation should be the same as the number of directors; that any member ceasing to be a member should cease to be a director, and any director ceasing to be a director should cease to be a member; that when any director votes in favor of any action it shall be deemed that he consents to the action as a member.
The bylaws provide that the board of directors shall consist of three members. Section 6 of article II of the bylaws provides:
'At all meetings of members, every member entitled to vote shall have the right to one vote in person or by proxy issued only to another member of the Gospel Foundation of California.
'In addition to the one vote hereinabove provided, each member shall have one vote for each One Thousand Dollars ($1,000.00), either in money, real or personal property conveyed to and accepted by the Corporation. Any and all contributions of money, real or personal property proffered or tendered, by any member of the Corporation to the Corporation, shall be subject to approval and acceptance by a majority of the votes of the members of the Corporation before receipt of such contribution by the Corporation * * * except that anything to the contrary herein contained notwithstanding, A. M. Johnson shall have the right to make contributions of $1,000.00 or more in money, real or personal property, without the approval or acceptance as stipulated in this Section Six hereof and to forthwith acquire the right to one additional vote for each $1,000.00 of such contribution as he may make hereunder. * * *'
The bylaws also provide that vacancies on the board of directors may be filled by a majority of the remaining directors; and that any elective officer may be removed by the board of directors.
Mr. Johnson died on January 7, 1948. In May, 1947, he caused his secretary to prepare grant deeds which recited that he conveyed the above-mentioned properties to the Gospel Foundation of California. He signed the deeds on May 29, 1947, and acknowledged them on June 4, 1947. Thereafter, and until a few days before his death, the deeds were kept in his office (which was in his home at 7333 Franklin Avenue).
On December 12, 1947, at 11:30 p. m. (after he had discovered that he had an incurable affliction), a special meeting of the board of directors was held at his home, and the three directors were present. The minutes of that meeting recite that a resolution was adopted whereby the corporation accepted $2,000 as a donation to the corporation from Mary Liddecoat and that said sum shall entitle her to an additional two votes in the 'Gospel Foundation of California' according to the bylaws, article II, section 6. Those minutes were signed by Mary Liddecoat, secretary, and by Norman E. Johnson, director, but were not signed by A. M. Johnson.
On December 16, 1947, at 1:30 p. m., a special meeting of the board of directors was held at the hospital, and the three directors were present. The minutes of that meeting recite that a resolution was adopted whereby the corporation accepted $2,000 as a donation to the corporation from Mary Liddecoat and that said sum shall entitle her to an additional two votes in the 'Gospel Foundation of California' according to the bylaws, article II, section 6. Those minutes were signed by the three directors. On (the same day) December 16, 1947, at 5:30 p. m., a special meeting of the board of directors was held at the hospital, and the three directors were present. The minutes of that meeting recite that a resolution was adopted whereby the corporation accepted $2,000 as a donation to the Gospel Foundation of California from Mary Liddecoat [259 P.2d 515] and that said sum shall entitle her to an additional two votes which, together with the one vote she already has as a member and a director of the corporation, will entitle her to a total of three votes in all according to the bylaws, article II, section 6. Those minutes were signed by the three directors.
About December 26, 1947, while Mr. A. M. Johnson was in the hospital, he instructed his secretary (Miss Downey) to have the said deeds, above referred to, taken to the proper county offices to be recorded. The deeds were recorded in December, 1947. Some months before Mr. Johnson died, he signed two statements, which will be referred to herein as statements of intention. He recited therein, among other things, that he requested that Clarence Erickson be elected a director so that in case of Mr. Johnson's death the directors would be Miss Liddecoat, Mr. Erickson, and Norman Johnson; and in case of the death of Miss Liddecoat, he desired that Mr. Erickson have active management of the Foundation. Defendant Mary Liddecoat signed said statements, as shown thereon, under the [259 P.2d 516] word 'Accepted.' All the signatures on those documents were placed thereon 'at the same time.' After those statements were signed, they were kept in Mr. A. M. Johnson's office until the time of his death. There was evidence that the statements of intention were in existence at the time the deeds were signed and acknowledged.
'Gospel Foundation of California
At a meeting of the board of directors held on January 12, 1948 (directors Liddecoat and Norman E. Johnson being present), said statements of intention were made a part of the minutes of said meeting. The minutes of said January 12th recite that vice-president Liddecoat stated that she had a writing from Mr. A. M. Johnson outlining the terms and conditions under which he had executed the said deeds, and that she had acknowledged the offer to convey upon the terms outlined on behalf of the Foundation. Also at said meeting, the plaintiff Clarence Erickson, who resided in Chicago, was elected a director--each director casting one vote for him; Mary Liddecoat was elected president and treasurer; and Norman E. Johnson was elected vice-president and secretary.
At an annual meeting of members held on April 13, 1948, the three members, Liddecoat, Johnson and Erickson, were present. At that meeting the minutes of the meeting held on December 12, 1947, and the minutes of the two meetings held on December 16, 1947, were approved. (Those meetings in December were the ones wherein Mary Liddecoat allegedly was accorded two additional votes.)
At the annual meeting of the directors on April 4, 1950 (the three directors being present), the plaintiff, upon motion of Mary Liddecoat was re-elected a director. The day following that meeting, Miss Liddecoat and Mr. Erickson had a conversation regarding the duties of the directors. Plaintiff testified that he told Miss Liddecoat that he thought that the directors could operate the castle without the services of Walter Webb (the manager) 'at that high price' ($10,000 per year), because he (plaintiff) thought that Mr. A. M. Johnson wished to have the corporation operated by the directors; and that he (plaintiff) told her that Webb's services should be discontinued as soon as possible in order to save the funds. After the conversation, Mr. Erickson returned to Chicago. He is pastor of the Chicago Gospel Tabernacle. He first met Mr. A. M. Johnson about 1930. Mr. Johnson had supported the Tabernacle financially to a great extent.
On April 26, 1950, in the office of the corporation at the Franklin Avenue house, defendant Liddecoat typed and signed a document which stated, in part, that 'The membership of Clarence Erickson is cancelled and annulled by a majority of the votes which the other members are entitled to cast at any time,' and the action has been recorded in the minutes. Webb, the manager, helped her in the preparation of that document. She did not communicate with Mr. Norman E. Johnson, the director who resided about one block from the office, concerning the cancellation of the membership of Mr. Erickson, and he had no knowledge of her contemplated action. On said April 26th, after she had allegedly cancelled his membership, she left Los Angeles [259 P.2d 517] by train to go to Chicago. Upon her arrival there, she telephoned to Mr. Erickson and told him that she wanted to talk to him. She had not notified him that she would be in Chicago. He went to the hotel where she was, and she had a conversation with him to see if his 'attitude' regarding the Foundation had changed. She decided that his attitude had not changed, and then she gave to him a letter, informing him that his membership was cancelled. He told her that the cancellation was illegal. Before she left Los Angeles to go to Chicago, she conferred with Webb as to the available time for him (Webb) to tell Norman Johnson about the cancellation. It was prearranged between her and Webb that at a certain time, as she was arriving in Chicago, Webb would tell Norman Johnson regarding her action and also tell him that, if he wanted to discuss the matter, he could telephone to her in Chicago. She testified that she did not notify Mr. Johnson about the cancellation and the proposed trip to Chicago, because it was her impression that he might disapprove; that she took upon herself the full responsibility of making the decision and carrying it out for the reason she had the additional votes. At the time she gave Mr. Erickson the said letter she also gave him another letter which stated, in part, that his call on April 5th, the day after the directors' meeting, has been a source of great concern to her, and that his statements on that day had been disturbing for several reasons. The letter is set forth below. She testified that there was a lot of self-interest in what Mr. Erickson wanted to do as far as the Foundation was concerned. He testified that he had talked to her, before his membership was cancelled, about trips to South America for the purpose of working on or founding missions; they discussed the possibilities of missionary activities, but the Foundation was not to pay anything on it; the money used would be his own funds which are now channeled through his Chicago church, [259 P.2d 518] but if he moved to the Coast, the funds would be channeled through the Gospel Foundation; he told defendant Liddecoat that the three directors could operate the Foundation and save the $10,000 per year that was being paid to Webb; he (Erickson) spoke to her about coming here and doing some work in connection with the board of directors and getting $5,000 a year; he told her that he would give $100 an acre for some of the land at Shadelands Ranch, but he said that as a jest; he asked her why she had to pay six per cent interest on the $25,000 loan which was placed against the Franklin Avenue house, and then told her that he would have liked to have that loan himself; he told her that he was willing to put up $2,000 so that each of them would have three votes; and she did not say anything in reply.
'April 26, 1950
'April 26, 1950
'April 26, 1950
Defendant Liddecoat testified that she did not like Mr. Erickson's attitude because: He was one way in the meetings, but outside the meetings he took a contrary position; he urged that Webb be removed, stating that the directors could carry on, that he (Erickson) would be free to come from Chicago and take over, and he could use the Foundation headquarters as his office; he asked if he could draw $5,000 per year--that he would go to the castle but would come to Los Angeles on weekends and conduct services so that he could get additional money; he wanted to purchase some of the ranch property (in Contra Costa County) for $100 per acre; he showed considerable interest in acquiring the $25,000 mortgage for himself; he wanted to bring his radio program here from Chicago and then solicit funds for the Foundation, which solicitation was contrary to Mr. A. M. Johnson's plan.
A special meeting of the directors was held on August 21, 1950. Notice of the meeting was given. After receiving the notice, Mr. Erickson asked if his expenses in coming from Chicago to the meeting would be paid. It was agreed that the Foundation would pay his expenses. Miss Liddecoat, Mr. Johnson and Mr. Erickson were present at the meeting. At 10 a.m., she called the meeting to order, read a prepared statement which recited that at a previous membership meeting she had cancelled the membership of Clarence Erickson by certificate recorded in the minutes of April 26, 1950. Then, according to the minutes of August 21st, she recessed the meeting, explaining that 'she would reconvene at 4 P.M.'
When the meeting was resumed at 4 p.m., she stated (according to the minutes) that the first matter before the meeting was the voting upon the cancellation of the membership of Clarence Erickson 'by the other member who has not previously voted thereon.' She asked Mr. Johnson to state his vote, and he voted 'No.' She stated that her three votes, recorded on April 26, 1950, in favor of the cancellation, still stood--'three votes, yes.' (She testified that she asked Mr. Erickson how he voted, and he did not vote--he remained silent.) Then at 4:20 p. m., she stated the meeting was dismissed.
After that meeting there was discussion regarding the legality of the alleged dismissal of Mr. Erickson, and thereupon, at 4:30 p. m., she reopened the meeting. She testified that she said that the cancellation 'was in order, to vote'; she called for the vote of Mr. Johnson and he voted 'No,' and she voted 'Yes.' The minutes show, with reference to the meeting at 4:30 p. m., that 'Clarence Erickson was not allowed to vote.' (She testified that she did not call the name of Mr. Erickson because she 'considered that there was no vote there, since I [she] had taken action in April.') The meeting was then recessed until the following morning.
At the meeting held (the following morning) on August 22, 1950, directors Liddecoat and Johnson were present. Miss Liddecoat made a motion that Selma C. Abnot be elected a member to fill a vacancy. Miss Liddecoat cast three votes for her. Mr. Johnson did not vote. Mr. Johnson nominated Selma C. Abnot to fill a vacancy in the position of secretary. Miss Liddecoat and Mr. Johnson voted for the nominee.
Miss Liddecoat testified that at meetings of members she never 'mentioned' the casting of three votes until the meeting when [259 P.2d 519] she cast three votes for the cancellation of Mr. Erickson's membership.
Mr. Norman E. Johnson, a cousin of Mr. A. M. Johnson, testified that he had lived in Mr. A. M. Johnson's home most of his lifetime, and that he and his wife were living there when Mr. A. M. Johnson died; Miss Liddecoat did not notify him that she was going to Chicago to see Mr. Erickson; on April 28, 1950 (two days after she left for Chicago), Webb called him by telephone and said that he would like to see him; he (Johnson) went to the Foundation office; Webb showed him two papers--one of which was to the effect that Mr. Erickson had been dismissed; Webb said that Miss Liddecoat was 'at this very moment' in Chicago presenting the papers to Mr. Erickson; Webb asked him to sign the paper; he replied that he would have nothing to do with it, he did not agree with it, and he did not think it was honest; Webb said that he (Johnson) could talk with her by telephone; he replied that she did not see fit to discuss it with him before she went, and he would not try to call her by telephone; three meetings of directors were held on August 21, 1950, and at one or all of those meetings Miss. Liddecoat said to Mr. Erickson: 'You can't vote'; 'Well, you are out'; and 'You are through.'
The court found that A. M. Johnson executed conveyances dated May 29, 1947, and filed of record between December 27 and December 30, 1947, whereby he conveyed to the Gospel Foundation of California his said properties hereinabove described; said instrument, referred to in the trial as a statement of intention, was signed by A. M. Johnson about December 15, 1947, and remained in his files until after his death, when it was presented to the directors of said corporation on January 12, 1948; said statement was received by the corporation subsequent to the conveyance and cannot limit said conveyance, and contains only precatory words which do not impose a charge against the assets of the corporation, and its terms cannot be enforced by Erickson who is a third party and not a beneficiary of said trust; said statement could not obligate the trustees to elect Erickson a member and director; the provisions of the articles of incorporation and the bylaws, and the action taken pursuant thereto, vesting in Miss Liddecoat three votes as a member are valid and were accepted by Erickson to create a binding contract on him; the action of Miss Liddecoat in casting three votes on April 26, 1950, for the cancellation of Erickson's membership was of no force and effect, but at the meeting held on August 21, 1950, the cancellation of his membership was properly voted and is valid, and that Selma C. Abnot was properly elected; Erickson has no further rights in regard to the corporation and no further obligation as a member or director; Erickson waived any objection to Liddecoat being vested with three votes, by approving the minutes of prior meetings and by acting as a director without protesting the provisions of the articles and bylaws and the action taken pursuant thereto; Erickson ratified and approved the articles and bylaws, and is estopped to contest the validity thereof; and Erickson was not prevented by laches from contesting the validity of the articles and bylaws. Judgment was rendered in accordance with the findings.
A question here is whether the second paragraph of section 6 of article II of the bylaws is valid, which paragraph allows a member an additional vote for each $1,000 'conveyed' to the corporation and accepted by a majority vote of the members of the corporation.
This is a nonprofit and charitable corporation. As above stated, the articles of incorporation provide that the number of directors shall be three, but the number may be changed by bylaw, but in no event shall the number exceed five; the number of members shall be the same as the directors, not less than three nor more than five; a person, upon being elected a director, thereby becomes a member; when he ceases to be a member, he ceases to be a director. There is no bylaw changing the number of directors. Therefore, under the articles, a basic principle or provision, with respect to directing or governing the affairs of the corporation, is that there shall be three directors. Also, since the articles provide that there shall be as many members as there are directors, and since a director is a member and a [259 P.2d 520] member is a director, a basic principle or provision, under the articles, with respect to membership in the corporation, is that there shall be three members. It is also a basic principle, under statutory provision except as otherwise provided in the articles or bylaws, that the affairs of a nonprofit corporation shall be conducted by 'a board of not less than three directors.' Corp.Code, § 9500. Therefore, since such provisions are in the articles and the statute, it appears that a fundamental principle of the corporation is that its affairs shall be controlled and governed by a board of at least three directors.
Section 600 of the Civil Code, in effect in 1946 when the corporation herein was formed, provided in part: 'A nonprofit corporation shall have such memberships or classes thereof as may be specified in the articles or bylaws, but unles otherwise provided there shall be but one class of members whose rights and interests shall be equal.' Section 603 of the Civil Code, in effect when the corporation was formed, provided: 'Unless otherwise provided in the articles or by-laws every member of a nonprofit corporation shall be entitled to one vote and may vote or act by proxy. The manner of voting may be by ballot, mail or any reasonable means provided in the articles or by-laws. No member may cumulate his votes unless it is so provided in the articles or by-laws.'
In 1947 the Corporations Code was adopted and the provisions of said Civil Code sections 600 and 603, just referred to, were incorporated in substance therein as sections 9602 and 9601 respectively. Said section 9602 of the Corporations Code was amended in 1949. That section, as amended, provides: 'A nonprofit corporation shall have such memberships or classes thereof as the articles or by-laws specify, but no member may hold more than one membership, and in the absence of any such classification of members there shall be deemed to be but one class. Unless the articles or by-laws set forth the rule or rules fixing the respective voting, property and other rights and interests of each member or class of members, the rights and interests of members shall be equal as to any right or interest not so fixed.' Section 9601 of the Corporations Code provides: 'Unless the articles or by-laws provide otherwise, every member of a nonprofit corporation is entitled to one vote and may vote or act by proxy. The manner of voting may be by ballot, mail, or any reasonable means provided in the articles or by-laws. No member may cumulate his votes unless the articles or by-laws so provide.'
The articles or bylaws herein do not provide for more than one class of membership. The provision in the bylaws which allowed a member an additional vote for each $1,000 contributed to the corporation was not a provision creating a different class of membership. Upon dissolution of the Gospel Foundation the members would not be entitled to any of the assets of the corporation. They had no property interest in the assets. Upon dissolution, the assets are to be distributed to three certain religious organizations named as beneficiaries in the articles. The only object or purpose of the corporation was to operate the ranches and other property, which were assets of the corporation, and to contribute the income therefrom for the purpose of aiding and promoting Christian missions. In view of such object or purpose of the corporation, there was no reason or basis for creating different kinds or classes of membership which would entitle the members to varying privileges or rights as members of the corporation. There being only one class of membership, a member was entitled to only one vote, under said statutory provisions, unless it can be said, under the last sentence of said section 9602 of the Corporations Code, that said provision of the bylaw (§ 6, art. II) sets forth a valid rule 'fixing the respective [259 P.2d 521] voting * * * rights * * * of each member or class of members * * *.' The bylaw awarded a member, whose contribution of $1,000 was accepted by a majority vote of the members, more voting power than another member of the same and only class of membership, whose proffered contribution of $1,000 was not accepted. In practical effect, that bylaw permits the member, who first contributes $2,000 that is accepted and who thereby has a total of three votes, to control and govern all the affairs of the corporation--including the decision as to whether other members may likewise acquire additional votes by making contributions. In other words, the first member whose contribution of $2,000 is accepted could refuse to accept contributions from other members and thereby prevent them from having equal voting power with the first member whose contribution was accepted. The result under such a bylaw could be (and the result herein is) that the corporation would be, in effect, a corporation sole instead of a corporation governed by three directors, as contemplated under the above-mentioned basic principle (of the articles and the statute) with respect to governing the affairs of the corporation. The said bylaw is in conflict with the above-mentioned basic principle or provision of the articles and the statute, to the effect that the affairs of the corporation shall be governed by three directors. Under the bylaw the member-directors were not accorded equal rights in the matter of making contributions to the corporation and acquiring equal voting power. It might be argued, in alleged justification of the bylaw, that the bylaw was intended to encourage the making of contributions to further the financial position of the corporation, and that a member who contributes the more money would be the more interested or determined in successfully promoting the charitable interests of the corporation, and therefore should have more voting power than those members who do not contribute money to the corporation. The bylaw itself, however, refutes a suggestion that general contributions of money were desired. The bylaw pertains to the making of contributions by members, as distinguished from contributions generally, and further restricts the making of contributions by providing that the proposed contributions from members must be accepted by a majority vote of the members. Such restrictions indicate that the bylaw was not calculated to promote the general financial welfare of the corporation, and they also indicate that it was not based upon a theory that a member who had made a contribution would be a better and more interested member and therefore should have increased voting power in proportion to the amount of his contribution. Here, the practical application of the bylaw reveals that defendant Liddecoat contributed $2,000 to a corporation of the value of more than $1,000,000 and thereafter by refusing to accept a similar offer made by plaintiff Erickson she gained complete and arbitrary control of the corporation. The provision of the bylaw requiring that contributions be accepted by a majority vote of the members was arbitrary and unreasonable in its application to all three members, and it does not operate uniformly and equally upon all the members who are of the same and only class of membership of the corporation. 'The power to make by-laws, even where unrestricted by statute, is subject to the condition that they must not be unreasonable in their practical application; and they must not contravene or be inconsistent with the provisions of the charter, or articles or with the law, or with the constitution. Moreover, a by-law must not contravene public policy; nor, it has been said, may a by-law be inconsistent with the general principles of the law of the land * * *.' 6A Cal.Jur., pp. 319-320, § 166. In the Fletcher Cyclopedia of the Law of Corporations (Permanent Edition), Vol. 8, section 4192, at page 734, it is said: 'As a general rule, by-laws must be general and uniform in their operation and effect upon all persons or subjects of the classes affected by them; that is, they must affect all alike, and operate equally as to all persons or matters standing in equal status or circumstances and without unreasonable discrimination as to any particular person or thing of the class.' In Lindsay Strathmore [259 P.2d 522] Irrigation District v. Wutchumna W. Co., 111 Cal.App. 688, at page 701, 296 P. 933, at page 939, it was said: 'Not only must by-laws be reasonable (citations), but they must also operate equally upon all persons of the same class.' The second paragraph of section 6 of article II of the bylaws, which provides for such additional votes, is invalid.
The last sentence of section 9602 of the Corporations Code is: 'Unless the articles or by-laws set forth the rule or rules fixing the respective voting, property and other rights and interests of each member or class of members, the rights and interests of members shall be equal as to any right or interest not so fixed.'
Respondents assert that appellant Erickson affirmed and acquiesced in the bylaw and that under the doctrines of waiver and ratification he is estopped to contest its validity. This contention is based upon the fact that Mr. Erickson, as a member and director, joined the other directors in approving the minutes of meetings wherein defendant Liddecoat's contribution of $2,000 was accepted; and upon the further fact that he acted as a member and director without protesting the provisions of the bylaw and the action taken pursuant thereto which vested her with two additional votes. A bylaw which is opposed to public policy is void. Wells v. Black, 117 Cal. 157, 162, 163, 48 P. 1090, 37 L.R.A. 619. A contract which is opposed to public policy cannot be treated as valid by invoking the doctrine of estoppel or waiver. Woods v. Kern County Mut. etc. Ass'n, 34 Cal.App.2d 467, 473, 93 P.2d 837. As above shown, it is the policy of the law of California (1) that a member of a nonprofit and charitable corporation, with only one class of membership, shall have only one vote; (2) that such a corporation shall be directed and governed by a board of directors of not less than three directors; and (3) that a bylaw must not be unreasonable in its application, nor operate unequally upon the members, nor contravene the provisions of the articles of incorporation. As above stated, there was only one class of membership in the Gospel Foundation; the bylaw, in its application, permitted the corporation to be governed by one member. Said bylaw is against public policy, and the doctrines of waiver, ratification, and estoppel are not applicable herein.
By reason of the above conclusions, it is not necessary to discuss other contentions on appeal.
The judgment is reversed, and the superior court is directed to enter a judgment declaring that the second paragraph of section 6 of article II of the articles of incorporation (allowing additional votes) is invalid, and that the action of Mary Liddecoat in casting three votes allegedly cancelling and annulling the membership and directorship of Clarence Erickson is invalid.
SHINN, P. J., and VALLÉE, J., concur.
'Attention: Mary Liddecoat, Director
'Gentlemen:
'I have executed deeds to the Gospel Foundation of California conveying all of my right, title and interest in and to Shadelands Ranch, consisting of 335 acres more or less, located in Contra Costa County, California, and the Death Valley Ranch commonly known as Scotty's Castle, located in Inyo County, California and consisting of about 1500 acres more or less; and a residence at 7333 Franklin Ave., N.E. Corner of Camino Palmero and Franklin Avenue, located in Los Angeles County, and some vacant property located in Lake County, Illinois and all of my right, title and interest in a tract or tracts of land, commonly known as the Lake Harbor Conference Grounds or Maranatha Conference Grounds;
'Now, in consideration of my deeding these properties, and delivering to you the title of these properties, I would like it to be understood as follows:
'That my mother's sister, Elizabeth M. Jenkins, and myself are to have the use of the property and residence located on the northeast corner of Franklin Avenue and Camino Palmero Street, Hollywood, California, for as long a period of time as we shall live and that the Gospel Foundation of California shall supply and furnish Elizabeth M. Jenkins with the necessary monies, not exceeding $6,000.00 a year, out of which shall be provided a nurse, medical care and incidental expenses including burial expenses.
'Yours very truly,
'A. M. Johnson
'Accepted:
'Mary Liddecoat, Vice President and Director
'A. M. Downey, Assistant Secretary and Treasurer
'Witness:
'H. M. Harding
'Now, in consideration of my having deeded (above properties) to the Gospel Foundation of California, I desire the right and privilege of having the Gospel Foundation of California pay me up to, but not exceeding, $50,000.00 upon my demand each and every year as long as I may live.
'Now, in consideration of the above, it is my desire mhat the affairs of the Gospel Foundation of California be conducted primarily by Mary Liddecoat with the assistance of Norman E. Johnson as he is able to; and, if Clarence Erickson has not already been elected a Director of the Gospel Foundation of California, I request that he be elected a Director so that, in the case of my death, the directors will consist of Mary Liddecoat, Clarence Erickson and Norman E. Johnson. In the case of the death of Mary Liddecoat, it is my desire that Clarence Erickson have the active management of the Gospel Foundation.
'It is also my desire that Mary Liddecoat, as long as she lives, and in the event of my death, be the active head of the Gospel Foundation of California with a salary, depending upon her sole judgment as to the amount of services she is rendering, at not less than $3,000.00 per year and not more than $5,000.00 per year.
'It is also may desire that, in the event of my death, Mary Liddecoat, as the head of the Gospel Foundation of California shall employ Norman E. Johnson at a salary of not less than $3,000.00 per year and not more than $5,000.00 per year.
'In the event of the death of Mary Liddecoat and the succession of Clarence Erickson to the active management of the Gospel Foundation of California, I would like to have him draw a salary of not less than $3,000.00 per year and not more than $5,000.00
per year.
'In the event of my death, it is my desire that Mary Liddecoat, in her sole judgment, place Carrie Lee Johnson Pagenta on the payroll of the Gospel Foundation of California for such an amount and for such a period as in her judgment should be wise and suitable.
'A. M. Johnson
'Witness:
'H. M. Harding
'Accepted:
'Mary Liddecoat, Vice President and Director
'A. M. Downey, Assistant Secretary and Treasurer
'Witness:
'H. M. Harding'
'The membership of Clarence Erickson is cancelled and annulled by a majority of the votes which the other members are entitled to cast at any time.
'This cancellation and annulment is signed and the action is here recorded in the Minutes of the Gospel Foundation of California; all as provided in the Foundation By-Laws Article II Section 11.
'Member Voting
Number of Votes 3'
'Mary Liddecoat
'Mr. Clarence Erickson
'825 Barry Avenue
'Chicago 14, Ill.
'My dear Mr. Erickson:
'You are hereby informed that, pursuant to Articles of Incorporation, and By-Laws (Article II, Section 11), your membership in the Gospel Foundation of California is cancelled and annulled by a majority of the votes which the other members are entitled to cast at any time.
'Co-incident with this action, I am writing you the enclosed letter pertaining to the subject.
'The cancellation has been signed and the action has been recorded in the minutes of the Foundation, as provided.
'Regretfully yours,
'Mary Liddecoat
'President'
'Mr. Clarence Erickson
'825 Barry Avenue
'Chicago 14, Ill.
'Dear Mr. Erickson:
'Your call on me (April 5th) the day after our Foundation meetings has been the source of great concern to me the past three weeks.
'I shall not here recite all you said. Your memory should serve you in that respect.
'Your expressed views and opinions were in sharp contrast to the actions agreeably formalized in our Foundation meetings of the previous two days.
'From January 1948, when you were first elected a member-director, to and including the 1950 April Annual Meetings, during which you were re-elected on my nomination, you have unrestrainedly participated in all discussions and debate of subjects pertinent to the business of the Foundation. All member-director conclusions have been embodied in formal resolutions, and/or motions, which received your recorded voice of approval.
'Your statements the day following our meetings have been disturbing for several reasons. One reason is the incompatibility of your expressed opinions of procedure when viewed in the light of your suggestion to me in January 1948. You will recall you then proposed making a personal contribution to acquire additional votes, by which to create for you a control factor in your Foundation association.
'It is deeply regrettable that the action of today became inevitable after considering the attitude you expressed, against the background of events.
'Regretfully yours,
'Mary Liddecoat'