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Board of Directors of the Washington City Orphan Asylum v. Board of Trustees of the Washington City Orphan Asylum

May 23, 2002

BOARD OF DIRECTORS OF THE WASHINGTON CITY ORPHAN ASYLUM, APPELLANT,
v.
BOARD OF TRUSTEES OF THE WASHINGTON CITY ORPHAN ASYLUM, APPELLEE.



Appeal from the Superior Court of the District of Columbia (CA-4613-00) (Hon. John H. Bayly, Jr., Trial Judge)

Before Steadman and Washington, Associate Judges, and Belson, Senior Judge.

Argued September 17, 2001

I.

Belson, Senior Judge: This case presented the trial court with the difficult task of construing an 1828 Act of Congress that is far from clear. The statute incorporated a board of five trustees to constitute a corporation known as the Washington City Orphan Asylum, and assigned different authority and responsibilities to that board, appellee here, and to a second board, a board of directors and managers, our appellant. After working in apparent harmony for over a century and a half, the two boards fell into disagreement, with the result that the board of trustees has purported to oust the other board created by Congress. The trial court ruled that appellant board of directors and managers is without standing to sue over its ouster and, largely for that reason, alternatively ruled against that board's various claims on the merits. We hold that the purportedly ousted board has standing to sue, and we therefore remand the case to the trial court for both a further consideration of the appellant's claims on the merits and, incidental thereto, for such further consideration of the legislative history of the statute as available materials permit. *fn1

II.

In 1815, the First Lady of the United States, Dolley Madison, and other prominent women in the District of Columbia founded the Washington City Orphan Asylum (WCOA) as an orphanage, and operated it in a non-incorporated form for a period of about thirteen years. Legislative history indicates that WCOA's founders attempted to incorporate in 1816, but were unsuccessful because the original proposed incorporators were married women who legally were prohibited from owning property at the time. On May 24, 1828, Congress adopted "[a]n Act to incorporate the trustees of the Female Orphan Asylum in Georgetown, and the Washington City Orphan Asylum in the District of Columbia." 6 Stat. 381, Chap. 88 (1828). The Female Orphan Asylum in Georgetown, created by the same Act of Congress, is an entirely separate entity and is not implicated here. The statute, except for two passages of marginal relevance, is set forth in the footnote. *fn2

Section 2 of the 1828 Act identifies five men and constitutes them, as well as their successors, "a corporation and body politic in law." The members of the current Board of Trustees (Trustees) of WCOA assert that they are the successors of the five incorporators. Section 3 prescribes that all property belonging to the unincorporated asylum be vested in the corporation, and authorizes the corporation to buy and sell property and to receive donations. Section 4 grants the corporation the ability "to sue and be sued" and "to appoint a treasurer and secretary, and such other officers as they may deem necessary and proper, to assign them their duties, and fix their compensation . . . and to make such by-laws as may be useful for the government of the said asylum . . . ."

Section 6 deals with the appointment and functions of directors, and states in part:

[T]here shall be appointed a first, and a second female directress, and also fifteen female managers; and these directresses and managers, a majority of whom shall be necessary to do business, at such time and place as they may direct, shall appoint a treasurer and secretary, and such other officers; and also perform such other duties as the by-laws may direct . . . .

Section 7 specifically provides to the directors additional authority regarding underage children who were not to leave the asylum without the consent of those directing the institution. The current members of the Board of Directors (Directors) of WCOA assert that they are the successors of the original directors and managers.

In 1927, WCOA began to operate under the name of "Hillcrest, A Children's Village." The only version of the so-called constitution of WCOA (actually by-laws) brought to the attention of this court is the constitution as amended in 1958. The 1958 constitution divided responsibilities between the Trustees and the Directors and provided that changes in the constitution required the concurrence of both boards. In the 1950s, Hillcrest ceased to operate an orphanage and, in 1970, Hillcrest ended its residential program entirely. Thereafter, WCOA continued to provide counseling services to destitute children in the District of Columbia under the name "Hillcrest Children's Center."

Hillcrest Children's Center's current mission is to provide counseling and psychiatric treatment to children and families in the District of Columbia. In March 1998, the Trustees informed the Directors that they would discontinue funding Hillcrest Children's Center and suggested that the Directors incorporate in order to operate it by themselves. By a board resolution of February 25, 2000, the Trustees repealed the constitution of WCOA and replaced it with new by-laws eliminating the role of the Board of Directors entirely. *fn3 The Trustees advised the Directors that funding for Hillcrest Children's Center would be terminated effective June 30, 2000.

On June 19, 2000, the Directors filed a complaint for injunctive relief and enforcement of trust, asserting that the Trustees in their governance of the corporation had engaged in breaches of fiduciary duty, arbitrary and capricious action, diversion of funds, conversion of funds, and ultra vires acts, and demanded an accounting. The Superior Court granted a preliminary injunction requiring the Trustees to continue to fund WCOA at the rate of approximately $20,000 per month. The Trustees then moved for a judgment on the pleadings, asserting that the Directors lacked standing and capacity to bring the action. The trial court granted the Trustees' motion for judgment on the pleadings, concluding that the Trustees constituted the "sole governing board" of WCOA and that, for that reason, the Directors lacked standing to pursue any claims against the corporation. In the alternative, the court granted a judgment for defendant Trustees on the merits which appeared to be a summary judgment because of the language used and ...


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