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Paul E. Jochimsen v. Wapsi Hunting Club

July 13, 2011

PAUL E. JOCHIMSEN, PLAINTIFF-APPELLANT,
v.
WAPSI HUNTING CLUB, INC. AND JAMES WILLIAMS, DEFENDANTS-APPELLEES.



Appeal from the Iowa District Court for Clinton County, C.H. Pelton, Judge.

The opinion of the court was delivered by: Tabor, J.

Paul Jochimsen appeals the district court's decision declining to dissolve the Wapsi Hunting Club, Inc. or to impose alternative equitable relief.

AFFIRMED.

Heard by Eisenhauer, P.J., and Potterfield and Tabor, JJ.

We are asked to decide whether four members of the Wapsi Hunting Club, Inc. (WHC) engaged in oppressive conduct. Club member Paul Jochimsen asserts the four members acted oppressively when they amended the corporation's governing documents, admitted new member James Williams, and declined to adopt several of Jochimsen's proposals. Jochimsen asks us to dissolve WHC or to grant alternative equitable relief, including canceling defendant Williams's membership.

Because none of the actions or inactions of the four members ran contrary to their fiduciary duties, denied Jochimsen his reasonable expectations, or imposed upon him burdensome, harsh, and wrongful conduct, we conclude their conduct was not oppressive. The district court was correct in declining to grant relief.

I. Background Facts and Proceedings

Jochimsen is one of six members of the defendant-corporation, WHC, a mutual-benefit corporation under Iowa Code chapter 504 (2009). WHC was incorporated in 1948 "for the purpose of amusement and the promotion of athletics, not for profit, among its members."*fn1 Since incorporation, WHC has acquired approximately 300 acres of Wapsipinicon River-bottom land, which club members and their families use for hunting, fishing, and various outdoor recreation. Jochimsen testified the value of WHC's land has increased "tremendously" over the years.

Jochimsen joined WHC in 1971 and is currently WHC's longest-serving member.*fn2 When he joined, Jochimsen resided in Clinton County, Iowa-where he lived for "50-some years" and worked as a dairy farmer. In 1993, he moved to Missouri. Jochimsen testified that since his move, he returns to Clinton County about once a month to see family and has visited the club several times. He testified he "come[s] up every year on second season and . . . drive[s] deer for them, walk[s] around the timber, . . . [and has] a meal at noon." He participates in work days and club meetings. He also testified that the last time he hunted on WHC property "would have been '95 or -6."

A. Membership Decline

The composition of club membership has changed over the years. The corporation began with nine members-the number provided for in the original 1948 Articles. Since that time, as members redeemed their shares or passed away, the membership declined to five members-the minimum number before dissolution under WHC's articles of incorporation and bylaws in effect at the time.*fn3 Between 1991 and 2008, no new members were admitted to WHC. Jochimsen testified that since 1991, existing members proposed and discussed several possible new members, but WHC did not admit any of the prospective members. Jochimsen testified that in September 2008, he moved for all members' sons to be admitted, but his motion failed on a vote of three to two.

Jochimsen further testified that in May 2008, the members held a special meeting where he expressed concern about the fact that WHC had only five members. In light of his concern about membership numbers, he proposed WHC hire a corporate attorney to review its governing documents. The motion passed, and an attorney reviewed WHC's articles and bylaws. In November 2008, all four members, with only Jochimsen protesting, adopted amended and restated articles and bylaws. The amendments adopted through this process were the impetus for the present suit.

B. 2008 Amendments to Articles and Bylaws; Admission of New Member, Williams

The original articles authorized the corporation's members to amend the articles or bylaws by a two-thirds vote. In this case, the members adopted three amendments by a vote of four to one, satisfying the two-thirds requirement. Only Jochimsen voted against the changes-he asserts they are oppressive.

Amendment 1: The original 1948 articles and bylaws required members to unanimously approve the admission of a new member. In 2008, four members voted to reduce the requirement to admit new members from a unanimous vote to a three-fourths vote. Jochimsen alleges this change is oppressive.

After adopting the three-fourths vote requirement, four members-again, with only Jochimsen voting "no"-approved a new member, Williams. Jochimsen testified he and Williams never met before Williams was admitted to WHC. Jochimsen maintains such admission was contrary to the club's past practice, where prospective members were introduced to all WHC members and participated in various activities before joining. Jochimsen seeks to cancel Williams's membership.

Amendment 2: The original 1948 articles mandated a minimum of six and maximum of nine members on the board of directors. The 2008 amendment to the articles removed that provision and provided the "number of Directors shall be fixed by the Bylaws." The amended 2008 bylaws provide that the "Board of Directors . . . shall consist of all the member[s] [of] the Corporation" and further provide that "[e]very Member shall be on the Board of Directors and shall serve for the duration of their membership." Jochimsen contends that amending the articles so they no longer mandate a minimum number of directors is oppressive.

Amendment 3: The original 1948 articles and bylaws did not specify how the corporation's assets would be distributed in the event WHC dissolved. The 2008 amendment provides that upon dissolution, WHC's assets will be "distributed pro rata to the members." The amended articles also include a "No Impairment of Restrictions" clause. That clause states that the "Distribution of Assets on Dissolution" provision (along with several restrictions including limiting the corporation to non-profit status and limiting compensation) "shall not be repealed, impaired, or weakened in any way . . . by amendment . . . or in any other manner." Jochimsen contends this change is oppressive.

C. Members' Rejection of Jochimsen's Proposals

The original 1948 documents provided that WHC's membership certificates would be nontransferable and redeemable by only the corporation for the sum of $125. In 1965, the buyout price was amended and WHC thereafter redeemed certificates for the purchase price paid for the membership plus any capital contributions remitted during the term of the membership. The 2008 amendments retained the non-transferable nature of the certificates and the buyout calculation adopted in 1965. Jochimsen contends that retaining "the old buyin and buy-out" rules is inequitable "where the value of corporate assets has soared" and other rules have been changed.

Jochimsen contends, moreover, that he suggested transferring WHC's assets to a charity, rather than the members, upon dissolution; that membership be made transferable; or that they dissolve the corporation. The other members declined to ...


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