Nakakuni v. Towse , 1939 Haw. LEXIS 31 ( 1939 )

  This is a bill in equity to restrain a corporate election of
officers. The bill discloses the following facts: The corporation
involved (hereinafter indiscriminately referred to as "the
corporation" or "mission") is a domestic, private corporation
organized to promote religious work and worship based upon the
teachings and doctrines of the Shinshiyu sect of Buddhism. It is
not organized for private gain or profit and has no shares of
stock. Since its organization it has prospered and accumulated
property of the approximate value of $6000. Any person, male or
female, who believes in the doctrines of the sect of Buddhism and
agrees to support the objects and purposes of the mission may be

admitted as a general member. The officers to be elected by the
corporation are a chief priest and sixty members of the standing
committee as provided by the bylaws of the mission to serve until
the next annual meeting of the mission. Under the bylaws the
standing committee selects the directors and the latter in turn
appoint certain officers, including two treasurers. A general
member of the corporation has no power to vote. Only those
persons, male or female, whose names are duly enrolled by the
secretary of the mission as "regular contributors" to the support
of the mission are entitled to vote. The election sought to be
enjoined was about to be held pursuant to an order entered in
quo warranto proceedings pending before a judge of the circuit
court of the first circuit. The quo warranto proceedings had
been instituted to try the titles to office in the corporation
claimed to have been usurped, including the office of director.
The election at which the defendants in the quo warranto
proceedings claimed to have been duly elected had been declared
void and upon rendering the judgment of ouster, the circuit judge
ordered the corporation to proceed to a new appointment. One of
the grounds of the illegality of the election was that members of
the corporation who were not regular contributing members were
permitted to vote at said election. Only four members of the
corporation were plaintiffs in the quo warranto proceedings.
Only the three officers, the titles to office of whom were in
question, were made defendants. The corporation itself was not a
party. The plaintiffs did not claim the disputed offices for
themselves. Nor did they pray that the corporation be ordered to
proceed to a new appointment. The respondent commissioner herein
was appointed by the judge in the quo warranto proceedings to
conduct the election ordered. In the order of appointment the
commissioner was expressly directed to prepare a roll or list of
the present bona fide voting members of the corporation. He
reported that the secretary of the corporation had failed

to enroll regular contributing members during the period from
July 28, 1934 (the date of the election adjudged to have been
illegal), to March 6, 1937 (the date of his appointment), and
that of the members of the corporation but 156 were regular
contributing members and entitled to vote, listing them by name.
The result of the findings of the commissioner was that 118
members of the corporation claiming to be regular contributors to
and consequently voting members of the corporation were omitted
from the list of bona fide voting members of the corporation
entitled to vote at the new election. But five members of the
corporation are parties petitioners in the instant case. Four of
the petitioners are included in the 118 members excluded from
voting and appear as petitioners both in their individual
capacity and as representatives of the other excluded members of
the corporation similarly situated. Neither they nor the members
of the class which they represent, with but one exception, were
parties to the quo warranto proceedings. One of the
petitioners, Masao Nakakuni by name, is included in the
commissioner's list of bona fide voting members. He admits the
receipt of certain moneys collected by others from members of the
mission as regular contributions to the mission and their deposit
in a bank in trust for the mission to await the outcome of the
quo warranto proceedings and the selection of legal and
lawfully elected officers of the mission. In this regard he
alleges that the statuses of the contributors to said fund as
regular contributors of the mission came into question in the
quo warranto proceedings and were determined adversely to them
in said proceedings. As an additional ground for equitable relief
the petitioners allege that dissension has arisen among the
members of the mission resulting in the formation of two
factions, of which they are one; that in the quo warranto
proceedings the presiding judge held, among other things, that
the petitioners and those whom they represent, with the exception
of Nakakuni, were not regular contributing

members of the mission, their contributions not having been made
to a de jure treasurer of the corporation, and hence not
entitled to vote at elections of officers thereof and that the
members of the opposing faction were regular contributing members
to the mission and entitled to vote at elections of officers
thereof; that many of the persons whose names have been included
by the commissioner in the list of bona fide voting members of
the corporation comprise the opposing faction, and the
petitioners and those whom they represent, with the exception of
Nakakuni, are those who have been excluded from his list of bona
fide voting members of the mission; that through threats of the
use of force and violence the opposing faction has usurped the
possession of the mission, its property, books and records and
the petitioners and those whom they represent have been
wrongfully and fraudulently prevented from using the mission
premises for religious worship or other functions connected with
the mission and have been compelled to carry on their meetings
and services at the private homes of members; that if the
proposed new election is held it will result in the election of a
standing committee and the appointment by it of a board of
directors representing the opposing faction; that the opposing
faction has incurred considerable expenses in the mandamus
proceedings and the directors selected by the standing committee
to be elected will, unless restrained, reimburse the opposing
faction from funds to be secured by the directors by the pledge
and hypothecation by them of the property of the mission. The
bill concludes with the usual general averments of the absence of
a plain, adequate and complete remedy at law, that an injunction
will avoid a multiplicity of suits and circuity of action and
that the present suit is the only means by which petitioners can
prevent irreparable injury and the deprivation of their legal
right to vote at the new election.
 
  In compliance with the terms of the temporary restraining
order, the new election, as ordered by the circuit judge in the
mandamus proceedings, has been indefinitely postponed. The quo
warranto proceedings are still pending and have not proceeded to
final judgment. Demurrers to the bill in the instant case were
filed by the respondent commissioner and certain "intervenors."
The demurrers were sustained by the circuit judge upon the ground
that petitioners' rights were pending before the circuit court at
law in the quo warranto proceedings and that they had an
adequate remedy at law. The petitioners, except Nakakuni and the
class they represent, will hereinafter be referred to as the
"petitioners."
  The determination of petitioners' rights as electors of the
corporation is not before the circuit court at law in the quo
warranto proceedings further than they affected the titles of
the defendants in that proceeding to the respective offices
claimed by them in the corporation.
  Private individuals in this jurisdiction have a right of action
in the nature of quo warranto to try title to office in a
private corporation. (R.L. 1935, §§ 4258-4266.) "Private
corporations," as that term is used in the statute, obviously
includes private corporations organized for religious purposes.
The right of stockholders of a private corporation, title to
office in which has come into question, to invoke the provisions
of the statutes has been repeatedly recognized by this court.
(Canairo v. Serrao, 11 Haw. 22; Yong Kwong Tat v. Yee Mun
Wai, 22 Haw. 604; Chinese Society v. Yee Yap, 24 Haw. 377.)
Jurisdiction over the statutory action in the nature of quo
warranto is vested in the circuit judges at chambers. But the
action is essentially one at law. (Jones v. McElreath,
167 Ga. 833, 146 S.E. 734, 736; State ex inf. Thompson v. Bright,
298 Mo. 335, 250 S.W. 599, 601; State v. Hall, 228 S.W. [Mo.]
1055, 1057; People v. Albany  Susquehanna R.R. Co., 57 N.Y. 161,

171; Att. Gen'ral v. Utica Ins. Co., 2 Johns. Ch. [N.Y.]
288, 291.) Title to the office in dispute need not, under the
statute, be in the plaintiff to entitle him to bring the action.
His interest as a member of the corporation is sufficient.
(Canairo v. Serrao, supra; Yong Kwong Tat v. Yee Mun Wai,
supra.) Where, in an action in the nature of quo warranto, the
sole question in issue is title to office in a private
corporation, ordinarily the only necessary party defendant is the
person who, it is alleged, is in possession of and usurps the
office in question. (51 C.J., T. Quo Warranto, § 15, p. 341;
State v. Kohnke, 109 La. 838, 33 So. 793, 807; State v.
Riordan, 75 N.J.L. 16, 69 A. 494, 496; Foard v. Hall,
111 N.C. 369, 16 S.E. 420, 422.) The judgments which may be entered
in actions in the nature of quo warranto are prescribed by
sections 4262, 4263 and 4264, R.L. 1935. These sections are
quoted in the margin.1 The judgment of ouster is against the
usurper and not against the corporation, office in which he is
alleged to have usurped. (The People v. Bartlett, 6 Wend.
422, 423.) Where the sole question in issue is title to office in
a private corporation, the judgment is conclusive only against
the parties to the proceedings or their privies. (People

ex rel. Gilchrist v. Murray, 73 N.Y. 535, 538; Modlin v.
State, ex rel., 175 Ind. 511, 94 N.E. 826, 28 Am.  Eng. Ann.
Cas. [1913C] 669.) Under the provisions of sections 4262 and
4263, where ouster from office in a private corporation is the
subject of the judgment, whether the judgment is on default or on
the merits, the court may direct the corporation to proceed to a
new appointment. And the additional express authority thereby
conferred has been considered sufficient to include "authority to
require the performance of all acts preliminary or incidental to
the accomplishment of the ultimate object," including the
appointment of a commissioner clothed with power and authority to
prepare a roll or list of members of the society entitled to vote
at the election ordered. (Chinese Society v. Yee Yap, supra.)
Obviously, any new election that may be ordered by the circuit
judge must be confined and limited to the election of officers of
the corporation made legally necessary by the judgment of ouster.
  Sufficient has been said to formulate the conclusion that
where, in proceedings in the nature of quo warranto to try
title to office in a private corporation, the corporate election
upon which title to office is predicated is declared void upon
the ground that certain members of the corporation who voted at
said election were not contributing members of said corporation
and hence not qualified as electors, under the bylaws, to vote at
said election, the judgment of ouster is not conclusive except as
to the parties to the proceedings and their privies; and those
members of the corporation, the determination of whose
qualifications as electors was adverse, if not parties to the
quo warranto proceedings, nor in privity with any of the
persons who were parties to those proceedings, may subsequently
assert their qualifications as electors of the corporation in any
legal proceedings to which they may be parties and in which their
qualifications as such may come in issue.
 
  Four of the petitioners were not parties to the quo warranto
proceedings nor in privity with any person who was a party
thereto. Hence, the judgment of ouster in the quo warranto
proceedings is not res adjudicata against them as to their
alleged disqualifications as regular contributing members of the
mission. And they may assert their qualifications as electors of
the corporation in the instant proceedings provided the bill
shows a case of equitable relief and they have no plain, adequate
and complete remedy at law. For it is not alone the general rule
in equity but it is expressly provided by statute that
jurisdiction in equity may not be invoked where there is a plain,
adequate and complete remedy at law. (R.L. 1935, § 4701.)
  In our opinion the bill states facts sufficient to entitle
petitioners to equitable relief.
  In the absence of statutory, charter or bylaw restrictions the
right to vote at elections of directors or officers of a
corporation organized for profit is ordinarily an incident to
ownership of shares of stock of the corporation and to deprive a
stockholder of the right to vote at such elections is to deprive
him of an essential attribute of his property, which is not
permissible. Moreover, the threatened deprivation of the
incidental right of ownership of stock of a private business
corporation to vote at elections of directors or officers of the
corporation creates remedial rights as between the aggrieved
stockholder on the one hand and the corporation or its officers
and agents on the other. In private corporations organized for
religious purposes, however, where its members have no beneficial
ownership of nor personal or private interest in the property of
the corporation, the rights of members to vote for officers and
directors of the corporation depend entirely upon the statutory,
charter or bylaw provisions of their organization. If electors,
the remedial rights, however, of the aggrieved electors are the
same.
 
  The rules generally governing meetings of stockholders of
commercial corporations apply to meetings of members of
incorporated religious societies. (2 Thompson, Corporations [3d
ed.], § 931, pp. 295, 296; People v. African Wesleyan M.E.
Church, 141 N.Y.S. 394, 396; Vargo v. Vajo, 76 N.J. Eq. 161,
73 A. 644, 647.) Section 6738 provides that at any meeting of
any corporation it shall be lawful for the members in the
transaction of business to vote either in person or by proxy.
While members of an incorporated religious society are not
stockholders in the technical sense, yet under statutory or
individual organic laws or rules usually obtaining they are
members of the society in the sense that stockholders are members
of a business corporation in respect to elections of officers and
directors of the society. (54 C.J., T. Religious Societies, § 38,
p. 22; The State v. Crowell, 9 N.J.L. 390, 411; Wiswell v.
The First Congregational Church, 14 Ohio St. 31; Keith v.
Howard, 24 Pick. 292, 294.) The local statutes under which
religious societies may incorporate are silent as to the
qualifications of members as electors. The charter of the mission
is not before us. The bylaws of the mission, quoted in the
margin,2 prescribe the qualifications of electors. There are
two. An elector must be a member and he must also be a regular
contributor to the mission. The petitioners allege that they and
the members of the class they represent are both. Upon demurrer
this allegation must be accepted as true. Hence, the petitioners
and the members of the class they represent as members of and as
regular contributors to the mission were,

under the bylaws of the mission, entitled to vote at elections of
the mission for officers and directors thereof. (The People v.
Tuthill, 31 N.Y. 550, 559.) And this right includes the right
to vote at an election ordered by the court. An election of
officers of a corporation is a corporate function. (2 Fletcher
Cyc., Corporations, § 283.) That the new election had been
ordered by a court and that the presiding officer thereof is a
commissioner appointed by a court as a substitute for those
officers of the corporation to whom is committed, by the bylaws,
the power to hold elections, is immaterial. It is, nevertheless,
a corporate election.
  The holding of an election of officers of a business
corporation will rarely be enjoined. (32 C.J., T. Injunction, §
380; Hooe v. Hall, 4 Ohio Circ. 547.) And it is only where an
aggrieved stockholder may suffer irreparable injury that equity
will interfere. (2 Thompson, Corporations [3d ed.], § 1055; 2
High, Injunctions [2d ed.], § 1230, p. 804; 5 Fletcher Cyc.,
Corporations, §§ 2071, 2072; 32 C.J., T. Injunctions, § 377, p.
239; Granite Brick Co. v. Titus, 226 Fed. 557, 566; Brown
v. Pacific Mail Steamship Co., 4 Fed. Cas. [No. 2025], pp. 420,
423; Supreme Lodge v. Simering, 88 Md. 276, 40 A. 723, 725,
71 Am. St. Rep. 409.)
  But the bill discloses, as a concomitant to the interference
with the legal right of the petitioners to vote at the new
election of officers of the corporation, the invasion of the
equitable right of the petitioners to enforce the trust with
which the property of the corporation is impressed and to prevent
its diversion directly or indirectly from the purposes for which
it was organized. We refer specifically to the alleged
interference with the use by the petitioners of such of the
mission property as is devoted to church purposes, the
deprivation of the petitioners' right of access to the books and
records of the trust and the threatened

diversion of the proceeds of the pledge or hypothecation of the
property of the mission. Enforcement of a trust for religious
purposes and the prevention of its misuse or abuse are within the
exclusive jurisdiction of equity.
  The jurisdiction of equity to supervise and control a trust for
religious purposes is well-settled. Title to the mission property
is in the mission. (People v. Braucher, 258 Ill. 604,
101 N.E. 944, 946.) The corporate organization of the mission
impresses its property with a trust for religious purposes. (St.
Michael's etc. Ch. v. St. Michael's etc. Ch., 288 Mass. 258,
192 N.E. 628, 630.) There are cases which hold that corporations
organized for religious purposes and not for profit are public
charities. (People v. Braucher, supra; McNeilly v. First
Presbyterian Church, 243 Mass. 331, 137 N.E. 691, 694.) Nothing
appearing to the contrary, it will be presumed that the property
of the mission is held by the mission for the purposes for which
it was incorporated. (McNeilly v. First Presbyterian Church,
supra.) Further, it will be presumed upon demurrer that these
purposes are lawful and not contrary to public policy. Equity has
extensive jurisdiction of uses and trusts for religious purposes
not only to uphold them but also to protect them, prevent their
misuse or abuse and enforce their execution. (11 C.J., T.
Charities, § 73, p. 356; Mt. Zion Church v. Whitmore, 83 Iowa 138,
49 N.W. 81; VonHoven v. Presbyterian Church,
108 La. 274; 32 So. 389, 390. See also People v. Braucher, supra.) A
religious corporation has a double aspect, one spiritual and the
other temporal, and with regard to the latter, the directors
thereof have the same status as the directors of a business
corporation and are subject to judicial supervision and control.
(Koch v. Estes, 262 N.Y.S. 23, 26.) When a religious society
acquires a legal status by incorporation the courts may deal with
it the same as with any other person or sui juris entity in
respect to its property and with rights of its members considered

as property. (Brown v. Protestant Episcopal Church, 8 F. [2d]
149, 150.)
  Courts of equity afford equitable relief to restrain
interference with the right of members of a religious society to
use the property of the society devoted to religious purposes.
(Manning v. Yeager, 201 Ala. 599, 79 So. 19.) Similarly to
prevent the threatened diversion of the property owned by such
society. (Mt. Zion Church v. Whitmore, supra; VonHoven v.
Presbyterian Church, supra; Hansel v. Purnell, 1 F.[2d] 266,
269.) Nor is there any question of the right of a member of such
society to invoke the jurisdiction of equity upon such grounds.
(VonHoven v. Presbyterian Church, supra.)
  The only proceedings at law available to petitioners are
proceedings in the nature of quo warranto when and if the
election ordered by the court shall have been held and finally
confirmed by the court. From the possibility that the petitioners
may eventually litigate at law in proceedings in the nature of
quo warranto their right to vote as electors of the
corporation, of which they are members, it does not necessarily
follow that they must pursue that remedy. If the relief which
they could obtain in those proceedings would not be plain,
adequate and complete, they are entitled to pursue their remedy
in equity. (Makainai v. Lalakea, 24 Haw. 268.) The statutory
provision that suits in equity, including injunction, shall not
be sustained in any case where there is a plain, adequate and
complete remedy at law is declaratory and does not exclude the
circuit judges from any part of the field of equitable remedies.
(Dow v. Berry, 18 Fed. 121, 125.) It seems to be the rule
that to oust the jurisdiction in equity the remedy at law must be
as efficacious as that in equity. (21 C.J., T. Equity, § 28, p.
52.)
  The instant case is not a mere matter of establishing a legal
right to vote at a corporate election. It seeks to protect

and enforce the execution of a trust for religious purposes and
to prevent its misuse and abuse. While awaiting the final outcome
of the pending quo warranto proceedings, the opposing faction
may continue to prevent the petitioners from using and enjoying
the property of the mission devoted to religious purposes and
continue to force and compel them to carry on their meetings and
services at the private homes of the members and deprive them of
access to the books and records of the mission. The disposition
of the contributions accepted by Masao Nakakuni will remain
undecided. The persons to whom contributions may be legally made
will remain in doubt. It was upon the legal status of those who
had accepted contributions on behalf of the mission that the
legality of the election, at which the defendants in the quo
warranto proceedings were elected, primarily depended. The
existing confusion will naturally and necessarily discourage
contributions. The mission depends for its existence upon the
contributions of members. And the decrease in or the
discontinuance of contributions seriously affects the ability of
the mission to perform the religious functions for which it was
organized. Moreover, if representatives of the opposing factions
are elected at the new election ordered by the court, they will,
as alleged, resort to the property of the mission for
reimbursement of personal expenses incurred by them. The
election, the legality of which came into question in the quo
warranto proceedings, was held July 28, 1934. The quo warranto
proceedings were instituted a month later. More than four years
of internal strife and dissension has been the history of the
mission and the settlement of its temporal affairs is not yet in
sight. This is not alone a case in which the remedy at law is not
plain, adequate and complete but one in which, if equitable
relief is not promptly granted, the purposes for which the
mission is organized may be submerged if not defeated.
  It should be borne in mind that there were subject to

review by this court only those grounds of demurrer passed upon
by the court below. Whether or not all necessary parties to the
proceedings have been made parties petitioners or respondents has
not been presented for determination and we expressly refrain
from passing upon any question of misjoinder or nonjoinder of
parties.
  Consistent with the views herein expressed, the decree appealed
from is reversed and the cause remanded for further proceedings
consistent with this opinion.
1 "Sec. 4262. Judgment on default. If the person to whom the
order is directed does not answer within the time allowed, the
judge shall declare him not qualified to fill the office of which
he performs the duties; shall forbid him to perform them any
longer; shall condemn him to pay the costs; and shall direct the
corporation to proceed to a new appointment.
  "Sec. 4263. Judgment on answer. But if the person to whom the
order is directed answers within the time allowed, judgment shall
be pronounced upon the answer in a summary manner. After hearing
the parties, if the judge who issued the order thinks that the
person to whom the mandate was directed has usurped the office
which he holds, or that he continues in it unlawfully, judgment
shall be rendered against him in the manner provided in the
preceding section; otherwise, the petition shall be dismissed
with costs to be paid by the applicant.
  "Sec. 4264. Judgment according to nature of complaint. In all
cases contemplated by sections 4258-4266, judgment shall be given
according to the nature of the complaint made; provided,
however, that in the event of the application being dismissed the
attorney general shall not be ordered to pay costs."
2 "Section 1. General Members. Any person, male or female,
who believes in the doctrines of the SHINSHIU SECT OF BUDDHISM,
and agrees to support the objects and purposes of the Mission may
be admitted as a general member. A general member shall have no
power to vote.
  "Section 2. Voting Members. Any person, male or female, whose
name is duly enrolled by the Secretary of the Mission as a
regular Contributor to the support of the Mission shall become a
voting member of the Mission."

  Circuit Judge Matthewman: I am obliged to dissent from the
foregoing opinion. My views upon the case will be expressed
later.