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Shorter College v. Baptist Convention of Ga.

A non-profit college could not dissolve without approval of its only member.

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In 1959, Shorter College College amended its charter to confer on the Baptist Convention of the State of Georgia GBC the exclusive authority to name the school’s Board of Trustees Board. As a result of the grant of this power to choose the trustees, GBC assumed the status of a “member” of the College. OCGA § 14-3-140 22. Over the years, GBC and the College collaborated in the trustee selection process. In 2001, however, a conflict arose as to GBC’s exercise of its authority under the charter to fill two vacancies on the Board. The controversy was precipitated by the Southern Association of Colleges and Schools, which questioned the College’s independence and threatened its accreditation because the power to select trustees was vested in GBC. The dispute culminated in GBC’s rejection of candidates proposed by the College and the naming of two new trustees who lacked the prior approval of the school. Contending that GBC’s power to select the trustees was an encroachment on the independence of the institution which endangered its accreditation, the Board thereafter sought to amend the bylaws to allow the school some input into the process. However, GBC insisted on continued exercise of the exclusive authority granted to it by the charter, and it named several new trustees to the Board.

The College refused to recognize the new trustees selected by GBC. Instead, a majority of the “old” Board approved a plan, denominated as a “dissolution” of the College, whereby all assets of the school, including its name, would be transferred for no consideration to the Shorter College Foundation Foundation. From the perspective of the “old” Board and its concern about accreditation, this transfer had the desired effect of divesting GBC of its authority to name the trustees, since the Foundation’s directors would not be subject to approval or removal by GBC.

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