Election vs Appointment

[Tomm]

The Article of Incorporation state:

"Three (3) Directors in a manner set forth in the Corporate Bylaws, shall be elected each year to serve for a term of three (3) years and shall serve until their successors are installed. A Member/Director may be elected to a maximum of two (2) three-year terms, six (6) years total, on the Board of Directors."

Just wondering what effect this has on appointments to fill vacancies? 

Directors are elected by the General Membership but appointees are selected only by the Board in executive session.

It is typical that if a Director resigns before his/her term has been completed, the board would appoint a Director, who has previously served, to serve out that term. 

Question: If a Director has already served his/her total 6 years, should they be eligible to fill an appointment? 

[Josh Martin]

On 3/14/2024 at 5:48 PM, Tomm said:

Just wondering what effect this has on appointments to fill vacancies? 

I believe the rules on this matter are equally applicable to filing vacancies, if that is your question.

On 3/14/2024 at 5:48 PM, Tomm said:

Question: If a Director has already served his/her total 6 years, should they be eligible to fill an appointment? 

No.

I suppose the argument for the other side is that the bylaws provide "A Member/Director may be elected to a maximum of two (2) three-year terms, six (6) years total, on the Board of Directors" means that a member may be "appointed" rather than elected to serve in excess of the two terms.

I don't find this argument persuasive. Among other reasons, I would note that persons appointed by the board are still elected - they're just elected by the board rather than by the membership.

[Tomm]

On 3/14/2024 at 4:32 PM, Josh Martin said:

I suppose the argument for the other side is that the bylaws provide "A Member/Director may be elected to a maximum of two (2) three-year terms, six (6) years total, on the Board of Directors" means that a member may be "appointed" rather than elected to serve in excess of the two terms.

That is the exact argument, over the term "appointment."

On 3/14/2024 at 4:32 PM, Josh Martin said:

I don't find this argument persuasive. Among other reasons, I would note that persons appointed by the board are still elected - they're just elected by the board rather than by the membership.

100% in agreement!

[Gary Novosielski]

On 3/14/2024 at 6:48 PM, Tomm said:

The Article of Incorporation state:

"Three (3) Directors in a manner set forth in the Corporate Bylaws, shall be elected each year to serve for a term of three (3) years and shall serve until their successors are installed. A Member/Director may be elected to a maximum of two (2) three-year terms, six (6) years total, on the Board of Directors."

Just wondering what effect this has on appointments to fill vacancies? 

Directors are elected by the General Membership but appointees are selected only by the Board in executive session.

It is typical that if a Director resigns before his/her term has been completed, the board would appoint a Director, who has previously served, to serve out that term. 

Question: If a Director has already served his/her total 6 years, should they be eligible to fill an appointment? 

Apparently not.  You appear to be relying on a distinction between election and appointment, when in fact there is no practical difference.  When the board appoints a person to fill a vacancy, how do they decide whom to appoint?  By election.

And your bylaws seem to say say that once having served two terms, the impediment to serving on the board is permanent.  Most bylaws specify that after an appropriate interval a previously termed-out person may again be eligible for election to the board.  Yours do not.  There are one (1) or two (2) other clues that they might benefit from a review.

So after a certain number of years, unless your group continues to grow (or at least experiences significant turnover) you may be faced with a situation that no qualified candidates are eligible to serve on the board.

Edited March 15, 2024 at 12:49 AM by Gary Novosielski
spelling

[Tomm]

Hmmm? The posted Article above was from the Articles of Incorporation. Further research into the bylaws I found this:

E. Vacancies occurring on the Board during the year (January 1 through December 31) may be filled by appointment by the Board. A majority vote of the Board (5) is required for said appointment. An appointment ends on December 31 of the year appointed. An appointed term does not enter in the six (6) year limit set forth in the Articles.

So now I'm wondering if the 6 year limit stated in the Articles of Incorporation takes precedence or does the Bylaw simply expand on the original rule stated in the Articles? 

Is the Bylaw in conflict with the Articles of Incorporation or simply a fine tuning?

[Atul Kapur]

On 3/14/2024 at 8:54 PM, Tomm said:

I'm wondering if the 6 year limit stated in the Articles of Incorporation takes precedence or does the Bylaw simply expand on the original rule stated in the Articles? 

Both.

The Articles of Incorporation take precedence over the bylaws. RONR (12th ed.) 2:7 and 2:5

The two provisions can be read together in a way that doesn't create a conflict so that should be the way they're read. 56:68(2)

[Josh Martin]

On 3/14/2024 at 7:54 PM, Tomm said:

E. Vacancies occurring on the Board during the year (January 1 through December 31) may be filled by appointment by the Board. A majority vote of the Board (5) is required for said appointment. An appointment ends on December 31 of the year appointed. An appointed term does not enter in the six (6) year limit set forth in the Articles.

So now I'm wondering if the 6 year limit stated in the Articles of Incorporation takes precedence or does the Bylaw simply expand on the original rule stated in the Articles? 

Is the Bylaw in conflict with the Articles of Incorporation or simply a fine tuning?

The rule in the bylaws is in conflict with the Articles of Incorporation, and the rule in the articles is controlling.

I would note that the articles do not just say that members are limited to two three year terms, but go further and provide that board members are limited to serving "six years total" on the board. I don't see what's ambiguous about the phrase "six years total." Seven years is more than six years.

The organization is free to establish this "carve-out" if it wishes, but it may only do so by amending the Articles of Incorporation. To the extent the organization wishes to adopt such a rule, it would seem desirable to place some limitations on it. It seems undesirable to permit a person to serve on the board indefinitely, as this would seem to defeat the purpose of the rule.

I do also agree with Mr. Novosielski that providing a lifetime limit for service on the board is somewhat unusual. It is more typical to provide a limit on consecutive service, with members permitted to serve again after a break in service of a specified length. But ultimately, it is up to the organization to decide on its rules.

On 3/14/2024 at 10:36 PM, Atul Kapur said:

The two provisions can be read together in a way that doesn't create a conflict so that should be the way they're read. 56:68(2)

I'm curious as to what reading you believe would accomplish this.

Edited March 15, 2024 at 12:19 PM by Josh Martin

[Atul Kapur]

On 3/15/2024 at 8:11 AM, Josh Martin said:

I'm curious as to what reading you believe would accomplish this.

That the bylaws interpret the Articles of Incorporation as being specific to election by the membership, rather than including appointment by the board to fill a vacancy. I'm not saying that I like this interpretation, but it is not unreasonable.

In the end, the organization, itself, is the body that needs to decide if this bylaw provision is in conflict with the Articles. I would also advise that they consult an attorney experienced in the relevant law.

[Gary Novosielski]

On 3/14/2024 at 8:54 PM, Tomm said:

Hmmm? The posted Article above was from the Articles of Incorporation. Further research into the bylaws I found this:

E. Vacancies occurring on the Board during the year (January 1 through December 31) may be filled by appointment by the Board. A majority vote of the Board (5) is required for said appointment. An appointment ends on December 31 of the year appointed. An appointed term does not enter in the six (6) year limit set forth in the Articles.

So now I'm wondering if the 6 year limit stated in the Articles of Incorporation takes precedence or does the Bylaw simply expand on the original rule stated in the Articles? 

Is the Bylaw in conflict with the Articles of Incorporation or simply a fine tuning?

This Bylaw is in conflict with the Articles.  A provision in the bylaws cannot deactivate, suspend, or relax a provision in the Articles of Incorporation.  I do not agree that there is a way to read them as non-conflicting, without qualifying the term limits in a way that the original language does not allow for.

[Richard Brown]

This is ultimately a question of bylaws interpretation, something only the members of this organization can do.  However, I agree with @Atul Kapur that the bylaws can be construed as interpreting the articles to the effect that the term limit provision in the articles of incorporation applies only to election to the board by the membership, and not to appointments by the board to fill vacancies.  Such an interpretation does permit effect to be given to both provisions.

[Josh Martin]

On 3/14/2024 at 10:36 PM, Atul Kapur said:

The two provisions can be read together in a way that doesn't create a conflict so that should be the way they're read. 56:68(2)

 

On 3/15/2024 at 2:32 PM, Atul Kapur said:

That the bylaws interpret the Articles of Incorporation as being specific to election by the membership, rather than including appointment by the board to fill a vacancy. I'm not saying that I like this interpretation, but it is not unreasonable.

In the end, the organization, itself, is the body that needs to decide if this bylaw provision is in conflict with the Articles. I would also advise that they consult an attorney experienced in the relevant law.

While I will concede that this is one potential reading, and I certainly agree that ultimately the organization itself interprets its own rules, I will note I am not certain that 56:68(2) is fully applicable here.

"When a provision of the bylaws is susceptible to two meanings, one of which conflicts with or renders absurd another bylaw provision, and the other meaning does not, the latter must be taken as the true meaning. For example, assume the bylaws define the officers as “a president, a vice-president, a secretary, a treasurer, and five other members, all of whom shall serve as members of the Board…” Assume also that elsewhere the bylaws speak of “Directors” being board members. A suggestion that the “Directors” are not officers and are additional members of the board would create a conflict within the bylaws and cannot be taken as the true meaning. The “other members” are the same as the “Directors.”" RONR (12th ed.) 56:68(2)

This provision assumes that both provisions are found in the same document. If both of these provisions were in the articles, I would agree wholeheartedly that, if possible, they should be interpreted in a way that gives effect to both provisions, if at all possible.

But in this instance, we have two provisions in different documents, one of which is superior to the other. So I am not certain I agree that the articles should necessarily be interpreted in a manner to give effect to a provision in a lower-level document.

On 3/15/2024 at 2:58 PM, Gary Novosielski said:

This Bylaw is in conflict with the Articles.  A provision in the bylaws cannot deactivate, suspend, or relax a provision in the Articles of Incorporation.  I do not agree that there is a way to read them as non-conflicting, without qualifying the term limits in a way that the original language does not allow for.

Well, I don't know. It is the case that some organizations will use the term "elected" to mean elections by the membership and "appointed" to mean elections by the board. I do recall a few of those coming up before, where it did seem apparent from the governing documents that was the organization's intent. So it may be that was the understanding of this organization. I would probably want to see some evidence of this distinction in the Articles of Incorporation, however, in order to be persuaded that was the organization's intent at the time of adopting the articles.

I do think there is a way to read them as non-conflicting, but based upon the evidence presented at this time, I don't find that interpretation persuasive.

[Gary Novosielski]

On 3/15/2024 at 5:29 PM, Richard Brown said:

This is ultimately a question of bylaws interpretation, something only the members of this organization can do.  However, I agree with @Atul Kapur that the bylaws can be construed as interpreting the articles to the effect that the term limit provision in the articles of incorporation applies only to election to the board by the membership, and not to appointments by the board to fill vacancies.  Such an interpretation does permit effect to be given to both provisions.

I would agree if the distinction between election by the members and election by the board were made in the Articles of Incorporation, but I don't think that can be backfilled by a provision in the bylaws.