Opinion
Rehearing Denied Jan. 8, 1974.
Page 1369
Robert Dunlap and David C. Mize, Colorado Springs, for plaintiff-appellant.
Fredrickson & Johnson, Robert G. Fredrickson, Canon City, for defendant-appellee.
PIERCE, Judge.
Plaintiff, Robert Yarbrough, filed a complaint alleging that the defendant association's forfeiture or termination of his membership was contrary to the association's bylaws. He also joined his ex-wife as an involuntary plaintiff, although she claims no interest in the subject matter of the lawsuit. For relief, Robert requested specific enforcement of his claimed membership status.
Unless otherwise indicated, the facts as found by the trial court are not in dispute. Eleven Mile Grazing Association is a nonprofit corporation organized in 1966 under C.R.S.1963, 31--19--1 et seq. The association chose not to elect the provisions of 1967 Perm.Supp., C.R.S.1963, 31--24--1 et seq.
Plaintiff Robert and his then wife, Ruby, joined the association in 1966 and were issued a certificate of membership in joint tenancy. They used the corporation's land for grazing purposes and paid the corresponding grazing fees in 1966 and 1967. For the years 1968, 1969, and 1970, plaintiffs made no use of the corporation's land and made no payments of the grazing fees attributable to their certificate for those years. They do not dispute the legitimacy of the charges for those years, nor that they had knowledge that such charges were past due.
Article III, Section 16 of the Bylaws of the association provides that 'a full season's grazing fee will be assessed each member regardless of use' of association grazing land.
In July of 1968, Robert and Ruby were divorced. Under the property settlement agreement which was approved by the divorce court and made a part of the divorce decree, Ruby was awarded the ownership of the membership. She also received a power of attorney from Robert. Ruby's attorney wrote to the defendant association requesting transfer of the certificate to her name, and the association responded with the requisite forms to complete the transfer. However, these forms were not completed, and in January of 1969, one week after receiving a notice that the grazing fees for 1968 were past due, Ruby returned the certificate to the association for relinquishment. Immediately following the return of the certificate, the plaintiffs were dropped from the rolls of the association and the certificate remained in the hands of the attorney for the association. In February of 1970, the Board of Directors of the association passed a resolution 'to cancel and reclaim all delinquent stock.' Robert testified that he had conversations with an officer of the association in 1969 and was told he could obtain the use of association property for grazing by paying the back charges for the grazing fees. These statements were denied by the officer.
Robert did not have any further contact with the directors of the association until the spring of 1971. Early in March of 1971, he sent a check to the corporation in an attempt to pay the grazing fees for the years 1968 through 1970. The check was returned to the plaintiff with a statement that his membership had been canceled.
Robert contended at trial that the association wrongfully refused his tender of past-due grazing fees and that the termination of his membership was not accomplished in accordance with the bylaws of the association. The trial court concluded, as a matter of law, that the divorce decree entered in 1968 conveyed all title to the certificate to Ruby, thus extinguishing all of Robert's right, title and interest in the membership. It then concluded that Ruby had relinquished the membership and the certificate was then canceled in accordance with Article III, Section 7 of the bylaws which provides in part:
'Any person desiring to withdraw from the association while continuing to reside in the community, may do so by surrendering to the secretary his certificate which shall thereupon be canceled and his name shall be stricken from the records of the association . . ..'
Thus, the trial court concluded that no action was required on the part of the Board of Directors to cancel the membership and that the action of the secretary taken at the request of Ruby terminated the rights and liabilities between the parties. While we do not agree with the reasons stated by the trial court as bases for its ultimate decision, we do agree with the result, and therefore, affirm. See Klipfel v. Neill, 30 Colo.App. 428, 494 P.2d 115.
On appeal, Robert argues that the trial court erred in concluding that the divorce decree was sufficient to convey his interest in the membership to Ruby. Robert relied on provisions of the bylaws of the association requiring association approval of any transfer of membership. He is correct in this contention.
Where certificates of membership in an association or non-profit corporation are involved, a requirement in the bylaws that transfers be approved by the association is not dispensed with, even where the transfer is otherwise effected by operation of law. Cf. Baird v. Tyler, 185 Va. 601, 39 S.E.2d 642.
Robert then argues that since the divorce decree did not transfer his interest in the membership to Ruby, her relinquishment of the membership was ineffective, at least as to his interest, and the certificate was not otherwise canceled in accordance with Article VII, Section 8(b) of the bylaws. We do not agree with this latter contention.
Section 8(b) reads as follows:
'Upon failure of any member of the association to pay any assessment within ninety days after the same shall become due, the association may recall and repossess the delinquent member's certificate of membership, with or without legal process and, if any operator qualifying for membership can be found to purchase such membership, to sell such membership paying any surplus over and above the cost of sale, delinquent assessment and any unpaid grazing fees, over to the delinquent member. If no qualified purchaser for membership can be found within six months after the date the assessment became due, the association may declare the member's membership forfeited and cancel his certificate of membership.'
From the testimony taken at trial and from a reading of all the bylaws of the association it is clear that the grazing fees in question were unquestionably 'assessments' within the meaning of Section 8(b) of the bylaws.
While we agree that Section 8(b) does not provide for automatic termination of membership upon failure to pay delinquent assessments, See Denver Chamber of Commerce & Board of Trade v. Green, 8 Colo.App. 420, 47 P. 140, it does set up a procedure for forfeiture. Robert argues that the association did not comply with the prescribed procedure because it made no effort to find a purchaser. We do not agree. The association retained complete control over the selection of new members by virtue of its bylaws and the particular section of the bylaws in question did not place an affirmative duty upon it to seek out a buyer for the membership. Here the association received no applications within the six-month period and it was not incumbent upon it to search out new members.
The forfeiture and cancellation of the delinquent membership was therefore effective upon the passage of the resolution in February of 1970, and Robert's tender of delinquent fees, over one year later, was ineffectual.
Judgment affirmed.
ENOCH and SMITH, JJ., concur.