Shorter College v. Baptist Convention of Georgia

Shorter College (Shorter) (plaintiff) was incorporated in Georgia as a nonprofit corporation. Shorter’s charter gave the Baptist Convention of the State of Georgia (GBC) (defendant) the exclusive authority to name Shorter’s board of trustees. For many years, Shorter and GBC worked cooperatively to name the trustees, and GBC provided funding to Shorter. However, a college-accreditation organization became concerned about GBC’s control over Shorter. Shorter feared losing its accreditation and asked GBC to give up some of its authority. GBC refused and instead appointed two new trustees to the board without Shorter’s approval. However, even without those two new votes, the board of trustees had enough votes to approve a plan to: (1) dissolve Shorter as a corporate entity, (2) transfer Shorter’s assets and name to a different entity called the Shorter College Foundation (the foundation) (plaintiff), and (3) carry on the college under the foundation without GBC’s involvement. GBC became upset and refused to give the foundation several million dollars that the foundation claimed GBC had been holding in trust for Shorter. The foundation and Shorter sued GBC to release the disputed funds. GBC counterclaimed, seeking to prevent Shorter from officially dissolving. GBC conceded that the board of trustees had authority to dissolve Shorter without GBC’s approval. However, GBC argued that the board’s actions were not a valid dissolution but instead qualified as a merger or asset transfer that required GBC’s approval. The trial court ruled that the board had effected a valid dissolution. The court of appeals reversed, finding that the board had not validly dissolved Shorter. The Georgia Supreme Court agreed to review the issue.