Teresa Speaks v. U. S. Tobacco Cooperative, No. 20-2098 (4th Cir. 2022)
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Certain members of the The U.S. Tobacco Cooperative(“Cooperative”) seek dissolution of the Cooperative and distribution of its reserves. They claim that “the Cooperative is no longer fulfilling the mandates under which it was created” and “is no longer able to carry out its purpose.” According to the members, the Cooperative simply cannot keep up with market realities and they request the judicial dissolution of the Cooperative.
The Cooperative argued that the ground for which the members seek dissolution—that the Cooperative can no longer carry out its purpose—only applies to dissolution under North Carolina’s Nonprofit Corporation Act (“Nonprofit Corporation Act”). The key issue underlying the Cooperative’s motion to dismiss was whether the Business Corporation Act or the Nonprofit Corporation Act applied to the Cooperative’s dissolution. The members argue that the Nonprofit Corporation Act, not the Business Corporation Act, applies to judicially dissolve the Cooperative.
The court found the members fail to explain why applying the Business Corporation Act’s dissolution provisions here would contradict the statute’s “so far as appropriate” language. Therefore, the court determined that since the Cooperative is organized “with capital stock,” the Business Corporation Act governs the Cooperative’s dissolution. The Business Corporation Act does not list the failure of a corporation to carry out its purposes as a ground for dissolution. But that is the only ground the members addressed on appeal. Thus, the court affirmed the district court’s dismissal of the members’ claim for judicial dissolution.
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