ALBION COLLEGE CHARTER S.B. 396: COMMITTEE SUMMARY
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Senate Bill 396 (as introduced 5-24-11) (as enrolled)
Sponsor: Senator Randy Richardville
Committee: Education


Date Completed: 6-8-11

CONTENT The bill would amend Public Act 72 of 1857, which governs Albion College, to do the following:

-- Revise the membership of the college's board of trustees.
-- Revise the trustees' terms of office.
-- Provide that volunteer trustees and nontrustee volunteers who were officers would not be liable to the college for monetary damages for a breach of fiduciary duty, subject to certain exceptions.
-- Provide that the college would assume liability for acts or omissions of volunteer trustees and nontrustee volunteers, if certain conditions were met.

Board Membership & Terms of Office


The Act requires the board of Albion College to consist of 33 trustees, including the president of the college and the following:

-- The resident bishop of the Michigan area of the United Methodist Church.
-- An ordained active minister and a layperson of the United Methodist Church designated by the West Michigan Annual Conference.
-- An ordained active minister and a layperson of the United Methodist Church designated by the Detroit Annual Conference.
-- A layperson of the United Methodist Church designated alternately by the West Michigan Annual Conference and the Detroit Annual Conference.
-- Six trustees designated by the Albion College Alumni Association.
-- Twenty trustees designated by the remaining trustees.


The bill, instead, would require the board to consist of not more than 33 members, including the president of the college and the following:

-- Up to six trustees appointed by the United Methodist Church.
-- Up to two recent graduates of the college, appointed by the college president.
-- Up to six trustees appointed by the Albion College Alumni Association.
-- Up to 20 trustees appointed by the trustees then in office.


The number of trustees in each group would be determined by the board.


The Act requires each trustee to serve a three-year term until his or her successor is appointed. Under the bill, except for the recent graduates, the appointed trustees would have three-year terms, unless otherwise provided in the college's bylaws. The term of office of a recent graduate would be two years, although the board could appoint an individual for a one-year term so the terms of those trustees would be staggered.


Except for a trustee who was a recent graduate, an appointed trustee could serve in office only until his or her term expired, regardless of whether a successor had been appointed.


In bylaws adopted by the board, it could limit the number of consecutive terms an individual could serve.


Liability to the College


The bill provides that a volunteer trustee or a nontrustee volunteer who was an officer of the college would have no personal liability to the college for monetary damages for a breach of the trustee's or officer's fiduciary duty. This provision would not eliminate or limit the liability of a trustee or officer for any of the following:

-- A breach of the trustee's or officer's duty of loyalty to the college.
-- Acts or omissions that were not in good faith or that involved intentional misconduct or a knowing violation of law.
-- Any distribution of assets of the college in violation of applicable law.
-- A transaction from which the trustee or officer derived an improper personal benefit.
-- An act or omission occurring before the bill's effective date.
-- Any act or omission that was grossly negligent.

(The bill would define "volunteer trustee" as a trustee who does not receive anything of more than nominal value from the college for serving as a trustee other than reasonable per diem compensation and reimbursement for actual, reasonable, and necessary expenses incurred by a trustee in that capacity.

"Nontrustee volunteer" would mean an individual, other than a volunteer trustee, performing services for the college who does not receive compensation or any other type of consideration for the services other than reimbursement for expenses actually incurred.)


Assumption of Liability


Under the bill, while the college was tax exempt under Section 501(c)(3) of the Internal Revenue Code, the college would assume all liability to any person other than itself for all acts or omissions of a volunteer trustee incurred in the good faith performance of his or her duties.


The college also would assume the liability for all acts or omissions of a person who was a volunteer trustee or nontrustee volunteer occurring on or after the bill's effective date if all of the following were met:

-- The person was acting or reasonably believed he or she was acting within the scope of his or her authority.
-- The volunteer was acting in good faith.
-- The volunteer's conduct did not amount to gross negligence or willful and wanton misconduct.
-- The volunteer's conduct was not an intentional tort.
-- The volunteer's conduct was not a tort arising out of the ownership, maintenance, or use of a motor vehicle for which tort liability may be imposed under Section 3135 of the Insurance Code.

(Section 3135 retains tort liability for noneconomic loss if an injured person suffered death, serious impairment of body function, or serious permanent disfigurement caused by the ownership, maintenance, or use of a motor vehicle.)

A claim for monetary damages for an act or omission of a volunteer trustee or a nontrustee volunteer could not be brought or maintained against that person. The claim would have to be brought and maintained against the college.


Repealed Sections


The bill would repeal Sections 4 and 8 of Public Act 72 of 1857.


Section 4 requires the college president to be elected by the board and provides that a majority of the trustees constitute a quorum for the transaction of business.


Section 8 provides that the Michigan and Detroit Annual Conferences of the Methodist Episcopal Church and the Alumni Association of Albion College have the power to appoint visitors to the college, and the Superintendent of Public Instruction may appoint three visitors annually. Section 8 also requires the board to report on the condition of the college to the Michigan and Detroit Annual Conferences, the Alumni Association, and the Superintendent of Public Instruction.


MCL 390.702 et al. Legislative Analyst: Suzanne Lowe

FISCAL IMPACT
The bill would have no fiscal impact on State or local government.

Fiscal Analyst: Bill Bowerman

Analysis was prepared by nonpartisan Senate staff for use by the Senate in its deliberations and does not constitute an official statement of legislative intent. sb396/1112