State Ex Rel. Guste v. Nicholls College FoundationState Ex Rel. Guste v. Nicholls College Foundation
Until now, the Inspector General of the State of Louisiana has been unsuccessful in examining certain records of the Nicholls College Foundation, notwithstanding the provisions of the Public Records Act,
In connection with an investigation conducted at Nicholls State University, the Office of the Inspector General of the State of Louisiana sought to examine the financial records of the Nicholls College Foundation, a non-profit corporation, apparently on the belief that the Foundation had received “public funds” through a “donation” from the Nicholls State University Alumni Federation. The Federation is also a non-profit corporation. One David Morales, an auditor with the Inspector General‘s office, had previously inspected the records of the Federation and determined from that inspection and other sources that the Federation received “public funds” through a student “self-assessment” fee. The fee was approved by the student body of Nicholls State College in 1962, and had since been collected by Nicholls State from registering students (along with the students’ tuition payments) for the benefit of the Nicholls State University Alumni Federation.
The assessed fee was initially 85¢ per semester in 1962. In 1969, the students voted to increase the fee to $1.35.1 The assessment for the alumni federation is mandatory for all students registering for seven hours or more each semester at Nicholls State. The money is deposited, along with other fees and tuition, in Nicholls State‘s general operating account, and transferred to the Alumni Federation in one lump sum payment each semester after registration is completed.
In 1984, the Board of Directors of the Alumni Federation decided to give to the Nicholls College Foundation ten percent (10%) of all the student assessed fees received thereafter by the Federation from the University. This payment was apparently unsolicited, and the specific purpose not evident, at least insofar as is revealed by this record.
The Inspector General‘s auditor inspected the Federation‘s records in connection with the investigation at Nicholls State, without opposition from the Federation. Donald L. Peltier, Foundation president and a named defendant in this suit, however, refused to allow an inspection of the Foundation‘s records. The Attorney General of the State of Louisiana filed suit on behalf of the Inspector General to obtain a court order allowing examination of the Foundation‘s records pursuant to the Public Records Act.
We find, for the reasons explained below, that the State did present sufficient evidence to present a prima facie case, and that the district court erroneously granted the defendants’ motion for directed verdict.
The Federation, whose records were made available to the Inspector General at the latter‘s request, states in its Articles of Incorporation that its purpose is to “foster[], protect[ ], and promot[e] the welfare of Nicholls State University.”2
The Foundation, whose records are the subject of this litigation, is also a tax-exempt, non-profit private corporation, like the Federation. Its purpose, as stated in its Articles of Incorporation, is to:
“[P]romote, stimulate and improve the educational, cultural, moral and material welfare of Nicholls State College ... to give financial aid to needy and deserving students; to promote and encourage research and scholastic excellence among the faculty members of Nicholls State College; ...”
The Public Records Law allows inspecting, reproducing or obtaining reproductions of any public record.
The Act defines “public body“, in
The Attorney General contends that the Foundation‘s records are subject to examination because the Foundation is a “public body” under the terms of
On the other hand, the defendants allege that the Foundation is not a public body and the funds it receives from the Federation are not public funds. Rather, the transfer was a simple donation of money without responsibility on the part of the Foundation to perform any function in return. Furthermore, the funds are too far removed from the public purse, if in fact the funds were ever public, but rather is more akin to receipt of money for goods or services rendered as would be the case with an independent private, perhaps business, corporation. Additionally, the Foundation takes issue with the characterization of the Federation as a public body, and contends further that the Federation is an indispensable party, the determination of whose status cannot be made without the Federation‘s being a party.
The evidence presented at the trial on the merits indicates that the Foundation‘s domicile and registered office is the office of the president of Nicholls State. The Foundation‘s telephone number is a University telephone number listed in the student directory. The Foundation is housed in the building occupied by the Federation on the Nicholls campus, the NSU Office of Alumni Affairs. That building is leased by the Federation from the State of Louisiana through the Louisiana State Board of Trustees for State Colleges and Universities for a small sum paid only at the outset of the lease.6 The evidence also shows that the Foundation transmits funds to the University to pay the salary of one Gerald Talbot, an employee of the University who works at the Nicholls State Farm. Two university employees, both civil servants of the State of Louisiana, perform the administrative duties required by, and for, the Federation. Those university employees, in carrying out their duties, prepare the check by which ten percent of the student fees received by the Federation from the University is transferred to the Foundation each semester. One of those employees, Eleanor Talbot, also performs administrative and secretarial duties for the Nicholls State Farm.
Furthermore, the record also reveals that, at the time the Foundation was incorporated, one of its registered agents was Dr. Vernon Galliano, whose address is listed as Nicholls State College, Thibodaux, Louisiana. Dr. Galliano also is listed as a subscriber to the Foundation and a member of the original Board of Directors of that corporation.
We approach the resolution of this case by considering some preliminary questions the answers to which will assist us in reaching our decision concerning whether the Foundation‘s records come within the scope of the Public Records Act.
1. Is the Foundation a public body?
2. Is the Federation a public body?
3. Is the money transferred by the Federation and received by the Foundation public funds?
4. Was the money transferred in furtherance of a constitutional or legal duty of the Federation?
5. Correspondingly, was the Foundation, if not a public body, nonetheless charged upon receipt of the money to use it in furtherance of a constitutional or legally endowed responsibility?
We must keep in mind, while answering these questions, that the law favors a liberal construction of the public records law “so as to enlarge rather than restrict access to public records by the public.” Lewis v. Spurney, 456 So.2d 206 (La.App. 4th Cir.), writ denied, 457 So.2d 1183 (La.1984) and 458 So.2d 488 (La.1984); Amoco Production Co. v. Landry, 426 So.2d 220 (La. App. 4th Cir.), writ denied, 433 So.2d 164 (La.1983); Trahan v. Larivee, 365 So.2d 294 (La.App. 3d Cir.1978), writ denied, 366 So.2d 564 (La.1979).
The Foundation—a public body?
Whether the Foundation is a public body is a close question because of the sparse record presented in this case. While the evidence may lean in favor of the State, we cannot make the determination that the Foundation is a public body without a greater appreciation of the duties and functions of the Foundation than is permitted by this record. However, the issue before us can be resolved without making that determination, as will be seen below.
The Federation—a public body?
We conclude that the Alumni Federation is a public body within the intendment of the Public Records Act. A “public body“, for purposes of the Act, is “a public or quasi-public nonprofit corporation designated as an entity to perform a governmental or proprietary function.”
The student assessed fees—public funds?
We also find that the “student assessed” fees are “public funds“. The First Circuit considered the status of student assessed fees in Carter v. Fench, 322 So.2d 305 (La.App. 1st Cir.1975), writ denied, 325 So.2d 277 (La.1976), and held that the fees become public funds when paid by the students to the university because imposed on the students in order to gain admission. The student fees collected for the Alumni Federation are similarly public funds. Thus, the recipients of those funds, “whether they be governmental, public or private bodies, are subject to the Public Records Law insofar as their financial records are concerned.” Carter v. Fench, 322 So.2d at 307.
The fees, paid by registering students along with tuition, are mandatory in the sense that the students do not have the option of whether or not to pay the fee. It seems fair to say, therefore, that it was imposed by the University under its constitutional and statutory powers, albeit responsive to a self-assessment determination made by the student body, originally in 1962 and supplemented at least one other
The Federation—a legal or constitutional duty in transferring the funds?
The Federation was formed to further the educational goals of Nicholls State University, and, as we determined hereinabove, is a quasi-public body because “designated as an entity to perform a governmental or proprietary function.” Surely those educational goals of the Alumni Federation fit within the legal and constitutional duties of the University, in addition to constituting a charge under its charter. The Federation has seen fit to transfer a portion of the student fees to the Foundation. The Louisiana Constitution, however, prohibits donations by the state to “any person, association, or corporation, public or private“,
The Foundation—a legal or constitutional duty upon receipt of funds?
Even assuming the Foundation is not a public body, it is evident that they accepted the funds in connection with a constitutional or legally endowed responsibility. This is not a case where the recipient of public funds has provided goods or services, and as to which there may be independent statutory authority requiring the maintenance of books and records for auditing purposes. See, for instance,
We summarize our conclusions as follows: 1) we need not determine whether the Foundation is a public body; 2) the Federation is indeed a public body under the Public Records Act; 3) the funds transferred from the Federation to the Foundation are and were public money; 4) the funds were transferred in the discharge of the Federation‘s constitutional or legal duties; and 5) the funds were accepted by the Foundation, assumedly a nonpublic body (a private nonprofit corporation) with a commitment to assist the Federation in carrying out its constitutional and legal duties in public education.
The district court granted defendants’ motion for directed verdict and the court of appeal affirmed. However, a motion
The defendants contend that in this holding there is the potential for invading the books and records of private corporations whose missions and activities are almost entirely private, and whose receipt of public money other than through payment for goods and services in a given case may be miniscule. They argue that allowing examination will discourage private donations to profit and nonprofit corporations and will ultimately hurt the recipients. The answer to this is not difficult. If a private corporation accepts public money from a public body in the discharge of the latter‘s constitutional or legal duties, it must disclose records concerning those transactions, including the receipt and expenditure of those funds. If those corporations wish to avoid divulging nonpublic receipts and expenditures, they need only maintain separate and distinct books, accounts and records.
In this case, the right of inspection is limited to the records of receipts and expenditures of public funds. The Inspector General does not have the right to examine records regarding private donors, nor other receipts or expenditures unrelated to the transmitted fees. Indeed, the Inspector General has not sought such relief.
DECREE
For the foregoing reasons, the judgment of the district court granting the defendants’ motion for directed verdict and the judgment of the court of appeal are reversed. The case is remanded to the district court for further proceedings.
REVERSED AND REMANDED TO THE DISTRICT COURT.
* * *
COLE, J., dissents and assigns reasons.
COLE, Justice, dissenting.
It is a fiction to say the funds were given and accepted under the authority of the constitution or the laws of this state. The Foundation has no constitutional or legally endowed responsibility to do anything nor has it been designated as an entity to perform a governmental or proprietary function. It is not a public body subject to the Public Records Act.
Notes
“The corporation is organized exclusively for charitable, religious, literary, educational, and scientific purposes, ... including the purpose of fostering, protecting, and promoting the welfare of Nicholls State University....”