Proxies, redux

The last explanation of proxies was pretty dense, so let's try a simpler take on it.

Are proxies allowed?

The first place you go for that answer is State Law. We can imagine State law saying one of four things:
#1 It could say Yes - accepting proxies is mandatory.
#2 It could say No - accepting proxies is forbidden.
#3 It could say Yes, unless disallowed in bylaws.
#4 It could say No, unless allowed in bylaws.

Michigan law says #3. Proxies are allowed, unless disallowed in bylaws. (note 1) In other words, the Bylaws are specifically allowed to override state law.

Bylaws? Those are the governing rules of a nonprofit. Every nonprofit must have them. But they're just rules, right? Do they have the force of law? YES - the above law gives them that force.

But stop for a moment and think about Bylaws.

Imagine you are starting a new nonprofit. Every one must have Bylaws, and you must write them. The Bylaws define how meetings occur. What is an agenda? How do you 'table' motions? When does the chairman vote? Arrrrgh! There are 1000 things to think about. How do you do this from scratch?

The answer is - you don't. There are already rulebooks which answer these questions. Robert's Rules, Riddick's, Demeter's, Sturgis's. Pick one. Include it into your bylaws by reference, and it becomes PART of the bylaws, in the same way that Bylaws are included by reference into state law.

SMRS Bylaws include Robert's Rules of Order. With a proviso: Robert's Rules apply if they are not overridden by 1) state law; 2) Bylaws; and 3) an action of the Board of Directors. (note 2).

Golly, you have to "allow" state law to override Robert's, that's one train you can't stop. Unless state law allows you to override it. (Michigan law allows Bylaws to prohibit proxies.)

Of course, it's also reasonable to allow Bylaws to override Robert's Rules. After all, Robert's got its authority from the Bylaws.

Allowing the Board of Directors to override Robert's is a very useful thing.

So there is the chain of authority.
State law > Bylaws > Board > Robert's Rules of Order.

Now - finally let's look at the question of proxies.

Are proxies allowed at SMRS?

1. State law says "Allowed, unless Bylaws say disallowed."

2. Bylaws say nothing.

3. Board of Directors actions have said nothing.

4. Robert's Rules of Order (note 3) says No, No, No, No! But it also says, if the Bylaws invoke Robert's Rules, that has the same effect as Bylaws prohibiting proxies. (assuming of course that is possible under state law.)

Adds up to: Proxies are disallowed at SMRS.

It is common knowledge that proxies are disallowed at nonprofits governed by Robert's Rules. Even Wikipedia discusses it. That's why I was so shocked when the inspector and the court so casually dismissed Robert's and allowed proxies. You can't dismiss Robert's - it's part of the Bylaws. How could they not know that? Real simple - lawyers are lawyers, not gods. They don't know everything. It's up to parties to remind them, which means it's up to parties to know the law, and be assertive.



Note 1: State Law.

MCL 450.2421 "(1) Except as otherwise provided in the articles of incorporation or in a bylaw adopted by the shareholders or members, a shareholder or member entitled to vote at a meeting of shareholders or members or to express consent or dissent without a meeting may authorize other persons to act for the shareholder or member by proxy."

Note 2: SMRS Bylaws.

(SMRS Bylaws 8.7) PARLIAMENTARY AUTHORITY: The procedures contained in Robert’s Rules of Order, Newly Revised current edition shall be employed in conducting General Membership meetings and meetings of the Board of Directors in all cases to which they are applicable, and in which they are not inconsistent with the laws of the State of Michigan, or of these bylaws or with any particular procedures which the Board of Directors may adopt.

Note 3: Robert's Rules

Roberts Rules of Order, Newly Revised 10th Edition, page 414:
(line 15) PROXY VOTING. A proxy is a power of attorney given by one person to another to vote in his stead; the term also designates the person who holds the power of attorney. Proxy voting is not permitted in ordinary deliberative assemblies unless the laws of the state in which the society is incorporated require it, or the charter or bylaws of the organization provide for it. Ordinarily it should neither be allowed nor required, because proxy voting is incompatible with the essential characteristics of a deliberative assembly in which membership is individual, personal, and nontransferable. In a stock corporation, on the other hand, where the ownership is transferable, the voice and vote of the member also is transferable, by use of a proxy. But in a nonstock corporation, where membership is usually on the same basis as an unincorporated, voluntary association, voting by proxy should not be permitted unless the state's corporation law - as applying to nonstock corporations - absolutely requires it.
(line 32) If the law under which an organization is incorporated allows proxy voting to be prohibited by a provision of the bylaws, the adoption of this book as a parliamentary authority by prescription in the bylaws should be treated as sufficient provision to accomplish that result.

SMRS scores minor victory

Another article in the newspaper:
http://www.lenconnect.com/news/courts/x2077692917/Costs-mounting-as-railroad-election-nears-end

The election inspector filed with the court, demanding immediate payment for his election inspection services, which now amount to $14,000.

The Society makes $50,000 gross income on a good year, and 2009 wasn't one.

Simultaneously, the Society's lawyer attempted to argue that Gross/Goligoski should pay since they started the inspection. That would be a difficult argument to win, without getting into the rather complex legal matter of their long history of scheming and legal manipulation.

The court said "No" on both counts. It validated $14,000 as an appropriate amount of money for an election inspection, but it refused Brooks a special status as debtor, and it also refused to assign costs to Gross.

Are proxies allowed in mail-in votes?

The purpose of a proxy is to allow someone to vote without being present. In presidential and municipal elections, proxies are illegal, and the problem of an absent voter is handled with an absentee ballot.

Most railway museums and many other membership organizations, vote by mail. Robert's Rules of Order has a procedure for that (RONR p. 409, line 19) People are allowed to bring their ballots to the meeting, but in practice, few people do.

Proxies have no purpose whatsoever in a mail-in election. After all, everyone can vote by mail, and at SMRS they have over 30 days to do so. That amply serves the needs of absentees. Therefore proxies are totally unnecessary and redundant.

In any case, people cannot vote during the meeting. The ballot box closes at the start of the meeting. That's because, as Robert's Rules discusses (RONR p. 409, line 4 etc.), you can't have some people vote prior to discussion while others vote after discussion. They'd be voting on different things.

Now read what Robert's Rules has to say about any form of absentee voting:

It is a fundamenal principle of parliamentary law that the right to vote is limited to the members of an organization who are actually present at the time the vote is taken in a legal meeting, though it should be noted that a member need not be present when the question is put. Exceptions to this rule must be expressly stated in the bylaws. Such possible exceptions include: a) voting by postal or electronic mail, or fax, and b) proxy voting. (RONR p. 408-409).

Sounds like if either mail or proxy voting is done, it must be expressly stated in the bylaws. Mail is specified - proxies are not!

Can both systems be used at once? Plainly, that would be bizarre and redundant. Let's look at Robert's Rules, RONR p. 571, line 24: "If the bylaws authorize certain things specifically, other things of the same class are thereby prohibited." Now wind back to page 408 above, which puts "mail" and "proxies" in the same class - both are methods for absentee voting. Note also Robert's emphatic criticism of proxies on page 414 line 15 (near the bottom of the last blog entry) Which do you think is more likely:
1. Robert's Rules endorsing an awkward scheme allowing both mail-in and proxies? Or
2. Robert's Rules disallowing proxies as redundant to mail voting?

What do you think?

Are proxy votes allowed at SMRS?

You may have noticed -- you can't proxy vote in a municipal or presidential election. You can't write out a piece of paper giving your friend permission to walk into a polling place and vote your vote. They would be laughed out of the polling place - or leave in handcuffs.

Yet if you've ever owned stock, you've received "proxies". Somebody wants you to sign over your rights to vote your shares in the company. How is this different from signing over your right to vote for the Governor or Congressmen?

Simple - in one case, your shares in the company can be sold. You could sell me half your shares, and with it, half your voting power. Shares are transferable. So it makes sense for votes to be transferable. (I could sell you my shares for $1 and agree to buy it back for $1 after the election.) In the other case, the fundamental principle is "one man, one vote". Citizenship is not transferable, so neither are a citizen's voting rights.

Where does SMRS fit into that? The very definition of a membership organizations is "one man, one vote". There are other types of structure, and the founders of SMRS could have chosen one of them. But they deliberately chose "membership organization". That is not to be treated lightly. Roberts' Rules says "Nothing has been placed in the Bylaws without some reason for it." (p. 571 line 26).

Wikipedia has an excellent summary for why proxies are not allowed in nonprofits generally.

Does SMRS disallow proxies? Yes - but not directly. Short version: State law defers to SMRS Bylaws. Bylaws defer to "Robert's Rules of Order", which is a parliamentary authority, or rules for governing meetings. Robert's Rules say roughly "If the decision is deferred to Robert's Rules, then absolutely no proxies."

Now let's go deeper into that.

State law does not require proxies. It allows proxies by default, and then allows the organization's Bylaws to prohibit them.

MCL 450.2421 "(1) Except as otherwise provided in the articles of incorporation or in a bylaw adopted by the shareholders or members, a shareholder or member entitled to vote at a meeting of shareholders or members or to express consent or dissent without a meeting may authorize other persons to act for the shareholder or member by proxy."

SMRS bylaws say nothing about proxies. However, they invoke Roberts Rules of Order, Newly Revised, "current edition" (often called RONR). Here:

(SMRS Bylaws 8.7) PARLIAMENTARY AUTHORITY: The procedures contained in Robert’s Rules of Order, Newly Revised current edition shall be employed in conducting General Membership meetings and meetings of the Board of Directors in all cases to which they are applicable, and in which they are not inconsistent with the laws of the State of Michigan, or of these bylaws or with any particular procedures which the Board of Directors may adopt.

Robert's Rules says Absolutely No Proxies, unless it is required by state law or bylaws:

(RONR p. 414) "Proxy voting is not permitted in ordinary deliberative assemblies unless the laws of the state in which the society is incorporated require it, or the charter or bylaws of the organization provide for it... proxy voting is incompatible with the essential characteristics of a deliberative assembly in which membership is individual, personal, and nontransferable."

Well, that's that! No proxies at SMRS!

Almost. We must revisit this again because the SMRS bylaws (8.7 again) have this extra clause:

"... and in which they are not inconsistent with the laws of the State of Michigan, or of these bylaws or with any particular procedures which the Board of Directors may adopt."

In other words, Robert's Rules control, if not incompatible with #1 state law; #2 Bylaws; and #3 any Board of Directors actions.

#1 is the hardest. State law allows proxies by default. Roberts Rules disallows proxies by default. Are these "inconsistent" with each other? No. Robert's Rules saw this one coming! Here we have a case where state law allows proxies to be prohibited but defers to bylaws, and then bylaws defer to Robert's. Robert's Rules specifically call out this case:

"If the law under which an organization is incorporated allows proxy voting to be prohibited by a provision of the bylaws, the adoption of this book as a parliamentary authority by prescription in the bylaws should be treated as sufficient provision to accomplish that result." (RONR p. 414 l. 32).

#2 is very easy. The bylaws say absolutely nothing about proxies.

#3 is easy too: the Board of Directors is silent on the issue. However, here, I must throw in some comment: In September, I cautioned, warned, begged the Board of Directors to pass a resolution: "Proxies are not allowed in SMRS elections." I gave them the wording and said "pass this like your life depends on it - can't hurt, is likely to help." Well, they failed to do that, wringing hands about it possibly being improper. Too bad... the authority in bylaws is clear, and it would have made the election a lot shorter. And cheaper.

For reference, here is the full text of the Robert's Rules section. I may be pushing the limits of Fair Use to reprint it in whole, but doggone it -- citizens have a fundamental right to be able to read the laws which govern them, and this law directly impacts 550 SMRS members.

Roberts Rules of Order, Newly Revised 10th Edition, page 414:
(line 15) PROXY VOTING. A proxy is a power of attorney given by one person to another to vote in his stead; the term also designates the person who holds the power of attorney. Proxy voting is not permitted in ordinary deliberative assemblies unless the laws of the state in which the society is incorporated require it, or the charter or bylaws of the organization provide for it. Ordinarily it should neither be allowed nor required, because proxy voting is incompatible with the essential characteristics of a deliberative assembly in which membership is individual, personal, and nontransferable. In a stock corporation, on the other hand, where the ownership is transferable, the voice and vote of the member also is transferable, by use of a proxy. But in a nonstock corporation, where membership is usually on the same basis as an unincorporated, voluntary association, voting by proxy should not be permitted unless the state's corporation law - as applying to nonstock corporations - absolutely requires it.
(line 32) If the law under which an organization is incorporated allows proxy voting to be prohibited by a provision of the bylaws, the adoption of this book as a parliamentary authority by prescription in the bylaws should be treated as sufficient provision to accomplish that result.

Robert's Rules is not the only parliamentary authority, but it is the most popular one. The correct edition for SMRS is the current one: "Robert's Rules of Order, Newly Revised, 10th Edition". It is copyright controlled. There are many obsolete copies out there. All of them are dangerously wrong. The worst is the 95-year-old edition, now copyright expired, which bounces around the Internet. Even Amazon is a minefield of wrong versions, and they promote the wrong ones as most popular! The correct editions on Amazon are Hardback ($22), Softcover ($13), Leather bound ($60). The correct Kindle Edition is $5, but it's semi-useless, because it doesn't have page numbers, and that's how everyone cites it. Avoid the 99 cent Kindle version, it is the 95-year-old edition.