Banner Health System v. Long

Argued March 24, 2003 FACTS [1.] On March 8, 2002, Banner Health System (Banner) filed a complaint in the United States District Court for declaratory and other relief against the South Dakota Attorney General. Banner sought a ruling that it is governed solely by the state's nonprofit corporation law with respect to the sale of its facilities in South Dakota. The Attorney General filed a motion to dismiss. The district court denied the motion to dismiss and certified the following question to this Court: Whether the laws of South Dakota recognize any legal theory that would subject any of the assets of a nonprofit corporation or proceeds from the sale of those assets to an implied or constructive charitable trust in the absence of an express trust agreement. [2.] This Court entered an order on October 10, 2002 accepting certification of the question. Upon consideration, we answer the question in the affirmative and hold that South Dakota law does recognize legal theories that would subject Banner's assets to an implied charitable trust assuming certain alleged and disputed facts are established.