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Banner Health System v. Lawrence E. Long, Attorney General of South Dakota

The health system filed a complaint for declaratory and other relief against the State’s attorney general. It sought a ruling that it was governed solely by the State’s nonprofit corporation law with respect to the sale of its facilities in the State. The attorney general filed a motion to dismiss. The district court denied the motion and certified the following question to the supreme 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. The court answered the question in the affirmative and held that S.D. Codified Laws ch. 55-1 and equitable principles recognized legal theories that would subject the health system’s assets to an implied charitable trust, assuming certain alleged and disputed facts were established. To the extent that a charitable trust was imposed on one of its predecessor corporations, the health system took the assets subject to that trust and would likewise be bound thereby.

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