The Reorganization to Not-for-Profit

By the beginning of the 1950s, the organizational framework associated with Wentworth Military Academy had become complicated. Lines of relationship and responsibility were confusing and needed to be clarified and rationalized. The motivation for this whole exercise was financial. By mid-century the institution needed to expand. Classrooms and laboratories needed to be updated. Room needed to be found for more college students and facilities always need attention, no matter what.

It became increasingly difficult for the academy leadership to raise enough money to meet those needs. It was time to change the form of corporate organization to fall under the revised Missouri statues of 1949. Another very human motivation for change surfaced: Col. Sellers had a severe heart attack. It was clear to all that had he died during that illness, the heirs of his estate would have been hard-pressed to settle the inheritance taxes and still keep the academy operating in the same manner as it had been.

Most organizations closely held by families face this predicament. Inheritance taxes frequently force the break-up of holdings unless they are in some form of not-for-profit organization. The Sellers family and Col. Wikoff took action as soon as possible to rationalize the situation.

The best way to understand the process as it took place in 1951 is to briefly trace the corporate history of the institution and of those who were associated with it.

Those who have read Volume I are familiar with the founding in 1880 of Wentworth Male Academy by Stephen G. Wentworth as a memorial to his 27-year-old son, William, who had died the previous year. The school was a continuation of Benjamin L. Hobson’s one-year-old Select School for Boys. Hobson arranged for his college classmate, Sandford Sellers, to come to Lexington from Sherman, Texas, to serve as co-principal of the new school with its 34 students. In 1881 Hobson left to pursue studies in the ministry, leaving Sellers to guide the school for the next fifty-seven years until his death in 1938.

Sandford Sellers would introduce military training to the school’s program in 1882 and by 1890, the military concept would be so well-established that it would be incorporated into the name of the school as Wentworth Military Academy.

That year the trustees leased the facilities of the school to Sandford Sellers in return for five percent of the gross revenues and the right to supervise and control the overall policies of the institution. Sellers would erect additional buildings, make repairs, and conduct school operations out of his share. The original lease was for sixteen years but would be subsequently expanded.

Sellers would be in partnership with William M. Hoge and Edwin A. Hickman until the middle of the 1910-1920 period. The partners, who by this time included Sandford Sellers, Jr., and James M. Sellers, would convey their lease and interest to the Wentworth Military Scientific and Literary Educational Company (hereafter referred to as the Educational Company). This was a for-profit business corporation organized under the laws of Missouri.

Now, there were two corporations associated with Wentworth: the school itself, and a corporate leaseholder, which would run the school. The directors of these organizations were mostly the same individuals and these were closely-held family corporations.

The minutes and records of both of these corporations were meticulously kept and any changes to organization were approved by the Circuit Court of Lafayette County. These arrangements served Wentworth well through hard times and good times until the 1950s. Then, financial borrowing arrangements and tax considerations for both the individual stockholders and the corporations themselves dictated a change.

The revised statutes of Missouri of 1949 allowed institutions with purposes that were benevolent, religious, scientific, and educational to form not-for-profit corporations under chapter 352. The problem was how to sort this all out and still retain the name recognition and traditions associated with Wentworth Military Academy.

The first action was to change the name of the original corporation (Wentworth Military Academy) to the Stephen G. Wentworth Foundation. That was accomplished on April 4, 1951, with the approval of the circuit Court of Lafayette County.

Then, Wentworth Military Academy was incorporated under articles of association approved by the Circuit Court on April 25th and the Secretary of State of Missouri issued a certificate of incorporation on May 4, 1951.

The next step was for the Educational Company to deed all of its property to the new, not for profit, Wentworth Military Academy. The stockholders received promissory notes for the value of their stock which were issued by the academy. The Educational Company then dissolved itself by resolution. All of this was accomplished by the end of May 1951.

Now there were only two corporate entities, the Wentworth Military Academy and the Stephen G. Wentworth Foundation, the residual agent of the original corporation. There were still questions about the clear and free title to the property of the school and that limited the mortgage ability of the academy to borrow money for necessary purposes. Did the foundation have the power to join with the academy to borrow on one set of property that appeared to have two owners? The solution taken in 1954 was to file a “friendly” lawsuit against the attorney general of Missouri as a representative of the public interest, and have the matter adjudicated by the Lafayette County Circuit Court.

This was finally completed by the end of July, 1954, and a first mortgage deed of trust was issued to a lending institution for issuance of $100,000 worth of bonds by both the Stephen G. Wentworth Foundation and Wentworth Military Academy.

Another court action was filed and adjudicated in 1958 in which the Circuit Court of Lafayette County approved the entire transfer of all real estate and other property to Wentworth Military Academy with full rights to control all of its property. Now there was one corporate entity and only one to deal with financial matters and property ownership and educational operations.

The Stephen G. Wentworth Foundation still exists in the database of the Missouri Secretary of State. The corporation is in an inactive status with no officers or directors. It served its mission well in the change from profit-making to not-for-profit status.

The Wentworth Foundation, Inc., was formed in February of 1998. It exists as a separate entity to hold and manage the assets of endowed funds, which will enable the academy to grow and develop into the twenty-first century.

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