Opinion
Argued November 11, 1954.
January 4, 1955.
Unincorporated associations — Sale of assets — Dissolution — Validity — Meetings — Notice to members — Necessity.
1. All members of an unincorporated association have a right to receive notice of the time, place and purpose of a meeting which is called for the purpose of dissolving the association and transferring or selling its assets. [237-40]
2. Resolutions to dissolve an unincorporated association and transfer its assets to another organization which are adopted at a meeting without proper notice of the meeting having been sent out to the membership are invalid. [237-40]
Before STEARNE, JONES, BELL, CHIDSEY, MUSMANNO and ARNOLD, JJ.
Appeal, No. 259, Jan. T., 1954, from decree of Court of Common Pleas No. 5 of Philadelphia County, Sept. T., 1951, No. 2424, in case of James E. Strong, William Ricks and Jason Drake, Trustees, etc. v. Garvey Memorial Liberty Hall, Inc. et al. Decree affirmed.
Bill in equity. Before SMITH, P.J.
The opinion, by REIMEL, J., of the court below, is as follows:
Plaintiffs, acting as Trustees on behalf of an unincorporated association known as Division 121 Universal Negro Improvement Association and African Communities League, August 1929, of the World, herein referred to as U. N. I. A. filed a bill in equity for the purpose of adjudicating its right, title and interest in certain premises located at 1609-11 West Columbia Avenue, Philadelphia, Pa. The case was heard by SMITH, P.J. as the Chancellor. This matter is now before the Court on exceptions to the adjudication.
This adjudication necessitated a determination as to which of the divers parties was the proper successor in interest to the legal title to the premises. The crux of the case rests upon the defendants' assertion that the right, title and interest of the Rehabilitating Committee of Division 121, U. N. I. A. was lost by reason of a purported dissolution and transfer of the assets of the Committee.
The U. N. I. A. is an international organization with locally chartered divisions in various parts of the United States and Canada. Prior to 1942, there existed in Philadelphia an unincorporated association known as Division 121 U. N. I. A. In the latter part of 1942 and early in 1943 dissension crept into the entire organization. As a result, the dissatisfied elements formed a Rehabilitating Committee on both the national and local levels. The local dissidents withdrew their support from Division 121 U. N. I. A. and formed the Rehabilitating Committee of Division 121 U. N. I. A., herein referred to as the Rehabilitating Committee.
In 1943, this Committee negotiated for the purchase of the premises in question. On May 4, 1943, a written agreement for the purchase of the premises was signed by A. Warreno, Thomas W. Harvey and Benjamin W. Jones as agents for the Rehabilitating Committee. Settlement for the premises was made April 10, 1944. The funds to complete settlement came from deposits made by the Treasurer of the Rehabilitating Committee, from loans advanced by the members, and from the creation of two mortgages.
On or about September 13, 1943 the Rehabilitating Committee created a Pennsylvania corporation known as the Garvey Memorial Liberty Hall, Inc., for the purpose of holding title to the premises as Trustees for the Rehabilitating Committee. This corporation, which is the defendant herein has held title to the premises from the date of settlement to the present time.
On October 3, 1946 at a special meeting of a minority of the members of this Committee, a motion was made to dissolve the Committee and close out its assets. This meeting was continued to October 24, 1946 when the resolutions were allegedly adopted. The minutes do not contain a copy of either resolution.
One of the alleged resolutions gave Llewllyn Campbell a power of attorney which authorized the sale of the premises to the Universal African Nationalist Movement, herein referred to as U. A. N.M., for the consideration of One Dollar provided that the U. A. N.M. would agree to accept all the liabilities of the Rehabilitating Committee. Subsequent to October 24, 1946 certificates of stock constituting controlling ownership of the defendant corporation were transferred of record to the U. A. N.M.
The legality of these two resolutions is the basis of the present controversy. Since there is no provision in the constitution or by-laws of the Rehabilitating Committee as to the method of dissolution and the sale of this property, the decision to do so is one to be made by a majority vote of the membership. ( Liederkranz Singing Society v. Germania Turn Verein, 163 Pa. 265, 268, 269).
The proposal to dissolve an unincorporated association and to transfer its sole assets to another organization is momentous. It is fundamental that all of the members must have notice of the time, place, and purpose of any meeting at which such drastic action is proposed. In the instant case, this basic requirement of notice took on an even greater significance due to the fact that nearly all of the officers and members of both the Garvey Memorial Liberty Hall, Inc., and the U. A. N.M. were the immediate family of Llewllyn Campbell. The testimony and the minutes of both meetings establish that proper notice was never sent to the membership of the Rehabilitating Committee or to its national headquarters. This defect in notice is sufficient to render the resolution invalid.
There can be no doubt that the Campbell clique was operating the Rehabilitating Committee for its own benefit and the conclusion is overwhelming that the two resolutions were in violation of the law governing such activities. The U. A. N. M., therefore, is not the owner of, and has no right or title in, the premises.
At a national convention held at Detroit, Michigan, in September 1950, the Rehabilitating Committee merged with U. N. I. A. on both the national and local levels. The merger transferred all rights and tangible assets of the Rehabilitating Committee to Division 121 U. N. I. A., the plaintiff herein. We, therefore, find that the defendant corporation holds title to the premises in question as the legal trustee of Division 121 U. N. I. A.
Defendants appealed.
Donald E. Hogeland, for appellants.
James K. Baker, for appellees.
The Decree is affirmed on the Opinion of Judge REIMEL. Costs to be paid by appellants.