Nelson's Estate , 92 Pa. Super. 198 ( 1927 )

Argued October 10, 1927. Appellant's testator was a member of the Columbia Club at the time of his death May 28, 1924. The club was organized pursuant to the general incorporation act as a corporation of the first class for social purposes without capital stock. On January 17, 1924, after prior negotiation for the purpose, the club executed an agreement to sell all its property. The sale was consumated by the delivery of title papers and the payment of part of the consideration on June 23, 1924, the balance being paid August 22, 1924. At a club meeting on September 3, 1924, the officers were directed to take legal steps to dissolve the corporation and to distribute its assets among those entitled. On September 9 they declared a dividend and ordered a refund to the members of the club — dues and tax received on July 1, 1924. A petition for dissolution was filed April 16, 1925, and in May the court below entered such a decree pursuant to the Act of April 9, 1856, P.L. 293. To the account exhibited in the proceeding, exceptions were filed by appellant complaining that the estate of its testator was awarded no part of the assets distributed. After hearing, the learned court below concluded that appellant was not entitled to share because its testator's membership had terminated with his death before the sale.

Appellant's only point therefore is whether the right to participate in distribution arose when the agreement to sell the property was made; its contention is that a dissolution in fact resulted by the agreement to sell all the club property, and that testator thereby became entitled to share in distribution.

While the statute provides that such a decree of dissolution "shall not go into effect until a certified copy thereof be filed and recorded in the office of the Secretary of Commonwealth," this record does not require us to decide whether the right of participation in the assets arose when the club formally decided to dissolve, or when the decree was made or when it was recorded, for it appears by the findings of fact, supported by evidence and therefore conclusive here, that the club functioned for the purposes for which it was incorporated until June 23, 1924 when the conveyance was made, and there is evidence that would support a date even later. This finding settles against appellant the contention that there was a dissolution in fact during decedent's life time without now considering what would constitute a dissolution of that character.

When the agreement of sale was made in January 1924, decedent was a member in good standing, a status which existed until his death in May 1924. Sec. 12, Art. 4 of the by-laws provides: "When a person shall cease to be a member from any cause, all the interest he may have in the property of the club, by reason of his membership shall be vested in the corporation." Pursuant to that by-law, decedent ceased to be a member of the club and to have any interest in its property after his death, unless such interest is conferred by some other contract superseding the by-law. Appellant contends that such relation arose by a by-law subsequently adopted in 1920 reading as follows: "All proprietary interest and right to share in a distribution of the assets of the club, real or personal, already acquired or to be acquired, shall be vested only in (1) members in good standing on the date of the approval of this by-law and who shall continue in good standing thereafter, and in (2) additional active or resident members in good standing who shall have been such members for not less than five years from the date of the approval of this by-law." Though the decedent had been a member in good standing for more than five years at the time of his death, he did not remain a member. The obvious result of the second by-law was to exclude from distribution on dissolution members admitted to the club after the adoption of the by-laws, who lacked five years membership prior to dissolution. This by-law did not supersede the earlier by-law, because it specifically states that the member "shall continue in good standing thereafter."

Appellant also contends that as the agreement of sale of January 1924 was sufficient to constitute the transfer to the vendee the equitable ownership of the premises sold, the club was then in fact dissolved. While the conclusion drawn is unsound for several reasons, it is sufficient again to refer to the finding that the club functioned for the purpose for which it was incorporated until after testator's death. As the by-law governing his membership provided that his interest in the property should end with the termination of his membership — a result of his death on May 28, 1924 — he had no interest in the property of the club under the findings of fact referred to.

Judgment affirmed, costs to be paid out of the fund.