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SHERMAN v. YIDDISHER KULTUR FARBAND (10/15/53)

October 15, 1953

SHERMAN
v.
YIDDISHER KULTUR FARBAND, APPELLANT



Appeal, No. 139, March T., 1953, from order of Court of Common Pleas of Allegheny County, July T., 1944, No. 1205, in case of Samuel Louis Sherman and Paul Ginsburg v. Yiddisher Kultur Farband, also known as Jewish Culture Association. Order reversed; reargument refused November 10, 1953.

COUNSEL

Hymen Schlesinger, for appellant.

Harry Alan Sherman, for appellees.

Frank P. Lawley, Jr., Deputy Attorney General, and Robert E. Woodside, Attorney General, amicus curiae, filed a brief.

Before Stern, C.j., Stearne, Jones, Bell, Chidsey, Musmanno and Arnold, JJ.

Author: Stearne

[ 375 Pa. Page 110]

OPINION BY MR. JUSTICE ALLEN M. STEARNE

May petitioners, who are not members of a nonprofit corporation, intervene and petition the court of common pleas to revoke its decree of incorporation, upon the ground that such decree had been obtained through fraudulent misrepresentation?

The Yiddisher Kultur Farband, also known as Jewish Culture Association, in proceedings under the Nonprofit Corporation Law of May 5, 1933, P.L. 289, obtained a charter from the Court of Common Pleas of Allegheny County on May 22, 1944. The application stated that the purposes for which the corporation was formed were to encourage the study of Jewish literature, arts, and cultural pursuits, together with a number of similar objectives.

Samuel Louis Sherman and Paul Ginsburg filed a petition in that court as of the original term and number at which the charter was grated, in which petition they pray that they be permitted to intervene specially as parties. They allege that the incorporators, directors and officers wilfully, maliciously and corruptly perpetrated a fraud upon the court by misrepresenting the purposes of the corporation, "its true and clandestine purpose being the establishment of a Communist formed, controlled and directed 'front' for unlawful purposes," and that the existence of the corporation constitutes a continuing fraud upon the court and a gross abuse of the corporation laws of the Commonwealth. They aver, therefore, that, after

[ 375 Pa. Page 111]

    investigation of the facts, the charter of the corporation should be revoked and punitive measures taken against the persons responsible. The court granted leave to the petitioners to intervene and fixed a time for a hearing. The Association, by its counsel, filed preliminary objections. The court below announced its intention to take testimony in order to determine whether the alleged fraud was in fact committed. The Association has appealed to this Court under the Act of March 5, 1925, P.L. 23, 12 PS 672, which authorizes an appeal where on preliminary objections, the jurisdiction of a court is raised. There is no question that a court of common pleas possesses jurisdiction to revoke its decree of incorporation, but such proceeding must be instituted by interested parties and in an appropriate statutory action.

All corporations, whether for profit or nonprofit, are creatures of statute, which prescribes not only how they shall be formed but how they shall be dissolved: Act of May 5, 1933, P.L. 364, as amended, 15 PS 2852, and Nonprofit Corporation Law of May 5, 1933, P.L. 289, as amended, 15 PS 2851. This Court has consistently decided that in corporations formed for profit the Attorney General, by an action of quo warrantor, is the appropriate official to petition for the dissolution and termination of an improperly formed or illegally conducted corporation: Centre and Kishacoquillas Turnpike Road Company v. McConaby, 16 S. & R. 140; Commonwealth ex rel. v. American Baseball Club of Philadelphia, 290 Pa. 136, 138 A. 497; Commonwealth ex rel. v. United States Annuity Society, 303 Pa. 19, 154 A. 24. Section 209 of the Act of May 5, 1933, supra, 15 PS 2851-209, under which the present nonprofit corporation was formed, provides: "The articles of incorporation, approved by a judge and recorded by the recorder of deeds, shall be conclusive evidence

[ 375 Pa. Page 112]

    of the fact that the corporation has been incorporated, but proceedings may be instituted by the Commonwealth to dissolve, wind up and terminate a corporation which should not have been formed under this act or which has been formed without a substantial compliance with the conditions prescribed in this act as precedent to incorporation." (Italics supplied) The statutory remedy of revocation is by the Commonwealth in an action of quo warrantor.

Petitioners possess no status as interested parties in this proceeding. The Act of June 14, 1836, P.L. 621, § 2, 12 PS 2022, provides that the writ of quo warrantor may be issued "upon the suggestion of the Attorney General, or his deputy, in the respective county, or of any person or persons desiring to prosecute the same." But the words "any person desiring to prosecute the same" have uniformly been held to mean a person having an interest of his own to be affected, or a wrong to be redressed, separate and distinct from that of the Commonwealth or the community in general; they do not give a private relator the use of the writ in a case of public right involving no individual grievance. In short, a stranger who has no interest in a corporation except that which is common to every citizen cannot demand a judgment of ouster in a writ of quo warrantor: Commonwealth v. Allegheny Bridge Co., 20 Pa. 185, 190; Murphy v. Farmers' Bank of Schuylkill County, 20 Pa. 415, 418; Commonwealth ex rel. Banning v. The Philadelphia, Germantown and Norristown Railway Co., 20 Pa. 518; Commonwealth ex rel. McLaughlin v. Cluley, 56 Pa. 270, 272; Commonwealth ex rel. Attorney General v. Dillon, 81 Pa. 41, 45, 46; Commonwealth ex rel. Butterfield v. McCarter, 98 Pa. 607, 612-614; Commonwealth ex rel. Gast v. Pfromm, 255 Pa. 485, 489-491, 100 A. 276, 277, 278; Commonwealth ex rel. Attorney General v.

[ 375 Pa. Page 113]

    also National Endowment Co., 142 Pa. 450; and neither the common law nor any statute or decision of this Court declares the last remedy to be exclusive.

The Act upon which the majority relies, i.e., § 209 of the Nonprofit Corporation Law of 1933 provides that "proceedings may be*fn1 instituted by the Commonwealth to dissolve, wind up and terminate a corporation which should not have been formed under this act." It is crystal clear that this provision is permissive or directory not mandatory or exclusive.

The decision of the majority is not only based upon an act which being permissive, utterly fails to support its position, but it is likewise contrary to prior decisions of this Court, which require this appeal to be quashed or dismissed. This is not an appeal from a final judgment, order or decree; this is an appeal under and limited by the Act of 1925. In Com. ex rel. Shumaker v. New York & Pennsylvania Co., Inc., 367 Pa. 40, 79 A.2d 439, the Court said (page 46): "... The narrow scope to which this inquiry must be confined was clearly restated recently by Mr. Justice JONES in Upholsterers' International Union etc. v. United Furniture Workers, etc., 356 Pa. 469, 52 A.2d 217 (1947), where he said, p. 472, 473, 'The procedure prescribed by the Act of 1925 for testing jurisdiction "in the court of first instance" applies to questions of inrisdiction either of the defendant or of the subject-matter : Welser v. Ealer, 317 Pa. 182, 184, 176 A. 429. In the present instance, the question involved goes to the jurisdiction of the cause of action (whereon the suit was instituted) which "... relates 'solely to the competency of the particular court to determine controversies of the general class to which the case then presented for its consideration belongs': Skelton v.

[ 375 Pa. Page 115]

Lower Merion Twp., 298 Pa. 471, 473. See also Koontz v. Messer, 314 Pa. 434": Welser v. Ealer, supra... The thing of chief importance on a question of jurisdiction of subject-matter is not whether the plaintiff may recover in the particular forum on the cause of action pleaded but whether the court is empowered to hear and determine a controversy of the character involved: Matthews v. Plum Township, etc., 152 Pa. Superior Ct. 544, 546-547, 33 A.2d 38.'"

In Welser v. Ealer, 317 Pa., supra, this Court said (page 183-184): "This case is before us by virtue of the provisions of the Act of 1925, P.L. 23, authorizing an appeal from the preliminary determination of the lower court's 'jurisdiction over the defendant or of the cause of action for which suit is brought.' The action is in trespass to recover damages for injuries resulting from an automobile accident.... Manifestly it has jurisdiction over the cause of action alleged in the statement, namely, trespass to recover damages for personal injuries. No other matters are open for inquiry in proceedings of this nature. Jurisdiction or the cause of action, as used in the statute, relates 'solely to the competency of the particular court to determine controversies of the general class to which the case then presented for its consideration belongs': Skelton v. Lower Merion Twp., 298 Pa. 471, 473. See also Koontz v. Messer, 314 Pa. 434."

The majority opinion necessarily admits that the Court below had jurisdiction over the defendant and over the subject matter or cause of action, viz., fraud, as well as the power to determine controversies of the general class to which the case belongs, viz., the grant and revocation of charters of nonprofit corporations. The majority dismiss this appeal on procedural grounds and because the parties plaintiff have no interest in the suit, thus flying in the teeth of the foregoing authorities

[ 375 Pa. Page 116]

    which they ignore and which specifically hold that no such matters are open for inquiry in an appeal under the Act of 1925. Mercy, equity, justice, changed conditions or modern times may impel a Court to modify or reverse prior decisions, but no such reason ro justification exists in this case. For this additional reason, the opinion of the majority is untenable.

The pleadings allege (and the Court below heard testimony which up to now has not been contradicted) that this charter was fraudulently obtained to teach, foster, advocate and spread Communism instead of its chartered purpose of promoting Jewish culture.

It is at long last recognized, legislatively, judicially and by public officials that a major objective of Communism is the overthrow of our Government by sabotage, violence, and revolution. To counteract this and to protect our Country from its mortal enemies, we need the aid not only of all our public officials, agencies, and Courts but also of every patriotic American citizen. A Court's power to revoke a decree obtained fraudulently is clear and unquestioned; the only question is whether it must suppress or nullify its own fundamental powers, jeopardize the interests of our Country, and call upon a very busy and distant Attorney General to institute the proceedings. If there were any doubt on this question -- and in my opinion there is none -- it should not be resolved in favor of those who are charged with advocating and plotting the destruction of our Country.

How untenable, unrealistic, and unwise is the majority opinion which gives to the Attorney General, who has a multiplicity of other important duties, the sole and exclusive power to vacate a fraudulent decree and to protect the security of our Country and the safety of our citizens, is further apparent from the Attorney General's brief: "The rule asked for by the

[ 375 Pa. Page 117]

    appellant [and adopted by the majority] make the courts dependent upon the Attorney General; if the Attorney General capriciously or arbitrarily refused to bring an action of quo warrantor, the court would be powerless to cleanse itself of the fraud. It is submitted that such is not the law of Pennsylvania nor is it desirable. On the other hand, the rule as announced by the court below fully protects the court and in no way limits the power of the Attorney General to bring quo warrantor where fraud is present, since Section 209 of the Act of 1933, supra, ...


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