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SCHWARTZ v. MAHONING VALLEY COUNTRY CLUB. (05/23/55)

May 23, 1955

SCHWARTZ, APPELLANT,
v.
MAHONING VALLEY COUNTRY CLUB.



Appeal, No. 11, Jan. T., 1955, from judgment of Court of Common Pleas of Carbon County, June T., 1952, No. 18, in case of George A. Schwartz, Jr. et ux. v. Mahoning Valley Country Club. Judgment affirmed.

COUNSEL

Carl A. Niehoff, with him Albert P. Leonzi and deutsch & Leonzi, for appellants.

Henry Houck, with him George M. D. Richards, Howard Miller, R. M. Harris and James P. Bohorad, for appellee.

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

Author: Chidsey

[ 382 Pa. Page 140]

OPINION BY MR. JUSTICE CHIDSEY

The plaintiffs brought this action of assumpsit to recover $16,900 with interest, representing the balance of the purchase price for a tract of land allegedly conveyed by them to the defendant, Mahoning Valley Country Club, a Pennsylvania nonprofit corporation, by a deed dated January 2, 1951. At the conclusion of plaintiffs' evidence the court below, on defendant's motion, entered a compulsory non-suit on the ground that plaintiffs had not proven that the purchase was authorized by a resolution, approved by a majority of the members of the defendant corporation as required by the Nonprofit Corporation Law (Act of May 5, 1933, P.L. 289, 15 PS ยง 2851-1 et seq.). Plaintiffs' motion to take off the non-suit was subsequently denied and this appeal followed.

Plaintiffs' evidence, consisting solely of the plaintiff husband's testimony and the deed, established the following facts which they contend were sufficient to make out a prima facie case. After preliminary negotiations between the husband plaintiff and the defendant's vice-president an agreement of sale*fn1 was entered into on August 10, 1950 wherein the plaintiffs agreed to convey a portion of their and to the defendant for the sum of $17,000, $100 being paid upon execution of the agreement and the balance to be paid on delivery of a deed. A deed was delivered to the president of the corporation on January 2, 1951 but the balance of the consideration was never paid and the deed was not returned until January 16, 1952. There

[ 382 Pa. Page 141]

    was also testimony by this witness that during the period in which the deed was retained the officers of the corporation attempted to have the agreed upon price of the land reduced and that this offer was rejected by the plaintiffs.

Section 308 of the Nonprofit Corporation Law, as amended August 17, 1951, P.L. 1287, provides, inter alia, as follows: "Unless its articles or by-laws provide for the approval of another body, a nonprofit corporation shall not borrow money, or purchase, sell, lease away, or otherwise dispose of any real estate, unless and until a resolution authorizing the same shall have been approved by a majority of the members of the corporation, ... at a regular or special meeting, duly convened upon proper notice of this purpose...". (Emphasis supplied). Compliance with the procedure prescribed in this section of the Act has been held imperative and essential to the validity of a nonprofit corporation's acts and contracts thereunder. The burden is upon the claimant to prove that the express mandate of the Legislature was complied with either by a resolution authorizing the conveyance, approved by a majority of the members of the corporation or by proving that the articles or by-laws provide for the approval of another body: Neth et ux. v. St. John's Reformed Church of Hempfield Township, 335 Pa. 155, 6 A.2d 421. Admittedly the record is devoid of any evidence tending to show that the members or some other authorized body approved the conveyance in question and consequently, the plaintiffs failed to sustain their burden in this regard.

The plaintiffs also argue that the corporation is estopped from setting up the defense of no authority since it has accepted the benefits of the transaction by retaining the deed for a period of over one year, ...


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