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STO-ROX FOCUS ON RENEWAL NEIGHBORHOOD CORPORATION v. NELLIE KING (03/01/79)

decided: March 1, 1979.

STO-ROX FOCUS ON RENEWAL NEIGHBORHOOD CORPORATION, A NON-PROFIT CORPORATION, APPELLANT
v.
NELLIE KING, MARIE HANDLOW, AUDREY YANKE AND MILDRED FINNEGAN, APPELLEES



Appeal from the Order of the Court of Common Pleas of Allegheny County in case of Nellie King, Marie Handlow, Audrey Yanke and Mildred Finnegan v. Sto-Rox Focus on Renewal Neighborhood Corporation, a non-profit corporation, No. G.D. 77-14982.

COUNSEL

Paul H. Titus, with him Thomas M. Kerr, Jon Hogue, and Kaufman & Harris, for appellant.

Samuel J. Pasquarelli, with him Jubelirer, Pass & Intrieri, for appellees.

Judges Crumlish, Jr., Mencer and Craig, sitting as a panel of three. Opinion by Judge Mencer.

Author: Mencer

[ 40 Pa. Commw. Page 642]

Nellie King, Marie Handlow, Audrey Yanke, and Mildred Finnegan (plaintiffs), members of the non-profit corporation known as Sto-Rox Focus on Renewal Neighborhood Corporation (defendant),*fn1 filed a petition for the inspection of documents of the defendant corporation in the Civil Division of the Court of Common Pleas of Allegheny County on July 5, 1977, pursuant to Section 7508 of the Nonprofit Corporation Law of 1972, 15 Pa. C.S. § 7508. A rule to show cause why the petition should not be granted issued on that date, and a hearing was scheduled for August 8, 1977. Because defendant had commenced proceedings to remove the plaintiffs from membership, plaintiffs filed a petition on July 8, 1977 to set aside the attempted expulsion, pursuant to 15 Pa. C.S. §§ 7781 and 7783. A rule issued on the second petition, and the hearing was also set for August 8. Following the hearing, the Court ordered that defendant's expulsion of plaintiffs be set aside and that defendant make its corporate records available to plaintiffs. This appeal followed. We affirm.

Defendant argues that the order of the lower court should be vacated and the case remanded, with instruction that it be transferred to the Orphans' Court Division of the Court of Common Pleas because the action allegedly should have been commenced in the Orphans' Court Division, pursuant to Pa. R.J.A. No. 2156(1). This issue, however, was not raised below. Since the proper selection of a division within the court of common pleas is not a jurisdictional question, Binder v. Miller, 456 Pa. 11, 317 A.2d 304 (1974),*fn2 and since the issue was not raised below as it must be to be considered on appeal, Pa. R.A.P. 302(a); In re: Application of DeLuca, 33 Pa. Commonwealth Ct. 186,

[ 40 Pa. Commw. Page 643381]

A.2d 208 (1977), we may not vacate the order and remand.

Defendant also argues that the case before us is moot, since plaintiffs have failed to retain their membership by allegedly not paying their dues for 1978 and since membership is a requirement for inspection of corporate records pursuant to 15 Pa. C.S. § 7508. We disagree. Plaintiffs were expelled by corporate action, the validity of which is a subject of this proceeding. There is nothing of record showing that plaintiffs' membership was restored and that subsequently plaintiffs failed to pay dues. There is nothing to indicate that plaintiffs cannot or will not be reinstated by court order setting aside the corporate expulsion, and therefore we believe there exists a case and controversy capable of judicial resolution.

Defendant contends that the trial judge erred in finding that plaintiffs met their burden of proving that they sought to inspect corporate records for a "proper purpose," as required by 15 Pa. C.S. § 7508. "Proper purpose" is defined in 15 Pa. C.S. § 7508(b) as "a purpose reasonably related to the interest of such person as a member." Plaintiffs Handlow and Yanke testified that their reasons for inspection were to determine whether the membership lists were correct, to determine whether there were any financial irregularities, to determine whether voting at meetings was properly conducted, and to learn about corporate salaries, property, and income. Plaintiffs suspected mismanagement, based upon reports of certain corporate activity; e.g., it was reported that county officials requested and were refused certain corporate financial information. Inspection of corporate records to determine whether a corporation is managed properly is a reasonable purpose. Cf. Hagy v. Premier Manufacturing Corp., 404 Pa. 330, 172 A.2d 283 (1961) (the Supreme Court stated that, as a general rule, apparent

[ 40 Pa. Commw. Page 644]

    mismanagement or misconduct by corporate officials provides a sufficient, proper, and reasonable purpose for inspecting corporate records, pursuant to Section 308 of the Business Corporation Law, ...


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