Opinion
March 23, 1936.
April 20, 1936.
Corporations — Charter — Forfeiture — Abuse of corporate powers — Nonuser — Social and political club — Interest of public — Evidence — Quo warranto.
1. Forfeiture of a valuable corporate franchise will not be declared unless there is a clear abuse of the corporate powers and the necessity for such remedy is apparent. [576]
2. In proceedings in quo warranto to have forfeited the charter of defendant, a private nonprofit corporation, the interests of whose members were social and political, the refusal of the lower court to enter judgment of ouster was affirmed on appeal, where it appeared that, although the members had abandoned the clubhouse, held no meetings, and remained inactive for an extended period of time, many members had always maintained their membership in the club, and there was no affirmative evidence of any intention to abandon the charter; that after the period of quiescence, the members had met and elected officers, acquired a new clubhouse, and otherwise renewed activity; and that no special interest of the public was involved, and the continued existence of the club did not conflict with the best interests of the Commonwealth. [575-6]
Before KEPHART, C. J., SCHAFFER, MAXEY, DREW, LINN, STERN and BARNES, JJ.
Appeal, No. 196, Jan. T., 1936, by plaintiff, from judgment of C. P. No. 4, Phila. Co., March T., 1934, No. 3584, in case of Commonwealth ex rel. Charles J. Margiotti, Attorney General, v. Neptune Club of City of Philadelphia. Judgment affirmed.
Quo warranto. Before FINLETTER, P. J.
The opinion of the Supreme Court states the facts.
Judgment entered for defendant. Plaintiff appealed.
Error assigned, among others, was dismissal of exceptions to findings of fact and conclusions of law.
Thomas I. Guerin, Special Deputy Attorney General, with him Charles J. Margiotti, Attorney General, for appellant.
A. J. Nydick, with him Matthew K. Stevens, for appellee.
Argued March 23, 1936.
The Neptune Club was incorporated by special Act of Assembly of April 9, 1872, P. L. 1036. It appears that the interests of the members were social and political. The organization was active until 1906 when a schism developed, brought about by political differences, and part of the membership withdrew. Those who remained loyal abandoned the clubhouse, they held no meetings, and by 1907 all activity had ceased. Several members at the time of the disruption are still living, however, and they have always maintained their membership in the club. In 1933 they met and elected officers, directors, and new members; a clubhouse was acquired; the present membership totals almost six hundred. Subsequent to the renewal of activity, the attorney general, on behalf of the Commonwealth, instituted the present proceedings in quo warranto to have the corporate charter declared forfeited on the ground that it had been abandoned by nonuser. The case was tried by the court without a jury and judgment was entered for defendant. It is from that judgment that we have the present appeal.
We have carefully reviewed the testimony upon which the trial judge's findings of fact, already outlined, were based. They are amply supported by the evidence, and, under familiar principles, we may not now challenge their correctness. Aside from the question of the Commonwealth's laches, a matter not relevant in our view of the case, the statement of questions involved presents but one issue: Did the defendant corporation forfeit its charter because of its neglect to exercise its corporate powers for a period of twenty-six years? Our consideration of the case is limited to this question.
The judgment must be affirmed. Appellant's argument, relying as it does upon the presumed intention of defendant's members to abandon their corporate franchise, based upon their extended period of inactivity, overlooks the trial judge's finding that they always maintained their corporate affiliation. However inactive they might have been, there is no affirmative evidence of any intention to abandon the charter. From all that appears, the organization was merely quiescent. Activity could be resumed at any time. "A dormant corporation possesses a vitality which at any time may galvanize it into action": Rachiele v. Marsico, 303 Pa. 372, 380.
No considerations of public policy are here present. The continued existence of the club will not conflict with the best interests of the Commonwealth. This is a purely private nonprofit corporation. The nonuser was of such rights and privileges as inured solely to the interests of the corporation and its members. No special interest of the public was, or is now, involved. A corporate charter will very properly be forfeited in case of harm or loss resulting from misuser ( Erie North-East R. R. v. Casey, 26 Pa. 287; Com. ex rel. v. U.S. Annuity Society, 303 Pa. 19), or from nonuser ( Com. ex rel. v. Seventh Day Baptists, 317 Pa. 358), but there is no such danger here present. The law is loath to declare a forfeiture of a valuable corporate franchise: Com. ex rel. v. Monongahela Bridge Co., 216 Pa. 108. To warrant such action the abuse must be clear and the necessity for such a harsh remedy must be apparent. All the circumstances of this case point to the soundness of the action of the court below in refusing to enter judgment of ouster.
Judgment affirmed.