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New Jersey Association for Children With Learning Disabilities v. Burlington County Association for Children With Learning Disabilities

Decided: May 12, 1980.

NEW JERSEY ASSOCIATION FOR CHILDREN WITH LEARNING DISABILITIES, A NEW JERSEY CORPORATION, PLAINTIFF-RESPONDENT,
v.
BURLINGTON COUNTY ASSOCIATION FOR CHILDREN WITH LEARNING DISABILITIES, A NEW JERSEY CORPORATION, DEFENDANT-APPELLANT



On appeal from Superior Court, Chancery Division, Burlington County, whose opinion is reported at 163 N.J. Super. 199 (1978).

Matthews, Ard and Polow.

Per Curiam

This dispute arises over the withdrawal of defendant from plaintiff, a state-wide nonprofit organization. The trial judge imposed a constructive trust upon all of defendant's property and enjoined defendant from using the name "Association for Children with Learning Disabilities." 163 N.J. Super. 199 (Ch.Div.1978). Defendant's motion for a new trial was denied, and defendant appeals, contending that (1) the trial judge erred in applying standards established for resolving church disputes, and in failing to consider defendant's justification for withdrawal; (2) the trial judge erred in evidential rulings, and (3) the trial judge erred in enjoining defendant from using its name.

The trial judge relied on Kelly v. McIntire , 123 N.J. Eq. 351 (Ch.1938), and Protestant Episcopal Church v. Graves , 161 N.J. Super. 230 (Ch.Div.1978), aff'd o.b. 167 N.J. Super. 563 (App.Div.1979), (notice of appeal to the New Jersey Supreme Court filed on May 29, 1979), both of which involve secession of local congregations from their church hierarchy because of disputes over religious doctrine.

The reason why civil courts refrain from determining the merits of disputes of religious corporations involving religious

doctrine is found in the First Amendment of the United States Constitution prohibiting the establishment of religion. Presbyterian Church in United States v. Mary Elizabeth Blue Hull Memorial Presbyterian Church , 393 U.S. 440, 449, 89 S. Ct. 601, 606, 21 L. Ed. 2d 658 (1969). That consideration is not present in the instant case.

As the trial judge pointed out, the parties are bound by plaintiff's constitution and by-laws. 163 N.J. Super. at 205 206. However, we find no provision in plaintiff's constitution or by-laws dealing with secession of a section. Secession is not prohibited, nor is there any requirement that a section's property must revert to the state organization upon secession or expulsion. The only by-law dealing with ownership of property is Art. VI, par. 5:

All materials; [ sic ] such as films, slides, camp equipment are the property of the Association. Use in other than ACLD [plaintiff] activities must have the express consent of the Executive Committee.

At issue here is control over the Burlington County programs for children with learning disabilities, i.e. , the leases and contract rights involving the Midway School and Camp Melpine. Since there is no provision in the constitution or by-laws that property, such as the rights in question here, belongs to the state association, there is no authority in the constitution or by-laws for granting ownership of it to plaintiff.

Cases involving disputes over ownership of property when local chapters have seceded or withdrawn from larger nonprofit corporations have usually been resolved on the basis of the provisions of the parent organization's by-laws, which constitute a contract binding upon the withdrawing chapter. See, e.g., Textile Workers Union of America v. Bellman, etc., Co. , 18 N.J. 476 (1955); Harker v. McKissock , 7 N.J. 323 (1951), reh. den. 8 N.J. 230 (1951); International Union, etc., C.I.O. v. Becherer , 4 N.J. Super. 456 (App.Div.1949), certif. den. 3 N.J. 374 (1949).

Here, the record establishes that defendant's actions were justified. Plaintiff had instituted a system of centralized banking under which local chapters were required to submit all their funds to plaintiff, and plaintiff in turn would pay their bills. ...


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