NONPROFIT CORPORATIONS

Not being chartered under the ordinary commercial business statutes, which require capital stock and tangible assets, members or officers of nonprofit corporations cannot claim the same limited financial liability protection that stockholders in for profit, domestic corporations can claim for the financial liabilities, slanderous or illegal acts of such domestic corporations. Instead, each member, officer, director, trustee and agent is individually financially liable for the financial liabilities incurred, torts committed and damages caused by the corporate entity, their managers and agents through the neglect of the members and officers to properly supervise their activities. This fact should cause people to hesitate when they are solicited to become members or supporters.

The most forceful analogy of this is the “Danbury Hatters’ case”, because it was carried to the United States Supreme Court; and, hence, is affirmed by our highest authority.

The suit was instituted not against the Hatters’ Union as an organization, but against Martin Lawlor and 250 other individual members who paid dues to the organization. The verdict awarded the plaintiff, D. E. Loewe, $80,000.00 which when trebled, as provided under the Sherman Antitrust Act, amounted to $240,000.00.

In this particular case, many of the members of the defendant organization were unable to pay their share of the judgment rendered. Therefore, in several instances, the homes and life savings were taken from them to satisfy the judgment.

Under this decision, each and every member of a nonprofit corporation is liable for any judgment obtained by any individual or business against the organization.

NONPROFIT CORPORATIONS

by Robert A. Kroboth www.citizengadfly.com

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