• Key point. The members of an unincorporated organization ordinarily cannot sue the organization for injuries they sustain on its premises or during its activities.
An Indiana court ruled that a member of an unincorporated charity was barred from suing the charity for injuries that he suffered on its premises. The member was injured while diving in a lake on the charity’s premises. He sued the charity to recover damages for his injuries, claiming that his injuries were due to the charity’s negligence. A state appeals court ruled that the member was barred from suing the charity on the basis of the general rule that members of unincorporated associations cannot sue their association. The court referred to an earlier Indiana Supreme Court case that explained the rationale for this rule:
The theory of the general rule is that the members of an unincorporated association are engaged in a joint enterprise. The negligence of each member in the prosecution of that enterprise is imputable to each and every other member so that the member who has suffered damages through the … conduct of another member of the association may not recover from the association for such damage. It would be akin to the person suing himself as each member becomes both a principal and an agent as to all other members for the actions of the group itself. Calvary Baptist Church v. Joseph, 522 N.E.2d 371 (Ind. 1988).
The victim claimed that the unincorporated charity should be treated like a corporation because of its relationship with a national charity. He noted that the local charity collected dues for the national charity; the national charity establishes rules governing the operation of local affiliates; and the national charity exercises supervisory authority over local affiliates. The victim claimed that these facts demonstrate that the local charity should be considered an “extension” of the national charity and that the corporate status of the national charity should be “imputed” to the local charity. The court rejected this argument, noting that it could not find a single case supporting the theory that “because the national organization is incorporated the local should be treated as an extension of the national for purposes of imputed corporate existence.” The court continued: “The state alone can incorporate such an association, and the mere fact that a benevolent organization of a local nature has received a so—called charter from the central or governing body of the [organization] with which it desires to affiliate does not constitute it a corporation.”
The victim also claimed that he was not subject to the general rule (that members cannot sue an unincorporated association) because his membership had expired as a result of his failure to pay his dues. The court disagreed, noting that the bylaws of the national organization specified that members are not automatically dismissed for failing to pay dues. Rather, membership is revoked for nonpayment of dues only after the dues have been in arrears for one year or upon two—thirds vote of the local membership. Since neither event had occurred, the member’s status had not been affected by his failure to pay dues. As a result, the victim was a member on the day of his injury, and therefore was barred from suing the charity.
What is the significance of this case to church leaders? Simply this-church leaders must recognize that one of the consequences of the unincorporated form of organization in many states is that church members injured during church activities cannot sue their church for money damages. This may seem like an advantage as far as the church is concerned. But, this is small consolation to a member who suffers severe injuries during a church activity. Such a result often comes as a shock to the injured member, and to other members. This case also will be helpful to denominational offices that are sued for the liabilities of local affiliated churches or programs. The court’s finding that such relationships do not result in any “imputed” corporate status to the local affiliate will be a useful precedent. Benevolent and Protective Order of Elks v. Mooney, 666 N.E.2d 970 (Ind. App. 1996). [ Unincorporated Associations]
© Copyright 1997, 1998 by Church Law & Tax Report. All rights reserved. This publication is designed to provide accurate and authoritative information in regard to the subject matter covered. It is provided with the understanding that the publisher is not engaged in rendering legal, accounting, or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought. Church Law & Tax Report, PO Box 1098, Matthews, NC 28106. Reference Code: m77 58 m86 c0297
