Personal Liability of Members
Key point 6-01.02. The traditional rule is that members of an unincorporated association are personally liable for the acts of other members committed within the course of association activities. Some courts have modified or rejected this rule.
Since an unincorporated association could not sue or be sued under the traditional rule, it was assumed that an association's members were personally responsible for the acts of other members committed in the course of the association's business. One court stated the general rule as follows:
The members of an unincorporated association are engaged in a joint enterprise, and 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 to his person, property, or reputation through the tortious conduct of another member of the association may not recover from the association for such damage although he may recover individually from the member actually guilty of the tort. Williamson v. Wallace, 224 S.E.2d 253, 254 (N.C. 1976).
As noted in the preceding section, the traditional rule regarding the personal liability of the members of unincorporated associations for the acts of other members has been eliminated by statute in some states. See note 8, supra, and accompanying text.
• A Colorado court ruled that an officer of a nonprofit unincorporated association was not personally liable for compensation that the association had failed to pay to former employees, since the association was located in a state that had enacted the Uniform Nonprofit Unincorporated Association Act. The court explained: "The Act makes a nonprofit unincorporated association a legal entity separate and apart from its members. Therefore, logically, nonprofit unincorporated associations are more in the nature of corporations, limited partnerships, or limited liability companies. This basic and fundamental change has a considerable impact on the liability of members and others for the liabilities of nonprofit unincorporated associations." The court concluded that the Act makes it clear that an officer is not liable for the contracts of an unincorporated association merely because he had management responsibilities or negotiated the former employees' employment contracts. Mohr v. Kelley, 2000 WL 177691 (Colo. App. 2000).
• A Connecticut appeals court ruled that individual members of an unincorporated association could be sued personally as a result of negligence or other misconduct of fellow members. The court observed: "Persons who associate together for some common nonbusiness purpose without a corporate franchise from the state are merely an aggregation of individuals, not a separate legal entity. … A voluntary association for tort liability purposes remains an aggregation of individuals who may be held personally liable in tort for certain of its activities." Company v. Sena, 619 A.2d 489 (Conn. Super. 1992).
• The Texas Supreme Court ruled that the members of an unincorporated association are not necessarily responsible for the misconduct of their fellow members. A police officer was injured while attempting to carry away a protester at an abortion clinic. He later sued twelve other persons who were engaged in the protest. The supreme court ruled that the twelve protesters were not personally liable for officer's injuries. It noted that "even if the demonstrators constituted an unincorporated association, we have never held that they are automatically liable for the actions of other members of the association." The court further noted that "imposing liability on individuals on the sole basis that a member of the group to which they belong has committed a [wrong] in the pursuit of the group's goals would pose serious threats to the right of free association." The court concluded: "We believe that the liability of members of a group should be analyzed in terms of the specific actions undertaken, authorized or ratified by those members. Therefore, regardless of whether there was an unincorporated association here, we reject the lower court's intimation that the existence of such an association might alone form the basis for imposing tort liability on all members for the acts of some." Note, however, that the court did not grant members of unincorporated associations absolute immunity from personal liability. The court pointed out that members can be personally liable on the basis of "specific actions undertaken, authorized or ratified." Juhl v. Airington, 936 S.W.2d 640 (Tex. 1996). In a case addressing the question of whether or not members of an unincorporated church can sue the church for injuries they sustain, the Texas Supreme Court avoided the issue of the personal liability of individual members of unincorporated churches for the negligence or misconduct of other members. It simply noted that this lawsuit had not named any individual church members as defendants and accordingly there was no need to address this broader issue. It did mention, however, that "protection is afforded by the simple act of incorporation." Cox v. Thee Evergreen Church, 836 S.W.2d 167 (Tex. 1992).
Tip. As noted later in this chapter, incorporation is a simple and relatively inexpensive process. Of course, it requires the assistance of an attorney. Unfortunately, many church leaders do not know if their church is incorporated. Many assume that it is. This can be a dangerous assumption if in fact the church is not incorporated, since it may mean that the members are personally responsible for the liabilities of the church. It is essential for church leaders to confirm whether or not their church is incorporated. This easily can be done by contacting the office of the secretary of state in your state capital. Representatives of the office of secretary of state ordinarily will tell you over the telephone whether or not your church is incorporated. If you are informed that your church is incorporated, then you may wish to ask for a certificate of good standing (the name of this document varies somewhat from state to state) that confirms the corporate status of your church. You also should request a certified copy of your charter (article of incorporation), to be sure that you have a copy of the document on file with the state.
Tip. Calling the office of the secretary of state is important even if you think that your church is incorporated, since the corporate status of many churches has "lapsed" through failure to file annual reports with the state. In many states, church corporations must file relatively simple annual reports with the state. In a surprisingly large number of cases, churches do not file these reports. In some states, the failure to file these reports will cause the church's corporate status to lapse. As a result, it is a prudent practice for churches to confirm each year with the office of their secretary of state that they are in fact a corporation in good standing.