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In re Los Angeles County Pioneer Soc., 40 Cal.2d 852, 257 P.2d 1

Facts

The Los Angeles County Pioneer Society was founded in 1897 and incorporated as a non-profit in 1910. Over the years, membership dwindled, and by 1941, there were fewer than 100 members. Significant gifts were made to the society, including a substantial bequest from member Emma Stoltenberg. In 1948, the society decided to dissolve and distribute its assets among members, prompting intervention by the Attorney General, who claimed the society was a charitable corporation that had abandoned its trust.

Pioneer was founded in 1897 as an unincorporated association of pioneers living in Los Angeles County, with about 600 members. In 1910 the members incorporated as a non-profit corporation. Over the years membership decreased until in 1941 there were less than 100 members. In that year and later years Mrs. Emma Stoltenberg, a member of Pioneer, made substantial gifts to Pioneer and on her death in 1946 left additional sums to Pioneer by will.

Issue

Whether the Los Angeles County Pioneer Society held its assets for charitable purposes and whether the appointment of a successor trustee was justified.

The first question presented is whether the trial court correctly determined that all of the assets of Pioneer were given and received for charitable purposes and held by Pioneer for those purposes.

Rule

A charitable corporation cannot dissolve and distribute its assets among its members; instead, the assets must be used for the charitable purposes expressed in its articles of incorporation.

A charitable corporation cannot dissolve and distribute its assets among its members.

Analysis

The court determined that the Pioneer Society's assets were dedicated to charitable purposes based on its articles of incorporation and the activities it engaged in, such as commemorating historical events. The court found that the society had abandoned its trust by attempting to distribute assets among its members, which justified the appointment of a new trustee to ensure the assets were used for their intended charitable purposes.

The court ordered that the assets be impounded. On May 19, 1950, the court entered judgment that Pioneer was a charitable corporation, that its assets were dedicated to charitable purposes, that it had abandoned its trust and was threatening to divert the assets to the private benefit of its members, and that appointment of a new trustee was necessary.

Conclusion

The Supreme Court affirmed the lower court's decision, declaring the Pioneer Society a charitable corporation and upholding the appointment of the Historical Society of Southern California as trustee.

The order was entered after the trial court determined that Pioneer held its property for charitable purposes, that Pioneer had repudiated its trust, and that appointment of Historical as trustee was necessary to carry out the purposes of the trust.

Who won?

The Historical Society of Southern California prevailed in the case as the court upheld its appointment as trustee, emphasizing that the Pioneer Society's assets were to be used for charitable purposes rather than distributed among its members.

We have concluded that the order is amply supported by the evidence and must be affirmed.

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