In Re: Reliance Hose Company No. 2 of Glassport, a PA Non-Profit Corp. ~ Appeal of: Citizen's Hose Company No. 1 of Glassport ( 2016 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Reliance Hose Company :
No. 2 of Glassport, a Pennsylvania :
Non-Profit Corporation :
:
Appeal of: Citizen’s Hose Company : No. 1260 C.D. 2015
No. 1 of Glassport : Argued: April 12, 2016
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE ANNE E. COVEY, Judge
HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE BROBSON FILED: May 13, 2016
Citizen’s Hose Company No. 1 of Glassport (Citizen’s) appeals from
an order of the Court of Common Pleas of Allegheny County, Orphans’ Court
Division (trial court), which granted the petition for voluntary dissolution of a
non-profit corporation filed by Reliance Hose Company No. 2 of Glassport
(Reliance). The trial court further ordered that Reliance’s remaining funds be
disbursed to the Salvation Army, Glassport Police Department, and Clairton
Volunteer Fire Department & Relief Association. Reliance has filed an application
to quash Citizen’s appeal for lack of standing. We now grant Reliance’s
application to quash Citizen’s appeal.
On May 5, 2014, Reliance, a volunteer fire department that had served
the Borough of Glassport (Borough) for over one-hundred years, filed a petition for
voluntary dissolution of a non-profit corporation with the trial court. Reliance
averred that it was no longer able to provide firefighting services due to the loss of
local fire tax revenue in 2008. (Reproduced Record (R.R.) at 41a-42a.) Reliance
sold its firefighting equipment and real property, and it sought to disburse the
proceeds from these sales to various non-profit organizations, including the
Salvation Army, Glassport Police Department, and Clairton Volunteer Fire
Department & Relief Association. (Id. at 42a-43a.) Reliance notified the Borough
and the Office of Attorney General1 of the pending petition, and the trial court
conducted a hearing.
During the hearing before the trial court, Reliance offered the
testimony of John Bender, a member of Reliance. Mr. Bender testified that
Reliance’s members wanted Reliance’s remaining funds to be distributed to the
Salvation Army, Glassport Police Department, and Clairton Volunteer Fire
Department & Relief Association.2 (Id. at 22a-23a.) The Office of Attorney
General explained that although it had no objection to the dissolution of Reliance,
it took issue with the disbursement of Reliance’s remaining assets to
non-firefighting entities. (Id. at 3a.) Rather, the Office of Attorney General argued
that the assets should be distributed solely to Citizen’s as the only firefighting
company continuing to serve the Borough after the dissolution of Reliance.
1
Neither the Borough nor the Office of Attorney General has participated in the instant
matter. As a result of the failure to file timely briefs, by order dated March 7, 2016, this Court
precluded the Borough and the Office of Attorney General from filing briefs or participating in
oral argument.
2
Throughout his testimony, Mr. Bender referred to “Clairton Ambulance Service” as one
of the entities to which the members of Reliance wished to distribute Reliance’s remaining
assets. (R.R. at 23a.) It appears that the Clairton Ambulance Service is associated with the
Clairton Volunteer Fire Department & Relief Association, and the trial court’s order specifies
that the funds distributed to the Clairton Volunteer Fire Department & Relief Association are
“for use in providing ambulance services in the Borough.” (Id. at 4a, 128a.)
2
(Id. at 5a.) In support of this position, the Office of Attorney General presented the
testimony of Citizen’s counsel, D. Scott Lautner, Esquire. Mr. Lautner noted that
he had entered his appearance “in case we had to intervene in this matter.”
(Id. at 25a.) Mr. Lautner testified that Citizen’s was interested in receiving
Reliance’s remaining assets, and that the assets would be used only for firefighting
purposes. (Id. at 27a.)
By order dated November 24, 2014, the trial court granted Reliance’s
petition for voluntary dissolution of a non-profit corporation. In so doing, the trial
court disbursed Reliance’s remaining funds to the Salvation Army, Glassport
Police Department, and Clairton Volunteer Fire Department & Relief Association.
The Office of Attorney General filed exceptions to the trial court’s order, arguing
that the trial court “erred in failing to award the remaining funds to the firefighting
company that presently serves the locale previously served by . . . [Reliance], in
contravention of the doctrine of cy pres.” (Id. at 131a.) The trial court dismissed
the Office of Attorney General’s exceptions, and the Office of Attorney General
did not file a notice of appeal. Citizen’s, however, did file a notice of appeal, and
by order dated February 24, 2015, the trial court ordered Citizen’s to file a concise
statement of errors complained of on appeal. Like the Office of Attorney General,
Citizen’s argued that the trial court’s distribution order violated the doctrine of
cy pres, and that Citizen’s alone was entitled to Reliance’s remaining assets. The
trial court issued an opinion, in which it explained that Citizen’s does not have
standing to appeal, as it “is not a party to this matter and has not filed a request to
intervene in this matter.” (Trial Ct. Op. at 2.) The trial court further explained that
although Citizen’s “sought a share of the funds in the accounts, such a request does
not give the entity standing in the action.” (Id.) As to Citizen’s argument
3
concerning cy pres, the trial court explained that it was appropriate to disburse
Reliance’s remaining funds to the Salvation Army, Glassport Police Department,
and Clairton Volunteer Fire Department & Relief Association, because “it was the
stated desire of the remaining members to contribute the funds to these three
charities, and these charities served the purposes of Reliance . . . and the citizens of
the surrounding community.” (Id. at 2-3.)
On appeal,3 Citizen’s argues that the trial court erred in its application
of the doctrine of cy pres, because Citizen’s, as the entity most closely resembling
Reliance, was entitled to Reliance’s remaining funds. Reliance has filed an
application to quash Citizen’s appeal,4 in which it argues that Citizen’s lacks
standing to appeal as it was not a named party nor did it seek to intervene in the
matter before the trial court.
Initially, we note that Section 5976(b) of the Nonprofit Corporation
Law of 1988 (Law), 15 Pa. C.S. § 5976(b), requires that when a nonprofit
corporation seeking voluntary dissolution has assets that include “any property
committed to charitable purposes,” the corporation must apply for a court order
pursuant to Section 5547(b) of the Law, 15 Pa. C.S. § 5547(b). Section 5547(b) of
the Law provides:
Property committed to charitable purposes shall not . . .
be diverted from the objects to which it was donated,
3
“This Court’s standard of review is limited to considering whether the trial court, sitting
as a chancellor in equity, committed an error of law or abused its discretion.” Williams Twp. Bd.
of Supervisors v. Williams Twp. Emergency Co., Inc., 986 A.2d 914, 920 n.4 (Pa. Cmwlth.
2009).
4
By order dated January 26, 2016, this Court directed that Reliance’s application to
quash be listed with the merits of Citizen’s appeal.
4
granted or devised, unless and until the board of directors
or other body obtains from the court an order under 20
Pa. C.S. Ch. 77 (relating to trusts) specifying the
disposition of the property.
Section 7740.3(e) of the Uniform Trust Act (Act), 20 Pa. C.S. § 7740.3(e),
provides that a trust may be judicially terminated and the assets awarded to the
charitable organizations identified in the trust instrument or, alternatively, to
charitable organizations selected by the court. “[I]f a particular charitable purpose
becomes unlawful, impracticable or wasteful . . . the court shall apply cy pres to
fulfill as nearly as possible the settlor’s charitable intention.” Section 7740.3(a)(3)
of the Act.
We first address Reliance’s application to quash Citizen’s appeal. In
its application, Reliance contends that Citizen’s participation in the matter before
the trial court was limited to filing a praecipe for entry of appearance, testifying as
a witness, and participating in “at least one, and perhaps two, off the record
conferences with the trial court.” (Reliance’s App. to Quash at 2.) Citizen’s failed
to file a petition to intervene in this matter.5 Reliance contends that Citizen’s
cannot appeal the trial court’s order, because it was not a party nor was it granted
leave to intervene. In response, Citizen’s argues that it is aggrieved by the trial
court’s order, because Citizen’s, as the entity most resembling Reliance, was not
awarded Reliance’s remaining assets pursuant to the doctrine of cy pres.
5
Reliance, in its application to quash, states that Citizen’s may have delivered a petition
to intervene to the trial court, but that no such petition appears in the record, nor does it appear
that the trial court ruled on the petition. We note that neither in its answer to the application to
quash nor in its brief to this Court does Citizen’s contend that it delivered a petition to intervene
to the trial court. Similarly, the trial court observes that no such petition was filed with the trial
court.
5
The Pennsylvania Rules of Appellate Procedure provide that “[e]xcept
where the right of appeal is enlarged by statute, any party who is aggrieved by an
appealable order, or a fiduciary whose estate or trust is so aggrieved, may appeal
therefrom.” Pa. R.A.P. 501. The term “party” is defined in the Judicial Code as
“[a] person who commences or against whom relief is sought in a matter. The
term includes counsel for such a person who is represented by counsel.” 42 Pa.
C.S. § 102. Our Supreme Court has held that “[t]here is but one way to become a
party litigant in a court and that is by appearing in the proceedings.” Appeal of
Greco, 254 A.2d 6, 7 (Pa. 1969). If a person is not named as a party to the original
action, he or she may be permitted to intervene in the matter. Pa. R.C.P. No. 2327.
To do so, however, the person seeking intervention must file a petition to
intervene, which sets “forth the ground on which intervention is sought and a
statement of the relief or the defense which the petitioner desires to demand or
assert.” Pa. R.C.P. No. 2328. “Participation at the trial court level without
intervening is insufficient to be accorded standing to appeal.” Stanbro v. Zoning
Hearing Bd. of Cranberry Twp., 566 A.2d 1285, 1287 (Pa. Cmwlth. 1989), appeal
denied, 584 A.2d 325 (Pa. 1990); see also In re Barnes Found., 871 A.2d 792, 794
(Pa. 2005) (“Since [the appellant] was unsuccessful in his effort to intervene in the
orphans’ court proceedings, he had no greater rights than would be available to any
other non-party, and therefore, [the appellant] lacked the ability to implicate the
appellate process with respect to the court’s final decree.”).
Here, Citizen’s contends that the trial court “was aware of [Citizen]’s
participation in the matter both through the [Office of Attorney General]’s
objections to proposed distribution and through [Citizen]’s counsel’s presence and
testimony.” (Citizen’s Reply to App. to Quash at 3.) There is no evidence of
6
record, however, that Citizen’s was identified as a party to the underlying matter.
Rather, Reliance served only the Borough and the Office of Attorney General with
its petition for voluntary dissolution of a non-profit corporation. (R.R. at 40a,
119a.) Both of these entities participated through counsel at the hearing before the
trial court. Although Citizen’s counsel was present during the hearing, his
participation was limited to providing testimony on behalf of the Office of
Attorney General. (Id. at 25a.) Before the trial court, the Office of Attorney
General, rather than Citizen’s, advocated for the distribution of Reliance’s
remaining funds to Citizen’s. Further, there is no indication that Citizen’s filed a
petition to intervene or that the trial court ruled on any such petition, even though
Citizen’s counsel was aware that intervention may be necessary. (Id. at 25a,
37a-38a.) Citizen’s counsel’s participation in conferences with the trial court,
testimony as a witness, and entry of appearance is insufficient to afford Citizen’s
standing to appeal. Because Citizen’s was not a party to the underlying matter, nor
did it seek to intervene in the matter, Citizen’s does not have standing to appeal the
trial court’s order.
Citizen’s also argues that although it was not a named party and did
not intervene, it has standing to appeal the trial court’s order because Citizen’s, as
the entity which most resembles Reliance, is aggrieved by the trial court’s failure
to award it Reliance’s remaining assets pursuant to the doctrine of cy pres.
Reliance counters that Citizen’s is not so aggrieved, because “Citizen’s desire to
receive the funds as a potential recipient does not create an actual direct or
immediate adverse [e]ffect on Citizen’s.” (Reliance’s Br. at 18.)
“In order to be aggrieved, a party must have a substantial interest in
the subject matter of the litigation, the interest must be direct, and the interest must
7
be immediate.” Energy Conservation Council of Pa. v. Pub. Util. Comm’n, 995
A.2d 465, 475-76 (Pa. Cmwlth. 2010). “A litigant possesses a substantial interest
if there is a discernable adverse effect to an interest other than that of the general
citizenry.” In re Milton Hershey Sch., 911 A.2d 1258, 1262 (Pa. 2006). In In re
Nevil’s Estate, 199 A.2d 419 (Pa. 1964), the Supreme Court of Pennsylvania
considered a similar appeal concerning a charitable organization which sought to
obtain a grant from the income of a charitable trust. In concluding that the
charitable organization did not have standing, the Supreme Court cited an opinion
of the Supreme Judicial Court of Massachusetts regarding the same issue:
In [Bolster v. Attorney General, 28 N.E.2d 475, 476
(Mass. 1940)], the Court, speaking of a party who sought
to appeal from a decree in a charitable trust proceeding,
said: “Simmons College was under no duty or
responsibility as to the disposition of the fund. . . . As an
institution that hoped to be the beneficiary or active
agency of the application of the cy pres doctrine,
Simmons College had no legally recognized private
interest in the disposition of the fund. It had no interest
different in kind from that of the public generally, which
is represented exclusively by the Attorney General.”
In re Nevil’s Estate, 199 A.2d at 422-23.
Citizen’s has not demonstrated that it has an interest other than that of
the general public so as to afford it standing to appeal the trial court’s order in this
matter. Rather, Citizen’s simply seeks to benefit from the trial court’s
disbursement of the dissolved organization’s funds. As the Supreme Court
explained in In re Nevil’s Estate, such an interest is properly represented by the
Office of Attorney General. Here, the Office of Attorney General represented
Citizen’s interests during the proceedings before the trial court. After the trial
court issued its order concerning the dissolution petition, the Office of Attorney
General filed exceptions. The trial court dismissed the exceptions, and the Office
8
of Attorney General did not appeal. The Office of Attorney General’s failure to
appeal the trial court’s order does not afford Citizen’s standing to appeal in the
Office of Attorney General’s place.6 Citizen’s does not have a substantial interest
6
We note that there are certain situations in which a non-party may intervene after the
entry of a common pleas court decree. See, e.g., Ackerman v. Twp. of N. Huntingdon, 228 A.2d
667 (Pa. 1967). In Ackerman, a land developer (Ackerman) brought an action, in which he
sought to be declared the sole owner of certain sewer lines and to enjoin the Township of North
Huntingdon (Township) and two other developers from using the sewer lines. The Township
filed an answer to the action, claiming that it had right and title to the sewer lines. The common
pleas court filed a decree nisi, in which it dismissed the Township’s claim to the sewer lines and
“held that no connection or tap could be made in the . . . sewer lines except with Ackerman’s
approval and consent.” Ackerman, 288 A.2d at 668. The Township did not file exceptions to the
common pleas court’s decree, but the adjoining property owners (Bielskis), who did not
participate in the proceedings before the court, filed a petition to intervene in the matter. The
common pleas court denied the petition, holding that the Bielskis’ petition was barred by the
doctrine of laches. The Pennsylvania Supreme Court reversed the common pleas court’s denial
of the petition to intervene, explaining that the Bielskis had an “interest in the subject matter of
the controversy which justifies their intervention.” Id. Specifically, the Bielskis were parties to
a tentative agreement with a land developer who sought to build 200 homes on their property.
The agreement was cancelled when the Bielskis were unable to obtain a permit from Ackerman
to use the sewer lines at issue, as there was no other means of providing sewer service for the
prospective homes. The Supreme Court explained that during the proceedings before the
common pleas court, the Bielskis “as resident property owners had the right to assume that their
interests would be protected by the Township in the litigation.” Id. Because the Township failed
to file exceptions to the common pleas court’s decree, however, “it became imperative for the
[Bielskis] to intervene to protect their interests.” Id. The Supreme Court noted that the Bielskis
acted promptly by filing the petition to intervene within the twenty-day period for the filing of
exceptions, and, therefore, the common pleas court erred in denying their petition.
Here, unlike the Township in Ackerman, the Office of Attorney General filed exceptions
to the trial court’s order. It was not, therefore, imperative for Citizen’s to intervene in order to
protect its interests. In fact, as noted above, Citizen’s at no point sought to intervene in this
matter. Rather, Citizen’s seeks to assume the role of the Office of Attorney General by
appealing the trial court’s order in its place. The role of the Office of Attorney General in
matters concerning the disposition of charitable funds, however, is to protect the interests of the
public, and this role is exclusive to the Office of Attorney General. See In re Nevil’s Estate, 199
A.2d at 423. Citizen’s appeal does not make it a party to the instant matter in the absence of any
attempt to intervene in the proceedings. Further, as the Supreme Court noted, there was no
(Footnote continued on next page…)
9
in this matter and, therefore, is not aggrieved by the trial court’s order. Because
Citizen’s is not a party aggrieved by the trial court’s order, it does not have
standing to appeal.
Accordingly, because Citizen’s does not have standing to appeal the
trial court’s order, we grant Reliance’s application to quash Citizen’s appeal.7
P. KEVIN BROBSON, Judge
(continued…)
question that the petitioners in Ackerman had an interest in the matter which justified their
intervention. As explained above, Citizen’s interest here is no different from that of the general
public and, consequently, does not afford Citizen’s the standing to appeal the trial court’s order.
The instant matter is thus distinguishable from Ackerman.
7
Because we grant Reliance’s application to quash Citizen’s appeal, we need not address
the merits of Citizen’s appeal.
10
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Reliance Hose Company :
No. 2 of Glassport, a Pennsylvania :
Non-Profit Corporation :
:
Appeal of: Citizen’s Hose Company : No. 1260 C.D. 2015
No. 1 of Glassport :
ORDER
AND NOW, this 13th day of May, 2016, Reliance Hose Company
No. 2 of Glassport’s application to quash the appeal of Citizen’s Hose Company
No. 1 of Glassport is hereby GRANTED, and Citizen’s Hose Company No. 1 of
Glassport’s appeal from the order of the Court of Common Pleas of Allegheny
County is hereby QUASHED.
P. KEVIN BROBSON, Judge