Shortlidge v. Gutoski

484 A.2d 1083, 125 N.H. 510, 1984 N.H. LEXIS 404
CourtSupreme Court of New Hampshire
DecidedOctober 4, 1984
DocketNo. 82-444
StatusPublished
Cited by17 cases

This text of 484 A.2d 1083 (Shortlidge v. Gutoski) is published on Counsel Stack Legal Research, covering Supreme Court of New Hampshire primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shortlidge v. Gutoski, 484 A.2d 1083, 125 N.H. 510, 1984 N.H. LEXIS 404 (N.H. 1984).

Opinion

King, C.J.

This case arises on appeal from a decision of the Keene District Court (Richard J. Talbot, S.J.). At issue is the personal liability of the defendant, a member of the Winchester Taxpayers Association, to pay for legal services rendered by the plaintiff to that association. We vacate the decision of the district court, which found the defendant not personally liable, and remand the case for further proceedings consistent with this opinion.

The findings of fact made by the district court indicate that the defendant, Francis Gutoski, on behalf of the Winchester Taxpayers Association, contracted with the plaintiff for the plaintiff’s legal services. At the time, the defendant was both a director and the vice president of the taxpayers association, an organization described by the district court as an “unincorporated group venture.” Upon failing to receive full compensation for his services, the plaintiff brought an action against the defendant personally to recover the outstanding balance.

The district court found the plaintiff’s outstanding bills of $2,978.41 reasonable in amount for the services he rendered to the association. The court recognized that the plaintiff had performed “a substantial amount of work for the Association in the form of securing a second reassessment of the Town of Winchester as the first attempt was unsatisfactory to the members of the Taxpayers Association.” The court, however, refused to find the defendant personally liable for payment of the plaintiff’s fees based upon its findings that: (1) the defendant never agreed to be personally liable for the unpaid bills, and (2) the plaintiff’s legal services resulted in no particular benefit to the defendant. The plaintiff appealed.

While the record presented on appeal indicates that the defendant may be liable for payment of the plaintiff’s legal fees, the findings of fact made by the district court in this case, which constitute the [513]*513entire record on appeal, provide an insufficient basis for us to determine, as a matter of law, the extent of the defendant’s liability. Therefore, we must vacate the decision of the district court and remand the case with specific instructions as to the further factual determinations which are necessary in order ultimately to resolve the issue presented.

We are faced, in this case, with an issue of first impression in New Hampshire — the liability of a member of an unincorporated association for the debts of that association. In order to resolve the issue, therefore, we must rely upon general principles of agency and partnership law. Recognizing that the term “association” has been employed to describe a number of different types of relationships, we note that for purposes of this opinion, whenever we refer to an “association,” we will be referring to an unincorporated group of individuals voluntarily joined together for a common purpose.

A voluntary association, except as provided for by statute, see RSA 292:12 — :14 (unincorporated associations deemed corporations for receiving and using donations), has no legal existence apart from the members who compose it. See Lyons v. Am. Legion Realty, 172 Ohio St. 331, 333, 175 N.E.2d 733, 735 (1961). See generally H. Oleck, Non-Profit Corporations, Organizations, and Associations, § 32, at 63 (3d ed. 1974). Unlike a corporation, which can act in its own person, “the individuals who compose an association act only by virtue of a mere agency, with their privileges and duties defined by the contract they have made.” Forest City Mfg. Co. et al. v. Garment Workers’ Union, 233 Mo. App. 935, 944, 111 S.W.2d 934, 940 (1938).

When an association is organized for profit, the members of the association are treated as partners. See Azzolina v. Sons of Italy, 119 Conn. 681, 691, 179 A. 201, 204 (1935); Lyons v. Am. Legion Realty, 172 Ohio St. at 336, 175 N.E.2d at 737. Under New Hampshire statutory law, every partner is viewed as an agent of the partnership for the purpose of carrying on the partnership’s business and, therefore, has the power to execute instruments binding the partnership. See RSA 304-A:9 (Supp. 1981). RSA 304-A:15(b) (Supp. 1981), a provision adopted from the Uniform Partnership Act, states: “All partners are liable: (a) Jointly and severally for everything chargeable to the partnership under RSA 304-A:13 [partner’s wrongful act] and RSA 304-A:14 [partner’s breach of trust], (b) Jointly for all other debts and obligations of the partnership . . . .” Each member of an association organized for profit, by virtue of his membership in the association, is a partner of every other member of the association and is thereby jointly liable with [514]*514those other members for the contract debts validly incurred in the name of the association.

When an association is not organized for profit, however, as we presume the Winchester Taxpayers Association was not, the members are not viewed as partners and no agency is implied from the mere fact of association. See Jim Host & Associates, Inc. v. Sharpe, 639 S.W.2d 784, 785 (Ky. Ct. App. 1982). A member of such an association incurs liability for the debts of the association only when he authorizes, assents to, or ratifies the underlying transaction. See id,.; Lyons v. Am. Legion Realty, 172 Ohio St. at 336, 175 N.E.2d at 737. Mere membership in the association, without more, will not generally be sufficient to attach liability for debts incurred in the name of the association.

Unlike corporate shareholders, who are shielded from personal liability by the corporate entity, the members of an association organized for profit, or those members of a non-profit association who have authorized, assented to, or ratified the underlying transaction and thereby have become liable for the association’s debts, are personally liable. See Smith & Edwards v. Golden Spike Little League, 577 P.2d 132, 133-34 (Utah 1978). See generally H. Oleck, supra at 62-63 (unincorporated non-profit association desirable form of organization only for very special purposes — use of this form of organization today “usually results from sheer ignorance of the possible degree of personal liability of its members”). In the absence of a specific statutory provision or a contract stipulation to the contrary, the personal assets of each member who is liable can be reached by creditors of the association. See Cousin v. Taylor et al., 115 Or. 472, 478-80, 239 P. 96, 98 (1925) (party must affirmatively allege contract agreement to look to specific association funds for compensation); H. Oleck, supra § 33, at 64 (“[fjormal articles of association .. . are the minimum provisions to avoid both misunderstanding and possible full personal liability” of members of a nonprofit association).

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Bluebook (online)
484 A.2d 1083, 125 N.H. 510, 1984 N.H. LEXIS 404, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shortlidge-v-gutoski-nh-1984.