HUNTERDON COUNTY DISTRICT SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS, INC. v. NEW JERSEY STATE SOCIETY FOR THE PREVENTION OF CRUELTY TO ANIMALS

(NOTE: The status of this decision is .)
 

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-6232-07T36232-07T3

HUNTERDON COUNTY DISTRICT SOCIETY

FOR THE PREVENTION OF CRUELTY TO

ANIMALS, INC., AND HUNTERDON HUMANE

ANIMAL SHELTER, INC.,

Plaintiffs-Respondents,

v.

NEW JERSEY STATE SOCIETY FOR THE

PREVENTION OF CRUELTY TO ANIMALS;

STUART RHODES, INDIVIDUALLY, AND

AS PRESIDENT OF THE NEW JERSEY STATE

SOCIETY FOR THE PREVENTION OF CRUELTY

TO ANIMALS; MURRAY ROTHBLATT,

INDIVIDUALLY, AND AS AN AGENT OF

THE NEW JERSEY STATE SOCIETY FOR THE

PREVENTION OF CRUELTY TO ANIMALS;

JOSEPH BIERMANN; FRANCIS J. RIZZO;

STEVEN SHATKIN, INDIVIDUALLY, AND

AS THE NEW JERSEY STATE SOCIETY FOR

THE PREVENTION OF CRUELTY TO ANIMALS

MEMBERSHIP COMMITTEE,

Defendants/Third-Party

Plaintiffs-Appellants,

v.

T. CARLSON; DIRECTORS OF THE

HUNTERDON COUNTY SPCA; AND

HUNTERDON HUMANE ANIMAL SHELTER, INC.,

Third-Party Defendants-

Respondents.

 

Argued April 21, 2009 - Decided

Before Judges Winkelstein, Fuentes and Chambers.

On appeal from the Superior Court of New Jersey, Law Division, Hunterdon County, L-187-05.

Harry Jay Levin argued the cause for appellants (Levin Cyphers, attorneys; Colleen Flynn Cyphers and Kelly H. Hamilton, on the brief).

William J. Rudnik argued the cause for respondents (Gebhardt & Kiefer, attorneys; Mr. Rudnik, on the brief).

PER CURIAM

The New Jersey State Society for the Prevention of Cruelty to Animals (the State SPCA) appeals from two trial court orders, dated August 15, 2007, and August 5, 2008, respectively denying the State SPCA's motion to enforce a settlement, and denying the State SPCA's motion to declare illegal the Hunterdon County Society for the Prevention of Cruelty to Animals' (the Hunterdon SPCA) transfer of assets to a newly formed corporation incorporated by the Hunterdon SPCA to operate an animal shelter. On appeal, the State SPCA raises the following points for our review:

POINT I

THE COURT ERRED IN FINDING THAT A SETTLEMENT AGREEMENT HAS NOT BEEN REACHED, WHERE THE PLAINTIFF'S ATTORNEY AND BOARD MEMBER AGREED TO THE SETTLEMENT AND THE COURT ADMITTED, ON THE RECORD, THAT IT BELIEVED A SETTLEMENT HAD BEEN REACHED.

POINT II

THE COURT ERRONEOUSLY HELD THAT THE TRANSFER OF FUNDS FROM THE HUNTERDON SPCA TO HUNTERDON, INC. WITHOUT NOTICE TO THE NJSPCA FOR THE EXPRESS PURPOSE OF SHIELDING THE FUNDS FROM THE NJSPCA IN THE EVENT OF HUNTERDON SPCA'S REVOCATION WAS NOT AN ILLEGAL TRANSACTION.

In light of the prevailing law and the record on appeal, we reject the State SPCA's arguments and affirm substantially for the reasons the trial court set forth in its July 27, 2007 written opinion, addressing point I; and in its August 5, 2008 written opinion, addressing point II.

On September 4, 2004, the State SPCA revoked the Hunterdon SPCA's charter. On October 2, 2004, the State SPCA sent a second letter to the Hunterdon SPCA, again revoking the charter. Subsequently, the Hunterdon SPCA board of directors voted to transfer the animal shelter it had been operating, along with a majority of the Hunterdon SPCA's assets, to a new nonprofit corporation, the Hunterdon Humane Animal Shelter (the Animal Shelter). The Animal Shelter filed a Certificate of Incorporation with the State on October 18, 2004, which listed the Animal Shelter as a charitable organization with the following purposes:

1) [t]o promote the humane treatment of animals[;] 2) [t]o promote the welfare of, and to provide shelter for homeless animals in Hunterdon County[;] 3) [t]o educate the public about animals, and to educate animal owners as to the care, maintenance and treatment of animals[;] 4) [t]o raise funds in order to make contributions, [and] gifts, and render financial or other assistance in the undertaking of the above-mentioned work.

On November 22, 2004, the Hunterdon SPCA amended its bylaws to refocus its work solely on enforcement of animal cruelty laws, and on November 23, 2004, the Animal Shelter adopted its own bylaws.

The Hunterdon SPCA filed this lawsuit to enjoin the State SPCA from revoking its charter and from interfering with the operations of the Animal Shelter. During a court proceeding, the parties placed on the record what appeared to be a settlement of the lawsuit. Later, when the State SPCA sought to enforce the settlement, the Hunterdon SPCA claimed that there was no settlement because its board of directors had not approved the settlement. The trial judge agreed with the Hunterdon SPCA, making the following findings:

This Court finds that there was a misunderstanding by the New Jersey SPCA attorney that the plaintiff Hunterdon's attorney could settle the case without Board approval.

Despite this misunderstanding, it is clear to the Court, and also I have to say that I thought so, too. . . . When I put this settlement on the record, I thought that it was on the record, and I thought the only thing that had to be done was the New Jersey SPCA going out and ensuring itself that the representations made by [Walter Wilson, a board member of the Hunterdon SPCA] concerning the Highlands were correct.

Despite this one misunderstanding, it is clear to this Court that plaintiffs' counsel did not have authority to bind Hunterdon until the Board had voted on a settlement agreement.

Therefore, even if the attorney for the [State] SPCA and the Court believed that they had an enforceable agreement, if plaintiffs' counsel did not have the actual authority to bind his clients, as such, the Court will then not enforce the agreement.

[T]he New Jersey SPCA argues that even if counsel for Hunterdon [SPCA] did not have actual authority to bind Hunterdon [SPCA] under the terms of this proposed agreement, the acts of counsel and the individual board member from Hunterdon [SPCA] created apparent authority in the hands of [the] Hunterdon [SPCA] counsel and therefore Hunterdon [SPCA] must be bound by the terms of the agreement.

The Court agrees with counsel for Hunterdon [SPCA] regardless of the actions for the agent, apparent authority only exists when the principal has acted in a manner that would suggest to a third party that the agent had authority to settle the case. . . .

Although the settlement was placed on the record and counsel for Hunterdon [SPCA] did not state on the record that Board approval was necessary for the settlement, Walter Wilson, a member of [Hunterdon SPCA's] Board, testified . . . that he personally informed counsel for [the State] SPCA that Board approval was necessary.

The actions of the principal negate any attempt by [the State] SPCA to establish apparent authority, since it is the actions of the principal, not the agents, that are determinative when one side looks to establish apparent authority. This testimony is especially significant. . . .

Further, although there clearly was a factual discrepancy between the testimony of [the State] SPCA's counsel and the testimony of Mr. Wilson, the burden of establishing apparent authority rests with the party seeking to establish such authority. . . .

Therefore, in light of the conflicting testimony, this Court does not find that [the State] SPCA has met its burden of proof, and therefore this Court does not find the existence of apparent authority.

In a subsequent proceeding, the court rejected the State SPCA's substantive argument. After observing that the Hunterdon SPCA's conduct was governed by the pre-2006 amendments to the statute governing SPCAs in New Jersey, the court found that the Hunterdon SPCA's actions were controlled by the general laws governing nonprofit corporations, which gave the Hunterdon SPCA the authority to transfer its assets without the State SPCA's approval. The court found that even though the Hunterdon SPCA transferred its assets to the Animal Shelter in response to the State SPCA's revocation of the Hunterdon SPCA's charter, pursuant to N.J.S.A. 15A:12-8b(4), the Hunterdon SPCA acted lawfully in distributing a substantial portion of its assets to another domestic nonprofit corporation with a similar charitable purpose. In other words, the court concluded that because the Hunterdon SPCA was an independent, nonprofit corporation, upon revocation of its charter, it had the same authority as it would had it been dissolved; that is, it had a right to transfer its assets to another nonprofit corporation with similar charitable purposes. We agree.

 
In sum, we affirm substantially for the reasons Judge Coyle expressed in his July 27, 2007 oral decision and in his August 5, 2008 eighteen-page written opinion. Consequently, we reject the State SPCA's arguments to the contrary without further discussion. R. 2:11-3(e)(1)(E).

Affirmed.

The Legislature created "the New Jersey Society for the Prevention of Cruelty to Animals" in 1868, "for the purpose of the enforcement of all laws enacted for the protection of dumb animals." Gerofsky v. Passaic County Soc'y for the Prevention of Cruelty to Animals, 376 N.J. Super. 405, 415 (App. Div. 2005). Following a report issued in December 2000 by the State Commission of Investigation and a task force appointed by the governor, the statutes governing New Jersey SPCAs, N.J.S.A. 4:22-1 to -11, were repealed, L. 2005, c.372 22 (eff. Jan. 12, 2006), and new statutes were enacted in their place. See N.J.S.A. 4:22-11 to -60. The instant appeal is governed by the former statutes.

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A-6232-07T3

June 1, 2009