
    Henry et al. v. Cox et al.
    
      Voluntary fraternal associations — Members withdrawing therefrom forfeit interest in assets, when — Organization not dissolved by four-fifths of members withdrawing and creating new organization — Transfer of assets from old to new organization invalid and ineffective.
    
    In the absence of a provision in the constitution or by-laws', giving members of a voluntary fraternal organization an individual interest in its assets, members who withdraw forfeit all their interest in such assets, and the withdrawal, in a body, of four-fifths of the members, and the creation by them of a new organization, does not effect a dissolution of the old organization, and the attempt of said four-fifths, before withdrawal, to transfer the assets of the old to the new organization, is invalid and of no effect.
    (Decided May 16, 1927.)
    Appeal : Court of Appeals for Summit county.
    
      Mr. O. L. Dally, and Messrs. Gommins, Brouse, Englebeck $ McDowell, for plaintiffs.
    
      Messrs. Benner, Harter, Walker $ Watters, Mr. Wm. F. Zumbrunn, Mr. John H. Conmaughton, Mr. Wm. B. Brown and Mr. Benj. H. Sullivan, for defendants.
   By the Court.

The evidence in this case shows that Summit County Klan, No. 27, is a subordinate branch of the Knights of the Ku Klux Klan, Inc., of the state of Q-eorgia, the charter to the local klan having been granted on November 29, 1923.

The evidence further shows that the local klan at one time, in point of numbers, was the largest in the world. This large membership brought about many jealousies among the members and among those who aspired to leadership, with the result that on September 18, 1926, at a meeting held on that day, the trouble in the klan had reached such a stage that by a vote of those present, estimated to be approximately 3,500 members, all but 18 members voted to return the charter to the state headquarters at Columbus, which was done. At the same meeting, before the vote was taken on the question of returning the charter, the following resolution was passed, to wit:

“Mr. W. M. Myers then arose and moved that any and all assets of the Summit County Klan, No. 27, be transferred, assigned, conveyed, and turned over to the Protestant Service League, to be held by them as trustees for a period of six months, and that the income from said funds and property during that time be used by the Protestant Service League for charity purposes. Henry and Jenks to be appointed as a committee to dispose of these funds as instructed by 40 per cent, of those present at this meeting. Henry and Jenks to turn this property over at once. Second by Mr. Safreed. Motion carried by acclamation. Five dissenting votes.”

"When the charter was received by the officers at the state headquarters, it was immediately returned to the officers of the local klan in Akron, and we find and agree with the finding of the lower court that the action taken by the members on September 18, 1926, did not effect a dissolution of or disbandment of Klan No. 27, and from that time until now we find the local klan to be intact, and a going, active organization, with an estimated membership of 1,200 in good standing. This conclusion therefore renders it entirely unnecessary to decide the question to which much space has been given in the briefs, as to the rights of the parent organization to the property involved in this controversy; nor do the facts justify the court in decreeing a dissolution of Klan No. 27 and distributing its funds and property.

We also agree with the finding of the lower court that:

“There were on September 18, 1926, about 4,300 members of Summit County Klan, and that assuming there were at the meeting 3,500 who assented to the action taken, there still remained about 800 members not participating or giving their assent.
“Now, considering the nature of the organization, being composed of a voluntary membership accepted as individuals, and with the right to remain or withdraw as individuals, and having individually assented to the provisions of the charter and so accepted same, can a majority disband the organization, leaving a remaining membership of about 800, not actually assenting, without standing as members, and without an organization! I do not think so. No such conditions attach to the granting of the charter as to empower a majority to cancel it, or surrender it. The charter itself contains no such condition or authority. No doubt in many matters the majority may control the action of the klan. But the majority may not say to the minority you cannot longer be klansmen under the existing charter, and if you wish to continue to be klansmen, you must apply for and obtain a new charter, and form a new society or organization. Clearly such is in contravention of the scheme and plan on which the order is based and conducted. It is contrary in principle and practice to the method of existence and operation of all similar bodies or societies. It is my judgment that the action of September 18, 1926, did not effect a disbandment of the klan.”

This, then, brings us down to the crux of the controversy, and that is, What was the legal effect of the resolution as passed by members on the evening of September 18, 1926?

The resolution by its terms designated and appointed “the Protestant Service League,” a corporation not for profit and not connected with the local klan, with its principal place of business in Akron, trustee of all of the funds and property of Klan No. 27 for a period of six months, with the power to dispose of the income during such time for charitable purposes, and then it attempts to authorize two members to dispose of all of the principal of this fund as directed by 40 per cent, of the members present at the meeting on September 18,1926.

This resolution, as a matter of law, constituted the league a trustee for Klan No. 27, with the implied power in the klan to cancel or recall the trust thus created and to require the property to be returned to the real owners upon demand.

The attempted grant of power of disposition of the principal of this trust property, which continued to belong to the organization as such and not to its members, to “40 per cent, of those present at this meeting,” was of no effect, as those present could not affect the power of the members in good standing, at a subsequent meeting, to dispose of klan property in accordance with the rules and regulations of the order; nor could they transfer the power to handle and control the klan property to others than the regular officers of the klan and the members in good standing at the time the disposition was attempted to be made.

Approximately four-fifths of the members voted to surrender the charter and to transfer possession of the property to trustees for the purpose of having it turned over to a new organization then being formed by the said four-fifths; they did send the charter back, and they did transfer possession of the property, and they have since taken no part as members of Klan No. 27 and are not now claiming to be such members. They had a right voluntarily to withdraw and cease to be members, and the court must find that they did so. They could withdraw singly or collectively, but they could' not take with them any of the property, whether they left individually or collectively.

We are therefore unanimously of the opinion that" the action of September 18, 1926, was ineffectual to deprive Klan No. 27 of the title to the property which was transferred to the Protestant Service League, as trustee, and that said klan has the right to have said property now returned to it; it having exercised its undoubted legal right to terminate the trust made voluntarily for its own benefit.

We do not make any finding as to the parent organization, as it is not in court and of course is not making any claims of any kind.

The plaintiffs not being entitled to the relief prayed for, their petition is dismissed, and an order may be drawn in accordance with the prayer of the cross-petition of Klan No. 27, directing all of said property to be returned to tbe proper officers of Summit County Klan No. 27, and they are ordered to give tbeir receipt therefor.

Decree accordingly.

Washburn, P. J., Funk and Pardee, JJ., concur.  