Nonprofit Law YOU Want to Know
We regularly feature answers to questions from readers in our “Your Legal Questions Answered” column. The full list can be viewed on the site.
Must board report embezzlement?
Lead Stories
Mortgage Broker Not Liable When Co-Pastor Misuses Funds
Bankruptcy Court recognizes breach of duty, but says conduct was not a substantial factor in harm
A mortgage broker who helped a church procure three mortgage loans that were signed by a co-pastor but never authorized by the pastor or the board has been found not liable to the church for funds apparently diverted by the co-pastor for other uses. A bankruptcy court in California has held that even though the broker breached a duty to the church, its conduct was not a “substantial factor” in the harm. (In re: Church of God in Christ #2 v. BDM Mortgage Services, Bankruptcy Ct., N.D. CA, Bankruptcy No. 08-30750, 10/20/11.)
Charity May Sue Bank For Failing to Get Beneficiary Change
Even though charity did not contest distribution of estate, Court says charity may sue two years later for negligence
The Watch Tower Bible and Tract Society of Pennsylvania has been permitted to sue Fifth Third Bank in Ohio for failing to have a customer complete a change of designation form on his “payable on death” accounts even where the Society’s lawyer had filed an entry of appearance in a probate court case determining the rightful owner of the funds. The Court of Appeals of Ohio has said the Society was not precluded from litigating the issue because it was not decided in the earlier case. (Fifth Third Bank v. Watch Tower Bible & Tract Society of Pennsylvania, Ct. of App., OH, No. 96403, 10/6/11.)
Foundation May Sue Bank For Delay in Stock Transfer
Foundation May Sue Bank For Delay in Stock Transfer
A family foundation has standing to sue a bank for breach of its custodianship agreement between the bank and a foundation donor when the bank’s delay in transferring stock may have cost the foundation about $1.6 million in lost value. The bank had argued that the foundation had no standing to sue because it was not a party to the custodianship agreement. An appellate court in Massachusetts has ruled that the foundation was an intended beneficiary of the agreement and could pursue the case for its damages. (The James Family Charitable Foundation v.
Nonprofit Law YOU Want to Know
We regularly feature answers to questions from readers in our “To the Point” column. The full list can be viewed on the site.
How can I get my name off board list on website?
“Gross Negligence” Requires Deliberate Misconduct
Court says difference from simple negligence is intentional wrongdoing or conscious disregard
The difference between negligence and gross negligence is not in degree or magnitude of inadvertence or carelessness, the Court of Appeals of North Carolina has held. Gross negligence is rather intentional wrongdoing or deliberate misconduct done with conscious or reckless disregard for the rights and safety of others. (Green v. Kearney, Ct. of App., NC, No. COA11-439, 11/15/11.)