Lead Stories

A divided Supreme Court of Vermont has set the conditions under which members of an unincorporated association can be held personally liable for the debts of the association when the association can’t meet its obligations.  It has refused to impose liability only on members who were actively involved in the wrongdoing that created the obligation, and imposed liability on anyone who was a member at the time.  (Daniels v.

When CITGO Petroleum Corporation and CITGO Refining and Chemicals Company were convicted on two felony counts each of operating an oil water separator without proper emission controls and three misdemeanor counts of unlawfully taking migratory birds the government asked for the maximum criminal fine of $2.9 million.  It also asked for a five-year probation and “community service” in the form of fully funding seven proposed projects in the amount of $44 million. 

The companies said they were willing to pay the fines, but not make the contributions.  A trial court in Texas has agreed it has no power to require the contributions.  (U.S. v. CITGO Petroleum Corporation, S.D. TX, No. C-06-563, 9/18/12.)

When wait staff of the Kittansett golf club in Massachusetts sued the club and one of its officers for failure to properly distribute gratuities added to meal charges, the club tendered the claim to its Directors and Officers insurance carrier.  It sought coverage under the provisions providing indemnification for losses suffered from claims for wrongful acts. 

The carrier said it had no obligation under the policy, and a federal District Court has agreed.  It held that the claim was essentially one for money the club already had the obligation to pay, and not for the failure to pay it.  (Kittansett Club v. Philadelphia Indemnity Insurance Company, D. MA, No. 11-11385, 9/10/12.)

The Supreme Court of Illinois has allowed the Rush University Medical Center in Chicago to pursue a claim against a trust created by a donor who died without fulfilling his irrevocable pledge for $1.5 million.  The Court said that a trust created by the donor/settlor naming himself as beneficiary could be liable for the debt even though it contained a spendthrift clause saying its assets could not be used to pay claims of creditors. The Court said the common law rule was not abrogated by the state’s enactment of the Uniform Fraudulent Transfer Act.

A frequent patron of Merchants’ Square in the historic district of Colonial Williamsburg has been permitted to bring a suit against the Colonial Williamsburg Foundation to remove barriers to accessibility.  The patron lives in Gloucester, Virginia and claims he visits the Square several times a month but cannot enjoy all of the services and facilities because it is not fully accessible to the wheelchair he uses for mobility.

We regularly feature answers to questions from readers in our “Your Legal Questions Answered” column. The full list can be viewed on the site.

May we transfer endowment to another charity?