Adler v. SAVE
PERSONAL PROPERTY — Gifts
Adler v. SAVE, A-0643-10T3; Appellate Division; opinion by Fuentes, P.J.A.D.; decided and approved for publication August 5, 2013. Before Judges Fuentes, Harris and Koblitz. On appeal from Law Division, Mercer County, L-2611-07. [Sat below: Judge Sumners.] DDS No. 58-2-0893 [39 pp.]
Defendant SAVE, a 26 U.S.C.A. § 501(c)(3) charitable organization n/k/a SAVE, A Friend to Homeless Animals, was founded as a nonprofit animal shelter in the greater Princeton area. Its mission is to provide for the rescue, shelter, veterinary care, and adoption of stray companion animals in the region.
At the time the SAVE board of trustees hired Sara Nicolls in 1999 as SAVE's executive director, its main concern was how to address the problems associated with renovating its antiquated facility located at Herrontown Road in Princeton Township. It eventually retained an architectural firm to design a new shelter facility. The plans depicted a 35,000-square-foot facility, that would include separate living areas for cats and dogs and accommodations for larger dogs.
The capital campaign began by asking the board members to pledge matching grants. It then focused on a select group of historically loyal and generous supporters who were invited to a spring benefit event where Nicolls personally solicited their support for the proposed facility. Plaintiffs Bernard and Jeanne Adler, whose involvement with SAVE began in the early 1990s, were among the guests at this event.
Nicholls testified that plaintiffs were very interested in the project, especially in facilities for larger dogs and older cats. Her testimony corroborated plaintiffs' account of events in all material respects. Mr. Adler testified that Nicolls emphasized that the new facility would have different rooms for keeping larger dogs and older cats. She also told them that they could get naming rights for a large dog and older cat facility. The Adlers agreed to donate $50,000. Mr. Adler conceded that he did not specifically discuss with Nicolls what would occur if the facility were not constructed.
In February 2006, defendant announced that it was merging with another charitable foundation and would not construct a new shelter on Herrontown Road. Rather, the merged charity would construct a 3,000-square-foot shelter in Montgomery Township.
This announcement came as a total surprise to plaintiffs. Mr. Adler testified that he made several unsuccessful attempts to speak to the executive director and a board of trustees member. Unable to reach a satisfactory resolution, he requested the return of his donation. SAVE refused to do so.
Plaintiffs then filed suit seeking the return of their donation, arguing that SAVE accepted the donation fully aware that plaintiffs expected the funds to be specifically earmarked for the construction of two rooms exclusively for the care of large dogs and older cats, in a facility on Herrontown Road and that it violated these conditions by deciding unilaterally to use the funds to construct a facility that did not meet their expressed conditions.
The trial judge held in plaintiffs' favor, finding that they were entitled to the full return of their gift.
On appeal, defendant argues that the judge erred in finding that plaintiffs' donation was a conditional gift or, alternatively, that the court should have reformed plaintiffs' gift under the doctrine of equitable deviation.
Held: A charity that solicits and accepts a gift from a donor, knowing that the donor's expressed purpose for making the gift was to fund a particular aspect of the charity's eleemosynary mission, is bound to return the gift when it unilaterally decides not to honor the donor's expressed purpose. Absent the donor's consent, the recipient of the gift is not at liberty to ignore or materially modify the expressed purpose underlying the donor's decision to give, even if the conditions that existed at the time of the gift may have materially changed, making the fulfillment of the donor's condition either impossible or highly impractical. When, as here, the donor is alive and able to prove the conditional nature of the gift through his testimony and other corroborative evidence, a reviewing court must enforce the donor's original intent, by directing the charity to either fulfill the condition or return the gift.
The panel says it is clear that plaintiffs expressly announced their conditions when they made their gift, and defendant expressly acknowledged those conditions when it accepted the gift. Noting the absence of a published New Jersey opinion directly addressing the right of a live donor to demand the return of a conditional inter vivos gift based on the recipient's failure to honor the donor's conditions, the panel applies its collective jurisprudential experience and general sense of fairness.
Based on the unquestioned realization that the recipient accepted the gift fully aware of the donors' conditions and did not express any reservation about its ability to meet those conditions, the panel concludes that this created a reasonable expectation in the donors' minds that (1) the recipient would attempt to meet those conditions in good faith; (2) absent the donors' consent, the recipient did not have the right to ignore or disregard any of the material conditions of the gift; and (3) if the recipient decides to unilaterally disregard the donors' expressed condition, basic fairness dictates that the gift must be returned to the donors.
The panel says this analytical paradigm is consistent with the principles governing a fiduciary relationship. By opting to disregard plaintiffs' conditions, SAVE breached its fiduciary duty to them. Requiring SAVE to return the gift is not only eminently suitable, but a mild sanction.
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