AB553: Bill Text

1997 - 1998 LEGISLATURE

1997 Assembly BILL 553

October 9, 1997 - Introduced by Representatives Cullen and Green, cosponsored by Senators George and Huelsman. Referred to Committee on Judiciary.

AB553,1,11 An Act to repeal 801.11 (7); to renumber chapter 184 (title), 184.01 to 184.05, 184.07 to 184.11, 184.13 and 184.15; to renumber and amend 184.06, 184.12 and 184.14; to amend 20.155 (1) (g), 20.155 (2) (g), 87.01 (7), 182.025 (1), 182.031 (2), 182.70 (9) (a), 182.71 (7) (c), 195.60 (2), 196.02 (7), 196.195 (1), 196.195 (5), 196.202 (2), 196.203 (1), 196.203 (3) (a), 196.203 (4), 196.795 (5) (a), 196.795 (5) (b), 196.80 (1m) (d), 196.85 (1), 196.85 (2), 893.33 (5) and 946.82 (4); and to create 59.43 (1) (v), 77.25 (20), chapter 184 and 706.03 (3m) of the statutes; relating to: the adoption of the Uniform Unincorporated Nonprofit Association Act; the authority of nonprofit associations to acquire, hold and transfer property; the liability of nonprofit associations and their members; and the ability of nonprofit associations to sue and to be sued.

Analysis by the Legislative Reference Bureau

This bill adopts the Uniform Unincorporated Nonprofit Association Act, which was approved by the National Conference of Commissioners on Uniform State Laws in 1992. The bill makes a number of changes regarding the legal status of nonprofit associations and their members. The bill defines a nonprofit association as an unincorporated organization consisting of 3 or more "members" joined by mutual consent for a common, nonprofit purpose. The term "members" is defined to mean persons who, under the nonprofit association's rules, are entitled to participate in the selection of the association's management or in the development of its policy. In particular, the bill makes the following changes:

1. Authority to Acquire, Hold and Transfer Property. At common law, unincorporated associations were generally not recognized as separate legal entities. The bill changes this common law rule by permitting a nonprofit association, in its own name, to acquire, hold, encumber or transfer real or personal property, regardless of whether the nonprofit association has any other ties to this state. The bill also expressly permits a nonprofit association to be a legatee or beneficiary of a trust or contract.

The bill establishes a mechanism under which a nonprofit association may record a statement of authority with a county register of deeds stating the name and address of the nonprofit association, the name or title of a person authorized to transfer real property held in the name of the nonprofit association and the action, procedure or vote of the nonprofit association that authorizes the person to transfer real property and that authorizes the person to execute the statement of authority. The county register of deeds may collect a fee for recording the statement in an amount equal to the amount charged for recording a transfer of real property. Unless amended or canceled earlier, a statement of authority is canceled by operation of law 5 years after the date of the most recent recording.

If a nonprofit association has been inactive for 3 years or longer, the person in possession or control of the nonprofit association's personal property may transfer the property. If the documents of the nonprofit association specify to whom the transfer is to be made in such circumstances, the transfer must be made in accordance with the documents. If no person is specified, the property may be transferred to a nonprofit association or nonprofit corporation pursuing similar purposes or to a governmental agency or instrumentality. The bill does not specify a mechanism for disposition of the real property of an inactive association.

The bill contains certain transitional provisions regarding certain property transfers that occurred before the effective date of the bill. If an estate or interest in real or personal property was purportedly transferred to a nonprofit association before the effective date of the bill, the estate or interest vests in the nonprofit association on the effective date of the bill, unless the parties have treated the transfer as ineffective. Also, if a transfer of property vested the estate or interest in the property in another person to hold as fiduciary for the benefit of the nonprofit association or its members or both, the fiduciary may transfer the estate or interest to the nonprofit association in its name, or the nonprofit association may, by appropriate proceedings, require that the estate or interest be transferred to it in its name. No real estate transfer fee is assessed for these transfers.

2. Contract and Tort Liability of Nonprofit Associations and Members. Because an unincorporated nonprofit association was generally not treated as a separate legal entity at common law, members of the association were generally subject to joint and several liability for the association's actions. Under the bill, a nonprofit association is recognized as a legal entity separate from its members for purposes of liability in tort and contract. A person is not liable for a tortious act or omission of the nonprofit association, or for the nonprofit association's breach of contract, solely because of the person's status as a member or a person authorized to participate in the management of the nonprofit association's affairs. The bill does not address the liability of nonprofit associations for civil forfeitures or for criminal acts.

3. Ability of a Nonprofit Association to Sue and to be Sued as an Entity. At common law, a nonprofit association was generally not viewed as a legal entity distinct from its members. The bill authorizes members of a nonprofit association to assert a claim against the association and allows the association to assert a claim against one of its members. The bill allows a nonprofit association to, in its own name, institute, defend, intervene or participate in judicial or administrative proceedings. It allows a nonprofit association to assert a claim in its name on behalf of its members if one or more members of the association would have standing to assert the claim in their own right, if the interests that the nonprofit association seeks to protect are germane to the association's purposes and neither the claim asserted nor the relief requested requires the participation of a member. Under the bill, a judgment or order against a nonprofit association is not by itself a judgment or order against the association's members. Further, claims against a nonprofit association do not abate merely because of a change in the members or management of the association. The bill also contains provisions determining proper venue for nonprofit associations, establishing procedures for serving a complaint or summons on a nonprofit association and allowing a nonprofit association to appoint an agent for service of process.

For further information see the state and local fiscal estimate, which will be printed as an appendix to this bill.

The people of the state of Wisconsin, represented in senate and assembly, do enact as follows:

AB553, s. 1 Section 1. 20.155 (1) (g) of the statutes is amended to read:

AB553,3,7 20.155 (1) (g) Utility regulation. The amounts in the schedule for the regulation of utilities. Ninety percent of all moneys received by the commission under s. 184.10 (3), 196.85 or, 196.855 or 200.10 (3) shall be credited to this appropriation. Ninety percent of all receipts from the sale of miscellaneous printed reports and other copied material, the cost of which was originally paid under this paragraph, shall be credited to this appropriation.

AB553, s. 2 Section 2. 20.155 (2) (g) of the statutes is amended to read:

AB553,4,5 20.155 (2) (g) Railroad regulation and general program operations. The amounts in the schedule for railroad regulation under chs. 189 to 192 and 195 and general program operations of the office of the commissioner of railroads. Ninety percent of all moneys received by the office under s. 184.10 (3) or, 195.60 or 200.10 (3) shall be credited to this appropriation.

AB553, s. 3 Section 3. 59.43 (1) (v) of the statutes is created to read:

AB553,4,7 59.43 (1) (v) Record and index statements of authority under s. 184.05.

AB553, s. 4 Section 4. 77.25 (20) of the statutes is created to read:

AB553,4,9 77.25 (20) Made under s. 184.15.

AB553, s. 5 Section 5. 87.01 (7) of the statutes is amended to read:

AB553,4,12 87.01 (7) "Public service corporation" means any corporation specified in s. 184.01 200.01.

AB553, s. 6 Section 6. 182.025 (1) of the statutes is amended to read:

AB553,5,14 182.025 (1) Any domestic corporation formed to furnish water, heat, light, power, telegraph or telecommunications service or signals by electricity may, subject to the provisions of ch. 184 200 and by an affirmative vote of at least two-thirds of its outstanding shares entitled to vote thereon, or any cooperative association organized under ch. 185 to furnish water, heat, light, power, telegraph or telecommunications service to its stockholders or members only may, by a vote of a majority of a quorum of its stockholders or members present at any regular or special meeting held upon due notice as to the purpose of the meeting or when authorized by the written consent of the holders of a majority of its capital stock outstanding and entitled to vote or of a majority of its members, mortgage or trust deed any or all of the property, rights and privileges and franchises that it may then own or thereafter acquire, to secure the payment of its bonds or notes to a fixed amount or in amounts to be from time to time determined by the board of directors, and may, in and by such mortgage or deed of trust, provide for the disposal of any of its property and the substitution of other property in its place. Every such mortgage or deed of trust may be recorded in the office of the register of deeds of the county in which such corporation is located at the time of such recording, and such record shall have the same effect as if the instrument were filed in the proper office as a chattel mortgage or financing statement, and so remain until satisfied or discharged without any further affidavit, continuation statement or proceeding whatever. For this purpose the location of such corporation shall be deemed to be: as to a corporation or a cooperative association not at the time subject to either s. 180.0501 or 185.08, the location designated in its articles as then in effect; as to a corporation subject to s. 180.0501, the location of its registered office; and as to a cooperative association subject to s. 185.08, the location of its principal office or registered agent as designated thereunder.

AB553, s. 7 Section 7. 182.031 (2) of the statutes is amended to read:

AB553,5,22 182.031 (2) Powers; place of business. Every such corporation shall possess all the rights and powers conferred upon corporations by chs. 180 and 184 200. It may have its principal place of business without the state. If its principal place of business is outside the state, process in actions against it may be served as provided in s. 180.1510 for service on a foreign stock corporation authorized to transact business in this state or upon the department of financial institutions as provided in s. 181.66 (2) for service upon a foreign nonprofit corporation.

AB553, s. 8 Section 8. 182.70 (9) (a) of the statutes is amended to read:

AB553,6,2 182.70 (9) (a) The company may, after certification from the commission according to the procedures under ss. 184.03 200.03 and 184.04 200.04, issue bonds or other obligations secured by pledge, assignment, mortgage or trust deed of its property.

AB553, s. 9 Section 9. 182.71 (7) (c) of the statutes is amended to read:

AB553,6,11 182.71 (7) (c) The company may, after certification from the commission according to the procedures under ss. 184.03 200.03 and 184.04 200.04, issue capital stock or negotiable bonds. The money received by the company upon account of capital stock or sale of its negotiable bonds shall be used to pay the original cost of purchase, construction or improvement of the reservoir system. All tolls collected under sub. (5) shall be applied only to the payment of cost of maintenance and operation of the system and payment of the net return on capital so that the capital stock and bonds of the corporation shall be maintained at par value at all times.

AB553, s. 10 Section 10. Chapter 184 (title) of the statutes is renumbered chapter 200 (title).

AB553, s. 11 Section 11. 184.01 to 184.05 of the statutes are renumbered 200.01 to 200.05.

AB553, s. 12 Section 12. 184.06 of the statutes is renumbered 200.06, and 200.06 (2), as renumbered, is amended to read:

AB553,7,2 200.06 (2) The commission may attach to the issuance of any certificate under this chapter such terms, conditions or requirements as in its judgment are reasonably necessary to protect the public interest. Any public service corporation dissatisfied with any of the terms or conditions so imposed by the commission in such certificate of authority shall be limited in its remedy to an action to modify or set aside the commission order authorizing a certificate of authority, as provided by s. 184.08 200.08. Any public service corporation issuing securities pursuant to any certificate of authority, not having brought any such action to set aside such order, shall be deemed thereby to have waived any and all objections to the terms, conditions and requirements contained in such certificate of authority.

AB553, s. 13 Section 13. 184.07 to 184.11 of the statutes are renumbered 200.07 to 200.11.

AB553, s. 14 Section 14. 184.12 of the statutes is renumbered 200.12 and amended to read:

AB553,7,15 200.12 Judicial sale of corporation, reorganization. Whenever the rights, powers, privileges and franchises of any domestic public service corporation shall be sold at judicial sale or pursuant to the foreclosure of a mortgage, the purchaser shall, within sixty days after such sale, organize a new corporation pursuant to the laws respecting corporations for similar purposes and shall convey to such corporation the rights, privileges and franchises which the former corporation had, or was entitled to have, at the time of such sale, and such as are provided by the statutes applicable thereto. The amount of securities which may be issued by the new corporation for the purpose of acquiring the property of the former corporation shall be determined in accordance with ss. 184.04, 184.05 200.04, 200.05 and 184.06 200.06.

AB553, s. 15 Section 15. 184.13 of the statutes is renumbered 200.13.

AB553, s. 16 Section 16. 184.14 of the statutes is renumbered 200.14 and amended to read:

AB553,8,3 200.14 Validation of securities issued without certificate. Securities issued by any such corporation, for the issuance of which a certificate should have been, but through excusable neglect or mistake was not, applied for, may be validated by the commission upon application of such corporation, signed and verified by the president and secretary, and setting forth the information required by s. 184.05 200.05 (1), and in addition thereto a concise statement of the reasons why such application was not made at the time such securities were issued. If the commission shall find and determine that such failure to make application was due to excusable neglect or mistake, and was not occasioned by any design to evade compliance with the law, and that such issue was otherwise in accordance with law, the commission shall issue to the corporation a validating certificate.

AB553, s. 17 Section 17. 184.15 of the statutes is renumbered 200.15.

AB553, s. 18 Section 18. Chapter 184 of the statutes is created to read:

AB553,8,6 Chapter 184

AB553,8,8 Uniform unincorporated nonprofit association act

AB553,8,9 184.01 Definitions. In this chapter:

AB553,8,13 (1) "Member" means a person who, under the rules or practices of a nonprofit association, may participate in the selection of persons authorized to manage the affairs of the nonprofit association or in the development of policy of the nonprofit association.

AB553,8,18 (2) "Nonprofit association" means an unincorporated organization consisting of 3 or more members joined by mutual consent for a common, nonprofit purpose. However, joint tenancy, tenancy in common, or tenancy by the entireties does not, by itself, establish a nonprofit association, even if the coowners share use of the property for a nonprofit purpose.

AB553,8,21 184.02 Supplementary general principles of law and equity. Principles of law and equity supplement this chapter, unless displaced by a particular provision of this chapter.

AB553,8,25 184.03 Territorial application. Real and personal property in this state may be acquired, held, encumbered and transferred by a nonprofit association, whether or not the nonprofit association or a member has any other relationship with this state.

AB553,9,3 184.04 Real and personal property; nonprofit association as legatee or beneficiary. (1) A nonprofit association in its name may acquire, hold, encumber or transfer an estate or interest in real or personal property.

AB553,9,4 (2) A nonprofit association may be a legatee or beneficiary of a trust or contract.

AB553,9,7 184.05 Statement of authority as to real property. (1) A nonprofit association may execute and record a statement of authority to transfer an estate or interest in real property in the name of the nonprofit association.

AB553,9,11 (2) An estate or interest in real property in the name of a nonprofit association may be transferred by a person so authorized in a statement of authority recorded in the office of the county register of deeds in which a transfer of the property would be recorded.

AB553,9,12 (3) A statement of authority must include all of the following:

AB553,9,17 (a) The name of the nonprofit association. The name of a nonprofit association as set forth in the statement of authority must contain the words "unincorporated association" or "unincorporated assoc." or end with the abbreviation "U.A." or "UA". The name may not contain language stating or implying that the nonprofit association is incorporated.

AB553,9,20 (b) The address in this state, including the street address, if any, of the nonprofit association or, if the nonprofit association does not have an address in this state, its address outside this state.

AB553,9,22 (c) The name or title of a person who is authorized to transfer an estate or interest in real property held in the name of the nonprofit association.

AB553,9,25 (d) The action, procedure or vote of the nonprofit association that authorizes the person to transfer the real property of the nonprofit association and that authorizes the person to execute the statement of authority.

AB553,10,3 (4) A statement of authority shall be executed in the same manner as a deed by a person who is not the person authorized by the statement of authority to transfer the estate or interest in real property.

AB553,10,7 (6) An amendment, including a cancellation, of a statement of authority must meet the requirements for execution and recording of an original statement. Unless canceled earlier, a recorded statement of authority or its most recent amendment is canceled by operation of law 5 years after the date of the most recent recording.

AB553,10,12 (7) If the record title to real property is in the name of a nonprofit association and the statement of authority is recorded in the office of the county register of deeds in which a transfer of real property would be recorded, the authority of the person named in a statement of authority is conclusive in favor of a person who gives value without notice that the person lacks authority.

AB553,10,15 184.06 Liability in tort and contract. (1) A nonprofit association is a legal entity separate from its members for the purposes of determining and enforcing rights, duties and liabilities in contract and tort.

AB553,10,19 (2) A person is not liable for a breach of a nonprofit association's contract merely because the person is a member, is authorized to participate in the management of the affairs of the nonprofit association, or is a person considered to be a member by the nonprofit association.

AB553,10,23 (3) A person is not liable for a tortious act or omission for which a nonprofit association is liable merely because the person is a member, is authorized to participate in the management of the affairs of the nonprofit association, or is a person considered to be a member by the nonprofit association.

AB553,11,3 (4) A tortious act or omission of a member or other person for which a nonprofit association is liable is not imputed to a person merely because the person is a member of the nonprofit association, is authorized to participate in the management of the affairs of the nonprofit association, or is a person considered to be a member by the nonprofit association.

AB553,11,7 (5) A member of, or a person considered to be a member by, a nonprofit association may assert a claim against the nonprofit association. A nonprofit association may assert a claim against a member or a person considered to be a member by the nonprofit association.

AB553,11,11 184.07 Capacity to assert and defend; standing. (1) A nonprofit association, in its name, may institute, defend, intervene or participate in a judicial, administrative or other governmental proceeding or in an arbitration, mediation or any other form of alternative dispute resolution.

AB553,11,16 (2) A nonprofit association may assert a claim in its name on behalf of its members if one or more members of the nonprofit association have standing to assert a claim in their own right, the interests that the nonprofit association seeks to protect are germane to its purposes, and neither the claim asserted nor the relief requested requires the participation of a member.

AB553,11,18 184.08 Effect of judgment or order. A judgment or order against a nonprofit association is not by itself a judgment or order against a member.

AB553,11,22 184.09 Disposition of personal property of inactive nonprofit association. If a nonprofit association has been inactive for 3 years or longer, a person in possession or control of personal property of the nonprofit association may transfer the property to any of the following:

AB553,11,24 (1) If a document of a nonprofit association specifies a person to whom transfer is to be made under these circumstances, that person.

AB553,12,3 (2) If no person is so specified, a nonprofit association or nonprofit corporation pursuing broadly similar purposes, or to a government or governmental subdivision, agency or instrumentality.

AB553,12,6 184.10 Appointment of agent to receive service of process. (1) A nonprofit association may file with the department of financial institutions a statement appointing an agent who is authorized to receive service of process.

AB553,12,8 (2) A statement appointing an agent shall be on the form prescribed by the department of financial institutions and shall set forth all of the following:

AB553,12,13 (a) The name of the nonprofit association. The name of a nonprofit association as set forth in the statement appointing an agent must contain the words "unincorporated association" or "unincorporated assoc." or end with the abbreviation "U.A." or "UA". The name may not contain language stating or implying that the nonprofit association is incorporated.

AB553,12,16 (b) The address in this state, including the street address, if any, of the nonprofit association, or, if the nonprofit association does not have an address in this state, its address out of state.

AB553,12,18 (c) The name of the person in this state who is authorized to receive service of process and the person's address, including the street address, in this state.

AB553,12,19 (d) That the person appointed as agent has accepted the appointment.

AB553,12,23 (3) A statement appointing an agent must be signed by a person who is authorized to manage the affairs of a nonprofit association. The appointed agent may resign by filing a resignation with the department of financial institutions and giving notice to the nonprofit association.

AB553,13,3 (4) The department of financial institutions shall collect a fee of $15 for filing a statement appointing an agent to receive service of process, an amended and restated statement or a resignation.

AB553,13,8 (5) A statement filed under sub. (1) may be amended by filing a statement changing or restating the information set forth in the original statement and declaring that the statement supersedes and takes the place of the original statement. The statement shall set forth all of the information required under sub. (2) and shall meet the requirements for execution of an original statement.