Court Opinion

ID: 9538204
Source: CourtListenerOpinion
Date Created: 2023-08-07 07:32:21.368964+00
Date Added: 2024-06-11T14:57:38.056558
License: Public Domain

WORTHEN, Justice
(dissenting).
I dissent.
Title 16, Chapter 6 deals with nonprofit corporations. Section 1 provides that: “any and all societies and associations whose object is not pecuniary profit, but is to promote the general interest and welfare of the members, whether temporal, social or spiritual, may be incorporated as herein provided.” Section 2 requires an affidavit declaring in general that the association has elected to comply with the statute. The affidavit does not provide for a declaration by the association or society that its object is not pecuniary profit.
Prior to the 1955 amendment Section 13 of the act was substantially as amended in 1925 and read, “The secretary of state shall require proof from any social club, recreational or athletic association, or kin*79dred association, incorporating under the provisions of this chapter, that such club or association is a bona fide club or association, the object of which is not for pecuniary profit; that it is organized with actual participating members; and that it will not be used for permitting gambling or any other violation of law or ordinance. If it is afterwards shown to the satisfaction of the secretary of state, after he shall have held a hearing thereon, of which notice shall have been given to such club or association, that any such social club recreational or athletic association, or kindred association, was actually organized for pecuniary profit, or that such association or corporation was or is actually used for gambling or other purposes in violation of law or ordinance, the secretary of state shall revoke the charter of such corporation.”
This court in the case of Entre Nous Club held that the provision for forfeiture of the charter upon the showing provided for in said section was a reasonable exercise of the state’s police power. There we concerned ourselves with a situation in which a hearing was providing in the normal course and after due notice and the provision for forfeiture was applicable only upon it being made to appear that the law had been violated.
For some reason apparently satisfactory to the legislature no provision is made in the chapter for the other two types of societies, to-wit: temporal and spiritual, to furnish proof to the Secretary of State that they are bona fide clubs, and that the object is not for pecuniary profit and that said clubs will not be used for permitting gambling or any other violation of law or ordinance.
It may have been the idea of the legislature that it was unnecessary to require such proof of temporal and spiritual clubs or of clubs whose object is to promote the temporal or spiritual welfare of the members. The legislature may have felt that the same danger to public welfare does not exist as to the other two types of clubs (temporal and spiritual), although there are many who may have a different opinion.
In my opinion the original act which provided for the revocation of the charter went as far as conscience and fair play would permit by leaving the matter entirely in the hands of the Secretary of State and permitting the determination to be made by him as to whether or not the club was actually organized for pecuniary profit or used for gambling ,or other 'illegal purposes. The 1955 . Legislature in- its amendment to Chapter 6, in my opinion, went beyond reasonable bounds. In amending Section 13 the legislature extended still further the conditions and limitations upon social clubs, recreational or athletic asso*80ciations, but left untouched temporal and spiritual clubs. In addition to the provision of the original section, the act requires that proof be made to the Secretary of State that such club is organized with actual participating members, “a record of which membership will be continually maintained and available to the secretary of state.”
The section retains the provision that the club will not be used for permitting gambling or other law violation. After providing that the Secretary of State shall require proof that the club is a bona fide club not operated for pecuniary profit, it provides as follows:
“The secretary of state shall hold a hearing, after notice, for purposes of determining whether a club or association incorporating or operating under this chapter is organized or operating in accordance with the law. Notice shall be sufficient if sent by registered mail to the principal place of business or to any of the officers of such club or association.”
It should be observed that under the provisions of the act prior to the 1955 amendment it required that “notice shall have been given to such club or association.^
The amendment does not guarantee notice in the provision “notice shall be sufficient if sent by registered mail * * In the Entre Nous Club case we had notice given. The amended act requires only that notice be sent by registered mail. No requirement is made for actual notice.
The section then provides that if it is shown after a hearing that any such club or association (1) was actually organized for pecuniary profit, (2) was used for gambling or other illegal purposes, (3) has failed to maintain or make available to the Secretary of State a record of its membership, or (4) “Has failed to procure and file with the secretary of state, within the time herein prescribed, and maintain in good standing a bond as herein provided or has failed to file and/or keep on record with the secretary of state a copy of its constitution, by-laws and house rule which must be in conformity with the requirements of this chapter, or has failed to conform to or abide by such constitution and by-laws and house rules, the secretary of state shall revoke the charter of such corporation.”
This section differs materially from the section before the amendment was added in that under the amended section the Secretary of State might, as soon as the social club had posted its $5,000 bond, conclude that the club was organized for pecuniary profit without any evidence during any operation of the club, or that it was used for gambling or other purposes, or that it failed to post its membership list and *81its $5,000 bond might be forfeited. Before the present amendment Section 16-6-13 contemplated an operating period by the club during which time the Secretary of State would presumably make investigation of the club’s operation, after which investigation the charter might be forfeited if it was shown to the satisfaction of the Secretary of State that the law was being violated. The section as amended would indicate that it is not necessary for the Secretary of State to have reason to believe that the law has been violated before holding his hearing, nor to have any complaint or affidavit filed against a club. In a most summary manner the Section declares that he shall hold a hearing for the purpose of determining whether or not the act has been violated. Not even a suspicion is required under the amended section in order to permit the Secretary of State to proceed with his summary investigation.
The act was further amended by adding sub-section 1, requiring a $5,000 bond if the club intends to maintain premises upon which liquor is or will be stored or consumed.
I am constrained to agree with counsel for appellants that Section 16-6-13.1 constitutes an amendment to the Liquor Control Act (Title 32) and constitutes a second subject in violation of Article VI, Section 23 of the Utah Constitution. The amended act, Chapter 25, Laws of 1955, certainly provides in its title for the locker system for storing and serving liquor in addition to the general subject, nonprofit corporation.
I am clearly of the opinion that the act is likewise ambiguous, unreasonable and discriminatory.
It is impossible for me to see any reasonable relationship between any justifiable end and the means adopted by said section. Rather than being calculated to accomplish fhe purpose desired, they appear to be intended to harass and lay the basis for repeated forfeitures of exorbitant bonds.
If the subject clubs are undesirable, if there is danger of abuse and improper practices in connection with the consumption in such clubs, then the legislature under its exercise of appropriate police power might well be justified in refusing to authorize the operation of any such clubs.
Nor do I feel that the regulations, and forfeitures provided for can do anything .except put out of business social clubs with small memberships and limited finances, while permitting a free rein to affluence and wealth in enjoying the privileges which the act denies to the first mentioned clubs.
In my opinion it requires nothing more than the reading of the regulations im*82posed by Section 16-6-13.1 to support appellants’ contention that the act is invalid as constituting an unreasonable interference with appellants’ business and too uncertain and ambiguous to afford any guide as to what should be done by the Secretary of State. Section 16-6-13.1 provides as follows in part:
“Each club or association, which is required by this chapter to file said $5,000 bond shall also submit a copy of its constitution, by-laws and house rules to the Secretary of State, and each such club or association shall abide by and conform to said constitution, by-laws and house rules. A copy of such constitution, by-laws and house rules and any amendments thereto shall be kept on file with the Secretary of State at all times. The constitution, by-laws and/or house rules shall provide among other things:
“1. That all classifications of members must be admitted only on written application and only after investigation and approval by governing body. Such admissions must be duly recorded in the official minutes of a regular meeting of the governing body.
• “2. Standard of eligibility for members.
“3. Limitation on the number of members consistent with the nature and purpose of the association.
“4. Reasonable initiation fees and dues consistent with the nature and purpose of the club or association.
“5. The period for which dues shall be paid and the date upon which such period shall expire.

“6. Reasonable regulations for the dropping of members for the nonpayment of dues or for other causes.

“7. Strict regulations for the government of association or club rooms and quarters generally consistent zvith the nature and character of the association or club.
“8. That rooms and quarters must be under the supervision of a manager or house committee, who shall be appointed by the governing body of the association or club.
“9. Provisions for visitors and for the issuance and use of guest cards/ which shall be issued for a period of not to exceed izvo weeks. A record of the issuance of each such card shall be maintained and available for inspection by the secretary of state at all times.
“10. That the sale of food and beverages by any such club or associ*83ation must be conducted by the club or association itself and in its own right and not upon any concession basis either to any member of the club or association or to any third party.
“11. That no member, officer, agent or employee of any such club or association shall be paid or directly or indirectly receive, in the form of salary or otherwise, any revenue from the operation of the club or association beyond the amount of such reasonable compensation as may be fixed or voted by the proper authorities and in accordance with the constitution and by-lavus of the club or association.
“12. That said club or association shall not engage in any public solicitation or public advertising of open house activities, banquets, cocktail hours or similar functions.
“13. That all property of said club or association shall belong to all the members thereof in common.
“14. That each club or association shall, in its own name, own or lease premises suitable for its activities. If leased premises are occupied by said club or association the lease must be for at least a twelve month period. A copy of the lease shall be filed ivith the secretary of state.” (Emphasis added.)
In my opinion the act denies the clubs in question every reasonable semblance of due process of law. It charges the Secretary of State with the enforcement of the act without providing him with any rule or guide as to when and how he must proceed. It requires a standard of eligibility for members. What standard is contemplated ?
It provides for limitations on the number of members. Who will fix the quota as the basis of determining the same?
Who shall determine what initiation fees and dues are reasonable?
Who shall say what regulations shall be applied for dropping members for nonpayment of dues or other causes? What are the other causes?
Who will determine if the strict regulations mentioned in sub-section (7) are consistent with the nature and character of the club?
Does the amendment prohibit the club from admitting anyone but members and guests with guest cards, or may visitors without guest cards be admitted -.under sub-section 9?
Is there some public policy that justifies the requirement that leased premises be leased for at least a twelve month period?