Causes of Dissolution
An unincorporated association may be dissolved according to the mode of dissolution provided in its articles of association, charter, or by-laws. The constitution or by-laws of an unincorporated association have the same effect as a contract between the association and its members. The members are bound by the by-laws and are presumed knowledgeable about such by-laws.
Where the association’s constitution or by-laws are silent as to the method of dissolution, the consent of the majority of the membership may effectuate dissolution of the association.[i] The general rule is that in the absence of a stipulation as to the mode of dissolution in the by-laws, an association may only be dissolved by the unanimous consent of its members, by the decision of some parent/superior organization, or by a court decree.
In the case of dissolution by court decree, a court of equity has jurisdiction to decree dissolution and to distribute the association’s funds among the members or contributors where its operations have been discontinued by common consent of the members. However, an unincorporated association will not be dissolved upon the unconvincing complaints of some members.[ii]
An unincorporated association can also be dissolved by unanimous vote, consent of the members, or by a formal resolution. For a court to decree dissolution there must be an entire failure of purpose of the organization. “An association may be regarded as dissolved if it abandons the purposes of its creation and ceases to exercise its functions, especially where power to resume business does not exist. However, neither the loss of an association’s property, nor a failure to hold regular meetings or elect officers, nor all combined, necessarily amounts to abandonment. The question whether the association has dissolved by abandonment is one of law.”[iii]
Similarly, a voluntary unincorporated organization must be dissolved only with the consent of a requisite number of members. Dissolution of the organization by a smaller number of members will be ineffective. Further, a wrongful expulsion alone is not a sufficient ground for granting a decree of dissolution.
[i] Strong v. Garvey Memorial Liberty Hall, Inc., 110 A.2d 244 (Pa. 1955)
[ii] Holt v. Santa Clara County Sheriff’s Benefits Assn., 250 Cal. App. 2d 925, 930 (Cal. App. 1st Dist. 1967)
[iii] Watson v. Woods, 312 Ky. 694, 697 (Ky. 1950)