I.
Clubs [Note: Boldness, Italics
and/or Underlining are for emphasis and may not be in the original document; however it will be done throughout this
report.]
A. Legal Definition from the Free Dictionary Online:
1. A club is defined in pertinent parts as; “[A]n organization composed of people who voluntarily meet on a
regular basis for a mutual purpose other than educational, religious, charitable, or financial pursuits. A club is any kind
of group that has members who meet for a social, literary, or political purpose, such as health clubs, country clubs, book
clubs, and women's associations. The term club is not a legal term per se,
but a group that organizes itself as a club must comply with any laws governing its organization and otherwise be cognizant of the legal ramifications in undertaking to organize itself in this manner.
B.
Types of Clubs:
2. Various types of clubs exist. An incorporated members' club
is composed of a group of individuals who each contribute to the club's funds, which are used to pay the expenses of conducting
the society. An unincorporated proprietary club is one whose proprietor owns the property and funds and conducts the
club to attempt to make a profit. The members are entitled to use the premises and property in exchange for the payment of
entrance fees and subscriptions to the proprietor as well as any additional rights and privileges provided in their contractual
agreement.
3. An incorporated club is generally governed by state statute. Many
statutes provide for the incorporation of clubs, and the statutory requirements must be strictly observed. A statute may require
that an application for incorporation state
the purposes of the club in a definitive manner to help the court determine whether
the objective of the club is legal. In addition, the application should state the manner in which club revenues are to be
provided and the basis upon which an individual may become a member of the club.
C. Organizational Structure:
4. A club's certificate of incorporation should indicate pecuniary
means (i.e., funds, money, property), describe the objective of the club, and specify a place of business or office. If a
club is unincorporated, the rules that govern associations apply.
5. Voluntary clubs are not partnerships, since the members do not
join them for profit-making purposes and, unlike partners, are not responsible for the acts of each other. If a club's members
do unite for a commercial venture, however, this association would constitute a partnership. In such cases, a club might be
required to comply with state law governing partnerships.
D. Purpose and Objective:
6. The purpose and objective of a club must be in compliance with
the law and in the best interests of the community, whether a club is incorporated or not. An application for a club charter
will be denied if the proposed bylaws provide for illegal methods of management.
7. The Police Power of the state encompasses the supervision of amusements
and thereby regulates clubs to make sure that the objectives of these organizations are lawful and that the organizations
do not become harmful to society. Statutes may authorize the revocation of a club's charter if the club conducts unlawful
activities.
E. Constitution and Bylaws:
8. The constitution and bylaws adopted by a club constitute a binding
contract between the club and its members. There is a presumption that every member of the club is acquainted with its rules.
The rules and bylaws of a club must provide for the selection of officers, handling of money or property, selection of members,
and dissolution or disbanding of the club itself.
9. A club's rights and powers are usually governed
by applicable statutes and the club's own charter, constitution, and bylaws. Clubs ordinarily have the power to acquire and
convey real property, to hold real estate, and to obtain suitable buildings for their accommodation, as well as to borrow
money for such purposes.
10. Private clubs
have the right to Immunity from public interference. Public authorities have
no power to interfere with a private club's activities when they are organized
for a legitimate purpose and do not violate any lawfully enacted statute.
F. Liabilities:
11. If a contract is made by a club's duly authorized agent on its behalf, then
the club will be liable under the contract. A membership corporation is subject to strictly limited powers and well-defined
methods of procedure, and anyone dealing with such a club is deemed to know this information. Unincorporated clubs are not liable for members' debts.
12. Concerning liability to its members for torts, an incorporated club that has
a clubhouse and is financed by membership dues is financially responsible for injuries due to its Negligence. Similarly, a club, whether incorporated or not, that maintains a clubhouse has a duty to keep the
premises reasonably safe for its members. It also has a duty to inform and warn guests of all dangers related to the enjoyment
of club privileges, that are not immediately observable.
13. A club may have various responsibilities to nonmembers.
For example, a hunting club may be required to carry insurance in case of an accidental injury within its boundaries. Similarly,
a club owes invitees on club property the duty to exercise ordinary care to prevent them from being injured.
G. Protecting Civil Rights:
14. Almost every organization that provides food, drink, lodging, or entertainment
must obey the federal Civil Rights laws and any applicable state statutes. The federal laws are designed to protect all people
from interference with their right to get a job or education, participate in government, and enjoy public accommodations.
15. Private membership clubs are exempted from these civil rights laws in order
to preserve their rights to privacy and freedom of association. In attempting to determine whether an organization genuinely
deserves private club status, courts have considered a number of factors, including the club's criteria for admission, membership
fees, membership control over the organization's operations, and use of facilities by nonmembers. Because the courts have
applied these factors on a....case-by-case basis..., the results have been inconsistent. For example, recreational sports
clubs such as golf, tennis, fishing and hunting, private
dining, and swimming clubs have generally been found to provide public accommodations. Fraternal orders and lodges have proven
to be more difficult to categorize.
16.
In four decisions dealing with these types of organizations, the Supreme Court narrowed the definition of freedom
of association and upheld the constitutionality
of state statutes designed to keep private clubs from discriminating.
A. The Jaycees: In the first case, Roberts v. United States Jaycees, 468 U.S. 609, 104 S. Ct. 3244, 82 L. Ed. 2d 462 (1984), the Supreme Court
addressed the constitutionality of a state public accommodations law that had been applied to a private club. The club, the
U.S. Jaycees, a major national and international civic organization, had been ordered by the Minnesota Department of Human
Rights to accept women as full members. The Court rejected the Jaycees' argument that this order violated its constitutional
rights. In its decision, the Court identified two distinct types of protected associations: intimate associations and expressive
associations.
1. According to the Court, intimate associations,
such as families, are distinguished by "relative smallness, a high degree of selectivity in decisions to begin and maintain
the affiliation, and seclusion from others in critical aspects of the relationship." Such associations are always subject
to protection, the Court said, whereas large business enterprises are not. Private clubs such as the Jaycees fall somewhere
in between the two. According to the Court, factors that may be relevant in determining whether a particular organization
is an intimate association include "size, purpose, policies, selectivity, [and] congeniality.
2. The Court concluded that the Jaycees is not
subject to protection as an intimate association because its chapters are large and unselective. With regard to the Jaycees'
rights as an expressive association, the Court acknowledged that the organization has the right to associate with others for
political, social, economic, educational, religious, and cultural purposes. However, the Court held that this right may be
infringed by compelling state interests such as the desire to eliminate Sex Discrimination. The Court concluded that Minnesota
had such a compelling interest in ensuring women equal access to the leadership skills, business contacts, and employment
promotions offered by the Jaycees.
B. Rotary Clubs: Three years after Roberts,
the U.S. Supreme Court decided Board of Directors v. Rotary Club, 481 U.S. 537, 107 S. Ct. 1940, 95 L. Ed. 2d
474 (1987). This case involved the application of the Unruh civil rights act (Cal. Civ. Code § 51 [West 1996]), a California
statute that prohibits gender discrimination by all "business establishments," to Rotary clubs. The Rotary is a major national
and interna-tional service club. The Supreme Court held that application of the act to require the Rotary to admit women as
members did not violate the club's First Amendment right to intimate or
expressive association. The Court pointed out, that
Rotary chapters range in size from
20 to more than nine hundred members, the organization has a high dropout rate, and many club activities are carried out in
the presence of visitors. In finding that application of the Unruh Act would not interfere significantly with the Rotary's
right to expressive association, the Court stated, "Indeed, by opening membership to leading business and professional women
in the community, Rotary Clubs are likely to obtain a more representative cross section of community leaders with a broadened
capacity for service."
C. New York Clubs: In 1988, in New York
State Club Ass'n v. City of New York, 487 U.S. 1, 108 S. Ct. 2225, 101 L. Ed. 2d 1 (1988), an association of 125 private
clubs challenged the constitutionality of a New York City public accommodations ordinance that prevents discrimination. The
ordinance, Local Law No. 63 of 1984, exempts clubs that are "distinctly private" in nature, specifically excluding from that
status any club that has more than four hundred members, serves meals on a regular basis, and receives payments directly or
indirectly from nonmembers in the pursuit of business. The Court rejected the clubs' challenge to the ordinance, finding that
the law could be validly applied.
1. In this case, the Court
went beyond its decisions in Roberts and Rotary by approving a statutory presumption that large
clubs that serve food and receive payments from nonmembers are not entitled to First Amendment protection. The Court emphasized
the fact that significant commerce occurs at most of the clubs and that "business deals are often made and personal contacts
valuable for business purposes, employment and professional advancement are formed." Such characteristics, according to the
Court, are significant in determining the nonprivate nature of clubs.
2. The law upheld by the
Court in this case narrowed the definition of a private club in order to remedy a situation deemed inappropriate by a legislative
body.
D. Boy Scouts of America The Supreme Court clarified
its position on the reach of civil rights laws in Boys Scouts of America v. Dale, 530 U.S. 640, 120 S.Ct. 2446,
147 L.Ed.2d 554 (2000). The Court, in a 5–4 decision, held that forcing the Boy Scouts of America (BSA) to accept gay
troop leaders would violate its rights of free expression and free association under the First Amendment. The BSA is a private
association and therefore was not subject to state and federal public accommodation laws.
1. The Supreme Court tied
this ruling to its previous decision in Hurley v. Irish-American Gay, Lesbian and Bisexual Group of Boston,
515 U.S. 557, 115 S.Ct. 2338, 132 L.Ed.2d 487 (1995). In Hurley, the Court ruled that the sponsor of Boston's
St. Patrick's Day parade could not be forced to let a group of gays and lesbians participate.
2. The Court held that parades
are a form of expression and that the sponsors could not be forced to include "a group imparting a message the organizers
do not wish to convey."
H. Public Opinion:
17. Despite the fact that private clubs may be exempt from civil rights laws, they
are still subject to the power of public opinion. In 2002, the National Council of Women's Organizations (NCWO), which has
approximately six million members from over one hundred groups, announced that it would seek the admittance of women members
to the Augusta National Golf Club in Augusta, Georgia. The club, with a membership of three hundred, is the home of the prestigious
Masters Golf Tournament. When NCWO stated that it would contact television sponsors of the Masters to seek their help in applying
pressure, the club announced it would forgo advertising revenue for the 2003 tournament.
18. The controversy generated friction within the membership, with some members
urging the admittance of women and some resigning in protest at the club's actions in dealing with the demands of NCWO. The
NCWO pressed the CBS network not to televise the 2003 tournament but was rebuffed by the network. However, many corporations
declined to sponsor the tournament, a sure indication that the NCWO campaign had some success.
II. Laws governing Private Clubs in South Carolina
19. Currently, there are no laws governing
private clubs in South Carolina.
Black’s Law Dictionary (2nd ed. 1910), pg 210, defines a Club in pertinent parts as; “[A] voluntary, unincorporated association of persons for purposes of a social,
literary, or political nature, or the like. A club Is not a partnership. 2 Mees.
& W. 172. The word "club" has no very definite meaning. Clubs are formed for all sorts of purposes, and there is no uniformity
in their constitutions and rules. It is well known that clubs exist which limit the number of the members and select them
with great care, which own considerable property in common, and in which the furnishing of food and drink to the members for
money is but one of many conveniences which the members enjoy. Com. v. Pomphret,
137 Mass. 567, 50 Am. Rep. 340.
20. However, there are laws governing Associations under Title 33. ACDNAC is a nonprofit Association.
A. Unincorporated
Associations that are Partnerships:
21. Legally speaking, when a group of people get together
and decide to perform some task without filing any legal paperwork or establishing any formal legal structure? Whether they know
it or not, they have formed an unincorporated association. “Unincorporated association" means an unincorporated group
of two or more persons joined by mutual consent for a common lawful purpose, whether organized for profit or not.
22. Now, if the lawful purpose they’ve joined together to accomplish includes
earning a profit, their association is automatically a partnership or joint
venture for tax and most other legal purposes. For example, if two people get
together and decide to operate a food truck, they
have formed a partnership, even if
they file no paperwork.
B. Unincorporated Associations that are Nonprofits:
23. If the purpose for the association is to benefit the public some way, and does
not include earning a profit, the association’s members have formed an unincorporated nonprofit association. People form nonprofit unincorporated associations all the time; often without being
aware of it. For example, if a person and his/her neighbors get together to help raise funds to keep a local library open,
they have formed an unincorporated nonprofit association.
24. If an unincorporated association’s purpose is charitable, educational,
and/or scientific in nature, it can qualify as a Section 501(c)(3) organization (also called a public charity). Contributions
to Section 501(c)(3)s are tax deductible. If an unincorporated charitable nonprofit has less than $5,000 in annual revenues,
it may function as a 501(c)(3) without applying for IRS recognition of its status. However, as a practical matter, it may
be difficult to obtain contributions without an IRS determination letter officially recognizing the nonprofit as a Section
5010(c)(3) organization.
25. An association with over $5,000 in revenue must apply for recognition from
the IRS by filing IRS Form 1023. It is not necessary for an unincorporated association to convert to a nonprofit corporation
to obtain IRS recognition of its Section 510(c)(3) status. However, the association must adopt written bylaws or a constitution,
and include it with its IRS application. It’s probably easier to form a nonprofit corporation than to adopt such bylaws
or constitution.
26. The biggest drawback to the unincorporated nonprofit association, and the reason
nonprofits often abandon this form in favor of a nonprofit corporation, is that it has no separate legal existence apart from
its members. Because it is not respected as a separate legal entity, its members generally can be personally liable for its
debts and liabilities. Some states, such as California, give some limited liability to nonprofit association members; but...it’s
not as good...as the protection obtainable from a nonprofit corporation. Moreover, unless a state law contains an “enabling
statute” granting such rights to entities, an unincorporated association cannot hold or receive property, or sign contracts,
in its own name. Because of these limitations, nonprofit unincorporated associations are usually used to accomplish limited
short-term goals. Nonprofits with long-term missions should usually incorporate. [Note: This information,
in whole or in part comes from Nolo.com] {Click here to review iin its entirety}
III. Based On Research & Prevailing Case Law in Federal
Courts
27. In order to expedite ACDNAC’s purpose and goals, I recommend the following strategic real estate and/or business acquisition and/or development model/s and/or
approach.
A.
All clubs should be designated as private. There are no laws, federal
or state that governs the organization of private clubs that are formed for the limited purpose of pooling resources to become
a shareholder in a corporate entity whose sole purpose for being is Real Estate Acquisition & Development and Business
Acquisition & Development. The Club, however it is designated is the shareholder.
B.
All clubs regardless of name, should be designated as Affiliates pursuant to 17
CFR § 230.405 – under definitions of terms that clearly state in pertinent parts; {Click here to review § 230.405]
“[U]nless the context otherwise requires, all terms used in §§ 230.400 to 230.494, inclusive, or in the forms
for registration have the same meanings as in the Act and in the general rules and regulations. In addition, the following
definitions apply, unless the context otherwise requires: [Act means the Security Act of 1933.]
Affiliate. An affiliate of, or person affiliated with, a specified person, is a person that directly, or indirectly
through one or more intermediaries, controls or is controlled by, or is under common control with, the person specified. [The person specified will be Unity
International, Inc., and its Board of Directors.]
Amount.
The term amount, when used in regard to securities, means the principal amount if relating to evidences of indebtedness,
the number of shares if relating to shares, and the number of units if relating to any other kind of security.” [Share means one with a value to be determined by the Board of
Directors of no less than $500.00 and no more than $5,000.00 for Real Estate Acquisition & Development and Business Acquisition
& Development purposes]
