If a person donates a “conditional gift” (a gift that can only be used for the stated purpose) to a charity, may the charity ignore that restriction and use it for another purpose? The Court in Adler v. Save, was confronted with that very issue. In that case, Bernard and Jeanne Adler (the “Adlers”) donated fifty thousand dollars ($50,000.00) (“Donation”) to SAVE. (See Adler v. Save, 432 N.J. Super. 101 (App. Div. 2013) at 111. The Adlers made the Donation to SAVE based upon its representations that the money would be utilized to construct and run a new animal shelter facility (“New Facility”). Unfortunately, after accepting the Donation, SAVE decided that it no longer wanted to build the New Facility. The question presented to the Court was whether SAVE would be required to return the Donation to the Adlers.
SAVE was a charitable organization with a self-proclaimed mission to provide for the rescue, shelter, veterinary care, and adoption of stray companion animals. SAVE was located in the Borough of Princeton, New Jersey (“Princeton”). Id at 105.
Prior to agreeing to make the Donation, SAVE informed the Adlers of the original plans for the New Facility which encompassed the following:
- a large facility approximately thirty-five thousand (35,000) square feet;
- separate living areas for cats and dogs;
- areas designed for isolation and rehabilitation;
- areas for spaying and neutering, including an on-site veterinary clinic with x-ray equipment for treatment and triage of sick and injured animals;
- accommodations for larger dogs, designed as “dog living rooms.”
The Adlers informed SAVE that the purpose for their agreement to make the Donation was “to have rooms for large dogs and older cats that are not easily adopted and specifically for the naming rights for those rooms at that facility [in Princeton].” Id at 113-114. According to Mrs. Adler, SAVE told her that, in recognition and appreciation for the Donation, it would designate two rooms in the New Facility; one for the care of large dogs and the other for the care of older cats. SAVE also told them that the Adlers would have nameplates outside of each of those rooms. Id.
However, after receiving the Donation, SAVE announced to its donors (including the Adlers) that instead of proceeding with its construction of the New Facility, it had decided to merge with another charitable foundation. As a result, SAVE decided that it would not construct its new shelter at its original location in Princeton. Id at 114. The newly formed “merged charity” would transfer all of its operations to a location in Montgomery Township, New Jersey. Id. According to the new plans, SAVE decided to construct a new animal shelter that was significantly smaller than the New Facility and did not include two rooms specifically designated for the long-term care of large dogs and older cats. Id. at 114-120.
As a result of SAVE’s new plans, the Adlers demanded the return of the Donation. Id at 116. SAVE refused. Id. Accordingly, the Adlers filed suit in the Law Division of the Superior Court of New Jersey (“Trial Court”) seeking the return of the Donation. Id at 115. They argued that SAVE violated the material aspect of their gift by deciding, without their knowledge or approval, to use the Donation to construct a facility that did not meet their expressed animal-care conditions and would be located in an area outside of Princeton. Id at 115-116. Accordingly, the Adlers argued that they were entitled to the return of the Donation because it was a conditional gift and SAVE failed to meet its conditions. Id.
The Trial Court confirmed that this was a conditional gift. That means that the gift was one in which the recipient must comply with certain conditions in order to keep it. Normally, if the recipient fails to do so, it must return the gift to the donor upon the donor’s request.
The Trial Court went on to explain that the Donation made by the Adlers was motivated by their desire to provide better conditions for large dogs and older cats. Id at 121. Thus — since SAVE was no longer building a facility that would serve those goals — the Trial Court ruled in favor of the Adlers, finding that they were entitled to the return of the Donation. Id at 120-121.
SAVE appealed to the Appellate Division of the Superior Court of New Jersey (“Appellate Court”). Id at 121. The Appellate Court explained that SAVE was under a fiduciary obligation to return the Donation to the Adlers if it could not meet the conditions they imposed upon it. Specifically, when a donor places trust and confidence in a recipient who is in a dominant or superior position, the recipient assumes a fiduciary duty to the donor. Id at 125. In this case, the Adlers placed their trust in SAVE to meet the conditions of their gift. By virtue of SAVE’s control of the funds, it was required to either meet the Adlers’ conditions or obtain their consent to rededicate the funds to another purpose acceptable to them. Otherwise, SAVE had a fiduciary duty to return the Donation to the Adlers. Id.
In sum, the Appellate Court held in favor of the Adlers based upon the “unquestionable realization” that SAVE accepted the Donation fully aware of the Adlers’ conditions and did not express any reservation to them about SAVE’s ability to meet any of those conditions. Therefore, even though SAVE no longer wanted to build the New Facility, SAVE had to return the Donation to the Adlers since it failed to meet those original conditions. Id at 124.