Gale v. York Center Community Co-op., Inc.
| Decision Date | 01 December 1960 |
| Docket Number | No. 35825,35825 |
| Citation | 171 N.E.2d 30,21 Ill.2d 86 |
| Parties | William GALE et al., Appellant, v. YORK CENTER COMMUNITY COOPERATIVE, INC., Appellee. |
| Court | Illinois Supreme Court |
Edward Jacobs, Wheaton, for appellant.
Rathje & Woodward, Wheaton, and Leon M. Despres, Chicago, for appellee.
The principal question presented by this appeal is whether a co-operative housing association may partially restrain the alienability of its members' property interests in order to maintain its existence as a co-operative enterprise. The circuit court of Du Page County held such restraints and all other portions of the written agreements between York Center Community Cooperative, Inc., a co-operative housing association, and the seven plaintiff families, members of the association, to be valid, and directed five of the plaintiff families to reconvey the properties they occupy to the association. Five of the plaintiff families have appealed from the decree. A freehold in involved.
York Center is a subdivision located just south of Lombard. There are 72 families living in the subdivision, each of whom is a member of the defendant association, a not-for-profit corporation organized for the purpose of establishing and maintaining a co-operative housing community. Legal title to all real estate in the subdivision is held by the association and the members each own a membership entitling them to the perpetual use and occupancy of their respective dwellings.
The rights and duties of membership are set out in uniform written agreements between each member and all other members, in which the association acts as the contracting party for the other members. The membership contract, certificate of membership, and bylaws of the association constitute the agreement. Membership is open to all persons, regardless of race, color or creed, who are in agreement with the aims and purposes of the association and who, in the judgment of the board of directors, can comply with the bylaws of the association. Each member holds only one membership, which is equal in value to the appraised value of his home and lot plus his interest in the association. The membership entitles the member to one vote in the conduct of affairs of the association.
The association, by action and participation open to all of its members, acts to develop and maintain the subdivision as a carefully planned, nonspeculative, attractive community. To this end it may use surplus savings to provide or replace community facilities; levy assessments for taxes, operating expenses, and general community improvements; redeem membership upon a member's notice of withdrawal; pass on requests for approval of membership transfers; pass on redemption of membership or approval of heirs or legatees in case of a member's death; pass on the admission of new members; decide on the expulsion of members guilty of seriously detrimental conduct and redeem their memberships; pass on all building and roadside planting plots and plans; adopt occupancy standards; correct nuisances; terminate undesirable nonresidential uses; and require repairs to dwellings. In all other respects each member enjoys all the incidents of individual ownership with respect to the dwelling be occupies. Thus, the members have built their own homes, have done their own financing, make their own mortgage payments, arrange and pay for the insurance on their homes and otherwise conduct themselves in many respects as the owners of the dwellings they occupy.
The plaintiffs argue that restrictions on their right to transfer their memberships violate the rule against restraints on alienation of property and are therefore void. The agreement provides that when a member wishes to withdraw, he shall give written notice of his intent to the board of directors. The association then has a twelvemonth period in which to purchase the membership at any of the following prices, as determined by the association: (1) at the selling price fixed in the notice; or (2) at whatever price the member and the association agree on; or (3) at the price determined by impartial appraisal. If the association does not exercise its option within twelve months, the membership may be sold on the open market. If the purchaser is not acceptable to the association, it may redeem the membership within 90 days. If this redemption is not exercised in 90 days, the purchaser then acquires the membership upon request. It is provided, nevertheless, that membership may be transferred subject to the written approval of the board.
The agreement further provides that upon written request the association will give to a member a deed for the purpose of obtaining a loan secured by a mortgage on the premises he occupies. The member is to reconvey the premises after he obtains his loan. The mortgagee is not required to inquire as to compliance with the agreement as long as the member has a deed from the association, and he may treat the member as the fee-simple owner of the mortgaged premises.
The agreement also provides that when a member dies and his membership passes by will or by statute of descent to a single family household headed by a son, daughter, spouse, or parent of the deceased member, such family shall, upon application and execution of the membership agreement, become a member without further inquiry be the association. If the membership passes to several individuals who are not members of the same family household, they are to decide which family household is to receive the membership rights; and if the family so chosen is headed by a child, spouse or parent of the deceased member, he shall, upon application and execution of the membership agreement, become a member without further inquiry from the board. If the membership passes to an individual or group not wishing to become a member, the association may redeem the membership within twelve months. If the membership passes to an individual or group not including a child, spouse, or parent of the deceased member and the individual applies for membership, his application is to be given first consideration; and if he is not approved, the association may redeem within twelve months. If the membership passes to a group of individuals who cannot agree within twelve months as to the disposition to make of the membership, the association is to have a second twelve-month period in which to redeem the membership.
It seems to us the agreements show a studied effort on the part of the association to retain some voice in the selection of new members and at the same time to give its members as much freedom as possible in...
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§ 31.02 The Various State Laws and Views
...v. Harris Trust & Savings Bank, N. 143 supra, 433 N.E.2d at 946.[148] Id.[149] Id.[150] Gale v. York Center Community Cooperative, Inc., 171 N.E.2d 30, 33 (Ill. 1960).[151] Id.[152] First Federal Savings Bank of Indiana v. Key Markets, Inc., 559 N.E.2d 600, 603 (Ind. 1990). The trial court ......