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Denckla v. Independence Foundation

Court of Chancery of Delaware, New Castle County

May 22, 1962

Katherine DENCKLA and Dorothy Stewart, Plaintiffs,
INDEPENDENCE FOUNDATION (formerly known as Donner Foundation Incorporated), Robert Maes and Alexander F. Barbieri, Defendants, Robert Donner, Sr., Robert Donner, Jr., Margaret Donner Spencer, Joseph W. Donner, Carroll Donner Annan, William Donner Roosevelt and Curtin Winsor, Jr., Intervenors.

John VanBrunt, of Killoran & VanBrunt, Wilmington, for plaintiffs. Richard K. Stevens and Fred C. Aldridge, Jr., of Stradley, Roman, Stevens & Young, Philadelphia, Pa., of counsel.

Howard L. Williams and Henry N. Herndon, Jr., of Morris, James, Hitchens & Williams, Wilmington, for defendants. Alexander F. Barbieri, of Erskine, Barbieri & Sheer, Philadelphia, Pa., of counsel.

[40 Del.Ch. 269] Robert H. Richards, Jr., of Richards, Layton & Finger, Wilmington, for intervenors. James A. Fowler, Jr., and J. Bernard Quigley of Cahill, Gordon, Reindel & Ohl, New York City, of counsel.

SHORT, Vice Chancellor.

This action challenges the validity of a purported grant of fifty-five per cent of the assets of defendant Independence Foundation,

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a corporation of the State of Delaware, formerly known as Donner Foundation (Incorporated), to William H. Donner Foundation, Inc., a non-stock, charitable corporation of the District of Columbia. Plaintiffs are members of defendant Independence Foundation. On November 17, 1961 plaintiffs applied for and obtained from this court an order restraining Independence Foundation from 'soliciting and/or receiving the votes of the members of said corporation at the Special Meeting of Members called for November 17, 1961, * * * for the purpose of approving or ratifying the 'grant' of fifty-five per cent of the net assets of said corporation to a new corporation by action of the Board of Directors of said corporation at a special meeting on October 27, 1961.' By stipulation filed December 13, 1961, and approved by the court, leave to intervene was granted to certain members of Independence Foundation who are also the organizers of William H. Donner Foundation, Inc. The intervenors' petition to vacate the restraining order issued on November 17, 1961 has been briefed and argued and is now pending before the court.

On December 1, 1961 defendant Independence Foundation filed a motion to dismiss on the ground that the complaint failed to state a claim upon which relief could be granted. This motion is supported by affidavits and should, therefore, be considered by the court as a motion for summary judgment.

Donner Foundation (Incorporated) was incorporated under the laws of the State of Delaware in 1945 by William H. Donner as a non-stock, charitable membership corporation. It was formed for the purpose of taking over the assets of The International Cancer Research Foundation, a Pennsylvania corporation. The name of the foundation was changed to Independence Foundation by an amendment to its certificate dated October 27, 1961. By Article Third of the Certificate of Incorporation of Donner Foundation (Incorporated), its business and purposes are stated in the following language:

[40 Del.Ch. 270] 'THIRD: The nature of the business and the objects and purposes to be transacted, promoted and carried on by this corporation shall be to acquire by grant, gift, purchase, devise, bequest, or otherwise, real and personal property of every class and description and to use and apply the principal thereof and the income therefrom exclusively in such charitable benevolent, scientific and educational activities as will promote the well-being of mankind and the alleviation of human suffering, and without in any way intending to limit such general purposes by any of the specific objects and powers hereinafter referred to, said corporation shall have power:

'(a) To further research work as to the causes, prevention, control, treatment and cure of diseases, and to devise ways and means of encouraging and stimulating investigation and investigators throughout the world in this field; to assist in the establishment of cooperation and contact among research workers; to coordinate their efforts and to collect, consolidate and set forth data thereon; to ascertain and propose specific problems for investigation and to verify reported achievements; to assist in the construction of new and improved experimental apparatus intended to be useful in the treatment of disease and to assist and engage in such other similar activities as may be incidental and necessary to the accomplishment of said purposes.

'(b) To establish and maintain charitable, benevolent, scientific and/or educational agencies and institutions.

'(c) To contribute to, aid and/or assist agencies and/or institutions

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now or hereafter established for such charitable, benevolent, scientific and/or educational purposes.

'(d) To publish and circulate reports, pamphlets, articles and other matter dealing with charitable, benevolent, scientific and/or educational purposes.

'(e) To make awards, grant scholarships and create endowments for the purpose of promoting or carrying out any of its objects or purposes.

'(f) To comply with the directions of the donors or testators with regard to any property given, devised or bequeathed to [40 Del.Ch. 271] it, for any such charitable, benevolent, scientific or educational purpose.

'(g) To enter into, make, perform and carry out contracts of every form or kind for any corporate purpose without limit as to amount, with any ...

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