In re Matter of Multiple Sclerosis Service Organization of New York, Inc.

The Multiple Sclerosis Service Organization of New York, Inc. (MSSO) (plaintiff) was a nonprofit corporation. MSSO specifically chose not to focus on research and instead focused on providing services to enable people with multiple sclerosis to function to their maximum potential. MSSO’s primary activity was operating a physical fitness center in Brooklyn that offered specialized equipment for people with multiple sclerosis. After 17 years, MSSO’s finances had declined, and its members had aged. MSSO determined that it needed to dissolve. The National Multiple Sclerosis Society (NMSS) was a separate nonprofit corporation that focused on multiple-sclerosis research. MSSO asked NMSS’s New York City chapter (the chapter) (defendant) to take over the Brooklyn center, but it declined. MSSO’s board then voted to sell the center and distribute the proceeds to four other charities. These four charities had no specific ties to multiple sclerosis; MSSO chose them because they provided on-site services to people with other chronic, irreversible medical conditions requiring expensive long-term treatment. As required by state law, MSSO filed a petition in state court seeking judicial approval of its dissolution plan. The chapter intervened and objected to the proposed recipients. The chapter and the New York attorney general (defendant) argued that donors had originally given money to MSSO to help people with multiple sclerosis, so MSSO’s money could be used only to support multiple-sclerosis-oriented charities, like the chapter. The trial court approved the distribution, finding that the recipient charities’ activities were “substantially similar to” MSSO’s activities because the proposed charities also provided services to people with chronic illnesses to enable them to function to their maximum potential. The appellate division reversed, ruling that (1) MSSO needed to distribute its assets to recipients that matched the donor’s original intent “as near as possible” and (2) the listed charities did not meet this stricter standard because they did not specifically benefit people with multiple sclerosis. MSSO appealed to the New York Court of Appeals.