The state attorney general has reopened a review of the sale of the Nineteenth Century Club property on Union Avenue just as efforts by current and former club members to challenge the sale face a critical Monday fundraising deadline.
Attorney General Robert E. Cooper Jr. said in an Aug. 7 letter sent to Charles Cottam that his office was reopening the review following questions raised about the validity of the sale in a Shelby County Chancery Court lawsuit.
Attorney and Shelby County Commissioner Steve Mulroy calls on the state attorney general to not approve the dissolution of the Nineteenth Century Club and freeze proceeds from the sale of the Union Avenue property.
(Daily News/Andrew J. Breig)
“In light of this litigation and the allegations raised therein, the Office has determined that it should reopen its review of the matters referenced in our two previous letters and monitor the court proceedings,” Cooper said.
Meanwhile, Chancellor Walter Evans said Thursday that the plaintiffs in the lawsuit have until the close of business Monday to come up with a $50,000 bond, which is designed to protect the owners of the property, Union Group LLC, from suffering any losses while the case is ongoing.
Last week, Evans issued a temporary restraining order prohibiting the Union Group from doing any work on the property after two current and two former members of the club filed suit over the sale saying it did not meet the organization’s bylaws or follow state law. That injunction could be lifted Monday if the plaintiffs don’t raise the $50,000.
The current and former members allege the club’s rules required all club members – not just the organization’s leadership – to vote on the sale and that the Tennessee Nonprofit Corporation Act requires nonprofits disposing of major assets to get approval from Cooper’s office.
Documents provided by Shelby County Commissioner Steve Mulroy, one of the attorneys working on the case for the plaintiffs, show only the club’s executive committee voted on the sale, not the full membership.
“The state law makes absolutely clear that the sale had to be approved by a vote of the full membership, therefore the sale is void,” said Mulroy during a mid-day press conference Thursday at the property. “We need to go back to square one. We need to give the members the chance to decide who they want to sell it to and we’re hopeful, if given that opportunity, they’ll say, ‘Sell it to somebody who wants to preserve it not demolish it.’”
The Union Group acquired the property for $550,000 in January after winning a competitive bidding process, beating out a group that offered $350,000 and wanted to turn the property into a women’s business center. Mulroy said that group and a Nashville-based buyer were still interested in acquiring the property.
The Nineteenth Century Club decided to donate the sale proceeds to the Children’s Museum of Memphis. CMOM has used $50,000 to fund new exhibits. Mulroy said the club retained $15,000 and CMOM is keeping the remaining $435,000 in a segregated account.
Mulroy and state Rep. Joe Town, D-Memphis, called on Cooper to not approve the dissolution of the club and that he order the funds from the sale be frozen pending the resolution of the review and litigation.
“It may not have been done in compliance with state law,” Towns said. “What we want to do is make sure it was done properly before this building is demolished.”
The legal and political maneuvering over the future of the property kicked in to high gear this week.
State Sen. Jim Kyle, D-Memphis, asked officials with the Tennessee Historical Commission, which can offer incentives to encourage the rehabilitation of the building but has no authority to stop the demolition, to assist with local efforts to save the building.
A plan by some members of the Memphis City Council to declare a four-month moratorium on all demolitions of Memphis properties on the National Register of Historic Places – including the Nineteenth Century Club – was put off after questions surfaced over the legality of the moratorium.
The regal but decaying property on Union was built in 1907 by Rowland Jones, a Memphis lumber king.
In 1926, the 15,813-square-foot house was acquired by the Nineteenth Century Club, a philanthropic women’s organization.