AIME in Transition: Separate Society Incorporation

As Edward E. Runyan, 1983 AIME President, in an interview excerpt in ME, June, p. 607, stated, "...the AIME Transition Committee has recom¬mended to the AIME Board that each Constituent Society be allowed the option of separate incorporation, whereby each could become its own separate legal entity." Background The American Institute of Mining Engineers (AIME) was formed in 1871 by 22 engineers in Wilkes-Barre, PA. Although originally a mining organization, it became a home for metallurgists, iron and steel industry people, and for the individuals in the expanding petroleum engineering profession. There are now four Constituent Societies: Society of Mining Engineers, located in Littleton, CO, 29,000 members; Society of Petroleum Engineers, located in Dallas, TX, 47,500 members; The Metallurgical Society, located in Warrendale, PA, 10,000 members; and Iron and Steel Society, located in Warrendale, PA, 6,500 members. Each of the four groups has grown and continues to serve the specific and/or diverse needs of its membership. As the needs and requirements of their industries and professions change, each of the Societies has perceived and initiated programs that serve their constituency rather than AIME as a whole. Therefore, each Society has recognized an increasing need for autonomy to better augment their own programs. An AIME Ad Hoc Transition Committee, with Robert Merrill, AIME Past President, as chairman, made a number of recommendations pertaining to AIME operations that were approved in October 1982 by the AIME Board of Directors. One of the recommendations was to endorse separate incorporation of the Constituent Societies on an individual-society-option basis. The AIME Board commissioned a task force of Constituent Society representatives to develop specific revisions to the AIME Certificate of Incorporation and the AIME Constitution and Bylaws. This was done to allow separate incorporation and to reflect the decentralized structure of the Institute. The SME-AIME Board of Directors subsequently approved the recommendation of SME Working Party #69 that SME pursue separate incorporation. Meanwhile, Working Party #69 continues to work with the other Constituent Societies and with the AIME Task Force on Reorganization to determine the form and substance of the separate incorporation. Why Incorporate? George Webster in The Law of Associations quoted Chief Justice Marshall's (1819) definition of corporation as: "A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. Being the mere creature of law, it possesses only those properties which the charter of its creation confers upon it, either expressly or as incidental to its very existence. These are such as are supposed best calculated to effect the object for which it was created." SME-AIME attorneys, Davis, Graham & Stubbs, have pointed out that the status of an organization operating as an unincorporated association is always unclear. At present, SME-AIME administers assets of almost $3.5 million (mainly property and inventory) but technical ownership and ability to enter into contractual relationships resides with AIME. However, the operation appears to outsiders (particularly those with whom SME-AIME does business) to be an independent operation which would be expected to be a legal entity in its own right. Advantages of Incorporation Liability. Because of legal ownership by AIME of all assets of the Constituent Societies, those assets are subject to the claims of any of the creditors of AIME or any of its constituent parts (i.e., the other societies). Liabilities can be those usually encountered in business but also encompass special risks, which could develop if there were a careless and erroneous publication of material that might be used in practice or if standards are improperly established. The recent US Supreme Court decision in American Society of Mechanical Engineers, Inc.,