Charities in New Jersey have been put on notice that they are not free to solicit donations for a specific purpose and then put the funds to another use.

An appeals court on Monday issued the state's first published opinion on what happens when the purpose of an inter vivos gift — in contrast to a testamentary one — is thwarted.

The ruling, in Adler v. SAVE, requires a Princeton animal shelter to return $50,000 donated by a couple who expected the money to go toward the construction of a new state-of-the-art facility at its existing location. When those plans changed in the face of difficulty in raising funds and securing municipal approvals, the shelter refused to return the money, hoping to use it for a smaller facility in a neighboring town.

The Appellate Division found the shelter breached its fiduciary duty to the donors and thus requiring the return of the money was a "mild" sanction.

"Absent the donor's consent, the recipient of the gift is not at liberty to ignore or materially modify the expressed purpose underlying the donor's decision to give, even if the conditions that existed at the time of the gift may have materially changed, making the fulfillment of the donor's condition either impossible or highly impractical," the panel wrote.

"When, as here, the donor is alive and able to prove the conditional nature of the gift through his or her testimony and other corroborative evidence, a reviewing court's duty is to enforce the donor's original intent, by directing the charity to either fulfill the condition or return the gift."

Bernard and Jeanne Adler of Princeton had been volunteering and donating smaller sums to the shelter, SAVE, since the early 1990s.

Between 2002 and 2004, they contributed $50,000 in response to a capital building campaign that sought to raise $7.5 million so that SAVE could construct a new 35,000-square-foot building to replace the one it had occupied since 1941 on Herrontown Road. Naming rights were being offered — the new building itself for $1 million and particular areas or rooms for lesser amounts, starting at $15,000.

The Adlers claimed they were led to believe that the new building would have two separate rooms designated for care of large dogs and elderly cats, which they saw as unlikely to be adopted, and that their money would buy the naming rights to those rooms, at $25,000 each.

No one from SAVE ever discussed with them what would happen if the planned facility were not built.

In February 2006, SAVE announced that it would merge with Montgomery-based Friends of Homeless Animals and was canceling plans for the new Herrontown Road shelter. Instead, it would build a much smaller one at a site in Montgomery.

The Adlers sued to get their money back in October 2007. During a two-day bench trial before Mercer County Superior Court Judge Thomas Sumners Jr., SAVE presented evidence that it had raised only $1.3 million of its $7.5 million goal and that approximately $250,000 of it had already been spent on plans and efforts to deal with the township, which appeared likely to deny approval because of concerns about wetlands and complaints from neighbors.

SAVE also presented testimony that its base of supporters was shrinking, it was operating at a deficit and the overcrowding was so bad that the board voted to freeze taking in new animals.

Sumners ruled in the Adlers' favor and ordered SAVE to return the money but denied their request for prejudgment interest.

On appeal, Judges Jose Fuentes, Jonathan Harris and Ellen Koblitz rejected SAVE's cy pres argument that rather than allowing the gift to fail because it could not be used for the donors' exact intention, the money should be applied to a charitable purpose as near as possible to that intention.

It would be "a perversion of these equitable principles to permit a modern charity like SAVE to aggressively solicit funds from plaintiffs, accept plaintiffs' unequivocally expressed conditional gift, and thereafter disregard those conditions and rededicate the gift to a purpose materially unrelated to plaintiffs' original purpose, without even attempting to ascertain from plaintiffs what, in their view, would be 'a charitable purpose as nearly possible' to their particular original purpose," Fuentes wrote for the panel.

The judges disagreed with SAVE that requiring return of the $50,000 would set a precedent that would hurt New Jersey charities, saying "responsible charities will welcome this decision because it will assure prospective donors that the expressed conditions of their gift will be legally enforceable."

The Adler's attorney, Stuart Polkowitz of Brach Eichler in Roseland, says there is case law on how to ascertain the intent of a dead donor, but here the donors were alive and well and there was overwhelming evidence of what they wanted.

SAVE, in a statement furnished by its pro bono counsel, Carissa Rodrigue of McCarter & English in Newark, called the ruling a “pyrrhic victory” for the Adlers in that it would diminish the funds available to care for homeless dogs and cats.

The organization said it intends to fulfill the Adlers’ desire to care for large dogs and aging cats and could have done so in Montgomery, where there were no zoning issues.