Grand Lodge v. Germania Lodge, No. 50

56 N.J. Eq. 63 | New York Court of Chancery | 1897

Pitney, V. C.

The first question to be considered arises on the motion to strike out of the bill the allegation of continued organic existence of Germania Lodge, No. 50, Knights of Pythias, and its name as a party defendant.

I think the motion should be granted. The organization of the lodge had been destroyed by the withdrawal, on November 13th, 1894, of a part of its members, and by the resignation, on November 27th, of all its officers, and the resolution to dissolve, accompanied by the complete abandonment by all its members of the organization. This was not fully known to the complainant when it prepared its bill, and it should not be bound by the allegation of its continued existence. Though the statutes of 1885 and 1890 (Gen. Stat. pp. 2588, 2592 §§ 324, 342) provide for suing an unincorporated association like this at law, and it is possible, though I doubt it, that it warrants the making such association a party to a suit in equity like this, yet nothing can be gained thereby, and I think its name should be stricken from the bill as a party defendant.

This brings us to the merits.

It is familiar law that funds accumulated as were those here in question become, as soon as paid in, impressed with a trust with all its consequences. In this case the terms of the trust are found in the constitutions of the supreme, grand and subordinate lodges, and the laws of the former and by-laWs of the latter. The funds being impressed with such a trust cannot lawfully be diverted therefrom, and all persons aiding and assisting in such diversion are guilty of a breach of trust and liable for the consequences. Torrey v. Baker, 1 Allen 120; Abels v. McKeen, 3 C. E. Gr. 462; Fraas v. Barlement; 10 C. E. Gr. 84; Altmann v. Benz, 12 C. E. Gr. 331; Van Houten v. Pine, 9 Stew. Eq. 134, and note on p. 135; State Council v. Sharp, 11 Stew. Eq. 24, and cases cited; Crisman v. Smith, 17 Stew. Eq. 240; Gable v. Miller, 10 Paige 627; Den v. Bolton, 7 Halst. *206; Den v. Pilling, 4 Zab. 653; Hendrickson v. Decow, Sax. 577; Nibl. Mut. Ben. Soc. § 144 seq. § 354.

The ease of State Council v. Sharp, supra, is quite in point. Chancellor Runyon (at pp. 26, 27) says: “The defendants have willfully violated the law of the society in dividing up its funds among themselves and taking them to their own use. Of these funds, part, at least (that called the widows’ and orphans’ fund), was the accretion of years, and it is highly probable that others than they made some of the contributions from which during those years it has been accumulated. But from whomsoever derived, the money in question, the council and widows’ and orphans’ funds, was contributed under the charter for and dedicated to certain specified purposes, for which it was, from the time when it was contributed, held in trust by the society and its officers to whose hands it was committed or to whose control it was subjected. It was held by them also subject to the trust to pay it over to the state council in case of the dissolution of the subordinate one. The defendants, therefore, had no right to take the money. It is within the jurisdiction of this court to grant the relief which the complainant seeks.”

The laws of the order of the Knights of Pythias provide how, and upon what formalities, payments out of funds like these shall be made. In letter and spirit they require that such payment shall be made only for certain purposes and after certain prerequisites have been complied with; and these are all based upon certain action taken by the society when properly organized in subordination and allegiance to the supreme society. These prerequisites and conditions were not complied with in the disposition made of the funds in this case.

It will not help the defendants to show, as they have attempted to do, that some of the funds went to the same persons and upon the same occasions as they would have gone if the original organization had been preserved. The persons so receiving moneys had lost their right in that behalf by abandoning the organization, and the appropriation was not made in accordance with the by-laws of the association.

It is objected to the right of the complainant to relief that although it was duly incorporated by special act of the legislature, yet it has no authority to collect and retain this money, and a distinction is made between the charter of the complainant corporation (P. L. of 1871 p. 1027) and that of the complainant in State Council v. Sharp, supra. P. L. of 1871 p. 356.

The language of the charter of this last corporation, after giving express power to sue, &c., is this:

“Shall be able and capable in law and in equity to take, purchase, hold and receive to them and their successors, for the use of said association, any lands, tenements, goods, chattels, sum or sums of money by grant, gift, bargain and sale, will, devise or bequeath, from any person or persons whatsoever, and the same to grant, bargain, sell, mortgage, improve or dispose of for the use of the association, and in general to do all things which may be lawful or necessary for the well-being and proper management of the said corporation.”

The corresponding language in the charter of complainant is this:

“Shall and may at all times hereafter be capable in law of having, purchasing, holding and possessing any lands, tenements, héreditaments and personal estate purchased, devised or bequeathed by any person or persons, bodies corporate or politic, capable of making the same.”

I am unable to perceive any material difference in the effect of the verbiage of the one and that of the other. The right to sue is given by the General' Corporation act to all corporations, and it is not too much to say that when these moneys were paid into the treasury of Germania Lodge, No. 50, Knights of Pythias, the payment was, in law, to the complainant as the only corporate entity in existence which could hold the title and protect it. The actual custody and care of the fund was, by the by-laws, entrusted to certain individuals so long as they continued to act as an association in obedience to the laws of the order, but when they ceased so to act their right and power of control also ceased, and the legal title in the complainant at once became paramount.

It is further insisted by the defendants that the complainant fails to show any facts out of which a forfeiture arose, and counsel plants himself upon the ground that the language is that the charter of the lodge must be surrendered by its chancellor commanding, and that there must be some formal suspension of the organization by the superior lodge. But this argument ignores the language of chapter 16, section 328, of the supreme statutes, which enacts that “ in case a lodge shall from any cause cease to exist, said fund shall revert to the grand lodge within whose domain the lodge is located.”

Besides that, I think that under the other section relied upon by the defendants, to the effect that “A lodge becoming dissolved by the surrender of its charter, its property and effects shall be returned to the grand lodge,” &c., the defendants are estopped from setting up that this lodge was not, to all intents and purposes, dissolved and its charter surrendered. They did all in their power to produce that result, and, in my judgment, they succeeded.

I am of the opinion that the complainant is entitled to relief, and it remains to consider against whom and to what extent.

The individual defendants are thirteen in number. Of these, one was reported, by the sheriff, dead, and one out of the state, against whom no further proceedings have been taken, leaving eleven who were served with process, appeared and joined in a single answer. They are Huff, Rommell, Seelinger, Kirschbaum, Firner, Jansen, Kull, Schonk, Schill, Sonn and Robert Teschke. By their answer they denied every allegation of the bill, and put the complainant on proof even of matters, that were in their own personal knowledge. The only information the eomplainant.derived from the answer is an allegation toward the last, to the effect that

“all the members of the said Germania Lodge, by unanimous consent, divided the funds of said lodge between themselves, share and share alike, as they had a lawful right to do, and that each of these defendants’ shares did not exceed 540, and that each of these- defendants has. long since used up his share for living expenses; that the said division of said fund was made some time before the filing of the original bill of complaint in this suit.”

This statement in the answer is substantially untrue. There was no actual division of the fund, but only a nominal division, and it was made by individuals, not as members of Germania Lodge, No. 50, Knights of Pythias, but of Columbia Kranken Untersturtzen Verein, No. 3.

The evidence shows that Rommell, Seelinger, Firner, Jansen, Schonk, Soun and F. Teschke took an active part in the disposition and handling of the funds of the Germania Lodge, No. 50, and while some of them may not have actually had the money in their personal possession, the disposition of the funds which was made was the result of a common understanding and action. Those defendants must, in my judgment, be held jointly and severally liable for the whole fund. I can find no evidence to implicate Huff, Kirschbaum, Kull, Schill and Robert Teschke, and there will be no decree against them, but as they joined in an answer with the others which failed to disclose the real facts of the case, and as they admitted and claimed that they were among the seceding members of Germania Lodge, No. 50, which authorized, in effect, the action taken by the others, I think they are not entitled to costs.

The bank-book of the Dime Savings Bank, containing a credit of about $400 to Germania Lodge, No. 1, Improved Order Knights of Pythias, was impounded during the hearing, and must be delivered to the complainant, and the defendants must do all acts necessary to enable the complainant to draw the money.

The decree will be for $1,172.25, with interest from February 11th, 1895, subject to a credit for whatever is realized from the Dime Savings Bank.

The complainant is entitled to costs against the defendants individually.