Sumner Lodge v. Odd Fellows Home

77 N.J. Eq. 386 | New York Court of Chancery | 1910

Garrison, V. C.

From the foregoing statement of facts it will appear that the defendant the Odd Fellows Home of New Jersey has undertaken the proceedings for voluntary dissolution, and, incident thereto, has provided for the distribution of its assets.

The first question requiring consideration is whether there is any statutory authority for such proceedings. If there is not, it is quite clear that such corporation has no power, by the action of its stockholders and directors, or either, to voluntarily dissolve itself. Benedict v. Columbus Construction Co. (Chancellor McGill., 1891), 49 N. J. Eq. (4 Dick.) 23.

The act under which this corporation became incorporated was entitled “An act to incorporate benevolent and charitable associations.” Rev. 1875; Gen. Si,at. p. 149. By a supplement approved on the 12th of March, 1878 (Gen. Stat. p. 151 § 12), provision was made for proceedings for dissolving such associations. This act and this specific supplement were included among acts repealed by an act entitled “An act to repeal sundry acts relating to associations not for pecuniary profit,” which was approved on the 22d of March, 1899. P. L. .1899 p. 190 § 8. Whether this attempted repeal is efficacious in view of the title of the act is, I think, a very grave question. Montclair Military Academy v. State Board of Assessors (Supreme Court, 1900), 65 N. J. Law (36 Vr.) 518.

Furthermore, in the act of 1899 (at p. 197), there is a section reading as follows:

“Nothing herein contained shall impair or annul any vested rights, privileges, or powers heretofore obtained and used under authority of said acts or any of them, and all corporations which have heretofore availed themselves of the provisions of said acts may continue to enjoy the rights and advantages which they now enjoy and exercise by virtue thereof.”

The intention of the legislature is quite plain. By an act entitled “An act to incorporate associations not for pecuniary profit,” approved April 21st, 1898, they made provision for the incorporation (and by the fifth section for the reincorporation) of all corporations of a fraternal, religious, beneficent and charitable kind, evidently intending thereby to bring them all under the provisions of one general statutory rule; and therefore, in the next year, by the act of 1899 (at p. 189), they repealed all existing legislation under which societies or associations of this kind had previously been incorporated.

Since, however, these previously incorporated bodies had been provided for by acts of various titles, the doubt, heretofore expressed by me and by the supreme court in the cited case, exists as to whether the repealing act is effective, its title being perhaps not constitutionally adequate. The act of 1898, just referred to, also provides for dissolution, but only of corporations incorporated (or reincorporated) under it ; and therefore that provision does not apply to the defendant corporation now being dealt with. If, however, it should be determined that the title of the repealing act was adequate, and that by force of such act the act under which the defendant corporation was incorporated was repealed, we still have to deal with the provision in the act of 1899, which has been quoted in full, and which reserves to existing corporations vested rights, privileges or powers.

I incline to the opinion that since one of the rights, privileges or powers (or, perhaps, in the language of the section, it might be proper to call it an “advantage”) was the right to dissolve itself by voluntary action. The question therefore to be considered (assuming that the law will be decided in favor of this corporation having the right to voluntarily dissolve' itself) is whether it may, upon dissolution, distribute its assets among its members. The specific thing- before the court, under the bill and answers, is whether it may distribute them in accordance with the resolution adopted at a meeting of the representatives of its members. That resolution, it will be recalled, provided that the assets on hand should be distributed by giving a certain proportion to each of the lodges or encampments now members, such proportion to be arrived at in a certain manner in said resolution set forth.

It will be remembered from the recital of facts that this corporation, under the act incorporating it, could not use its funds in any other manner except as provided in the act; that by its certificate of incorporation it set forth that its sole and exclusive object was the relief of indigent, aged or disabled members'. By its constitution it recites that its purpose is to purchase a home for and to support and maintain aged and indigent Odd Fellows in the manner the by-laws prescribe. The by-laws prescribe that any lodge or encampment of the Independent Order of Odd Fellows might become a member by paying one cent a week for each of its members, and that such member, i. e., the lodge or encampment, had the privilege of applying for the admission of inmates, the essential details concerning which application and admission of such inmates having been heretofore set forth.

The proofs show that the maintenance of the home always cost more than the receipts from the dues of the lodges which, at any. one time, belonged to or were members of the defendant corporation. The so-called members of the corporation varied from year to }rear. Lodges would join and pay their contributions so long as they pleased, and then would cease paying their contributions, and thereupon cease to be members; and other lodges which had not theretofore paid dues would commence doing so and would thereupon become members. The deficit arising from the excess of expenditures over income from dues was made up out of the donations or gifts heretofore alluded to.

As has been explained, the records of the corporation have been lost, but from those which have been preserved it appears that such donations, for a period from January 1st, 1896, to June, 1908, amount to $14,388.59.

The by-laws in the seventeenth article provided that all such donations should be invested and only the interest used for maintenance. But evidently the exigency of the circumstances caused an entire disregard of this provision. It is the fact, however, that the amount of money now 'in hand almost exactly corresponds to the amount of donations that the corporation, by its present records, shows that It has received.

It is entirely clear that such donations were made to this corporation for its charitable purposes. Whether the work in which this corporation engaged was a charity in the legal sense is a question of doubt and difficulty; but that it was a charity in its popular sense there can be no doubt.

There was no suggestion a^where that anyone was to make any profit out of its operation. Whether the providing of a home for the indigent, aged or disabled members of a certain fraternal order or society is within the limits of a “charity” as defined by the courts was debated at great length by counsel, and I find that there is a contrariety of decision in the courts. But I do not find it necessary for me to determine this question in this suit, and I therefore conceive it improper for me to indulge in any expression of my personal views concerning this question. Whatever may be determined to be the proper thing to do with these funds, I am clearly of the opinion that it is improper for them to be distributed among the lodges who happened to be members of the defendant corporation at the time that the dissolution proceedings were undertaken.. This, of course, applies not only to the specific method of distribution provided for in the resolution of April 28th, 1908, which the complainant insists is the proper one and which the defendant, curiously enough, now disclaims any right to make; but also to any other method or manner of distribution of these moneys among the lodges or encampments aforesaid.

It is the fact that whatever moneys were paid to this corporation by the lodges or encampments who, at various times, since its corporation, were members thereof, were used for the purpose for which they were contributed, namely, the support and maintenance of the home. All moneys contributed for this purpose as dues, and all moneys donated were, by the organic law of the corporation, by the specification in its charter or certificate, by its constitution and by-laws, to be devoted to but one purpose, namely, the relief and support of the aged, indigent and disabled members of the lodges who should become-members.

Nowhere in the organic law, or in any other law relating to this defendant corporation, can there be found to be any greater or other right in the so-called members than to obtain relief for their aged, indigent or disabled members as aforesaid. Under these circumstances, and with the law as existing, I do not see how these so-called members have any right to take the assets of the corporation to themselves by any form of proceedings. I do not, therefore, decide, because I do not have to, whether, under existing law, this corporation has the power to become dissolved by its voluntary action, or has not such power. I do not decide, because I should not in the present state of the pleadings and with only the present parties before me, what the corporation should do with these funds. I do decide that they may not be distributed, in accordance with the resolution of the defendant corporation passed on the 28th day of April, 1908, or in any other manner, among the members of- the defendant corporation.

Whatever funds are now in the hands of the defendant corporation .arose out of donations made to it; these were undoubtedly for the benevolent, not to say charitable, purposes which it was carrying on. I do not find that the so-called members thereof have any right to divert those funds to their individual uses, or, by any proceedings, to obtain these funds from the defendant corporation and take them to themselves.

If this corporation has the right to dissolve under the law, and is unable to properly dispose of the fund without the interposition of this court’s aid, it should make such proper application to this court, bringing the proper parties before it, and raising the issue in a proper manner to have this court then pass upon the question which would then have to be considered. There is no such issue now in the case. It may be that if the moneys cannot legally be .distributed among the so-called members, the defendant will be able, without any aid or direction from this court, to fulfill its fiduciary duties respecting said funds. In any event, it is improper, under the present pleadings and issues, and 'with the present parties as the only ones, to discuss, much less dispose of, the important and difficult questions involved.

The present bill, which prays for an ascertainment of the complainant’s share and for a distribution of the funds among the members, must be dismissed.