Lafond v. Deems — 8 Abb. N. Cas. 344

Majority

p. 344

LAFOND v. DEEMS.

N. Y. Court of Appeals,

September, 1880.

Headnote

[Reversing 1 Abb. New Cas. 318.]

Dissolution of Voluntary Associations.—Interference of Courts in Affairs of Voluntary Associations.— Accumulations of Funds.—Partnership.

Dissolution of a voluntary association for moral, benevolent, and social purposes should be adjudged on complaint of members, if at all, only when the organization has ceased to answer the ends of its existence, and no other mode of relief is possible.

Where an association possesses power to suppress and punish the improper conduct of its members, one complaining of such conduct must resort to the remedies provided by the association, before applying to the courts for relief.

And this rule is not affected by the discontinuance of an appellate power which had once existed, when it does not appear that any appeal would have been necessary, if charges had been presented.

Courts should not, as a general rule, interfere with the quarrels of voluntary associations so long as their government is fairly and honestly administered.

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A voluntary association, whose purpose is not business, but the benefit and protection of its members, having no power to compel payment of dues, and whose right of membership ceases upon a failure to pay annual subscriptions, is not a partnership.

And such an association will not be made a partnership, by the accumulation of a considerable fund of money, it being’ accumulated not in business but in transactions incidental to the primary object of the association, nor will such accumulations be a ground for dissolving the association.

Appeal from a judgment of the general term of the supreme court of the first department, reversing a judgment of the special term, which dissolved a voluntary association and appointed a receiver of its property.

John Lafond, and two others, trustees of the Washington Tent No'. 1, Independent Order of Bechabites, brought this action against their fellow-members. The society was a mutual benefit association, which was organized in 1842, the objects of vyhich were “mutual benefit in the exercise of temperance, fortitude and justice ; securing to its membership sympathy and relief in times of sickness and distress, and in the event of death, the decent observance of the necessary funeral obsequies, and is based upon and seeks the extension of the principles of total abstinence from all intoxicating drinks.” In the course of time the association accumulated about $5,000. The plaintiffs were regularly elected trastees, and as such, claimed the care and custody of the funds.

In September, 1875, one of the defendants, who claimed to be chief ruler, served a notice on the banks 'in which the funds were deposited, warning them not to pay out money except by the order of the tent. Discord and dissensions arose among the members, and the plaintiffs therefore prayed for a dissolution of the, association, the appointment of a receiver, and for a distribution of the funds among the members.

Eleven of the defendants, by their answer, alleged

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that the money in question had not been earned in the. regular course of collection of dues, but by outside business, and that in transacting such business bitter hostility had grown up. They also prayed for a dissolution, a division of the funds, and that they might be permitted to organize as they should see fit.

Twenty-six of the defendants denied the copartnership alleged in the complaint, and alleged that the fund was a trust fund for the benefit of their order. They admitted the election of the plaintiffs as trustees, but stated that they had been dismissed by a majority vote at a subsequent regular meeting. That the funds, according to the constitution and by-laws, were lodged with the chief ruler and recording secretary ; and that, if the trustees thought themselves aggrieved by their dismissal, they should have appealed, either to the tent, to the high chief ruler of the high tent, or to the high tent itself, as provided for in the by-laws. It appeared, however, from the evidence, that the high tent had not met since 1860.

The parts of the constitution and by-laws relating to the application of its funds are as follows :

“Primary tents shall have power to make such laws for the payment to sick and funeral benefits to their own members, as they may deem expedient, it being optional with each tent whether it provides any system of benefits or not.

‘ ‘ The stocks, securities, investments, funds and other properties of this tent shall not be disposed of, or transferred in whole or in part, over $100, unless by a motion at a regular meeting, &c.

“The treasurer shall hold the moneys so received for the use of the tent, . . deliver up, when re-

quested by the tent, all moneys, vouchers, books and papers, to whomsoever the tent may specially appoint to receive them.”

A similar clause as to the trustees required them

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“ to deliver to their successors in office, or whomsoever the tent may appoint, any and all moneys, vouchers, securities and all other property and effects of the tent, which shall come into their hands.”

There was also a clause that the tent should never be dissolved or disbanded except by unanimous vote; and that no motion to disband should be entertained so long as there were ten members in regular standing.

Evidence was adduced on the trial tending to show that the meetings were very turbulent and boisterous, and all gentlemanly instincts were forgotten, while parliamentary rules were utterly disregarded.

The special term ordered a dissolution of the association and appointed a receiver (see 1 Abb. New Cas. 318). The general term reversed this decision and ordered a new trial, from which decision the plaintiff appealed.

W. S. Cowles, for appellant.

Wm. II. Townley, for respondents.

The organization which the plaintiffs seek to dissolve and close up, by a distribution of the funds belonging to the same, is a voluntary association instituted for moral, benevolent and social objects, and occupies a different position from institutions of a financial character. In view of the purposes for which such societies are organized, they should not be dissolved for slight causes, and if at all, only when it is entirely apparent that the organization has ceased to answer the ends of its existence, and no other mode of relief is attainable.

The judgment of the special term dissolving the association is based upon the ground that the- division of the association into factions, and the hostile feeling of the members towards each other, were such as to render it impossible for the members to agree as to the transaction of the proper business of the association

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and particularly as to the proper care of the fund that by reason thereof the enmities and differences engendered were irreconcilable, and the usefulness of the association had departed.

It is not to be disguised that, at some of the meetings of the organization, severe and harsh language was employed, unfit for the occasion and unbecoming the members who used it. These expressions appear, however, to have been the result of undue excitement and bad feeling, which had been created by the strifes and dissensions arising among the members as to the government and control of the association and the acts of some of its officers. Without entering into an examination of the evidence in reference to these matters, it is sufficient to say that it was entirely within the power of the association to suppress conduct of this character, and it was not so subversive of the organization as to require the interposition of the power of a court of equity to obtain the relief demanded. It would seem that, in regard to most, if not all the charges made in this respect, the organization applied the proper remedies ; the alleged disorderly proceedings were suppressed, and the improper conduct of the officers was in the course of investigation and correction when this action was brought. The dissensions manifested at the meetings of the association, the conduct of the members, and the alleged delinquencies of the officers must be regarded, having in view the constitution and by-laws of the association, and the rules adopted for the redress of grievances and for the punishment or expulsion of unworthy members. Article III. of the constitu tion declares what offenses are punishable, and prescribes the penalty, and in connection with article II. a system is provided for preferring charges, and for the trial of accused parties.

These provisions furnish a remedy for the redress of grievances and for the punishment of parties offend

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ing, by fine, suspension and expulsion. An appeal is authorized by any party aggrieved, to a higher tribunal, the high chief ruler.

As no complaint was made in reference to the act or . conduct of any member, and no action taken as to the alleged difficulties, which demanded a trial; in fact, no movement whatever made on the subject, when all adequate relief could have been thus attained, it may well be doubted whether the plaintiffs occupy a position which would justify the interference of a court of equity.

Nor does it, in my opinion, affect the rights of the plaintiffs to 'relief, that the appellate power had not met since 1860, as it does not appear that any appeal would have been required from the determination of the association, if charges had been presented and a trial had under the constitution and by-laws. The discontinuance of the appellate power was an incident which might possibly occur, and a risk assumed by those who belonged to the organization. Of itself, it would not render a dissolution necessary, and especially. when no attempt had been made to obtain redress within the association, and it is not apparent that its exercise was in any way important.

As the members who are claimed by the plain tiffs to have been chargeable with a violation of the rules of the association were not called upon to answer, so as to correct the evils complained of, and as the power to remedy the same was ample and complete, the plaintiffs are not in a position to seek the interposition of a court of equity (Carlen v. Dury, 1 Ves. & B. 154; White v. Brownell, 6 Abb. Pr. N. S. 162).

Courts should not, as a general rule, interfere with the contentions and quarrels of voluntary associations, so long as the government is fairly and honestly administered ; and those who have grievances should be required in the first instance to resort to the remedies for redress provided by their rules and regulations.

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This had not been done in the case considered,, and, under such circumstances, no action lies.

Hone of the authorities cited by the plaintiff’s counsel sustains the position that the remedy is at law or in equity unless there is well grounded cause for complaint ; and even then an opportunity should be given to correct the cause of complaint within the organization, where it can be properly done. .

Hor are the plaintiffs entitled to the relief claimed upon the ground that the members of the society were copartners. Associations of this description are not generally partnerships. There is no power to compel payment of dues, and the right of the member ceases when he fails to meet his annual subscription. This certainly is not a partnership, and the rights of copartners as such are not fully recognized. The purpose is not business, trade or profit, but the benefit and protection of its members, as provided for in its constitution and by-laws. In accordance with well established rules, no partnership exists under such circumstances (3 Kent. Comm. 23; In re St. James’ Club, 13 Eng. L. & Eg. 589; McMahon n. Rauhr, 47 N. Y. 67 ).

It is claimed that the society departed from the objects of its organization by the accumulation of funds from the rents of rooms, and as to that fund the members were copartners.

It appears that the association originally was obliged to hire more room than was actually required, to obtain the room which they wanted for their meetings, and that it fitted up, furnished and sub-let what was not needed, and rented its own room when not in use. From the rents received a fund of a considerable amount has accumulated, in connection with the other income, dues, fines and initiation fees. The amount thus on hand is not so large as to be beyond the reasonable wants of an association whose object was benevolence and the practice of the higher virtues. The renting of

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rooms was not the business of the association, bat merely incidental to its primary object, and the rents received were the result of accident and good management in the exercise of a proper discretion, having in view merely the accommodation and prosperity of the association. There was, we think, no such accumulation of funds as calls for the dissolution of the association upon any such ground, or authorizes a conclusion that a copartnership was thereby created.

There is no claim that the fund is not properly invested, nor any disagreement as to the same. Nor is it apparent that differences exist which cannot be reconeñed, or wrongs prevail which cannot be remedied. The association was intended to be perpetuated as long as practicable, and one of its by-laws provides that it shall not be dissolved unless by a unanimous vote ; another declares that no motion or resolution shall be entertained by the chair to dissolve the same so long as ten members remain in good standing on the books. It should not therefore be disturbed unless for sufficient reasons. None such appear in the case presented, and the order of the general term should be affirmed, and judgment absolute upon the stipulation ordered for the defendants, who succeeded, with costs.

All the judges concurred.

Judgment accordingly.

Cases cited

McMahon v. Rauhr 47 N. Y. 67 N.Y. 1871-12-19 p. 350