Georgeson v. Caffrey — 24 N.Y.S. 971

Majority

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GEORGESON v. CAFFREY.

(Supreme Court, General Term, Fourth Department.

September, 1893.)

Headnote

1. Appeal—Practice.

An order from which no appeal is taken, which is not specified in the notice of appeal, and to set aside which no motion was made, is not reviewable.

8. Corporations—Proof of Incorporation.

Proof of filing and recording of a certificate of incorporation in the county clerk’s office and of user will raise a presumption of incorporation, without proof of filing in the office of the secretary of state.

3. Associations—Liability of Members.

The members of a mutual aid association, with a fluctuating membership, the officers of which are not authorized to pledge the individual credit of the members, and the expenses of which are, under the by-laws, to be paid out of a particular fund, raised by setting apart a certain percentage of the monthly dues, are not hable for the salary of the manager, so as to authorize him to bring an action against the treasurer therefor under Code Civil Proc. § 1919.

Appeal from circuit court, Onondaga county.

Action by William Georgeson against Frederick H. Ebeling,, treasurer of the Empire Mutual Union of Syracuse, for salary as manager of said union. James S. Caffrey, having been elected treasurer, was substituted as defendant. From a judgment entered on a verdict for plaintiff, and from an order denying a motion for a new trial, defendant appeals.

Eeversed.

In the notice of appeal it is stated that “the appeUant intends to bring up for review upon such appeal the order denying a motion for a new trial, errors in the judgment, and all other questions of irregularity, law, or fact disclosed by the record.” The action when commenced, on the 5th January, 1892, was against Frederick H. Ebeling, as treasurer of the Empire Mutual Union. In the complaint it was alleged that said union was an unincorporated association, composed of seven or more persons, and that Ebeling was at the time of the commencement of the action the treasurer of the association; that the plaintiff was its general manager from the 2d day of December, 1890, to the 20th November, 1891, at an agreed compensation of $25 per week; and that at the commencement of the action there was due and unpaid to the plaintiff, on account of such services, the sum of $683.37, with interest from November 20, 1891. The answer contains a general denial. Upon the trial it appeared that on the 26th September, 1890, the plaintiff and four others duly executed and acknowledged a certificate purporting to be a certificate of incorporation of the Empire Mutual Union of Syracuse, N. Y. This certificate stated a desire to form a society for social, mutual benefit, and benevolent purposes, pursuant to chapter 267 of the Laws of 1875, entitled “An act for the incorporation of societies or clubs for certain lawful purposes,” and the acts amendatory thereof, and that the particular business and objects of the society were as follows: “To gather together in social and friendly union persons of good character and standing; to assist the members of said society in obtaining help, aid, and employment, both outside and among themselves; to join together the members in mutual efforts to assist each other in economic and benevolent purposes and enterprises; to provide regular relief, aid, and benevolence among the members; and to promote in every manner possible the interests of the members among themselves.” The number of the trustees was five, and, as named for the first year, they were the same persons who executed the certificate. This certificate was approved by a justice of the supreme court, and was on the 26th September, 1890, filed and recorded in the office of the clerk of Onondaga county, that being the county where the office of the society was situated.

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It was not shown whether or not the certificate was ever filed in the office of the secretary of state. The court below assumed that it was not. By-laws were adopted, which stated that the purpose of the union “is to join together the members in mutual union and encouragement, to enable them to gather together in one sum, which can be used to some advantage, the little savings which members are able to. contribute.” It was provided that any person might become a member by making application and paying the admission fee, and $1.25 per month thereafter on each certificate held by him or her during the continuance of membership. The admission or membership fee was $2.50 for one certificate, and $1.25 additional for each additional certificate'; no member to have more than four. The form or contents of this certificate do not appear in the case. The manner of payment of the monthly dues was provided for, and, in case of nonpayment, the certificate lapsed and became void, and all moneys paid forfeited to the union. A general fund and a benefit fund were provided for, the general fund to consist “of the admission fee and other fees and fines and first month’s dues, 20 per cent, of all monthly dues, and 10 per cent, of benefit fund for collection;” the benefit fund to consist of “one dollar per month from each certificate, less 10 per cent, commission collections, and be used exclusively for members on their certificates.” It was provided that “on the fifth day of each month all moneys deposited in the benefit fund shall be applied to the payment of maturing certificates, after deducting $50, less the monthly dues previously paid and readmission fees.” There was also- a provision that “the trustees shall appoint one as general manager, who may be removed for cause, at a salary consistent with his duties, who shall have general supervision of the business of the union.” At a meeting of the board of trustees on December 1, 1890, at which the plaintiff and four others were present, a resolution was adopted that the plaintiff “be made general manager of the Empire Mutual Union, at a salary of twenty-five dollars a week.” From this time to November 19, 1891, the plaintiff continued to be manager, and this action is for the balance due him for such services. It was shown that at the time of the commencement of this action there were about 600 members of the association. At the close of the trial the defendant moved for a nonsuit, upon the grounds, among others, that there was a de facto corporation, and it could not be treated as an association; that the plaintiff, being a promotor of the company, its president, and actively interested and engaged in its organization, is estopped from denying that it is a corporation; that it had not been proved that the association was an unincorporated one, consisting of seven or more individuals, as required by section 1919 of the ■Code. This motion was denied, and defendant excepted. In the course of the trial it appeared that Ebeling had ceased to be treasurer about the time •of the commencement of the suit, and that James S. Caffrey had been ■elected in his place, and was treasurer at the time of the trial. At the close of the evidence the court directed the entry of an order substituting Caffrey ns treasurer, etc., as defendant, in place of Ebeling. To this the defendant •excepted.

Argued before HARDEST, P. J., and MEKWTN and PARKER, JJ.

Geo. H. Sears, for appellant.

D. E.’ McLennan, for respondent.

The appellant claims that the order substituting 'him as defendant was erroneous. ¡No appeal, however, is taken from the order itself, it is not specified in the notice of. appeal, and no motion appears to have been made by him to set it aside. He is not, therefore, in a position to review it. There is no evidence in the case that the certificate of incorporation was not filed in the office of the secretary of state. Proof of filing and recording in the county clerk’s office and of user would ordinarily be

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sufficient proof of incorporation, without proof of filing in the office of the secretary of state. Bank v. Willard, 25 N. Y. 574 . If the plaintiff sought to show that the certificate never became effectual, it was for him to show the omission which produced that result. The court, I think, erred in presuming it was not filed as required by law, and it looks to me very doubtful whether the plaintiff can, for the purpose of throwing a personal liability upon members, himself claim that the incorporation, or attempted incorporation, is invalid by reason of the circumstance that he and his associates engaged in a business that the act did not allow. See Foster v. Moulton, 35 Minn. 458 , 29 N. W. Rep. 155 . Assuming, however, that the Empire Mutual Union was an unincorporated association, having seven or more members, and that the plaintiff is in a position to take advantage of the fact, it does not follow from that fact alone that the plaintiff is entitled to the benefit of the provisions of section 1919 of the Code. According to the ruling in McCabe v. Goodfellow, 133 N. Y. 89 , 30 N. E. Rep. 728 , the plaintiff, to maintain the action, must allege and prove, and it must be found, that all the members of the association were liable either jointly or severally to pay his claim. Does the evidence in this case authorize the finding that all of the members are personally liable to the plaintiff? The plaintiff was himself one of the members, and his associates did not become liable for his claim unless they, in effect, agreed to become so. There is no evidence of any such agreement on their part. The members, besides their admission fees, were required to pay certain monthly dues, nothing else was required of them, and, if they did not pay as required, they ceased to be members. True, the trustees were by the by-laws authorized to employ a manager at a reasonable salary, but the payment of this and the other expenses of the society was provided for out of a fund raised in a particular way, and called the “General Fund.” Concerning this the plaintiff testified: “The general fund was the expense fund. There was no separate expense fund, but the expenses were paid out of the general fund. * "* * Officers were paid out of the general fund. That includes me as general manager. The general fund was created in this way: admission fees and fines and first month’s dues, 20 per cent, of all monthly dues, and 10 per cent, of benefit fund for collection.” It is very clear that the trustees were not authorized to pledge the individual credit of the members, nor did the plaintiff have the right to expect any such thing, and there is no evidence that he did expect any such thing. He and his associates Had formed, or attempted to form, a corporation, and the inference is that on the 1st December, 1890, when plaintiff was appointed manager, they supposed that a corporation existed. As between the members, no partnership existed, for there was no agreement expressed or implied to that effect. See Lafond v. Deems, 81 N. Y. 514 . The failure to incorporate did hot make the members partners. Bank v. Pendleton, (Sup.) 9 N. Y. Supp. 46 , affirmed 129 N. Y. 662 , 30 N.

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was no capital or stock, and no basis for saying that it was a joint-stock company. It was apparently a mutual- aid association, with fluctuating membership, liable to be diminished by lapsing, and increased by new, members. The case shows that when plaintiff was appointed manager there were about 200 members, and at the commencement of the suit about 600. If these views are correct, the plaintiff failed to make a case within the rule laid down in the McCabe Case, and the motion for nonsuit should therefore have been granted.

Judgment and order denying motion for new trial reversed on the exceptions, and new trial ordered, with costs to abide event. All concur.

Cases cited

Leonardsville Bank v. Willard 25 N. Y. 574 N.Y. p. 973
McCabe v. Goodfellow 133 N. Y. 89 N.Y. 1892-04-12 p. 973
Merchants' National Bank v. Kirby 129 N. Y. 662 N.Y. 1892-01-20 p. 973