Whiteside v. Noyac Cottage Ass'n — 60 N.Y. St. Rep. 303

Majority

p. 303

Newton E. Whiteside et al., App’lts, v. Noyac Cottage Association, Resp’t.^[1]

(Court of Appeals,

Filed June 5, 1894.)

Headnote

1. Association—Assessment—Equitable action.

Where the illegality of an assessment,imposed by an association, appears upon the face ot' the papers, and the facts which the association will be compelled to prove, to enforce at law the assessment or forfeiture, will themselves show the invalidity, an equitable cause of action to remove a cloud on title is not established.

2. Same—Valid.

The by-laws of the association and the deed to plaintiff, when read together and properly construed, were held, in this case, to leave no reasonable doubt of the validity of the assessment.

Appeal from judgment of the general term of the supreme court in the first judicial department, entered upon an order made the first Monday of May, J893, which affirmed a judgment in favor of defendant entered upon an order dismissing the complaint on trial at special term. ,0

This Action was brought by plaintiffs, who were the owners of . certain lots by purchasing from defendant, a club of which they had become members, to remove a cloud from their title caused by the lien of an assessment levied under the by-laws of defendant, apd to restrain defendant from forfeiting their rights as members by reason of non-payment of said assessment. The facts, so far as material, are stated in the opinion.

Eugene D. Hawkins, for app’lts; William G. Reddy, for resp’t.

The plaintiff and others situated like him joined a club incorporated under the Laws of 1875, (Chap. 267), and the amendments thereof. It had become the owner of about forty acres of land for its corporate purposes, and had sold and conveyed to the plaintiff a single lot or parcel for the purpose of the erection by him of a dwelling house thereon. By the purchase he became a member of the club, and subject to its rules and regulations, and this liability appeared upon the face of his deed and limited and modified the title transferred. The lot could only be used for the construction and occupation of a dwelling house, and was inalienable except to the club or those accepted

p. 304

as its members; and the grantee covenanted by his deed to hold the land subject to assessments by the managers of the association to meet any deficiencies arising from the maintenance of its public grounds, club house and other property, and to submit to a forfeiture of his estate if Ire should fail to pay as prescribed. The by-laws of the association contained all these provisions, and dictated in detail the mode of procedure. An assessment was made in accordance with their terms, and the plaintiff, neglecting and refusing to pay, was served with a formal notice that his title and membership would be forfeited unless, at a specified date, he appeared before the board of managers and showed cause to the contrary. Instead of so appearing he brought suit in equity, asking as relief that the action of the board be rescinded, .and it be enjoined fróm forfeiting the plaintiff’s title and membership. The complaint was dismissed and the judgment affirmed by the general term.

That affirmance went upon the ground that no equitable cause of action was established. There was no cloud upon the title if the plaintiff’s view of the by-laws was correct. His theory was and is that, by their terms, no assessment could be made for permanent improvements, but only for current expenses. The assessment showed on its face that it was made in part at least for permanent improvements, and so was unauthorized by the bylaws if plaintiff’s construction is the true one. The case is not one of an assessment by a public authority, which is presumably valid, but of a claimed contract right, which has no force except under the contract, and which, if invalid at all, was so upon the very face of the claim. The facts which the association would be compelled to prove, in order to enforce at law the assessment or forfeiture, would themselves show the invalidity of their claim if the plaintiff’s construction of the by-laws be correct.

But that construction is not correct. It is apparent from the by-laws, the circular • disclosing the aims and objects of the association, and the very terms of plaintiff’s deed, that the expenditures of which complaint is made were fairly within the scope of those current expenses and that maintenance to which the by-laws and the deed referred. By his deed the plaintiff became a member of the association and as such gained the right to “the use of the club house, public grounds, water front, beaches, yachts, fishing privileges, etc.” He knew, therefore, that they did exist or were to exist, and were to be paid for out of the revenues of the association, any deficiency in which was to be met by an assessment within certain fixed limits. The appellants’ construction is purely and severely technical, and disregards utterly the manifest purport and meaning of the contract. By chapter fifth of the by-laws, two funds were constituted: one the land and improvement fund to be “applied exclusively to the purchase, improvement and maintenance of the grounds and other property of the association and the other, into which all membership fees, annual dues and assessments were to be paid, called the current expense fund. This was to be appropriated “in the first instance,” that is, primarily, to such current expenses, in-

p. 305

eluding taxes, but any surplus at the end of a year might be “turned into the land and improvement fund,” so that assessments creating a surplus beyond current expenses could, at the option of the managers, go to permanent improvements and the purchase of needed “property.” By § 2 of chapter six, provision was made for assessments to pay taxes; and then follows a broad general provision that “the board of managers may also, from time to time, make assessments for other purposes * * as they shall deem necessary.” There is here no limitation of the power within the scope of the corporate purposes, except as to amount, and they may be carried to permanent improvements when not needed for current expenses. The by-laws and the deed-read together, and properly construed leave no reasonable doubt of the validity of the assessment

It may be added that we approve also of the ground taken by the general term founded upon Thomas v. M. M. P. Union, 121 N. Y. 50 ; 80 St. Rep. 563 , and beyond their argument in that ■direction no further discussion is necessary.

The judgment should be affirmed, with costs.

All concur.

Judgment affirmed.