Wetterwulgh v. Knickerbocker Building Ass'n — 15 N.Y. Super. Ct. 381

Majority

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Peter J. Wetterwulgh v. The Knickerbocker Building Association.

Headnote

1. The twenty-second, of the Articles of the Knickerbocker Building Association, provides that “ in case any member, by reason of sickness or removal from the city, or through misfortune, is unable to continue the payment of his subscription to the society, he or she may give notice to the secretary of an intention to withdraw from the association; and in case the board of trustees are satisfied as to the grounds of withdrawal, the whole amount of subscription paid by the party into the association shall be returned.”

2. A member of this association, who has given notice, in due form, of his intention to withdraw, on the ground that he was “ no longer able to continue the payment of his subscription to the said association, owing to various misfortunes, losses in business, sickness in his family, and the rigor of the times,” in an action to recover back the money paid by him to the association, should be permitted to prove the truth of said alleged grounds for withdrawing, they having been set forth in his complaint, and denied by the answer.

8. If he proves, that, owing to such causes, he was totally unable to continue the payment of his subscription, and that there was nothing in the pecuniary circumstances or condition of the association, furnishing any reason why the money paid to it by him should not be returned, he may recover it back, although the board of trustees may not have declared themselves satisfied as to the grounds of his withdrawal

4. It is not an indispensable condition to a member’s right to withdraw, and to a return of his money, that, under any and all circumstances, the board of trustees shall declare themselves satisfied as to the grounds of his withdrawal. They have no right to withhold that declaration, arbitrarily, when no ground exists, or can be suggested, for withholding it.

6. It was, therefore, error to exclude evidence of the truth of the grounds alleged by the plaintiff for his withdrawing, and to order a nonsuit, on the ground that in no event, and under no circumstances, could the plaintiff recover without proving that the board of trustees declared that they were satisfied as to the grounds of his withhrawal.

Nonsuit set aside, and new trial granted, with costs to abide the event.

(Before Hoffman & Pierrepont, J. J.)

Heard, Jan. 11;

decided, Jan. 30, 1858.

This is an appeal, by the plaintiff, from a judgment dismissing his complaint, ordered at the trial, which was had in March,. 1856, before Chief-Justice, Oakley and a jury.

This action is brought by the plaintiff, as a member of the Knickerbocker Building Association, to recover from, it the

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moneys he had contributed to it, on the theory, that he had ceased to be a member, under circumstances that entitled him to recover the moneys he had paid in, as a member.

The complaint allegesThat the defendants are a corporation or association, organized under, and in pursuance of the provisions of an Act of the Legislature of the State of New York, entitled, ‘An Act for the Incorporation of Building, Mutual Loan and Accumulating Fund Associations, passed April 10th, 1851,’ by the name of the Knickerbocker Building Association. That such organization was made by the filing of .articles of association, pursuant to the provisions of the Act aforesaid, on or about the 24th day of February, one thousand eight hundred and fifty-two, as, by reference to the same, or authentic copies thereof, may appear.

“ That, on or about the ninth day of February, one thousand eight hundred and fifty-two, the plaintiff became a member of the said association, in conformity to law, and the rules and regulations and by-laws of the said association, and continued such member thereof until on or about the seventh day of March, one thousand eight hundred and fifty-five, at which time the plaintiff shows, .that being no longer able to continue the payment of his subscription to the said association, owing to various misfortunes, losses in business, sickness in his family, and the rigor of the times, the plaintiff, on or about the 7th day of March, 1855, gave notice, to the secretary of the said association, of his intention to withdraw from said association, pursuant to the requirements of the twentieth section of said articles of association.”

It also alleges, that while the plaintiff was such member, and between the 9th of February, 1852,.and the 7th of March, 1853, he paid into the association, in all, $108, which he has demanded, and which they refuse to pay; for which sum, with interest, judgment is prayed.

The answer admits the organization of the defendants, and plaintiff’s membership. Among other allegations, it contains the following, viz.:—

“ That the said defendants admit, that on or about the seventh day of March, 1855, the plaintiff gave notice, to the secretary of the said association, of his intention to withdraw from the same;

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but, whether it was because the plaintiff was no longer able to continue his subscription to the said association, owing to various misfortunes, losses in business, sickness in his family, and the rigor of the times, neither the said association nor its officers have sufficient knowledge to form a belief, and the same is, therefore, denied; but the defendants allege, upon information and belief, that one of the principal reasons why the said plaintiff made the said application to withdraw from the said association, was, that the said association was in. embarrassed circumstances, and had lost large sums of money by the maladministration and neglect of certain agents of the said association, and that the plaintiff was fearful of losing some portion of the moneys he had paid in, and was anxious to realize the amount of the said moneys, notwithstanding such withdrawal, would have the effect of injuring the several members of the said association; in the proportion of the plaintiff’s claim to the total of their interests in the said association.” . ........

“ And the defendants further allege, that the articles of the said association, as appears by article No. 20 of the same, require, that before any member shall be entitled to withdraw, and to be repaid the amount paid in by such member, he shall obtain the approval of the board of trustees of the said association; and it was part of the agreement of membership between the plaintiff and the defendants, that said board of trustees should, as a protection to all the members of said association, have and exercise the right of determining whether or not the application of the plaintiff to withdraw should be accepted, and the amount paid in repaid.”

The entire proceedings at the trial, so far as the printed case furnished to the Court, on the appeal, shows any thing in relation thereto, were as follows, viz.:— 4

“ The case came on to be tried at a Trial Term of this Court, on the 3d day of March, 1856, before the Honorable Thomas J. Oakley and a jury. Mr. Shannon, counsel’ for the plaintiff, then opened the case to the Court and jury, and then moved for judgment in favor of the plaintiff, on the pleadings, on the ground, that the plaintiff’s complaint was admitted by defendants’ answer.”

“ Mr. King, counsel for defendants, resisted said motion, for the reason, that before any member could withdraw from the associ

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ation, he must' obtain the consent of the board of trustees, and thereupon moved to dismiss the complaint. The said Justice denied the said motion of plaintiff for judgment. To which decision of the said Justice the plaintiff then and there excepted; The plaintiff then offered evidence to show that the plaintiff was unable, by reason of misfortune and sickness in his family, to continue the payment of his dues into the said association. Which evidence the said Justice refused to admit, on the ground of irrelevancy.

“ To which decision the plaintiff then and there excepted.

■ “Whereupon the said Justice dismissed the plaintiff’s complaint, with liberty to plaintiff to make a case or exceptions within twenty days, and to appeal to the General Term of the Court, without security.”

The respondents’ points state, that article 20 of the articles of said association, reads as follows, viz:—

In case of the death of any member, the amount paid into the society shall be refunded to his widow or next of kin, or shall belong to his executors or administrators, who shall enjoy the same benefits and advantages, and be subject to the same liabilities as the original holder enjoyed or was subject to. When there are more than one executor or administrator, the first name only, in the letters testamentary or of administration, ■ shall vote at the meetings of the association; and in case any member, by reason of sickness or removal from the city, or through misfortune, is unable to continue the payment of his subscription to the society, he or she may give notice to the secretary of an intention to withdraw from the association; and in case the board of trustees are satisfied as to the grounds of withdrawal, the whole amount of subscription paid by the party into the association shall be returned. Any person wishing to withdraw, for the above reasons or otherwise, and who shall have been a member of the association two years, and be clear of the books, shall receive an interest of four per cent., and any member of more than three years’ standing, shall be entitled to an interest of'five per cent, on the amount of funds paid by such member or members into the funds of the association.

Judgment having been entered in favor of the defendants, upon

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the order dismissing the complaint, the plaintiff appealed from the judgment to the General Term.

B. S. Shannon, for plaintiff and appellant.

Wm. B. Smith, for defendants and respondents.

J.—The plaintiff had been a member of the association more than “ two year;" had paid in his money, and, so far as appears, was “ clear of the books.” He had given the requisite notice of his intention to withdraw, alleging sickness and misfortune, which had rendered him unable to continue the payment of his subscription. The defendants having taken issue upon the allegations of sickness and misfortune, the plaintiff offered to prove them; but the Judge excluded the evidence as irrelevant.

The plaintiff, upon this argument, contends that, had he been permitted to show, that by reason of misfortune and sickness in his family, he was unable to continue the payment of his dues, he was then prepared to prove, that the condition of the association was such, that there was no legal or equitable objection to a repayment of the money as claimed by him, but that he was prevented in the outset from giving any evidence on the ground of irrelevancy.

In this view, we think the ruling was erroneous. Proof of the facts, which the plaintiff offered to establish, was, certainly, the first and appropriate step in the plaintiff’s case; and if he could not be permitted to prove them, no evidence of the condition of the association, nor any other evidence could be of any avail to him.

If the plaintiff had proved what he offered to prove, and had proved, in addition, such facts relating to the condition of the association as in law and good conscience ought to have satisfied the trustees, as to the grounds of the plaintiff’s withdrawal, then we think he not only had a right to withdraw, but was also entitled to a return of his money; and as his first step, we think, he had a right to give the evidence which was excluded.

The defendants insist, that the plaintiff must first show, that “ the trustees were satisfied as to the grounds of withdrawal.”

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How the plaintiff was to prove that fact, it is not easy to see. To prove that trustees of a corporation are satisfied as to the grounds of withdrawal, when that withdrawal takes money with it, would be difficult.

We think the statute of 1851, under which this association was formed, gives no such arbitrary power to trustees, and imposes no such impossible conditions upon a member’s right to a return of the subscription money paid by him to the association, who desires to withdraw from that association, by reason of sickness and misfortune.

New trial ordered, with costs to abide the event^[1]

* This case should, probably, he understood as merely deciding, that it is possible that a member’s right to withdraw, and to a return of his money, may be perfect, although the board of trustees may have omitted, or declined to express themselves satisfied as to the grounds of his withdrawal. The point is not decided, that in a case fairly calling for the exercisfe of judgment, whether the alleged grounds exist, or if a member has suffered from sickness, or misfortune; whether they have actually disabled him from continuing the payment of his subscription to the society; or whether they have merely made it inconvenient or undesirable to the member: the dissatisfaction of the board of trustees, as to the grounds of withdrawal, would not conclude him, and be an answer to a suit to recover back the money paid. This case cannot be regarded as deciding, that if the association is in debt, and ' its assets are barely sufficient to pay its debts, much less, if they are insufficient, that a member, however unfortunate and poor, can withdraw and coerce a return of the whole amount of subscription paid by him to the association. The opinion clearly intimates the contrary The shareholders are declared, by the statute under which the association is organized, “ liable to the creditors of the said association, to an amount equal to the amount of stock held by them respectively, for all debts contracted by such association.”—Laws of 1851, p. 234, § 11. In passing upon the truthfulness or sufficiency of the alleged grounds of withdrawal, and the extent to which they may affect a member’s ability to continue the payment of his subscription; the board of trustees owe a duty, not only to the other members of the association, but to its creditors; and by the law of its organization, their satisfaction, as to the grounds of withdrawal, would seem to be a condition, as the. general rule, to any member's right to withdraw, and be refunded the amount he may have paid on his subscription to the association.—Rep.