Case ID: ny-st-rep_17/html/0879-01.html
Source: Caselaw Access Project
Author: {"author": "\n      Adams, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

In the Matter of the Petition for a Dissolution of The Livingston Sportsmen's Association.
    
      (Supreme Court, Special Term, Monroe County,
    
    
      Filed June, 1888.)
    
    Corporations—Dissolution op—When decreed—Social clubs—Code Civ. Pro., chap. 17, title 2—Does not apply.
    The Livingston Sportsmen’s Association was incorporated in 1876 under Laws 1875, chap. 267, and the acts supplementary thereto and amendatory thereof. Prior to its incorporation the association existed under the same name and had acquired about $1,400 in money, which was transferred to the new organization. With this money some real estate was purchased and a club house erected. At the time this proceeding was commenced, to dissolve said association, the association was the owner of real and per sonal property of the value of more than $2,000, free from encumbrances, of any kind, and there are no debts existing against the club. At the time of its incorporation the association consisted of forty-five members, of whom fifteen remain, the others having ceased to be members by reason of death, resignation, etc. Of the members remaining nine are in favor of a dissolution and six opposed. The annual dues of each member are five dollars, which furnish the only source of regular income of the club, except assessments. There are no stockholders and no capital stock as such, but the rights and privileges of the members are equal, and the constitution provides that whenever, for any reason, a person ceases to be a member, his interest in the property shall be vested in the association. Held, that the court could not make an order dissolving said association; that,under Code Civ. Pro., § 2429, before making itsfinal order dissolving a corporation, the court must be satisfied either that the corporation is insolvent or else that it is for the interest of the stockholders, and not injurious to public interest, that a dissolution should be decreed; that it was not the design of the legislature to embrace social clubs or associations of this character within the operation of Code Civil Procedure, title XI.
    This is an application for a final order in proceedings for the dissolution of the above-named corporation, and for the appointment of a receiver of its property.
    
      Strang & Doty, for petitioners; L. O. Reed, opposed.
   Adams, J.

The petitioners base their proceedings upon the provisions of title XI, chapter 17, of the Code of Civil Procedure. The method there prescribed for obtaining the relief sought appears to have been literally followed, and it only remains for the court to say, upon the facts presented, whether or not it shall order the dissolution asked for in the petition.

Before discussing this proposition it will be well to refer to some of the more important facts, concerning which there appears to be little or no dispute.

It seems that the “Livingston Sportsmen’s Association” was duly incorporated in August, 1876, under the provisions of chapter 267 of the Laws of 1875, entitled “An act for the incorporation of societies or clubs, for certain lawful purposes,” and the acts supplementary thereto and amendatory thereof.

Prior to its incorporation the association existed under the same name and had acquired about $1400, in money which was transferred to the new organization. With this money some real estate was purchased upon the shore of Conesús Lake, where a club house was erected and other improvements were made so that at the time this proceeding was commencd it appears that the association was the owner of real and personal property of the value of more than $2,000. This property is free from encumbrances of any kind and there are no debts existing against the club. It further appears that at the time of its incorporation, the association consisted'of forty-five members, of whom fifteen remain, the others having ceased to become members by reason, of ■death, resignation or failure to pay dues and assessments. Of the members thus remaining, nine are in favor of a dissolu • tian and six are opposed, and of those favoring the dissolution several are so situated as to be practically unable to enjoy the privileges of the association.

The annual dues of each member are five dollars which furnish the only source of regular income to the club, small assessments being resorted to in case the annual dues prove insufficient for the purposes of the association. There are no stockholders and no capital stock, as such, but the rights and privileges of the members are equal and the constitution provides that whenever, for any reason, a person ceases to be a member, his interest in the property shall be vested in the association.

There are many other facts found by the referee but the foregoing are perhaps sufficient to enable the court to furnish a satisfactory reason for the disposition which it finds itself compelled to make of this motion.

It will be seen by a reference to the provisions of section 2429, of the Code of Civil Procedure, that before making its final order the court must be satisfied either that the corporation is insolvent or else that it is for the interest of the “stockholders” and not injurious to public interests that a dissolution should be decreed.

It is not contended that the association is in any other than a perfectly solvent condition, and it is difficult for me to perceive upon what theory it can be said that it is for the interests of all the stockholders or members to order a dissolution. It may be that the payment of the annual ■dues and assessments, trifling as they are, proves somewhat annoying and even onerous to the members who derive no corresponding benefit from the association; if so, it is an easy matter for them to relieve themselves from the burden without compelling a very respectable minority to give up the privileges which they seem to esteem so highly and for the enjoyment of which they have parted with their money.

Again, it appears that this association was organized upon what is termed the “tontine ” principle, which confers upon the remaining members rights and privileges which it is difficult to estimate in dollars and cents. It must be assumed that the petitioners joined the association with full knowledge of the fact that those members who survived the others would enjoy such additional rights and privileges, and it is not at all improbable that the minority were induced to join or to continue their membership down to the present time by reason of this very attractive feature of the organization. If, therefore, this may be treated as one of the corporations contemplated by the provisions of the Code upon which this proceeding is based, what satisfactory reason can be urged for its dissolution? The organization, in some considerable degree at least, still answers the end for which it came- into being, and other and stronger reasons than those assigned should be presented to the court in order to justify its interference, even at the request of a majority of its members. Lafond et at. v. Deems et al, 81 N Y., 507.

I am quite inclined to the opinion, however, that it was not the design of the legislature to embrace associations of this character within the operation of the statute in question. It will appear, upon" investigation, that the present statutory provisions are the outgrowth of an act designed to affect insurance companies only, See Laws 1814, chap. 172, and Laws 1817, chap, 146.

At the time of the revision, the acts referred to were so enlarged in their scope as to include other bodies politic (3 R. S.. 467, §§ 58 to 65), and these sections were in return repealed by tne act of 1880, the provisions of the Code being substituted in lieu thereof. As thus revised and amended, the statute obviously was designed to affect corporations-organized for purposes of trade, business and profit, and not those of a social character.

To illustrate — sections 2419 and 2420 refer to “ stockholders,” “trustees” and “directors,” and, although by the-amendment of 1884, the title “member” was made interchangeable with that of “ stockholder,” yet the business-feature of the statute remains, and it is still provided by section 83 of the Eevised Statutes, which was unrepealed by the acts of 1880, that the surplus remaining in the hands of the receiver, after paying debts and expenses, shall be distributed among the “ stockholders ” of the corporation. I am not unmindful of the contention of counsel that in construing this statute, which specifically excludes certain corporations from its operation, it should be held to be inclusive of all others, and yet it must be borne in mind that when this-statute was first enacted, and certain corporations were expressly excluded from its operation, which, with a single exception are the same as those specified in section 2431 of the Code (see 3 E. S., 472, § 91), the act of 1875, under which this association was incorporated, did not exist, and this fact of itself furnishes a satisfactory reason for not excluding from its application “societies or clubs for certain lawful purposes,” as well as those which are mentioned.

In England there are enactments similar in many of their features, and designed to attain the same end as this one of ours, which are known as the “ winding up acts.” And as long ago as 1832, Lord Chancellor St. Leonards, in a carefully prepared opinion, held that a social club, although an “ association,” was not such within the meaning of those acts, which were obviously, although not specifically, designed to apply to associations of business and profit. In re The St. James’ Club, 13 Law & Eq., 589.

This case is analogous to the one under consideration, and furnishes ample authority, if any were needed, for my interpretation of the statute which the petitioners invoke.

The motion is therefore denied, and the proceeding dismissed, but under the somewhat peculiar circumstances of the case, no costs are imposed.