Case ID: abbn-cas_22/html/0231-01.html
Source: Caselaw Access Project
Author: {"author": "Patterson, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

MATTER OF AMERICAN DRAMATIC FUND ASSOCIATION.
    N. Y. Supreme Court, First District, Chambers;
    
    February, 1889.
    1. Corporations; voluntary dissolution.] Code Oiv. Pro. § 2419, et seq.—providing for the voluntary dissolution of a corporation— apply to all corporations, except to an incorporated library society, to a religious corporation, or to a select school or academy incorporated by the regents of the university or by the Legislature, or to a municipal or other political corporation, all of which are • exempted from the provisions of § 2419, et seq. by § 2481.
    2. Same.] A corporation whose objects are the constitution and administration of a fund for the payment of annuities and allowances to members and beneficiaries, and' for the burial of those entitled to interment under its by-laws or regulations,—Held, within the provisions of Code Civ. Pro. § 2419, et seq. Matter of Sportsman’s Club, 15 Gw. Pro. B. (Browne) 215, overruled.
    3. Same; distribution of property.] The property of such a corporation may be distributed according to a plan approved by its members, and it is not an objection to a dissolution that, owing to the nature of the corporation, some of the details prescribed by the statute, as to distribution by a receiver, cannot be carried out.
    Motion to confirm referee’s report.
    This was an application by the directors of The American Dramatic Fund Association, a corporation organized by Special act in 1848, for its dissolution, on the ground that it was for the interest of the members that the funds be distributed.
    All of the members of the society at first agreed to the proposed dissolution, but one of them subsequently withdrew her assent.
    The proceedings were referred to a referee, and the petitioners now moved to confirm his report.
    
      Olin Rives <& Montgomery, for the petitioners.
    
      A. J. Rittenhoefer, for the objecting member.
   Patterson, J.

This is an application to confirm the report of a referee, appointed in proceedings instituted under title 2 of chap. 17 of the Code of Civil Procedure, for the voluntary dissolution of a corporation. The referee has presented a very careful and elaborate report exposing, in great detail, the situation at the present time of the association and its funds, and showing convincing reasons why continued corporate existence would fail to benefit any one interested as member, annuitant, or beneficiary, and recommending that a dissolution be decreed under the terms of a plan which has been submitted to all the parties in interest. I entirely concur with the referee in the propriety of directing a dissolution of this corporation. There were seventy-two persons in all connected with it as members or beneficiaries at the time this proceeding was begun. Seventy of these persons have consented to the decree being made, and there is now but one objecting party. Her assent was originally given, but has been withdrawn pending the reference, her expressed desire being that the funds and property of the association shall be transferred to another -corporate organization, having kindred purposes with those of this corporation, but her opposition docs not seem to be based upon any real claim that it would be wise or prudent to continue the existence of this particular society. It is scarcely necessary to say that this court has no power to compel the consolidation or amalgamation'of the two associations, and therefore any suggestion looking to the accomplishment of that object cannot now be entertained. It is found by the referee that the objecting member is estopped from opposing the dissolution prayed for in the petition, because of her former acquiescence in the institution of this proceeding, but I am not disposed to hold as matter of law that she became irrevocably bound, and that her objections mow presented should not be considered.

The principal ground of opposition goes to the foundation of the whole proceeding. It is claimed that the sections -of the Code of Civil Procedure under which the application is made do not relate to such a corporation as the American Dramatic Fund Association. The provisions of the Code are in terms broad enough to cover this corporation. Section 2419 enacts (among other things) that the directors, trustees or other officers of a corporation, created by or under the laws of this State, if they deem it beneficial to the interests of the stockholders that the corporation should be dissolved, may present to the court a petition praying for a final dissolution. Section 2431 was amended in 1884, so xthat corporations without stockholders, but having “ members ” were recognized as within the purview of the law, and certain corporations expressly named were excepted from its operation. The American Dramatic Fund Association was created by a special act of the Legislature in the year-1848, and had for its object the constitution and administration of a fund for the payment of annuities and allowances-to members and beneficiaries and for the burial of those entitled to interment under its by-laws or regulations. I think a corporation organized for such purposes is within the statute relating to voluntary dissolution.

The provisions of the Code of Civil Procedure regulating, the subject, as they now stand, are substantially a re-epactment of the Eevised Statutes relating to the same matter, and I think the history of the legislation shows a clear-intent to allow the dissolution, under those provisions, of all kinds of corporations organized for carrying on business of any character, or organized for any purpose other than such corporations as are expressly excluded by the Code from theoperat-ion of the provisions under consideration. This corporation is in no sense a mere club or secial organization, as-to which it was held, at special term in another district-, the-provisions of the code do not apply (Re Sportsman’s Club, 15 Civ. Pro. R. 215). But I think it is evident that all corporations, except those excluded by section 2431, come-within the application of the provisions. Section 2419 is-substantially the same as section 58 of art. 3, title 4, chap. 8, part 3 of R. S. (2 Edm. 488), as to who may make the application and the grounds on which it may be made. The-words “ any corporation ” are used in the Revised Statutes “ a corporation ” in the Code. Section 2431 is substantially the same as section 91 of the R. S. (p. 494, 2 Edm.), except as to corporations having members and not stockholders (since the amendment of 1884), and as to the addition of" municipal and political corporations to the excluded class. This change indicates that the Legislature had in mind the-subject of the application of the provisions to various kinds of corporations, and embraced by designation in the limitation two classes of corporations which, but for the restriction,, might have been considered as liable to be dissolved under the statute.

We are not left without some knowledge as to the intent of the revisers. In their notes on section 58, above referred to, they state the origin of the provision as being found in acts relating to the dissolution of insurance companies, and add that “ the act of 1817, which was confined to insurance-companies in the City of New York, will be extended by this article to all corporations, excepting -a few,” and those-are named in section 91. The provisions of the Code and' the Revised Statutes, being essentially the same (except the amendment of 1884, above referred to), it must follow, I think, that any corporation may be dissolved by such a proceeding as this except those mentioned in section 2431.

The further objection is taken that the Code provisions do not apply to this corporation, because all the details required to be complied with relating to distribution by a reeeiver cannot be earned out. I am not prepared to hold that the law absolutely requires those things to be done which are-not at all pertinent, in view of the situation of the property and the character of the corporation. The court can acquire-jurisdiction to dissolve only from the statute, but it is not deprived of jurisdiction because in the nature of the corporation certain inapplicable statutory requirements cannot and need not be fulfilled. The scheme of distribution in this-matter among members and others, has been assented to by all but one of the parties interested, and the by-laws of the c>:poration require the assent of a certain number to a plan of division of the property in case of a dissolution of the-corporation. Ordinarily the plan of the members could not be substituted for the plan of the statute, but in this case, there are provisions of the by-laws which were lawful when made, and are obligatory on all the members and constitute a condition, subject to which a dissolution must be allowed, if at all, besides which there is in reality no statutory plan for distribution among “ members ” where there are no stockholders.”

Corporations without stockholders may be dissolved, but the provisions respecting distribution among stockholders, according to the amounts paid in by them, cannot apply in ¡such cases as this, and if the court may dissolve corporations not having stockholders, why may that not be done in accordance with a plan adopted by the requisite number of members, under a requirement of the by-laws which is binding on all members, when no plan is provided in the statute that can be followed, and no particular method of distribution among members is pointed out ?

The fact that the cemetery lots cannot be sold and the proceeds divided, does not necessarily prevent the dissolu- . tion. The members may voluntarily surrender that prop•erty and so much of their respective shares of money dividends as will be necessary to create a fund for the maintenance of the burial place. I have looked into the other technical objections, but they do not require especial consideration, and are not such as to defeat the application.

The motion to confirm the report is granted, and Mr. S. L. M. Barlow is appointed the receiver.