Case Name: Theresa Wells, Resp't, v. Edward H. Monihan et al., App'lts
Court: New York Court of Appeals
Jurisdiction: New York
Decision Date: 1891-12-01
Citations: 41 N.Y. St. Rep. 409
Docket Number: 
Parties: Theresa Wells, Resp’t, v. Edward H. Monihan et al., App’lts.
Judges: 
Reporter: New York State Reporter
Volume: 41
Pages: 409–411

Head Matter:
Theresa Wells, Resp’t, v. Edward H. Monihan et al., App’lts.
(Court of Appeals,
Filed December 1, 1891.)
1. Statute op fbauds—How made available.
Unless the defense of the statute of frauds is pleaded or is raised by the averments of the complaint, it cannot he made available.
2. Knights op labob—Action by, whebe chabteb eevoked.
The charter of Excelsior Assembly, 4120, composed of women, was revoked for “insubordination.” field, that this could not destroy their rights as individuals or as an unincorporated association, and they could choose officers, such as a treasurer, in whose name they could sue and enforce the collection of notes given to the assembly.
Appeal from judgment of the supreme court, general term, third department, affirming judgment in favor of plaintiff.
Edward J. Meegan, for app’lts; Charles S. Nisbet, for resp’t
Affirming 35 St. Rep., 494.

Opinion:
Finch, J.
So far as the defense in this case rests upon the statute of frauds it must fail, for two reasons. No such defense has been pleaded, and it is not raised by the averments of the complaint, and without one or the other of these conditions the defense, if existing, cannot be made available. Porter v. Wormser, 94 N. Y., 450. And then there is the further difficulty that the referee has found as a fact that the consideration of the note was advanced to the defendants and refused to find that the loan was made to the local executive board. The evidence was contradictory, but clearly sufficient to justify the finding; and so we must hold the defendants' promise to have been original, since there was no primary debt established to which' it could have been collateral.
The effect of the revocation of the charter by the superior authorities of the " Knights of Labor " was not to destroy the property rights of the association as between itself and its debtors, because these sprang from the law of the state and not from the rules and regulations of the order. The latter are, therefore, not here in question. It is not claimed that they operated in any manner to vest the property of a local assembly in any superior officer or body upon the revocation of a charter. This claim was made in the answer and repeated upon the trial, but is disavowed here.
As a reply to the case of Austin v. Searing, 16 N. Y., 112, which denied the power of confiscation in organizations like the present, the learned counsel for the defendants explicitly admits in his brief that "the General Executive Board did- not assume to divest the title to the property of No. 4120," and speaking of its order issued by the general secretary, adds: " This order did not claim to give a title to property to any one." The only effect asserted is that the general secretary was entitled to become, not the owner, but the custodian of the property " subject of course to the legal rights of the parties." There is no question of custody in the case. The note is in the possession of the association, and there is no party before the court entitled to dispute that custody, and it is conceded that nothing has occurred to transfer elsewhere the ownership of the obligation. The whole defense of failure of title and of an outstanding and different ownership, therefore, disappears, and the only question left is the further contention that the revocation of the charter destroyed the association and the right of the plaintiff to represent it in this action.
Excelsior Assembly 4120 was composed of women. Their charter was revoked for " insubordination," of which very likely they were guilty. The offense and its punishment ended their powers and privileges so far and so far only as they were derived from the rules and regulations of the Knights of Labor, but could not destroy their rights as individuals or as an unincoraported association derived from the law of the state. Under that law they could, as they did, associate for a common purpose and choose officers in whose name they could sue. These powers they had when their charter from the Knights was given, and retained when it was taken away. That event broke off their relations with the order, but not with tbeir own treasury. That treasury they could control in their collective capacity until some superior power took it away, or it disappeared in a final distribution among the members. The defendants have nothing to do with that question. They owe their debt to the association of whom they borrowed the money and which through its treasurer seeks to recover it.
It may be true that by their " insubordination " and consequent expulsion from the society and protection of the " Knights " the members of the association have no longer the common purpose which brought them together. That may prove to be a reason for dissolving the association, but until dissolved it can exist to collect its debts and pay its creditors and make distribution of its surplus. Even where the state destroys a corporation for violation of its charter it does not free the debtors from the payment of their honest debts. What shall be done with the money when restored is sometimes a serious question, but it must first be collected. It does not belong to the debtors in any event, and no rule of the " Knights " or law of the state allows them to confiscate it.
The defendants do not assert any conflicting claim to the money If they did they would still be obliged to pay to the true owner, and could not escape liability. That true owner is the association which the "Knights" have not utterly destroyed. There has been a divorce, but that is quite different from a death.
We can see no good reason why the plaintiff should not recover, and the judgment should be affirmed, with costs.
All concur.