Court Opinion

ID: 5263569
Source: CourtListenerOpinion
Date Created: 2022-01-06 18:50:38.311369+00
Date Added: 2024-06-11T08:28:06.841985
License: Public Domain

Rich, J.:
The defendant, incorporated under the Membership Corporations Law at the time of respondent’s reception as a member in 1914, embraced civilian employees of the city of New York, together with policemen and firemen. The civilian employees were accepted as members in violation of the provisions of the Insurance Law, in that they were hot restricted to those engaged in hazardous occupations, and the Superintendent of Insurance notified the defendant that unless it eliminated its civilian members, proceedings would be instituted to revoke its charter. The defendant might have complied with the statute and retained its civilian members, but it saw fit instead to expel them. Accordingly, a resolution was adopted, which had the effect of expelling all of the civilian members, including the plaintiff. The resolution provided among other things, “ the members so eliminated to receive the benefits as provided by sections 2 and 4 of Article II of the By-laws now in force, and we hereby empower the officers of the Supreme Council to draw checks for these benefits.” The benefits referred to under defendant’s constitution were only payable in the event of death, or upon retirement or dismissal from their positions, but under the resolution, if valid, plaintiff would have been entitled to receive the sum of $400.
The Municipal Court has held that the original contract between plaintiff and defendant was void from its inception, but that plaintiff was entitled to the sum deposited with the clerk of the court, representing sums paid by plaintiff to *193defendant, on the theory that plaintiff has a cause of action for moneys had and received to the amount of the tender. The Appellate Term reversed the judgment of the Municipal Court and directed judgment for the plaintiff for the full amount claimed, on the ground that the action is upon the promise contained in the resolution and not upon the contract of insurance.
The defendant failed to comply with the provisions of sections 234 and 235 of the Insurance Law (as added by Laws of 1911, chap. 198), and the policy it issued to the plaintiff was void from its inception (Patrons of Industry Fire Ins. Co. v. Plum, 84 App. Div. 96, 97), and the defendant was never legally liable thereon. It undertook, however, for reasons of its own, and because of the fear induced by the ultimatum of the Insurance Department, to expel the plaintiff from membership, and promise to pay him a benefit amounting to 1400. It is upon this promise that the Appellate Term has held the defendant liable, but the difficulty is that there was no consideration for the promise and it was consequently unenforcible, and the order must, therefore, be reversed.
There is another reason why the order of the learned Appellate Term must be reversed. The supreme council, as trustee and custodian of the property and funds of the defendant, was without authority to divert the funds to any other than a legal purpose. It was without authority to extend gratuities in the manner sought. (Parish v. New York Produce Exchange, 169 N. Y. 34.) It did have authority, however, to offer to repay to the plaintiff the money he had paid to the defendant, for the reason that plaintiff had received no consideration therefor.
It follows that the order of the Appellate Term must be reversed, and the judgment of the Municipal Court reinstated, without costs to either party.
Present — Blackmar, P. J., Mills, Rich, Putnam and Kelly, JJ.
Order of the Appellate Term reversed, and judgment of the Municipal Court unanimously reinstated, without costs to, either party.