Court Opinion

ID: 6744863
Source: CourtListenerOpinion
Date Created: 2022-07-20 23:45:49.321314+00
Date Added: 2024-06-11T16:02:02.923985
License: Public Domain

DISSENTING OPINION
By LIEGHLEY, J.
The defendant in error was plaintiff in the trial court and will be thus referred to herein. The plaintiff in error was defendant and will be referred to as defendant or Society.
Plaintiff brought an action to recover a judgment for attorney fees. The trial resulted in a judgment in his favor against defendant. Error is prosecuted to this court to reverse same.
During the early part of 1933 one Michelarcangelo Petti, as a result of some altercation, found himself in the county jail charged with murder in the second degree. Being a member of the Society and being without funds for his defense, he made application to the Society for a loan of Five Hundred Dollars with which to employ plaintiff as counsel. His application was considered on the 7th day of May, 1933, by the Society, and by a vote of fifty to one a resolution was adopted to make said loan to him, (a large number of members were not present.) Plaintiff claims that on this night, or the next day, the president of the Society advised him of the action of the Society and told him to go ahead and the money would be paid in a day or two.
The indictment against Petti was returned on the 9th of May and the trial set for the 16th. During the interim the president and other members consulted counsel and as a result of said consultation told plaintiff on May 15th, 1933, that the Society had no authority to make the loan to Petti by reason of the law of the State and the provisions of the Constitution and by-laws of the Society. Notwithstanding this information plaintiff decided to continue as counsel for Petti. The case was tried on the 16th and the services then rendered were included in the bill upon which suit was brought. Plaintiff claims that the president of the Society told him to go ahead with the case and the Society would pay him the money. This was denied by the president.
The facts having been found in favor of plaintiff by the trial court plaintiff claims that he is entitled to recover said judgment upon two grounds. In the first place, he *205claims that the purpose clause of the Articles of Incorporation authorized such expenditure in behalf of one of its members as well as Article 14 of the Constitution and by-laws of the Society. In the second place, plaintiff claims that, if it be determined that such expenditure was not authorized in law or by the Constitution and by-laws, the Society must nevertheless pay for the reason that the defense of ultra vires has been denied to corporations under §8623-8 GC of the General Corporation Act.
Dealing with the first claim, the provisions of the purpose clause of the Articles of Incorporation of the defendant read as follows:
“promoting sociability among its members, cultivating patriotism and love of country, assisting financially its members in sickness and distress, and in case of death to assist families of deceased members by carrying on a fraternal benefit society as defined by §9462 GC without capital stock, solely for the mutual benefit of its members and their beneficiaries, and not for profit, having a lodge system with ritualistic form of work and representative form of government and' providing for the payment of benefits in accordance with §9491 GC, which death benefits do not exceed the sum of $300.00 to any one person and disability benefits do not exceed $300.00 in any one year to any one person, and issuing no insurance certificates and exercising all the corporate powers conferred upon fraternal benefit societies by the General Code of Ohio'in accordance therewith, and in accordance with the constitution, laws, rules and regulations of said corporation.”
It should be specifically noted that the defendant is incorporated under §9462 et seq, GC, which sections authorize and empower a group of individuals to organize and incorporate a fraternal benefit society. The incorporators thereof limited the purpose for which moneys' may be expended to the payment of benefits to sick members and expressed its purpose by Article 14 of its Constitution as follows:
“The society funds cannot be touched for any reason except for the payment of benefits to sickmembers; administration expenses exceeding the monthly receipts and extraordinary expenses must be voted by the general assembly (of the society).”
However, plaintiff predicates his claim upon the words “sickness and distress” contained in the purpose clause of the Articles. With this claim’ we do not agree. The sickness and distress contemplated by such an organization as defendant is-generally limited to necessaries of life, such as food, clothing and shelter. It certainly does not, in the absence of express language to the contrary, include attorney fees incurred in the defense of one of its members charged with homicide. Especially is this true in view of the fact that the State law commands and requires the appointment of counsel at the expense of the State for the defense of indigent prisoners. A member is not in distress for funds to employ counsel when counsel is readily available by law.
As stated above plaintiff claims that even though his authorization to proceed as counsel for Petti by the president was unauthorized by the Society, the Society is nevertheless liable by reason of the fact that the General Corporation Act by subsection 8 thereof has taken from all corporations the right to interpose the defense of ultra vires to a claim of a third party without knowledge.
The General Corporation Act may be found in the Code from §8623-1 to §8623-138 GC, inclusive. The pertinent parts of §8623-8 GC upon which plaintiff relies follow:
“Every corporation of this state, heretofore or hereafter organized, shall have the capacity possessed by natural persons to perform all acts, within or without this .state.
“The articles shall constitute an agreement by the directors and officers with the corporation that they will confine the acts of the corporation to those acts which are authorized by the statement of purposes and within such ’limitation and restrictions as may be imposed by the articles.
“No limitation on the exercise of the authority of the corporation shall be asserted in any action between the corporation and any person, except by or on behalf of the corporation against a director or an officer or a person having actual knowledge of such limitation.”
The General Corporation Act -received §§8623-1 to 8623-138, GC, inclusive. By the terms of §1, §§8623-1 to 8623-138, GC, inclusive, shall be known and cited as the General Corporation Act and as so consti.tuted is to be referred to as “this act.”
The incorporation of corporations for profit and their powers and -regulations is covered by §§8623-1 to 8623-96 GC. Corporations not for profit are likewise covered by §§8623-97 to 8623-138 GC. Whether *206or not the words “every corporation” used in §8 thereof refers to both corporations for profit and not for profit, it is not necessary for us to decide in this case, although the question was raised and seriously urged as decisive.
This Society was undoubtedly organized and incorporated under §9462 GC et seq. Its purpose clause for the most part adopts the language of §9462 GC. This chapter of the Code denominated “Fraternal Insurance”, §§9462 to 9509 GC inclusive, deals exclusively with the organization of fraternal' benefit, societies, such as this defendant. §9465 GC provides that such Society shall be governed by this Act, the Insurance Act. Such societies could be organized and incorporated and conducted under the powers conferred by this chapter to the exclusion of the General Corporation act and would be authorized and empowered to continue even though the general Corporation Act were repealed.
Secs 9462 to 9509 GC, constitute a special provision in the General Code for the incorporation of a designated class. This chapter is limited in its operation to fraternal benefit societies and alone controls such societies. Such corporations shall be formed under this special chapter and not under the general corporation act. This is commanded by §8623-3 GC of the General Corporation Act, by the use of the following language: “provided that where the General Code makes special provision for the filing of articles of incorporation of designated classes of corporations, such corporation shall be formed under such provisions and not hereunder.”
The above quotation should be sufficient justification for the statement that the defendant is controlled by sections of the General Code independent of the provisions of the General Corporation Act. The defense of ultra vires has not been denied to the defendant by §5623-8 GC.
The sections of the Code covering fraternal benefit societies are not only independent of and uncontrolled by the General Corporation Act, but are expressly exempted from its operation and control by the General Corporation Act itself.
For authority for the statement that this defendant is expressly exempted from the operation of the General Corporation Act, we refer to §8623-132 GC:
“When special provision is made in the General Code for the incorporation, organization, conduct or government of corporations farmed for any specified purpose, this act shall not apply, but the special provision shall govern unless it clearly appears that the special provision is cumulative.”
So that, having reached the conclusion that the plaintiff is not entitled to recover under either claim as a matter of law, the judgment should be reversed and final judgment entered for plaintiff in error.