Ranken v. Probey

Smith, P. J.: The questions arising in this case do not arise between the unincorporated association defendant and a third party. The contract here to be construed was made between the association and one 'of its own members. Whatever, therefore, may be the rights of third parties in dealing with such an association, it can hardly be questioned that the rights of members with the association and among themselves are to be governed by their agreement which is contained in their constitution and by-laws. This is held in Belton v. Hatch (109 N. Y. 593); O'Brien v. Grant (146 id. 173). In the latter case, in the Opinion, it was said: “ It was perfectly competent for the banks to form themselves into this voluntary association and to agree that they should be governed by a constitution and by.rules. When adopted they expressed the contract by which each member was bound, and which measured its rights, duties and liabilities.” In the complaint is stated, the contract between the association and its members, by. which its members were required to pay an initiation fee of five dollars, and in addition thereto two dollars per. year, payable in advance. We may assume that there is no further express provision, either in the Constitution or by-laws, subjecting the members of the association to any further liability. In McCabe v. Goodfellow (133 N. Y. 89) a law and order league had been organized for the purpose of using its influence to assist the town and village officers in enforcing the excise and corporate [332] laws. There was no constitution or by-laws shown, but it seems to have been contemplated that the moneys necessary to perfect the purpose of the association should be raised by subscriptions. The officers of the association employed an attorney to prosecute for penalties. The action was brought against the association under section 1919 of the Code of Civil Procedure, for the value of the services rendered by the attorney, in these prosecutions for penalties. It was held that the association was not liable, as no individual liability was there contemplated. In the opinion, however, occurs this sentence: “In this respect there is a plain distinction between associations formed for the purpose of pecuniary profit and those formed for other objects.” This complaint alleges that this association was formed for pecuniary profit, and it is claimed that this allegation distinguishes this case from the rule of law stated in the case above cited. A further reading of the opinion in the McCabe case makes, clear what is there meant by an association- organized for a pecuniary profit; It refers to an association organized to carry on some business in which a. profit is looked for; in which case the members of the association become, in fact copartners, and the liability of the individual member rests upon rules governing the liability of partners and the liability of principals for the acts of the agent. Such was the cage of National Bank v. Van Derwerker (74 N. Y. 234). In Lightborn v. Walsh (97 App. Div. 187) an association was formed of the members of the Socialist Labor Party, who -were required to pay monthly, dues. A newspaper was started by this association, which was supported by a fund acquired from voluntary contributions, “ and it did not appear that the board of trustees in charge of the newspaper were authorized to contract debts in excess of such: fund.” R was there held that one who rendered services as a linotype operator in the printing of the newspaper, and who was a member of the association, could not . recover against the association for his services, and that “ it could not be said that it was within the contemplation of the members of the organization that they should be individually liable for debts contracted in the publication of the newspaper.” - But the question here arises as it were upon á demurrer. The averment that the corporation was organized, for pecuniary profit could well .have been more definite. Unchallenged, however, by motion to make more [333] definite it is sufficient to authorize proof of such a purpose in its formation as would authorize contracts in excess of the fund provided by the initiation fees and dues. The duties of plaintiff may have been such that a failure to perform the same would subject the society to pecuniary loss. In such case there would be little doubt from the necessity of the service of an implied power to pledge the credit of the members therefor. The complaint is challenged as stating conclusions only, but those conclusions are conclusions of fact which may be pleaded, subject to the right of defendant to demand by motion more specific averments. The judgment should, therefore, be reversed and a new trial granted, with costs to appellant to abide event. All concurred. Judgment reversed and new trial granted, with costs to appellant to abide event.