Dodge v. Dale

The facts alleged in the amended complaint and the amended supplemental complaint, so far as they relate to the questions necessary to be determined upon this appeal seem to be as follows:

The Phelps Mission is a corporation created and organized in March, 1876, under the laws of the state of New York, authorizing the formation of societies to establish free churches passed in 1854, and of such corporation the plaintiff and the individual defendants are trustees. That / the defendant, Anson Gí. P. Atterbury, is a clergyman and *902a minister, a pastor of the Eighty-fourth street Presbyterian church in the city of New York.

That there have been large donations of property and money to said Phelps Mission to enable it to carry on the object for which it was incorporated, and that since its organization, such mission has been maintained as a free church.

That on the 13th day of October, 1866, at a meeting of the board of trustees of said mission, at which were present five of said trustees, a series of resolutions were submitted by one of the trustees present which were adopted, the said Anson Gr. P. Atterbury, whereby it was resolved that the Phelps Mission enter into an agreement with the Eighty-fourth Street Presbyterian church for the unions consolidation of said two corporations. That the said Eighty-fourth Street Presbyterian church is a corporation organized under the laws of the state of New York relating to the incorporation of religious societies passed in 1813, and the acts amendatory thereof. That the said Presbyterian church is by its organization and rules governed differently from a free church, organized as is the Phelps mission.

That its trustees are elected by its pew holders and attendants from time to time, that it is subject to the government and rule of the Prebytery, and that as a rule the settings are not free to all attendants.

That the said Phelps Mission, as organized, has not and cannot have any members who have voice in the management of its property and affairs, but that its affairs must be managed by its board of trustees, which is self-perpetuating, and that the settings in it and all the privileges connected with it must be free.

That since the commencement of this action, and in January, 1887, the trustees of the Phelps Mission, except the plaintiff, made an application to this court for an order consolidating the said mission with “the trustees of the Eighty-fourth Street Presbyterian church ” (a religious corporation created in 1853, under the act for the incorporation of religious societies, passed in 1873). That such order was granted creating a new corporation, conferring upon it the name of the Park Presbyterian Church. That the said order further provided that the Phelps Mission should make a conveyance of its property to the said new corporation, the Park Presbyterian church, in pursuance of which order the trustees of the Phelps Mission have pretended to make a conveyance thereof. That the plaintiff brings this action as a trustee of and on behalf of the Phelps Mission because the corporation cannot bring the action, as the acts complained of were participated in by all the trustees except the plaintiff. The defendants demurred, upon the ground that the plain*903tiff had no legal capacity to sue, and that the complaints did not state facts sufficient to constitute a cause of action. That actions may, under certain conditions, be brought upon behalf of a corporation, by one of its trustees, to redress wrongs done to the corporation, seems to be .too well settled to require citation of authority, and that this right exists as well in respect to religious corporations as to civil corporations, is equally well settled.

As a prerequisite to the maintenance of such action, it is necessary that the plaintiff should make it appear that he has applied to the trustees of the corporation to bring the action in its name, and that they have refused so to do, or that he has not applied, because it would be useless to make such application, the trustees themselves being all wrongdoers, whose acts are to be attacked.

This condition the plaintiff has fulfilled. He has shown that all of his associate trustees were engaged in the conspiracy to deprive the Phelps Mission of vitality and rob it of its property for the benefit of another corporation, in the success of which one of them was deeply interested, being pastor of the recipient of the stolen goods.

The fact that one of the trustees of the Phelps Mission, and who is alleged to have been the chief promoter of this scheme of consolidation, was also the pastor of the Eighty-fourth Street Presbyterian Church, would of itself be sufficient, if no other ground existed to invalidate the whole proceeding.

The principle, that corporations having common offices and trustees cannot enter into valid contracts with each other, has become well established in the jurisprudence of this country and in England (Metropolitan Elevated Railway Co. v. The Manhattan Railway Co., 11 Daly, 367, and cases there cited) and needs no elaboration here.

It is held that each corporation has the right to the unbiased counsels of each of its officers and trustees, and where an officer or trustee is connected with two different corporations, each, in any dealings between the two, will be deprived of that to which they are entitled, viz: The unbiased aid and counsel of such trustee, and, therefore, they must not contract, and, if they do, such contract will be set aside at the instance of any party having the right to call the transaction in question. A more striking illustration of the salutary tendency of this rule has never been presented to any court than is exhibited by the facts alleged in the complaint in this action.

The pastor of the Eighty-fourth Street church, also a trustee of the corporation called the Phelps Mission, assumes that it would be greatly for his advantage if he can, by means of his Eighty-fourth Street church, swallow up *904the property of tho Phelps Mission which he also represents, and apply the same to the support of the church over which he ministers, and sets about the consummation of this purpose, and, as trustee of the' Phelps Mission, he brings about the surrender of the whole of its property to the Eighty-fourth Street church, of which he is pastor. It is clear that the whole interest of the pastor was in the Eighty-fourth Street church, and that the Phelps Mission, as far as he was concerned, not only did not have the benefit of his aid and counsel, but that he used his position as a trustee of said mission to accomplish the object of absorbing for the benefit of the church to which he must look for his support of all property and assets of the mission. But there is another difficulty in the way of the consummation of this .scheme, and that is a corporation formed for the purpose of founding and continuing, one or more free churches, pursuant to the provisions of chapter 218 of the Laws of 1854, in the Phelps Mission, was incorporated, and cannot be consolidated with a corporation formed under the act, entitled ‘‘an act to provide for the incorporation of religious societies passed in 1813 as the Eighty-fourth Street Presbyterian church was incorporated.

It is sought to sustain this attempted consolidation under the provisions of chapter 176 of the Laws of 1876, but we think that a very brief examination of the acts referred to will demonstrate that the claim is without foundation.

The act of 1876 is declared by its title to be a supplement to the act of 1813, and is, therefore, to be read with it, and as a part of it, and with and as a part of no other act. The first section of the act of 1813, which is an act to provide for the formation of religious societies as has been stated, provides for the incorporation of churches, or congregations in communion with the Protestant Episcopal church.

Section two provides for the incorporation of trustees of Reformed Protestant Dutch churches and congregations.

Section three provides for the incorporation of churches or congregations of any other church, congregation or religious society, and the remaining sections relate to the powers and duties of such corporations and their trustees.

The first section of the supplemental act of 1876 then provides that the officers of any church, congregation or religious society incorporated under the laws of this state shall administer the temporalities thereof and hold and apply the estate and property belonging thereto, and the revenues of the same, for the benefit of such corporation according to the rules and usages of the church or denomination to which said corporation shall belong; and it shall not be lawful to divert such estate, property or revenue to *905any purpose except the support and maintenance of any church or religious or benevolent institution or object connected with the church or denomination to which such corporation shall belong. It is evident that the corporations above referred to are those having a denominational character, and those only, and that the section in no way relates to any religions society except those that belong to some church or denomination, because those are the only class of corporations mentioned in the section and to which its provisions can apply. The act of 1876 being supplemental to the act of 1813, it is clear that the word religious society is used in the first' mentioned act in the same manner, as the words religious societies are used in the title of the act of 1813, and has no application whatever to benevolent societies, whether they are religious in their character or not. After having thus carefully provided that all the estate and property of a religious corporation shall not be divested, in section 3 of the act is pointed out the method by which the provisions of section 1 may be nullified.

Section 3 provides that any two or more corporations aforesaid (that is religious societies belonging to some church or denomination) are hereby authorized to unite and consolidate themselves into a single corporation of the denomination (another indication that it was denominational corporations which were being legislated about) to which, at least one of such corporations shall belong, etc.

The Eighty-fourth street congregation belonged to the Presbyterian denomination. The Phelps Mission had no denominational characteristic stamped upon it, and is under no ecclesiastical or denominational control, and therefore did not come within the terms of the act of 1876.

. The organic differences between the corporation of a church under denominational control and a charitable society organized under the free church act are so striking that the property of the latter should not be allowed to be diverted from the uses to which it was intended to be devoted by its donors, to the support of an organization so essentially distinct and different. The act under which this mission was incorporated does not make the corporation subject to any of the provisions of the acts relating to the incorporations of churches and congregations, but applies to it the provisions of the act of 1848 relating, to the incorporation of benevolent, charitable, scientific and missionary societies.

* It is true that in the case of Stephenson v. Short (92 N. Y., 446) the court of appeals have held that a missionary society is a religious society, but even if the corporation of the Phelps mission is to be considered as a religious society, *906this fact does not bring it under the provisions of the act of 1876, because, as has been seen, the act of 1876 evidently relates to religious societies having denominational relations and formed under the act of 1813 and similar acts, and that they have no application to charitable societies formed under the act of 1848 or similar acts. We are of the opinion, therefore, that the attempted consolidation being utterly void, the plaintiff was entitled upon the fact set forth in this complaint to have the same so declared.

Judgment reversed and demurrer overruled, with leave to defendants to answer upon payment of costs of appeal and cost of demurrer in court below.

Bartlett find Macomber, JJ., concur.