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§ 13

General Provisions

L. 1909, ch. 40

What constitutes a two-thirds vote.- The “concurring vote of at least two-thirds of the whole number of directors required by the first paragraph of this section, is not supplied by resolutions of the board of directors that the president and vice-president be empowered to take charge of the fiscal affairs until by-laws are adopted,' and that the president has authority to sign and execute all documents.'' Catholic Foreign Mission Soc. of America v. Oussani, (1915) 215 N. Y. 1, 109 N. E. 80.

Ratification of unauthorized act.—Although the secretary of a membership corporation had no authority to make a contract of lease, yet where his act in so doing was within the knowledge of the board of governors, and the corporation held a meeting on the premises and transacted business there, it was held that there was sufficient evidence to warrant the trial judge in submitting to the jury the question of a ratification of the secretary's act by the corporation. Fischer V. Motor Boat Club of America, (1908) 61 Misc. 66, 113 N. Y. S. 56.

§ 13. Purchase, sale, mortgage and lease of real property. No purchase, sale, mortgage or lease of real property shall be made by a membership corporation, unless ordered by the concurring vote of at least two-thirds of the whole number of its directors, provided, however, that when the whole number of directors is not less than twenty-one, the vote of a majority of the whole number shall be sufficient.

No real property of a membership corporation located within this state shall, without leave of the court, be leased for a longer period than five years, or sold or mortgaged. A mortgage may be executed to secure the payment of bonds issued or to be issued to different persons. The court may grant leave to a membership corporation to convey real property, without consideration, to another membership corporation created for the same or kindred purposes or to a religious corporation, if the membership corporation is incorporated for religious or Sunday school purposes.

If a conveyance or mortgage of the real property of any such corporation located within this state has been or shall be executed and delivered without leave of the court, obtained as required by law, the court may, thereafter, upon the application of the corpo ration or of the grantee or mortgagee in any such conveyance or mortgage, or any person claiming under such grantee or mortgagee, upon notice to such corporation, confirm such previously executed conveyance or mortgage, and thereupon such conveyance or mortgage shall be as valid and of the same force and effect as if it had been executed and delivered with leave of the court, except as to purchasers or mortgagees of record of such real property, subsequent to the execution and delivery of such conveyance or mortgage.

L. 1909, cha 40

General Provisions

§ 13

A membership corporation may, if its by-laws so provide, and pursuant to the provisions thereof, and without leave of the court, convey to a member of the corporation a portion of its real property for the erection thereupon of a cottage or other dwellinghouse with suitable outbuildings, on the terms and conditions that such portion, together with the buildings thereupon, shall belong to such member and on his death pass as part of his estate to his heirs or devisees, but that the land whereupon such buildings shall be erected shall be inalienable by him or them, except to the corporation or to a member thereof, and that such member in his lifetime, or after his death, his heirs or devisees, may convey such interest in such property to the corporation, or to a member thereof for such sum as may be mutually agreed upon, but not to any other person. Such conveyance may provide that the grantees of the interest in each lot so conveyed shall be entitled to one vote, either in person or by proxy, at all meetings of the corporation, if the by-laws authorize such a provision.

Except as otherwise provided in this chapter, no portion of a cemetery of a cemetery corporation which any person other than the corporation is entitled to use for burial purposes, or in which burials have been made and not lawfully removed, shall be sold, mortgaged or leased by the corporation.

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This section was derived from the Membership Corporations Law of 1895, § 13, as amended by L. 1907, ch. 177, § 1. It was amended to read as above by L. 1915, ch. 154. This amendment added the words beginning or to a religious corporation ..." at the end of the second paragraph.

Enlargement of limitations upon amount of property of non-stock corporation: see GENERAL CORPORATION LAW, § 12.

Acquisition of additional real property and of property without the state: see GENERAL CORPORATION LAW, $$ 13, 14.

Sale of corporate real property; see GENERAL CORPORATION LAW, § 70

et seq.

Power of stock corporation to mortgage property: see STOCK CORPORATION LAW, $ 6.

Validating mortgages of stock corporations : see STOCK CORPORATION LAW, § 7.

Power to mortgage property.- An attempt to place a mortgage on the corporate property in any way other than that prescribed by the statute is ineffectual. Dudley v. Congregation of Third Order of St. Francis, (1892) 65 Hun 21, 22 Civ. Pro. 380, 19 N. Y. S. 605, affirmed (1893) 138 N. Y. 451. The attorney-general has ruled that an Odd Fellows' lodge incorporated under the provisions of the Benevolent Orders Law could have no power to mortgage its real estate except in the manner provided in section 3 of that Act. Op. Atty.-Gen. (1902) 245.

Effect of order confirming conveyance.— Where an order of the Supreme Court is entered confirming a conveyance purporting to have been made by a membership corporation and executed by its officers, the deed executed in

88 14-16

General Provisions

L. 1909, cha 40

accordance therewith is valid on its face even though fraud was practiced, but the corporation may maintain an action to set the same aside as a cloud on title.

Roswadow Young Men's Ass'n v. Langweil, (1912) 136 N. Y. S. 1065.

§ 14. Changing number of directors. A membership corporation, created under or by a general or special law, may by vote of the majority of its members present at an annual meeting, or at any special meeting duly called for that purpose and so specified in the notice of the said meeting, determine to change the number of its directors to any number which a corporation created under this chapter for the same purposes is authorized to have. Notice of such special meeting shall be given as provided by section twenty-six of the stock corporation law, or by publication thereof once in each week, for three successive weeks next preceding the time when such special meeting is to be held, in at least two newspapers within the county where such special meeting is to be held. On such determination, a majority of the directors shall sign, acknowledge and file an amended certificate specifying such reduction or increase; and thereupon the number of directors shall be the number stated in such certificate. Each director then in office shall serve until his term expires, and there shall be no election of directors, until the number of directors is less than the number specified in the certificate.

This section was derived from the Membership Corporations Law of 1895, § 14, as amended by L. 1904, ch. 271, § 1.

Quorum and majority generally: see GENERAL CONSTRUCTION LAW, § 41; GENERAL CORPORATION LAW, § 34.

§ 15. Changing time of annual meetings. The time of holding the annual meeting of a membership corporation, created under or by a general or special law, may be changed, from time to time, by vote of an annual meeting, or of a special meeting duly called for that purpose, and by filing a supplemental certificate of incorporation containing a transcript of the minutes of the meeting, relating to such change, duly certified and verified by the president and secretary of the meeting.

This section was derived from the Membership Corporations Law of 1895, § 15.

§ 16. Visitation of supreme court. All membership corporations with their books and vouchers, shall be subject to the visitation and inspection of a justice of the supreme court, or of any

L. 1909, cha 40

General Provisions

$ 16

person appointed by the court for that purpose. If it

appears to such court by the verified petition of a member or creditor of any such corporation, that it, or its directors, officers or agents, have misappropriated any of the funds or property of the corporation, or diverted them from the purpose of its incorporation, or that it has acquired property in excess of the amount which it is authorized by law to hold, or engaged in any business other than that stated in its certificate of incorporation, it may order that a notice of at least eight days be served on the directors of the corporation, with a copy of such petition, requiring them to show cause at a time and place to be therein specified, why they should not be required to make and file an inventory and account of the property, effects and liabilities of such corporation with a detailed statement of its transactions during the twelve months next preceding the granting of such order; and if, on the hearing of such application, no good cause is shown to the contrary, the court may make an order requiring such inventory, account and statement to be filed, and proceed to take and state an account of the prop erty and liabilities of the corporation, or appoint a referee for that purpose; and when such account is taken and stated, it may, after hearing all the parties to the application, enter a final order determining the amount of property so held by the corporation, its annual income, whether any of the property or funds of the corporation have been misappropriated or diverted to any other purpose than that for which such corporation was incorporated, and whether such corporation has been engaged in any other business than that specified in its certificate of incorporation, from which final order an appeal may be taken by any party aggrieved to the appellate division of the supreme court, and to the court of appeals; but no corporation shall be required to make and file more than one inventory and account in any one year, nor to make a second account and inventory, while proceedings are pending for the statement of an account under this section.

This section was derived from the Membership Corporations Law of 1895, $ 16, as amended by L. 1899, ch. 360, § 1.

Judicial supervision of corporations and of officers and members thereof : seo GENERAL CORPORATION LAW, § 90 et seq.

Scope of section.— This section coníers no powers other than those specifically granted. Accordingly, the court may require an inventory of the property and liabilities of the corporation, with a detailed statement of its transactions during the past twelve months, and may appoint a referee in the

$ $ 17-20

General Provisions

L. 1909, cha 40

0

premises; but it cannot order money to be paid back nor give any direction for the future, disobedience of which can be punished as for contempt. Matter of Norton, · (1916) 97 Misc. 289.

Exclusiveness of provisions. It has been said that the fact that the legislature provided that the New York Society for the Prevention of Cruelty to Children should be subject to visitation by the Supreme Court, was evidence of an intention that it should not be subject to the visitation of the state board of charities. People v. New York Soc., etc., (1900) 161 N. Y. 233, 55 N. E. 1063, reversing 42 App. Div. 83, 58 N. Y. S. 953.

Injunctive relief in order for visitation. The court has no power to incorporate in an order for the visitation of a cemetery corporation an injunction restraining the sale of its property. Matter of Greene, (1912) 153 App. Div. 8, 138 N. Y. S. 95.

Appeal from order for visitation.-An appeal does not lie from an order of Special Term granting a referee the power of visitation pursuant to this section. Matter of Norton, (1915) 168 App. Div. 385, 153 N. Y. S. 798, affirmed (1915) 216 N. Y. 637 mem.

$ 17. Reports to comptroller by corporations receiving state moneys. No moneys appropriated by the legislature from the treasury of the state to a membership corporation, created under or by a general or special law, except a corporation subject to the visitation of the regents of the university of the state of New York, shall be paid to it or to any institution under its care, control or management, until its president and secretary, or a majority of its directors, make a sworn report to the comptroller of its purposes, operations, financial condition, expenditures and management, and particularly, of the disposition of

moneys appropriated by the legislature for the maintenance of such institution, for the year ending with the last preceding thirtieth day of September. The comptroller shall transmit such report to the legislature with his annual report.

was derived from the Membership Corporations Law of 1895, § 17.

This section

§ 18. Societies and clubs taking property by will. (Repealed.)

This section was repealed by L. 1911, ch. 857.

Devise or bequest to certain societies, associations and corporations : see DECEDENT ESTATE LAW, § 17.

§ 19. Societies taking property by will. (Repealed.)
This section was repealed by L. 1911, ch. 857.
Devise or bequest to certain societies : see DECEDENT ESTATE LAW, $ 17.

§ 20. Appointment of special policemen. Any corporation duly incorporated under the laws of the state of New York for the erection of buildings, and also duly authorized by law to procure the people to assemble in its buildings or on its grounds for camp

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