Crohn v. Firemen's Benev. Fund Ass'n of City of Mount Vernon

• Decision Date: 12 September 1973
• Citation: 359 N.Y.S.2d 599,79 Misc.2d 536
• Parties: In the Matter of Roland J. CROHN et al., Petitioners, v. The FIREMEN'S BENEVOLENT FUND ASSOCIATION OF the CITY OF MOUNT VERNON, New York, Respondent.
• Court: New York Supreme Court

Page 599

359 N.Y.S.2d 599

79 Misc.2d 536

In the Matter of Roland J. CROHN et al., Petitioners, v. The FIREMEN'S BENEVOLENT FUND ASSOCIATION OF the CITY OF MOUNT VERNON, New York, Respondent.

Supreme Court, Westchester County.

Sept. 12, 1973.

Bleakley, Platt, Schmidt & Fritz, White Plains, for petitioners.

Williams & Rossetto, Great Neck, for respondent, Firemen's Benevolent Fund Ass'n, Mount Vernon.

JOSEPH F. GAGLIARDI, Justice.

In this CPLR article 78 proceeding petitioners, four individual professional firemen of the Fire Department of the City of Mount Vernon, have commenced a class action for an accounting and a declaration that the membership requirements promulgated by respondent, The Firemen's Benevolent Fund Association of the City of Mount Vernon, unlawfully discriminate against petitioners. In reality petitioners are seeking apportionment of tax moneys received by respondent.

Respondent is a domestic corporation created in 1894 by special act of the Legislature (L.1894, ch. 111). Section 6 of the act designated respondent as the recipient of a tax on premiums of fire policies issued by foreign and alien fire insurance companies in the City of Mount Vernon. The tax provisions are now located in sections 553 and 554 of the Insurance Law. The moneys received were to be used for 'the care of indigent and disabled firemen and their families' (L.1894, ch. 111, § 6).

Section 1 of the act constituted respondent a 'body corporate' with power to adopt a constitution and by-laws and to amend same. Membership was authorized to all persons presently or 'hereafter' engineers of the fire department, members of any fire company located in the city and all residents of the city exempt from jury service as provided by local regulation.

On June 9, 1930 respondent filed with the Secretary of State an amended certificate of incorporation whereby membership was thereafter restricted to 'volunteer members of the fire department' (section 1) and the tax premiums were to be used 'in the care of indigent and disabled volunteer firemen only and the members of their families' (section 6). Article 2, section 1 of respondent's constitution and by-laws provides that only 'volunteer members of the fire department' are eligible to membership.

On December 7, 1972 petitioners' applications for membership were rejected by respondents' Board of Trustees on the ground that the applicants were not eligible to membership. Petitioners contend that under the original charter any fireman in the City of Mount Vernon was eligible to membership and respondents' unilateral act which changed the membership requirements is of no force and effect. No constitutional issues are raised pertaining to the classification of members. Respondent asserts that under the original charter petitioners are not eligible to membership and, further, that the amended certificate of incorporation is in all respects proper which requires dismissal of the petition.

It is uncontroverted that at present, as in 1894 when respondent was created, the fire department of the City of Mount Vernon consists of nine incorporated volunteer fire companies. ¹ There are approximately three hundred and fifty active volunteer firemen in the City of Mount Vernon. In the late 1920's the city fathers determined that paid firemen were needed in the fire department. The paid firemen drive the fire vehicles to the scene while the volunteer firemen respond directly to the location of the alarm. Approximately twenty former volunteer firemen, now paid firemen, are members in the respondent association. Petitioners never served as volunteer firemen.

The tax provisions in the Insurance Law (sections 553 and 554) have been traced back to an act promulgated in 1849 and have been upheld by the Court of Appeals (Trustees of Exempt Firemen's Fund v. Roome, 93 N.Y. 313). The court there noted that the primary purpose of the state mandated benevolent fund was to aid volunteer firemen who rendered an important service to the state without receiving monetary recompense (93 N.Y. at 322). ² Respondent argues that this legislative intent must be read into the original charter. However, it is clear that the insurance tax provisions do not create a preference among the recipients of the moneys (Cary v. City of Oneida, 158 App.Div. 773, 144 N.Y.S. 57) and, while respondent remains as the designated recipient, paid firemen may have an interest in the fund if they are eligible to membership (Cary v. City of Oneida, Supra: Eisinger v. Stern, 57 Misc.2d 16, 290 N.Y.S.2d 979; Niagara Falls Fire Dept. v. Exempt Firemen's Assn., 25 A.D.2d 484, 266 N.Y.S.2d 627; cf. Exempt Fireman's Assn. v. City of Little Falls, 148 App.Div. 440, 132 N.Y.S. 798). ³ Legislative intent regarding respondent may be ascertained by recourse to the original charter (Mtr. of De Peyster, 210 N.Y. 216, 104 N.E. 714). Nonetheless, while such intent in 1894 might have been to confer benefits upon volunteer firemen only (Ashley Co. v. Fire Department of Rochester, 73 Misc. 636, 133 N.Y.S. 591, affd., 142 App.Div. 929, 127 N.Y.S. 1110) the broad language used in the charter (L.1894, ch. 111, § 1) ('All such persons as now are, or who hereafter shall be * * * members of any fire * * * company' are entitled to membership) is not restrictive and respondent's amendment in 1930 leads to the inescapable conclusion that legislative intent was not clearly manifested (Robia Holding Corp. v. Walker, 257 N.Y. 431, 178 N.E. 747.)

Accordingly, the issue narrows down to the effect to be accorded the 1930 amended certificate of incorporation. Petitioners contend that the amended certificate is invalid because respondent has amended a special law by its own private act (cf. 1921 Rep. of the Attorney General 232). Petitioners' reliance on Abeline v. Firemen's Fund Assn., 55 Misc.2d 406, 285 N.Y.S.2d 644, is misplaced. There the Court merely held that the recipient of the funds designated by special law could not be changed in the absence of another special act of the legislature. Nevertheless, even that limited ruling pertaining to modification of recipients has been eroded by subsequent determinations which hold that the designated recipient can be changed by validly enacted local laws (Firemen's Assn. v. City of Lockport, 31 A.D.2d 311, 297 N.Y.S.2d 365; Fire Dept. of Roch. v. City of Rochester, 23 A.D.2d 183, 259 N.Y.S.2d 517, affd., 16 N.Y.2d 933, 264 N.Y.S.2d 921, 212 N.E.2d 439). Respondent has remained as the designated recipient since 1894 and it is incumbent upon petitioners to establish that they are entitled to membership.

Pursuant to Article 10, section 1 of the New York State Constitution the Legislature reserved power to amend corporate charters. The cited provision was enacted to overcome the ruling of the United States Supreme Court in the Dartmouth College case (4 Wheat. (17 U.S.) 518, 4 L.Ed. 629), where it was adjudged that a state's special grant of powers to an association constitutes a contract within the meaning of the federal constitution prohibition against impairing contract obligations (Lord v. Equitable Life Assur. Society, 194 N.Y. 212, 87 N.E. 443; cf. Skaneateles W.W. Co. v. Vil. of Skaneateles, 161 N.Y. 154, 57 N.E. 1124). Under the subsequently enacted state constitutional provision it has been definitively decided that the Legislature can amend the law under which a charter is granted by special or general law or authorize the corporation to effect changes (Lord v. Equitable Life Assur. Society, Supra; Pennsylvania R.R. v. State of New York, 15 A.D.2d 269, 223 N.Y.S.2d 541, affd., 11 N.Y.2d 504, 230 N.Y.S.2d 1004, 184 N.E.2d 588; Mtr. of Walker v. Commodity Exchange, Inc., 251 App.Div. 28, 295 N.Y.S. 283, affd. 276 N.Y. 567, 12 N.E.2d 579; Sylvander v. Taber, 19 Misc.2d 1005, 188 N.Y.S.2d 368, affd., 9 A.D.2d 1019, 196 N.Y.S.2d 592, affd., 8 N.Y.2d 835, 203 N.Y.S.2d 93, 168 N.E.2d 533, app. dismissed, 364 U.S. 629, 81 S.Ct. 357, 5 L.Ed.2d 364; McNulty v. W. & J. Sloane, 184 Misc. 835, 54 N.Y.S.2d 253; see 11 N.Y.Jur., Corporations, §§ 67--76; 1 Hornstein, Corporate Law & Practice, §§ 116, 360 (1959 ed.)).

Regarding the 1930 amended certificate, approval of a Supreme Court Justice of this Court was obtained authorizing the modifications and the certificate was accepted for filing by the Secretary of State. At present as in 1930 the filing of an amendatory certificate of incorporation commences the effective date of the amendments (Not-For-Profit Corporation Law § 104(f); Business Corporation Law § 104 (f); General Corporation Law § 8(2). Approval of a Supreme Court Justice is a mere condition precedent to the right to file the amendment and is not conclusive on either the public or Secretary of State (People ex rel. Blossom v. Nelson, 46 N.Y. 477; Mtr. of Debs Mem. Radio Fund v. Lomenzo, 50 Misc.2d 51, 269 N.Y.S.2d 632). Such approval, however, indicates that the purpose of the amendment is lawful (cf. Mtr. of Gay Activists Alliance v. Lomenzo, 31 N.Y.2d 965, 341 N.Y.S.2d 108, 293 N.E.2d 255; Mtr. Assn. Freedom of Choice v. Shapiro, 9 N.Y.2d 376, 214 N.Y.S.2d 388, 174 N.E.2d 487) and acceptance by the Secretary of State reenforces this view (cf. Mtr. Assn. Freedom of Choice v. Simon, 22 Misc.2d 1016, 201 N.Y.S.2d 135, affd. 11 A.D.2d 927, 206 N.Y.S.2d 532, affd. sub nom., Mtr. Assn. Freedom of Choice v. Shapiro, 9 N.Y.2d 376, 214 N.Y.S.2d 388, 174 N.E.2d 487; Mtr. of State Soc., etc., Engineers v. Dept. of State, 174 Misc. 173, 20 N.Y.S.2d 62). Petitioners contend that judicial and administrative approval notwithstanding, respondent was without power to amend its charter. Respondent urges that section 30 of the Membership Corporations Law authorized it to effect the amendment.

The petition alleges, and it is not denied, that respondent is a 'mutual benefit corporation'. Such classification does not exist in the general laws of this state nor is it found in respondent's charter. At the time of respondent's...