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Siena v. Grand Lodge

Decided: February 6, 1951.

MICHAEL SIENA, PLAINTIFF-RESPONDENT,
v.
GRAND LODGE OF THE STATE OF NEW JERSEY, ORDER SONS OF ITALY IN AMERICA, A CORPORATION, AND JOSEPH GIZZI, LOUIS J. LIGUORI AND GERARDO E. IERVOLINO, DEFENDANTS, GRAND LODGE OF THE STATE OF NEW JERSEY, ORDER SONS OF ITALY IN AMERICA, A CORPORATION, DEFENDANT-APPELLANT



McGeehan, Jayne and Wm. J. Brennan, Jr. The opinion of the court was delivered by Jayne, J.A.D.

Jayne

The plaintiff instituted this action by filing a complaint in lieu of mandamus demanding a judgment directing the defendant to permit the plaintiff to examine and cause the audit of the financial records and books of account of the defendant embracing a period of years in the past, including those accounts pertaining to the administration of the Mortuary Benefit Fund and to the conduct and operation of the Orphans' Home.

The Supreme Lodge, Order Sons of Italy in America, is the national organization, which may be said to have predominant supervision over all subordinate associations such as the defendant Grand Lodge of the State of New Jersey, Order Sons of Italy in America, a corporation instituted primarily for objects of fraternity and not for the acquisition of pecuniary profit. Beneath the Grand Lodge of each state are the district lodges, which are the community units in which the individual obtains membership. The governmental structure of the confederacy, although representative in character, rests fundamentally upon the will of the members of the local and district lodges. For example, the Grand Lodge of the state is composed of officers and delegates chosen by the members of the local lodges.

The Grand Lodge of New Jersey, pursuant to the authority of its certificate of incorporation, established a Mortuary Benefit Fund for the benefit of the members of the affiliated lodges, and also maintains an Orphans' Home. Both of those enterprises are functions of the Grand Lodge. The Mortuary Benefit Fund consists of the premiums currently received from members of the order who join the fund, and is administered in accordance with a collection of pertinent by-laws which, inter alia , state: "It is a trust fund and governed

by the laws and rules of the Grand Lodge of the State of New Jersey."

The maintenance of the Orphans' Home derives its financial support by means of a per capita assessment levied upon the membership of the local and district lodges.

The plaintiff is a member of a local lodge and an eligible beneficiary of the Mortuary Benefit Fund. He has been a delegate to the Grand Lodge, a Grand Trustee, and Grand Recording Secretary.

The plaintiff asserts that the information he obtained of the administration of the financial affairs of the Grand Lodge while serving in some or all of those capacities inspired him to address a communication to the members of the Arbitration Committee of the Grand Lodge on September 24, 1948, requesting the opportunity to inspect and audit the specified records and books of account. The request was not immediately granted and on October 28, 1948, he dispatched a similar overture to the Supreme Lodge.

In those communications he set forth the following reasons for his application:

"1. There has been no periodic accounting of the affairs of the Grand Lodge made available to me and other individual members.

"2. Funds have been disbursed by officers of the Grand Lodge without authority.

"3. Illegal death benefits have been paid.

"4. An illegal mortgage investment of funds of the Lodge was made.

"5. Monies of the Lodge Mortuary Fund were illegally diverted from the same.

"6. No itemized accounting has been made of receipts of monies for the maintenance of persons who were not orphans in the Orphans Home maintained by the Lodge.

"7. Illegal personal loans were made to employees of the Lodge.

"8. Printing bills for bulletins were illegally incurred and paid."

The trial resulted in a judgment directing the defendant, Grand Lodge, to produce the stated records, reports, books of account, bank statements, and checks "having to do with the accounts of the Grand Council, Order Sons of Italy in America, and having to do with the Mortuary Benefit Fund and the Orphans Home * * * during the period from

July 1, 1944, through June 30, 1949," for examination and audit by Harry Kalb & Company, certified public accountants, with the plaintiff (at his expense) and, if desired, in the presence of the defendant's accountants. 8 N.J. Super. 579 (Law Div. 1950).

The judgment constitutes the subject matter of the present appeal.

Initially, the appellant calls in question the status of the plaintiff lawfully to prosecute this action. In Emma v. Loggia Fasci Italici No. 16, Sons of Italy , 7 N.J. Misc. 387 (Sup. Ct. 1929), it was determined: "In the present case, participation in a mortuary fund is involved, and that is a property right." See, Id. , 5 N.J. Misc. 1073 (Sup. Ct. 1927); Freda v. Societa Di Mutero, &c., Jersey City , 106 N.J.L. 17 (Sup. Ct. 1930). Vide , 1 Bacon, Life and Accident Insurance (4 th ed.), ยง 49 et seq.

Where the right to examine the books and records of the corporation exists, an action in lieu of mandamus is appropriately maintainable. Stettauer v. N.Y. & Scranton Const. Co. , 42 N.J. Eq. 46 (Ch. 1886); Trimble v. American Sugar Refining Co. , 61 N.J. Eq. 340 (Ch. 1901); Fuller v. Alexander Hollander & Co. , 61 N.J. Eq. 648 (Ch. 1900); Bruning v. Hoboken Printing & Pub. Co. , 67 N.J.L. 119 (Sup. Ct. 1902); Feick v. Hill Bread Co. , 91 N.J.L. 486 (Sup. Ct. 1918); affirmed, 92 N.J.L. 513 (E. & A. 1918); Wyckoff v. Hardware Supply Co. , 134 N.J.L. 172 (Sup. Ct. 1946).

The right of the member or stockholder possessing a proprietary interest in the corporation to inspect the books and records, unlike that of a director of the corporation, is a qualified rather than an absolute right in that it is only judicially accorded where the application is made in good faith and is for a purpose germane to the applicant's status or proprietary interest as a member or stockholder. Bruning v. Hoboken Printing & Pub. Co., supra; Feick v. Hill Bread Co., supra; McMahon v. Dispatch Printing Co. , 101 N.J.L. 470 (Sup. Ct. 1925); Schroeck v. J. ...


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