Through the executive committee meeting | minds of the parties, for the deed gives to in Utica, June 11, 1913, the plaintiff decided the college the option to purchase within 12 to exercise its option and selected a surveyor years so much land as it "may choose for a and civil engineer to map out an appropriate reservoir site," etc. The choice is with the site at the gorge for the extension of its wa-grantee, and the thing to be chosen is a site. terworks. Upon the land conveyed by Mrs. Whether it be appropriate or necessary is Scollard's deed in 1904, the plaintiff had for the grantee alone to determine. Those built two other reservoirs, and this addition- charged with the duty of providing for the al land was for an enlargement of the sup- next generation as well as this are to deply. The surveyor selected a little over nine termine while choice can be made, and not acres alongside and to the east of the exist- wait until vision is unnecessary and actual ing reservoirs which, in his judgment, was facts prove necessity-but all too late. appropriate for the purpose intended by reason of the land formation about the spring. It is true that the selection, together with the land already held by the plaintiff, cut the farm in two, but the springs furnishing the water were at this point. The conveyance provided for a causeway and the piping of water for the cattle and farm use. On It may be incumbent upon the plaintiff to the portion taken was a ravine 20 or 25 feet show that the part of the farm selected can deep, 20 feet wide at the bottom, sloping up be used for the purpose intended by the so as to be about 400 feet from the top of deeds, and that it is at the gorge or ravine the bank on one side to the top on the other. below the south spring, but it cannot be limThis engineer had constructed the last res-ited in its choice to prepared plans or preservoir, known as No. 3, having a capacity of about 8,000,000 gallons, and testified that in his opinion the place now mapped out and selected by him was suitable for a reservoir site. "Equity looks through the form to the substance and purpose of the agreement, and molds its decree in accordance with what the tended. Every contract implies good faith and parties may fairly be presumed to have infair dealing between the parties to it." Simon v. Etgen, 213 N. Y. 589, 595, 107 N. E. 1066, 1067. ent needs. [2-4] Bad faith, or such an unreasonable selection as to indicate bad faith, is always a defense to such choice. But the burden of showing bad faith or an unreasonable and The learned trial judge held the plaintiff unwarranted exercise of the option rested to strict proof of the land needed for a res-upon the defendants. The fact that in the ervoir, embankments, and borders, and dis-opinion of their experts the college might get missed the complaint on the merits for the along with less ground would not, of itself, apparent reason that no definite plans and constitute bad faith. specifications had been adopted showing the size and extent of the works to be built. The Appellate Division modified the judg-person, the workman desiring his pay must ment by providing for a nonsuit, not on the merits. It sustained the trial judge, however, in holding that the plaintiff had failed to show what land was reasonably necessary to answer the requirements of the deed. Mrs. Scollard could have conveyed to the plaintiff a fee or any property or rights less than a fee. She did grant an option to be exercised any time within 12 years. The dealings with the college indicate that the parties were looking to the future as well as the present. What water supply would be necessary in years to come as this college grew and demands increased could not be definitely determined on any given day. It was the duty of the trustees to provide, if possible, for the future as well as the present, and a wise provision in this respect would not yield to a measurement by present requirements. The trustees might rightly determine to select and pay for a site to meet what their best judgment indicated would be useful and necessary in years to come, and leave the construction of the work until such day arrived. It is as necessary for such institutions to lay by for the future as for the prudent man. Just this marks the difference between wisdom and folly. Where the parties to a building contract leave the approval of the work to some third furnish such approval or show its refusal has been unreasonable or in bad faith. 6 Ruling Case Law, § 335; Doll v. Noble, 116 N. Y. 230, 22 N. E. 406, 5 L. R. A. 554, 15 Am. St. Rep. 398; Weeks v. O'Brien, 141 N. Y. 199, 36 N. E. 185; Thomas v. Fleury, 26 N. Y. 26; City of Elizabeth v. Fitzgerald, 114 Fed. 548, 52 C. C. A. 321. See, also, on the question of approval or satisfaction, Hawkins v. Graham, 149 Mass. 284, 21 N. E. 312, 14 Am. St. Rep. 422. While these cases are not in point, yet they indicate that, where choice or approval is left to another, the action of the other is binding unless unreasonable or fraudulent, and the burden is upon the party seeking to avoid the choice or option to prove it unreasonable. The defendants who have taken title from Mrs. Scollard were fully acquainted with all the facts and the limitations of their title. They took by deed the same day as the college, and not only was the plaintiff's deed read to them, but their own deed contained a recital that it was"subject to the conveyance by said Ellen R. Scollard to said trustees by deed dated this day of certain lands consisting of about three acres intended to aid said trustees in providing [1] These things must have been in the greater reservoir capacity and a more adequate water supply for the future needs of Hamilton [ciety, increasing its rate of assessment, was College waterworks and including an option for the purchase by said trustees at any time within 12 years from the date hereof, on the terms therein mentioned, of so much land as they may choose for a reservoir site and the privileges connected therewith at the gorge or ravine below the springs and lands granted as aforesaid to said trustees." [5] When a valid option to purchase real property is accepted, the obligations and remedies of the parties become mutual, so as to make specific performance a proper remedy. Jones v. Barnes, 105 App. Div. 287, 94 N. Y. Supp. 695; Fox v. Hawkins, 150 App. Div. 801, 135 N. Y. Supp. 245. Under these circumstances, the plaintiff is entitled to a new trial, and the judgment below must be reversed. The judgment of the Appellate Division should be reversed and new trial ordered, costs to abide the event. HISCOCK, C. J., and COLLIN, CUDDEBACK, CARDOZO, and POUND, JJ., concur. ANDREWS, J., not sitting. Judgment reversed, etc. 92 (222 N. Y. 470) - Vested rights are not taken away by increasing the amount of the assessments agreed upon by a fraternal benefit society at the time of issuing to its members certificates of membership and insurance in the society, if the contract of insurance or the charter of the society expressly or otherwise clearly provides that the assessments may be changed from time to time. 3. CONSTITUTIONAL LAW 154(3)—MUTUAL BENEFIT INSURANCE - CONTRACT RIGHTSCHANGE OF CORPORATE CHARTER-RATE OF ASSESSMENT. effectual to increase the rate of assessment on the policy of a member of the society whose policy contract was made in New York with a subordinate court or lodge there doing business; both the society and the certificate holder being, subject to such amendments and modifications of their contractual relations by charter changes as might be required by the Dominion Parliament. Appeal from Supreme Court, Appellate Division, Fourth Department. Action by Henry C. McClement against the Supreme Court of the Independent Order of Foresters to set aside an extraordinary assessment charged by defendant on plaintiff's certificate of insurance and to remove the lien thereof from such certificate. From a judgment of the Appellate Division (169 App. Div. 77, 154 N. Y. Supp. 700), reversing a judgment of the Jefferson County Trial Term for plaintiff (88 Misc. Rep. 475, 152 N. Y. Supp. 136), and dismissing the complaint, plaintiff appeals. Affirmed. See, also, 171 App. Div. 890, 155 N. Y. Supp. 1121. John Conboy, of Watertown, for appellant. Elliott G. Stevenson, of Detroit, Mich., for respondent. CHASE, J. The only question involved on this appeal is the power of the defendant to charge an extraordinary assessment of $520 against the certificate of insurance held by the plaintiff as a member of the society. The defendant is a fraternal benefit society. A declaration of incorporation of the society or order was filed in the office of the provincial register of the province of Ontario on the 23d day of July, 1881, pursuant to Revised Statutes of Ontario 1877, c. 187. It was reincorporated by an act of the Parliament of the Dominion of Canada entitled "An act to incorporate the Supreme Court of the Independent Order of Foresters," assented to May 2, 1889, and known as 52 Victoria, c. 104. It expressly therein provided: "Nothing herein contained shall be held to exempt the society from the effect of any legislation hereafter passed by the Parliament of Canada in respect to any insurance powers exercis The Parliament of the Dominion of Canada not being bound by a written constitution, and power to repeal or amend every act of the Parliament being expressly reserved by R. S. Can-ed by friendly societies." ada, c. 1, § 47, the rate of assessment of a beneficiary society chartered by the Dominion may be changed by amendment of the charter by the Dominion Parliament, whether or not power was expressly reserved by the beneficiary society, in the contract with its certificate holders, to change assessment rates. 4. INSURANCE 716-BENEFICIAL ASSOCIATION-CHARTER. The charter or articles of incorporation of a beneficial association become a part of the contract of membership, when one joins the association, as if written therein, and a member is presumed to have joined with knowledge of their terms and conditions. The society has since 1881 maintained its principal office in the city of Toronto. Further acts amending the act of incorporation were passed by said Dominion Parliament in 1896 and 1901. In the act of 1896 it was expressly provided: "The society shall be bound forthwith and from time to time to make assessments to an amount adequate with its other available funds to pay all obligations created under every such certificate or policy heretofore issued or hereafter to be issued without deduction or abatement." And: 5. INSURANCE 719(3)—FRATERNAL INSUR- "Nothing herein contained shall be held to exANCE-RIGHT TO INCREASE ASSESSMENT-empt the society from the effect of any legislaWHAT LAW GOVERNS. tion hereafter passed by the Parliament of Can An amendment by the Dominion Parliament ada in respect to assessment or other insurof the charter of a Canadian mutual benefit so- ance." For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes of insurance, instead of 80 cents on each $1,000 of insurance as theretofore. The plaintiff has paid this increased monthly assessment, and no question is presented on this appeal relating thereto. The supreme governing body of the society is a supreme court or lodge, constituted of representatives from other courts or lodges formed and governed pursuant to the terms of its charter and the constitution and bylaws adopted by the society. In 1892 the In 1912 the defendant caused a further society applied for and obtained permission valuation of its assets and statement of its to do business in the state of New York, liabilities to be made. The report thereof which permission still continues. On Decem- showed a deficiency of assets, affecting the ber 29, 1892, a subordinate court was orga- members who had joined the society prior nized in the city of Watertown, known as to 1899, amounting to $25,555,448. In 1913 "Court Watertown." On that day the plain- the Parliament of the Dominion of Canada tiff, then nearing his thirty-sixth birthday, enacted a statute, entitled "An act to consolmade application for membership therein, and idate and amend the acts relating to the Suon January 7, 1893, the defendant issued to preme Court of the Independent Order of Forhim a certificate of insurance of $2,000. The esters and to change its name to "The Indecontract between the parties consists of the pendent Order of Foresters,'" which took application for membership and insurance, effect May 16, 1913. Chapter 113, Acts of the certificate of insurance, and the constitu- 1913. The act recites the several acts relattion and by-laws of the society. All, how-ing to the order hereinbefore referred to and ever, are subject and subordinate to the de- that the societyfendant's charter powers. The monthly rate of assessment on the plaintiff's certificate as then provided by the defendant's by-laws was $1.60 per month, or 80 cents per month per $1,000 of insurance. The certificate provided that upon the plaintiff's reaching his seventieth birthday the defendant would pay him an annuity benefit of $200 and the same amount on each subsequent birthday until the full sum of $2,000 was paid less any sum paid on account of total and permanent disability benefit. It also provided for payment upon total and permanent disability and for payment to a beneficiary named, in case of death. The bylaws among other things provided (section 237) that the plaintiff "shall pay the same rate of assessment thereafter as long as he remains continuously in good standing in the order and in the same class." There was also a special agreement indorsed on the back of the certificate which was signed by the plaintiff as follows: em "has by its petition prayed that the said acts Among the other provisions of the act is one as follows: "4. The society shall ascertain as at the first day of October, 1913, the valuation deficiency in respect of all outstanding mortuary benefit certificates or policies of the members who entered the society under the constitution and laws from time to time in force prior to the first day of January, 1899, and shall apportion such valuation deficiency among the said members in proportion to the amount of the member's mortuary benefit certificates or policies: Provided that the share of the valuation deficiency so apportioned to any member shall not exceed the re serve proper to such member's mortuary benefit certificate or policy according to the Foresters' experience and four per cent. annual interest. "If the Supreme Court of the society at the section 12 of this act, by resolution so decides, session to be held pursuant to the provisions of the society may charge against each such mor"I agree that the constitution and laws en-tuary benefit certificate or policy as an assessacted by the Supreme Court, Independent Order of Foresters, as well as any and all amendments thereto which may be adopted from time to time by the said Supreme Court shall be part of this contract." ment, a sum not exceeding its proportion of the valuation deficiency aforesaid. Such assessment shall thereupon be payable to the society by the member on the first day of October, 1913, or if not so paid shall be a lien or debt against such member's mortuary benefit certificate or policy The application for insurance was signed bearing interest until paid at the rate of four by the plaintiff in the state of New York per cent. per annum compounded annually and together with the interest shall be deducted by and the policy was delivered to him in this the society out of the moneys or first moneys state. In the year 1908 the defendant caused payable by the society under said mortuary bena valuation to be made of its assets and aefit certificate or policy; provided that such interest may at the option of the member be paystatement of its liabilities, and it was found able in equal monthly installments with the that the value of the existing certificates of monthly premium or assessments of such meminsurance exceeded the accumulated mortu-ber." ary fund on hand together with the then present value of future monthly assessments based upon a valuation according to the standard mortuary tables, in the sum of $55,000,000. After this valuation and statement the defendant amended its by-laws and increased its assessments of members. By the increase of assessments made at that time the plaintiff was required to pay a monthly assessment of $1.72 on each $1,000 Provision was also made for other optional methods of paying such assessments. The Supreme Court of the society met in regular session, as provided by the act of 1913, and accepted the act by more than a two-thirds vote, and pursuant to its terms the act came into force on the day on which such acceptance took place, and notice and proof thereof was filed with the superintendent of insurance of the Dominion of Canada. Acting under the authority of the act of the said Dominion Parliament, the Supreme Court of the defendant at its convention commencing August 26, 1913, by resolution charged the deficiency aforesaid upon the members who had joined the society prior to 1899 and apportioned the same among said members according to the amount of their respective certificates. The amount so charged to the plaintiff was $520, and that amount was declared a lien and charge on his certificate, together with interest at the rate of 4 per cent. per annum from October 1, 1913, to be compounded semiannually. The plaintiff was given the option of paying the same in cash or in monthly assessments as by the act provided. The plaintiff refused to consent to said extraordinary assessment and this action was brought to set aside the lien and charge of said assessment upon his certificate of insurance. changes to meet new conditions. This court in Beach v. Maccabees, supra, referring to a change of assessment by a beneficiary association, say: "If the certificate had provided that the payments therein specified should be subject to such modification as to amount, terms and conditions of payment and contingencies in which the same were payable as the endowment laws of the order from time to time might provide, the amendments would be applicable to existing members." 177 N. Y. 105, 69 N. E. 283. [3] It is not necessary to consider whether power was expressly reserved by the society in the contract with the plaintiff to change his rate of assessment because of the conclusion reached by this court that the defendant had power to change the assessments of its members by its charter as amended by the Parliament of the Dominion of Canada. Its we have already charter was obtained as stated pursuant to the Revised Statutes of [1, 2] Rights that have become fully vested the Dominion of Canada. We have quoted from the acts the provisions thereof relating cannot be taken away by amendment to a corporate charter or to the constitution and to amendments thereto, but the Parliament by-laws of the corporation. Such rights are of the Dominion of Canada is not bound by Power to repeal preserved by Constitution. Vested rights are any written constitution. not taken away, however, by increasing the or amend every act of the Dominion Parliaamount of the assessments agreed upon by a ment is also expressly reserved by the Revisfraternal benefit society at the time of issu- ed Statutes of Canada proclaimed and pubing to its members certificates of member-lished under authority of Act 49 Victoria, ship and insurance in the society, if the con- chapter 4 (1886), as follows: tract of insurance or the charter of the so Par "Every act shall be so construed as to reserve to Parliament the power of repealing or amending it and of revoking, restricting or modifying any power, privilege or advantage thereby vest ever such repeal. amendment, revocation, restriction, or modification is deemed by Parliament to be required for the public good." Chapter 1, § 47. [4] The charter or articles of incorporation of a beneficial association become a part of the contract of membership when one joins ciety expressly or otherwise clearly provides that the assessments may be changed from time to time. This court has held in sub-ed in or granted to any person or party whenstance that a general power reserved by charter or the constitution and by-laws of a society to amend the same does not authorize an amendment thereof so as to impair rights expressly reserved by contract. ish v. N. Y. Produce Exchange, 169 N. Y. 34, 61 N. E. 977, 56 L. R. A. 149; Weber v. Supreme Tent, K. of M., 172 N. Y. 490, 65 N. E. 258, 92 Am. St. Rep. 753; Beach v. Supreme Tent, K. of M., 177 N. Y. 100, 69 N. E. 281; Evans v. So. Tier M. R. Association, 182 N. Y. 453, 75 N. E. 317; Ayres v. Grand Lodge O. of U. W., 188 N. Y. 280, 80 N. E. 1020; Boswell v. Security M. L. Ins. Co., 193 N. Y. 465. 86 N. E. 532, 9 L. R. A. (N. S.) 946; Wright v. K. of M., 196 N. Y. 391, 89 N. E. 1078, 31 L. R. A. (N. S.) 423, 134 Am. St. Rep. 838; Dowdall v. Supreme Council C. M. B. Association, 196 N. Y. 405, 89 N. E. 1075, 31 L. R. A. (N. S.) 417; Green v. Supreme Council Royal Arcanum, 206 N. Y. 591, 100 N. E. 411. the association as if written therein, and a member is presumed to have joined with knowledge of their terms and conditions. Ruling Case Law, vol. 19, page 1190; Supreme Lodge K. of P. v. Mims, 241 U. S. 574, 36 Sup. Ct. 702, 60 L. Ed. 1179, L. R. A. 1916F, 919; Supreme Lodge K. of P. v. Smyth, 245 U. S. 594, 38 Sup. Ct. 210, 62 L. Ed. -, decided January 28, 1918. [5] The defendant, in doing business under its charter, was not only governed and controlled by it, but was subject to such modifications, restrictions, and repeal as should from time to time seem to Parliament to be required by the public good. Its charter is carried with it wherever it goes. Every conThe decisions quoted, at least so far as they tract made by it whether in Canada or elserelate to assessments upon members of bene- where is dependent upon its authority. It is ficiary societies, are based upon a construc- true in this case that the plaintiff is a resition of the contract made by the association dent and citizen of the state of New York. with its members. Where the reservation of In many respects the defendant, when doing authority to amend a charter or the consti- business in this state, is subject to our laws, tution and by-laws of a society is clear, the but its power to contract is dependent upon right to have the rate of assessment contin- its charter. In Supreme Council Royal Arued as originally provided is not vested or canum v. Green, 237 U. S. 531, 542, 35 Sup. fixed beyond the possibility of reasonable | Ct. 724, 727 [59 L. Ed. 1089, L. R. A. 1916A, 771], reversing this court (Green v. Supreme | court in Jemison v. Citizens' Savings Bank, "As the charter was a Massachusetts charter, and the constitution and by-laws were a part thereof, adopted in Massachusetts, having no other sanction than the laws of that state, it follows by the same token that those laws were integrally and necessarily the criterion to be resorted to for the purpose of ascertaining the significance of the constitution and by-laws." See Sauerbrunn v. Hartford Life Ins. Co., 220 N. Y. 363, 115 N. E. 1001. In Canada Southern Railway Company v. Gebhard, 109 U. S. 527, 537, 3 Sup. Ct. 363, 27 L. Ed. 1020, the court say: "A corporation 'must dwell in the place of its creation, and cannot migrate to another sovereignty' (Bank of Augusta v. Earle, 13 Pet. 588 [10 L. Ed. 274]), though it may do business in all places where its charter allows and the local laws do not forbid. Railroad v. Koontz, 104 U. S. 12 [26 L. Ed. 643]. But wherever it goes for business it carries its charter, as that is the law of its existence (Relfe v. Rundle, 103 U. S. 226 [26 L. Ed. 337]), and the charter is the same abroad that it is at home. Whatever disabilities are placed upon the corporation at home it retains abroad, and whatever legislative control it is subjected to at home must be recognized and submitted to by those who deal with it elsewhere. A corporation of one country may be excluded from business in another country (Paul v. Virginia, 8 Wall. 168 [19 L. Ed. 3571); but, if admitted, it must, in the absence of legislation equivalent to making it a corporation of the latter country, be taken, both by the government and those who deal with it, as a creature of the law of its own country, and subject to all the legislative control and direction that may be properly exercised over it at the place of its creation. Such being the law, it follows that every person who deals with a foreign corporation impliedly subjects himself to such laws of the foreign government, affecting the powers and obligations of the corporation with which he voluntarily contracts, as the known and established policy of that government authorizes. To all intents and purposes, he submits his contract with the corporation to such a policy of the foreign government, and whatever is done by that government in furtherance of that policy which binds those in like situation with himself, who are subjects of the government, in respect to the operation and effect of their contracts with the corporation, will necessarily bind him. He is conclusively presumed to have contracted with a view to such laws of that government, because the corporation must of necessity be controlled by them, and it has no power to contract with a view to any other laws with which they are not in entire harmony. It follows, therefore, that anything done at the legal home of the corporation, under the authority of such laws, which discharges it from liability there, discharges it everywhere." The language quoted from the Canada Southern Railroad Company Case is applicable to the controversy on this appeal. The defendant's charter is subject to amendment when the Dominion Parliament deems an amendment required for the public good, and the plaintiff as a part of the society is bound by such action as he and his associates may take under the charter. He is not only bound by such action as a member of the society, but as a policyholder and in his contractual relations with the society. This "Corporations are artificial creations existing by virtue of some statute and organized for the purposes defined in their charters. A person dealing with a corporation is chargeable with notice of its powers and the purposes for which it is formed, and when dealing with its agents or officers is bound to know the extent of their power and authority. A corporation necessarily carries its charter wherever it goes, for that is the law of its existence." The charge and lien of the assessment against the plaintiff's certificate of insurance is not a reduction thereof. It is an assessment on account thereof that he can pay in cash or by the more easy terms provided therefor and pursuant to the terms of the amended charter and the action of the society, it is a lien and charge upon the certificate of insurance until paid. The judgment should be affirmed, with costs. PEOPLE ex rel. WORONOFF et al. v. MALLON, Prison Warden. (Court of Appeals of New York. Feb. 12, 1918.) 1. CONSTITUTIONAL LAW 311-DUE PROCESS-EVIDENCE. The Legislature has general power to prescribe the evidence which shall be received, and the effect of such evidence in the courts of its own government, and statutes providing that proof of one fact shall be prima facie evidence of the main fact in issue, where the inference is not arbitrary, and there is a rational relation between the two facts, and accused is not deprived of a proper opportunity to submit all facts bearing upon the issue, do not violate the requirements of due process. 2. CONSTITUTIONAL LAW 311-DUE PROCESS-PRESUMPTIVE EVIDENCE-STATUTE. Penal Law (Consol. Laws, c. 40) § 442, providing that whenever property shall be purchased by aid of a statement relating to the purchaser's means or ability to pay, made in writin such statement the party to be charged shall ing and signed by the party to be charged, and state that he conducts a specified kind of business, and keeps books of account of such busicredit obtained by him, if he shall fail to pay, ness, then, at the expiration of any term of at all times during the 90 days subsequent to such failure, on request of the persons from whom he purchased, he shall produce, within count, and permit the persons from whom the 10 days after such request, his books of acproperty was purchased fully to examine them, and to make copies, and providing that failure evidence that every pretense relating to the so to produce such books shall be presumptive purchaser's means or ability to pay in the statement contained were false when made, and known to the purchaser to be false, is not unconstitutional as denying due process of law on the ground that it raises an unreasonable presumption in that the evidentiary fact has no natural connection with the main fact. For other cases see same topic and KEY-NUMBER in all Key-Numbered Digests and Indexes |