
    In the Matter of the Petition of the Creditor’s Audit & Adjustment Association to Amend Its Certificate of Incorporation.
    (Supreme Court, New York Special Term,
    June, 1911.)
    Corporations — Incorporation and organization: Creation in general — Powers permissible: Certificate of incorporation—Amendment of certificate — Objections.
    It is not a valid objection to the formation of a membership corporation, composed of merchants, to prevent and expose the commission of frauds of debtors with whom its members are trading or may do business, that the association is seeking to obtain power to practice law.
    A membership corporation may amend its certificate of incorporation, where the amendment does not contemplate any radical change but only corrections of informalities or defects, without notice to the Attorney-General; but when formal application is made to the court upon notice to the Attorney-General and to such other persons as the court" may direct, then, upon due cause shown and on such terms and conditions as may be deemed just, the certificate may be amended in respect of its objects and purposes.
    Application on notice to the Attorney-General to file an amended certificate of incorporation.
    Jerome, Rand & Kresel, for petition.
    Thomas Carmody, Attorney-General (Robert P. Beyer, Deputy Attorney-General, of counsel), in opposition.
   Erlanger, J.

The applicant on notice to the Attorney-General applies for leave to file an amended certificate of incorporation so as to truly set forth its object and purpose. The Attorney-General objects upon the grounds, (a) that the association is seeking to obtain power to practice law, and (b) that the statute does not contemplate any radical change but only corrections of informalities or defects.

The association was organized under the Membership Corporations Law and under no possible construction of its purposes and objects, as set forth in the proposed amendment, can it engage in the practice of law. Its purpose is simply to protect the members, who are merchants of character, in preventing and exposing the commission of frauds and collusive bankruptcy proceedings by dishonest methods of debtors with whom its members are trading or may do business. Its aim does not come within the vice pointed out in Matter of Co-Operative Law Co., 198 N. Y. 479.

Neither am I impressed- with the objection that only informal defects may be cured by amendment-. Under the Stock Corporation Law (§ 18) provision is made for amendments to the charter of stock corporations, so- as to include any purpose which might have been included in the original certificate, when authorized by a majority of its directors and three-fifths in value of its stockholders. Membership' corporations may amend their charter under section 7 of the General Corporation Law. It is true that under that section, if an amended certificate is sought to be filed without notice to the Attorney-General, such amendment must be limited to the correction of informalities, defects or striking out unauthorized matter; but, when formal application is made to the court upon notice to the Attorney-General and to such other persons as the court may direct, then, upon due cause shown and on such terms and conditions as may be deemed just, -the certificate may be amended in respect of its objects and purposes. Uo good reason can be conceived why a stock corporation organized for profit may amend its charter as broadly as authorized by section 18 of the S'tock Corporation Law, and yet a membership corporation • be denied equal rights. " The cases relied upon by the Attorney-General do not apply. In Lord v. Equitable Life Assurance Society, 109 App. Div. 252, the question related to the right to take the voting power from the stockholders of the corporation -and vest it in the policy-holders, contrary to the special charter under which the company was formed; and in Matter of Riverhead, etc., R. R. Co., 36 App. Div. 514, the amended certificate was filed without application to the court, -or notice to the Attorney-General, and the amendment had no reference to a change in the purposes or objects of the company, which operated a railroad, but to a change of its route. The applicant brings itself directly within the province of section 7 (General .Corporation Law) to express the true object and purpose of the corporation.” To adopt the Attorney-General’s argument would, in effect, render meaningless that portion of section 7 referred to, respecting amendments on formal application to the court on notice and due cause shown. If only informalities and defects may be corrected as contended, this may be done under the first paragraph of section 7 without notice; and the second paragraph, requiring notice if directed to the same character of defects, would be abortive and pointless. If a membership corporation may amend its charter only to cure informal defects, then, in a case where there was a material omission in stating its true object and purpose, there would be no redress but to dissolve the corporation and file a new certificate. This useless circumlocution could not have been the intention of the law makers; but, on the contrary, it was expressly enacted that a certificate which “ fails to express the true object and purpose of the corporation ” may be amended “ so as to truly set forth such object and purposes.”

Application granted.  