N.Y. Not-for-Profit Corporation Law § 203: Defense of ultra vires

§ 203. Defense of ultra vires.

(a) No act of a corporation and no transfer of real or personal

property to or by a corporation, otherwise lawful, shall, if duly

approved or authorized by a judge, court or administrative department or

agency as required, be invalid by reason of the fact that the

corporation was without capacity or power to do such act or to make or

receive such transfer, but such lack of capacity or power may be

asserted:

(1) In an action by a member against the corporation to enjoin the

doing of any act or the transfer of real or personal property by or to

the corporation. If the unauthorized act or transfer sought to be

enjoined is being, or is to be, performed or made under any contract to

which the corporation is a party, the court may, if all of the parties

to the contract are parties to the action and if it deems the same to be

equitable, set aside and enjoin the performance of such contract, and in

so doing may allow to the corporation or to the other parties to the

contract, as the case may be, such compensation as may be equitable for

the loss or damage sustained by any of them from the action of the court

in setting aside and enjoining the performance of such contract;

provided that anticipated profits to be derived from the performance of

the contract shall not be awarded by the court as a loss or damage

sustained.

(2) In an action by or in the right of the corporation to procure a

judgment in its favor against an incumbent or former officer or director

of the corporation for loss or damage due to his unauthorized act.

(3) In an action or special proceeding by the attorney-general to

annul or dissolve the corporation or to enjoin it from the carrying on

of unauthorized activities.