Wells v. Mobile County Bd. of Realtors, Inc.

• Citation: 387 So.2d 140
• Parties: Henry E. WELLS, etc. v. MOBILE COUNTY BOARD OF REALTORS, INC., an Alabama Corporation. 78-740.
• Decision Date: 15 August 1980
• Court: Supreme Court of Alabama

Page 140

387 So.2d 140

Henry E. WELLS, etc. v. MOBILE COUNTY BOARD OF REALTORS, INC., an Alabama Corporation.

78-740.

Supreme Court of Alabama.

Aug. 15, 1980.

Harold R. Reed, Jr., Mobile, for appellant.

Mary Elizabeth McFadden of McFadden, Riley & Parker, Mobile, for appellee.

EMBRY, Justice.

This is an appeal from a declaratory judgment rendered in favor of the Mobile County Board of Realtors, Inc., and against Henry Wells, holding that Wells violated the Bylaws of the Mobile County Board of Realtors, Inc., the Code of Ethics of the National Association of Realtors, and the Code of Ethics and Arbitration Manual of the National Association of Realtors, and further holding that the decision of the Mobile County Board of Realtors, Inc., to expel Wells from membership was proper. We reverse.

On 7 July 1977, A. C. Reeves and Margie Powles, a salesperson associated with Reeves, filed a complaint with the Board charging Ann Nichols with unethical conduct, alleging that she sold a home upon which the Reeves agency had obtained an exclusive listing agreement. The complaint was later amended to request that the Professional Standards Committee of the Board determine that Century 21 Reeves Realty, Inc., was entitled to the listing side of a commission earned by Bay Agency, Inc. (of which Henry E. Wells is the principal broker), for whom Nichols worked.

On 11 October 1977, Reeves and Powles executed agreements to submit the controversy regarding the entitlement of the listing side of the commission to arbitration pursuant to the bylaws of the Board, the Code of Ethics of the National Association of Realtors, and the Code of Ethics and Arbitration Manual of the National Association of Realtors. On 17 October 1977, Wells refused to submit the controversy to arbitration.

On 22 November 1977, the directors of the Board met to take disciplinary action regarding the refusal of Wells to submit to arbitration. Upon consideration of the matter, at a hearing conducted in compliance with the requirements set forth in the Code of Ethics and Arbitration Manual of the National Association of Realtors, the directors determined that Wells should be expelled from membership in the Board. The Board held in abeyance its decision to expel Wells until a final determination of the rights of the parties could be made by the circuit court. That court held as stated in the initial paragraph of this opinion, and also that the Board's hearing determining whether to expel Wells was held in compliance with all applicable rules and standards of the Board, and that the expulsion of Wells was consistent with all applicable rules and standards. This is Wells' appeal from that judgment.

Wells contends there is not a justiciable controversy existing between the parties which suffices to invoke the jurisdiction of the court to enter a declaratory judgment, that the section of the Board's bylaws which requires its members to submit to arbitration is void as against public policy, that the arbitration procedure provided in the Board's by-laws does not strictly comply with the Alabama Arbitration Statute, § 6-6-3, Code 1975, and is unlawful, and that the Board's expulsion of Wells was therefore improper.

The Board contends there is an existing controversy between the two parties and that any consideration of the arbitration procedure provided in the Board's bylaws is immaterial. The Board, instead, contends the issue is simply whether a voluntary, incorporated association may expel one of its members who is deemed to have known and assented to the association's bylaws, rules and regulations, and who is found to be in violation of the association's bylaws, rules and regulations, when that member is expelled by procedures consistent with the association's constitution, bylaws, rules and regulations.

There is clearly a controversy existing between the parties capable of determination by an action for declaratory judgment. It is well established that the constitution, bylaws, rules and regulations of a voluntary association constitute a contract between the association's members, which is binding upon each member so long as the bylaws, etc., remain in effect. Medical Society of Mobile County v. Walker, 245 Ala. 135, 16 So.2d 321 (1944). Any dispute between a voluntary association and one of its members concerning the construction or validity of the association's constitution, bylaws, rules and regulations constitutes a dispute as to the construction or validity of a written contract. The Board contends that it properly expelled Wells. Wells contends that the Board's expulsion of him was improper. That constitutes the justiciable controversy.

Wells contends that the bylaws of the Board which require members to submit any controversy which arises out of the real estate business to arbitration for determining are void as against public policy. The rules of law regarding voluntary associations are well developed in Medical Society of Mobile County v. Walker, surpa, where the court stated,

"Membership in a voluntary association is a privilege which may be accorded or withheld, and not a right which can be gained independently and then enforced. * * * Societies of the sort here considered have the right to make their own rules upon the subject of admission or exclusion of members, and these rules may be considered as articles of agreement, to which all who are members become parties. * * * They may make their own constitution and by-laws; and so long as they remain unchanged, each member is alike bound and shielded by them. The society too must observe its own constitution and by-laws until it changes them in legal form. Of course such constitution and by-laws, to be obligatory, must not contravene public law, nor any principle of public policy. Weatherly v. Medical & Surgical Society of Montgomery County, 76 Ala. 567.

" * * * (A) corporate franchise is property, incorporeal, it is true, but deemed none the less valuable in the eye of the law. Each individual member, as remarked by Sir William Blackstone, is said in such cases to be the owner of the franchise, and his privilege of membership, we may add on high authority, is, therefore, properly subject to the protection of the courts as valuable, although it may have no actual market value. * * *

' * * * In High on Extraordinary Remedies, § 294, it is said to be now a well established rule, that "mandamus will lie to restore to his corporate rights a member of a corporation who has been improperly disfranchised or irregularly removed from his connection with the corporation. And while the court will not inquire into the merits of the decision of corporate authorities in expelling or removing a corporator in the regular course of proceedings, yet, if the amotion has been conducted without due authority, the courts will interfere by mandamus to compel the restoration of the member to his corporate...