Albers v. Merchants' Exchange

• Decision Date: 10 March 1897
• Citation: Albers v. Merchants' Exchange, 39 S.W. 473, 138 Mo. 140 (Mo. 1897)
• Parties: ALBERS v. MERCHANTS' EXCHANGE OF ST. LOUIS et al.
• Court: Missouri Supreme Court

39 S.W. 473

138 Mo. 140

ALBERS v. MERCHANTS' EXCHANGE OF ST. LOUIS et al.

Supreme Court of Missouri, Division No. 2.

March 10, 1897.

ASSOCIATIONS — SUSPENSION OF MEMBER — ACTION FOR DAMAGES — MEASURE OF RECOVERY — MALICE.

1. Where plaintiff, a member of an incorporated voluntary association, is suspended for failure to pay a fine, and obtains an injunction annulling his suspension and restoring him to membership, he cannot recover, in an action against the association and its officers, fees for the services of an attorney in the injunction proceeding, in the absence of evidence that the directors of the association were actuated by malice in so suspending him.

2. Where a member of an exchange was suspended for a day, but his business was not molested thereby, and he could make no estimate of any loss suffered by not being on the exchange, he could not recover therefor in an action against the exchange for unlawful suspension.

3. Where an exchange made a reasonable regulation prohibiting smoking during business hours, and a member thereof violated for several days such rule, in a defiant manner, and, on the advice of an attorney, he was fined by the directors of such exchange, and, on failure to pay the same was suspended, no malice is shown on the part of the officers of the exchange, though the suspension was subsequently annulled by decree of court.

4. An action will not lie against the officers of private associations in exercising their discretion under their charter powers, by which damage results to a member of the association, unless the acts are willfully or maliciously done.

5. Where the officers of an association, in attempting to enforce a reasonable by-law preventing smoking during business hours, rendered an erroneous sentence for a violation of such regulation, they are not subject to damages, notwithstanding the court avoided the conclusion they reached by enjoining the enforcement of their judgment.

Cross appeals from St. Louis circuit court; L. B. Valliant, Judge.

Action by Claus H. Albers against the Merchants' Exchange of St. Louis and others. Judgment for plaintiff, and both parties appeal. Affirmed on plaintiff's appeal. Reversed on defendants' appeal.

Jos. S. Laurie, for plaintiff. Judson & Taussig, for defendants.

GANTT, P. J.

The Merchants' Exchange of St. Louis is a corporation organized under act of March 4, 1863, amended by acts of February 2, 1865, and February 12, 1875, whereby was incorporated a theretofore existing voluntary association. The corporation thus created had no capital stock, and about 3,000 members. The preamble of defendant's original articles of association is as follows: "We, the members of the Merchants' Exchange of St. Louis, having a desire to advance and promote the commercial and manufacturing interests of the city of St. Louis, and wishing to inculcate just and equitable principles of trade; establish and maintain uniformity in the commercial usages of the city; acquire, preserve, and disseminate valuable business information; and with a view to avoid and adjust, as far as practicable, the controversies and misunderstandings which may arise between individuals engaged in trade when they have no acknowledged rules to guide them, — do hereby agree to be governed by the following rules, regulations, and by-laws." The charter of the exchange, as amended by the act of February 12, 1875, provided as follows: "Sec. 2. The rules, regulations and by-laws of the said association, shall be the rules, regulations and by-laws of the corporation hereby created, until the same shall be regularly repealed or altered in the mode therein provided; and the present officers of said association shall be the officers of this corporation until, by the terms of said rules, regulations and by-laws, their respective offices shall regularly expire or be vacated; and the board of directors of said association shall have power to suspend or expel any member of said exchange for misconduct, or for violation of any of the rules or regulations, or by-laws, or for other causes specified in said rules." The government of the exchange was vested by its rules in a board of 13 directors, including the president and two vice presidents. Section 8 of rule 4 provides as follows: "Sec. 8. The directors shall cause to be provided suitable reading and exchange rooms for meetings of members, which shall be kept open during usual business hours; they shall have control over such rooms, and may establish and enforce such rules and regulations in regard to the use of the same as may seem proper: provided, however, that from 11 o'clock a. m. to 1 o'clock p. m. daily the same shall be set apart and applied for the general meeting for the transaction of business." The rules also provided — rule 4, § 9 — a method of procedure against any member charged with misconduct or violation of any of the rules, regulations, or by-laws, or other act specified in the rules: "Sec. 9. It shall be the duty of the board of directors to examine charges preferred against any member of the exchange, when made to the board in writing by a member of the exchange, and to examine into the misconduct of any member in any way coming to their knowledge; and when any member shall be found guilty of a violation of any rule, regulation or by-law of the exchange, or shall have failed or refused to comply with or fulfill the award of the committee of arbitration, of the committee of appeals, or of any properly constituted committee of the exchange; or shall be found guilty of failing to comply promptly with the terms of any business contract or obligation, or of failing to equitably adjust and settle the same; or if any member shall be found guilty of refusing or neglecting to pay for property sold for cash on the delivery of the same; or when any member shall be found guilty of obtaining property upon false representation; or when any member shall be found guilty of making false or fictitious reports of sales or purchases; or when any member shall be found guilty of any act of bad faith or of any act of a criminal nature, or when any member shall be found guilty of giving false weight of flour, corn meal, provisions, or any other article, or of false packing, or of changing an original package with intent to defraud, such offending member shall be censured, suspended or expelled by the board of directors, and for disorderly or improper conduct in any of the rooms of the exchange, may be fined, censured, suspended, or expelled, as they may determine. A majority of a quorum of the board of directors shall be necessary to fine, censure or suspend a member; and an affirmative vote of at least ten members of the board shall be necessary to expel. No member, however, shall be censured, suspended or expelled without having an opportunity of being heard in his defense; and any member charged with a violation of the rules of the exchange, or with any of the offenses enumerated in this section, shall be notified in writing of the nature of such charges, and at the time at which such charges will be investigated by the board, at least five days before the day of trial. In investigations before the board of directors, either party shall be allowed to be represented by a member of the exchange, either as professional counsel or as a friend. Any member suspended may be reinstated by a majority vote of a quorum of the board of directors. * * *"

Under article 8 of the by-laws, smoking in the exchange room between the hours of 11 a. m. and 1 p. m. was prohibited. Under rule 16, it was provided that the rules could not be rescinded or altered without a two-thirds vote at a meeting of the members of the exchange. In September, 1888, the board of directors abolished the afternoon session of the exchange, and extended the morning session, which had theretofore closed at 1 o'clock, to 1:15 p. m., and at the same time directed that there should be no smoking on the floor between 1 o'clock and 1:15. Mr. C. H. Albers, the plaintiff herein, a member of the exchange, denied the power of the board to make this change in the hours of business, and the prohibition of smoking in such extension of the morning. He declared that it was a usurpation of power by the board, and declared to the president that it was his intention to make a test case. The president of the board at that time, Mr. Charles F. Orthwein, testified: "After the change was made, Mr. Albers came to me, on 'change, and told me he thought the board had no right to make such a change of the rule forbidding smoking; that he would not recognize the right of the board, and he would not obey the rule. I told him that the board thought differently; that the board thought they had the right, and that they were acting under legal advice; and that he had better not violate the rule, and if he did he would have to take the consequences. He said that was just what he wanted; he wanted to bring the matter into court, to see what rights he had in the matter. He said he wanted to take the matter to court. * * * Yes; he said he would fight us, and fight the board. He said he would bring the matter, if necessary, into court." Accordingly, Mr. Albers publicly challenged the authority of the board of directors, and the regulation made by them, by smoking on 'change between 1 o'clock and 1:15 p. m., during public session, — smoking, as he says, in plain sight of any one that was there. Mr. Orthwein testifies that for the next few days he smoked continually after 1 o'clock. "I saw him, myself, smoking; he was reported by the floor committee to the secretary. I have seen him myself. For three or four days we took no notice of it, because we thought he would quiet down about the matter and abstain from smoking. After three or four days he walked up to me with a cigar in his hand, and said, `Mr. Orthwein, I want to say to you that I don't care for your rule, and I want you to see that I am smoking,' in a...