Eliot v. Merchants' Exch.

• Decision Date: 23 October 1883
• Citation: 14 Mo.App. 234
• Parties: EDWARD C. ELIOT, Respondent, v. MERCHANTS' EXCHANGE ET AL., Appellants.
• Court: Missouri Court of Appeals

14 Mo.App. 234

EDWARD C. ELIOT, Respondent,

v.MERCHANTS' EXCHANGE ET AL., Appellants.

St. Louis Court of Appeals, Missouri.

Oct. 23, 1883.

APPEAL from the St. Louis Circuit Court, THAYER, J.

Affirmed.

OVERALL & JUDSON, and BROADHEAD & HAEUSSLER, for the appellants: A membership in the Merchants' Exchange is not property.-- In re Sutherland, 6 Biss. 576; Thompson v. Adams, 93 Pa. St. 55; Pancoast v. Cowen, 93 Pa. St. 66. And can not be subjected to the payment of a creditor by a creditor's bill.-- Show v. Aveline, 5 Ind. 384; Stewart v. English, 6 Ind. 176.

EDWARD C. ELIOT, pro se, GEO. W. TAUSSIG, and DAVID GOLDSMITH, for the respondent: The right of membership in the Merchants' Exchange of St. Louis is a “right of property,” and is “property.”-- Powell v. Waldron, 26 Alb. L. J. 32; Hyde v. Woods, 94 U. S. 523; In re Ketchum, 1 Fed. Rep. 840; Smith v. Barclay, 21 Am. L. Reg. 408; Ritterband v. Bagget, 4 Abb. (N. C.) 67. The right of membership in the Exchange, although a “right of property” and “property” is not subject to execution, attachment, or garnishment, in an action at law.-- Thompson v. Adams, 93 Pa. St. 55; Pancoast v. Gowen, Id. 66. But, like a right to letters-patent, can be reached only by process of a court of equity, after all legal remedies have been exhausted.-- Ager v. Murray, 105 U. S. 126; Dos Passos on Stockbrokers, 87, etc., and cases cited. And equity will aid the creditor in reaching the property of the debtor and furnish the remedy when the strict rules of legal practice fail, without showing fraud or “any other recognized ground of equitable jurisdiction.”-- Pendleton v. Perkins, 49 Mo. 565; Turner v. Murray, 46 Mo. 95, 99; Beal v. McVicker, 3 Mo. App. 592. The rule requiring transfers to be made with the “approval of the board of directors” does not affect the plaintiff's right to subject this membership to his judgment claim. The right to impose this restriction upon the transfer of shares “frequently happens in corporations.”--1 Lindley on Partnership, etc., * 702; Penny's Case, 8 Chanc. App. 446; Robinson v. Bank, etc., 1 Eq. 32. But the right to impose this restriction by a by-law depends upon express authority in the charter, and in the absence of such express authority, the by-law is void.--Morawetz on Corporations, sect. 321; Moore v. Bank, 52 Mo. 377; Chouteau v. Harris, 20 Mo. 382. Such express authority is not given to the Merchants' Exchange of St. Louis.

BAKEWELL, J., delivered the opinion of the court.

This was a proceeding by a judgment-creditor of defendant Schieferdecker, to expose to sale, in satisfaction of plaintiff's judgment, a certificate of membership of Scheiferdecker in the Merchants' Exchange of St. Louis.

On hearing, the circuit court made a decree that plaintiff is entitled to subject a certificate of membership, No. 2394, issued by said Exchange to said Scheiferdecker to sale in satisfaction of plaintiff's demand and directing the defendants to deliver the certificate to the sheriff, and directing the sheriff to advertise and sell the same in the manner provided by law for making sales under execution of personalty, and to apply the proceeds to the payment of plaintiff's demand, which is ascertained to be $16,701.19, defendants are also enjoined from transferring the certificate, otherwise than specified in the order of court, which further directs Scheiferdecker, within five days from the sale of the certificate, to execute an assignment to the purchaser, according to the form of the certificate indorsed thereupon.

On the hearing, certain acts of the legislature and rules of the Merchants' Exchange were offered in evidence. These are not copied in the bill of exceptions, but the bill stipulates that counsel may, in this court, introduce a certain book of the rules of the Exchange which was introduced on the hearing below, and which contains all these documents. This book does not appear to be filed with the transcript, nor have we seen it. But there seems to be no dispute about its contents; and, for the purposes of this opinion, we shall assume that these acts and rules, so far as needed, are correctly set forth in the briefs of counsel.

It appears from the pleadings and evidence, that plaintiff is the assignee of a judgment rendered in December, 1876, in the St. Louis circuit court against Scheiferdecker for $10,666.74, which is unpaid; and that Scheiferdecker has no property subject to execution, if his membership in the Exchange be left out of question. Scheiferdecker is, and since 1873 has been, a member in good standing of the Merchants' Exchange of St. Louis. His dues are paid. A certificate of membership in the Exchange has been duly issued to him, and is in the hands of the secretary of the Exchange for delivery to him. This certificate, No. 2394, is sealed with the seal of the Exchange and signed by its president and secretary; and sets forth that Scheiferdecker is, on the date named (3d of January, 1882), a member of the Exchange in regular standing; that the membership is subject to annual assessments, and is transferable, on payment of all assessments and a transfer fee of $5, on the books of the corporation to any person approved by the board of directors, on surrender of the certificate. The transfer is to be made according to a form indorsed on the certificate, which purports to transfer the membership subject to the rules of the Exchange, provided that the membership is not found to be forfeited or impaired. The members of the Exchange have the privilege of admission to its floors to transact business, the right of taking part in, and voting at, all deliberations of the Exchange, and the benefit of its market reports and other information. Scheiferdecker is a commission merchant. He was a member before any rule was adopted authorizing transfer of membership. He paid for his membership an initiation fee of $10 and an assessment of $25. The Exchange holds three daily sessions. Its transactions embrace nearly all business in certain lines, specially breadstuffs and provisions. There were at the date of the hearing three thousand five hundred and sixty-five members of the Exchange. The market reports from Liverpool and from leading American cities are daily posted on the building of the Exchange. The revenue of the Exchange is from assessments of its members: $20 from each member per year; rent of chairs, $600; rent of telegraph counters, $800; and interest upon government bonds owned by the Exchange, which, last year, amounted to $10,000. The income exceeds the expenses, and the surplus goes to the reserve fund, which is about $350,000. The market value of certificates of membership varies. Their highest value, during the year preceding April, 1882, was $525; and their lowest, $215. The average attendance on Exchange, is about one thousand two hundred persons. The business of commission merchants requires them to attend almost daily.

The Merchants' Exchange of St. Louis was originally a voluntary association, the objects of which, as expressed in the preamble, were to promote the manufacturing and commercial interests of St. Louis, inculcate just principles of trade, maintain uniformity of commercial usage, acquire, preserve, and disseminate business information, and adjust controversies between merchants. It was incorporated in 1863, and the charter was amended in 1865 and again in 1875. It has power to receive and hold and dispose of real and personal property. It is admitted that the privileges of membership are, by the rules, such as are common to mercantile organizations of similiar character. Under rule X., new members are admitted upon written application, with references as to business character and standing, and only on a favorable report of the committee of membership and the approval of the board of directors. The member may be suspended or expelled for violation of rules of the Exchange. Before January, 1882, there was no rule providing for transfer of membership, and every new member had to pay an initiation fee for himself, whether an old member was retiring or not. On January 1, 1882, and before the commencement of the present proceeding, a rule was adopted to the effect that “members of the Exchange, on and after this date, shall be entitled to certificates of membership, which shall be transferable on payment of all assessments due, and a transfer fee of five dollars; subject, however, to the recommendation of the committee on membership, and the approval of the board of directors.”

The question presented by the record is one that has arisen of late years and as to which the authorities are not in accord. It is, whether the seat of a member of a merchants' exchange, such as is established in the large centres of commerce, and having a constitution and rules such as usually govern these exchanges and stock exchanges in America, is a species of property which, if not subject to execution by the ordinary process without the...