Jackson v. American Yorkshire Club

• Decision Date: 18 June 1971
• Docket Number: Civ. No. 69-C-2020-C.
• Parties: Wayne JACKSON, Plaintiff, v. AMERICAN YORKSHIRE CLUB, Defendant.
• Court: U.S. District Court — Northern District of Iowa

340 F. Supp. 628

Wayne JACKSON, Plaintiff, v. AMERICAN YORKSHIRE CLUB, Defendant.

Civ. No. 69-C-2020-C.

United States District Court, N. D. Iowa, C. D.

June 18, 1971.

Thomas L. McCullough, Sac City, Iowa, and M. Gene Blackburn, Maxwell, Iowa, for plaintiff.

Whitley M. Hemingway, Webster City, Iowa, for defendant.

MEMORANDUM AND ORDER

HANSON, Chief Judge.

This cause was tried to the Court without a jury. Jurisdiction is predicated and accepted by reason of diversity of citizenship and the requisite jurisdictional amount.

To facilitate an understanding of the issues in this controversy, the Court believes it is helpful to set forth some of the salient facts and the respective contentions of the opposing parties.

Plaintiff, Wayne Jackson, a resident of Calhoun County, Iowa, is a farmer engaged in the business of raising and selling purebred Yorkshire swine. Defendant, American Yorkshire Club, Inc., (AYC), is an organization incorporated under the Indiana Not For Profit Corporation statute. Defendant's corporate purpose is, as stated by its articles of incorporation:

The maintenance and publication of a record of the pedigrees of pure-bred Yorkshire swine owned in the United States, the preservation of purity of blood thereof by strict rules of registry, and the further introduction and improvement of such breed, the education and assistance of owners and breeders of such swine by dissemination of information and advice respecting such matters through publication of the Yorkshire Journal and similar publications.

One of the primary services rendered by the AYC to its members is the recordation of purebred Yorkshire swine and the issuing of registration papers evidencing that a particular hog is a purebred.¹ It is not disputed by either litigant that the success of a breeder and seller of purebred Yorkshire swine is dependent upon securing purebred registration papers for these animals. And since the AYC is the sole registry in the United States for purebred Yorkshires, membership in the AYC is necessary and vital to a profitable purebred hog breeding program. Plaintiff Wayne Jackson joined the AYC in 1967.

The crux of this law suit is plaintiff's suspension from membership and potential expulsion from the AYC for the alleged reason that one or more of plaintiff's hogs which were registered as purebred Yorkshires were in fact non-purebreds or cross-breeds. The suspension, which occurred on June 27, 1969, provided that plaintiff, d/b/a Crow's Yorkshire Farm, was suspended from membership and prohibited from registering any swine until certain conditions were met which were designed to correct the alleged false registration. The notice of suspension further provided that unless Wayne Jackson complied with these requests by December 1, 1969, his membership would be subject to termination.

On July 7, 1969, plaintiff commenced suit in the Calhoun County District Court in Iowa against the AYC. This suit was ultimately removed to this federal court. Plaintiff alleged in his Complaint that the AYC had acted tortiously as well as illegally in claiming certain of his hogs were not purebreds, in suspending him from membership and in refusing to register any more of plaintiff's swine until he complied with the terms of his suspension.

Subsequent to the commencement of this law suit, but prior to trial, the AYC initiated expulsion or termination procedures against plaintiff which this Court, upon motion, enjoined until the final determination of the pending law suit.

This cause was tried to the Court on a purely factual issue — whether certain of plaintiff's swine were or were not purebred Yorkshires. However, at this stage of the proceeding, it is incumbent upon the Court to ascertain whether this is the proper forum for resolution of such an issue. Thus, even though federal jurisdiction is present, the Court's concern is with its scope of review in this particular case.

The American Yorkshire Club is properly classified under the generic term of an incorporated association or club. There is a substantial body of law in respect to such organizations and, in particular, the matter of suspension or expulsion of members and the attendant scope of judicial review.

As a general rule, an organization like the AYC has the right of suspension and expulsion if this power is reflected in either the articles of incorporation or the by-laws. The grounds for which a member may be suspended or expelled are those expressly stated in either the charter or the by-laws or acts which violate the very precept for which the organization was founded.²

The articles of incorporation of the AYC (Defendant's Exhibit Z) do not specifically provide for suspension or expulsion of members but do state that the corporation shall possess those powers properly within the general scope of the corporation's business or incident thereto or necessary or convenient in the accomplishment of its corporate objects. The articles further provide that defendant corporation shall have the power to regulate and conduct the affairs of the corporation.

However, the by-laws of defendant corporation (Plaintiff's Exhibit 11) do provide, inter alia, the following: (1) That members comply with the By-Laws and Rules of Registry (Article 1, section 1) of the AYC; (2) That membership may be terminated at any time by the Board of Directors in the manner provided in the by-laws for violation of the by-laws or the Rules of Registry or for any other conduct deemed by the Board of Directors to be prejudicial to the best interests of the corporation (Article 1, section 1); (3) That memberships may be withdrawn at any time by the board of directors and terminated in the manner provided by the by-laws (Article 1, section 3).

Furthermore, Section 8 of Article 1 of the by-laws states:

Section 8. The membership of any person or corporation may be terminated at any Annual Meeting of the Board of Directors for conduct by such member in violation of the By-Laws or Rules of Registry of this corporation. The decision of the Board of Directors shall be made after a complaint in writing designating the charges against such member shall be furnished to him (it) and after such member has had an opportunity to be heard, and such decision shall be final and conclusive and the member whose membership is so terminated shall have no further rights in law or equity in or against this corporation, its officers, directors, or members. Such member's name shall be removed from the records of the corporation and the certificate or certificates evidencing such membership cancelled. Failure or refusal to surrender the certificate or certificates evidencing the membership so cancelled shall not continue in the holder thereof any rights of membership subsequent to the decision of the Board of Directors.

Thus, in respect to expulsion or termination of membership in the AYC, the corporate by-laws definitely and clearly provide the essential and basic procedures such as a hearing incidental to a valid expulsion. See Berrien v. Pollitzer, 83 U.S.App.D.C. 23, 165 F.2d 21 (1947); Schroeder v. Meridian Improvement Club, 36 Wash.2d 925, 221 P.2d 544; Werner v. Intern. Ass'n of Mach., 11 Ill.App.2d 258, 137 N.E.2d 100; Annotation, 20 A.L.R.2d 344 et seq.

In addition to these well-recognized precepts concerning the respective rights of both the organization and its members in respect to suspension and expulsion, there is also a comparable body of law touching upon the court's interference or intervention in controversies where the association is seeking to suspend or expel one of its members.

This applicable body of law can be distilled into one sentence. A court's scope of review is severely limited in cases wherein members have been either suspended or expelled from their organizations. A clear and concise statement in respect to the permissible scope of judicial review in matters such as the instant case is found in 6 Am.Jur.2d, Associations and Clubs, Section 37, wherein it is stated:

With regard to associations, societies, and clubs generally, the trial or hearing before the tribunal or officers of the organization is judicial or quasi-judicial in nature, and a court will not retry the case upon the facts or determine, as a matter of its own judgment, whether the members should have been suspended or expelled, but will limit its interference to certain other grounds. In such cases the courts never interfere except to ascertain whether or not the proceeding was pursuant to the rules and laws of the organization, whether or not the proceeding was in good faith, and whether or not there was anything in the proceeding in violation of the law of the land. If it is found that the proceeding was had fairly, in good faith, and pursuant to the laws of the organization, and that there was nothing in it in violation of the law of the land, the decision is conclusive. In other words, a member of an association, society, or club, who is suspended or expelled by the tribunal vested with authority in this respect, pursuant to a fair hearing in which he has been given an opportunity to appear and defend himself, conducted in accordance with the procedure established by the constitution or by-laws of the organization, has no recourse to the courts.

On the other hand, the expulsion or suspension of a member of a voluntary association, society, or club is not conclusive upon the civil courts if the organization, or its tribunal, acted without or exceeded its jurisdiction or powers; or if the disciplinary action was unwarranted or was based on insufficient grounds under the laws of the organization. Nor will the courts hesitate to interfere where the proceedings have not been conducted in accordance with the organization's own rules of procedure, or have been carried on contrary to the principles of natural justice, as where the accused member is given no proper notice of the charges and hearing and no

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