Johnson v. New York Produce Exch.

• Decision Date: 26 May 1896
• Citation: 149 N.Y. 401,44 N.E. 84
• Parties: PEOPLE ex rel. JOHNSON v. NEW YORK PRODUCE EXCHANGE.
• Court: New York Court of Appeals Court of Appeals

149 N.Y. 401

44 N.E. 84

PEOPLE ex rel. JOHNSON

v.NEW YORK PRODUCE EXCHANGE.

Court of Appeals of New York.

May 26, 1896.

Appeal from superior court of New York City, general term.

Petition by Edwin L. Johnson for writ of mandamus to compel the New York Produce Exchange to restore him to membership. From an order of the general term, reversing an order refusing the writ (29 N. Y. Supp. 307), the exchange appeals. Reversed.

The appellant is a corporation created by special act of the legislature. Laws 1862, c. 359. The name of the original corporation was changed to the New York Produce Exchange by an act passed February 13, 1867, amending the charter, and several other amendatory acts were subsequently passed. The third section of the charter declared the purposes of the corporation to be ‘to provide and regulate suitable room or rooms for a produce exchange in the city of New York, to inculate just and equitable principles of trade, to establish and maintain uniformity in commercial usages, to acquire, preserve and disseminate valuable business information, and to adjust controversies and misunderstandings between persons engaged in business.’ It was authorized to ‘make all proper and lawful by-laws, not contrary to the constitution and laws of the state of New York or of the United States,’ and ‘to admit new members and expel any member in such manner as may be provided by the by-laws'; and the charter provided that the ‘property, business, and concerns' of the corporation should be managed by a president, vice president, treasurer, and 12 managers. The charter authorized the board of managers to elect annually 5 members of the association to act as an arbitration committee, to hear and decide any controversy which may arise between members, and as may be voluntarily submitted to said committee for arbitration, and authorized a formal submission to be made in writing of any controversy which might be the subject of an action at law or in equity, and an award to be made upon which a judgment of the supreme court might be entered. In 1864, many years before the relator became a member of the exchange, the corporation enacted the following by-law, which has remained unchanged from that time: ‘Sec. 32. Any member of the Produce Exchange who shall be accused of willful violation of the charter or by-laws, or of fraudulent breach of contract, or of any proceeding inconsistent with just and equitable principles of trade, or of other misconduct, shall, on complaint, be summoned before the complaint committee, when, if he desire, he shall be heard in his defense. Should the committee be unable to conciliate the disputants, or induce them to arbitrate, and the circumstances seem to warrant, the complaint shall be referred to the board of managers, when both plaintiff and defendant shall have an opportunity to be heard again in person, prior to final action in the case; and if, in the opinion of the board, the charge or charges against said defendant be substantiated, it may, by a vote of not less than two-thirds of all the members present, either censure, suspend, or expel him from the exchange.’

December 22, 1892, Whitman Bros., a firm, the members of which were members of the exchange, filed a complaint addressed to the chairman of the complaint committee of the exchange, accusing the relator ‘of proceedings inconsistent with just and equitable principles of trade, as follows: Nonfulfillment of contract of November 16, 1892.’ The relator and Whitman Bros., on due notice, appeared before the complaint committee on the next day. The subject-matter of the complaint was stated to the committee. The parties made their statements, respectively, in relation to the subject-matter of the complaint, and gave their explanations, and introduced various letters and memoranda bearing upon the transaction involved. The relator declined to submit the dispute to arbitration, and the committee, being unable to conciliate the disputants, referred the matter to the board of managers, pursuant to section 32 of the by-laws. On the hearing before the committee, it appeared that November 16, 1892, the relator executed and delivered to Whitman Bros. a contract in writing, as follows: ‘New York, November 16th, 1892. Messrs. Whitman Brothers, Produce Exchange, City-Gentlemen: We herewith confirm sale to you of 1,000 bbls. prime crude cotton oil from Sulphur Springs and Wolfe City, Texas, at 26 1/2 cts. per gallon, delivered New York City, in tank cars, to be furnished the mills by you as needed. Yours, very truly. Tank Cotton Oil Agency of New York. Edwin L. Johnson.’ Whitman Bros., on the 19th of November, forwarded one tank car from Little Rock, Ark., to Sulphur Springs, and another on the 22d of November, to receive the oil, and were about to forward cars to Wolfe City for the same purpose, but, being informed by the proprietor of the mill there that there was no oil to fill them, did not send them. The oil was not furnished. The relator was so informed, and he did not perform his contract. The price of oil largely advanced after the making of the contract, and, at the time of the hearing before the committee, the aggregate advance was, as was admitted by the relator, about $8,000. The complaint was founded upon the nondelivery of the oil. The relator claimed before the committee that, in making the contract, he acted as agent for the mills, and that Whitman Bros. had notice of the fact, and insisted that he was not personally liable to perform the contract. He did not claim he informed Whitman Bros. that he was acting as agent, but that from the face of the contract this was inferable, and that Whitman Bros. knew that he was a broker in oils. Whitman Bros. denied that they knew or supposed the relator was acting as agent, and insisted that the contract was made by him as principal. The complaint committee having referred the matter to the board of managers, the relator was notified that the matter would be heard before the board on the 28th of December. The parties appeared on that day. They respectively made their statements. The relator claimed, as before the complaint committee, that the contract was not binding upon him personally, and that he was acting as agent only, and could not contract the delivery of the oil. In the proceedings before the managers, which are set out in full in the record, is the following: ‘Mr. Outerbridge [one of the board]: Mr. Johnson, you read a letter from the president of the mills a few minutes ago, in which he stated that he had sold you this oil, that it was a very cheap purchase, etc. At the same time, you stated that you had bought no oil. Can you explain why he says he had sold you the oil? Mr. Johnson: If he had sold me the oil, why should he pay me the commission? Mr. Romer: He could have sold you less the commission. Mr. Johnson: I never yet had the commission when I was the purchaser of the oil.’ After the hearing, the board of managers, by a unanimous vote, suspended the relator during the pleasure of the board, and this is the action sought to be reversed in this proceeding. The by-laws of the exchange required that a person becoming a member should sign ‘an agreement to abide by the charter, by-laws, and rules of the exchange,’ and the relator conformed to this regulation.

Abel E. Blackmar, for appellant.

Ben. L. Fairchild, for respondent.

ANDREWS, C. J. (after stating the facts).

The relator, by the action of the board of managers, has been deprived of a valuable right appertaining to membership in the exchange; and if the...