Moffatt v. Board of Trade of Kansas City

• Decision Date: 20 May 1913
• Citation: 157 S.W. 579,250 Mo. 168
• Parties: E. O. MOFFATT et al. v. BOARD OF TRADE OF KANSAS CITY et al., Appellants
• Court: Missouri Supreme Court

157 S.W. 579

250 Mo. 168

E. O. MOFFATT et al. v. BOARD OF TRADE OF KANSAS CITY et al., Appellants

Supreme Court of Missouri, Second Division

May 20, 1913

Appeal from Jackson Circuit Court. -- Hon. William B. Teasdale Judge.

Reversed.

Kimbrough Stone and Frank Hagerman for appellants.

(1) The nature of an organization like the Board of Trade. Tompkins v. Saffrey, L. R. 3 App. Cas. 213; Law & Customs of the Stock Exchange, by Melsheimer & Gardner (3 Ed. London, 1891), 98, 102; Clark v. Foss, 7 Biss. 547 555; Bisbee and Simons Produce Exchanges, Pref. 6; White v. Brownell, 2 Daly, 329; Leech v. Harris, 2 Brewst. (Pa.) 571; In re Haebler, 149 N.Y. 414; American Com. Co. v. Live Stock Exchange, 143 Ill 226; Dos Passon on Stock Exchange, 15; 23 Am. & Eng. Ency. Law, 749, 751; Seymour v. Bridge, 14 Q. B. D. 465; Belton v. Hatch, 109 N.Y. 593; Telegraph Co. v. Smith, 47 Hun, 505; Board of Trade v. Nelson, 162 Ill. 431; People v. Commercial Assn., 18 Abb. Pr. 271; Vaughn v. Herndon, 91 Tenn. 64; People v. Board of Trade, 80 Ill. 134; Grain & Stock Exchange v. Board of Trade, 15 F. 847; Evans v. Chamber of Commerce, 86 Minn. 448. (2) There is a vast difference between the rights of a member of a voluntary, unincorporated institution, and those of a shareholder of a corporation. 1 Thompson on Corporations, sec. 846; Bacon on Benefit Societies, sec. 89; Niblack on Benefit Societies, secs. 30, 22, 23, 73, 74, 75; Kehenbeck v. Logeman, 10 Daly, 447; Ellerbe v. Faust, 119 Mo. 653; White v. Brownell, 2 Daly, 358; Lewis v. Wilson, 121 N.Y. 285; State v. Merchants' Exchange, 2 Mo.App. 96; State v. Odd Fellows, 8 Mo.App. 154; People v. Board of Trade, 80 Ill. 136; Albers v. Merchants' Exchange, 138 Mo. 140; Borgraefe v. Supreme Lodge, 22 Mo.App. 142; Warren v. Merchants' Exchange, 52 Mo.App. 167; Levy v. Magnolia Lodge, 110 Cal. 297; Greer, Mills & Co. v. Stoller, 77 F. 1. (3) While there may be provisions that will be condemned as by-laws, yet, where the provision is part of the original contract, the rule as to the reasonableness or unreasonableness as a by-law cuts no figure. Niblack on Benefit Societies, sec. 23; Bacon on Benefit Societies, sec. 87; Society v. Vandyke, 2 Wharton, 309; Levy v. Magnolia Lodge, 110 Cal. 297; Albers v. Merchants' Exchange, 138 Mo. 140. (4) There is power to expel, under section 1, article 8 of the constitution, any member who refuses to promptly and faithfully fulfill his business obligations, and who refuses to equitably and satisfactorily adjust and settle the same. Farmer v. Board of Trade, 78 Mo.App. 557; Dickinson v. Chamber of Commerce, 29 Wis. 45; People v. Board of Trade, 45 Ill. 112; Albers v. Merchants' Exchange, 138 Mo. 140; White v. Brownell, 2 Daly, 358; Lewis v. Wilson, 121 N.Y. 284; Payne v. Crawford, 97 Ala. 604; Greer, Mills & Co. v. Stoller, 77 F. 1; In re Haebler, 149 N.Y. 414. (5) There was the right to try respondents for dishonest practices and conduct detrimental to the best interests of the association. Farmer v. Board of Trade, 78 Mo.App. 557; Gladish v. Bridgeford, 113 Mo.App. 726; Albers v. Merchants' Exchange, 138 Mo. 140; State ex rel. v. St. Louis Med. Soc., 91 Mo.App. 76; Brandenburger v. Jefferson Club, 88 Mo.App. 148; Lawson v. Hewel, 118 Cal. 613; Niblack Benefit Societies, sec. 75; People v. Board of Trade, 80 Ill. 134; Baxter v. Board of Trade, 83 Ill. 146; Sturgis v. Board of Trade, 86 Ill. 441; Pitcher v. Board of Trade, 121 Ill. 412; Board of Trade v. Nelson, 162 Ill. 431; Greene v. Board of Trade, 63 Ill.App. 446; In re Haebler, 149 N.Y. 414; Osceola Tribe v. Schmidt, 57 Md. 106; Gregg v. Medical Society, 111 Mass. 193; Board of Trade v. Weare, 105 Ill.App. 299. (6) In any event, no injunction should have been issued before the trial. (7) The respondents have ceased to be members, by reason of having relinquished any right to complain, by virtue of section 11, article 5, of the constitution. Grosvenor v. United Societies, 118 Mass. 78; 2 Parsons on Contracts (8 Ed.), secs. 713, 417; Pierce v. Parker, 4 Met. 80; Fuller v. Railroad, 67 Md. 433; Donald v. Railroad, 93 Iowa 284. (8) There was error in excluding the record of the Board of Directors of October 13, 1906. Farmer v. Board of Trade, 78 Mo.App. 557. (9) Vice of the decree in enjoining a trial until the claim against respondents was arbitrated. Bigelow on Estoppel (5 Ed.), 673, 689-690, 693-694; 11 Am. & Eng. Ency. Law (2 Ed.), 446; Railroad v. Howard, 13 How. 307; Railroad v. McCarthy, 96 U.S. 258; Daniels v. Tearney, 102 U.S. 415; Davis v. Walker, 156 U.S. 680; Brooks v. Laurent, 98 F. 647, 39 C. C. A. 209.

Harkless, Crysler & Histed for respondents.

(1) A voluntary association like a Board of Trade cannot transcend the limits of natural justice, the public policy of the State, or violate its own rules or deal capriciously with its members by fraudulent devices and pretenses. The rules and regulations constitute a contract between the members respectively of the board, and the board cannot over-ride, violate, or usurp its own rules in order to accomplish some ulterior motive, or be itself a party to the violation of its own rules. Hoeffner v. Grand Lodge, 41 Mo.App. 359; Mulroy v. Supreme Lodge, 28 Mo.App. 463. (2) The proceedings to expel a party from membership must be strictly pursued and the member cannot be expelled where the rules and regulations vest power in the Arbitration Committee to determine the dispute, until the committee decides, and the member refuses to thereafter comply with the committee's award and the board cannot arbitrarily usurp that power themselves. The rules and regulations having provided that all disputes of a mercantile or commercial character must be submitted to arbitration, is an exclusion of all other power or body to determine. (3) The board cannot put an end to membership merely at the caprice of the directory. Farmer v. Board of Trade, 78 Mo.App. 564.

BLAIR, C. Roy, C., concurs.

OPINION

BLAIR, C.

This appeal is prosecuted from a decree of the circuit court of Jackson county making perpetual an injunction issued to restrain defendants, as officers and directors of the Board of Trade of Kansas City, from further pursuing proceedings alleged to have been instituted to expel plaintiffs from membership on that board.

The case was originally appealed to this court, and subsequently transferred on jurisdictional grounds to the Kansas City Court of Appeals, where it was heard and the judgment ordered affirmed in an opinion by Judge Johnson in which Judge Broaddus concurred and from which Judge Ellison dissented stating he entertained a different view of the facts and deemed the opinion in conflict with certain decisions of this court. The case was then transferred here, in due time docketed, and, after several continuances by agreement of the parties, the record is submitted for judgment. Plaintiffs and defendants are members of the Board of Trade of Kansas City (hereafter referred to as the Board of Trade) a voluntary association whose declared objects are: "To maintain a board of trade; to promote uniformity in the customs and usages of merchants; to inculcate principles of justice and equity in business; to facilitate the speedy adjustment of business disputes; to inspire confidence in the business methods and integrity of the parties hereto; to collect and disseminate valuable commercial and economic information, and generally secure to its members the benefits of co-operation in the furtherance of their legitimate pursuits, and to promote the general welfare of Kansas City."

Plaintiffs were officers and directors of the Moffatt Commission Company (hereafter referred to as the Moffatt Co.), and at all times herein mentioned there was in force a provision of the constitution of the Board of Trade to the effect that all provisions of the by-laws and constitution relative to arbitration, settlement and adjustment of claim should "apply to firms and corporations, so that each member of the Board of Trade, who is a member of a co-partnership, or officer, director or stockholder of a corporation shall be required to see to it that the same proceedings shall be had as to the debts or claims of such partnerships or corporation as is required as to his own debts or claims, and his membership shall, in the discretion of the directors, be subject to like fines, suspensions and penalties for the default of his firm or corporation as it would be for his individual acts."

The proceedings to expel plaintiffs were initiated by Goffe, Lucas & Carkener, partners and members of the Board of Trade, who claimed plaintiffs owed them for a car of grain destroyed by high water after, as they contended, delivery had been made. Plaintiffs denied all liability. The sale occurred, if at all, on May 29, and the car in question and some eight hundred others belonging to various owners, and similarly situated with respect to the title to the grain they contained, were caught in an extraordinary flood and all the grain in them destroyed.

On June 5 the board of directors of the Board of Trade adopted the following:

"Resolved that after mature consideration and after taking legal advice, it is the sense of this directory that on all sales of track grain and grain products, the title passed at the time the sale was made and the ticket passed."

This was the exact question then in dispute between the Moffatt Co. and Goffe, Lucas & Carkener, plaintiffs maintaining the negative thereof.

On June 8, Goffe, Lucas & Carkener by letter requested the board of directors of the Board of Trade to take up the question of the Moffatt Company's indebtedness to them and order payment if they were entitled to the money claimed. On the same date the directors took up this matter, and plaintiff Moffatt appeared and...