State ex rel. Crane v. Chamber of Commerce of Minneapolis
| Decision Date | 17 July 1899 |
| Docket Number | 11,712 - (103) |
| Citation | 79 N.W. 1026,77 Minn. 308 |
| Parties | STATE ex rel. JAY W. CRANE and Another v. CHAMBER OF COMMERCE OF MINNEAPOLIS and Others |
| Court | Minnesota Supreme Court |
Alternative writ of mandamus issued by the district court for Hennepin county requiring defendants Chamber of Commerce and its president and secretary to transfer to relator Robbins a certain certificate of membership or to show cause why they had not done so. The case was tried before Elliott, J., who found in favor of defendants; and from an order quashing the writ, relators appealed. Reversed.
Certificate of Membership -- Transfer -- Bankruptcy of Holder -- Discharge from Unpaid Debts.
The respondent corporation was organized to facilitate buying and selling of products, to inculcate principles of justice and equity in trade, and to facilitate speedy adjustment of business disputes among its members. It had no capital stock but the price of a certificate of membership was $1,000. The rules of the corporation provided that, after a proposed member was elected, he should pay that sum, or present a membership certificate, duly transferred to himself, and pay a transfer fee of $15; that notice of a proposed transfer of such a certificate should be given the members by posting the same for 10 days, and, "if no objection shall have been made on account of any unsettled contracts, claims, demands or complaints against the holder of such membership," it may be transferred, but, if there are objections, the board of directors shall, upon a hearing, determine the sufficiency of the same. A member was adjudged a bankrupt in the United States district court, and was, by order of the court, discharged from his debts. His trustee in bankruptcy sold his certificate to a person who was duly elected a member of the corporation, and who presented the certificate, and tendered the $15 fee. Notice of the proposed transfer of the certificate was posted. Two members who held claims against the bankrupt, which were barred by the order discharging him from his debts, objected to the transfer, because such debts were not paid. Held, the debts so barred gave the objectors no standing to make the objection, and a writ of mandamus will lie to compel the corporation to transfer the certificate.
Charles R. Fowler, for appellants.
Rule 12, as applied to transfers of membership, is void for uncertainty, ambiguity, and indefiniteness, and as being unreasonable, vexatious, and oppressive. A by-law must be free from ambiguity, and afford complete protection to those who are to obey it. 1 Beach, Priv. Corp. § 308. The usage of the chamber in construing the by-law was not binding. Manson v. Grand Lodge A.O.U.W., 30 Minn. 509. The rule, as construed by defendants and by the court, is void as against public policy and an unlawful restriction on the alienation of personal property. Property is the right of dominion, possession, and power of disposition. Braceville v. People, 147 Ill. 66; 23 Am. & Eng. Enc. 637. Whatever rights in property a man has are alienable. Gray, Restr. Alien. § 166. A by-law restricting alienation is void as in restraint of trade. Moore v. Bank, 52 Mo. 377. See People v. Fire Department, 31 Mich. 458; Morse v. Blood, 68 Minn. 442; Albers v. Merchants, 39 Mo.App. 583, 598. Membership is property, and passes to a trustee in bankruptcy, subject only to the conditions and restrictions attaching to it in the hands of the bankrupt. In re Ketchum, 1 F. 840; Hyde v. Woods, 94 U.S. 523; In re Warder, 10 F. 275. The law discountenances all attempts by corporations to prevent sale and transfer of stock. 1 Cook, Stock & Stockh. § 408; Baldwin v. Canfield, 26 Minn. 43; Sargent v. Franklin, 8 Pick. 90; Driscoll v. West, 36 N.Y.S. Ct. 488; Farmers v. Wasson, 48 Iowa 336.
As construed by defendants and the court, the rule is ultra vires. Albers v. Merchants, supra; People v. New York, 149 N.Y. 401, 411; Haebler v. New York, 149 N.Y. 414, 428; Rochester Ins. Co. v. Martin, 13 Minn. 54 (59); Thomas v. Railroad Co., 101 U.S. 71, 82; People v. Chicago, 170 Ill. 556; Kolff v. St. Paul F. Ex., 48 Minn. 215; Bergman v. St. Paul M.B. Assn., 29 Minn. 275, 278; Bisbee, Law Prod. Ex. § 48. The directors had no jurisdiction to pass on the objections to membership. No conduct contrary to principles of justice and equity in trade was charged. In re Haebler, 15 Misc. (N.Y.) 42; People v. New York, supra; Haebler v. New York, supra; People v. New York, 8 Hun, 216, 219. No debt or claim existed on which to base objection. The debt was barred. St. Anthony Falls W.P. Co. v. Greely, 11 Minn. 225 (321); Trebby v. Simmons, 38 Minn. 508; Humphrey v. Carpenter, 39 Minn. 115; In re Doty, 16 N.B.R. 202. There can be no estoppel when the directors were acting without the corporate powers. People v. Chicago, supra; Greene v. Board, 174 Ill. 585; People v. New York, supra; Ryan v. Cudahy, 157 Ill. 108, 118; State v. Milwaukee, 47 Wis. 670, 680. See Ex parte Saffery, L.R. 4 Ch. D. 555, 561.
Wilson & Van Derlip, for respondents.
The Chamber of Commerce has power to prescribe conditions of membership. G.S. 1894, § 2983, subd. 5. The enactment of the rule in question is within the express terms of the statute. Brent v. President & Directors of Bank, 10 Pet. 596; Pitcher v. Board, 121 Ill. 412; 23 Am. & Eng. Enc. 769; People v. Board, 45 Ill. 112; Thompson v. Adams, 93 Pa. St. 55; Board v. Nelson, 162 Ill. 431; Com. v. Union, 135 Pa. St. 301. Such associations have of necessity the right to attach to membership such conditions as may be deemed proper to carry out the purposes of their organization. Board v. Nelson, supra. Such by-laws are valid, if any object of the association is promoted thereby. People v. Board, supra; State v. Milwaukee, 47 Wis. 670; Morawetz, Corp. § 494; Com. v. Union, supra; People v. New York, 149 N.Y. 401. The rules and regulations become the terms or rights of membership. Hyde v. Woods, 94 U.S. 523. See also Board v. Nelson, supra; Brent v. President & Directors of Bank, supra; Belton v. Hatch, 109 N.Y. 593; Powell v. Waldron, 89 N.Y. 328; Platt v. Jones, 96 N.Y. 24; Londheim v. White, 67 How. Pr. 467; Ritterband v. Baggett, 4 Abb. Pr. (N.C.) 67; 1 Thompson, Corp. § 955; 5 Am. & Eng. Enc. (2d Ed.) 88. Such associations have inherent power by rules or by-laws to disfranchise or expel members. 23 Am. & Eng. Enc. 759, note 2. The members of the stock exchange may agree to be governed by such rules as they think proper, not in conflict with the law of the land; and for a violation of such rules may suspend or expel a member, after a fair and orderly hearing, according to the constitution and by-laws. 23 Am. & Eng. Enc. 761, note 1; Matthews v. Associated, 136 N.Y. 333; People v. New York, 149 N.Y. 401; Haebler v. New York, 149 N.Y. 414; Lafond v. Deems, 81 N.Y. 507; Com. v. Union, supra. There is no difference between incorporated and unincorporated associations in this respect. 4 Am. & Eng. Enc. (2d Ed.) 595; Board v. Nelson, supra; People v. Board, 80 Ill. 134.
One accepting membership accepts it subject to all the conditions thereof. Belton v. Hatch, supra; 23 Am. & Eng. Enc. 768, 769; Powell v. Waldron, supra; Hyde v. Woods, supra; White v. Brownell, 3 Abb. Pr. (N.S.) 318, 4 Abb Pr. (N.S.) 162; 5 Am. & Eng. Enc. (2d Ed.) 100; Com. v. Union, supra; Greene v. Board, 63 Ill.App. 446; Haebler v. New York, supra; 1 Thompson, Corp. § 941; 23 Am. & Eng. Enc. 767; Lewis v. Wilson, 50 Hun, 166. Such member is conclusively presumed to know and to accept the rules. White v. Brownell, supra; Board v. Nelson, supra; Haebler v. New York, supra; O'Brien v. Grant, 146 N.Y. 163; Belton v. Hatch, supra; Weston v. Ives, 97 N.Y. 222; Com. v. Union, supra; People v. Board, 45 Ill. 112. Where the rules provide for a body to pass on and enforce the conditions of membership, its finding is conclusive. 23 Am. & Eng. Enc. 763; White v. Brownell, supra; Lewis v. Wilson, supra; Thompson v. Adams, supra; Greene v. Board, supra. The discretion of the court cannot be substituted. Nichols v. Eaton, 91 U.S. 716; Pitcher v. Board, supra; Board v. Nelson, supra; Com. v. Union, supra; Haebler v. New York, supra; People v. New York, supra. Such boards are not bound by the rules of courts. If the investigation be bona fide, and after opportunity to be heard, it is conclusive. Brent v. President & Directors of Bank, supra; Hutchinson v. Lawrence, 67 How. Pr. 38, 53; Board v. Nelson, supra; Vaughn v. Herndon, 91 Tenn. 64; Hurst v. New York, 100 N.Y. 605; Lewis v. Wilson, supra; Com. v. Union, supra. Such determinations are analogous to awards by tribunals of the parties' own choosing. 23 Am. & Eng. Enc. 763, note 2; Board v. Nelson, supra; Com. v. Union, supra. Courts are restricted to the question of the jurisdiction of such boards under rules or by-laws legally enacted, and cannot inquire into the merits of a matter decided by them. 23 Am. & Eng. Enc. 763, 764, 773; Pitcher v. Board, supra; Gregg v. Massachusetts, 111 Mass. 185; Barrows v. Massachusetts, 12 Cush. 402; Lewis v. Wilson, supra; State v. Milwaukee, supra; Board v. Nelson, supra; Vaughn v. Herndon, supra; Appeal of Sperry, 116 Pa. St. 391; Ryan v. Cudahy, 157 Ill. 108; Com. v. Union, supra; White v. Brownell, supra.
Rules of an association like defendant, giving its members a preference or advantage over nonmembers do not conflict with and are not affected by, bankruptcy or similar acts. Hyde v. Woods, supra; O'Brien v. Grant, supra; 23 Am. & Eng. Enc. 769, 771, 772; Belton v. Hatch, supra. The proceedings in this case were regular. The application to transfer was made by Crane, who would be in law the applicant referred to in the rule. Platt v. Jones, supra; Belton v. Hatch, supra. By appearing before the board, relators waived any irregularity in the...
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