State ex rel. Kennedy v. Union Merchants' Exch. of the City of St. Louis

• Decision Date: 25 April 1876
• Citation: 2 Mo.App. 96
• Parties: STATE OF MISSOURI, ex rel. ANDREW T. KENNEDY, Respondent, v. UNION MERCHANTS' EXCHANGE OF THE CITY OF ST. LOUIS et al., Appellants.
• Court: Missouri Court of Appeals

2 Mo.App. 96

STATE OF MISSOURI, ex rel. ANDREW T. KENNEDY, Respondent, v. UNION MERCHANTS' EXCHANGE OF THE CITY OF ST. LOUIS et al., Appellants.

Court of Appeals of Missouri, St. Louis.

April 25, 1876

1. An unreasonable by-law of a corporation is void.

2. A by-law will not be declared void for unreasonableness unless that conclusion is perfectly clear.

3. A by-law of the Union Merchants' Exchange which compels members to submit their business controversies to arbitration, on pain of suspension or expulsion, is unreasonable and void.

4. Neither would a legislative grant, in the charter, of permission to make such a by-law avail.

J. O Broadhead and Broadhead & Overall, for appellants, cited Bryan v. Pike Benevolent Society, 8 Watts & S. 247; B & W. S. Society v. Vandyke, 2 Whart. 309; Ang & Ames on Corp. (6th ed.), secs. 415-418; Ib. (9th ed.), secs 415-418, 441-449, and notes; Ex parte Long, 29 Eng. Law & Eq. 194; Queen v Evans, 3 El. & Bl. 362; Green's Brown's Ultra Vires, 44, 45, and notes; High on Rem. 206, sec. 292, p. 208, sec. 295, and note; Wag. Stat. 1037, sec. 22, ch. 110; Society of Visitation v. Commonwealth ex rel., 52 Penn. 125; 23 Mo. 449; 27 Mo. 225; High on Rem. 211, secs. 301, 302, p. 212, sec. 302, and note.

Marshall & Barclay, for respondent, cited: Jaccard v. Anderson, 32 Mo. 188; State ex rel. v. Everett, 52 Mo. 95; Stephen's Pl. 143; Harper v. Mayor of New York, 17 Wend. 199; People ex rel. v. Mayor of New York, 7 How. Pr. 81; Taylor v. Griswold, 2 Green L. 223; King v. Liverpool, 2 Burr. 731; King v. York, 5 Durnf. & E. 76; King v. Hereford, 6 Modern 309; Ang. & Ames on Corp. (9th ed.), sec. 7; Ib., secs. 410, 432; State ex rel. v. Chamber of Commerce, 20 Wis. 63; People v. Medical Society of Erie, 24 Barb. 570; Fawcett v. Charles, 13 Wend. 473; Commonwealth v. Guardians of Poor, 6 Serg. & R. 469; State ex rel. v. Georgia Medical Society, Am. Corp. Cases, 328; Evans v. Philadelphia Club, 50 Pa.St. 107-115; King v. Feversham, 8 T. R. 352-356; Farmers' Loan Co. v. Carroll, 5 Barb. 613-649; Toler v. Hayden, 18 Mo. 399; Walt v. Huse, 38 Mo. 210; Berch v. Schneider, 27 Mo. 101; McCloon v. Beattie, 46 Mo. 391; King v. Doncaster, 2 Burr. 738; People v. St. Francis Society, 24 How. Pr. 218; Carter v. Sanderson, 5 Bing. 79; Scriveners' Co. v. Brooking, 2 Gal. & Dav. 419; Dunham v. Rochester, 5 Cow. 462; Kennebec R. R. Co. v. Kendall, 31 Me. 470; Cartan v. Father Matthew Society, 3 Daly 20; Perry on Tr. (1st ed.), secs. 411-491; State v. Burkhardt, 59 Mo. 75; State v. Lafayette County, 41 Mo. 545; Commonwealth v. St. P. Society, 2 Binn. 441,

OPINION

BAKEWELL J.

This is a proceeding by mandamus to compel the appellants to reinstate the relator as a member of the Union Merchants' Exchange of St. Louis.

It appears that relator is a general provision and commission merchant of St. Louis; that defendant, the Union Merchants' Exchange, is an incorporated institution, of which the other defendants are directors; that the Exchange numbers amongst its members one thousand merchants and business men of St. Louis, and occupies commodious rooms in which these merchants daily meet to trade, and where, at the common cost of the members, and for their exclusive benefit, they daily receive trade reports from the chief commercial centers of the world; that this Exchange is the business mart of St. Louis, and owns valuable personal property, in which all the members have a vested interest; that relator became a member of said Exchange on July 18, 1871, and has, up to the time of alleged wrong complained of by him, remained so; and that, on July 17, 1874, he was suspended from membership by the directors, and has since that date been denied access to the floor of the Exchange, and deprived of all the benefits of membership.

These facts are set up in the petition, and are not denied in the return to the writ. An alternative writ was issued; and, in their second amended return to this writ, the appellants set up that, prior to their incorporation, the Union Merchants' Exchange had long existed as an association of merchants of St. Louis, with rules, regulations, and by-laws to which members were required to assent; that, by its charter, it has power to make such rules and regulations as may be proper and needful, and possesses all other general powers incident to corporations, and not inconsistent with the laws of Missouri and of the United States; that, by said charter, the existing rules, regulations, and by-laws are declared the rules of the corporation until regularly repealed or changed; that the by-laws and regulations now in existence were legally enacted in accordance with the charter, and were in force when plaintiff's relator was admitted as a member; and that he applied to be admitted subject to the existing rules and by-laws, of which he had full knowledge, and was admitted subject to those rules; and that he has, knowingly and deliberately, violated these rules, and been lawfully suspended, in accordance with the by-laws, for this violation of the laws of the association; that he has, by the by-laws, a legal right to apply to be reinstated in his rights as a member, and has neglected to do so. This is a mere outline of the substantial features of the return to the writ. It is not necessary, for the purposes of this opinion, to set it out in detail, nor to refer to any technical objections made to it in the demurrer filed by the relator of plaintiff. The demurrer was sustained, and a peremptory writ ordered; and, a motion for a new trial and rehearing having been overruled, the cause is brought before us by appeal.

The by-laws of the Union Merchants' Exchange are set out in full in the return; and the offense committed by relator, for which he was suspended, was a refusal to comply with an award of arbitrators, to which he had, in accordance with the by-laws, agreed in writing to submit.

If the by-laws violated were not reasonable, they cannot be enforced. If, then, this point must be decided against the appellant, it will not be necessary to consider the many other questions presented for our consideration in the very carefully prepared briefs submitted by the counsel on either side.

The by-laws in question are rule 6, section 7, beginning " and any member" to " suspension," down to and including section 11. Then sections 15, 17, 18, 19, and 20.

The law is not opposed to arbitration. On the contrary, it is said to be the policy of the law to encourage these domestic tribunals, although they may, if they choose, disregard the rules of law in their decisions. Indeed, it is probably the very fact that they are not bound by legal rules, nor by the principles of that equity which follows the law, more than anything else, that has led the courts to say that arbitration is looked upon with favor. This was first said when the law as to the introduction of evidence excluded as witnesses, not only the parties themselves, but every person having an interest, though remote, in the matter in controversy; so that it must have been felt that, in many cases, justice was promoted by a submission to a tribunal which could get at facts that the courts could not regard. In many cases the rules of law and the inflexible principles of equity, which cannot be made to bend to meet the hardship of each particular case, must necessarily work injury and wrong to individuals, and, when ...