Strong v. Minneapolis Auto. Trade Ass'n
Decision Date | 17 February 1922 |
Docket Number | No. 22531.,22531. |
Citation | 186 N.W. 800,151 Minn. 406 |
Parties | STRONG v. MINNEAPOLIS AUTOMOBILE TRADE ASS'N. |
Court | Minnesota Supreme Court |
OPINION TEXT STARTS HERE
Appeal from District Court, Hennepin County; Jos. W. Molyneaux, Judge.
Action by A. W. Strong against the Minneapolis Automobile Trade Association. Judgment for the defendant, and from an order denying new trial, plaintiff appeals. Reversed, and case remanded.
One whose membership in a corporation has been terminated cannot question the validity of a by-law authorizing the repayment of his membership fee on the ground that the by-law, in disregard of section 6526, Gen. St. 1913, permits a partial distribution of the property of the corporation prior to its dissolution.
A by-law, though not expressly authorized by statute or the articles of incorporation, may operate as a contract between the corporation and its members so as to be binging on both. By surrendering his original certificate of membership and accepting one making his membership subject to the limitations contained in the by-laws, plaintiff made them part of his contract with defendant.
The by-law set out in the opinion was reasonable and applied to plaintiff.
An association cannot expel a member without an opportunity to be heard, particularly where his property rights will be affected by his expulsion. The rule holds good where cause for expulsion is conceded, but expulsion is discretionary. Fowler, Carlson, Furber & Johnson, of Minneapolis, for appellant.
G. A. Will, of Minneapolis, for respondent.
Defendant was incorporated in January, 1909, under the provisions of the statute relating to social, educational, and charitable corporations. Sections 6522-6527, G. S. 1913. The purpose for which it was organized was to give exhibitions and demonstrations of automobile construction and operation. There was a membership fee of $100, but no capital stock or annual dues. Qualifications for membership were to be prescribed by the by-laws. In December, 1910, the membership fee was increased to $500 by an amendment amplifying the statement of the objects of the association. Plaintiff was a dealer in automobiles from March, 1904, until some time in November, 1905, but at no time since. He was admitted to membership immediately upon the organization of defendant as a corporation and a certificate of membership issued to him.
When the articles of incorporation were first amended, the original certificates of membership were turned in for cancellation and new certificates taken out in lieu thereof. On October 2, 1912, plaintiff surrendered his certificate, and without an additional payment received one reciting that his membership was subject to the limitations contained in the articles of incorporation and by-laws, and that he was entitled to his proportionate share of the assets of the association. At a meeting held October 26, 1911, revised by-laws were adopted. Article 24 thereof read:
‘Whenever any member of the association ceases to become a dealer or a manufacturer of automobiles or ceases to be actively engaged in the automobile business either as manufacturer or dealer in the city of Minneapolis, the association may by a vote of three-fourths of the memberships issued and outstanding cancel such membership and retire the same by paying to the holder thereof the par value of said membership together with earned dividends and thereupon said membership shall terminate and the decision of the members relative to the fact whether or not, a member has ceased to be identified with the automobile business as herein provided shall be final and conclusive on that point and the members be the sole judges thereof.’
It was amended in June, 1912, by substituting the words ‘book value’ for ‘par value.’
At a meeting of the members on May 27, 1915, a motion was made and carried by a three-fourths vote to cancel plaintiff's membership and pay him $500 upon the surrender of his certificate. He was not present at the meeeting and had received no notice that action would be taken to terminate his membership. Subsequently he was tendered $500, but refused to accept it or give up his certificate. In 1918 he brought this action to establish his membership rights and have his certificate declared to be in full force and effect, or for judgment for its value, alleged to be not less than $2,000, and for an accounting to determine the amount he was entitled to receive if no longer a member. In its answer defendant asked that plaintiff's membership be declared terminated and his certificate canceled. Upon a stipulated statement of facts, the court made findings, and, as a first conclusion of law, found that the by-law was valid, and that defendant accepted membership pursuant to its conditions, and, as a second, that his membership was terminated by the action taken on May 27, 1915. Judgment was ordered terminating his membership and canceling his certificate upon the payment to him of $500. He has appealed from an order denying a motion for a new trial.
[1] 1. His first contention is that the by-law is void because it authorizes a distribution of the assets of the corporation in advance of its dissolution in disregard of section 6526, G. S. 1913. As we read his complaint, plaintiff's grievance is not that defendant proposes to give him a share in its assets, but that it does not offer him a larger share, though it is true he also questions...
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