Majority
p. 162New York Common Pleas ; General Term,Headnote
The New York “Open Board of Brokers.”—Rights of Members.The Open Board of Brokers in the city of Hew York is not a copartnership, within the operation of the equitable remedies afforded by the courts for the protection of the rights of partners as between themselves.
Nor is that board a corporation, in such sense as to render it subject to the rules by which courts of equity interfere to restore a corporator who has been unlawfully expelled or disfranchised, to his privileges of membership.
As the privileges of membership in a voluntary unincorporated association are not conferred by the sovereign power, but are merely created by the organization itself, courts of law cannot compel the admission of an applicant for membership, nor interfere to restore a member who has been deprived for non-compliance with the conditions on which membership is made to depend.
In a suit for an injunction to restrain the officers of a voluntary incorporated association from carrying into effect a resolution or vote suspending the plaintiff from membership, the only question which can arise is, whether the plaintiff was suspended in accordance with the constitution and by-laws of the association. Unless they were violated by the proceedings against him, he has no ground of complaint. Those who become members of such associations are bound by their rules, not being in conflict with the law of the land; and the courts can interfere no further than to hold the association to a fair and honest 'administration of those rules.
The decision at special term in the case of White v. Brownell, 3 Ante, 318, —affirmed.
Appeal from an order at special term, granting a motion to dissolve an injunction.
The general facts out of which the controversy in this action arose, are fully stated in the report of the decision appealed from (3 Ante, 318). The case now came before
p. 163the general term on an appeal "by the plaintiff from the order dissolving his temporary injunction.
William C. Barrett, for the appellant.
First. The plaintiff is a member of the Open Board of Stockbrokers in the city of New York. This board is a voluntary association of individuals, organized under no statute, nor other special enactment, its object being to afford the members the conveniences of a public mart or stock exchange. The plaintiff was lately suspended by the defendant Brownell (as president of the board) from membership. Deeming such action to be void, he commenced this suit, for the purpose of testing that question, and obtained a temporary injunction restraining the board from further interference with his rights, privileges and franchises as a member of the association.The facts which led to his suspension were these : on the 18th of February, 1867, Mr. White made a contract with the firm of Curry, Martin & Go., who are also members of the board, whereby he agreed to sell to them, and they agreed to purchase from him, one thousand shares of the capital stock of the Hudson River Railroad Company at the price of $128 per share. By the terms of this contract, the stock was to be delivered, and the contract price paid at any time which might suit Mr. White’s pleasure during the year of 1867. Afterwards, and on the 18th day of April, 1867, the Hudson River Railroad Company adopted certain resolutions for the increase of the capital stock of the company. The effect of these resolutions was to permit any person who appeared to be a stockholder upon the books of the company, on April 10, 1867 (when the books were closed), to subscribe for as many shares of the increased stock as he held of the old, by paying either the sum of $50 per share in cash, and thereupon at once receiving the new shares; or by paying the sum of $54 per share in installments ; and thereupon receiving the new shares on October 15, 1867. On April 10, 1867, but after the transfer boohs of the Company had been closed, and when it was too late for a person not then
p. 164a stockholder to subscribe for the new stock, Currie, Martin & Co. notified Mr. White that they elected to subscribe for the additional stock. • This was the only notice which Mr. White ever received from them." They never told him whether they desired cash stock at $50 per share, or time stock at $54 per share; nor did they ever tender him any money to enable him to effect. such subscription. Mr. White, in fact, was not then a stockholder, and had no intention of becoming one until such time as in the exercise of the option conferred upon him by the contract, he made the necessary purchase wherewith to fullfil said contract. Each of the parties from time to time deposited in the United States Trust Co., as security for the faithful performance of the contract, various sums of money, amounting in the aggregate to $55,000 each.On September 5,1867, Currie, Martin & Co. called upon the plaintiff to put up-$10,000 margin beyond the $55,000 already on deposit. At this point the dispute arose. C., M. & Co. claimed that the plaintiff was bound to deliver them 2,000 shares of stock upon this contract calling for but 1,000. If they were right in that demand, then the plaintiff was deficient in margin. If they were wrong, then'the plaintiff had an abundance of margin. C., M. & Co. claimed that, according to some Wall-street usage, where a party makes a contract for the delivery of stock at a future day, all dividends 'declared by the company between the date of the contract and that of the delivery, enured to the benefit of the purchaser; and they insisted that this increase of the capital stock was in the nature of a dividend, and that they thus became entitled to the additional 1,000 shares, which it was the option of the stockholders to subscribe for or not, at their pleasure. Mr. White declined to acknowledge the correctness of this position, and refused to deposit additional margin, asserting, as was the-fact, that his margin was ample as security for the delivery of 1,000 shares of the stock. C., M. & Co. then took measures to close the transaction, in their way, and according to their ideas of legality and fitness, by purchasing 2,000 shares of the stock at the board. This
p. 165was done against the solemn protest of the plaintiff) and thereupon they rendered him an account, claiming a deficiency of $69,633.34, which they insisted was due to them upon the "basis of the claim above referred to. They then cited Mr. White to appear before the arbitration committee of the board, to have the matter in dispute adjudicated by the so-called tribunal. This Mr. White declined to do; and he protested against the jurisdiction of the arbitration committee. Notwithstanding Mr. White’s protest, this extraordinary tribunal sat ex-pcirte, and heard 0., M. & Co.’s case, and, so to speak, granted a judgment by default against Mr. White ; finding that he was bound to deliver 2,000 shares, instead of the 1,000 contracted for, and that he must pay the amount of the difference between the contract price and the market value of the 2,000 shares ($69,633.34). Upon this misnamed. “ adjudication,” and upon this alone, Mr. White was suspended from his membership, under a provision in the constitution and by-laws, which declared that whenever a member is in default in any contract, the president of the board shall at once declare the member so reported suspended from all the privileges and immunities of the organization. The only evidence which the board had that Mr. White was in default, was the "adjudication” of this arbitration committee, who had heard and decided the case upon the assumption that they possessed the same power as this court in granting an inquest upon the call of the calendar at trial term.Second. The following points are made:—I. That the Open Board of Brokers is a voluntary association subject to equitable jurisdiction, and to be treated in a court of equity by those rules which govern hi the cases of the partnerships.II. That even if it be treated strictly as a voluntary association and not in any respect a partnership, the plaintiff is still entitled to the redress which he seeks.III. That the suspension of the plaintiff was wholly illegal, and was not even regular under the constitution and by-laws of the board itself.
p. 166IV. That the entire equity of the bill is admitted, and that the case stands as upon the final hearing, and that in every conceivable aspect of the case, the plaintiff was entitled to the injunction.The defendant’s argument admitted that it would be perfectly monstrous that bodies of men formed into voluntary associations for private purposes under private contracts, should create tribunals with the power of adjudicating upon, and working forfeitures of private property, yet he claimed that they might make such provisions as they pleased—by contract between the members— for the adjudication of their disputes and differences; and that they might execute the decrees resulting from such adjudications so far only as to deprive a member of Ids membership :—in other words, that the question of membership was one which belonged solely to the association, and that the courts could not entertain any suit whereby a re-examination or review of the matters so passed upon was sought. I submit that this doctrine is wholly untenable.In the first place, I claim that the right of membership is, if possible, a higher and greater right than the right of property itself. For what is membership? It is the right of the individual to have free access to that board, exchange, mart, or bourse, and there, day by day, to attend to his business, execute his orders, and earn the very property which it is conceded that the law will protect, notwithstanding the decree of any tribunal so formed but acting without a special submission. Vow, here, this right of membership, a right winch is seemingly intangible, the value of which cannot be defined, is just as exalted a right to the broker as the education or clientage of a lawyer, or as his office location. The lesser right, in property, springs from the full and free enjoyment of this greater right. Take away the latter and you take away . forever the power of acquiring the former. Yet it is so-| seriously claimed that while the courts have the power to % protect the lesser right, notwithstanding the contract, they' have not the power to protect the higher. It is claimed,
p. 167too, that whether C., M. & Co. were right or wrong in their demands is not of the slightest consequence ; that it is sufficient and conclusive that the board had arbitrarily decided that they were right; and that so far as the plantiff’s suspension, uncoupled with any forfeiture of material property, is the sole deduction of the board from that finding, no court in the land can look into it to ascertain whether the decision was of was not without foundation ; whether justice or gross injustice had been done ; and that, so far as the question of membership is concerned, the plaintiff is wholly remediless.This association was claimed to be of such a peculiar nature that it was essential that there should be harmony between its members, and a strict compliance with the rules. Granted. Now there is another species of society, where all this is of still greater importance. Take the case of an ordinary unincorporated club-house. Suppose that such an institution—and in illustrating from that extreme point of view, I am going much further than is required by my present purpose—has a regulation to the effect that any member, complaining that another member has been guilty of ungentlemanly conduct, shall have the right to cite the alleged offender before an arbitration committee of the society, and if the charges be found to be true, the offending member shall be suspended. Suppose that Mr. White, being one of the members, has the peculiar notion that sitting in the drawing-room with his hat off, is gentlemanly conduct. Conceive that Mr. C., another member, is of the clear opinion that that constitutes ungentlemanly conduct, and that he cites Mr. White before the arbitration committee. Mr. White declines the proffered arbitration. He is, nevertheless, found guilty and suspended. The day before this took place, he for the first time became a member : perhaps he paid §1,000 initiation fee, and, in addition, his yearly dues, upon the agreement that he should enjoy the restaurant, the billiard-table, the newspapers and books, the rooms, the lounges, and all the other comforts of the place, in common with his fellow members. All these rights are
p. 168torn, and Ms money filched from him, within twenty-four hours, by his brother members, and when he comes into a court of equity asking that their hands be stayed, that this shameless injustice be stopped by the high process of injunction, he is met by the response, ‘ ‘ Why, yon contracted for this very state of things when you signed the constitution and by-laws!” This is what the doctrine (that it is of no consequence whether C., M. & Co. wore right or wrong) must logically bring us to. I shall show hereafter that from an analogy of the rules laid down in respect to the disfranchisement of members even of corporations acting under the authority of special laws, as well as in the cases of voluntary associations, and of clubs, the authorities, as well as the principle, are all the other way. For the present, let me show that the suspension was contrary to the plain language of them own constitution and by-laws.. A member can only be suspended according to the terms of this constitution and these by-laws for being in default. He cannot be suspended for a refusal to arbitrate. There is no provision anywhere for the expulsion or suspension of a member for a refusal to arbitrate—only for being in default. How the first thing to be considered is, whether he was in default or not. If he was not in default in fact, then the society, according to its own constitution and by-laws, had no right to suspend Mm or expel him ; and there is no provision in the constitution or by-laws for ascertaining in the body itself, or otherwise than by the laws of the land, whether a member be in default or not, unless that member voluntarily submits to the jurisdiction of the arbitration committee. There is nothing strained or unreasonable in this construction of the constitution ; for it is plain that the provision for the suspension of a member “in default” was intended for the case of an actual defaulter, for a man who had failed, in the ordinary understanding and acceptation of the term, or one about whose “failure” there could be no question. Surely, it could never have been intended for a case where, to say the least, there was a grave question of law arising upon the construction
p. 169of the contract, and the rights and obligations of the parties thereunder—never intended to operate against a man who, like Mr. White, is perfectly solvent, and going on regularly with his business, who is able to deposit $55,000 to secure his contract, and who is perfectly able and willing to deposit $55,000 more, to secure any judgment which C., M. & Co. may ever recover against him. It was intended for well known and clearly defined failures.Now, I submit that not only was Mr. White not in default under his contract, but that the claim of his being in default is preposterous. And if he is not in default, then he is still a member, and the suspension, being solely for the reason that he was in default, is null and void. The board says, however, that he is in default, because the arbitration committee have so found. To this I answer: 1. That the finding of the arbitration committee, without a voluntary submission to their jurisdiction, no more establishes the fact of a default, for any purpose whatever, than the finding of any stranger in the street. 2. That there is no provision in the constitution or by-laws that the question whether a member is in default for the purpose of predicating thereon a suspension shall be ascertained in an / particular manner. I need cite no authority in support, of the proposition that there can be no valid award without submission to arbitration; and when the constitution provides that the arbitration committee shall have jurisdiction over all matters of difference between the members, such provision must be deemed to have been inserted with reference to the law of the land, and not in derogation of the law. It was, therefore, simply a provision which prescribed a tribunal for members who should be willing and desirous of submitting disputed questions. It furnished all the machinery of the judicatory, so that when the members resolved to submit a question they should find a regularly - organized body prepared for them. It was never intended that, where a member desired to have his dispute properly and legally adjudicated, that desire should cost him his dearest rights, and should work a forfeiture of the very franchises whereby
p. 170Ms living was earned. Had it been intended to make such a monstrous provision, is it not plain that it would have been direct and specific, and that the constitution would have gone further, and provided for a suspension because of a refusal to arbitrate ? But here is the difficulty in the defendants’ position. Even upon their own constitution and by-laws, I repeat, there is no provision whereby any member can be suspended for a refusal to arbitrate. How, if a member cannot be suspended for a refusal to arbitrate, he cannot be suspended by reason of an ex-parte award made without a submission; and the defendants must come to the point that an ex-parte award without a submission is no evidence of a default, either for the board or for this court, for the purpose of working a suspension of the enjoyment of property or of member- • ship, or for any purpose whatever, the member not having expressly contracted that the fact of a default shall be predicated thereon, and it being monstrous to claim that he has done so by implication.Third. How, let us look at the authorities.—I. The case of Austin ». Searing ( 16 N. Y., 112 ) is only distinguishable from the present in that the question was one there of the forfeiture, not of membership, but of property, in a voluntary association. The court says, — speaking of such voluntary associations,—that “to create a judicial tribunal is one of the functions of the sovereign power; and although parties may always make such tribunals for themselves in any specific case, by a submission to arbitration, yet the power is guarded by the most cautious rules. A contract that the parties will submit confers no power upon the arbitrator; and even when there is an actual submission, it may be revoked at any time.” And again, that “by-laws and regulations of these voluntary associations may be all very well in their place and sphere......They cannot, however, have the force of law, nor impair nor affect the rights of property against the will of the real owners.” The case of Lloyd v. Loring (6 Ves., 733) is to the same effect. See, also, upon the question of submission to arbitration: Haggart
p. 171v. Morgan (5 N. Y. [1 Seld.], 422), Mitchell v. Harris (2 Ves. Jr., 129 & n., Sumner’s ed. ; 8 Durnf. & E., 139; 2 Story Eq. Jur., §§ 1457, 1458), Simons v. Monier ( 29 Barb., 419 ), Smith v. Compton (20 Id., 262).II. It is not important, for the purposes of this investigation, what particular definition the court may give of this association.' It was claimed below that it was not a partnership, nor yet a joint-stock association, nor a corporation ; but that it was a species of hybrid affair which did not come under any of the usual heads upon which equitable relief is administered. I apprehend that the plaintiff is entitled to the relief sought, no matter what this court may conclude the association to be. It may be well, however, to consider for a moment what the legal status of this association is. I do not claim that it is strictly a partnership, yet I do claim and insist that in equity it is governed by the same rules; and that the rights of the members are the subject of the same general equitable jurisdiction as in the case of partnerships. I claim less, however, than the adjudged cases warrant (Wells v. Gates, 18 Bard., 554; Dennis v. Kennedy, 19 Id., 517). And a similar rule has been laid down, even in the case of joint-stock associations (Allen v. Sewall, 2 Wend., 327 ; Moss v. Oakley, 2. Hill, 265; Bailey v. Bancker, 3 Id., 188 ; Harger v. McCollough, 2 Den., 119 ; Corning v. McCollough, 1 N. Y. [1 Comst], 47).III- In the case of the St. James’ Club (13 Eng. L. & Eq., 592), a question arose before the lord-chancellor, Lord St. Leonards in respect to the rights of members in an ordinary club. Lord St. Leonards said that if the club was dissolved, each member would have a right to a share of the assets. He would lose the convenience of the club, but he would get a share of the assets ; otherwise, he would only have a right-of admission to the enjoyment of the club. In the case at bar the objects of the association are not pleasure or convenience, and there is therefore á still stronger reason for the claim that the member is a joint tenant in and vested in common with the other members with all the assets, franchises and privileges of the
p. 172association. That he is clearly liable for the debts will scarcely be disputed. Mr. White, for instance, while to-day prevented by his fellow-members from enjoying “his rights as a member, is clearly liable to an action by the creditors of the association; and is it not perfectly clear that if- in any such action he should plead his suspension by the act of his associates as a defense, it would be stricken out as frivolous % So here then is presented the singular spectacle of a man fully vested, in common with all the other members, with all the assets of the association, and liable for its debts, yet denied access to its apartments and prevented from enjoying any of the privileges for which he has assumed these liabilities, for which he has paid his money, and which are the concomitants of his vested interest in the assets.IV. A distinction was made in England, in the case of ordinary clubs conducted upon ready money principles, to the effect that a tradesman supplying goods to such a club, does so upon the credit of the funds, and that, at law, the members of such a club are not individually liable for debts incurred by its committee (Caldicott v. Griffiths, 22 Eng. L. & Eg., 527; and cases there cited in the briefs of counsel). This distinction, however, is only applicable to proceedings at law as between the creditors of the association and the members. They have, however, invariably been treated and dealt with in the courts of equity as partnerships (Colly. Partn., § 53 ; Beaumont v. Meredith, 3 Ves. & B., 180 ; Greenwood’s Case, 23 Eng. L. & Eg., 422; Richardson v. Hastings, 29 Eng. Ch., 323). And the courts of equity have invariably examined and considered the reasons for the expulsion of members, and if injustice has been done, they have been prompt in correcting abuses and affording adequate redress ; and that too in cases where the equities were infinitesimal, compared with the present (Innes v. Wylee, 1 Carr & K., 257; Exp. Wooldridge, 1 Ell., B. & S., 844; Bluset v. Daniel, 23 Eng. L. & Eg., 105 ; Regina v. Mallison, 1 Id., 289 ; Bury v. Cross, 3 Sandf. Ch., 1 ; Commonwealth v.
p. 173Pike Benefit Society, 8 Watts & S., 247 ; Gormon v. Russell, 14 Cal., 531 , and cases there cited).V. Even in the case of corporations where special statutes have given the "body power to expel or suspend its members, the courts have never refrained from investigating the justice and correctness of the procedure. The suggestion so boldly enunciated "here will nowhere be found in any of the cases, that it is of no consequence whether the society or corporation be right or wrong, regular or irregular ; whether there were cause for suspension or not; whether the member were in default or not; and that the courts of justice cannot inquire into the matter; but must deem the action of the society to be final and conclusive. On the contrary, even in the cases where such express power is conferred by statute, the justice, the legality, and even the regularity of its action therein have always been the questions debated before the courts, and upon which the decision in respect to the restoration to membership has invariably hinged. The general rule is, that corporations can exercise this jurisdiction only in case of offenses recognized by the common law as cause for expulsion. Of these there are but three: 1. Violation of duty to the society, as a member of the corporation. 2. Offenses as a citizen against the laws of the country. 3. Breach of duty in respect alike to the corporation and the laws (2 Burr., 732). See, also, People v. Medical Society of Erie ( 24 Barb., 570 , affirmed in the court of appeals, in 32 N. Y., 18 ), Commonwealth v. St. Patrick Benefit Society ( 2 Binn., 511 ), Green v. African Methodist Episcopal Society ( 1 Serg. & R., 254 ), Commonwealth v. German ( 15 Pa. St., 251 ), Fuller v. Trustees of Academy School in Plainfield ( 6 Conn., 533 ),—all of which go to show that no matter how the association may be viewed, whether as a corporation, joint-stock association, partnership, joint adventure, joint tenancy, or as an undefinable voluntary association, of a special and peculiar character, —still there can be no given case where a person has been expelled or suspended, or deprived of any of his legal or equitable rights, without the courts’ sifting the matter to
p. 174the bottom; and if such-person has been illegally, wrongfully, or even irregularly deprived of his rights, he will be restored to their full possession and enjoyment. Hone of these cases possess the grave considerations suggested by the case at bar ; in none of them was a man removed for a default which did not exist in fact, and which never had been legally, equitably, or morally found to exist. In none of them was a man disfranchised for refusing to submit a question, involving over $69,000, to a tribunal for a refusal to submit to whose jurisdiction, there was no provision in the constitution or by-laws authorizing a suspension. In no case was the ex-parte, partial, and prejudiced award of a committee, to whom nothing had been submitted, taken as the conclusive evidence of the existence of the fact upon which the suspension was or could be based.VI. Some objection was taken upon the argument to the form of the relief sought, but it is submitted that the plaintiff was clearly entitled to it upon several grounds:1. He is entitled to it upon the ground that his copartners, or co-tenants, seek to exclude him from taking that part in the concern which he is entitled to take (Story Partn., 3 ed., 356 n.; Wilson v. Greenwood, 1 Swanst., 481; Colly. Partn., 2 ed., book 2, ch. 3, § 6, pp. 240, 241). 2. He is also entitled to it upon the ground that one partner may apply to a court of equity to restrain the oppression and overbearing of another partner (Charlton v. Poulter, 1 Ves., 429, and 19 Id., 148; Story Partn., 227; Colly. Partn., book 2, ch. 3, § 5, p. 313). 3. And the plaintiff is entitled to the relief sought, although he does not ask a dissolution of the association. In fact, he is not entitled to a dissolution, unless the court sees that redress cannot be afforded without a winding-up (Gow Partn., 3 ed., ch. 2, § 4, pp. 1111, 112). 4. The opinion that a partner’s misconduct may be restrained by injunction, without the necessity of a dissolution, is sanctioned by Lord Eldox (Goodman v. Whitcomb, 1 Jac. & W., 572). 5. And if not a partner, the plaintiff
p. 175would still "be entitled to an injunction on the well-known ground of irreparable injury and the total destruction of business (Carpenter v. Gwynn, 35 Barb., 395 ¡.Livingston v. Livingston, 6 Johns. Ch., 497 ; Holdane v. Trustees, &c., 21 N. Y., 474 , and 33 Barb., 103 ).VII. It was also claimed that the plaintiff was not entitled to an injunction until the final hearing; but, 1. It is plain that there has not been an attempt to deny a single prominent fact upon which the equities rest. The case, therefore, is to be treated as upon the hearing (Grimstone v. Carter, 3 Paige, 421). 2. But had the equities been denied, it is a clear case of irreparable injury ; nay more, of ruin and destruction to a man’s business ; a case without remedy of any kind at law—no pretense that a mandamus, quo warranto, or even the useless action for damages would lie ; in fact a case of absolute and entire ruin, and that ruin between now and the hearing. An injunction was never refused under such circumstances. It has been granted with far less equity (Livingston v. Livingston, 6 Johns. Ch., 497 ; Spear v. Cutler, 2 Code R., 100 ; Dubois v. Budlong, 15 Abb. Pr., 445 ; Ryckman v. Coleman, 21 How. Pr., 404 ). 3. And it is by no means of course to dissolve an injunction upon a full denial of the equity of the bill, if the court, in the exercise of a sound "discretion, can see a good ground for retaining it,—and it ever, in such cases, rests in the sound discretion of the court (Bank Monroe v. Schermerhorn, Clarke, 303 ; Benson v. The Mayor, &c., 10 Barb., 223 ; Vermilye v. Vermilye, 14 How Pr., 470 ). 4. The rule, even in an ordinary case, without any of the extraordinary equities of this, is to continue the injunction, if upon the papers there is probable cause for the belief that the plaintiff will be ultimately decreed the relief asked, or if the rights sought to be protected are free from reasonable doubt (Snowden v. Noah, Hopk., 347; Bruce v. Delaware & Hudson Canal Co., 19 Barb., 371 ). 5. The preliminary injunction cannot possibly prejudice the defendant; while without it, the plaintiff is a ruined man. This is a well settled ground for retaining a preliminary injunction, even when all the
p. 176equities are denied (Carpenter v. Danforth, 19 Abb. Pr., 225 ; Church Holy Innocents v. Keech, 5 Bosw., 691 ).'VIII. Another point was made below, based upon the undoubted rule that a court of equity will not aid a party in specifically enforcing a contract which he has himself violated. 1. White did not violate the contract. Every agreement must have a fair and reasonable construction. Mr. White has violated no provision that the court will say he should have conformed to. Suppose he had, would that really have affected the present right, the enforcement of which is evoked. Ho ! for he does not ask a specific enforcement of the contract, or any provision thereof. He simply asks, not a scrupulous fulfillment of the constitution and by-laws, or any one of them, but that he may not be treated as an outcast, that he may not be deprived of all the rights of an associate in an association, avowedly continuing, and of which he is in law and equity a member, and liable for its debts. He is not asking that his partners or associates do any affirmative act which they have contracted to do, but simply to refrain from refusing to let him into the apartments of the association ; from refusing to let him look at the partnership books ; in fact to refrain from absolute ouster and disfranchisement.William B. Martin, for the respondents.
I. The constitution and by-laws of the Open Board are a contract between its members. They provide for the suspension of a member, and the plaintiff was suspended in precise conformity therewith, and was rightly suspended. 1. He had signed its constitution and pledged himself to abide by the same, and also by its by-laws, resolutions and rules. These instruments, therefore, become his contract with his fellow members, and the case before the court is primarily one of the construction of contract (Austin v. Searing, 16 N. Y., 121 ). The duty of the president to suspend him is made, by the by-laws, imperative, upon the report of the committee on membership. Their duty to make this report is imperative, after due investigation, when the fact that a member is in default becomes
p. 177"by any means known to them. 2. That brings us to this question : Was it a fact that he was in default? The constitution and by-laws afford a precise means of ascertaining this fact. The last clause of the contract between plaintiff and Currie, Martin & Co., reads thus : “ Either party having the right to call, from time to time, for deposits to meet the fluctuations of the market.” And it was upon a call for a deposit of this sort that proceedings were had under the by-laws, which resulted in a charge by Currie, Martin & Co. against Mr. White for a deficiency, and which made the case which they brought to the cognizance of the arbitration committee, under the provisions of the constitution. By these provisions it was made the duty of the arbitration committee to take cognizance of, and exercise jurisdiction over, all claims and all matters of difference between members of the board. They exercised their jurisdiction ; gave him notice of the hearing ; he absented himself; they heard the merits " ex-parte” and decided against him. This fact coming, in due course' and by whatever means, to the knowledge of the committee on membership, required of them an investigation, but not a hearing of the parties on the merits. The form in which this came was a sufficient warrant for their report. These proceedings, being entirely free from fraud or irregularity of any kind, made the default an ascertained and conclusive case upon the members of the board. The-defendant neglected to take, and thereby waived, his appeal. This made it a final determination. The arbitration committee had determined that they had jurisdiction. Their judgment could not be attacked collaterally in any co-ordinate administrative branch of the association, and as to all these committees was conclusive as to the fact of default. So far as the plaintiff’s contract is concerned, he was regularly suspended in conformity to its terms ; and if these proceedings are not subject to any legal objection—a point which will presently be examined—lie' was rightfully suspended. 3. These objections may be— that the arbitration committee had no jurisdiction of the person or of the subject-matter ; and, that the decision of
p. 178the arbitration committee was not conclusive as to the fact of the default, in face of his action before the committee.II. In order to import into this case an equitable ground for the injunction, it is asserted that this association is a partnership ; and upon that, that the general principles of partnership warrant the injunction, i. e., whatever a partner may do, this plaintiff may do ; or, to put it logically, this plaintiff says : If this were a partnership, on the facts of this case, a special injunction would lie against the defendants. This is a partnership ; therefore the injunction is to be sustained. We controvert both the premises. 1. This association is not a partnership. It wholly lacks the characteristics of a partnership. The members do not share profit and loss. They do not hold themselves out as partners. Then’ constitution does not declare them partners. They are not a society having gain for their object. They have no partnership property, used in any business or as a source of profit, in the sense that a mercantile partnership has. At the common law they are not jointly liable as partners. They do. not make money for their common benefit, nor divide their gains ; but the reverse. They are not partners between themselves, nor as to third persons, bio consequence happens to the others if one of them dies. Their property is only the accumulation of dues and entrance fees. This- does not consist of shares, is not transferable, and is not separable from the personal right of membership. They are like- a. partnership in nothing else than that they are not a single individual. They are in fact a club—neither more or less than a club. These institutions are known to the courts, and their rights and status have been adjudicated upon in the English courts for a century. A club is a society which gives to its members social and personal rights and privileges, in such direction as they determine, within the whole range of social, artistic, literary, political, or business objects, &c., &c. Their main point is the strict qualifications for membership and the conditions of its tenure. Their rights of property are the samé as the rights of property in this association. The only point distin
p. 179guishing this association from a club is the very point in which all clubs differ—their object. If this association should change its objects for the political objects of the Manhattan Club, and the Manhattan take on the business objects of this association, the other essential characteristics of each might remain unchanged. And there is nothing in the special object of-this association which distinguishes it from a club, as such institutions are generally understood, and makes it take on any of the characteristics of a partnership. This attempt at definition or classification has this bearing on the argument, that, in any aspect, .this association is not a partnership (Lindl. Partn., 62 ; Cox v. Hickman, 8 Ho. of L. Cas., 268 ; Caldicott v. Griffiths, 8 Exch., 898). 2. Nor, in the second place, if this association were a partnership, would the special facts of this case warrant an injunction. Here a fact must be kept in view, because it is the ground of a distinction, fatal at all its steps to the plaintiff’s argument. The plaintiff has, in this association, a personal or social right of attendance and of doing his business there, in conformity with their rules and regulations, that is, in conformity with the provisions of his contract. He has also his share in the accumulated bind. He is suspended, not expelled from membership. His personal right of attendance is gone, but his property is not forfeited or affected. This distinction, therefore, is applicable to this case: that the rules of law which protect rights of property, do not in like manner apply where simply personal or social rights, as here, are in question. Again, the cases in which injunctions have issued in actions between partners, show that they issue against partners only where they have been guilty of a breach of the contract, or of misconduct in a point not covered by the contract (Eden Inj., 220 ; 2 Lindl. Partn., 1002, 1009 ; where are collected all the cases in which injunctions against partners have been issued). Here no breach of the contract by the defendant is alleged. 3. As against partners who are guilty of misconduct that does not involve a breach of the contract, it seems to be settled that an injunction will not issue to sus
p. 180tain a partner in the simple exercise of a personal right, or a right of personal attendance, except his right of property is also in question. It is difficult to imagine the case where a partner might seek to maintain a purely personal right separate from any right of property, and this difficulty shows that no analogy can "be traced between this association and a partnership beneficial to the plaintiff (Hall v. Hall, 12 Beav., 414). 4. The doctrine of Lord Eldon, that the courts would not grant an injunction against partners, unless there were grounds for a dissolution (Marshall v. Coleman, 2 Jac. & W., 266; Colly. Partn., § 346), has been modified by granting injunctions where dissolution of the partnership was not decreed—in exceptional and extraordinary cases. But there appears to be no case where it was done merely to sustain a personal right and continue the partnership. On the contrary, there are cases where personal questions and controversies arose, and the courts have held it to be ground for dissolving the partnership. As' against partners guilty of misconduct, but not of a breach of the contract, an injunction will not be issued to sustain a partner in his purely personal rights, where-no rights of property'are involved, and, further, where the continuance of the partnership was sought, the court would not fail to consider whether the injunction would not be to the mutual injury of the partners, in which case the partnership would be dissolved (Watney v. Wells, 30 Beav., 56 ; Harrison v. Tennant, 21 Id., 482).III. The provision for arbitration in the constitution was the subject of much criticism. It was argued : That the plaintiff was not bound by the arbitration clause. That he might refuse to arbitrate, and that no consequence attached' to the refusal. That a suspension must be preceded by a default. That he revoked the agreement to arbitrate, and the law favors such revocations. That 'he did not agree to submit, but, only, that in case he did submit, the arbitration committee was to be the tribunal. That the arbitration committee had no power to determine the fact of default. That this court must pass upon it as a ques
p. 181tion of fact and of law upon all the special facts of the contract, whether the plaintiff was in default within the "by-laws. I propose, therefore, to examine the doctrine of arbitration, and the proceedings of this arbitration, to an extent sufficient to establish these points. 1. That the plaintiff was bound by the arbitration clause. 2. That the decision of the arbitration committee is conclusive here as to the fact of a default within the by-laws. 3. That no question arises here concerning the correctness of the decision against the plaintiff in point of law or in matter of fact.IV. There is no rule or principle of law denying to a man the. natural liberty of waiving a remedy before the tribunals of justice, and accepting as final, in respect to his rights, the act or arbitrament, of some private person. He may make such act or arbitrament the condition precedent of any other right, as a right of action, or retention of membership (Scott v. Avery, 5 Ho. Lo. Ca., 811; Horton v. Sayer, 5 Jur. N. S., 989 ; Lee v. Page, 7 Id., 768; Scott v. Liverpool, 27 Law J. Chy., 641; Tredwin . Holman, 8 Jur. N. S., 1080 ; Westwood v. Secretary of State for India, 7 Law T. N. S. Q. B., 736 ; Braunstein v. Accidental Insurance Co., 31 Law J. Q. B., 17 ; Elliott v. Royal Exchange Assurance Co., 2 Law Rep. Exch., 237 ; Inman v. Western Fire Insurance Co., 12 Wend., 459 -60 ; Wood v. Worsley, 6 Dumf. & E., 710; Ranger v. Great Western R. Co., 27 Eng. L. & Eq., 35; Avery v. Scott, 22 Law J. N. S. Exch., 287; Northampton Gas Co. v. Parnell, 15 Com. B., 651; Faunce v. Burke, 16 Pa., 479 ). These cases fully establish the principle, that a man may by contract agree to waive his right to resort to the courts and to submit any question to private arbitration. This is precisely what the plaintiff did in this case. He agreed to submit all differences between himself and any other r- ' the arbitration committee. He may go further such submission a condition precedent. The Aitthormes show that he can make it the condition of a right of action. He did agree that the tenure of his membership should depend upon it. It is entirely
p. 182competent for him to do so. There is no legal objection to it.V. On the previous argument it was suggested that the agreement to arbitrate might be void, or that consequences might follow, favorable to the plaintiff’s right. The doctrine of the validity of agreements to arbitrate may be thus stated. An agreement in a contract to arbitrate is valid and binding on the parties (subject to a qualification to be noted), but in case the agreement contain a clause- excluding the parties, or withholding the question from the courts expressly, that part of it is void (see the cases above cited). In an agreement to arbitrate, when the arbitration is not expressly made a condition precedent to an action, and when there is no clause withholding the question from the courts, the agreement is binding, except that the party may revoke his consent to the arbitration by express act, or, after the cause of action arises, he may bring an action instead of proceeding with the arbitration. The arbitration clause is collateral, and not a condition precedent. The party has concurrent remedies (Roper v. Lendon, 5 Jur. N. S., 491). Where there is no civil action nor revocation, the arbitration is binding ; and, where the party has had notice, or fails to attend, the arbitration may proceed exparte (Scott v. Van Sandan, 6 Q. B., 237). And a protest waives the necessity of giving any notice (In re. Morphett, 10 Jur., 546; Hares v. Drury, 10 Law T. N. S. Exch., 305). When the arbitrator acquires jurisdiction of the person by due notice to him, he may proceed in his absence exparie, and the decision is as binding as if he had been heard.VI. How, under these rules, what is the plaintiff’s position % He had agreed, by the constitution, that, when a claim or matter of difference arose against him, it should be the duty of the arbitration committee to take cognizance of and exercise jurisdiction over it. It was not a conditional. agreement that, in case he elected to submit to arbitrate, they should be the tribunal; but a positive agreement that the committee should have jurisdiction of the subject-matter whenever it arose ; and he further agreed
p. 183that their decision should be binding. For obvious reasons, and for purposes inherent in the whole nature and scope of their organization, the members contract between themselves for a special procedure in the performance of their contracts, and the ascertainment of defaults. Their business is such as to render prompt performance of contracts, and the immediate ascertainment of defaults, absolutely necessary. Their exclusiveness is in this point, that they are composed of those brokers only who do perform at the minute; others can do business elsewhere. Now there can be no prompt performance unless the questions, what performance requires, and what constitutes a default, can be determined speedily by themselves. With this exclusiveness they can rely upon one another, and in their instantaneous transactions, one member can accept the bid of another, with this simple reliance that he is a member. If here and there a defaulter mingles in the crowd, their business loses its reliance and is broken up. While a member is in default he must remain suspended. This is the vital principle of the association. These provisions do not interfere with any of the rights of property of the members, but they do justly bear upon the tenure of membership. There is no provision for the enforcement of the award. The party may perform or not, as he chooses, so far as the association is concerned ; with this proviso, that, if he chooses not to perform, then his membership becomes suspended. There is no attempt here to enforce the payment of the award. All that is now in question is the tenure of the plaintiff’s membership, after he has, in the judgment of the association, defaulted on his contract. 1. The moment Currie, Martin & Co., made claim against him, and he refused to acquiesce in it, the arbitration committee acquired jurisdiction of the subjectmatter. 2. Due notice was given to him that they would -hear the case ; thus they acquired jurisdiction of the person of Mr. White. 3. He then had his option between two courses. He could submit to, and proceed before the arbitrators. Or he could stand on what he was advised were his legal rights, take the question away to the adju
p. 184dication of the courts of law, revoke his submission, or in any way disregard the arbitration. The only thing he did do was to serve a protest. This was not a revocation. The arbitration went on, the committee saw the documentary evidence, and decided against him. 4. Then he again had this election: He could perform, in which case the proceedings would have terminated. Or he could refuse to perform, on any ground satisfactory to himself, and accept the consequences — his suspension. His refusal to perform was followed by two inevitable consequences: His suspension was the result of his own act. And the fact of the default was ascertained, so far as the members of the association were concerned. 5. The first consequence was that he became chargeable with the defalcation intended by the by-laws. When that fact became known to the members of the committee of membership, as it did by a communication from Currie, Martin & Co., it, became their duty to investigate it. This they did, and ascertained that it had been so adjudged by the arbitration committee. It was not made their duty to hear the parties on the merits; the action of a co-ordinate committee was conclusive as to that fact. The result of the regular application, to the plaintiff’s case, of the rules of the association, was the report of this committee to the president, and the suspension. It was the necessary result of his own voluntary election to stand on his legal rights, and not to abide by the decision of the arbitration committee. It was perfectly competent for the members to contract that such a performance should be the condition of the continuance of membership, and that a violation of a rule should result in a suspension. He was bound by Ms contract, and having, in view of the result, chosen his course, he elects also the regular • and necessary result. 6. The second consequence was, that, so far as it can come in question here on this question of his membership, the award is binding on him. Ho question arises here concerning the correctness of the decision against the plaintiff, either in point of law or in matter of fact. Where one’s rights are thus submitted to a private tribu
p. 185nal, there may be an action to relieve against fraud; for such a remedy may be had, not only as against the awards of arbitrators, but even against judgments of the highest courts (Munn v. Worrall, 16 Barb., 227 ). But for error of judgment, however plain and palpable, there is no remedy; the party must abide the forum which he has selected ; and he cannot have a writ of error or an appeal to the legally constituted tribunals (Underhill v. Van Cortlandt, 17 Johns., 403 , 412, 416, 421, 430; S. C. below, 2 Johns. Ch., 361 ; 2 Story Eq. Jur., § 51, et seg. ; Ketchum v. Woodruff, 24 Barb., 147 ; Phillips v. Evans, 12 Mees. & W., 305). Currie, Martin & Co., the other parties to the contract, are not now before the court; no relief is asked upon the contract with them ; they have no opportunity to answer or to be heard; and the merits of that controversy cannot be inquired into.VII. It follows that the arbitration committee had full jurisdiction, and that the plaintiff’s protest does not benefit him. 1. The arbitration committee had jurisdiction over the subject-matter; “it was a claim and matter of difference between members of the board.” The constitution settled that. They had jurisdiction over the person. The plaintiff had notice, and refused to appear before them. That justified their proceeding ex-parte. In the absence of any rule for acquiring jurisdiction over the person, it must proceed upon the general principles by„ which courts of law acquire jurisdiction, by a writ from the court, a summons from the moving party, or a voluntary appearance of the defendant (Innes v. Wylie, 1 Carr & K., 262). The protest served upon the arbitration committee, is a protest against the jurisdiction of the committee of arbitration, on the ground that no difference had arisen, and that there was no claim against him,—i. e., that they had no jurisdiction of the subject-matter. It virtually concedes jurisdiction over the person. In this protest the plaintiff fails to see that, though it takes two to make a bargain, one can make a claim ; and that, unless it be acquiesced in, a difference arises. He fails to discriminate between a non-existing claim (if the expression may
p. 186be used) and an unfounded one; he fails to see that while the groundlessness of a claim may be matter of defense, it does not warrant an exception to the jurisdiction. If his protest be construed as a refusal to submit to arbitration, then, as previously argued, he voluntarily accepted the alternative consequence—his suspension. If it be construed as a revocation of, or withdrawal from, the agreement to arbitrate in the exercise of a legal right, then his act must comprehend a withdrawal from the association, and a revocation of his signature to the constitution,— and thus he" suspended himself. Because, this contract being entire, and not several or divisible, he cannot sever it. to his advantage and continue to enjoy certain privileges that are agreeable, and reject a clause that may be onerous ; nor would the rule be different if the part attempted to be severed were illegal and void (2 Kent Com., 468).VIII. This is an attempt by a member of an unincorporated association to procure from the courts the same remedies for the enforcement of his social privileges therein, according to its articles of association, that the courts, by mandamus and injunction, have been accustomed to afford to members of corporations. It assumes that the courts will recognize the agents and servants of this society, as they would the officers of a corporation, and will compel them to perform'their official duties by compulsory process, issued in regular actions of the same nature as those allowed to corporations. 1. If this could be permitted, privileges of a social nature might be created by private compact, which the legislature has not seen fit to sanction, and our courts might be burdened with the task of enforcing them. The privileges of membership in ball, billiard, and ten-pin clubs, in political ward committees, in the prize ring, in the cock-pit, and in dog-fighting societies, would be enforceable by injunction and mandamus. There is no precedent for such a course, and no color in reason or good policy for making one. ’ The subject-matter is not property, as a chattel, but a social right or privilege unknown to the law. 2. The relief asked in this ac
p. 187tion, and afforded by the injunction is, that the plaintiff may have the full exercise and enjoyment of his rights and privileges as a member of the board, and that he may, at their meetings, transact all his business, in buying and selling stock, &c., fully, freely, and with the same facilities enjoyed by the other members, and as he enjoyed them previously to his suspension. Row this requires the court to interfere in the internal management of an association that has no legal existence, in favor of a member who has been suspended according to its rules, none of whose rights of property have been violated, in support of his purely personal and social rights against the other members, who have strictly followed their rules, and who have not been guilty of any misconduct.. If the injunction be allowed, and the plaintiff stands in the board at its sessions and bids for stock, the selling member may (within the rules of the board, for the plaintiff is an adjudged defaulter there) refuse to sell to him. The injunction is violated. The plaintiff does not enjoy his previous facilities in buying and selling stock, nor the facilities of other members (for they cannot refuse the bid of a member in good standing), and without this facility his mere light to attend as a speculator is valueless. The correlative of the personal and social rights, in which he seeks to be upheld, are like personal and social services from the other members; and although the board may be sued in the name of its president in respect to property, and the members bound by this injunction, so far as it seeks to restrain them from interfering with the plaintiff’s property, they are not bound in this action, in which they are not parties, to render to the plaintiff these personal and social services. 3. Even if every member were a party defendant, the court would not interfere to compel a member, to take the plaintiff’s bid, and will not, therefore, interfere to issue or enforce this injunction. 4. This injunction is, in fact and substance, 'mandatory and not prohibitory. The plaintiff’s complaint is that he is excluded from membership. The effect of the injunction is to direct the defendants to perform to him all the services they did before
p. 188the suspension—to give him the same relief pending the action that he would gain by final action in his favor. Such injunctions “ the court will not grant, except under very special circumstances ” (Dan. Ch. Pr., 4th ed., p. 1503 ; Hooper v. Brodrick, 11 Sim.,'47 ; Isenberg v. East India Ho. Co., 10 Jur. N. S., 221; Durell v. Pritchard, 35 Law J., 223). 5. The following cases abundantly show— That the courts will not interfere in the internal management of any association,—least of all, of those which have no legal existence. That they will not relieve against an arbitrary expulsion, where it has been made according to the rules. That they will look after rights of property, but not after personal or social rights, nor compel the performance of personal services (Brown v. Monmouth-shire Railway, 13 Beav., 32; Bailey v. Birkenhead Railway, 12 Id., 433 ; Exp. Ford, 7 Ves., 617 ; Waters v. Taylor, 15 Id., 19, 21 ; Carlen x. Drury, 1 Ves. & B., 154; Thompson v. University of London, 10 Jur. N. S., 669 ; Brancker v. Roberts, 7 Id., 1185 ; Mair v. Himalaya Co., 11 Id., 1013; Chaplin v. Northwestern Railway Co., 5 L. T. Rep., 601; Churchward v. Chambers, 2 Fost. & F., 229 ; Lumley v. Wagner, 1 De Gex, M. & G., 604; Blisset v. Daniel, 10 Hare, 493 ; 2 Lindl. Partn., 828 ; Hopkinson v. Marquis of Exeter, Lond. Times, Dec. 21, 1867; Commonwealth v . Pike Beneficial Society, 8 Watts & S., 250 ; Commonwealth v. St: Patrick’s Society, 2 Binn., 448 ; Innes v. Wylie, 1 Carr & K., 262; Lloyd v. Loaring, 6 Ves., 773 ; Cullen v. Queensbury, 1 Brown Ch. C., 101).IX. The machinery of suspension having been regularly set in motion, and the defalcation being a voluntary election between two courses, the plaintiff became suspended by the operation of his own contract. To keep him in, by injunction involves this wrong. He claims to be kept in the association, in spite of a clause in his contract which, by its necessary operation, repels him; and that the association shall be kept' in operation with this self-destructive element forcibly inserted. The result would be its destruction. If the court, upon any ground, nullifies the fundamental principle of the association that
p. 189their contracts must be performed according to their own rules, the destruction of the association is inevitable. As against all the other associates who have strictly adhered to the terms of their contract, it will not be equitable for the court to interfere in favor of one member who has broken them, to shield him from the consequences that, by his contract, follow his default. If the court should find any ground for interference, it would only be upon condition that he fully performed all the obligations on his part in his contract (Charlton v. Poulter, 19 Ves., 148, n.; Stockton v. Wedderburn, 26 Law J. Ch., 713).X. The plaintiff has no grievance. The case arose which gave the arbitration committee jurisdiction over him. He had notice, and an opportunity to be heard. In his voluntary absence the case was heard on its facts and merits, and decided against him. His suspension AA-as the regular consequence. He has appealed to the executive committee. That committee are ready to hear him, and have so notified him. There has, therefore, on the question of his suspension, been no final adjudication. The proceeding is pending, and it does not yet appear what may be the final result. The present suspension is temporary, and may be annulled.The organization known as the Open Board of Stock Brokers, which the plaintiff asks this court to restrain from depriving him of liis rights and privileges as a member of it, is not a partnership, and the plaintiff is not entitled, as has been argued, to the equitable remedies which courts afford for the protection of the rights of a copartner. It is not a union of persons joining together property, labor or skill for their common benefit, in any pursuit or business having a communion of profit or loss, and distinguishable by the feature that, if earned, there is to be division of gains. It may be described as an association of persons engaged in the same kind of business, who have organized together for the purpose of establishing certain rules, by which each agrees to be governed in the conduct and
p. 190management of Ms separate transactions or business— wMch is not a partnersMp.
The objects of the organization are set forth in the articles of association, which declare that greater facilities are requisite for the exchange and negotiation of commercial securities, a business which can be successfully transacted only where there is the utmost confidence ; that as such confidence is begotten only by public, open, fair and upright transactions, so that each party interested can know, not only where but how such business is done, the spirit of the age demands for such transactions a great public mart open to all; and that for the purpose of supplying these requirements the persons signing their names associate themselves together and adopt a constitution for an association, to be known as The Open Board of Stock Brokers, each pledging himself to abide by the constitution, and by all by-laws, rules, and resolutions which may be passed by the board. To carry out this object the constitution provides that there shall be a room where the members of the board shall have seats and desks, conveniently enclosed within a railing, and that outside the railing, and in a gallery, seats shall be provided for the public. Certain officers are designated who are to call stocks at the board; and a standing committee to arrange the order in which such securities are called. A record is to be kept by the secretary of all sales and purchases made at the board. He is required to prepare an account of the same for the newspapers, and no fictitious sales are to be allowed. It is, in fact, the creation of a public mart for the sale of stocks or other commercial securities, each purchase or sale of which is not for the joint benefit of the body, but is, as it would be in any other place, an individual transaction between the parties making it. It is analogous to what, in other branches of commerce, has long been familiarly known by the word “Change,”-—a fixed place where merchants meet, at certain hours, for the transaction of business with each other ; subject to such general rules or understanding as they think proper to be governed by. There may be property belonging to this body, derived
p. 191from the payment of tines or fines, or consisting of the furniture of the room where the "board meets'; "but the possesion of it is a mere incident, and not the main purpose or object of the association. A member has no severable proprietary interest in it, or a right to any proportionable part of it upon withdrawing. He has merely the enjoyment and use of it while he is a member, but the property remains with and belongs to the body while it continues to exist, like a pew, the ultimate and dominant property in which is in the congregation and not in the pew-holder ; and when the body ceases to exist, those who may then be members become entitled to their proportionate share of its assets (St. James Club, 13
Eng. L. & Eq., 592 ; Fassett
v. First Parish in Boyleston, 19
Pick., 361 ). This board of stock brokers is in fact analogous
to the organization which came under consideration in Caldicott
v. Griffith (8
Exch., 898,) called Midland Counties Guardian Society for the Protection of Trade, which was decided not to be a partnership. So far, therefore, as the plaintiff claims the equitable interference of this court upon the assumption that this association is a copartnership, or upon the ground that the rules which regulate the action of courts of equity in cases of partnership are to be applied to it, the claim cannot be supported.
It is not an incorporated body, and as a number of cases have been cited upon the argument in which courts of equity have interfered and restored a member of- a corporation who had been expelled or obstructed in the exercise of his franchise by the acts of the corporation, which are relied upon by the plaintiff as authorities applicable to the present case, it will be necessary to inquire into the reasons why corporations cannot expel members except in certain extreme cases, and to show that these reasons do not apply to a voluntary unincorporated body, which comes into existence by the mutual agreement of the persons forming it, and is thereafter carried on under rules which the body adopts for its government. A member of a corporation, whether it be municipal, eleemosynary or private, is in the enjoyment of a franchise, the right to
p. 192which is not derived from the "body, but is created by statute or exists -by prescription, and therefore cannot be taken away by the act of the corporation, except, as I have said, in certain extreme cases. As it is a right conferred by statute, or derived from immemorial custom which implies the existence of a grant, it can neither be taken away by the act of the corporation, or withheld by the act of the corporation, from any one eligible to the enjoyment of it. Thus, in The People v. The Medical Society of the County of Erie ( 33
N. Y, 187 ), an incorporated medical society was compelled by
mandamus to admit a licensed physician to membership, who was excluded under a by-law which had been adopted by the corporation.
In a corporation there is a distinction between what is called amotion, or the right to remove an officer, winch is a power inherent in every corporation, and disfranchisement. The former may be exercised without interfering with the franchise, as the officer, when removed, still continues a member; but disfranchisement is an actual expulsion of the member from the body and the taking away of his franchise, which cannot be done unless the power is given by the charter creating the corporation, or the member has been guilty of crime, a conviction of which would work a forfeiture of all civil rights, including the corporate franchise, or has committed acts which tend to the destruction of the corporation, such as the defacing of its charter, the obliteration pr alteration of its records, or other acts tending to impair or destroy its title to its rights or privileges ; in which case, the expulsion of the member is but the exercise of a power incident to the right of self-preservation (Evans v. Philadelphia Club, 50 Pa.,107; Bagg’s Case, 11 Coke, 93 ; Earle’s Case, Carth., 173 ; Commonwealth v. St. Patrick Benevolent Society, 2 Binn., 441 ; Fuller v. Trustees of Plainfield Academy, 6 Conn., 533 ; People v. Medical Society of Erie, 24 Barb., 570 ; Willc. Mun. Corp., 270 ; Grant Corp., 263-266.
But in an unincorporated, voluntary association, like the one now under consideration, the privilege of member
p. 193ship is not given "by statute, or derived through prescription, as in a corporation, but is created by and conferred by the organization itself. It is not a franchise—a franchise being a particular privilege vested in individuals, which is conferred by a grant from a sovereign or government
(Finch Law, 164 ; 3
Kent Com., 458), while, on the contrary, the privilege of membership in a voluntary association is derived exclusively from the body that bestows it, and may be conferred or withheld at its pleasure. The law cannot compel such an organization to admit an individual to membership, as may be done in the case of a corporation, nor can it interfere to restore a member who has been deprived of the privilege for not complying with the conditions upon which the enjoyment of it was made to depend. A member of a body of this description has, as such, undoubtedly rights which the law will protect, but they do not rest upon the same ground, and ¡are by no means coextensive with the franchise enjoyed by a member of a corporation. They depend upon the nature of the organization, upon the object for which it ,was formed, and upon- the rules, -regulations, constitution or by-laws which are explanatory of its purpose, and which the body has adopted for its government.
Individuals who form themselves together into a voluntary association for a common object may agree to be governed by such rules as they think proper to adopt, if there is nothing in them in conflict with the law of the land; and those who become members of the body are presumed to know them—-to have assented to them—and they are bound by them (Innes v. Wylie, 1 Carr & K, 262; Brancker v. Roberts, 7 Jur. N. S., 1185; Hopkinson v. Marquis of Exeter, Lond. Times, Dec. 31, 1867; 5 Law R. Eq. Ca., 63).
Such an organization may prescribe the conditions upon which persons will be admitted to membership, as well as the conditions upon which the continuation of membership will depend ; and where they have no regulation upon the subject they may expel a member by a vote of the majority, if he has been notified of the charge
p. 194against him, and afforded an opportunity of being beard in his defense (Innes
v. Wylie,
supra). Voluntary bodies of this kind will be held to the fair and honest administration of the rules which are in force when any proceeding is instituted against a member ; but where a member is expelled in conformity with the rules, and the proceedings are regular and in good faith, it is final, and no judicial tribunal can interfere (Commonwealth
v. Pike Beneficial Society, 8
Watts & S., 250 ). The only question, therefore, that can arise in the present case, is whether the plaintiff was suspended from the privileges of a member of this Open Board of Stock Brokers in accordance with the constitution and by-laws which that body have adopted for its government; for if he was, he has no ground of complaint.
The by-laws of the board provide that whenever a member is in default in any contract, and the fact becomes known to the committee on membership, they shall, after due investigation, report the same, without delay, through their chairman, to the president of the board, who shall at once declare the member so reported suspended from all the privileges and immunities of the organization; and that the member may, within sixty days, appeal, and demand a hearing before the executive committee, who are required to give notice at the board at least five business days before the hearing of the appeal, to enable any person interested to present objections. 'The executive committee are required by the by law to report the result of their investigations, and if it appears that the complaint is just, the declaration of suspension is to be confirmed, otherwise annulled. It is provided, in addition to this, by the constitution, that there shall be an arbitration committee, to take cognizance of and to exercise jurisdiction over all claims and all matters of difference between the members of the board, whose decision shall be binding. And the constitution further provides, that an appeal may be taken from the judgment of the arbitration committee to a board of appeals—-which board it is declared, shall take cognizance of all cases
p. 195of appeal from the judgment of the arbitration committee.
The plaintiff had a contract with the firm of Currie, Martin & Co., who are also members of the board, for the purchase by them from the plaintiff of 1,000 shares of the Hudson River Railroad stock, to be delivered at the plaintiff’s option, at any time during the year 1867. After the making of this contract the Hudson River Railroad Company adopted resolutions increasing the capital stock of the company—in which they provided that the persons in whose names stock should be standing on the 10th of April, 1867, might, before the 15th of the month, subscribe for an equal amount of the additional stock, at one-half its par value. Currie, Martin & Co. claimed that, under the contract, the plaintiff was bound to subscribe for 1,000 shares of the additional stock for them, insisting that they were rightfully entitled, under the contract, to the benefit of the increase ; but this claim the plaintiff refused to admit. By the conditions of the contract, either party were entitled to call for additional deposits, from time to time," to meet the fluctuations in the market; and by a by-law of the board,' either party, upon'all time contracts, may call, at any time during the continuance of the contract, for a united deposit of ten per cent. ; and if either party fail to comply, the other may elect to close the contract.
Currie, Martin & Co. made a call upon the plaintiff for an additional deposit of ten per cent., making an additional deposit of the amount themselves; but the plaintiff refused to make any additional deposit—whereupon Currie, Martin & Co. elected to close the contract-, and notified the plaintiff that they would purchase 2,000 shares of the stock for his account and at his risk, under another by-law of the board, which provides that if any member neglect to fullfil his contract after being duly notified, the other party may employ any one of certain designated officers of the board to buy or sell the stock, as the case may be, either in open market or at the board, accounting to the member in default for any surplus, and
p. 196charging him with any deficiency. Upon receiving this notice from Currie, Martin & Co., the plaintiff sent a notice to the president of the board protesting against the purchasing of any stock upon his account, under the contract, claiming he was not in default; but the president complied with the request of Currie, Martin & Co., and purchased 9,000 shares, and Currie, Martin & Co. notified the plaintiff of the purchase as a purchase under the rule, upon his account and at his risk ; which purchase was made at a rate creating a difference in their favor, and, as they insisted, against the plaintiff, of $69,633.34.
This sum, Currie, Martin & Co. claimed of the plaintiff, and he refused to pay it, whereupon they brought the claim, as a claim and matter of difference under the provision in the constitution heretofore referred to, before the arbitration committee, demanding that they should inquire into and decide it; and the committee appointed a day for the hearing, and notified the plaintiff to appear before them and interpose whatever objection or defense he might have ; to which the plaintiff replied by a written communication, declining to appear before the committee, protesting against their jurisdiction in the matter, and declaring that no matters of difference had arisen between Mm and Currie, Martin & Co.; that that firm had no claim of any kind against him; that the contract made with them was in full force and effect; and that nothing had arisen under it calling for any action of the arbitration committee.
Upon the day appointed, Currie, Martin & Co. appeared before the committee, and the plaintiff did not. The former presented their claim, and gave evidence of the facts upon which it was based, and the committee, by a report or award in writing, decided that Currie, Martin & Co. were entitled, under the contract, to 1,000 additional shares of the stock, having notified the plaintiff that they elected to subscribe for the same ; that the plaintiff was in default, having failed to respond to Currie, Martin & Co.’s call for an additional deposit; that by the by-laws it was, after such default, at the option of
p. 197Currie, Martin & Co. to elect to close the contract, and that they did elect to close it; and the arbitration committee rendered, as they expressed it, judgment in favor of Currie, Martin & Co., and against the plaintiff, for the sum of $69,633.34.
Currie, Martin & Co. then made known to the committee on membership the decision of the committee on arbitration, and the committee on membership, upon due investigation, as it is averred in the answer, reported to the president that the plaintiff was in default upon his contract with Currie, Martin & Co., upon which the president declared him suspended from his privileges as a member of the board. The plaintiff appealed from the act of the president to the executive committee—but before any decision was had upon this appeal, he brought this action to restrain the president and the members of the board, by injunction, from interfering with him in “the full and free exercise and enjoyment of all his rights, privileges and franchises ” as a member of the body. He avers in the complaint that he has daily and repeatedly urged upon the president the calling of the executive committee together, and the granting to him of a hearing, but has been unable to procure it from the failure of a quorum to attend ; and alleges, upon information and belief, that the' failure and delay were at the" instigation of Currie, Martin & Co., and were a part of a general plot on their part, and other members of the board, to deny him justice, and prevent him enjoying his privileges as a member; while the president avers in his answer that he took measures to call the committee together, but that the plaintiff brought this action before a meeting could be had—before it was possible to give any kind of reasonable notice to the members, and before the committee could give the notice required by the bylaws ; so that this averment on the part of the plaintiff of an intentional delay, which he makes upon information and belief, must be regarded as substantially denied ; in addition to which, the president avers that after the service of the preliminary injunction, a meeting of the com
p. 198mittee was had, and that the plaintiff was notified that they were willing and desirous that he should appear before them and have a hearing, and that he appeared before them, after consulting with his counsel, and refused to prosecute his appeal, protesting against and forbidding the committee to take any action in the matter.
The effect of this award made by the arbitration committee has been elaborately discussed upon the argument ; but many of the points raised do not and cannot come under consideration here. Currie, Martin & Co. are not defendants in this action, nor is this a proceeding to confirm the award and for judgment in accordance with it. We are not called upon, therefore, to say whether it did or could have any effect upon the legal rights of the parties to the contract for the purchase of the stock; nor whether the by-law of the board, under which the committee acted, had the same effect as an ordinary submission in writing of a matter in difference to arbitration, so as to be conclusive upon the parties upon the award being made; nor whether the protest of the plaintiff was a revocation of the submission which, in an ordinary arbitration, is a right which either party may exercise at any time before the- matter is finally submitted, upon a hearing, for a decision of the arbitrators. The action of this ."committee comes under consideration here merely as a part of the proceedings by which it was determined that the plaintiff should be suspended from the privileges of a member of the board, and it is only in that light that I shall consider it.
The constitution declares that the by-laws shall provide for the expulsion, suspension and readmission of members for cause, and the by-laws declare that a member’s being in default in any contract shall be a cause for suspension. The committee on membership, when it is made known to them that a member is in default, are, upon due investigation, to report the fact to the president, who must thereupon declare the member suspended, leaving him his rights of appeal to the executive committee ; and, as I understand the law, the further benefit of
p. 199the judgment of the whole body, when the executive committee
report the result of their investigation.
The by-law having provided a mode for reviewing and correcting any error or injustice on the part of the committee on membership in reporting to the president that the plaintiff was in default, he was bound to avail himself of the remedy provided by the constitution and bylaws of the body of which he had become a member, before he can ask a court of equity to investigate a proceeding not necessarily final in the body itself, but which was there subject to review, and might be annulled by the action of a committee expressly clothed with authority to investigate it (Carlen v. Drury, 1 Ves. & B., 154).
He must, in consonance with the rule upon which Lord Eldon acted in the case above cited, resort to the remedy which is provided by the constitution and by-laws of the association itself, before he asks a court of equity to interfere—unless by evasion, intentional delays, or other unjust procedure, he is practically deprived of the benefit of that remedy—which in this case is substantially denied by the answer.
It is averred in the answer that the committee on membership reported the plaintiff to be in default, upon due investigation—and this is all that is required under the by-laws to authorize the suspension of a member by the president. The by-law does not provide how this investigation shall be made, but the law will intend that it means an investigation on the part of the body, in which the member to be affected shall be afforded an opportunity of being heard. What shall or shall not constitute a default upon a contract, so far as it affects the continuance of membership, is a matter which a body like this has the right, in my judgment, to determine for itself; and when it acts in good faith, and the investigation is conducted in the mode prescribed by the constitution and by-laws, no judicial tribunal would assume the right to reverse and set at naught its decision. As the constitution and by-laws have provided for a standing committee,
p. 200who are to take cognizance of and exercise jurisdiction over all claims and matters in difference "between members, and whose decision is to "be binding upon them, that would seem to be the appropriate tribunal in this body to investigate and decide whether a member is or is not in default—the more especially as provision is made for reviewing; and correcting the decision, if erroneous, by an appeal to another tribunal of the board, called the board of appeals. When a claim, therefore, is made by one member upon another, and he brings the matter in difference before this arbitration committee, and they, after having notified the other, and afforded him the opportunity of being heard, investigate the claim, and decide that the other party is in default, that is, in my judgment, a “ due investigation” within the meaning of the law. It never could have been the design of the bylaw that the committee on membership are also to sit in deliberation upon the matter, and investigate it over again, before they are authorized to report to the president that the member is in default. It is due investigation on their part when they inquire and ascertain that the arbitration committee, whose decision is binding and subject to review, have decided, in a matter legitimately before them, that a member is in default. A second investigation would be superfluous, and was not, in my judgment, contemplated by the by-law.
The plaintiff avers, upon information and belief, that some of the members of the . arbitration committee were already prejudiced against him, having repeatedly expressed an opinion favorable to Currie, Martin & Co. ; to which ground of complaint there are several answers. In the first place, this allegation is too general and indefinite. The names of the members referred to are not given. It is not known whether they are or not defend ants in this suit; so that this allegation is incapable of a specific denial by answer on the part of those who could alone make it; in addition to which, the president, in his answer, denies, so far as he has any knowledge or information, that any member or officer of the board has at any time taken
p. 201any side or combined, or in any manner acted with or at the instigation of Currie, Martin & Co. against or to the prejudice of plaintiff, or
interfered in any way or manner, except so far as the constitution and by-laws required . them to.
In the second place, the plaintiff did not, when notified to appear before the committee, place his objection upon any such ground, but Ms written protest against the action of the committee was put upon the ground that no matter of difference had arisen between Currie, Martin & Co. and himself; that that firm had no claim against him of any kind, and that nothing has arisen under the contract calling for the action of the committee; in which he was mistaken; for a matter in difference had arisen between Mm and Currie, Martin & Co., and he and they differed in their understanding of the contract. They acted upon their construction of it, and the result was a claim by them against him, under it, for a large sum of money, which claim they brought before the committee— the committee having, under the constitution, cognizance over all claims between members, so that something had arisen calling for the action of the committee.
And, in the third place, if some of the committee were, as the plaintiff supposes, prejudiced against Mm, and had, before taking any action in the matter, expressed opinions favorable to Currie, Martin & Co., the action of the committee was not final. The plaintiff could have appealed from their decision, if it were erroneous or unjust, to the board of appeals, and he should have resorted to the remedy provided for him within the board, before he could ask a court of equity to interfere upon the ground that the arbitration committee were prejudiced against him.
For these reasons I am of the opinion that the proceedings upon the plaintiff’s suspension were regular ; that they were in accordance with the constitution and by-laws; that nothing has been shown that would authorize this court to interfere : and that Judge Van
p. 202Vorst was right in dissolving the injunction at special term.
Brady, J., concurred.
Barrett, J., having Been of counsel in the cause, while at the Bar, took no part in the decision.