Case ID: ohio-cc-dec_19/html/0543-01.html
Source: Caselaw Access Project
Author: {"author": "WINCH, J. HENRY, J.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

BENEFICIAL ASSOCIATIONS — PARTNERSHIP.
    [Summit (8th) Circuit Court,
    September 30, 1904.]
    Hale, Marvin and Winch, JJ.
    
      J. H. Webster et al. v. Taplin, Rice & Co.
    1. Association op Business Firms -for Mutual Protection not a Partnership.
    A voluntary association of business concerns formed for the purpose of adopting a uniform basis of dealings between the members thereof and their employes, and the investigation and adjustment of questions arising between them, is not a partnership.
    [For other cases in point, see 6 Cyc. Dig., “Partnership,” §§ 1-27. — Ed.]
    2. Liability oe Member oe Association eor Dues and Assessments.
    Benefits to be received from the membership in an association of business concerns, for adjustment of difficulties between the member and their employes, are sufficient consideration for an agreement to pay dues and other sums required by the constitution.
    [For other cases in point, see 1 Cyc. Dig., “Associations,” §§ 45-60. — Ed.]
    3. SUEFICIENCY OE DEMURRER TO RAISE OBJECTION TO AN ACTION.
    Objections, in an action for dues and assessments due a beneficial association, that all of the remedies within the organization have not been exhausted should be raised by answer and not by demurrer.
    4. Forfeiture of Membership by Failure to Pay Dues.
    Membership in such association does not cease from the mere nonpayment of dues, so as to relieve a member from liability therefor.
    [For other cases in point, see 1 Cyc. Dig., “Associations,” §§ 61-94; “Beneficial Associations,” §§ 77-108. — Ed.]
    [Proofs of these decisions and syllabus were submitted to Judges Winch and Henry and corrected.- — Ed.]
    Error to Summit common pleas court.
    Two Hearings- — First Hearing.
    This action was originally brought in the common pleas court of Summit county, Ohio, by the district committee for the fourth district, to recover, on behalf of the National Founders’ Association, dues and assessments, quarterly and special, and. the equity in the reserve fund, amounting to a little over $1,000.
    Taplin, Rice & Company had joined the association in the early part of 1900, signing the usual application form and reporting on May 1 the niunber of molders and other employes in their employment. They paid the quarterly dues up to October 1, 1900, but had never paid any other dues or any other regular or special assessments, nor had they ever paid their equity for the reserve fund. The defendant filed a demurrer on the ground that the petition did not constitute a cause of action, and raised two points:
    
      First. That the association is a partnership and cannot sue one of its members at law.
    Second. That the agreement of the members to pay dues, assessments, etc., was without legal consideration.
    The trial court sustained the demurrer and the association took the case to the circuit court, the opinion of* which court, delivered by Winch, J., on September 30, 1904, is as follows:
    Squire, Sanders & Dempsey, R. F. Denison and Allen, Waters, Young & Andress, for plaintiffs in error.
    Stuart & Stuart, for defendant in error.
    
      
       The defendant took the case to the Supreme Court, where the er’.o.s complained of were the two points raised the first time in the circuit court, and the one point raised the second time in the circuit court. The Supreme Court affirmed the court below, without report, April 9, 1907; 76 Ohio St. 000; 52 Bull. 210.
    
   WINCH, J.

The only error complained of in this case is the sustaining of a general demurrer to the amended'petition. It is set forth in the plaintiff’s petition that plaintiffs, defendant and over five hundred othms are members of the National Founders’ Association, which is a voluntary association formed for the purpose of adopting a uniform basis of just and equitable dealings between the members of said association and their employes, and not for the purpose of business adventure, trade or profit, whereby the interests of both may be properly protected, and the investigation and adjustment by the proper officers the association of 'any question arising between the members of said association and their employes. 1

It is further alleged that defendant made application for membership in the association, which application was duly received, and that defendant was elected and became a member of the association, and promised to pay it, or its duly authorized officers, all dues, assessments, quarterly or special, and other amounts payable by reason of the action of said association.

The petition further sets forth articles of the constitution of the association, providing for the payment of dues, assessments, a reserve fund based on the proportion of molders employed by the member, initiation fees and special assessments, the several amounts due and payable in accordance with said articles, demand therefor, and refusal of defendant to pay.

It is stated that the action is brought by plaintiffs in their o-v" names, being duly authorized by the association to do so, and that tlv suit is brought in behalf of the association and all its members.

The objection to the sufficiency of the petition is based upon two propositions, the first of which is, that the plaintiffs’ association is in law a partnership, and as such, cannot sue one of its members.

Definitions of partnership found in the text-books and adjudicated cases uniformly include the characteristic of a sharing in profits. Parsons, Partnership (2 ed.) 69, says:

September 30, 1905.

“A community of interest in the profits is essential to a partnership.”

Voluntary associations with many members may be organized for the purpose of sharing in the profits of some venture or they may be organized without such purpose.

The following is to be found in 1 Lindley, Partnership 50:

“No partnership or quasi partnership subsists between persons who do not share either profit or loss and do not hold themselves out as partners.
“Societies and clubs, the object of which is not to share profits are not partnerships.”

It appearing affirmatively from the petition that the National Founders’ Association is not organized for the purpose of business adventure, trade, or profit, the objection that it is a partnership is not well taken.

The second objection to the sufficiency of the petition is, that even if the association is not a partnership there is no consideration shown for the promise to pay the assessments and other charges.

We think the benefits to be received from membership in the association are sufficient consideration for the agreement to pay the dues and other sums required by the constitution.

Quoting from the case of Palmetto Lodge v. Hubbell, 2 Strob. (S. C.) 457 [49 Am. Dec. 604] :

“Conceding that the liability of. the defendant depends on contract, requiring a consideration, the consideration of his' undertaking to support the constitution and by-laws, and pay all ‘legal demands,’ was, that he should be admitted a member of the lodge and possess the rights and capacity of a corporator.”

The suggestion that the remedies within the organization for the collection of these payments .have not yet been exhausted, and that an action cannot be maintained until they have been, we think should be made by answer, and it is not necessarily raised by demurrer. The demurrer should have been overruled, and for error in sustaining it the judgment is reversed.

Hale and Marvin, JJ., concur.

Second Hearing,

Taplin, Rice & Co. v. J. H. Webster et al.

Marvin, Winch and Henry, JJ.

The ease then went back to the trial court, where the defendant filed an answer setting np Art. 4, Sec. 8, of the by-laws of the association, which provides that: “The secretary shall notify the members of all dues or assessments as they become payable, and if the same are not paid to the treasurer, within thirty days from the date of such notice, the treasurer shall make draft for such unpaid dues, and any member failing to honor such draft shall cease to be a member of this association, etc.,” and claiming that, by the refusal of the defendant to pay dues after October 1, 1900, it had ceased to be a member of the association.

The plaintiffs filed a reply in which they denied that Art.-4, Sec. 8, applied to this case; denied that any draft had been issued, and set up Art. 15, Secs. 1 and 2, and Art. 16, Sec. 1, which provides that:

“No member shall be relieved or absolved from the duties, obligations, requirements and agreements connected with his membership in this association, unless he shall have given four weeks’ notice in writing to the secretary, of his intention to resign from the said membership, whereupon said resignation may be accepted by the sanction of the committee of his district,, at the expiration of the notice, provided that such member shall not be in arrears for any dues or assessments, and shall pay any expenses for assessments incurred prior to his resignation, that may be made upon member at or before the next annual meeting of the association.”

Also that:

“No member shall resign during the existence of a strike.”

And also:

“Should any member refuse or fail to comply * * * with the obligations of membership of this association, the president shall have power to suspend his membership until the next annual or special meeting of the association, when in case of continued contumacy he may be expelled by a two-thirds vote of the members present.”

The reply also set up that the defendant never notified the secretary or the association in writing, of its intention to resign, never did resign, and that at all times the defendant had been in arrears for assessments and dues.

The case was tried to a jury and the trial court instructed the jury that, under Art. 4, Sec. 8, Art. 15, Secs. 1 and 2, and Art. 16, Sec. 1, there were only two methods of terminating membership in the association. One was by resignation, the member having complied with the requirements of Art. 15, Secs. 1 and 2; the other by expulsion, as provided by Art. 16, Sec. 1, and that Art. 4, Sec. 8, merely gave the association the right to expel a member.

The jury found a verdict in favor of the plaintiffs, and defendant took the case to the circuit court, the opinion of which court, rendered by Henry, J., is as follows:

Stuart & Stuart, for plaintiff in error.

Squire, Sanders & Dempsey, R. F. Denison and Allen, Waters, Young & Andress, for defendants in error.

HENRY, J.

Plaintiff in error operates a foundry in this city and was a member of a certain foundrymen’s association, represented by the defendants in error. Judgment was recovered against the former for arrears of dues to said association. Its defense was, that under the rules of the association it ceased to be a- member when it failed to pay its dues, and was thus relieved of liability therefor. There are other provisions of the rules relating to resignation and expulsion of members. But it is admitted that the plaintiff in error’s membership has not been discontinued under either of these sections. Literally, there is some color for the contention that there was a third method of terminating membership; but, reading all the rules together, we think the court below was clearly right in holding otherwise, and the judgment is affirmed.

Marvin and Winch, JJ., concur.