Court Opinion

ID: 6662838
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:03:32.550255+00
Date Added: 2024-06-11T16:00:13.731392
License: Public Domain

Cornish, J.,
concurring.
Men joining clubs, churches, brotherhoods, or exchanges understand that expulsion ipso facto■ extinguishes all rights. Why should it not? The association having performed the contract upon its part, upon what theory of the law can the member who may have, as in this case, violated the very purpose and spirit of the organization — honesty and fair dealing — recover back the consideration paid or damages? This is not forfeiture. What did he get and lose? The personal privilege of membership — a right or estate which al) initio, in its nature, and by the contract is limited and determined by his status as a member. The forfeiture which equity is said to abhor is the cutting off of an estate-depriving the person of something which -is to vest in the injured person as a recompense. The member’s interest could be likened to the license or estate which a farmer has who is permitted by his neighbor to use his private roadway so long as he will keep the gate shut and in- repair. He can have no property right in the association, separate and distinct from membership. If he could, then he could sell it and retain the. membership, which is absurd. In this respect it is like the interest of a partner in a firm, inseparable and untransferable except by consent of all the partners.
*735The association’s right to expel a member for good cause and the consequent extinguishment of all his rights is primary and fundamental. If not expressed, it exists by implication, and is limited only as the rules of the association may limit it. And herein lies what room there is for controversy in the instant case. Rules which would permit the expelled member to sell the vacant seat, or to receive the proceeds of a sale, would create by contract a right incidental to membership which could be enforced. No property right, separate and distinct from membership, would arise. It would be rather a condition of the expulsion of a member. Such a provision would be a rare thing, unless made only for the benefit of creditors. There is, however, a provision that members in good standing may transfer their certificates, subject to the right of the association to refuse membership to the transferee, either because he is not a suitable person or because the membership has been in some “way impaired or forfeited.” This provision is equitable and is made for those members who must move away or quit the association. It does not change the nature of a member’s interest. It is a right granted to and incidental to membership as such. Being a privilege granted only to members in good standing, it never arises in favor of an expelled member, and he can base no claim upon it. Such power to transfer will not give a member to understand that he is the unconditional owner of a privilege of membership with power to transfer. It is conditioned, and the condition has not been complied with. It seems to me it never would or could give to the certificate a value on the market distinct from and independent of the qualification and right of its owner to a seat on the stock exchange, and that, in view of the terms of the contract, there is no escape from the conclusion that expulsion meant the loss of all rights acquired by virtue of the certificate. That such is the meaning of the contract appears, not only from this provision, but from the. provisions of the contract providing for expulsion for fraud and the provision for reinstatement of an expelled mem*736ber only “upon payment of the regular initiation fee and annual assessment.”
This holding seems to be in line with the decided cases. In the case entitled In re Gaylord, 111 Fed. 717, relied upon by plaintiff, and the only case, I believe, cited by plaintiff where were involved the rights of an expelled member, the plaintiff represented creditors of the member as trustee in bankruptcy. The dispute arose over the proceeds of the sale of the member’s seat provided for by the rules. The rules provided that in the case of a suspended member or an expelled member the seat should be sold. In the case of the suspended member it provided that the proceeds should go to the member’s creditors. Not to make the same application in the case of an expelled member would defeat the general purpose of the rules to protect the creditors. In the absence of explicit directions as to the application of the proceeds of the sale of an expelled member’s seat, it was held that the rules as a whole intended that the proceeds should be applied in the same way, and any balance after payment of creditors should go to the member. The rules in question have no such provision.
So long as the association is not diverted from its purpose and does nothing against public policy, of course the contract controls and no estoppel arises.