Court Opinion

ID: 8336321
Source: CourtListenerOpinion
Date Created: 2022-10-17 22:36:24.96341+00
Date Added: 2024-06-11T16:45:31.833357
License: Public Domain

Gtldersleeve, J.
(dissenting).—This is an appeal from a final order of the special term, denying a motion for a peremptory mandamus. The relator was a member of the New York Produce Exchange, the respondent herein, from which he has been suspended. The respondent is a corporation, created by special act of the legislature, Laws of 1862, chapter 359. ; It was not organized for the sake of profit; but its leading purposes were “to •provide and regulate a suitable room or rooms for a produce exchange in the city of New York, to inculcate just and equitable principles of trade, to establish and maintain uniformity in commercial usages, to acquire, preserve and disseminate valuable business information, and to adjust controversies and misunderstandings between persons engaged in business.” It.has power to enact by-laws and to elect new members, and to expel or suspend members in such manner as may be provided by the by-laws. The by-laws provide that if any member be accused of a willful violation of the charter, a fraudulent breach of contract, or any proceedings inconsistent with just arid equitable principles of trade, or other misconduct, he may, by a complaint in writing, be summoned before the complaint committee, when, if he desire, he shall be heard in his defense. If that committee is unable to conciliate the disputants, or induce them to arbitrate, and the circumstances seem to warrant, the eornplaint shall be referred to the board of managers, when both plaintiff and defendant shall have an opportunity to be heard again in person prior to final action in the case; and if, in the opinion of the board, the charge or charges against said defendant be substantiated, it (the board of managers) may, by a vote of not less than two-thirds of all members present, either censure, suspend or expel him from the Exchange. At the time the relator was admitted to membership in the Exchange, he signed an agreement to abide by the charter and by-laws and any amendment which might 'thereto be made; and at such time of admission the charter and by-laws provided as above set forth, and so provided at all the times under consideration. On or about December 22d, 1892, the firm of Whitman Brothers, members of the Exchange, made a complaint against the relator, accusing him of “ proceedings inconsistent with just and equitable principles of trade, as follows: Non-fulfillment of contract,” etc. The relator appeared and presented his defense on the merits, and the complaint committee, being unable to conciliate the disputants or induce them to arbitrate, referred the matter to the board of managers. The relator then appeared before the board of managers and presented his defense on the merits. After hearing the testimony the board of managers, by a vote of more than two-thirds of all the members present, suspended said relator, holding that the charge of proceedings inconsistent with just and equitable principles of trade in respect-to the non-fulfillment of the contract in question was substantiated. The proceedings on the part of the Exchange appear to have been perfectly regular, and in accordance with the provisions of its charter and by-laws.
The relator, upon being so suspended from the Exchange, *535made a motion for a peremptory mandamus to compel the respondent to reinstate him as a member of the Exchange, which motion was denied by the special term, and from the order entered thereon this appeal is taken to the general term.
It is claimed, on the part of the relator, that the complaint filed by Whitman Brothers did not confer j urisdiction on the Exchange. By its charter and by-laws, to which relator subscribed, and by which he agreed to be bound, jurisdiction was conferred upon the Exchange to suspend a member for “ proceedings inconsistent with just and equitable principles of trade.”
The complaint is as follows:
“ To the Chairman of the Complaint Committee of the New York Produce Exchange:
“ Sir: The undersigned and above named complainants hereby
complain of the above named defendant, member of the New York Produce Exchange, and accuse him of proceedings inconsistent with just and equitable principles of trade as follows: Hon-fulfillment of contract of Hovember 16th, 1892 ; also claim costs of this complaint. “Whitman Brothers,
“Complainants.”
The relator claims that under some circumstances it is not “ inconsistent with just and equitable principles of trade” to break a contract, and that the complaint should have been more specific; that it should have specified or indicated that the contract was claimed to have been broken through the fault or fraud of relator. We are of opinion, however, that the complaint was sufficient, as it gave relator knowledge of the alleged offense which he was to meet. See Angel and Ames on Corporations, § 422. The complaint stated that the relator had broken a specified contract. This fact, once established, called for an explanation from the relator. It was the province of the Board to determine, from all the facts and circumstances, whether the conduct of the relator, in respect of the contract, was inconsistent with just and equitable principles of trade.
The nature and purpose for which a corporation was created is the controlling consideration in determining the validity of its bylaws ; and if they are foreign to its character and .a departure from its purposes, they are void; if otherwise, and they are in harmony with the general laws, they are valid. That a corporation, purely commercial in its character, would soon cease to be respected, or respectable, if it tolerated among its members a violation of an undisputed contract, is a proposition too plain for argument. People ex rel. Page v. Board of Trade, 45 Ill. 112.
In the case at bar, the charge against relator makes out a case of proceedings inconsistent with just and equitable principles of trade, and the relator must abide by an adjudication from the committee or board by whom, as one of the terms of membership, he agreed such matters should be investigated. Hurst v. N. Y. Produce Exchange, 1 Central Rep. 260, opinion of Danforth, J.
In the case last above cited, which controlled the court below, *536and which discloses a state of facts similar to those in the case at. bar and presents a similar question of jurisdiction, the court of appeals was sharply divided, three members holding that the Board, had jurisdiction, and three holding that it had no jurisdiction, and oue declining to pass upon the question of jurisdiction. SeeHurst v. N. Y Produce Exchange, 100 N. Y. 605. We are inclined to hold that the board had jurisdiction. Corporations have an inherent power of disfranchisement for any one of three causes, viz.: (1) for offenses having no immediate relation to a member’s, corporation duty, but of so infamous a nature as to render him unfit for the society of honest men; (2) for an offense against the-member’s duty as a corporatorand (3) for offenses compounded of the two. People ex rel. Page v. Board of Trade, supra. In this case at bar, relator is charged with an offense against his duty as a. corporator, e. g., acting inconsistently'with just and equitable principles of trade. He was duly given a hearing in his defense, and, after such hearing, suspended by proceedings in perfect conformity with the requirements of the charter and by-laws, which he had agreed to be bound by. It is true that there was an action pending in a court of law involving this contract between relator and Whitman Brothers; but the only question which the board attempted or cared to determine was this: Was the conduct of relator inconsistent with just and equitable principles of trade?' Where a member of a corporation performs an act in direct contravention of the purposes for which the charter was obtained, he-may be suspended or expelled. People ex rel. Thacher v. N. Y. Commercial Association, 18 Abb. Pr. R., 271. The charter of the-defendant stated that the corporation was formed,- among other-tilings, to inculcate just and equitable principles of trade; and; we are of opinion that just and equitable principles of trade require the members to perform their contracts, unless good and sufficient reasons are shown why such contracts should not or could; not be performed.
The Exchange, having jurisdiction, acted through its board of' managers judicially in determining the question of relator’s guilt, and punishment, and such decision, being regularly made, cannot, be collaterally reviewed. When relator joined the Exchange, the-by-law, above referred to, with regard to proceedings inconsistent, with just and equitable principles of trade, was in force, and he ■signed an agreement, as we have before stated, to abide by the-charter, and "by-laws; but,, independently of this agreement, the-mere fact of membership subjected him to their operation, for-when a person becomes a member of a corporation, he thereby voluntarily submits himself to the operation of all laws in force-for its government, and by implication agrees to be bound by them, so far as they are within the corporate authority to enact. People ex rel. Page v. Board of Trade, 45 Ill. 112. The by-law provides that if, in the opinion of the board of managers, the charge be substantiated, the accused member may be censured, suspended or expelled. The relator, by so joining the Exchange and subscribing to its charter and by-laws, chose his own tribunal, appeared before it, argued his case upon the merits, and the-*537tribunal decided that his conduct had been unjust and inequitable,, and suspended him.
Where one voluntarily becomes a member of an incorporated society or association, whose by-laws provide a certain method of disfranchisement for certain specified causes, the assent of the-member thereto being a fundamental condition of his tenure of membership, the right of disfranchisement is clearly established, in the corporate body, and may be duly exercised in the manner and for the causes prescribed. And where, under such an organization, a corporator has been regularly tried and suspended or expelled in due form, the sentence of the body corporate, thus acting in a judicial capacity, is not to be questioned collaterally, nor will the merits of such suspension or expulsion be examined in proceedings for a mandamus. See High on Mandamus, § 292.. Where a subordinate body is vested with power to determine a question of fact, the duty is judicial, and though it can be compelled by mandamus to determine the fact, it cannot be directed to decide in a particular way, however clearly it be made to appear what the decision ought to be. People ex rel. Francis v. Com. Council, 78 N. Y. 33. “Where the charter of an association provides for an offense, directs the mode of proceeding, and authorizes the society, on conviction of a member, to expel him, an expulsion, if the proceedings have been regular, is conclusive? and cannot be inquired into collaterally by mandamus or by any other mode.” Angelí and Ames on Cor., § 418.
The fact that relator refused to arbitrate has nothing to do with, the case. The proceeding before the board was not an arbitration, or, strictly speaking, a trial of the issues between relator and Whitman Brothers; it was simply an investigation into the conduct of the relator in the matter to determine whether or not he had been guilty of conduct inconsistent with just and equitable principles of trade. For the same reason the pendency of an action at law between relator and Whitman Brothers has no bearing upon the case.
For the reasons above stated the order appealed from must be' affirmed, with ten dollars costs and disbursements.