Court Opinion

ID: 7003605
Source: CourtListenerOpinion
Date Created: 2022-07-24 03:46:30.787203+00
Date Added: 2024-06-11T16:09:49.128505
License: Public Domain

Mr. Justice Adams, dissenting: I am unable to concur in the opinion of the court, for the following reasons: It is manifest from the bill that there is a serious dispute, involving a large amount of money, between the Weare Co. and the McNeil Co. The former admits that were it not for the pecuniary losses of the Weare Commission Co., alleged to have resulted from fraudulent stock transactions of McNeil and Jolly, the Weare Commission Co. would be indebted to the McNeil Grain Co., on account, to the amount of about $32,000; and the Weares claim that the loss to the Weare Commission Co., resulting from the fraudulent stock transactions, was at least $27,000, which they claim should, equitably, be set off against the claim of the McNeil Grain Co. McNeil, president of the latter company, denies the alleged fraudulent transactions, and refuses to allow the claim of the Weare Commission Co., or any part thereof. This dispute or difference between the parties renders it absolutely necessary for the board of directors, in passing on McNeil’s complaint, to investigate and determine whether there were such fraudulent stock transactions by McNeil and Jolly as are alleged in the bill, and, if so, whether the Weare Commission Co. suffered pecuniary loss by reason of such transactions. In fact, the decision of this dispute will be decisive of the complaint, in so far as it relates to the claim of the McNeil Grain Co. It is contended by counsel for the Weares that, under the charter and by-laws of the board of trade of the city of Chicago, the board of directors of the board of trade have no power to so investigate and determine. If this contention is sound, it is decisive of the controversy. Sections 7 and 8 of the charter of the board of trade are as follows: “ Sec. 7. Said corporation may constitute and appoint committees of reference and arbitration, and committees of appeals, who shall be governed by such rules and regulations as may be prescribed in the rules, regulations or by-laws for the settlement of such matters of difference as may be voluntarily submitted for arbitration by members of the association or by other persons not members thereof; the acting chairman of either of said committees, when sitting as arbitrators, may administer oaths to the parties and witnesses, and issue subpoenas and attachments, compelling the attendance of witnesses, the same as justices of the peace, and in like manner directed to any constable to execute.” “ Sec. 8. When any submission shall have been made in writing, and a final award shall have been rendered, and no appeal taken within the time fixed by the rules or bylaws, then, on filing such award and submission with the clerk of the Circuit Court, an execution may issue upon such award as if it were a judgment rendered in the Circuit Court, and such award shall thenceforth have the force and effect of such a judgment, and shall be entered upon the judgment docket of said court.” Section 7 is the only section or part of the charter which authorizes .the board of trade, or any committee of the board, to investigate and determine as to differences between members of the board, and the authority is expressly limited to cases in which the matters of difference are voluntarily submitted for arbitration by the members differing, which submission must, by section 8, be in writing. Section 7 is also the only section or part of the charter which confers authority to compel the attendance of witnesses and administer oaths to them, and it is evident that such powers are conferred solely for the purpose of the section, namely, the investigation and determination of differences between members voluntarily submitted for arbitration. The necessity for the exercise of these powers in cases of voluntary submissidn, in order that there may be a full and fair investigation, is made apparent by section 8, which gives to the award of the arbitrators the effect of a judgment of the Circuit Court, on filing the award and submission with the clerk of that court, and provides that execution may issue on it. Grants from the state are construed favorably for the state and strictly as against the grantee. Sedgwick on Construction of Statutes, 2d Ed., 291-2. “ All power exercised by corporate bodies, whether public or private, must be conferred by the government, either in express terms or by necessary and clear implication.” Webster v. The People, 98 Ill. 343; Metropolitan Bank v. Godfrey et al., 23 Ib. 579, 602; Thomas v. Railroad Co., 101 U. S. 71, 82; Commonwealth v. Erie & N. E. R. R. Co., 27 Penn. St. 339. In the last case, Black, C. J., a jurist of national reputation, delivering the opinion of the court, said: “ This case requires us to give a construction to the charter of a private corporation. The frequency of such cases excites some surprise when we reflect that an act of corporation is and always must be interpreted -by a rule so simple that no man, whether lawyer or layman, can misunderstand or misapply it. That which a company is authorized to do by its act of incorporation, it may do; beyond that all its acts are illegal. And the power must be given in plain words or by necessary implication. All powers not given in this direct and unmistakable manner are withheld.” In the same opinion is the following: “ If you assert that a corporation has certain privileges, show us the words of the legislature conferring them. Failing in this, you must give up your claim, for nothing else can possibly avail you. A doubtful charter does not exist; because whatever, is doubtful is decisively certain against the corporation.” Powers existing by necessary implication are such as are necessary to the exercise of the expressly granted powers. The maxim Expressio unius exclusio alterius est is applicable here. Brown’s Legal Maxims, 8th Am. Ed. 651; Huesing v. City of Rock Island, 128 Ill. 465; Gaddis v. Richland County, 92 Ib. 119, 123; Sammis v. Clark, 13 Ib. 544, 546; Sedgwick on Cons, of Statutes, 2d Ed., p. 31, and note a. Section 7 being the only section of the charter which authorizes an investigation by the board of trade or any committee thereof, of differences between members of the board, and the authority therein conferred being limited to cases in which such differences- are voluntarily submitted by the members differing, and the mode of proceeding in such case being plainly prescribed, the investigation of such differences not so voluntarily submitted, or otherwise than in the prescribed manner, is necessarily excluded. In Thomas v. Railroad Co., supra, the court say: “We take the general doctrine to be, in this country, though there may be exceptional cases and some authorities to the contrary, that the powers of corporations organized under legislative statutes are such and such only as those statutes confer. Conceding the rule applicable to all statutes, that what is fairly implied is as much granted as what is expressed, it remains that the charter of a corporation is the measure of its powers, and that the enumeration of these powers implies the exclusion of all others.” The general rule in the interpretation of statutes is that when the mode of exercising a given power is prescribed, the power can be exercised only in the prescribed manner. Webster v. The People, 98 Ill. 349; Badger v. Inlet Drainage District, 141 Ib. 540, 541; Butler v. Nevin, 88 Ill. 575; People v. Weber, 89 Ib. 347; Dillon on Mun. Corp., 4th Ed., Sec. 449, and cases cited. In the present case the appellants claim the right to investigate and decide in respect to the difference or dispute between the McNeil Grain Co. and the Weare Commission Co., without the consent and against the will of the latter company, and in a mode other than that prescribed. The first part of the second charge against the Weares, namely, that they “ have been guilty of an attempt at extortion, in that they refuse to pay over to said McNeil Grain Company the balance due said McNeil Grain Company, $32,731.46, more or less,” is evidently based on section 9 of rule 4 of the by-laws of the board of trade. Section 9 provides that any member of the association who shall be guilty of a willful violation of any business contract or obligation, and shall neglect or refuse to equitably and satisfactorily adjust and settle the same, shall be suspended from all privileges of the association until the same is satisfactorily adjusted and settled. The section also provides: “ When any member shall be guilty of an act of bad faith, or any attempt at extortion, or of any dishonest conduct * * * he shall be expelled by the board of directors.” Section 17 of article 4 provides for the examination of charges by the board of directors, notice of the charge to the accused, opportunity to be heard in his own defense, etc. Section 9 does not, in terms, provide, for an adjudication of differences or disputes between members, nor does it contemplate such adjudication. Taken in connection with section 17, it contemplates a trial of the member accused, and not an investigation of differences or disputes between. the accused and another member. In this respect it is in harmony with the charter. It is manifest that the board of directors can not discipline the Weares on the charge above quoted, without exercising a power withheld from that board by the charter, namely, the investigation and decision of the dispute between the McNeil Co. and the Weare Co. not voluntarily submitted as provided by section 7 of the charter. All that the board of directors could do in respect to the money demand of the McNeil Co., which is substantially admitted by the Weare Co., would be to investigate the disputed matter, namely, the cross-claim of the Weare Co., and this they are inhibited by the charter from doing. The effect of a decision against the Weares in respect to the dispute in question would be final, in the sense that their expulsion or suspension would follow as matter of course. The contention of appellants is that notwithstanding the legislature has, in express terms, authorized voluntary written submissions of disputes between members of the association to a committee of arbitration, and has conferred on such committee power to compel the attendance of witnesses and administer oaths to them, nevertheless it was intended that the board of directors should have power to investigate and decide such disputes without voluntary submission of them, against the will of one of the parties, and without power to compel the attendance of witnesses or administer oaths to them. The mere announcement of such contention seems a sufficient answer to it. In People v. Board of Trade, 45 Ill. 112, the following by-law was involved: “ In case any member of the association, having made any business contract, either written or verbal, and failing to comply promptly with the terms of such contract, shall, upon the representations of an aggrieved member to the board of directors, accompanied with satisfactory evidence of the facts, be by them suspended from all privileges of membership in the association until such contract is equitably or satisfactorily arranged or settled, when he may be restored to membership, and it shall be the duty of the board of directors to cause to be publicly announced the suspension or restoration of any member under this rule.” In respect to this by-law the court say : “ One of the objects for which the board of trade was created undoubtedly was to promote a high standard of commercial honor and commercial credit in the city of Chicago, by securing among the members of the board a prompt discharge of their pecuniary obligations, contracted in their dealings with each other, without a resort to the expensive and dilatory procedure of a court of law. In order to accomplish this, the charter authorizes the board to create within itself tribunals of reference and arbitration, by whose decision the members shall be bound. But it does not confine the board to the use of these means for the attainment of these objects. It expressly gives the power of expulsion, and under that power the corporation has adopted this by-law, providing that, if a member fails to comply with a business contract made with another member, he shall be expelled. This is somewhat different from, the adjustment of disputes, which cvreproperly referable to the committees of reference and arbi'braUon. It applies to cases of non-compliance with contracts'about which there is no dispute, necessary to be referred to one of these committees, as there was none in the present case.” The court, in using the language, “ This is somewhat different from the adjustment of disputes, which are properly referable to the committees ofreference and arbitration,” evidently had in mind section 7 of the charter, which provides : 11 Said corporation may institute and appoint committees of reference and arbitration.” In People v. Order of Foresters, 162 Ill. 78, 84, the court say: “ Where the controversy is concerning the discipline or policy or doctrine of the order or fraternity, the member must resort to the method of procedure prescribed by the association, including the remedy by appeal, before invoking the power of the courts. But it is otherwise where a member claims money due from the society on its contract, or where the beneficiary of a deceased member claims money due from the society on its contract of insurance; in such case, the right to resort to the courts to coerce payment will not be abridged by the rights of appeal from a lower to a higher tribunal of the society as conferred by. its laws and rules. ‘ Courts of justice are freely open to those who seek money due them upon a contract.’ (Niblack on Ben. Soc., and Acc. Ins., 2d Ed., Sec. 313; 2 Bacon on Ben. Soc. and Life Ins., Sec. 450; Zeliff v. Knights of Pythias, supra; Bauer v. Samson Lodge, 102 Ind. 262.) As was said in Zeliff v. Knights of Pythias, supra, ‘In determining whether courts will take jurisdiction, a distinction must be observed between cases in which the association subjects its members to discipline for immoral conduct or for violation of the rules of the order, and those instances in which the member appeals to the court to secure property rights or to enforce money demands.’ ” To construe the by-law, section 9 of article 4, as authorizing the decision by the board of directors of disputes between members of the association, involving money demands or rights of property, is not warranted either by the terms of the by-law or by the charter. The by-laws authorized by the charter, and to which members of the association must be presumed to have assented when they became members, are such as are authorized by the charter. Section 1 of the charter authorizes by-laws, “ not contrary to the laws of the land.” In Board of Trade v. Nelson, 162 Ill. 431, 439, the court say: “ When the relator became a mem ber of the board of trade, he voluntarily submitted himself to the operation of all laws enacted for its government, and agreed to be bound by them, so far as within the corporate authority.” In Green v. Board of Trade, 174 Ill. 585, 591, this language is used: “ The by-laws to which such member agrees to submit are such as are authorized by the nature of the corporation and the laws of the country, and hence must not be contrary to the policy of the law, or unreasonable.” The question in respect to the power of the board of directors in the premises was not presented for decision in any of the cases cited by counsel for appellants, nor has it been in any case. In the case of Ryan v. Cudahy, 157 Ill. 108, the question might have been, but was not, presented. On the contrary, the court, referring to Ryan, the complainant in the bill, say: “ He voluntarily submitted to a trial of the matter referred to the committee, without in any manner calling in question the jurisdiction of the committee of the person or subject-matter. Under such circumstances, having selected his tribunal, he is estopped from denying the jurisdiction of the committee of the person and subject-matter.” In the same opinion the court, referring to People ex rel. Rice v. Board of Trade, say: “ Expressions may be found in the opinion of the court which may bear the construction that a court would not interfere, in any case, with the action of an organization like the board of trade; but these expressions were not necessary to a decision of the case, and can not be regarded as authority.” That a court of equity has jurisdiction of the case stated in the bill, is unquestionable; and the court was warranted, as ancillary to its jurisdiction, in enjoining the board of trade and its officers from entertaining and passing on McNeil’s complaint, in so far as it involved the determination of the dispute between the McNeil Grain Co., and the Weare Commission Co., in regard to the claim of the latter company on account of the alleged fraudulent stock transactions, and in enjoining McNeil from prosecuting or aiding in amr way in the prosecution of said complaint, in so far as it involved the determination of that dispute. The injunction granted is in accordance with the prayer of the bill, and goes to the entire complaint. In this respect it is too broad, and should be limited as above stated. This, however, is now of no practical importance as to McNeil, as, by the order or decree of September 27,1902, the injunction was dissolved as to the board of trade and its officers, and modified as to McNeil by limiting it in the manner above suggested.