laws, the courts will at the instance of the expelled member enquire whether the by-laws were legal and reasonable; but in the case of unincorporated associations the courts will not question the reasonableness of the rules or by-laws; and unless it can be shown that they are contrary to natural justice, the decision of the association, if in accordance therewith and arrived at in good faith, is not open to judicial review.1 So also where, under its by-laws, a benevolent society has decided that a member is not entitled to benefits, the decision is conclusive, and will not be reversed or questioned by the courts.* When in a proper case the courts undertake to enquire into the reasonableness of a by-law, it is a question of law and evidence of its unreasonableness is inadmissible." § 320. To be general in application.-"A by-law may be in the form of a resolution and require the same solemnities to pass it; but a resolution is not necessarily a by-law." For by-laws must be general and not for the benefit or detriment of any particular person." They "must be directed to all within the sphere of their operation, and must operate equally." A resolution entered by the directors which is in effect a command to the officers to exclude one of the directors from the enjoyment of his rights, being aimed at a single individual, and not a general regulation affecting the directors at large or the stockholders, "is not entitled to the name of a bylaw." And where a company had no by-law providing for the forfeiture of shares for non-payment of assessments and 1 Niblack on Mutual Benefit Societies, § 25; Hirschl on Fraternities, 63; Note to Hiss v. Bartlett, 63 Am. Dec. 776; Note to Austin v. Searing, 69 Am. Dec. 672; Kehlenbeck v. Logeman, 10 Daly, 447, 448. 2 Osceola Tribe v. Schmidt, 57 Md. 98. But see Sutherland, J. in People v. Sailors' Snug Harbor, (1868) 54 Barb. 532, 535, where it was said, obiter, "The accused inmate should have reasonable notice of such examination, and an opportunity of being heard, of exculpating himself and of disproving the charge. Nor the directors attempted to effect a forfeiture in a particular instance by a resolution which was claimed to be a by-law, declaring the shares of a delinquent to be forfeited, and ordering them to be sold, the sale was decided to be irregular and unauthorized, and the company was held liable in damages for conversion of the shares.' It has been remarked by the English writer on this subject, Mr. Lumley, that the authorities who make by-laws are very prone to reserve to themselves powers to provide specially for special cases, to make individual exceptions out of the general rules, or to dispense with regulations when they deem it convenient or proper to do so; that it has also been considered that this discretionary power of dispensation will assist the authority in cases where the by-law as expressed is in excess of the legal power vested in them. It is plain, however, that all corporate by-laws must stand on their own validity, and not on any dispensation granted to members. They can not be subjected to any condition which does not apply to all alike, and can not be compelled to receive as a matter of grace anything which is matter of right; neither on the other hand should there be personal exemptions of a general nature from any valid regulations that bind the mass of corporators. § 321. Obligatory upon members. A member of a corporation or association is bound by all by-laws, rules, or regulations, to which he has assented, provided they be not immoral, contrary to public policy or in contravention of the charter or the law of the land; and his duties, rights and privileges are to be measured thereby. They embody the terms of a contract between the company and its members; 1 Budd v. Multnomah Street Ry. Co., (1887) 15 Oregon, 413; s. c. 3 Am. St. Rep. 169; s. c. 12 Oregon, 271; s. c. 53 Am. Rep. 355. 2 Lumley on By-Laws, 100. To the point, however, that the dispensing power does not remove the objection of ultra vires, he cites Waite v. Garston Local Board, L. R. 3 Q. B. 5, and Wortley v. Nottingham Local Board, 21 L. J. N. S. 582. 4 3 People v. Young Men's Father Mathew T. A. B. Soc., 41 Mich. 67. 4 Vide supra, §§ 312-317. 5 Hyde v. Woods, (1871) 2 Saw. 655, 659. Vide supra, § 85. 6 "There can be no possible doubt that the obligation of the company to the privileged shares rests on bylaw 18, and that the by-law establishes the terms of a contract between company and stockholders. and provided they be made in pursuance of its charter are as binding upon its members and upon others acquainted with its method of business as any public law of the State. The fact of absence from a duly constituted meeting at which a by-law is passed does not relieve a member from any obligation thereby created. The binding effect of by-laws is said to be derived from the assent of the member thereto. But it is not necessary that his assent be directly expressed by signing the constitution, articles or by-laws. It will be presumed from his act in becoming a member. While by-laws are not always binding upon strangers, a person who becomes a member of an association or company after the adoption of a bylaw, is not considered a stranger; and by joining the organization he is deemed to accord his assent thereto and to be thereafter bound by the obligations which it may impose upon the members." $322. Extent of the effect of by-laws upon strangers.Whether a by-law of a company or association can have any binding effect upon a stranger, depends, first, upon its being something more than a rule merely for the government of the members and officers in conducting the affairs of the organization; and, second, upon the stranger having or being affected with knowledge of it. And, on the other hand, the purpose of by-laws being to regulate the internal affairs of the company, the duties of the members toward each other and toward the company itself, an outsider can not enforce them unless he can show some privity, as for example that he relied upon them in giving credit to the company. By-laws regulating the use and enjoyment of joint property or to govern the con We have already so decided." Hazeltine v. Belfast & M. R. Co., (1887) 79 Me. 411; s. c. 1 Am. St. Rep. 330, 332. S. P. Belfast & M. R. Co. v. Belfast, 77 Me. 445. 1 Brick Pres. Church v. Mayor &c. of New York, (1827) 5 Cow. 538; Anacosta Tribe v. Murbach, 13 Md. 91; Cummings v. Webster, 43 Me. 192; McDermott v. Board of Police, 5 Abb. Pr. 422; Union Bank v. Guice, 2 La. Ann. 249. duct of the members of a private corporation or to protect, secure or enhance their rights or interests, have no binding effect upon strangers.1 A by-law which is a rule merely for the government of the officers of a corporation in conducting. the corporate business can have no effect upon its contracts with other parties. Thus where under the charter of a mutual fire insurance association, the incorporators are authorized to make such by-laws as they may deem advisable for the management of their corporate affairs, their by-laws can have no effect to modify contracts entered into between the corporation and the assured. And a by-law allowing stockholders upon paying thirty per cent. of their shares to forfeit them is void as against creditors of the company. So again, a by-law creating a lien upon shares of stock in favor of the corporation for debts due to it from the shareowner, are inoperative as against his judgment creditors. His assignee in bankruptcy, however, is not a stranger in respect of a by-law creating a lien. Whether a lien so created will operate against a transferee of the shareholder, depends, under the second consideration stated above, upon the transferee having knowledge thereof. Whether the transferee will be affected with knowledge of a regulation of this character by notice upon the face of the certificates that the shares represented by them are subject to all debts due the company from the holder, seems to be still unsettled. In Connecticut he is held to be affected 6 1 Lumley on By-Laws, 66, 67. The by-laws are evidence against the corporate officers although they be not corporators. Bank v. Wollaston, 3 Harr. (Del.) 90. Bank of Holly Springs v. Pinson, 58 2 Samuels v. Central &c. Express Ala. 585; Steamship Dock Co. v. Co., McCahon, 214. 3 Stewart v. Lee Mut. Fire Ins. Assoc., (1887) 64 Miss. 499. 4 Slee v. Bloom, 19 Johns. 456. Byron v. Carter, 22 La. Ann. 98. 6 In re Bigelow, 1 Nat. Bank. Reg. 632, 667; Morgan v. Bank of North America, 8 Serg. & R. 73; s. c. 11 Am. Dec. 575. In re Long Island R. Co., (1838) 19 Wend. 37; s. c. 32 Am. Dec. 429; Heron, 52 Pa. St. 280; Pelot v. Johnson, 33 La. Ann. 1286; Byron v. Carter, 22 La. Ann. 98; Anglo-Californian Bank v. Grangers' Bank, 63 Cal. 359; Morawetz on Corporations, 2nd ed. § 203. Cf. Neale v. Janney, 2 Cranch, 188; Evansville National Bank v. Metropolitan National Bank, 2 Biss. 527; Lee v. Citizens' National Bank, 2 Cin. Super. Ct. 298. with the knowledge; but in New York a contrary ruling has been made. Persons, although not members of the company, who engage in business transactions with its officers are affected with notice of limitations upon their powers prescribed in the corporate by-laws. So that a by-law providing that all contracts involving a certain amount shall be executed by certain officers with certain formalities is binding upon strangers, they being presumed to know the extent of the powers of the agents with whom they deal. A corporation, however, may be estopped by acquiescence in a contrary course of dealing from setting up its by-laws as against strangers. The general principle applicable to the rules of the Stock Exchange, as well as other trades, is, that a person who deals in a particular market must be taken to deal according to the custom of that market, and he who directs another to make a contract at a particular place must be taken as intending that the contract may be made according to the usage of that place." § 323. Amendment and repeal. The same authority which makes a by-law may subsequently repeal or amend it. Thus 1 Vansands v. Middlesex County those creditors whose claims arise Bank, 26 Conn. 144. out of Stock Exchange transactions, 3 Bohm v. Loewer's Gambrinus Brewery Co., (1890) 9 N. Y. Supl. 514, stated supra, § 203. Acc. Rathburn v. Snow, (1889) 22 N. Y. St. Rep. 227, stated supra, § 209. 2 Conklin v. Second Nat. Bank, 45 for that is a fraud upon the general N. Y. 655. creditors. And if it be urged that that is the rule of the Stock Exchange, the answer, as Lord Justice James said, is that the Stock Exchange is not an Alsatia; the Queen's laws are paramount there, and the Queen's writ runs even into the sacred precincts of Capel Court." Williams' Forensic Facts & Fallacies, (1885) 106. 4 Seeley v. San Jose Independent Mill &c. Co., (1882) 59 Cal. 22, stated supra, § 205. 5 Williams' Forensic Facts & Fallacies, (1885) 105. "But the rules of the Stock Exchange, being the rules of a domestic forum, can not affect persons who are neither members nor the clients of members. Thus they can not affect the rights of the general creditors of a defaulting member. A defaulting member, therefore, can not voluntarily pay money to the official assignee to be distributed exclusively amongst 6 Newling v. Francis, 3 Term Rep. 198; King v. Ashwell, 12 East, 22; King v. Westwood, 4 Barn. & C. 806. Cf. Lambert v. Addison, 46 L. T. 20. But in New Hampshire it has been said that a by-law of a religious society, requiring a two-thirds vote to alter by-laws, may, nevertheless, be repealed by a majority. Richardson v. Union Congregational Society, 58 N. H. 187. |