the matters they have assumed to decide come before the court for judicial determination. And if the association is incorporated, a mandamus may issue, in such case, to compel the restora tion of a member to his rights.2 c. MAY NOT OUST THE COURTS OF JURISDICTION.—It is a well established principle of law that the courts will not enforce an agreement to arbitrate, except as a condition precedent to bringing an action. And a by-law of a voluntary association designed to enforce the arbitration of disputes among its members and prevent recourse to the courts of justice, being in the nature of such an agreement, is contrary to public policy, and void in so far as it is attempted to oust the courts of their jurisdiction.4 plaintiff, perpetually enjoined it from doing so. Peirce, J, said: "What the plaintiff really submitted to when he became a member of the board of brokers was that the board should take jurisdiction if he should refuse to comply with his stock contracts, not that they should have jurisdiction of his contracts touching houses, lands, leasehold estates, or farming interests. I do not perceive that either by the law of the association, by the law of the land, or by submission to its jurisdiction, the board of brokers has acquired any right to arbitrate and settle the matters in dispute between the plaintiff and Reuben Manley, Jr. The courts of law are open to Mr. Manley to vindicate his rights and to reverse any wrongs done to him, but the board of brokers cannot erect itself into a tribunal for this purpose. The plaintiff has, in my opinion, a clear right to the protection of a court of equity. ... Like every member of such an association, he (the plaintiff) is bound by the laws of the association to which he has assented in becoming a member and by the law of the land as affecting these associations, but not by an exercise of power on the part of his fellow-members to which he has not assented, or which is not derived from the law of the land." See also Hurst v. New York Produce Exchange, 100 N. Y. 605; 10 Am. & Eng. Corp. Cas. 362. 1. Morris v. Grant, 34 Hun (N. Y.) Exch. 398; Russell v. Pellegrini, 6 El. & Bl. 1020; 25 L. J. Q. B. 75; Hemans v. Picciott, 1 C. B. N. S. 646; 87 E. C. L. 645; Braunstein V. Accidental Death Ins. Co., 31 L. J., Q. B. 17; Westwood v. Secretary of India, 1 W. R. 262; Elliott v. Royal Exchange Assur. Co., L. R., 2 Ex. 237; Sharp v. San Paulo R. Co., L. R., 8 Ch. 597; Dawson v. Fitzgerald, L. R., 1 Ex. Div. 257; Edwards v. Aberayron Mut. Ship Ins. Soc., 1 Q. B. Div. 563; Collons v. Locke, L. R., 4 App. Cas. 674; Smith v. Boston, etc., R. Co., 36 N. H. 458; Rowe v. Williams, 97 Mass. 163; Heath v. Gold Exchange, 7 Abb. Pr. N. S. (N. Y.) 251. 4. In State v. Union Merchants' Exchange, 2 Mo. App. 96, it appears that the relator had been suspended from the Union Merchants' Exchange of St. Louis in accordance with a by-law of that body, which compels members to submit their business controversies to arbitration on pain of suspension or expulsion. The court held the by-law unreasonable and void, and awarded a writ of mandamus to restore the relator to his rights and privileges in the Exchange. And after an elaborate review of authorities, the court said: "In view of the character and objects of this corporation and the manifest inconvenience to which every trader must necessarily be subject who is not permitted to join or is expelled from the chief mart of commerce in the place of which he is a citizen and a trader, we think a by-law compelling the members of the Union Merchants' Exchange to submit their controversies to arbitration on pain of suspension or expulsion, is unreasonable in the legal and technical sense of that term and that it cannot be sustained." And see Player v. Archer, 2 XI. THE CLEARING HOUSE.-An important feature of the Stock Exchange is the clearing house, through the agency of which much of the business of the brokers in respect to the delivery of shares of stock and payment for the same is carried on. At the close of each day, sheets, each of which contains the history of a broker's transactions on exchange for that day are sent to the clearing house. Each broker's clearing-house sheet contains a recerd of all the stocks bought and sold by him that day, together with the prices paid and received therefor, The clearing house acts as agent for all parties in making and accepting deliveries of stock, and also in the adjustment of the balances in cash to be paid and received by the members, respectively. If a broker's clearing-house sheet shows that he has bought and sold the same number of shares of any particular stock, his sheet is balanced as to that stock, and no actual delivery of the same is made by or to him. If it does not so balance, he delivers or accepts, as the case may be, an amount of the stock sufficient to make it balance. As in the delivery of shares, the clearing house acts also in the payment for them as a common and convenient agent. Each broker's transactions for the day are balanced on a cash basis, and if it appears that the aggregate price of his sales exceeds that of his purchises he is entitled to receive the amount of such excess in cash. If, on the contrary, the aggregate price of his purchases exceeds that of his sales, he must pay the amount of such excess in cash. Thus, it will be seen, that enormous transactions may be carried on with an actual manual delivery of but few stock certificates and the handling of comparatively small amounts of cash.1 Sid. 121; London v. Bernardiston, 1 Lev. 16; Ballard v. Bennett, 2 Burr. 778; Middleton's Case, Dyer 333a; Dos Passos, Stock-brokers, etc., p. 78; note to Austin v. Searing, 69 Am. Dec. 665. 1. Stock Exchange Clearing Houses.In an article on "Stock Exchange Clearing Houses," by Alexander D. Noyes, in the Political Science Quarterly, vol. 8, No. 2, p. 252 et seq. (June, 1893), it is said: "The system of clearing houses for stocks is not new. It was adopted in the New York Stock Exchange only in the early months of 1892, but it has been in existence elsewhere for at least twenty-five years. Ordinarily, in the first experiments, they took the form of the socalled 'ringing out' of contracts in the same security. By this plan if A had sold B a given amount of one security, and if B had presently sold the same amount to C, the series of trades could be personally adjusted between the three traders so that the only actual exchange required would be the transfer of the securities from A to C. Of course, the number of the traders in the series might be extended indefinitely, for the system did not require that the prices at which the trades were made should have been uniform. The first official establishment of this kind in Europe was founded at the Handelskammer of Frankfort, May, 1867, principally for the purpose of dealing in government securities; United States bonds in particular. The Berlin Exchange adopted the system in 1869; Hamburg in 1870; Vienna in 1873, and London in 1876; The Paris Bourse, owing to its peculiar system of limitation on exchange membership, has never established a regular clearing house for stocks, but the same ends are attained by a voluntary comparison of accounts by brokers' representatives, similar in its general workings to the system of bank clearings. It should be noticed as the particular feature of the European stock clearing houses that their purpose is to STOCKHOLDERS.-(See ASSOCIATION, vol. I, p. 881; BENEFICIAL ASSOCIATIONS, vol. 2, p. 171; BUILDING ASSOCIATIONS, vol. 2, p. 604; COMPANY, vol. 3, p. 366; CORPORATION, vol. 4, p. 184; DISFRANCHISEMENT, vol. 5, p. 684; DIVIDEND, vol. 5, p. 725; FOREIGN CORPORATIONS, vol. 8, p. 329; JOINT-STOCK COMPANIES, vol. 11, p. 1036; MANUFACTURING CORPORATIONS, vol. 14, p. 269; MINING COMPANIES, vol. 15, p. 613; NATIONAL BANKS, vol. 16, p. 143; OFFICERS (PRIVATE CORPORATIONS), vol. 17, p. 39; PARTNERSHIP, vol. 17, p. 824; RAILROADS, vol. 19, p. 775; RELIGIOUS SOCIETIES, vol. 20, p. 773; SOCIETIES AND CLUBS, vol. 22, p. 803; STOCK, vol. 23, p. 582; STOCK EXCHANGE, vol. 23, p. 748; ULTRA VIRES.) deal with exchanges not of money but 3. Parties to the Contract, 798. a. In General, 798. b. Other Corporations, 798. c. Who May Receive Subscriptions, 8oo. 4. Enforcement of the Contract, 801. a. Subscriber's Liability to Pay, So1. b. Calls and Assessments, 803. (1) Definition, 8oz. (2) When Calls Are Necessary, 804. (3) Who May Levy Calls, 805. (a) The Directors, 805. (b) The Courts, 807. (4) How Formulated, 808. (5) Requisites and Valid ity, SoS. (6) Notice, SIO. (a) Necessity, 810. (c) Proof, 812. (d) Specifications as to Pa ayment-Time, Place, etc., 812. the transactions in each separate security are to be grouped together. All transactions having been entered in one or the other column, the balance is struck. If the sheet as drawn up by the clearing-house shows a debit balance, the difference is entered as 'balance cheque,' and the sheet presented at the clearing-house must be accompanied by a check for the balance on a clearing-house association bank near Wall street, drawn to the order of the Stock Exchange Clearing-House's own bank. If, on the other hand, the sheet shows a credit balance, it must have with it a draft on the clearing-house's own bank for the amount of the difference." (7) Maturity, 813. (8) Interest, 813. (9) Limitations, 814. (10) Evidence, 815. (11) Calls After Transfer, 815. (12) Assessments Proper, 817. c. Actions and Remedies, 818. (1) In General, 818. (2) Forfeiture, 818. (a) Nature, Origin and Authority, 818. (b) How Exercised, 820. (c) Notice, 821. (d) Effect of Forfeiture -Deficiency, 822. (e) Stockholder's Protective Remedies, 824. (3) Application of Remedies, 826. d. Defenses, 827. (1) Abandonment or Delay of Enterprise, 827. (2) Charter Changes, etc., 828. (3) Conditions Not Performed, 833. Sub (a) Conditional scriptions in General, 833. (b) Validity of Condi tions, $34. 259; FALSE PRETENSES, vol. 7, p. 699; FRAUD, vol. 8, p. 635; OFFICERS (PRIVATE CORPORATIONS), vol. 17, p. 115), 844. (6) Increase of Capital Stock (See STOCK-Increase, vol. 23, p. 582), 844. (7) Irregular Organization (See CORPORATIONS, vol. 4, p. 197), 844. (8) Mismanagement (See also ULTRA VIRES), 844. (9) Mistake or Ignorance (See MISTAKE, vol. 15, p. 625), 845. (10) Reduction of Capital Stock (See STOCK-Reduction, vol. 23, p. 582), 845. (11) Release, 845. (12) Set-off and Claim, 846. Counter (13) Statute of Limitations (14) Ultra Vires Acts (See (16) Waiver of Defenses, 848. III. Rights, Powers, and Prerogatives, 851. 1. In General, 851. 2. Legislative Rights (See ByLAWS, vol. 2, p. 705; CORPORATIONS, vol. 4, p. 211), 852. 3. Electoral Rights (See also CUMULATIVE VOTING, vol. 4, P. 954; OFFICERS (PRIVATE CORPORATIONS), vol. 17, P. 41), 852. 4. Right to Share in Distribution of New Stock, 853. 5. Right to Dividends, 855. 6. Right to Inspect Corporate Books (See PRODUCTION OF DOCUMENTS, vol. 19, p. 227), 855. 7. Right of Action (See, for actions by Stockholders, CORPORATIONS, vol. 4, p. 280; actions against officers, see OFFICERS (PRIVATE CORPORATIONS), vol. 17, p. 172. See also ULTRA VIRES), 855. (2) Discounting Shares and Releasing Subscribers, 861. (3) Effect of In- (4) Effect of Re- b. Additional (2) Degrees, 867. (a) Ordinary, 867. (3) Statutes Imposing, (a) Constitutionality, (a) Where Execution Against the Com pany Must be Returned Unsatisfied, 888. (b) Where Stockholders May be Sued Immediately and Primarily, 888. (2) Period of the Limitation, 8S9. c. Enforcement of Statutory Liability in Foreign Juris dictions, 890. (1) In General, 890. d. Remedies, 894. e. Joinder of Parties. 896. f. Death of Parties, 896. g. Priority Among Creditors, 898. (1) Where Actions by Individual Creditors Are Authorized, 898. (2) Where Suits Are in Behalf of all reditors, 898. h. Contribution Stockholders Between (See CON TRIBUTION, vol. 4, p. 7, S99. V. Termination of Membership (See DISFRANCHISEMENT, vol. 5, P. 684), 899. |