Alters v. Journeymen Bricklayers Protective Ass'n, Appeal, No. 182

Appeal, No. 182 | Pa. Super. Ct. | Feb 14, 1902

Opinion by

Rice, P. J.,

The power to make reasonable by-laws consistent with its charter and not inconsistent with law, and to alter, amend, suspend or repeal the same, provided that in exercising the latter power vested rights are not interfered with, inheres in every corporation. The power is to be exercised by those in whom it is vested by the charter; but if that instrument is silent on the subject, it resides in, and is to be exercised, by the corporation at large, that is to say, by the members in their constituent character at a general meeting of the corporation. These general principles, already well established by the adjudications of the courts, were embodied in the Act of April 29, 1874, P. L. 73, under which, it is alleged in the plaintiff’s statement of claim, the defendant association was incorporated. Among the powers of the corporation enumerated in that act is the power to make by-laws, and section five declares as follows as to the mode in which, and the body by which, it is to be exercised : “ The by-laws of every corporation created under the provisions of this statute or accepting the same, shall be deemed and taken to be its law, subordinate to this statute, the charter of the same, the constitution and laws of the commonwealth, and the constitution of the United States. They shall be made by the stockholders or members of the corporation at a general meeting called for that purpose unless the charter prescribes another body or a different mode.” It is not claimed that the original charter of the defendant association vested the power to make by-laws in another body than the corporation itself, and while it is true that the -amendments of the charter made in 1895 conferred upon the directors very extensive powers, the power to change the by-laws adopted by the association is not mentioned as one of them. Unless it has been lawfully repealed or changed, the by-laws, which" provided that “ in case of the death of a member of this corporation who is fully paid up and square upon the books .... at the time of his decease, his legal heirs shall, upon establishing claim, receive” a certain sum,' is to be deemed and taken as a law of the association, and may also be regarded as a contract among the members by which to determine their rights and the right of the beneficiaries referred to. We do not say that the corporation, the body that adopted this by-law, had not power to change it by providing, that if a member became in arrears he should not become beneficial until a certain probationary period after payment of all arrears had expired, and that if he died within that period his heirs should not be entitled to receive anything. The reasonableness of such a by-law, and its validity as to a member who became in arrears either before or after its adoption are not the questions now under consideration. The question is as to the power of the directors thus to change the by-laws adopted by the corporation at large. We are very clearly of opinion that this power was not vested in them by the charter or the amendments thereto. 'Up to this point we are in accord with the opinion expressed by the learned judge of the common pleas. But here we diverge.

Such power as the board of directors had to make by-laws, or to change by-laws previously adopted by the association, was derived from the general by-law of the association which reads as follows: “No alterations or amendments shall be made to these by-laws unless proposed in writing to the board of directors ana read at three successive meetings of the board of directors, and adopted by a two-thirds vote of the members present.” Two constructions of this by-law suggest themselves. The first is that all alterations or amendments of the by-laws must first receive the approval of the board of directors. The second is that the corporation surrendered to the directors the exclusive power to alter or amend the by-laws. If the former be the correct construction, the by-law framed by the by-law committee of the board of directors and approved by the board on March 17, 1897, would not bar recovery unless it was after-wards adopted by the corporation in the lifetime of Augustus Alters. In this view it is unnecessary, under the facts of this case, to consider the question as to the binding effect of a by-law making the directors’ approval of a proposed amendment a condition precedent to its lawful adoption by the corporation at large. But if the second construction above suggested'be the true one, the by-law amounted 'to an abdication by the corporation of one of the most important powers conferred upon it by the charter; it was more than a mere by-law. Although called by that name, it was, in its real purpose and scope, an attempted amendment of the fundamental law of the association, whereby, if the position of defendant’s counsel be sustained, the power to change the contract rights growing out of membership, which antedated the by-law, was vested absolutely in the board of directors. This construction ought not to be put upon the bylaw if another is possible which would not involve conflict with the fundamental law. If, however, this construction is unavoidable, our conclusion is, that a by-law conferring such power upon the board of directors, to be exercised without notice to the members of the association, was ultra vires. It is thus seen that in either view of the case the action of the directors on March 17, 1897, was not, of itself, and without more, effective to change the previous by-law and the rights of Augustus Alters thereunder.

The question reserved was, “ whether there is any evidence upon which the plaintiff can recover.” We are of opinion that this question should have been answered in the affirmative.

The plaintiff made out a prima facie case and all that stood in the way of a recovery by her were the amendments of the by-laws approved by the board of directors on March 17, 1897. The burden of proving the lawful adoption of these amendments by the corporation rested on the defendant. The only evidence given to sustain its allegation in that regard was the -testimony of a single witness who testified that “they were ratified by the corporation subsequent to the action of the board.” We further quote from his testimony: “Q. What do you mean when you say a corporation meeting; who was present? A. All the members were notified to be present that belonged to the corporation. Q. For what purpose ? A. For the purpose of adopting the by-laws. In special business of that kind, the corporation is called through the board of directors. Q. According to your by-laws, the board of directors adopted the amendments? A. They frame them. They were adopted by the corporation meeting. Q. Was this a regular or a special meeting? A. It was a special meeting called to sanction the action of a board of directors. It would be advertised in as high as three newspapers and also through the members calling their attention to a special meeting of the corporation through the board of directors.” No record of this meeting was produced, and perhaps this was not absolutely essential. But the date when it was held was not stated by the witness. There was no evidence that Augustus Alters was present or had notice of it, or ever knew of the proposed by-law, or even that the meeting was held in his lifetime. And, although an adjournment of the case was had and the defendant given full opportunity to produce the secretary who sent out the notices of the meeting, no such evidence was given; nor were the advertisements referred to in the foregoing testimony produced. In this state of the proofs it could not be declared by the court that the fact of the adoption of the by-law by the corporation, at such a time and in such a manner as to affect the rights of Augustus Alters and bar recovery by the plaintiff, was conclusively established. This being so, it was error to enter judgment for the defendant non obstante veredicto. Owing to the defects in the defendant’s proofs as to this fact, the point upon which the case turned was the effect of the adoption of the by-law by the board of directors. It follows from what we have said upon that point that the plaintiff was entitled to judgment in her favor.

The judgment is reversed and judgment is now entered for the plaintiff for the amount of the verdict.