delivered the opinion of the court.
This аppeal is taken from an order entered in the Superior Court of Cook County dismissing plaintiff’s complaint on the ground the court lacked jurisdiction in the case since the plaintiff had not exhausted the remedies provided in the bylaws of the American Federation of Musicians, of which the plaintiff was a member, and of which the Mercury Becord Corporation was a licensee. By a provision of the contraсt the bylaws were made a part thereof.
The plaintiff’s complaint, in three counts, was filed on August 25, 1956. Count II was dismissed by order of court and is not before us for consideration. The first count of the complaint prays damages for breach of a recording contract entered into between Harry Hill (hereafter referred to as plaintiff) and the Mercury Record Corporation (hereafter referred to as defendant). The third count prayed an accounting of royalties allegedly earned by the plaintiff and due from the defendant. Attached to the complaint was an agreement by which the defendant agreed to employ the plaintiff and certain, musicians under his leadership to make a number of phonograph records for the defendant, a phonograph recording manufacturer and sales organization. The defendant agreed to pay plaintiff a sum certain for each phonograph record performed on and produced, and in addition, to pay plaintiff a royalty for each record sold. It was an exclusive contract for two years which prohibited plaintiff from performing for any other phonograph record producer, and guaranteed that at least 32 records would be produсed and released on the market during the term of the agreement.
Subsequent to the execution of the agreement only four records were produced. Plaintiff claims that he performed all his obligations under the agreement and that he held himself ready, willing and able to perform as provided in the contract, but that the defendant breached its obligations to the plaintiff’s damages.
The defendant filed an answer. Thе court, on motion of the defendant (together with other defendants named in Count II), struck Count II of the complaint. The plaintiff filed an amended count, which was also stricken. Count II was then abandoned by plaintiff. The defendant filed an answer on September 17, 1956, to Counts I and III of the complaint. On October 16, 1958, the defendant filed a motion to withdraw its answer and to dismiss the suit on the ground that the court had no jurisdiction of the subject matter of thе action, and filed an affidavit by one of the attorneys in support thereof, setting up in substance that the agreement between the parties contained a paragraph to the effect that the “rules, laws and regulations” of the American Federation of Musicians and of the Local in whose jurisdiction the musicians performed were made a part of the agreement; that the bylaws of the American Federation of Musicians in part provided as follows:
“Article 9, Section 1. A member of the Federation. shall at all times have the right to sue or make claim through his Local Union or the Federation, as the case may be, any leader, agent, employer or whoever it may be, for any amount, resulting from failure to receive his salary, for violation of contract or agreement, or for any difference in priсe actually received by him for an engagement and the price established by his Local Union or the Federation for same.”
“Article 9, Section 7, paragraph (A), sub-section (1) If any such grievance involves or relates to booking agents, traveling bands, recording, radio or television activities, or any other matter within the sole competence of the Federation pursuant to its Constitution, By-Laws, rules or resolutiоns, as distinguished from matters within the competence of the locals thereof, it shall be adjudicated and determined only by the International Executive Board of said Federation . . . .”
“Article 9, Section 7, paragraph (B), sub-section (1) The adjudication of grievances before the Board under the provisions of this Section 7 shall be the sole and exclusive remedy for breach of contract by employees (or performers of services), employers (or purchasers of services) and booking agents.”
(These are the only sections of the bylaws set out in the record.) The affidavit further states that the plaintiff was a member of, and the defendant was duly licensed by, the American Federation of Musicians.
The court on February 20, 1959, entered an order permitting the defendant to withdraw its answer previously filed and dismissing the cause for want of equity. From that order an appeal was taken to the Supreme Court, which transferred it to this court. At the time of entering the order the trial court rendered a written decision, in which he stated:
“The court has concluded that the specific sections of the By-Laws of the American Federation of Musicians which are set forth in the affidavit appended to defendant’s motion to dismiss are valid and binding upon the parties hеreto. The written contract between these parties specifically incorporates therein all of these By-Laws. Plaintiff has not exhausted the remedies provided in the By-Laws and he has not attempted to utilize the grievance procedure therein provided. As a result, under the doctrine of exhaustion of remedies which has been long adhered to by the courts of Illinois, plaintiff cannot obtain relief from the court at this time.”
At common law a general agreement in an executory contract to submit to arbitration any controversy which may arise under it is contrary to public policy and void inasmuch as it is an effort to divest the courts of their jurisdiction. Corbin on Contracts, vol. 6, sec. 1433; 6 C.J.S., Arbitration and Award, sec. 29a; 3 Am. Jur., Arbitration and Award, sec. 31; 3 I.L.P., Arbitration and Award, sec. 3; Cocalis v. Nazlides,
It is not contended by either pаrty that the instant case came under the terms of the Illinois arbitration statute. It is true that the courts at common law approved the submission of controversies to arbitration to avoid tbe expense, formalities and delay of litigation; bnt in spite of such approval the courts would not enforce an agreement to arbitrate even a presently existing controversy, and such agreement was revocаble by either of the parties until an award was actually made by the arbitrators. It has been held in this state that a binding agreement relating to future controversies may be made requiring that the determination of some fact be made by arbitrators or appraisers as a condition precedent to the bringing of a suit (Cocalis v. Nazlides, supra), and that rule is stated in 6 C.J.S., Arbitration and Award, sec. 29b to be generally prevailing. The rule is criticized in Corbin on Contracts, vol. 6, sec. 1435. It is also the rule that such a provision must make such arbitration a condition precedent to the right of action either expressly or by clear implication, and that if this is not done, the arbitration provision will be considered as merely a collateral matter which cannot be pleaded in bar to an action on the principal contract. 6 C.J.S., Arbitration and Award, seс. 29b; 3 Am. Jur., Arbitration and Award, sec. 35; Corbin on Contracts, vol. 6, sec. 1436; Niagara Fire Ins. Co. v. Bishop,
It is also the rule that “The courts will not interfere with the internal affairs of an unincorporated association so as to settle disputes between the members, or questions of policy, discipline, or internal government, so long as the government of the society is fairly and honestly administered in conformity with its laws and the law of the land, and no prоperty or civil rights are invaded, and, under such circumstances, the decision of the governing body or established private tribunal of the association is binding and conclusive and not subject to review or collateral attack in the courts.” 7 C.J.S., Associations, sec. 34a; 4 Am. Jur., Associations and Clubs, secs. 17, 18 and 19. In Cocalis v. Nazlides, supra, it is said at p. 157:
“It is also competent in the case of voluntary organizations and societies to require obedience to rules and regulations as a condition of membership and to enforce the same. Members may make valid and binding agreements to submit questions in dispute connected with their membership to arbitration, as provided by the articles of association.”
This rule has been applied to associations, clubs, churches and labor unions. Werner v. International Ass’n of Machinists,
There is grave doubt in our minds as to whether the provisions in the contract, which did not specifically set out or refer to the clauses concerning arbitration in the American Federation of Musicians bylaws, are sufficient to import those clauses into the contract. In Weiner v. Mercury Artists Corp.,
In the case before us the plaintiff urges that the clause in the bylaws, if it could be considered as binding on the parties, makes arbitration the exclusive remedy which can be pursued by either party in the case of any dispute which may arise in the future concerning the subject matter of the contract. The defendant insists that the contract, taken with the bylaws, does not involve compulsory arbitration, nor does it afford an exclusive remedy, and that all that is required is that the parties exhaust their remedies under the. bylaws of the American Federation of Musicians before commencing an action in court. Such a provision, as we have pointed out, will be enforced by the courts.
In the bylaws of the American Federation of Musicians referred to in the contract before us it is provided that the adjudication of grievances “shall be the sole and exclusive remedy for breach of contract.” That provision neither clearly states nor raises the implication that the determination made by the board is a condition precedent to bringing a legal action. It specifically provides for an exclusive and single remedy, and consequently falls squarely within the common law rule previously referred to, and in Weiner v. Mercury Artists Corp., supra, it is so interpreted.
The defendant in its brief states that the bylaws of the American Federation of Musicians cоntained complicated machinery for the submission of all grievances by the International Executive Board of the Federation, that the adjudication of grievances before that board is an exclusive remedy for the violation of any contract or agreement entered into by the members of the federation, and that adjudication of grievances before the board is the sole remedy by performers for breach of contract. It further says: “Although not shown in the abstract, the by-laws provided specifically that courts of the state in which any party resides shall have jurisdiction with reference to any matter arising out of any adjudication made by the Board including hut not limited to confirmation and enforcement of any award made by the Board.” In its reply brief the plaintiff argues that any judicial review would be limited to fraud, cоllusion or substantial errors appearing on the face of the award, and that the bylaws are clearly designed to set up a mechanism for full and final adjudication of grievances with which the federation is concerned. There is nothing in the record to support the argument of the plaintiff or the defendant and we could properly disregard it. Even if there is a provision in the bylaws permitting a review by the courts of a decision of the arbitrators, that review, under the general rules of law, is limited as indicated by the plaintiff.
We hold that the provision of the contract referring to the bylaws of the American Federation of Musicians, together with the bylaws, is an agreement involving a compulsory arbitration and consequently void. The defendant and the trial court take the view that it was not such an agreement but that it merely provided for a dеtermination before the board as a condition precedent to the bringing of suit. If we would assume that this position is correct, the defendant at the outset could demand that the plaintiff exhaust his remedies under the bylaws before he could bring an action, and if he failed so to do the defendant on that ground could urge that the cause should be dismissed. However, any conduct of the parties inconsistent with the provision or which might reasonably be construed as showing that they did not intend to avail themselves of such provision is a waiver and will prevent the party from setting it up as a defense. Notation in
The plaintiff also cites Payne v. Pullman Co.,
“. . . there is a clear distinction between the obligation to appeal from the lower to the higher tribunals of the society itself resting upon one who presents a question of discipline, аnd such obligation so far as it concerns one who asserts a claim to money due upon a contract. 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 mеmber 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 right of appeal from a lower to a higher tribunal of the society as conferred by its laws and rules. ‘Courts of justice are freеly 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 [53 N.J.Law 536 ]; Bauer v. Samson Lodge No. 32 K. of P.,102 Ind. 262 ,1 N. E. 571 ). 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 thоse instances in which the member appeals to the court to secure property rights or to enforce money demands.’ ”
The cases where the requirement of exhaustion of remedies is enforced are usually cases dealing with the internal discipline of the organization itself; they do not apply to a situation such as exists in the instant case.
The order of the Superior Court appealed from is reversed, and the cause remanded with directions to reinstate the defendant’s answer and for further proceedings consistent with the views expressed herein.
Reversed and remanded with directions.