67 How. Pr. 38 | N.Y. Sup. Ct. | 1884
— It was held by the general term of the court of common pleas, in the case of White agt. Brownell (2 Daly, 329), that as the privilege of membership of a voluntary unincorporated association is not conferred by the sovereign power, but is created solely by the organization itself, courts of law cannot compel the admission of an applicant for membership, nor interfere to restore to membership one who has been expelled for non-compliance with the conditions upon which membership is made to depend; that the members of such an association are bound by its rules, when not in conflict with the law of the land, and that the courts can interfere no .further than to hold the association to a fair and honest administration of those rules; also that, therefore, to warrant the granting of an injunction to restrain the officers of a voluntary unincorporated association from carrying
The Hew York Stock Exchange is an unincorporated voluntary association, but the seats therein are worth in cash, as shown by the affidavits in this case, at least $30,000, and the privileges attaching to membership in the board are of great value. The twentieth article of the constitution provides as follows:
“ Members guilty of obvious fraud: Should any member be guilty of obvious fraud, of which the governing committee shall be the judge, he shall, upon conviction thereof by a vote of two-thirds of said committee present, be declared by the members to be expelled, and his membership shall escheat to the exchange.”
By the second article of the constitution the government of the exchange is vested in the governing committee, composed of the president and treasurer of the exchange and of forty members elected as therein provided. The plaintiff in this case claims that he has been illegally and unfairly expelled from the stock exchange, and he has obtained an injunction that the said exchange, and the president and officers thereof, show cause why during the pendency of this action, and until final judgment is entered therein, they should not be enjoined and restrained from excluding the plaintiff from the said exchange, and, from asserting against him the resolution of expulsion passed upon him-, and from interfering with the exercise and enjoyment by him of his rights and privileges as
The defendant claims that the rules applicable to proceedings in ordinary courts of justice have no application to proceedings of this character, and that the trial contemplated by the constitution of the stock exchange is one to be had before the governing committee of that body, according to such methods as it may choose to pursue, subject, however, to the conditions that this committee must exercise the authority conferred upon it honestly and in good faith, and that they must afford to the accused party a full and fair opportunity to defend himself. I think that, under the decisions to which I have already referred, it must be conceded that the governing committee of the stock exchange is not bound, on the trial of a member for misconduct involving his suspension or expulsion, by the ordinary rules which obtain in judicial proceedings; but it is equally obvious, from the opinions rendered in those cases, that the courts are authorized to interfere for the purpose of holding the association to a fair
In the case now under consideration there is no appeal from the decision of the governing committee, and if the proceedings of the committee were fair and honest, and the members thereof were not actuated by bias, prejudice or partiality, their judgment must be deemed to be conclusive upon the rights of the plaintiff. It is stated in the brief of the learned counsel for the defendant that the excepted case in which judicial tribunals will interfere with or review the proceedings of voluntary unincorporated associations in the matter of the expulsion of members cannot, perhaps, be better stated than by saying that where the proceedings resulting in the expulsion of a member are contrary to natural justice a court of equity may interfere. I am inclined to think that this is a correct statement of the rule. How, in this case it appears that the plaintiff had been a member of the exchange for several years prior to the proceedings instituted against him; that rumors sprang up affecting his reputation for integrity and fidelity, and that publicity having been given to these rumors by an article published in one of the newspapers the plaintiff requested that the exchange should make an investigation. A committee of investigation was accordingly appointed, which made an examination extending over a period of several weeks. The plaintiff appeared before that committee, his books were
“Resolved, That in the management of the account of John E. Duff,-W. J. Hutchinson and George H. Kennedy, composing the late firm of Kennedy, Hutchinson & Co., were unfaithful to the trust reposed in them and were guilty of improper and illegal practices,. and apparently of obvious fraud, and that charges will promptly be preferred against them under article 20 of the constitution of the exchange.”
It was also resolved that the committee appointed to investí
The secretary was directed to forward to Messrs. Hutchinson and Kennedy, immediately, the resolution expressing the opinion of the governing committee after considering the report of the special committee. On the twenty-fourth of May, on the request of the plaintiff, it was ordered that the special meeting of the governing committee appointed for the hearing on Wednesday, the thirty-first, should.be postponed to the Monday following, and' a motion to allow Hutchinson and Kennedy to appear with, and be defended personally by, counsel was lost. At a meeting held on the 5th of June, 1882, the special business was taken up, Mr. Hutchinson was called in, and the charge of obvious fraud in his dealings with and for the account of Mr. John It. Duff during several years ending December 31, 1881, and the nine specifications under said charge, were read to him and he was informed that each specification would be read in its order, when he could answer to them separately. He answered, denying each accusation in the specifications, and read his defense at great length from a document in his possession, which “ he was asked to leave, but preferred to take away.” The minutes also recite that, after answering numerous questions by members, he retired. The committee then adjourned until the next day. On the sixth of June the special business was resumed by reading documents received from Mr. Hutchinson, in answer to interrogatories at the last meeting, and Mr. Kennedy was called in. After he had retired Mr. Duff was called in, and after answering questions and “ denying generally statements made by Mr. Hutchinson, he retired.” Mr. J. H. Brouwer was also called in, and after answering
It is apparent from the proceedings had before the governing committee that Hutchinson and Duff were never brought face to face before that committee, and that Hutchinson never had an opportunity of cross-examining Duff, or of calling upon him for any explanation in respect to any of the testimony which he gave before that committee. It is unnecessary for me in disposing of this motion to determine whether it would not have been competent for the governing committee, after Hutchinson had read his answer, to proceed immediately to vote upon the question of his expulsion. It may be conceded that they would have had the right to do so. But the examination of Duff and Brouwer after Hutchinson had retired was, to my mind, unjust and unfair to the latter, and I am of the opinion that under the decisions to which reference has been made—even confining the power of this court to interfere in proceedings of this nature, within the narrow rule conceded by the learned counsel for the defendant in their eighth point to be the true rule in such cases — a case is presented which calls for the interposition of the court.
When Hutchinson had read his answer, assuming that the members of the governing committee'had read the evidence taken before the special committee of investigation, both sides had been heard, and if it was intended to take any further evidence, I think that the ordinary principles of justice and of right required that Hutchinson should have been allowed to be present to confront his accuser and to cross-examine him in respect to any evidence which he might give before the
In Thorburn agt. Barnes (2 Common Pleas Law R., p. 401), a case relating to an award, Willes, J., says: “ It was certainly not put too high by Mr. Brett when he said that it is one of the first principles of justice that no man’s rights .shall be adjudicated upon without giving him an opportunity . of "being heard in support of them.”
Bayley, baron, in Capel agt. Child (2 Crompton & Jervis, p. 558), said: “ I know of no case in which you are to have a judicial proceeding by which a man is io be deprived of any part of his property, without his having an opportunity to be heard. There is the case of The King agt. Benn & Church (6 Term Reports, p. 198), in which, where a warrant of distress, which is in the nature of an execution, had issued, not grounded on a previous summons, lord Kenyon laid it down most distinctly as an invariable maxim of our law, that
In Wood agt. Woad (Law Reports, Exchequer, vol. 9, p. 194), which was a case where the plaintiff alleged that he had been wrongfully and improperly expelled from a mutual insurance company, chief baron Kelly said : “ This, then, is the great question in the case: Was the alleged act of expulsion void ? It is contended for the plaintiff that the language of the rules gives an unconditional and absolute power to the committee to expel a member from the society, and I agree that if the committee in fact exercised their power under the rules their decision could not be questioned; however unfounded the reasons for it may have been, it would have been final and could not be reviewed by any court. But they are bound, in the exercise of their functions, by the rule expressed in the maxim — audi alteram partem — that no man shall be condemned to consequences resulting from alleged misconduct unheard and without having the opportunity of making his defense. This rule is not confined to the conduct of strictly legal tribunals, but is applicable to every tribunal or body of persons invested with authority to adjudicate upon matters involving civil consequences to individuals.”
This case seems to be fully in point, inasmuch as it related to the expulsion of a member from a society attached to the membership of which were valuable rights and privileges.
Again, while these proceedings are not to be governed by the strict rules which apply to actions at law or suits in equity, or even, perhaps, by the rules which obtain in regard to arbitrations, there is, I think, a strong analogy between the principles which govern in arbitrations and those which relate to proceedings of this character. In the case of Sharpe agt. Bickerdyke (3 Dow’s Rep., 102), lord Eldon said that by the “great principle of eternal justice which was prior to all these acts of sederwnt regulations and proceedings of court, it was impossible an award could stand where the arbitrator heard
In the Matter of Plews agt. Middleton (6 A. E., N. S., 845), an award was set aside because the three arbitrators, after having determined within a small amount the sum to be paid, agreed to examine a witness separately, and did so. Coleridge, J., in that case says: “ To uphold this award would be to authorize a proceeding contrary to the first principles of justice. The arbitrators here carried on examinations apart from each other and from the parties to the reference, whereas it onght to have been conducted by the arbitrators and umpire jointly in the presence of the parties.”
In Oswald agt. Earl Grey (24 Law Journal, Q. B., 69) it was held that no usage can justify the arbitrators in hearing, one party and his witnesses only, in tíre absence of and without notice to the other party.
In Walker agt. Frobisher (6 Vesey, 69) an award was set aside, the arbitrator having received evidence after notice to the parties that he would receive no more, in which they acquiesced. In this case lord Eldon says: “ A judge must not take upon himself to say whether evidence improperly admitted had or had not an effect upon his mind. The award may have done perfect justice, but upon general principles it cannot be supported.” This decision also seems peculiarly applicable to the averments contained in the joint affidavit of Messrs. Lnmmis and Eames, that the testimony given by Duff and Brouwer before the governing committee was not different in character or effect from that which these witnesses had given before the special committee of inquiry. Both of the affiants sat in judgment upon the plaintiff in this case, and it does not seem just or fair that they should take evidence in his absence, without notice to him, and determine that
In Drew agt. Drew (2 Macqueen’s House of Lords Cases, p. 1) it was held “ that an arbitrator greatly errs if he, in any of the minutest particulars, takes upon himself to listen to evidence behind the back of any of the parties to the submission (See particularly remarks of Lord Chancellor Cramworth, at p. 9).
The principle to be deduced from all these cases is that in every proceeding before a club, society or association having for its object the expulsion of a member, the member is entitled to be fully and fairly informed of the charge and to be fully and fairly heard.
' In this case Hutchinson was not heard after Duff and Brouwer had been called in to satisfy members of the governing committee who were in doubt, even after hearing the
The recent case of The National Bank of the Republic agt. Darragh (30 Hun’s Reports, p. 29), decided by the general term of this department, shows how rigidly courts have maintained the rule that arbitrators should receive no evidence after a cause had been submitted, which might by any possibility influence their award.—[Ed.