448 Pa. 151 | Pa. | 1972
Opinion by
This appeal arises from a decree of the Court of Common Pleas of Allegheny County which denied equitable relief to appellants, all members of the Pittsburgh Athletic Association.
The gravamen of their complaint was that a certain bylaw purportedly passed at a meeting held November 14, 1967, which limited the transferability of certain membership certificates unlawfully deprived them of vested property rights.
After preliminary objections to this complaint were dismissed, the matter came on for trial before Silvestre J., sitting as chancellor. At the completion of testimony the chancellor entered his adjudication and decree nisi dismissing the complaint. Exceptions were subsequently dismissed and a final decree was entered by the court en banc. This appeal was then filed.
Trial of the issue disclosed the following facts:
The Pittsburgh Athletic Association, a nonprofit membership corporation, was incorporated by decree of tbe Court of Common Pleas of Allegheny County on December 24, 1908, at No. 120 First Term, 1909. The Association’s underlying purpose was and is the maintenance of a club for athletic exercises and social enjoyment.
Life membership was established under the original bylaws of the organization in 1908. Between the year of its establishment and 1923, some 164 original life memberships were sold by the Association, 122 of which are presently outstanding. Such membership called for an entrance fee of one thousand dollars.
The legend on the life membership certificate reads in pertinent part as follows:
“Life Member”
“The membership hereby represented is perpetually exempt from dues and assessments but is subject to all other bylaws and rules.
*154 “This membership is transferable on the books of the Association upon assignment and surrender of this Certificate in accordance with the provisions of the bylaws.” [Emphasis supplied.] On the reverse of the certificate is a provision for its assignment and transfer “according to provisions set forth in the bylaws of said Association.”2
During the intervening years between the foundation of the group and the inception of this lawsuit, the provisions in the bylaws dealing with life membership have been amended on several occasions.
Prior to February 6, 1922, the relevant portion of the bylaws provided that:
Section 4. “Life membership shall be transferable on the approval of the Board of Directors, subject to the regular action of the Membership Committee, upon the payment of a transfer fee equal to the amount of the resident initiation fee in force at the time transfer is made, and such members shall be exempt from the payment of dues and assessments. The Association has first opportunity to purchase any life membership which may be offered for sale.”
Section 9. “Each Life Member shall pay an entrance fee of $1,000 and shall be exempt from the payment of annual dues.”3
Section 5. “Life Membership shall be transferable to a Resident member only on the approval of the Board of Directors, subject to the regular action of the Membership Committee, upon the payment of a transfer fee equal in amount to the Resident initiation fee in force at the time transfer is made, provided there be credited on such payment in the amount of any initiation fee already paid by him, and such member shall be exempt from the payment of dues and assessments.
“Effective ten (10) days following the enactment of this amendment Bylaw, all Life Memberships in existence will be entitled to one (1) transfer as set forth above, and if and when said transfer takes effect, the new certificate will be marked with the legend, ‘This certificate is non-transferable’. However, the Life Member holding the new certificate will have all the other privileges of Life Membership as set forth herein, with*156 the exception of transfer rights and any rights incidental thereto.
“No Life Memberships, in addition to the 157 outstanding shall be issued. The Association has first opportunity to purchase any Life Membership which may be offered for sale.”
Appellants assert that the effect of the 1967 amendment was to convert what had been a life membership, exempt from dues and assessments and heretofore continuously transferable, subject to the bylaw regulations, to a life membership which would be terminated at the death, resignation or expulsion of the transferee of the present holder. The inherent defect, in their estimation, is the deprivation of contractual and property rights; rights which were vested in the holders of life memberships and which cannot be divested without their consent. The property right so vested is declared to be the unqualified right to transfer each such certificate in perpetuity, exempt from dues and assessments in the hands of the holder.
It is appellee’s position that while in past practice life memberships have been transferred beyond the life of the original life member, such transfers have always been made pursuant to the bylaws of the Association and their subsequent amendments. It is argued that the transferability of a life membership arose out of and exists solely by virtue of the bylaws of the Association and that an amendment limiting transferability is within the power of the Association, despite the fact that it may restrict privileges which were previously permitted by the liberal policy.
The chancellor concluded that it was necessary to strain the definition of life membership in order to find a perpetual right of transferability and declined to do so. \He further found by analysis of the contract between the Association and its members that any right
Two issues are presented for our determination: first, whether the court below erred in determining that life membership holders did not have a perpetual right to transfer such memberships; and second, whether it is now open to appellants to argue that the amendment did not receive the necessary vote of the membership.
We take as our starting point scrutiny of the term life member, in general and in the context in which it appears in the membership certificate document. While there is a dearth of cases on the point the term “life membership” was discussed by the court in Masonic Country Club of Western Michigan v. Holden, 12 F. 2d 951 (1926). At issue was the tax consequence of club membership. Analyzing the nature of such a membership, the court said at page 955: “It is a matter of common knowledge, of which this court will take judicial notice, that the kind of membership in clubs and organizations such as the plaintiff which is cal hid life membership is a familiar one, and constitutes essentially, as its name indicates, membership for life, subject to earlier termination only by resignation or dishonorable expulsion.” See also, Martin v. Town & Country Development, Inc., 230 Cal. App. 2d 422, 41 Cal. Rptr. 47, 10 A.L.R. 3d 1347 (1964), wherein the holding of the trial court that lifetime membership meant for the lifetime of the plaintiffs was affirmed.
Instantly appellants direct our attention to the use of the word “perpetual” in the legend on the life membership certificate and in the bylaws. As was earlier noted, the certificate plainly states that, “The member
We attribute little significance to the 1948 amendment to the title in the bylaws which formerly read “Life Members” and which now reads “Life [Perpetual] Members”. We are instead persuaded by the reasoning of the lower court that, “At the most all that was intended was an attempted clarification and conformity to the legend on the Life Member Certificate that that membership was perpetually exempt from dues and assessments.”
Appellants couple their argument that a vested property right in these memberships certificates arises by virtue of the contract between the Association and its individual members with the conclusion that this case is thus governed by such decisions as that of Marshall v. Pilots Association, 206 Pa. 182, 55 A. 916 (1903), and Becker v. Berlin Beneficial Society, 144 Pa. 232, 22 A. 699 (1891). Therein this Court refused to sanction what it deemed to be a forfeiture or impairment of preexisting contract rights vested in the membership. The difficulty as we perceive it lies in the major premise of the aforementioned argument.
• In our view the contract in the instant case consists of two elements: (1) the certificates of membership,
In our judgment cases like Moosic Lakes Club v. Gorski, 402 Pa. 640, 168 A. 2d 343 (1961), cited by appellants, are inapposite since none deals with an “open contract” clause as is present instantly. In none of the cases cited were rights expressly taken and accepted subject to all bylaws of the organization. Furthermore, we are not convinced that the principles operating in the case of Schaad v. Hotel Easton Co., 369 Pa. 486, 87
Appellants urge us, in the event of our deciding the first question adversely to them to remand this case to the lower court for a further hearing at which time argument will be received on whether the bylaw re
The following additional facts help to illustrate the problem at hand. In their original complaint appellants asserted the amendment did not receive the necessary vote. Prior to the commencement of trial there was some on-the-record discussion about stipulating the number of votes cast. Appellants were willing to stipulate that 278 members attended the meeting and that the teller’s count showed 179 votes for the resolution and 83 against. Appellee would not stipulate as to the accuracy of the teller’s count. Disagreement centered around some 12 votes plus the question of how many members were still in attendance at the time of the vote. At this point the on-the-record stipulation discussion bogged down and ended inconclusively. The crucial fact of which we must take cognizance is that
While such failure seems to lend credence to the court en banc’s conclusion that there was such a stipulation, we do not pass on the point since it is black letter law that an appellate court cannot consider anything which is not a part of the record in the case. See Kilian v. Allegheny County Distributors, Inc., 409 Pa. 344, 185 A. 2d 517 (1962). However, we cannot overlook the barren state of the record on this issue conjoined with the fact that there was no reservation of the question on the record, and hence we conclude that the point was inadvertently or otherwise surrendered.
Decree affirmed. Each side to pay own costs.
None of the appellants voted for or in any way consented to this amendment. Nor are any of them original life members but have instead come by their memberships in various other ways; as gifts or inheritances, purchases from original life members, through
The bylaws of the Association from 1922 to 1967 provided that life membership was to be transferable by approval of the Board of Directors, subject to the regular action of the membership committee and upon payment of a transfer fee. The bylaws, however, were not explicit as to the period of this transferability, i.e., whether it was to continue as long as the membership was outstanding, or whether it was to be only for the life of the original holder. The parties presented conflicting testimony and interpretations at trial.
At the February 6, 1922, meeting Section 9 was incorporated into the body of Section 4 by the membership.
In order to determine what the original bylaw on life membership provided, the Association manager, a Mr. Bailey Settle, took the pre-February 6, 1922, provision and traced it back through the minute books of the Association to 1911 and discovered that it had never before been the subject of an amendment.
The same process was repeated with regard to the critical bylaw on the power to amend bylaws. The search revealed that the Association had this power from its inception, a fact which was conceded by appellants in their brief.
See and Cf. Kensington National Bank et al., Trustees v. Cedarbrook Country Club et al., 161 Pa. Superior Ct. 407, 54 A. 2d 838 (1947), where it was said by the court that the rights of holders of certain proprietary certificates depended upon the contract which they entered into with the Club when the certificates were issued, the terms of which were contained in the certificates and in the bylaws.
Concepts of voluntariness are inherent in the notion of a club or association. In Carpenter v. Zoning Board of Appeals of Framingham, 352 Mass. 54, 223 N.E. 2d 679, 681 (1967), the Supreme Judicial Court of Massachusetts said that a “club” could be said to be “an association or a corporation comprised of individuals joining together for social intercourse or some other common object,” and noted also that “Samuel Johnson long ago defined a club as ‘an assembly of good fellows, meeting under certain conditions.’ ” See also, Chafee, The Internal Affairs of Associations Not for Profit, 43 Harv. L. Rev. 993, 1006, 1007 (1930).
In his adjudication Judge Silvestri wrote: “At the trial of the matter the parties agreed, if it was found by the Court that the plaintiffs do not have a ‘vested property right’ in their membership and the defendant has the right to enact bylaws regulating the transfer of the ‘Ufe Member’ or if the plaintiffs do have a ‘vested property right’ in their membership, that in either event the question of the improper tabulation of the ballots cast would be moot, for the reason that under the first possible finding the defendant would be able to hold another meeting and rectify any alleged errors and under the second possible finding the bylaws amendment whether properly or improperly enacted would be a nullity.”
The court en banc also found that the parties agreed to resolve the vote issue in the manner outlined by the chancellor, noting, however, that “The agreement . . . was not reduced to writing by counsel or placed in the record.” It went on to say, “It is the opinion of this court that the better practice would have been to imt the agreement of counsel in writing in the form of a stipulation and place it on the record. . . . This Court, however, will not vacate the decision of the Chancellor merely because of the conflicting recollection of one counsel.”