*1 stated, affirm the order of the trial For the reasons we court dismissing petition.
Order affirmed. took no considera- WARD part tion or decision this case.
(No. 43855. al., AUGUST A. VAN DAELE HENRY et v. Appellants, al., VINCI et Appellees.
Opinion rehearing March 1972. on denial filed Modified May
SCHAEFER, J., part. took no
WARD, J., specially concurring.
UNDERWOOD, DAVIS, C.J., J., dissenting. SULLIVAN, PFAFF,
THOMAS P. ROBERT E. KECK, SUSSMAN, ROBERT C. and ARTHUR M. all Jr., BLOCK, & Chicago (JENNER appel- counsel), lants. RUDNICK, both and PAUL D.
HARRY L. RUDNICK WOLFE, & Chicago counsel), (RUDNICK Illinois, Inc. Certified Grocers appellee TUN- P. and THOMAS McSWEENEY W. DONALD *2 WAITE, HARDIN, ING, both of Chicago (SCHIFF, BRITTON, of for other & appel- DORSCHELL counsel), lees. KLUCZYNSKI delivered the opinion
of the court:
We leave to from a granted reversal appeal Vinci, Daele v. (Van Ill.App.2d 332) of a of the circuit court of Cook judgment County Certified permanently Illinois, Grocers Inc. enjoining from resolutions Certi (hereinafter Certified) enforcing fied’s board of directors (hereinafter Board) in Certified or to take action punitive reason resolu tions.
The that Certified a pleadings alleged private, retail voluntary organization independent grocers doing business under the 1969, Act Co-operative (Ill.Rev.Stat. 32, ch. and the Business Act pars. 331) Corporation 305— 1969, ch. Certi- (Ill.Rev.Stat. pars. 157.167). 157.1— fied’s is to secure lower purpose prices through large volume It then these sells its purchasing. products members at a increased After Certified slightly price. pays its own a of the excess is operating expenses, portion rebate, refunded to the a members as and the remainder is i.e., used for its reserves, own and purposes, expansion business loans to its membership. 30, 1969,
On Certified’s Board sent written January Mart, notices Hills Inc. Hickory plaintiffs, Super and Center, Food Inc. Sparkle Hickory) (hereinafter them of a notifying (hereinafter Sparkle), special to be held on The meeting February purpose and was to determine whether meeting or censured, should be Sparkle suspended expelled members of Certified pursuant bylaws. corporate and from the arose charges against Hickory Sparkle Kalchbrenner, activities of a shareholder alleged Adolph Guinta, and Frank R. president Hickory, shareholder and officer of It was alleged Sparkle. Kalchbrenner and Guinta with the ‘Certified “associated Stockholders Committee Fair and Better Management,’ business, Certified’s resolution disrupted impeded associated with Certified’s construction problems program, false rumors and made untrue statements spread were intended to and which did Certified’s directors injure officers, relations firm to engaged public Certified publicize charges against purpose the election of aiding Stockholders’ Committee’s nominees to the Board of Directors Certified.” (129 332, at The notice also advised Ill.App.2d that each could be assisted counsel legal during *3 proceedings. at this time suit, was derivative class-action
Pending filed in the circuit court of Cook County, by Hickory, and other of Certified, shareholders Sparkle chairman and other members the Board averring the defendants knew or should have known of the alleged of one activities of Certified’s whose mal- employees feasance in the of Certified’s operation building program resulted in the loss of sums of large money Certified.
On 21, 1969, February amended their plaintiffs a count in which adding informed the complaint they court of the alia, board and inter special meeting alleging, would not receive a fair they before the Board hearing because of the many Board members were defendants in action and the Board was present seeking retribution rather than in in faith acting good convening this and disciplinary proceeding. Hickory Sparkle prayed relief the defendants “from injunctive prevent censure, or from action to them
taking any suspend in at Certified.” membership (129 Ill.App.2d The trial court continued of the disposition equitable until the acted on the prayer pending charges. before on At the Board hearings February 25 9, 1969, made motions to dismiss April various Board members because charges, disqualify and to Board member from prejudice, preclude if he from might participating profit plaintiffs’ expulsions. These motions were denied. for the Board then introduced various attorney exhibits, from sworn designated
papers excerpts deposi- tions, and trial with obtained connection testimony other counts in the After complaint. presentation evidence, the Board denied again motion plaintiffs’ dismiss the charges.
Plaintiffs introduced which showed that they proof on with Data Certified. good standing offered rebates for was also plaintiffs’ prior years indicated that those had during years averaged Sparkle $40,700 and had averaged approximately approxi- $22,400 No witnesses were year. mately per presented to call the Board side, either sought although plaintiffs chairman, who and the Board refused refused testify, or direct him to do so. It then resolutions request adopted from further excluding Certified.
Thereafter, the circuit court granted temporary after consideration injunction subsequently, exhibits, the court Board’s proceedings permanently member- from Certified enjoined expelling resolution in accordance with the Board’s April ship reversed. On appeal *4 that Plaintiffs now proceedings argue expulsion violated fundamental were so grossly unjust they of To due law. support position principles hear not contend that the Board could fairly plaintiffs these matters because its members were involved many in the which events rise to the gave charges.
Certified’s that a member can be bylaws only provide “the of not than affirmative vote less expelled by at a board two-thirds directors meeting.” present The record before us indicates that the Board preferred and the resolutions charges against expel plaintiffs and were vote eleven Board Hickory by Sparkle adopted members were seven defendants pending ten lawsuit. Both and were Hickory Sparkle expelled affirmative votes. Thus it that at least six apparent defendants voted to each plaintiff.
Furthermore, maintain that were charges initiated them and the evidence was Board introduced the same who was attorney representing seven Board members the instant Thus the case. directors were placed contradictory position both and being prosecutors judges.
To refute these contentions defendants maintain that were allowed all in that appropriate protections were notice Sparkle given pending charges discredit these at the permitted charges In addition hearings. granted every request for information or Moreover, documents. production defendants assert that the not Board was precluded because the had hearing allegations Board simply Trade, originated v. Board 174 Ill. charges. (Green Defendants that since the finally argue corporate authorize bylaws action, exclusively expulsion by of bias is allegation immaterial. While the Board did follow the agreeing pro- cedure set out in the we disciplinary hearings, cannot find the final defendants’ contention persuasive. There are too factors that the many indicating were in fact not faith good but disciplinary hearings, an reality, silence censure dissident attempt The record association. shows clearly *5 394 also
the Board of seven members that were was comprised The defendants derivative action. allega- pending tions the the against plaintiffs supported entirely for record, and statements taken depositions, excerpts in in to use the suit which were introduced an attempt to authenticate various exhibits. The Board’s decision expel was based on at least of the defendants six voting the The a commis- plaintiffs. provide be to sion could the conduct appointed investigate members and to the board avoid report independently the the in situations where board bias possibility the to avoid members and report independently the were not a fair given hearing. possibility in have the courts this State traditionally Although in internal been reluctant interfere operations that an associations, this strong possibility important interest of was affected an economic the court administrative gives power improper proceeding and the We with view act. duty agree expressed are here that said: “We Court of New Supreme Jersey an concerned with and therefore deal with organiza solely in tion, here, which language may Harbourt, 247, Trautwein v. 40 Super. [Trautwein N.J. 123 be A.2d viewed as an economic 30], necessity; with such must an be dealing organization, alert to the need for peculiarly truly protecting public welfare and the interests of reason advancing justice by ably individual’s safeguarding earning opportunity a while livelihood not standards impairing proper ” Falcone v. objective organization. [Citation.] 582, 592, Soc., Middlesex Medical 170 County N.J. A.2d 796-7. stand- adherence that strict
We recognize seriously be arduous might ards would due associa- voluntary the disciplinary proceedings impair Stores, v. retail Economy tions such grocers. (Gottlieb However, one Inc., 848, 102 S.E.2d 345.) 199 Va. accorded should be actions to such disciplinary subjected a fair To hold before tribunal. hearing impartial otherwise be a denial of essential We would agree rights. “that a if with organization, tinged private particularly not stature or or public purpose, may discipline member substantial contract adversely affecting property, or other of fair economic as a result rights, except be for in may provided organization carried forward in an faith by-laws, atmosphere good and fair v. 237 So.2d Wilson play.” (Fla. (McCune 1970), rationale as enunciated position *6 McCune from the of results character the i.e. organization, its aof that of a which exceeds assumption purpose merely social from its endeavor to benefit organization various State and Federal laws.
We are of mindful the caveat set forth in Hall v. Morrin the 293 S. W. wherein (Mo.Ct.App. 1927), court the view that one who faces expressed disciplinary before a a tribunal association proceedings voluntary need the entire only vilify organization rendering thereby all of that him, and, body incompetent try the consequently, rendering group totally incapable vicious, itself the unwarranted attacks defending against a however, member. If such a situation were develop, we believe that association is formulating capable Atkins, See Madden v. proper disciplinary procedures. 1, 162 N. Y.S.2d App.Div.2d
In the instant case the trial court stated “in the that entire here, the record indicated unfortunately *** significant differences large personality played actions which were taken In view this part ***.” latter we must that certain members conclude impression of the Board were not impartial.
Therefore hold we under facts presented instant case denied law due at their the resolution hearings. disciplinary Consequently, from are and the invalid, Certified expelling plaintiffs circuit court Certified properly enjoined enforcing the resolutions. contend should
Plaintiffs further expulsions at the no was introduced because evidence be enjoined of the five brought charges Board hearings support we need not However, pass Sparkle. advanced or other contentions by plaintiffs this issue upon of our issue. because primary disposition the decision reasons For the aforementioned order of the and the court is reversed injunction appellate of Cook is affirmed. circuit court County reversed;
Appellate circuit court affirmed. WARD, MR. concurring. specially JUSTICE took no SCHAEFER MR. part JUSTICE consideration or decision this case. UNDERWOOD, CHIEF dissenting: case
I cannot circumstances agree law which from settled the substantial justify departure the well-considered As majority opinion represents. Drucker, Mr. speaking opinion Justice announced court, notes, rule, heretofore prevailing court, been that in the earlier of this has opinions limited to and intervention were generally supervision *7 of determination that voluntarily agreed provisions were adhered and rules of the bylaws organization ex members. in its among resolving disagreements People 134; Trade, v. Board rel. Rice v. 80 Ill. Board Sturges of of 412; 441; Trade, Trade, 121 Ill. Ill. v. 86 Pitcher Board of 108; v. rel. Ill. ex v. 157 Ryan Cudahy, People Keefe 78; Foresters, 162 Ill. Catholic Order Women’s of of Trade, 431; Nelson, Green v. Board v. 162 Ill. Trade of 90; 585; Trade, 227 Ill. Bostedo v. Board Engel 174 Ill. Walsh, 98; International Association 258 Werner v. v. Ill. Machinists, See also Parsons 258. College 11 Ill.App.2d of v. North Central Association Secondary Colleges Schools Ill. F.Supp. (N.D. 1967), The as to the extent to which due question standards or should be agencies applicable public may into the internal associations which imported operations are one find nature is not which I basically private easily answered. answer provided majority opinion, however, is That answer is completely superficial.
“the that a commission could be bylaws provide appointed conduct members and to the investigate report board to avoid the of bias.” The independently possibility of this solution is that it is not the superficiality partiality of the which is the real issue—it investigators is bias to exist alleged members of the Board. among Certainly of a disinterested committee to appointment investigate does little to on the of members remedy partisanship part to which the adjudicatory body (the Board) committee It is bias in that which is reports. alleged body the real issue here. The of a commission does appointment to resolve it. nothing that,
It is clear stated, courts have adhered to broadly of non-intervention in cases refusal to admit or policy social, fraternal and expulsion religious organizations v. Middlesex Medical (Falcone Couty Society, 34N.J. cited;
The basis has, reversal association action been a violation of the again speaking broadly, ordinarily constitution or association, or, association rules and violate concepts fairness, fundamental or, that association action was motivated or bad faith. by prejudice pp. (Sheridan, 847-8.) been, There has no noted violation majority, *8 the nor us, the association case before do these bylaws violate basic regulations concepts justice. procedural sole for reversal relied the is ground by upon majority members of which to that the board directors voted have been reason of the by expel plaintiffs may prejudiced the had fact Board had instituted the charges made defendants- in been initiated by prior litigation The court’s the is Board plaintiffs. opinion agrees “not the but holds Board should necessarily disqualified,” “free have an committee appointed investigating to bound assertions bias be agreed by committee’s report.” case do not
In the circumstances this my judgment Certified, warrant the conclusion reached the court. by association, a sizeable can be to be thought while scarcely members, to Its monopolistic. including plaintiffs, agreed the terms of its There applying membership. therein offends of fundamental is a sense nothing that some of the fairness the fact members except which is vested with ultimate responsibility as a result may, plaintiffs’ disciplining activities, to the be in their approach prior predisposed it this is same body But question. precisely expulsion the most which is knowledgeable group presumably of the and best interests associa- welfare concerning to most it which is be tion. is Similarly, likely group of, of, and assess effect aware best able accurately To that such conduct members. say association’s them from authority awareness exercising prevents including in them membership, vested agreement believe, is I seriously likely, impair plaintiffs, effect will One such associations. efficiency operating members, enable be to dissident simple expedient members, render the association all other criticizing While the them. and its try incompetent situation, such that, states given majority optimistically the association formulating “we believe capable I believe it disciplinary procedures”, proper preferable *9 avoid that possibility. short, while
In that there are agreeing circumstances wherein intervention voluntary operation I associations is not but is necessary, only appropriate, believe should be used only power sparingly under more than circumstances those existing compelling here.
I would affirm the court. judgment DAVIS in this joins dissent.,
(No. 43379. ILLINOIS, THE PEOPLE OF THE STATE OF Appellee, al., v. EDWARD LINDSAY et Appellants.
Opinion March filed
RYAN KLUCZYNSKI, JJ., concurring. SAMUELS, MILLER, SCHROEDER, & JACKSON SLY, of Decatur R. MILLER, of (CARL counsel), appellant. WILLIAM SCOTT, General, of Attorney Spring- J.
field, and BASIL G. GREANIAS, State’s Attorney, Decatur G. LEACH, Assistant (FRED General, Attorney for counsel), People.