Board of Trade v. Weare

105 Ill. App. 289, 1902 Ill. App. LEXIS 78

• Court: Appellate Court of Illinois
• Decided: December 11, 1902
• Status: Published

Opinions

Opinion per Curiam,

It is not objected that the injunction order appealed from was entered without notice, nor can it be, for the reason that appellants had a hearing on the motion to dissolve the injunction. Cook County Brick Co. v. Kaehler, 83 Ill. App. 448.

Appellees’ counsel contends in quite a lengthy argument, which is to the effect that the first and third charges in McNeil’s complaint charge acts which are merely willful violations of business contracts, and not acts of bad faith, that because not acts of bad faith, the proceeding of the board of directors of the board of trade is not a disciplinary proceeding, but one involving only property rights. The first and third charges, concisely stated, are as follows:

First. That the Weares, or the Weare Commission Company, have been guilty of an act of bad faith in refusing to transfer the open trades and balance of the McNeil Grain Company to another firm, when ordered so to do, and that they closed all such trades on the open market, to the great loss of the McNeil Company, and have withheld all sums deposited with said Weare Commission Company as margins, amounting to more than $32,000.

Third. That the Weares, or the Weare Commission Company, have been guilty of dishonest conduct in charging back to the McNeil Company a note made by a third person for the sum of $7,000, which had been transferred to the Weare Commission Company by the McNeil Company as margin, and subsequently disposing of the note to a bank, which will demand payment thereof on maturity.

The contention is that if these acts are not acts of bad faith, but mere willful violations of business contracts or obligations, the investigation of them is not disciplinary, but the complaint is, in substance, a suit for the recovery of money; and counsel refers to sections 9, 16 and 18 of rule 4 of the board of trade, which provide as follows :

“ Sec. 9. When any member of the association shall be guilty of a willful violation of any business contract or obligation and shall neglect or refuse to equitably and satisfactorily adjust and settle the same, or -when any member shall willfully neglect or refuse to comply promptly with the award of any committee of arbitration or committee of appeals, rendered in conformity with the rules, regulations and by-laws of the association, he shall be suspended from all the privileges of this association until such contract or obligation is satisfactorily adjusted and settled, or such award is performed or complied with.

“ When any member shall be guilty of improper conduct of a personal character in any of the rooms of the association, or shall violate any of the rules, regulations or bylaws of the association, or shall be guilty of any dishonorable conduct, for which a specific penalty has not been provided, he shall be suspended by the board of directors from all privileges of membership for such period as in their discretion the gravity of the offense committed may warrant. When any member shall be guilty of making or reporting any false or fictitious purchase or sale, or where any member shall be guilty of an act of bad faith, or any attempt at extortion or of any dishonest conduct, or when a member shall, either in the Exchange Building, or elsewhere, contract to give himself or another the option to sell or buy any of the articles dealt in on' this Exchange, in violation of any criminal statute of this state, he shall be expelled by the board of directors.

“ Sec. 16. All charges made to the board of directors against any member of this association for any default, misconduct, or offense, shall be in writing, and in duplicate, and shall state the default, misconduct, or offense charged; and the same shall be signed by one or more members of the association, a business firm, one or more of whose members shall be a member of the association, or by the chairman of a committee of the association.

“Sec. 18. It shall be the duty of the board of directors in case any grave offense or act of dishonesty committed by any member, involving the good name or dignity of the association, or any act of dishonesty on the part of a member. shall come to their knowledge, either by complaint or public report, to cause a preliminary or informal investigation to be made by a committee of their number into the truth or falsity of such complaint, or report; and if the said committee, after investigation, shall deem any member guilty of such offense, they shall so report to the board of directors, with specific charges; whereupon any member thus implicated shall be notified to appear before the board of directors in manner as provided by section 16 of this rule, and if found guilty, the said member shall be suspended or expelled as hereinbefore provided,” etc.

Whether the acts mentioned in the first and third charges of the complaint are, or are not, acts of bad faith, or dishonest acts, is, as we think, a question properly determinable by the directors of the board, at least in the first instance; but whether they are, or not, dishonest acts, or acts on proof of which the party charged might be convicted of bad faith, does not affect the question of the jurisdiction of the board of directors to hear and determine in respect to the charges. Counsel admits the acts charged to be willful violations of business contracts or obligations. Section 9 of rule 4 expressly provides that any member guilty of such violations, and who shall neglect or refuse to equitably and satisfactorily adjust and settle the same, etc., shall be suspended until he does so. But it is contended by counsel that the board of trade, through its directors, is powerless to adjudicate, without the consent of the parties, disputes between its members respecting business contracts and obligations. Section 6 of the charter is as follows:

“ Sec. 6. Said corporation shall have the right to admit or expel such persons as they may see fit, in manner as prescribed by the- rules, regulations and by-laws thereof.”

The power to expel clearly includes the lesser power of suspension. In view of this section we can not hold that section 9, which applies to willful violations, by a member, of his contracts or obligations, is unauthorized by the charter of the board, or unreasonable. In People v. Chicago Board of Trade, 45 Ill. 112, the court say:

“ The sixth section of the charter of the board of trade provides that ‘ said corporation shall have the right to admit or expel such persons as they may see fit, in manner to be prescribed by the rules, regulations or by-laws thereof.’ Here is a specific grant of power, in terms so general that they seem to leave the causes of disenfranchisement at the discretion of the corporation, subject only to the one limitation that the proceeding shall follow the rules, regulations or by-laws.”

In that case a by-law similar in terms to section 9, above quoted, was held reasonable.

In Board of Trade v. Nelson, 162 Ill. 431, 439, the court say:

“A by-law of this board, providing that if a member failed to comply with a business contract made with another member, he should be expelled, was held to be valid in People ex rel. Page v. Board of Trade, 45 Ill. 112. The court also held in the Helson case that a by-law was ‘ unquestionably valid ’ which provided, ‘ When a member of the association shall be guilty of any act of bad faith, or any attempt at extortion, or of any other dishonorable or dishonest conduct, he shall be censured or expelled by the board of directors, as they may determine from the nature and gravity of the offense committed.’ ”

The board of directors was, at the time the present bill was filed, engaged in investigating the charges made in the McNeil complaint, in pursuance of valid by-laws, and it is not averred that the board was proceeding irregularly. It is thoroughly settled that, under such circumstances, the courts will not interfere by injunction.

In Board of Trade v. Nelson, supra, the court say:

“ This corporation is not bound to admit any person to membership, nor was the relator in any way forced into such association. He voluntarily became a member, and by this contract is bound to abide by the rules and regulations of the board. The courts will never interfere to control the enforcement of by-laws of such association, but they will be left to enforce their rules and regulations by such means as they may adopt for their government. (People ex rel. Rice v. Board of Trade, 80 Ill. 134.) When the relator became a member of the board of trade he voluntarily submitted himself to the operation of all laws enacted for its government, and agreed to be bound by them so far as within the corporate authority.” See, also, Board of Trade v. Riordan, 94 Ill. App. 298, and Green v. Board of Trade, 174 Ill. 585.

Counsel for appellees contends that the board of directors will not investigate or adjudicate as to the set-off claimed by appellees, on account of the alleged stock transactions of McNeil and Jolly, and that appellants, by moving to dissolve the injunction, admitted this. This contention is based on that portion of the bill quoted in full in the preceding statement, and which is, in substance, that complainants have been informed and believe that the board of directors has repeatedly ruled that it has no jurisdiction to investigate controversies between members of the board, arising out of any transactions other than those had upon said board, and, as a consequence, in case of complaint of failure to pay over money alleged to be due on transactions had on the board, the board of directors has no power to investigate or determine whether the member so charged has or not any claim, not arising out of a transaction on said board, which, in law or equity, could be set off against the money alleged to be due the complaining member, and complainants say that the board of directors, on the hearing of the complaint against them, will not undertake to determine whether or not the McNeil Grain Co. is liable to the Weare Commission Co. on account of any of the stock transactions aforesaid.

A motion to dissolve an injunction on the ground of the insufficiency of the bill, admits no more than would a demurrer to the bill; and a demurrer admits only such facts as are well pleaded and, necessarily, such as existed prior to or at the time of filing the bill. The averment that the board of directors will not undertake to investigate or determine the liability of the McNeil Grain Company is not an averment of fact, but merely of the pleader’s conclusion or opinion, deduced from the antecedent premise, viz., the alleged former rulings of the board of directors. The allegation in respect to such former rulings being on information and belief, it follows that the conclusion averred is also on information and belief. But this is not all. There is no basis in the record for the conclusion that the board will not investigate or adjudicate as to the liability of the McNeil Grain Company. The rulings of the board of directors are averred to have been that the board had no jurisdiction to investigate controversies between members, arising out of stock transactions other than those had on the board of trade, and it is not averred in the bill that the stock transactions in question did hot take place on the board of trade, nor is there anything in the charter of that board prohibitory of stock transactions on the board. Therefore non constat but that the stock transactions in question were not on the board. It is well established that a pleading must be taken more strongly against the pleader. The court will not anticipate or presume that the board of directors will act unfairly or irregularly in the investiga-' tion of a complaint. Green v. Board of Trade, 174 Ill. 585, 592; Board of Trade v. Riordan, 94 Ill. App. 298, 308.

Section 9 of rule 4 of the board clearly contemplates a just and equitable settlement. The language is :

“ When any member shall be guilty of a willful violation of any business contract or obligation and shall neglect or refuse to equitably adjust and settle the same,” etc.

Appellees can not complain of the limitations of the power of the board of directors that the board can not compel the attendance of or administer oaths to witnesses, etc. When the Weares became members of the association they assented to the exercise of the granted powers of the board of trade and to the limitations thereof.

We are inclined to the view that the board of directors should not, while the indictment is pending and undetermined against McNeil, investigate as to the motive of the Weares in procuring that indictment, if they did procure it, and we can not anticipate that the board will so do. We think it would be inexpedient so to do, and perhaps contrary to public policy.

The objection to the fourth charge of the complaint is that it'is too general. If too general, we can not anticipate that on proper application to the board of directors, the board will not rule McNeil to specify grounds for the charge, and if he refuses or neglects so to do, that the board will not ignore the charge.

It is urged by appellees’ counsel that appellants have no right of appeal. They are party defendants to the bill, and, as shown by the statement preceding this opinion, they perfected their appeal from the original injunction order by filing their appeal bond with the clerk before that order was dissolved as to the said board of trade and its officers by the subsequent order of September 27, 1902. Therefore, they had, at the time they so filed their bond, full right of appeal, and the subsequent modification of the order did not affect that right. But the question remains, whether, the injunction having been dissolved as to the board of trade and its officers by the order of September 27th, the complainants are, or not, in a position to question the validity of the injunction against McNeil. The court properly dissolved the injunction against the board of trade and its officers, but, by continuing it against McNeil, sought to do indirectly that which it could not legally do directly, namely, stop the hearing, of McNeil’s complaint. In Green v. Board of Trade, supra, the court say:

“As heretofore said, when such by-laws infringe no public policy or rule of law, and are not unreasonable, courts will never interfere to control their enforcement, but such corporations or associations will be left to enforce their rules and regulations in the manner they have adopted for their own government and methods of discipline; ” citing numerous cases.

We think' it manifest that to enjoin. McNeil, who made the complaint, and who, as may be inferred from the bill, is the most important witness in support of it, is an interference by the court with the enforcement by the board of its by-laws. We think it clear that if McNeil is so enjoined there can not be a full and fair investigation of his complaint. If the court may thus enjoin one important witness, it may enjoin all, and thus control the board as certainly and effectually as if the board itself were enjoined. We are of opinion that the board of trade and its officers have a direct interest in the question.

One of the assignments of error of appellants is, that “the court erred in entering the interlocutory order of August 26,1902, ordering an injunction writ to issue against Charles G. McNeil, in accordance with the prayer of the bill of complaint.”

Appellees’ counsel, not objecting to this assignment, filed his argument, in which he discusses the question whether the court erred as is assigned. This is equivalent to a joinder in error, the effect of which latter is to traverse the assignment of errors. The issue, therefore, whether the court erred as assigned by appellants, is presented by the record.

The court properly dissolved the injunction against the board of trade and its officers and continued it against McNeil, because of the rule that while a court of law may not be enjoined from proceeding in an action, the suitor may be. High, in his work on Injunctions, section 48, says of such an injunction : “ It is granted on the ground that an unfair use is being made of the legal form, which, from circumstances of which equity alone can take cognizance, should be restrained, lest an injury be committed wholly remediless at law,” citing authorities. No such ground for interference appears in the present case. The appellees, each of whom, on becoming members of the board of trade, impliedly agreed to be bound by its charter and by-laws, can not be heard to say that the enforcement of such by-laws, in the regular way, is unfair, and, as heretofore stated, it can not be presumed that the board of directors will act unfairly or inequitably in the premises. The appellees have assigned as cross-errors that the court erred in dissolving the injunction against the board of trade, and also in dismissing complainant’s bill, as amended, against the board of trade, Warren and Stone. These assignments of error are out of place on this appeal, which is from the original injunction order of August 26, 1902, and not from the subsequent order of September 27, 1902, in respect to which the assignments are.

Since the foregoing opinion was prepared a rehearing has been granted, and we have again considered, fully and carefully, the questions involved, and see no reason why we should change any of our conclusions.

The injunction order will be reversed.