Paddock Hodge Co. v. Grain Dealers' National Ass'n

18 Ohio App. 66, 1921 Ohio App. LEXIS 194
CourtOhio Court of Appeals
DecidedJuly 13, 1921
StatusPublished
Cited by2 cases

This text of 18 Ohio App. 66 (Paddock Hodge Co. v. Grain Dealers' National Ass'n) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Paddock Hodge Co. v. Grain Dealers' National Ass'n, 18 Ohio App. 66, 1921 Ohio App. LEXIS 194 (Ohio Ct. App. 1921).

Opinion

Chittenden, J.

This, action is brought to enjoin the defendant from expelling the plaintiff from membership in that association. The plaintiff is a corporation engaged in dealing in grain [67]*67in the city of Toledo. It has been so engaged for many years and conducts an extensive business. The defendant is an unincorporated association of grain dealers, its members numbering something over five thousand. The purpose of the organization is said to be to raise the standard of the grain business and to facilitate the exchange of business among its members. The association is governed by rules and by-laws, among which are certain arbitration rules that have been in effect for some years. The purpose of these arbitration rules is to reduce friction, avoid litigation, prevent misunderstandings and adjust unsatisfactory conditions, and applies to all matters of difference pertaining to the grain business that may arise between its members, or between its members and others who may submit their differences to the arbitration committee. These rules contain a complete system of arbitration, and provide for a board of appeals to review the decisions of the national committees. Section 17 of Article VI of these rules reads as follows:

“Neglect or refusal to submit the subject matter of a controversy to arbitration, or failure to comply with an award of ■ the arbitration committee, shall be deemed uncommercial conduct and the penalty shall be expulsion.”

Some time prior to June, 1919, a business difference arose between the plaintiff and the Park & Pollard Company of Boston, Massachusetts. The Park & Pollard Company asked to have the difference submitted to arbitration under the rules of the association, and in June of that year signed an arbitration agreement, as provided by Section 1, Article VI, and forwarded the same for signa[68]*68ture of the plaintiff. After some delay this contract for arbitration was signed by the plaintiff company. The contract was duly acknowledged by the president of the Park & Pollard Company on the 2d day of June, 1919, before a notary public in Suffolk county, Massachusetts, and on the 26th day of July the contract was acknowledged before a notary public in Lucas county by the president of plaintiff company. Each of these acknowledgments contains the statement that the execution of the same is the voluntary act of the party to the contract.

Thereupon the questions involved between the parties were submitted to the arbitration committee. Evidence was submitted by the Park & Pollard Company, and was forwarded to the committee, and after a delay of some eleven months the plaintiff submitted its evidence to the committee. The members of the committee separately, and at different conferences of the committee, considered the evidence and the case, and finally rendered an award in favor of the Park & Pollard Company against the plaintiff for a sum amounting to nearly $4,000. Thereupon, as the evidence in the ease shows, the plaintiff proposed to appeal from the decision of the committee to the board of appeals, but when it was advised by the secretary of the National Association that one of the requirements in perfecting an appeal was the deposit with the secretary of a certified check, covering the amount of the award, the plaintiff failed to go further with the appeal and declined to pay the award of the committee. Thereupon, in accordance with the rules of the association, the plaintiff company was notified that unless the ap[69]*69peal was perfected, or the award paid within the time limited by the rules, the plaintiff would stand expelled from membership in the association. In this connection it may be observed that the association publishes a magazine in which all affairs relating to the association and the grain, trade are published, and notice- of the expulsion of a member is published as an item of news to .the trade. This action is to restrain the defendant from carrying into effect the proposed expulsion of the plaintiff from membership.

The defendant being an unincorporated association not for profit, its affairs and the rights of its members do not depend upon provisions of positive law, but rest upon contract between and among the members. This has been held by courts in many reported decisions. The courts have uniformly held that equity will not interfere to control the management of such an association except where some civil or property right of a member is threatened. By taking membership in such an organization, the member agrees to conform to the rules and by-laws of the organization, arid such organization may pass all necessary rules and regulations to carry into effect the purposes for which it is organized, providing they do not conflict with the laws of the land. It is contended in this case that the provisions for arbitration do conflict with the general laws of the land, and that they are against public policy. Much reliance is placed by the plaintiff on the case of State, ex rel., v. Union Merchants’ Exchange, 2 Mo. App., 96. The defendant in that case was an incorporated institution, and owned valuable business property, in which all' members had a vested interest, but it [70]*70may be conceded that the case in general sustains the claims made for it by counsel for plaintiff. In the course of the opinion, however, the court fully sets forth the favor with which arbitration agreements in general are viewed. The court says, at page 99:

“The law is not opposed to arbitration. On the contrary, it is said to be the policy of the law to encourage these domestic tribunals, although they may, if they choose, disregard the rules of law in their decisions. Indeed, it is probably the very fact that they are not bound by legal rules, nor by the principles of that equity which follows the law, more than anything else, that has led the courts to say that arbitration is looked upon with favor.”

It is a matter of common knowledge that arbitration has been more and more resorted to in the settlement of business controversies in later years, and it is conceded that no objection obtains to settling controversies by arbitration, providing-controversies are submitted voluntarily to such a tribunal. The contention here made is that it is not a voluntary submission of the controversy.

The Supreme Court of the state of Missouri has made a more recent announcement upon the question determined by the Court of Appeals in the ease above cited. The case of Moffatt v. Board of Trade of Kansas City, 250 Mo., 168, was a case in which the plaintiff sought to restrain the Board of Trade from proceeding to expel the plaintiff from membership on that board. In the course of the opinion, at page 182, the court says:

“We agree with the learned Court of Appeals that in case of a difference or disagreement ‘of [71]*71a. financial, mercantile or commercial character’ between or among members of the Board of Trade the board of directors might, in a proper case, determine whether such difference or disagreement was under the rules a proper subject for arbitration and, if so, and the complainant demanded arbitration, then a refusal of the other party to arbitrate would subject him to fine, suspension or expulsion. ’ ’

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Bluebook (online)
18 Ohio App. 66, 1921 Ohio App. LEXIS 194, Counsel Stack Legal Research, https://law.counselstack.com/opinion/paddock-hodge-co-v-grain-dealers-national-assn-ohioctapp-1921.