§ 315. (d) In partial restraint of trade. But restraints particular as to time and place are good if founded upon sufficient consideration. Thus a trading company may prohibit its members from carrying on the trade separately at a different place from that of the company's domicile. So where a company was chartered for the purpose of maintaining uniformity in the business of insurance, a by-law requiring members to follow uniform rates of insurance is not void as being against public policy in restraint of trade. And a company may impose reasonable restrictions as to the manner of transferring shares of its stock; as, for example, that no transfer shall be made on the books of the company without a surrender of the old certificates or proof of their loss, or until the transferrer shall have discharged all debts due from him to the company. But a by-law making the consent of the president requisite to effecting a transfer has been held in- . valid as in restraint of trade. In Massachusetts it has been doubted,' and even entirely denied, that the company can by means of a by-law in any way limit the free transfer of stock. In New Hampshire restrictions of this character are forbidden by statute. In New York it has been held in the Superior Court that a by-law assuming to prohibit a transfer of stock in a manufacturing company because the owner is in debt to the company is ultra vires and void, the statutory power of these companies to make by-laws extending only to prescribing the manner and form in which transfers shall be made.10

9

§ 316. (e) Retroactive and ex post facto by-laws.- By-laws. can not be made to operate retrospectively." For a by-law, or

1 Gunmakers' Co. v. Fell, Willes, Pick. 90. Cf. Sargeant v. Essex M. 384. R. Co., 9 Pick. 202.

Sargeant v. Franklin Ins. Co., 8 Chart. (Ga.) 173.

regulation, means a rule for future action. Ex post facto laws are no more lawful for corporations than for States. For all by-laws contrary to the general principles of the common law or the policy of the State are void. Accordingly, the

rights of a transferee of shares can not be affected by a bylaw passed after the transfer was made.'

§ 317. Repugnancy to the charter.- Nothing can be better settled than that a by-law which conflicts with or attempts to alter the constitution of the corporation is void. To permit

it to pass and enforce by-laws in conflict with its charter "would be to enable the corporation to make a new constitution for itself and thereby wholly defeat the object of the law which gave it birth." Thus by-laws of a Musical Mutual Protective Union, which provide that it shall be the duty of every member to refuse to perform in any orchestra in which are any persons not members in good standing, and that it shall be deemed a breach of good faith between members to employ a suspended or non-member, or to assist in a public performance given wholly or in part by amateurs, and imposing a penalty for the violation of these provisions, have been held to be void as arbitrary and contrary to the provisions of its charter, which declares that its objects are the cultivation of

1 Pulford v. Fire Department of Detroit, (1875) 31 Mich. 458, 465, 466, citing Angell & Ames on Corporations, § 332, 355, 339; Taylor v. Griswold, 2 Green, 223; Philips v. Wickham, (1829) 1 Paige, 590.

People v. Crockett, 9 Cal. 112. Kearney v. Andrews, (1854) 10 N. J. Eq. 70; State v. Curtis, (1874) 9 Nev. 325; Queen v. Darlington School, 6 Adol. & E. N. S. 682.

Diligent Fire Ins. Co. v. Commonwealth, (1874) 75 Pa. St. 291, 296. In New York Protective Assoc. v. McGrath, (1889) 23 N. Y. St. Rep. 209, the defendant was a member of a corporation created under Laws N. Y. 1875, c. 267, membership in which was restricted to the members of certain "local assemblies" of the "Knights

of Labor" under the jurisdiction of "District Assembly 49." Section 3 of the statute referred to provided for the termination of membership in the corporation by death, voluntary withdrawal, and expulsion. And the court held that a by-law which declares that the removal of a local assembly from the jurisdiction of District Assembly 49 shall be equivalent to a voluntary withdrawal of all membership in the corporation is in conflict with the statute, and the removal for insubordination, in which defendant took no part, from the jurisdiction of District Assembly 49, of the local assembly of which defendant was a member, will not deprive him of his member ship on that ground.

music and the promotion of good feeling among the members of the profession, and the relief of such of their members as should be unfortunate. So also where the salaries of certain officers are fixed by charter, they can not be changed by bylaw, even though the charter authorize the company to fix the salaries of officers, this provision applying only to salaries not prescribed by the charter."

§ 318. To be reasonable.- By-laws should, of course, be reasonable. Thus an integral part of the body corporate is not to be deprived by a by-law of participation in its affairs.' A by-law providing that a member of a benevolent association failing to pay his dues should forfeit his right to any benefits while in arrears and for a certain period after payment, is void, being unreasonable, vexatious, oppressive and manifestly detrimental to the interests of the corporation. A by-law providing for the expulsion of a member from an incorporated mutual benefit society, whereof the right of membership was a valuable property right, was judicially questioned in an early Pennsylvania case, and it was held that a cause of expulsion therein prescribed, to wit, "vilifying" any other member, was bad, not being necessary for the good government and support of the affairs of the corporation.

319. Judicial enquiry into the reasonableness of bylaws. Whether the courts will interfere where by-laws are unreasonable, depends upon whether the company or association is incorporated or a mere voluntary organization. Thus when a corporation expels a member in pursuance of its by

1Thomas v. Musical Mutual Protective Union, (1888) 17 N. Y. St. Rep. 51, Daniels, J. dissenting.

Carr v. City of St. Louis, 9 Mo. 191.

3 Lumley on By-Laws, 101. Under the power given by the city ordinances of Philadelphia, the trustees of the city gas works may enforce reasonable regulations concerning the use of meters, and a regulation that all governors shall be connected with the pipe at least a foot from

the meter is a reasonable rule. Foster v. Philadelphia Gas Works Trustees, 12 Phila. 511.

4 Rex v. Head, 4 Burr. 2515; Hoblyn v. King, 6 Bro. P. C. 511; King v. Westwood, 7 Bing. 84. But see King v. Bird, 13 East, 367; King v. Westwood, 4 Barn. & C. 781; s. c. 7 Bing. 1.

Cartan v. Father Mathew &c. Soc. (1869) 3 Daly, 20.

6 Commonwealth v. St. Patrick's Soc. (1810) 2 Binn. (Pa.) 441, 448.

laws, the courts will at the instance of the expelled member enquire whether the by-laws were legal and reasonable; but in the case of unincorporated associations the courts will not question the reasonableness of the rules or by-laws; and unless it can be shown that they are contrary to natural justice, the decision of the association, if in accordance therewith and arrived at in good faith, is not open to judicial review.1 So also where, under its by-laws, a benevolent society has decided that a member is not entitled to benefits, the decision is conclusive, and will not be reversed or questioned by the courts.' When in a proper case the courts undertake to enquire into the reasonableness of a by-law, it is a question of law and evidence of its unreasonableness is inadmissible."

§ 320. To be general in application.-"A by-law may be in the form of a resolution and require the same solemnities to pass it; but a resolution is not necessarily a by-law." For by-laws must be general and not for the benefit or detriment of any particular person." They "must be directed to all within the sphere of their operation, and must operate equally." A resolution entered by the directors which is in effect a command to the officers to exclude one of the directors from the enjoyment of his rights, being aimed at a single individual, and not a general regulation affecting the directors at large or the stockholders, "is not entitled to the name of a bylaw." 7 And where a company had no by-law providing for the forfeiture of shares for non-payment of assessments and

Niblack on Mutual Benefit Societies, § 25; Hirschl on Fraternities, 63; Note to Hiss v. Bartlett, 63 Am. Dec. 776; Note to Austin v. Searing, 69 Am. Dec. 672; Kehlenbeck v. Logeman, 10 Daly, 447, 448.

2 Osceola Tribe v. Schmidt, 57 Md. 98. But see Sutherland, J. in People v. Sailors' Snug Harbor, (1868) 54 Barb. 532, 535, where it was said, obiter, "The accused inmate should have reasonable notice of such examination, and an opportunity of being heard, of exculpating himself and of disproving the charge. Nor

the directors attempted to effect a forfeiture in a particular instance by a resolution which was claimed to be a by-law, declaring the shares of a delinquent to be forfeited, and ordering them to be sold, the sale was decided to be irregular and unauthorized, and the company was held liable in damages for conversion of the shares.' It has been remarked by the English writer on this subject, Mr. Lumley, that the authorities who make by-laws are very prone to reserve to themselves powers to provide specially for special cases, to make individual exceptions out of the general rules, or to dispense with regulations when they deem it convenient or proper to do so; that it has also been considered that this discretionary power of dispensation will assist the authority in cases where the by-law as expressed is in excess of the legal power vested in them. It is plain, however, that all corporate by-laws must stand on their own validity, and not on any dispensation granted to members. They can not be subjected to any condition which does not apply to all alike, and can not be compelled to receive as a matter of grace anything which is matter of right; neither on the other hand should there be personal exemptions of a general nature from any valid regulations that bind the mass of corporators.

§ 321. Obligatory upon members. A member of a corporation or association is bound by all by-laws, rules, or regulations, to which he has assented, provided they be not immoral, contrary to public policy or in contravention of the charter or the law of the land; and his duties, rights and privileges are to be measured thereby. They embody the terms of a contract between the company and its members;

1 Budd v. Multnomah Street Ry. Co., (1887) 15 Oregon, 413; s. c. 3 Am. St. Rep. 169; s. c. 12 Oregon, 271; s. c. 53 Am. Rep. 355.

2 Lumley on By-Laws, 100. To the point, however, that the dispensing power does not remove the objection of ultra vires, he cites Waite v. Garston Local Board, L. R. 3 Q. B. 5, and Wortley v. Nottingham Local Board, 21 L. J. N. S. 582.

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3 People v. Young Men's Father Mathew T. A. B. Soc., 41 Mich. 67. 4 Vide supra, §§ 312-317.

5 Hyde v. Woods, (1871) 2 Saw. 655, 659. Vide supra, § 85.

6 "There can be no possible doubt that the obligation of the company to the privileged shares rests on bylaw 18, and that the by-law establishes the terms of a contract between company and stockholders.