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District Court of Appeal, First District, Division 1, California.


Civ. 8990.

Decided: November 28, 1934

J. Wiseman Macdonald, of Los Angeles, for appellant. O'Melveny, Tuller & Myers and Graham L. Sterling, Jr., all of Los Angeles, for respondent.

Plaintiff, being a regular member of defendant corporation, a nonprofit social club, sought to resign as such member and thereby terminate his liability to pay club dues and assessments. Defendant refused to accept the resignation and cancel the membership for the claimed reason that said resignation was ineffective under its by-laws. Thereupon plaintiff brought this action for declaratory relief to have it determined that he is no longer a member of respondent corporation and is not liable for any further dues or obligations as such. Judgment was rendered against him and in favor of defendant, and from this judgment plaintiff appeals.

The appeal is brought up on a bill of exceptions which contains an agreed statement of facts. From this statement it appears that the respondent club is a nonprofit corporation with two kinds of memberships, namely, regular and special. In 1916 appellant applied for membership, as a regular member, and in his application he agreed to abide by the constitution, by-laws, and rules of the defendant corporation. He was accepted as a regular member and thereafter remained such until September 18, 1931, at which date he tendered his resignation to take effect at once; at the same time he indorsed his certificate of membership in blank and delivered it to respondent for cancellation. Respondent's board of directors has refused to accept said resignation or cancel said certificate, and, since September 18, 1931, the certificate has been retained uncanceled by respondent, who notified appellant of its willingness to return said certificate to him if he so desired. Such portions of the by-laws as are necessary for a discussion of the case are as follows:

Section 10, article II, provides in part that “a certificate of membership shall be valid only when held by and registered in the name of a member of the Club, and shall be subject to all By-Laws and rules and regulations of the Board of Directors then in force and thereafter adopted, and * * * shall be considered as an essential part of the contract of membership between the Club and such member.”

Section 11 of article II provides for the sale and transfer of a certificate of membership to any candidate for membership who, having made application to become a member in the usual manner, has been elected by the board of directors and has paid the transfer fee of $250.

Prior to February 8, 1930, section 12 of article II of the by-laws provided for the resignation of a member as follows: “The resignation of any member shall be made in writing addressed to the Board of Directors. No resignation of a member shall be effective until accepted by the Board of Directors, nor shall the same be accepted while such member is in anywise indebted to the Club, nor until he has assigned and delivered to the Club his certificate of membership.”

On February 8, 1930, said section 12 was amended to read as follows: “The resignation of any member shall be made in writing addressed to the Board of Directors. No resignation of a member shall be effective until accepted by the Board of Directors, nor shall the same be accepted while such member is in anywise indebted to the Club, nor until he has assigned and delivered his certificate of membership. Until the transfer of the certificate of membership on the books of the corporation, or until the date of the expulsion of a member, the record owner of each membership shall be and remain liable for all dues, fees or other charges which have accrued or which may thereafter accrue.”

Respondent contends in support of the judgment that, under the by-laws, in order for the resignation to be effective, it must be accepted by the board of directors, transferred on the books of the corporation, and the certificate of membership assigned and delivered, and until assigned and accepted the directors still have the right to assess appellant as a member of the corporation and compel him to pay dues amounting to the sum of $216 a year for all time in the future.

Subdivision 4 of section 598 of the Civil Code authorizes nonprofit corporations to pass by-laws for the admission, election, appointment, withdrawal, suspension, and expulsion of its members, and section 602 of said Code provides that membership may be terminated in the manner provided in the articles or by-laws unless otherwise provided, etc. The by-laws in question by express terms vest in the board of directors the discretion of accepting or not accepting the resignation of a member, and until accepted by said board the resignation is not effective. As heretofore stated, the said board exercised its discretion against accepting appellant's resignation. Its reason for so doing does not appear. The judgment states that “plaintiff's alleged resignation was and is ineffective under the by-laws of defendant corporation.”

In Ewald v. Medical Society, 70 Misc. 615, 130 N. Y. S. 1024, 1031, the court, after stating that a member of a voluntary association could resign in the absence of some statute, rule, or law to the contrary, said: “But if a member of an association enters into a contract with it concerning the duration of his membership, and to the effect that it shall continue until the happening of a certain event, the case is different. Such a contract exists when, as here, the applicant for membership promises in the event of election ‘to comply with all rules, regulations and by-laws passed by the society or adopted for its government.’ Voluntary associations may adopt such by-laws as they please. When adopted and consented to by any member they become binding upon him as contracts.” 6 Cal. Jur., p. 718.

Appellant is presumed to have knowledge of the by-laws and cannot escape liability arising thereunder, or otherwise avoid their operation by a plea of ignorance of them. 14 Cor. Jur., p. 345. In addition to this presumption, in this case appellant signed both the original by-laws and the amendments of 1930, and so presumably had actual knowledge of said by-laws. Such action on his part constituted a contract.

Appellant cites cases from other jurisdictions which hold that a club member may resign by merely giving notice of his resignation, but it seems that in all of these cases the courts emphasized the fact there was no rule or by-law that prohibited the resignation.

Appellant contends that the by-laws are unreasonable so far as same pertain to resignations. In support thereof it is argued that under the present economic depression a member may not be financially able to pay his dues, or he may have removed from the locality in which the club is situated. These are matters which should have been considered by him when he entered into his contract. It might be a hardship under like conditions for the other members to assume his burden. Such facts do not affect or control the reasonableness of the by-laws. While it is a well-recognized rule that courts will set aside by-laws that are unreasonable, before a court will declare a by-law unreasonable its unreasonableness must clearly appear. Thompson on Corporations, 3d Ed. (Bobbs-Merrill), vol. 2, p. 504, § 1102; 14 Cor. Jur., p. 370. In Thompson on Corporations, as above cited, it is said: “But the fact that a court will assume to determine when a by-law is reasonable, contrary to the opinion of the corporators themselves, has its limitations. Thus, if the members of a strictly private corporation or association agree among themselves that a particular by-law is reasonable, and it is not opposed to the law in the sense of being immoral, criminal, or against public policy, the courts will give effect to it as a private contract, and will not set it aside because they may deem it unreasonable.”

There is no showing that the board of directors acted without sufficient cause, or arbitrarily, in its failure to accept appellant's resignation. So far as is disclosed by the record, it may have had ample cause to withhold such acceptance. Such being the case, we cannot say that the by-laws relating to resignations are unreasonable or that the board of directors acted arbitrarily in failing to accept appellant's resignation.

Respondent makes the additional point that the assignment of a membership, as provided for under the provisions of section 12, article II, is a condition precedent to the acceptance of a resignation. We cannot agree with this contention. This provision relates exclusively to sales of certificates and not to resignations of members without sale. A discussion of the question is unnecessary considering the conclusion we have reached.

The judgment is affirmed.

JAMISON, Justice pro tem.

We concur: TYLER, P. J.; KNIGHT, J

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