Chestnut Beach Assn. v. May

The record in this case discloses that along about July, 1925, certain persons organized a corporation not for profit, for the purpose of owning property adjacent to a lake and operating thereon a club for the social benefit of its members.

Richard J. May was one of the original members of said association, which was known as the Chestnut Beach Association, and in becoming a member he signed the code of regulations for the government of said association and received a certificate of membership issued to him under said regulations. The regulations provided that such certificate of membership should be assignable and transferable under certain conditions named in said regulations, and said Richard J. May never assigned or transferred said certificate of membership, never resigned his membership or surrendered his certificate to the association, and never did anything to in any way indicate that he was not a member except to stop paying his dues.

Said code of regulations provided that a member could be expelled for unbecoming conduct, but could not be so expelled until he was accused in writing, signed by at least five of the members, and had had an opportunity to be heard in defense at a meeting of the association, and further provided that if he were so expelled, he should "be repaid within two months the original initiation fee and all general and special assessments, without interest, which shall terminate such person's membership and all of his rights against either the association or its property."

At several places in the code of regulations the term "general and special assessments" is used, but the code of regulations nowhere provides for assessments as such, although it does provide that dues shall be assessed. That provision is found in Article VIII of the code of regulations, which is as follows:

"Each member shall pay an initiation fee in the sum of $100.00 and in case of his failure to so pay the same, his said election to membership shall be void. All initiation fees and all assessments, regular and special, shall be paid to the secretary of this association.

"Monthly dues in the sum of $5.00 shall be assessed against each and every member of the association. The association may, by a majority vote, at either a special or general meeting, called for such purpose, increase the amount of monthly dues, to not exceed the sum of $25.00 per month, in order to meet the necessary expense and maintenance of the association and its property.

"The accruing dues shall be a lien upon each member's membership in the association. The failure to pay the dues and assessments herein provided or hereafter assessed, shall be grounds for the expulsion of the member or members so in arrears, should said arrears continue for a period of six months, at the option of the trustees of this association.

"If such trustees shall see fit to exercise the option of expelling any member or members of the association in arrears for said period of six months, or more, said board shall so exercise said option by giving to the members so in arrears a written notice of the fact that they have so expelled such member from the association, and shall accompany such notice by the check of this association for the initiation fee, and all general and special assessments, paid by such member as hereinabove provided, without interest, and such action on the part of the board of trustees shall be final and conclusive, and said member so expelled shall have no other or further rights in the association or its property of any kind or character whatsoever."

The controversy in this case grows out of a difference of opinion as to the construction to be placed upon said Article VIII and the action taken thereunder against Richard J. May by the association.

May claims that by virtue of actions taken by the association under said Article VIII he was expelled from membership in the association, and is therefore entitled to recover back the initiation fee of $100, paid by him, and the sum of $35, dues which were assessed against him and which he paid. In the municipal court, where he brought his action for said $135, he recovered a judgment against the association. Upon error proceedings being prosecuted in the court of common pleas that judgment was affirmed, and the matter is now before this court upon a petition in error to reverse both of said judgments and render final judgment in favor of said association.

There is no dispute as to the facts which should control the judgment in this case.

When May became a member he was not only charged with knowledge, but had actual knowledge, of the provisions contained in the code of regulations; he paid the dues assessed until he had paid $35, and he did nothing thereafter to in any way affect his standing as a member except to cease paying dues, the last payment being made in September, 1925.

The minutes of the association show that from time to time the trustees considered the delinquency of May and other members, and that some motions were made in reference thereto, but the minutes fail to show whether said motions were adopted or rejected. One of such motions appeared in the minutes of August 5, 1927, which minutes recite that a motion was made by Mr. Miller to notify Richard J. May and others that their dues, which were in arrears, "would be applied against their memberships according to by-laws Article VIII," and on October 1, 1927, the following letter, signed by the officers and trustees of the association, was sent to Mr. May, to wit:

"Dear Sir:

"You are hereby notified that the amount of dues assessed against you as a member of the Chestnut Beach Association to date is the sum of $115.00. This amount is more than the amount which you have paid in as a member of this association.

"Under the provisions of the regulations of this association, the amount of these dues which are unpaid constitutes a lien on your certificate of membership. The trustees of the association are, therefore, hereby demanding that you pay, within thirty days from the date hereof, your unpaid dues and assessments hereinabove set forth, and that, in the event of your failure to so pay said dues within thirty days from the date hereof, that then and in that event your certificate of membership in this association will be cancelled, and all of your rights and privileges terminated."

Mr. May received said letter, but thereafter did nothing in reference to the matter except to bring the suit hereinbefore mentioned, which was begun on May 6, 1929.

After the sending of said letter, the officers and trustees of the association took no action in reference to expelling Mr. May from the association or enforcing the claimed lien of the association upon Mr. May's membership, nor in reference to denying him the right to any of his privileges as a member of the association, and did not in any way interfere with him in the enjoyment of such privileges; but after said notice had been given, said May ceased to avail himself of any of the privileges of such membership except that on one occasion he did visit the property of the club for a short time.

Some claim is made that, after the sending of said letter, the club failed to carry May's name on its books as a member of the association, but on that question we find against the claim of May. His name appeared upon the records as a member just the same as before said letter was written, but the secretary, in keeping track of the dues paid by the members, omitted May's name from such list because he was not paying his dues.

The claim of the association is that it never elected to exercise its option to expel May for nonpayment of dues, and we find that said claim is true, unless said election was made by the sending of said letter, notwithstanding the failure of the association to do anything thereafter in reference to the matter.

As to said letter, the association claims that, under Article VIII as hereinbefore quoted, the association had a lien upon Mr. May's membership for the dues which he should have paid and did not pay, and that, at the time of the writing of said letter, said unpaid dues amounted to more than the amount of said May's membership, and that, by said letter, it not only did not expel May from membership, or elect to exercise its option to expel him, but on the contrary merely notified him that it would enforce its lien upon his membership, and that as its claim amounted to more than his membership the enforcement of its lien would extinguish his membership and he would thereby lose all of the rights and privileges of a member of the association.

On the other hand, May claims that by said letter said association notified him that if he did not pay up his dues by a certain time, he would be expelled for nonpayment of dues, and that, by his failure to pay the dues within the time specified, his expulsion became operative without any further action being taken by the association, and that therefore he has a right to recover back his initiation fee; in other words, that the sending of said notice that his certificate would be cancelled unless he paid up his dues was a sufficient indication of the association's election to expel him, and that he was legally justified in making such assumption, and that by not paying he consented to being expelled.

The letter did not expressly state that the association proposed to expel May; it did expressly state that May's arrearage in dues amounted to more than he had paid in as a member, and that the association had a lien on his certificate of membership for an amount greater than he had paid in, and that therefore the association proposed, if he did not pay up, to cancel his certificate.

It seems to us that May was not legally justified in assuming that the association intended to expel him, but rather that the association proposed to extinguish his membership and apply what he had paid upon what he then owed, and that that is really what he acquiesced in when he failed to pay what he owed and ceased to avail himself of the privileges of a member and made no protest or complaint for nearly two years thereafter.

We do not find that anything the association did after the sending of such letter indicated an intention to expel May, and that what it did or omitted to do was perfectly consistent with an intention to insist upon its lien upon May's certificate.

If May's membership was terminated by his resignation or by any other means except his being expelled, he has no claim whatever against the association. Section 8623-103, General Code. Therefore his right to recover depends upon whether he was expelled; and we hold that he was not expelled.

If the association were suing May for dues accruing after the sending of said letter, it might reasonably be held that the association could not hold him for dues after the date on which it said in the letter it would cancel his certificate; but the fact that after said date he ceased to be a member, if he did, in the sense of being liable for dues, is not conclusive upon the question of whether or not he was expelled. We think the letter should be construed as an attempt to enforce the lien of the association, rather than an attempt to expel May, and we are not now concerned with whether the mode adopted of enforcing its lien was or could be effectual to accomplish the desired result. All we are called upon to decide is that, without any further action being taken, May was not expelled, as that term is used in said Article VIII.

The judgment of the municipal court, and the judgment of affirmance of the common pleas court, being contrary to law, they are reversed, and the controlling facts being undisputed, final judgment is rendered in favor of the association.

Judgment reversed and final judgment for plaintiff in error.

FUNK, J., concurs.

STEVENS, J., not participating.