and provided they be made in pursuance of its charter are as binding upon its members and upon others acquainted with its method of business as any public law of the State. The fact of absence from a duly constituted meeting at which a by-law is passed does not relieve a member from any obligation thereby created. The binding effect of by-laws is said to be derived from the assent of the member thereto. But it is not necessary that his assent be directly expressed by signing the constitution, articles or by-laws. It will be presumed from his act in becoming a member. While by-laws are not always binding upon strangers, a person who becomes a member of an association or company after the adoption of a bylaw, is not considered a stranger; and by joining the organization he is deemed to accord his assent thereto and to be thereafter bound by the obligations which it may impose upon the members." $322. Extent of the effect of by-laws upon strangers.Whether a by-law of a company or association can have any binding effect upon a stranger, depends, first, upon its being something more than a rule merely for the government of the members and officers in conducting the affairs of the organization; and, second, upon the stranger having or being affected with knowledge of it. And, on the other hand, the purpose of by-laws being to regulate the internal affairs of the company, the duties of the members toward each other and toward the company itself, an outsider can not enforce them unless he can show some privity, as for example that he relied upon them in giving credit to the company. By-laws regulating the use and enjoyment of joint property or to govern the con We have already so decided." Hazeltine v. Belfast & M. R. Co., (1887) 79 Me. 411; s. c. 1 Am. St. Rep. 330, 332. S. P. Belfast & M. R. Co. v. Belfast, 77 Me. 445. 1 Brick Pres. Church v. Mayor &c. of New York, (1827) 5 Cow. 538; Anacosta Tribe v. Murbach, 13 Md. 91; Cummings v. Webster, 43 Me. 192; McDermott v. Board of Police, 5 Abb. Pr. 422; Union Bank v. Guice, 2 La. Ann. 249. duct of the members of a private corporation or to protect, secure or enhance their rights or interests, have no binding effect upon strangers. A by-law which is a rule merely for the government of the officers of a corporation in conducting the corporate business can have no effect upon its contracts. with other parties. Thus where under the charter of a mutual fire insurance association, the incorporators are authorized to make such by-laws as they may deem advisable for the management of their corporate affairs, their by-laws can have no effect to modify contracts entered into between the corporation and the assured. And a by-law allowing stockholders upon paying thirty per cent. of their shares to forfeit them is void as against creditors of the company. So again, a by-law creating a lien upon shares of stock in favor of the corporation for debts due to it from the shareowner, are inoperative as against his judgment creditors. His assignee in bankruptcy, however, is not a stranger in respect of a by-law creating a lien. Whether a lien so created will operate against a transferee of the shareholder, depends, under the second consideration stated above, upon the transferee having knowledge thereof. Whether the transferee will be affected with knowledge of a regulation of this character by notice upon the face of the certificates that the shares represented by them are subject to all debts due the company from the holder, seems to be still unsettled. In Connecticut he is held to be affected 1 Lumley on By-Laws, 66, 67. The by-laws are evidence against the corporate officers although they be not corporators. Bank v. Wollaston, 3 Harr. (Del.) 90. Bank of Holly Springs v. Pinson, 58 2 Samuels v. Central &c. Express Ala. 585; Steamship Dock Co. v. Co., McCahon, 214. Heron, 52 Pa. St. 280; Pelot v. John 3 Stewart v. Lee Mut. Fire Ins. son, 33 La. Ann. 1286; Byron v. Assoc., (1887) 64 Miss. 499. 4 Slee v. Bloom, 19 Johns. 456. ទ Byron v. Carter, 22 La. Ann. 98. 6 In re Bigelow, 1 Nat. Bank. Reg. 632, 667; Morgan v. Bank of North America, 8 Serg. & R. 73; s. c. 11 Am. Dec. 575. In re Long Island R. Co., (1838) 19 Wend. 37; s. c. 32 Am. Dec. 429; Carter, 22 La. Ann. 98; Anglo-Californian Bank v. Grangers' Bank, 63 Cal. 359; Morawetz on Corporations, 2nd ed. § 203. Cf. Neale v. Janney, 2 Cranch, 188; Evansville National Bank v. Metropolitan National Bank, 2 Biss. 527; Lee v. Citizens' National Bank, 2 Cin. Super. Ct. 298. with the knowledge; but in New York a contrary ruling has been made. Persons, although not members of the company, who engage in business transactions with its officers are affected with notice of limitations upon their powers prescribed in the corporate by-laws. So that a by-law providing that all contracts involving a certain amount shall be executed by certain officers with certain formalities is binding upon strangers, they being presumed to know the extent of the powers of the agents with whom they deal. A corporation, however, may be estopped by acquiescence in a contrary course of dealing from setting up its by-laws as against strangers. The general principle applicable to the rules of the Stock Exchange, as well as other trades, is, that a person who deals in a particular market must be taken to deal according to the custom of that market, and he who directs another to make a contract at a particular place must be taken as intending that the contract may be made according to the usage of that place." § 323. Amendment and repeal. The same authority which makes a by-law may subsequently repeal or amend it. Thus 1 Vansands v. Middlesex County those creditors whose claims arise Bank, 26 Conn. 144. out of Stock Exchange transactions, 3 Bohm v. Loewer's Gambrinus Brewery Co., (1890) 9 N. Y. Supl. 514, stated supra, § 203. Acc. Rathburn v. Snow, (1889) 22 N. Y. St. Rep. 227, stated supra, § 209. 2 Conklin v. Second Nat. Bank, 45 for that is a fraud upon the general N. Y. 655. creditors. And if it be urged that that is the rule of the Stock Exchange, the answer, as Lord Justice James said, is that the Stock Exchange is not an Alsatia; the Queen's laws are paramount there, and the Queen's writ runs even into the sacred precincts of Capel Court." Williams' Forensic Facts & Fallacies, (1885) 106. 4 Seeley v. San Jose Independent Mill &c. Co., (1882) 59 Cal. 22, stated supra, § 205. 5 Williams' Forensic Facts & Fallacies, (1885) 105. "But the rules of the Stock Exchange, being the rules of a domestic forum, can not affect persons who are neither members nor the clients of members. Thus they can not affect the rights of the general creditors of a defaulting member. A defaulting member, therefore, can not voluntarily pay money to the official assignee to be distributed exclusively amongst 6 Newling v. Francis, 3 Term Rep. 198; King v. Ashwell, 12 East, 22; King v. Westwood, 4 Barn. & C. 806. Cf. Lambert v. Addison, 46 L. T. 20. But in New Hampshire it has been said that a by-law of a religious society, requiring a two-thirds vote to alter by-laws, may, nevertheless, be repealed by a majority. Richardson v. Union Congregational Society, 58 N. H. 187. where the articles of association of a corporation provide for the management of its business by a board of directors, and for meetings of that board, but do not provide for meetings of the corporation, and the first by-laws were adopted by the directors, the latter have power to amend them.' And the members are bound by amendments made in accordance with existing rules, to the same extent as by the original by-law. Accordingly, a member of a company whose by-laws are subject to amendment can not maintain an action against it under a by-law which has been repealed by amendment during his membership and before the bringing of his action. So, bylaws relating to the rights of members to benefits under the constitution and by-laws of a benevolent voluntary association, if amended in accordance with the existing constitution and by-laws, may be so altered as to reduce the amount due a sick member, and an alteration of this kind, even though made during his sickness, does not necessarily impair the obligation of a contract. The amendment is binding both upon the member and upon those claiming benefits under him. Thus it has been held that a member of the Philadelphia Stock Exchange, who subscribed to its constitution and by-laws, was bound by an amendment made in accordance therewith, providing for a gratuity fund from which payments were to be made to the representatives of deceased members who should pay dues and assessments, and providing that members failing. to pay dues and assessments should be debarred from participation in the benefits from the fund; and it was decided that the representatives of a member thus failing to pay could not be heard to question the validity of the amendment, and could receive no benefit from the fund. Power conferred upon the executive committee to amend the by-laws does not, however, authorize them so to amend them as to take away from the shareholders rights reserved for their protection. And any 1 Heintzelman v. Druids' Relief Assoc., (1888) 38 Minn. 138. Poultney v. Bachman, 31 Hun, 49; Note to Austin v. Searing, 69 Am. Dec. 674. 49. 4 Poultney v. Bachman, 31 Hun, 5 McDowell v. Ackley, 93 Pa. St. 277. 6 Blatchford v. Ross, (1868) 54 Schrick v. St. Louis &c. Co., 34 Barb. 42. Mo. 423. alteration of the by-laws must be expressly made. It can not be effected by a usage contrary to the by-law. Yet the company may be estopped from setting up a by-law to show its non-liability for an act done on its behalf where all the members have assented to its performance.2 § 324. Enforcement - Penalties - Expulsion - Fines.— The enforcement of by-laws is usually by means of the imposition of fines or amotion from office or suspension or expulsion from membership. Where the governing body of the company or society enforce a by-law by these means, acting in good faith, not capriciously or oppressively, there is no legal mode of reversing their action. The formality of expulsion, however, can not be lawfully made to involve a battery. The penalty must not be left to the arbitrary assessment of the makers of the law according to the circumstances, even though the utmost extent of the sum be limited." But a by-law may empower any other body than that enacting it to fix the amount within certain limits. A stoppage of a fine out of profits accruing to the offending member is legal but a stoppage of all profits is illegal. Even under express legislative authority to impose fines, there are limits beyond which the corporation by its by-laws can not go. The amount of the fine must be reasonable; it can be imposed only by way of punishment for some delinquency in the performance of a duty which the member may owe to the corporation by reason of his membership; and no more than one fine should be imposed for the same offense. The courts have been unanimous in discountenancing a repeated imposition of the same fine increased every time upon the principle of arithmetical pro |