Marshall v. Pilots' Ass'n

Opinion by Orlady, J., The voluntary association known as the Pilots’ Association for the Bay and River Delaware, is composed of duly licensed pilots and has as its objects the mutual benefit of its members; equalizing the earnings of pilots; and providing for sick and disabled members, etc. The plaintiff was one of the original members of the association which was organized in December, 1896, and this controversy arises upon the interpretation and effect to be given to a certain by-law or rule of the association, viz: “ Rule 14. A member losing his license for any other cause than intoxication shall receive half pay until reinstated.” While the plaintiff was in active service and good standing “ he became disabled by reason of impairment of his eyesight and could no longer pursue his calling.” On June 29,1899, his license was regularly revoked by proper authority for the cause as above stated, and under Rule 14 the defendant accorded and paid him half pay from July, 1899, until March, 1900, which was one half the amount awarded and paid each month to the pilots in active service. The case stated shows that on April 9, 1900, — “ the plaintiff being in the sixty-seventh year of his age and his disability being permanent,”— the association, conformably to the constitution, amended Rule 14, so as to read, “ a member losing his license through accident to the vessel, or through any other cause except intoxication, he shall receive one-half pay until reinstated. A member losing his license for not being capable of following his business shall receive fifty ($50.00) dollars per month.” The amended by-law defined the status of a member not mentioned in the original. It would be unreasonable to hold that the original by-law was intended to provide for other than cases of temporary disability. Under it a member could be reinstated in active service and thus be liable to perform the duties of a member and be entitled to the earnings of the association which [649] would be distributed at the end of each month among the mem. bers. After June 29,1899, the plaintiff could not be reinstated for the reason that, with his consent, his license was revoked by the pilot commissioners because of a physical disability which made it impossible for him any longer to pursue his calling as a pilot. The office of a by-law is to regulate the conduct and to define the duties of the members towards the corporation and each other. So far as its provisions are in the nature of a contract, the parties thereto are the members of the association, as among themselves; or the corporation on one side, and its individual members on the other: Flint v. Pierce, 99 Mass. 68; s. c. 96 Am. Dec. 691. It must be conceded that a by-law or regulation is a rule for future action, and an association which is authorized to make such by-laws as may be necessary to secure the objects for which it is created, has power to change them by a legal amendment when necessary to carry out such objects. It must also be conceded that the power to amend cannot be so exercised as to impair any right that has become vested by virtue of the by-law. The articles of association and by-laws existing at the time when membership begins are in many respects to be regarded as establishing between the association and members certain fundamental rights. It is essential to the control and disposition of conditions which cannot be anticipated when an association is formed, that it should have authority to provide for them by the amendment or repeal of a by-law, or by enactment of a new one. The power to repeal and amend is an incident to the power to enact: Com. v. Lancaster, 5 Watts, 152. x An association can enact “ alterations in the by-laws, of a mere regulative kind or which are not inconsistent with the fundamental scheme of the incorporation, but in the line of its original purpose, conducive to perfect equality of benefits and burdens, though they affect (without destroying) vested rights, so long as the alterations relate to the duties and rights springing from the contract of membership, and not from other purely contract relations; because, on all questions of the rights and duties incident to membership every member, by his fundamental contract of membership, pledges his assent in advance to every lawful rule adopted by the majority in furtherance of [650] the common objects: ” 7 Thompson on Corporations, sec. 8769; Supreme Lodge Knights of Pythias v. Knight, 117 Ind. 489, 20 N. E. Repr. 479; s. c., 8 L. R. A. 409. The plaintiff contends that the by-law (Rule 14) was a part of his contract, unalterable except with his consent, and relies on St. Patrick’s Male Beneficial Society v. McVey, 92 Pa. 610, and Becker v. Berlin Beneficial Society, 144 Pa. 233. In the latter case, which distinguishes the earlier one, the status of the plaintiff was definitely fixed, and, to use the words of the decision, “the defendant society became liable to the plaintiff for dues at the rate of two dollars and fifty cents per week, and after it had paid them for more than one year it proceeded to amend its by-laws so as to reduce the amount of benefits.” It was held that this could not be done, as “ he was a creditor whose rights had previously attached, and those rights cannot be swept away by such a scheme as this by-law.” The most extreme application of that case to the present one would be that the plaintiff had a vested right to receive the half pay allowance under Rule 14 while he was temporarily disabled; but when the new degree of disability, which equally affected all in that class, was determined and he was placed in the class of the permanently disabled, he was bound by the designation in the amendment. Having received half pay to the date o£ the amendment he is bound thereafter by the changed allowance. It is not reasonable to hold, that where an association at its formation has not anticipated all possible contingencies necessary to its successful government, that the association must follow the original lines even to inevitable bankruptcy by paying improvident allowances rather than by preserving the association; but it should carry out the purposes of its formation by the enactment of a reasonable amendment to meet the overlooked contingency. To justify interference by the courts and warrant the overthrow of a bylaw, it must be shown that there has been an abuse of power or that the by-law is unreasonable. This new condition'was established by the plaintiff’s consent to the revocation of his license by the pilot commissioners by reason of his permanent disability so that he “ could no longer pursue his calling.” No one has a right to presume that by-laws will remain unchanged. It is not claimed that the organic law [651] of the association forbids the amendment. The permanence and welfare of the pilot’s association required that there should be some special provision made for those who became permanently disabled. It would be unreasonable and inequitable that the permanently disabled should receive the half pay which is produced entirely by the young and active members. Fifty dollars per month was considered a reasonable contribution from the funds of the association to such permanently disabled members. It can readily be seen that on the half pay basis and with the increasing numbers of aged and disabled members the resources of the association would be so drained as to destroy its object, and new pilots would be deterred from assuming such a liability in becoming members. It was held in McCabe v. Father Matthew Total Abstinence Society, 24 Hun (N. Y.), 149, that when at the time of contract of membership there existed a by-law providing $5.00 a week for sick benefits, that a subsequent by-law, passed before the sickness of a member, reducing the amount of benefits, was valid and binding. As was said in Supreme Lodge v. Knight, supra, “ the change from one plan to the other was not an unreasonable exercise of power, because it may well be that the system originally adopted, which gave no heed to age, was so infirm as to be incapable of long enduring; it was not arbitrary, because the by-laws were rightly amended and a desire to promote the welfare of the association brought about the change; it was not. the repudiation of a debt, because the right to the avails of the association provided for by the contract was not taken away; it was not the destruction of a vested right, because the power to amend was, as reserved, a part of the contract from which the right emanated.” The liability to be placed in the new class of permanently disabled pilots applied to all members on equal terms. It may sometimes happen that the interests of an individual, or of a few individuals may be impaired by such amendments, but it is the duty of the association to protect the interests of the many rather than of the few. By this amendment of Rule 14 the active pilots have assumed an obligation which was neither specified nor provided for in the original by-laws, and have agreed to allow their permanently disabled comrades out of their own earnings at the rate of $600 per year. In the light [652] of the fact that the sole source of income of the association is from the hazardous and skilled laboixff the licensed active pilots —with out whom there could not be any association of this kind — the provision seems to be generous and reasonable. The judgment is affirmed.