Finn v. Beverly Country Club

                                             THIRD DIVISION
                                             June 11, 1997










No. 1-96-1749

JAMES J. FINN, CHARLES GILMARTIN, ROBERT
HOFFMAN, EARL VONDRASEK, FRANK SCHAFFER,
and WILLIAM PRINDIVILLE,

          Plaintiffs-Appellees and
          Cross-Appellants,

     v.

BEVERLY COUNTRY CLUB and ALLEN FLAGLER,
JOHN MEANY, NEIL RONEY, RICHARD JALOVEC,
THOMAS GEARY, EDWARD JOYCE, THOMAS BOYD,
EDWARD GOLZ, and JOHN CURTIN,

          Defendants-Appellants and
          Cross-Appellees.)
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)Appeal from the
Circuit Court of
Cook County




No. 94 CH 3926




Honorable
Margaret Stanton 
McBride,
Judge Presiding.

     JUSTICE CAHILL delivered the opinion of the court:
     Plaintiffs sued the Beverly Country Club (the Club) and
members of its board of governors (the Board) seeking veteran
member status and damages.  Plaintiffs alleged breach of contract,
breach of fiduciary duty and promissory estoppel.  The trial court
granted summary judgment for defendants on the breach of contract
and breach of fiduciary duty claims.  After a bench trial, the
court ruled in favor of plaintiffs on the promissory estoppel
claim.  Defendants appeal, and plaintiffs cross-appeal.  We reverse
the judgment of the trial court on the promissory estoppel count
and affirm the summary judgment for defendants on the breach of
contract and fiduciary duty counts.
     The Beverly Country Club is a private social club formed for
pleasure, social recreation and the promotion of outdoor sports,
especially the game of golf.  The Club's business affairs are
managed by a board of governors.   The bylaws provide that "in all
questions of administration or interpretation of these [bylaws], or
other matters relating to the [bylaws], the decision of the Board
of Governors shall be final."  The Board may amend the bylaws by
unanimous vote, but must submit amendments for ratification at the
next membership meeting.
     The Club's bylaws provide that a member who is 70 years old
and has been a regular member for 25 years is eligible to apply for
veteran membership.  The bylaws further provide:
          "Upon application for transfer to Veteran status and
     appearance before the membership committee, the Board of
     Governors may from time to time elect any eligible member
     to veteran status."
A veteran member does not pay dues or special assessments, but must
pay a house account.
     Excepting Frank Schaffer, plaintiffs met these requirements
when they applied for veteran membership.  They allege that, for as
long as they have been members, the Board has automatically allowed
transfers to veteran membership to applicants who met the
requirements.  But their transfers to veteran status were delayed
because of actions taken by the Board.  As a result, they sued.
     At the subsequent trial on the issue of promissory estoppel,
James Finn testified that, in selecting a country club, the Club's
veteran member program was one of the features he considered. 
Charles Gilmartin testified he decided not to join another country
club because he did not want to lose time accumulated toward the 25
years needed for veteran membership at Beverly.  Finn and Gilmartin
testified that they understood that the Club promised them an
automatic transfer to veteran status upon meeting the eligibility
requirements since such transfers had been granted to all qualified
applicants for as long as they had been members.  The parties
stipulated that, if called to testify, the testimony of the other
plaintiffs would be substantially similar to that of Finn and
Gilmartin.
     Edward Joyce, testifying for the defense, said that in early
1993 the Board became aware of a concern among members that the
growth of veteran membership contributed to a financial problem at
the Club.  In response, the Board adopted a bylaw that limited the
number of golfing veterans to 35 and required golfing veteran
members to pay 40% of the regular dues.  The cap on the number of
veteran members prevented plaintiffs from becoming golfing veterans
when they applied.  At the next annual meeting of the membership,
the bylaw was not ratified.
     In March 1994 the Board, again concerned about the Club's
financial condition, adopted a policy to defer requests for
election to veteran member status until the Club had 250 regular
members.  
     The trial court entered a judgment for the plaintiffs on the
promissory estoppel claim.  The trial court dismissed plaintiffs'
claim for specific performance as moot because all plaintiffs had
been elected to veteran membership while this case was pending.
     Defendants assert several errors on appeal: (1) once the trial
court found a contract between plaintiffs and the Club, it should
have dismissed plaintiffs' promissory estoppel claim; (2) the trial
court erred in finding promissory estoppel; and (3) the trial court
erred in intervening in the internal affairs of the Club.  We find
it necessary to address only the last of these.
     As defendants note, Illinois courts have long recognized that
voluntary associations have great discretion in conducting their
internal affairs.  Their conduct is subject to judicial review only
when they fail to exercise power consistently with their own
internal rules or when their conduct violates the fundamental right
of a member to a fair hearing.  Lee v. Snyder, 285 Ill. App. 3d
555, 558-59, 673 N.E.2d 1136 (1996); Kendler v. Rutledge, 78 Ill.
App. 3d 312, 316, 396 N.E.2d 1309 (1979).  Generally, a court will
not interfere with the internal affairs of voluntary associations
absent mistake, fraud, collusion or arbitrariness.  Proulx v.
Illinois High School Ass'n, 125 Ill. App. 3d 781, 787-88, 466 N.E.2d 620 (1984), citing 4 Am. Jur. Associations & Clubs 17
(1936).  If there has been no mistake, fraud, collusion or
arbitrariness, our supreme court has endorsed the exercise of
jurisdiction only when a substantial property, contract, or other
economic right that implicates due process is at stake.  Van Daele
v. Vinci, 51 Ill. 2d 389, 394, 282 N.E.2d 728 (1972).  
     In granting summary judgment for defendants on the breach of
contract count, the trial court found that the Board acted
consistently with the Club's bylaws when it imposed the cap on
veteran members.  The trial court's review of this case should have
ended there.
     Plaintiffs argue that, because their injury is economic,
judicial intervention is warranted.  But Illinois courts have never
held that classifying an injury as economic is sufficient to
subject a voluntary association's decision to judicial review.  Not
all economic injuries implicate due process concerns.  Review has
been limited to cases that concern "economic necessity."  In Van
Daele v. Vinci, our supreme court reviewed the decision of the
board of directors of Certified Grocers of Illinois, Inc.
(Certified), to expel a member when his "opportunity [to earn] a
livelihood" was at stake.  Van Daele, 51 Ill. 2d  at 394.  Certified
offered substantial economic benefits to its members, including
lower grocery prices and rebates.  Van Daele was an exception to
the general rule of nonintervention based on the character of the
organization and "its assumption of a purpose which exceeds merely
that of a social organization."  Van Daele, 51 Ill. 2d  at 395. 
     Unlike Certified, the Beverly Country Club is a social
organization and the economic impact asserted by plaintiffs does
not affect their economic livelihood.   If we found that plaintiffs
had asserted a sufficient economic necessity to warrant review, the
requirement set out in Van Daele would be stretched to a point
where it no longer has meaning.  A discount in membership fees at
a recreational club does not come near meeting the test of economic
necessity present in Van Daele. 
     On cross-appeal, plaintiffs contend that the court erred in
granting defendants' motion for summary judgment on the breach of
contract claim.  Plaintiffs assert that the bylaws are in the
nature of a contract between the Club and its members.  See Rotary
Club v. Harry F. Shea & Co., 120 Ill. App. 3d 988, 997-98, 458 N.E.2d 1002 (1983).  Plaintiffs challenge the trial court's
conclusion that the Board acted consistently with the Club's bylaws
and allege that the Board's policy amounted to an amendment of the
bylaws enacted without the required submission to the membership
for ratification.  If the Board had violated the Club's bylaws,
plaintiffs would have established a circumstance where a court may
intervene.  See Lee, 285 Ill. App. 3d at 560; Miller v. Suburban
Medical Center at Hoffman Estates, Inc., 222 Ill. App. 3d 668, 671,
584 N.E.2d 323 (1991).   Plaintiffs argue that under the bylaws the
Board only has discretion to decide whether an applicant qualifies
for veteran membership, not unlimited authority to grant or deny
veteran status.  The bylaws state that the Board "may" elect
eligible members to veteran status.  Plaintiffs urge us to consider
the Board's history of automatically electing members when
interpreting this provision.  But this extrinsic evidence may be
considered only if the bylaws are ambiguous.  Norris v. South Shore
Chamber of Commerce, 98 Ill. App. 3d 32, 34, 424 N.E.2d 76 (1981). 
The word "may" denotes discretion, and the bylaws do not limit that
discretion.  Even if the use of the word "may" is ambiguous, the
separate bylaw giving the Board the power to interpret the bylaws
is clear.  The bylaw that reads "in all questions of administration
or interpretation of these bylaws, or other matters relating to the
bylaws, the decision of the Board of Governors shall be final" is
dispositive of the issue.  We agree with the trial court's
conclusion that the Board had the power to create the policy.
     Plaintiffs argue that if the Board has the final word on
interpretation of the bylaws, plaintiffs' rights under the bylaws
are illusory and meaningless.  We agree that the Board's authority
to interpret the bylaws gives it considerable power to govern its
membership.  These are the rules plaintiffs agreed to abide by when
they joined the Club.  We have consistently held that "'each person
on becoming a member *** agrees to abide by all rules and
regulations adopted by the organization.'"  Lee, 285 Ill. App. 3d
at 559, quoting Engel v. Walsh, 258 Ill. 98, 103, 101 N.E. 222
(1913).
     Nowhere in the complaint or in the evidence before the court
is there an allegation that the action of the Board was a mistake,
fraud, collusive or arbitrary.  Plaintiffs do not contest the
evidence that the Board was motivated by the economic well-being of
the Club.
     This case does not fall within any of the exceptions to the
rule that courts will not intrude in the affairs of voluntary
associations.
     Reversed in part and affirmed in part.
     COUSINS, P.J., and GORDON, J., concur.