494
THE GREEN BAG
TAXATION. " Recent Reports on Taxa tion," by E. R. A. Seligman, Political Science Quarterly (V. xxii, p. 297). VOLUNTARY ASSOCIATIONS (Liability). "The Personal Liability of Members of Volun tary Associations," by G. A. Endlich, in. the June American Law Register (V. 55, p. 337), discusses the cases where a liability is attempted to be fixed upon members of a committee, a club, or any voluntary assoc ation by reason of the act, contract or expenditures of some of them or of their chosen officers. Omitting the analysis of cases the article may be sum marized as follows: By a familiar rule outsiders may hold mem bers as partners, though they were not such in fact, if they held themselves out as such and were so dealt with. And it is clear that if persons associated as a committee, club or voluntary association of any description are inter se partners, they are liable as such to one another and to outsiders. An early American case lays down the rule in substance, that a voluntary association for private or individual profit or pleasure, emolu ment or benevolence is a partnership, but that members of an association for objects of a public nature are not partners inter se, what ever may be their relation as regards outsiders. These conclusions were based on old English chancery rulings, now long abandoned in England. Recent American cases give a perplexing echo now and then, but "the weight of authority surely inclines to" the view that in associations not for trade or commerce the existence of public objects, as distinguished from objects o benevolence, sociability, pleasure, improvement or protection confned to the membership, is not indispensable to forbid the application of doctrines peculiar to the law of partnership. To that extent, at any rate, the ancient rule must be deemed to be modified by the modern one; the latter being understood as conceding partnership attributes, if at all, only to business associa tions. In such, where regarded as partner ships, the problem of the liability of members inter s: and to outsiders present no questions which do not find their adequate solution in the general principles of partnerhsip. In associations which are not partnerships those questions must obviously be approached upon
different lines. As to them the rule laid down by the Lord Chancellor in Re St. James's Club is fundamental; viz., that 'no member . . . is liable . . . except so far as he has assented to the contract in respect of which such lia bility has arisen,' — that rule determining his liability or non-liability both to his fellows and to outsiders in the absence of special and necessarily exceptional circumstances. "The effect of this rule is manifest. When ever a member not directly participating in the making of the contract is to be visited with responsibility for a debt or an expenditure incurred beyond the resources of the association by its managers or by a fraction of its member ship in its behalf, the question is one of agency on the part of those incurring the debt or expenditure." Whether there is agency or not depends on the ordinary principles of agency and must rest in antecedent authorization or subsequent ratification. If the antecedent authorization is expressed there is little room for trouble. Whether authorization is implied depends largely on the kind of association. One for the purpose of obtaining a charter for a bank ing company may be held impliedly to autho rize needfully incurred expenses. One for whose scheme " contemplates the defraying of all expenses out of funds provided by subscription, dues, etc., implies no authority to any one, member or officer, to pledge without limit the personal credit of the mem bers. It goes without saying that this scheme may be modified by explicit provisions to the contrary or by the adoption of measures in themselves inconsistent with and therefore to that extent displacing it. But nothing of that sort being in the way, common experience and observation, which are the sources of legal presumptions, make the rule stated broadly applicable to associations not for business, trade or commerce. It follows that as to such as a class it may be declared that no general implied authority exists in any individual member, in any fraction of the membership, in any officer or managing committee to bind the remaining members for debts incurred or for expenditures made on behalf of the asso ciation beyond the fund provided for its pur poses by subscriptions, dues or other contem plated revenues. . . .
