LEGAL PHASES OF COOPERATIVE ASSOCIATIONS. - 9 



have the power to adopt them in the absence of a provision in 

 the general law or in the charter, placing it in the hands of a 

 select body. ' They can, however, delegate this right to the directors. 



The purpose of by-laws is to provide rules for the regulation of 

 the affairs of the corporation. They can make provision consistent 

 with law and with the charter for any matter or thing relative to 

 the conduct or business of the corporation. By-laws should perform 

 the same office for a corporation or association that a blue print 

 performs for a builder. They should constitute a working plan for 

 the corporation. Among the matters usually provided for in the 

 by-laws of a corporation are the following: The time, place, and 

 manner of calling and conducting its meetings and the giving of 

 notice thereof, the number of members constituting a quorum, the 

 qualifications and duties of directors and officers and their com- 

 pensation, if any, and suitable penalties for violations of the by-laws. 



By-laws are to be distinguished from rules adopted for the; 

 guidance of the public dealing with the corporation. The members 

 of a corporation and its directors and officers are generally con- 

 clusively presumed to have notice of by-laws and of what they 

 contain, and hence are bound by them, although, as a fact, they may 

 be ignorant of them.^^ 



The great importance of members, officers, and directors knowing 

 the provisions of the by-laws of their association is thus apparent. 

 On the other hand, strangers having no knowledge of the by-laws 

 are not bound by them. If notice of the by-laws, either express 

 or implied, reaches strangers it is usually held to be binding on 

 them.2^ 



A question which will readily occur to anyone is whether the 

 majority of the members of an association may adopt by-laws which 

 will be binding upon the minority who oppose their adoption.^^ 

 The answer is that they may, if such by-laws are reasonable and 

 consistent with the charter and the general law. However, the 

 majority can not adopt and enforce by-laws which violate the law 

 or run counter to the purpose for which the association was formed. 

 In an Arkansas case, a majority of the members of a corporation 

 sought through a by-law to make what, under the circumstances, 

 was held to be an attempted gift of a sum of money to one of their 

 members. Certain stockholders of the corporation opplosed thie 

 by-law and later resorted to the courts to prevent the turning over 

 of the money. It was held that the action contemplated was a dis- 

 tinct violation of their rights and was, therefore, illegal.^* A by- 



" Brent v. Washington Bank, 10 Pet. 594 ; Columbia Bldg., etc. Ass'ns v. Junguist, 

 111 Fed. 645. 



22 Rathbun v. Snow, 123 N. Y. 343, 25 N. B. 379, 10 L. R. A. 355. 



"Iowa State & Savings Bank v. C. Nat. Bank, (Neb.) 83 N. W. 982. 



'^ G. W. Jones Lumber Co. v. Wisarkana Lumber Co., 125 Ark. 65, 187 S. W. 1068. 



