Golden Rule v. People ex rel. Swigert

Mr. Justice Sheldon delivered the opinion of the Court: This was a proceeding by information in the nature of aquo warranto, against the Golden Rule and its directors. The-information contains three counts. The first sets forth the organization of the Golden Rule as a body corporate, under the general Incorporation law, approved April 18,1872, (Rev. Stat. 1874, p. 290,) and its mode of doing business, and avers-that it has usurped, and now usurps, powers and franchises not conferred by law. The second avers that the corporation has wrongfully, and without warrant of law, engaged in and transacted a life insurance business, and is therein wrongfully usurping power; and the third count sets forth, that it has unlawfully usurped and exercised powers and franchises in respect to its so-called relief fund, and is so doing. To the information two pleas were filed, one by the corporation, and the other by the directors. These pleas set forth all the facts concerning the organization, objects, operation and business of the corporation, its constitution and by-laws, etc., and deny that it has exercised any power or franchise not warranted by law. A demurrer was sustained to the pleas. The defendants have appealed to this court, and assign for error-the decision of the circuit court in sustaining the demurrer and entering judgment of ouster. Among the objects of the association, as set forth in the pleas, are: “Second—To aid its members in the struggles incident to life, and to assist its sick and distressed members in every way that may be suggested by a refined humanity. “Third—To establish a fund by voluntary contributions, for the benefit and relief of the widows and orphans of deceased members, thereby securing the blessings of independence to those who otherwise might be left in poverty. “Fourth—To give material aid to those who, through a long series of years, may have their charity drawn upon by frequent and continued contributions, thus securing in old age a realization of mutual aid and protection. ” Section 1, article 4, of its constitution, is: “The Supreme Council shall establish, by voluntary contributions from the members of the order, a relief fund, from which, upon the death of a member, an amount not exceeding $1500 shall be paid to such person or persons as shall have been designated by such deceased member, and a sum not to exceed $500 shall be distributed in accordance with the custom and laws of the order; and the subordinate councils shall have authority to establish a charity fund, by voluntary contributions from the members of the order, to be devoted to the relief of worthy distressed members. ” In section 2 of the by-laws it is declared: “The relief fund shall consist of contributions received from its members, upon the death of a member. The amount so raised shall be distributed as follows: Seventy-five per cent,—not to exceed $1500,—to the widow, orphan, or other dependent, as deceased member shall have directed in his or her application for an interest in said fund; and twehty-five per cent,—not to exceed $500,—equally between the two members holding valid and existing certificates, next in number, both above and below, the number of the certificate of such deceased member. If there is an excess in the amount so raised, it shall remain in the relief fund, and when said fund contains $2000, then it shall be used to pay the beneficiaries, and no contributions shall be asked. Out of the amount contributed for the relief fund, the Supreme Council may appropriate a sum,—not to exceed ten per cent,—to the expense fund of Supreme Council. The Supreme Council shall cause to be paid to the beneficiaries of deceased members, the contributions received, within sixty days after due notice of death. ” The form of application for an interest in the relief fund, given in the pleas, after stating that all answers to the medical examiner are true, proceeds: “I desire my interest in said fund, being a sum not to exceed $2000, of the amount contributed at my death, to be paid as follows: Seventy-five per cent (not to exceed $1500,) to......, and the residue (twenty-five per cent,) equally to those persons who hold valid certificates in the relief fund department, numbered next above and next below the number of my certificate. I declare this to be my last will and testament as regards my interest in the relief fund of this order. ” The pleas give the form of the certificate issued, whereby the holder is declared to be entitled to an interest in the relief fund, as above set forth. The pleas state that the practice of the Supreme Council is to number the certificates according to the age of the member, instead of the order in which the applications are received, “so that the certificates of the older members would bear numbers between certificates of the younger members, and thus, by giving the younger members of the fund the prospect of receiving back some part of the contributions made by them, would encourage them to contribute thereto, and continue their membership in the order; ” that all the payments which are required to be made by members, is a membership fee, for charter members, of $5 ; for subsequent members, $7, and a semi-annual due of fifty cents, which are devoted exclusively to expenses. According to the showing of the pleas, we are of opinion that this corporation is in the exercise of powers not conferred by law. A corporation can only organize under this act above mentioned, “for any lawful purpose, except * * * insurance. ” (Sec. 1 of the act.) By the last clausq, of section 31 of the act, it is provided that societies intended to benefit the widows, orphans, heirs and devisees of deceased members thereof, and members who have received a permanent disability, and where no annual dues or premiums are required, and where the members shall receive no money, as profit or otherwise, except for permanent disability, shall not be deemed insurance companies. Here is the strongest implication that a society doing such a business as the pleas present, is doing an insurance business, and that it is to be deemed an insurance company. Not to be deemed an insurance company under the act, it must be intended to benefit the widows, orphans, heirs and devisees of deceased members, and members who have received a permanent disability, and where the members shall receive no money, as profit or otherwise, except for permanent disability. But here the declared object is the benefit of members, and the pecuniary benefits are enjoyed, not by the widows, etc., of deceased members,, and by members who have received a permanent disability,, but by the appointees of deceased members, the beneficiary named in the application, and by certain of the members generally, and not members who had received a permanent disability. It is urged that there are no assessments made on members to pay the benefits,—that the relief fund is constituted solely by the voluntary contributions of members. When a death occurs, of a member entitled to the benefits of the relief fund, the secretary is required to give notice of the fact to' each member of the order of the Golden Rule, who is asked to make contribution to the relief fund; but no penalty whatever attaches for not contributing, it being entirely voluntary to do so or not. Although there be no compulsory means of raising this relief fund, and it consists solely of donations, made as thus stated, there is certainly expectation that the fund will be raised, and when raised, there is an absolute obligation to distribute it to the persons named. This relief fund forms an important part of the society’s scheme, and is doubtless a main inducing reason for becoming a member of it, rendering it highly improbable that it will not be provided in the mode pointed out. When the contributions are received, seventy-five per cent of the amount (not exceeding $1500,) is required to be paid to the beneficiary named in the certificate of the member, and twenty-five per cent (not exceeding $500,) is to be divided equally between the two members holding certificates numbered next above and below the number of the deceased member’s certificate. Although the constitution of the society provides that this amount of seventy-five per cent shall be paid to such person or persons as shall have been designated by the deceased member, and the certificate states that it shall be paid over to the person named in such person’s application, it is said the person named must, under the laws of the order, be a widow, orphan or "dependent. The foundation for this statement appears to be the provision in the by-law that the money shall be distributed to the widow, orphan or other dependent, as the deceased shall have directed in his application. Even under this provision, a dependent may be designated; and a dependent is not necessarily of the class of persons designated in the above named section 31 of the law under which the corporation was created, to-wit, widows, orphans, heirs and devisees. But, passing this feature of the payment, the requiring of twenty-five per cent of the amount to be paid to the two members who happen to hold certificates next in number to that of the deceased.member, marks the transaction as unlawful life insurance business, as to be deemed such, under said section 31 of the statute. These two members are not members who, as named by this section, have received a permanent disability, nor are they members who “receive no money, as profit or otherwise, except for permanent disability. ” They become entitled to the money simply by chance—from holding certificates which happen to bear certain designated numbers. The affair is in the nature of a wager policy. This case was before this court on a former occasion, (The People ex rel. v. Golden Rule, 114 Ill. 34,) and although there was then involved but a question of practice, we took occasion there to say this much with regard to the merits of the case: “Although the payment of dues to a corporation, on account of fees or assessments upon its members, may be purely voluntary, persons may acquire legal rights to share in them when they are paid. * * * At present we do not perceive why the payment of a premium to one who holds a number next to that held by one who dies, and solely because he does die, is not, in effect, in the nature of a wager upon the life of one in whom the party thus benefited has no interest, and why, therefore, the transaction is not within the condemnation of the principle announced in Guardian Mutual Life Ins. Co. v. Hogan, 80 Ill. 35. And see, also, to like effect, Commonwealth v. Wetherbee, 105 Mass. 149; State v. Standard Life Ins. Co. 38 Ohio St. 281. ” After more full consideration, our views now coincide with what we then thus said. The circumstance of the relief fund not being made up from fees and assessments, but of purely voluntary contributions, does not, in our opinion, make any difference. The judgment will be affirmed. Judgment affirmed.