Wood v. Supreme Ruling of the Fraternal Mystic Circle

Mr. Justice Hand delivered the opinion of the court: It is conceded by the appellant that Joseph H. Wood was more than fifty-nine years of age at his nearest birthday at the date he applied for membership and was admitted to membership in the Order of the Protectors. It is clear, therefore, that there can be no recovery in this case unless the Order of the Protectors and the appellee, by receiving from Joseph H. Wood assessments as a member of said order from the time of his admission to membership therein to the time of his death, which covered a period of time intervening between March 19, 1898, and September 21, 1900, and which payments aggregated in amount, with interest, $962.42, waived the restriction as to age contained in the constitution and by-laws of the Order of the Protectors when said Joseph H. Wood might be admitted to membership in said order, and are estopped by their action in receiving said assessments from taking advantage of the fact that said Joseph H. Wood was above the age limit provided by the constitution and by-laws of said order at the time he was admitted to membership in said order. The law is well settled in this State that corporations can only exercise such powers as are conferred upon them by their charters, and that an act of a corporation not authorized by its charter is void, and the fact that the corporation has received the benefits of a contract or the party with whom it deals has acted thereunder does not estop the corporation from raising the defense, when sued upon such contract, of ultra vires. When, however, the contract is within the chartered powers of a corporation but there has been a failure to comply with some regulation, or the power has been improperly exercised, if the corporation has received the benefit of the contract it may be estopped to raise that defense. (Durkee v. People, 155 Ill. 354; National Home Building and Loan Ass. v. Home Savings Bank, 181 id. 35.) In the last case, on page 43, in discussing the -doctrine of ultra vires, the court said: “The term has been applied to acts of directors or officers which are outside and beyond the scope of their authority, and therefore are invasions of the rights of stockholders, but which are within the powers of the corporation. In such a case the act may become binding by ratification, consent and acquiescence, or by the corporation receiving the benefit of the contract. * * * Where an act is not ultra vires for want of power in the corporation but for want of power in the agent or officer, or because of the disregard of formalities which the law requires to be observed, or is an improper use of one of the enumerated powers, it may be valid as to third persons. In the more proper and legitimate use of the term it applies only to acts which are beyond the purpose of the corporation, which could not be sanctioned by the stockholders. * * * If. there is no power to make the contract there can be no power to ratify it, and it would seem clear that the opposite party could not take away the incapacity and give the contract vitality by doing something under it.” In this State the charter or organic law of an insurance association similar to that of the Order of the Protectors consists of the certificate of organization granted to it by the State, and the statutes of the State which provide for the organization of such associations and which define their powers. (People v. Chicago Gas Trust Co. 130 Ill. 268; City of Danville v. Danville Water Co. 178 id. 299.) The laws of the State of New Jersey governing the organization and specifying the powers of fraternal benefit insurance associations in that State were not introduced in evidence, and it will not be presumed, in the absence of proof, that the statute of said State contained any limitation as to the age of persons to whom insurance might be issued by fraternal benefit associations. We find nothing ip the certificate of organization of the Order of the Protectors which prohibited that association from granting certificates of membership to persons over fifty-nine years of age at their nearest birthday. By said order’s certificate of organization its national council was authorized to fix the age limit of its beneficial members. Said national council fixed by a by-law or by what is designated its constitution,—which designation added no force to its effect other than that of a by-law, (Supreme Lodge Knights of Pythias v. Kutscher, 179 Ill. 340; Peterson v. Gibson, 191 id. 365 ;)—the age limit of its beneficial members at not less than eighteen nor more than fifty-nine years at nearest birthday, and the most that can be said in support of the position that the certificate of membership to Joseph H. Wood was improperly issued is, that it was issued by the officers of said order in violation of the by-law of the association fixing the age limit of its beneficial members. In High Court Independent Order of Foresters v. Schweitzer, 171 Ill. 325, and in Coverdale v. Royal Arcanum, 193 id. 91, it was held the requirement of a by-law limiting the class of persons who might be admitted to membership in a fraternal benevolent insurance association might be waived. In the Coverdale case, on page 100, it was said: “It was certainly held in the Schzveitzer case that there could be a waiver of the enforcement of a requirement embodied in a by-law of a benefit society. It cannot be said that because of the by-law which provided that applications should not be received from bar-keepers or from persons who at any time sold or served intoxicating liquors to be drank on the premises William Wasserman did not become a member of the appellee society, and that on that account there was no membership to be forfeited. In his application, submitted to appellee, he agreed that any untrue statement made therein should forfeit the rights of himself and his family, or dependents, to all benefits or privileges therein. * * * The by-law is a direction to the persons whose duty it was to receive applications for membership. They were directed not to receive applications from bar-keepers, etc. * * * The appellee itself was affected with the same knowledge which the subordinate council had. It would be unjust to hold that, having such knowledge, it could continue for a year and eight months to recognize Wasserman as a member and receive dues and assessments from him, and yet, after his death, insist that he was never a member of the Royal Arcanum or its subordinate council at all. Having knowledge, as it must be presume'd to have had from the present record, the appellee should have taken steps to declare Wasserman’s membership forfeited. * * * The laws and rules of such associations as the appellee should be liberally construed, and where an attempt is made to work a forfeiture by a benevolent association, its laws, rules and regulations will be most strictly construed against it.” It appears from the admitted facts that Joseph H. Wood in his application stated the true date of his birth,—that is, June 3, 1838,-—from which it appeared he was nearer his sixtieth than his fifty-ninth birthday at the time he applied for membership in the Order of the Protectors. The application was presented to the Order of the Protectors and a certificate of membership based thereon was issued, and for more than two years that association and the appellee, with the written evidence before them that he was nearer sixty than fifty-nine years of age when he applied for membership, recognized him as a member of the association and during that time accepted his money in payment of assessments, and after his death the supreme recorder of appellee wrote the appellant her husband was a member of the appellee association and called upon her for death proofs, which were subsequently furnished. In the case of Morrison v. Wisconsin Odd Fellows’ Mutual Life Ins. Co. 59 Wis. 162, it was held the provisions of a by-law restricting membership to persons under a certain age might be waived by the officers of the association, and that where the application for the insurance, and other written evidence in possession of the secretary of the association, showed the age of the applicant as stated in his application for membership to be incorrect, the company was charged with notice of the mistake, and if it continued to accept assessments from the assured and failed to take action to forfeit his membership for such mistake, the association, after the death of the assured, was estopped to insist upon a forfeiture or that his certificate of membership was never in force. This case also points out very -clearly the distinction between the doctrine of waiver as applied to a limitation upon age contained in a by-law and such limitation when contained in the charter of the association. The authorities mainly relied upon by appellee, (Alexander v. Parker, 144 Ill. 355, Grimme v. Grimme, 198 id. 265, and kindred cases,) are cases holding a benefit association has no authority to create a fund for persons other than the classes specified in the law authorizing its organization, and that a member cannot direct a fund to be paid to a person outside of such classes. Had the charter of the Order of the Protectors restricted membership therein to persons fifty-nine years of age at their nearest birthday, the cases cited by appellee would perhaps be in point. But the case presented by this record for decision is not that sort of a case. Here the age limitation is found in a by-law, and while the issue of the certificate of membership to Joseph H. Wood by the officers of the Order of the Protectors was outside and beyond the scope of their authority as defined in that by-law, the act of admitting Joseph H. Wood to membership in said order was within the powers of the association, viz., the issuing of fraternal benevolent insurance to applicants therefor, and in such a case the act may become binding by ratification, consent and acquiescence, or by the association receiving the benefit of the contract. National Home Building and Loan Ass. v. Home Savings Bank, supra. We are of the'opinion the trial court did not err in refusing to hold the propositions of law contained in the statement preceding this opinion, submitted to it by the appellee, as the law governing this case. The judgment of the Appellate Court will be reversed and the judgment of the superior court will be affirmed. Judgment reversed.