Steele v. Fraternal Tribunes

Mr. Justice Wilkin delivered the opinion of the court: It is insisted as grounds of reversal that the finding of facts made by the Appellate Court is not sufficient, and that the court erred in sustaining defendant’s plea of ultra vires. The defendant in error was organized under the statute of this State which provides that the incorporation of such companies shall be under the supervision of the superintendent of insurance, and when they have complied with the, "statute he shall issue to them a certificate of organization, and thereupon they may proceed to transact business according to the plan of their organization. It was evidently the intention of the legislature to control all fraternal societies and place them under the direction of the insurance department. The defendant society, in its certificate of organization, provided that it would insure persons between the ages of eighteen and fifty-one years. This was the limit placed upon its operations, and it was not authorized to carry on business outside of those limits. At the time the insured made application for membership he falsely stated that he was fifty-one years of age, and gave the date of his birth as 1847, when, in fact, he was born in 1839. He agreed, in his application, to warrant the faithfulness of the statements therein contained, and agreed that any untrue or fraudulent statement made therein, or to the medical examiner, or concealment of facts made by him in his application, should forfeit his right of insurance. These facts were found by the Appellate Court, and are sufficient, in law, to sustain its judgment. The false statement of the age of the assured was a fraud upon the defendant in error and vitiated the contract of insurance. It is insisted, however, that even though the contract be regarded as ultra vires, yet defendant in error cannot avail itself of such defense, the contract having been performed in good faith by the other party and the corporation had the full benefit of such performance. We cannot agree with this contention, A contract of a corporation which is ultra vires in the proper sense of that term,—that is to say, outside the object of its creation, as defined by the laws of its organization, and therefore beyond the powers conferred upon it by the legislature,—is' not only voidable, but wholly void and of no legal effect. The objection to the contract here is, not merely that the corporation ought not to have made it, but that it could not lawfully make it. The contract could not be ratified by either party because it could not have been authorized by either. No performance by the parties-could give the unlawful contract validity or become the foundation of any right of action upon it. When a corporation acts within the general scope of the powers conferred upon it by the legislature, it, as well as all persons contracting with it, will be estopped to deny that it has complied with the legal formalities which are prerequisite to its existence or to its action because such prerequisites might, in fact, have been complied with. (Wood v. Mystic Circle, 212 Ill. 532.) But when the contract is beyond the powers conferred upon it by existing laws, neither the corporation nor- the other party to the contract can be estopped, by assenting to it or by acting upon it, to show that it was prohibited by those laws. The powers delegated by the State to corporations are matters of public law, of which no one can plead ignorance. A party dealing with a corporation having limited and delegated powers is chargeable with notice of those powers and their limitations and cannot plead his ignorance of their existence. (National Home Building Ass. v. Bank, 181 Ill. 35; Durkee v. People, 155 id. 354; Central Transportation Co. v. Pullman Palace Car Co. 139 U. S. 24.) Here the company was absolutely powerless to insure a man over fifty-one years of age. We find no reversible error, and the judgment of the Appellate Court will be affirmed. Judgment af¡irme^