Canton Masonic Mutual Benevolent Society v. Rockhold

Bakeb, J. The act approved March 26, 1869, in relation to life insurance companies, provides that before any life insurance company goes into operation under the laws of this State, a guarantee capital of at least $100,000 shall be paid in money and invested in such stocks and securities as are required by said act, and that until the Auditor of Public Accounts shall examine the capital and give a certificate authorizing such company to issue policies, no policy shall be issued. It is a part of the agreed case that the appellant corporation is not an insurance company, as defined by the statute, but that it is a corporation organized under the laws of the State relating to corporations not for pecuniary profit, its object being to give financial aid and benefit to the widows, orphans and heirs or devisees of deceased members. It appears from “Exhibit A,” which is expressly made a part of the agreed case, that the certificate which was filed by the proposed incorporators in the office of the Secretary of State, on the 30th day of March, 1874, stated that the business and object of the society, which was to be known as the “ Canton Masonic Mutual Benevolent Society,” should be to give financial aid and benefit to the widows, orphans and heirs or devisees of deceased members. It also appears from said exhibit that the certificate of the Secretary of State declaring the legal organization of the society was based upon the certificate of the incorporators, so filed, and upon the provisions of the act concerning corporations, approved April 18, 1872, and in force July 1, 1872. Prior to the date of the certificate of the incorporators and its filing, Sec. 31 of the said act concerning corporations was amended by an act approved March 28, 1874, and in force, under an emergency clause, from and after March 28, 1874. The amendment so made provided that, “ associations and societies which are intended to benefit the widows, orphans, heirs and devisees of deceased members thereof, and where no annual dues or premiums are required, and where the members shall receive no money as profit or otherwise, shall not be deemed insurance companies.” It is manifest that the society in question is organized under the provisions of this amendatory act and as a society not for the pecuniary profit of its members. In Commercial League v. The People, 90 Ill. 166, it is held that an association organized under said amendatory clause is not a life insurance company within the meaning of the statute relating to life insurance companies. In respect to associations and societies, whose charter is the amendatory and last clause of Sec. 31, Chap. 32 of the ¡Revised Statutes of 1874, the language of the clause is mandatory, that “ the members shall receive no money, as profit or otherwise.” In Commercial League v. The People, supra, it is held the word “ profit ” means the gain made upon any business or investment. If appellee, as a member of the appellant society, has invested in and paid to the association the sum of §165, and is entitled to receive and recover from it the sum of §1,836, in consideration of such investment, then it would seem necessarily to follow that he, as such member, is allowed to receive money as a profit upon his investment. It must be considered that the clause of the statute under consideration absolutely prohibits the members of societies organized under said clause from receiving money or profits from the association. The corporators elected to avail themselves of the privilege given them by the statute of forming themselves into a society not for pecuniary profit to themselves, and were by the State, upon that consideration, freed-from the heavy burdens imposed by law upon life insurance companies. To permit the society to contract to pay to one of its members upon his arriving at seventy years of age, or after he has been a member in good standing for twenty-five consecutive years, a sum of money as profits upon his investments in the society, would be in fraud of the charter upon which it depends for existence, would virtually nullify and abrogate the wholesome statutes enacted for the purpose of regulating the business of life insurance companies, would set at naught the legislative intent, and be in conflict with the public policy of the State. Appellee is not a stranger to the corporation, but is himself a member of the society, and as such is chargeable with full knowledge and notice of its charter powers and of the requirements and prohibitions of the statute under which it is organized. The general rule is that an agreement to do'a thing contrary to law or public policy can be enforced by neither party against the other. When a statute forbids a particular business generally, or to certain corporations, then any contract made in such business in violation of the statute or by a corporation prohibited therefrom is void. 2 Parsons on Cont. 186; Bishop on Cont. (Enlarged Ed.), Secs. 547, 549 and 627. In Penn v. Bornman, 102 Ill. 523, the provision in the bank charter was that “no director of said corporation shall be indebted to said corporation, either directly or indirectly, or individually, at any time, to an amount greater than seventy-five per centum of the capital stock held by such director, in good faith as his own,” and it was held that a director could not enter into a valid contract with the bank, as guarantor or indorser, without regard to his ownership of stock and in violation of such provision, and that no recovery could be had by the bank under such a contract against him of his estate; and it was further held that the prohibition of the charter applied to the bank as well as to the directors. See also, the numerous authorities cited in the opinion of the court in Penn v. Bornman. In the case just cited, the court said, in substance, that they •found no evidence of overreaching, fraud or bad faith on the part of Bornman, but only found the simple fact that he, like the bank, was a party to an agreement prohibited by its charter; and that if this of itself affords matter of estoppel against the defense of illegality in the contract, then it is manifest such a defense could not successfully be interposed in any case where the agreement is simply prohibited by statute, and that to so hold would, under the pretense of construction, he, in effect, abrogating the provisions of the charter by judicial legislation. These remarks seem to apply, with equal or greater force, to the case we now have in hand. The provisions of the Acts of May 22, 1883, and June 18, 1883, have no bearing upon the present controversy. Those acts have reference only to contracts for indemnity against accident or permanent disability. The contract here involved is not for indemnity against either accident or permanent disability, and there is nothing in the case to either indicate or suggest that appellee has either met with an accident or is suffering from a permanent disability. The present case is not governed by and is easily distinguished from the case of Benefit Association v. Blue, 120 Ill. 121, relied upon by appellee. There, the statute did not forbid the contract which was then under consideration; here, the statute does forbid the contract now in question. There the court said: “It is contended that all persons not named in the act are prohibited from becoming beneficiaries. It will be observed that the contract involved is not absolutely prohibited by statute. All that can properly be claimed is, that it was not expressly authorized by the statute.” Here, the charter of the appellant society contains an absolute prohibition against the character of benefits sought to be recovered, and the language of the statute is “the members shall receive no money, as profit or otherwise.” In our opinion, the members of the Canton Masonic Mutual Benevolent Society, as well as the society itself, were bound to know that a contract, such as that here in suit, was invalid so far as it provided for the payment of a sum or sums of money to a member of the association upon his arrival at the age of seventy years, or after he had been a member in good standing for twenty-five consecutive years, and was binding only in respect to the benefits secured thereby to the widow, orphans, heirs and devisees of such member, or other person entitled thereto after his decease. Our conclusion is, that the judgment of the Circuit Court was erroneous, and it is reversed. Judgment reversed..