Southern Mutual Aid Ass'n v. Boyd

TYSON, J. The Southern Mutual Aid Association is strictly a mutual aid association under section 1116 et. seq. of the Code. The scope of the business of the corporation in the -way of the payment of money, except for debts contracted in the usual and ordinary conduct of its business, as defined in its original charter is “to furnish financial aid to sick and destitute members * * * in the form of a weekly indemnity in case of sickness and a stated funeral benefit in case of death,” and by an amendment -to its charter, “to issue certificates to or [173] agreements with the members * * * upon the birth of any child, upon decease, sickness or physical disability of such member, * * * to pay money or to render aid to him or those dependent upon him, or any beneficiary designated by him, and to receive and collect from said members, dues or asesssments at stated intervals for such agreements or certificates,” etc.; “to accumulate a fund for meeting and providing for the payment of such certificates and to invest the money thus accumulated,” etc. .The association, besides its ordinary business in issuing and providing for the certificates and agreements indicated in the quotations from its charter above mentioned, and which were clearly within its powers, undertook to issue certificates or policies binding the company, in consideration of certain dues and assessments to be paid, not only to pay the amount for which the certificate was issued'upon the death of the member, or in case of sickness to pay the weekly benefit named therein as in ordinary cases, but at the expiration of 10 years from the date of the certificate, upon its surrender, “to return the amounts of dues paid to the said association less the amounts (if any) the person herein named may have drawn in case of sickness during that time.” A large number of such certificates were issued, but, objection having been made to them by some of the officers of the state having supervision of insurance companies, the practice was discontinued and a number of the certificates were taken up by substituting the ordinary policies; but a number of .such certificates, amounting to about 100, are still outstanding and will soon mature or commence maturing. This being the condition of affairs, the complainants below, as holders of the ordinary certificates issued by the company, and in behalf of themselves and of other holders and owners of policies issued by the corporation, except those holding the 10-year policies, filed their bill to prevent the collection of dues for the payment of said 10-year policies and to declare them invalid. Upon the final hearing of the case, the court below enjoined the collection of the said 10-year policies by assessments against the holders of the ordinary certificates, but in other respects held [174] the- said policies good, and thereupon cross-appeals are prosecuted against the decree — one of the appellants contending that the provision in said 10-year policies “to return the amount of-dues paid to said association, less the amounts (if any) the person herein insured may have drawn in case of sickness during that time” is wholly void; the other, that such stipulation is entirely valid and that the court erred in restricting the collection of dues at large to discharge said policies. To determine the question here involved, it is first necessary to observe that the character of the particular kind of corporation, defendant in this case, is very different from ordinary private corporations. It appears to he strictly a trutsee for its members, having no property of its own, and having no object in the way of accumulating property and profits for itself, but only for the benefit of its members, in order to distribute the burden of individual misfortunes of a specific class among the entire membership. The distinguishing feature of such association is the strict mutuality of obligations and objects of benefits, and that “these must not in any respect be wanting, superseded, or impaired.”— Kennan v. Rundle, 81 Wis. 212, 51 N. W. 430 ; Hall v. West Travelers Acc. Association, (Neb.) 96 N. W. 170 ; Knights T. & M. L. I. Co. v. Vail, 206 Ill. 404, 68 N. E. 1103. And it is a general proposition, universally recognized, that corporations have only such powers as are expressly given in their charters, with such incidental powers as are necessary for the carrying out of the objects of their charters. — Central R. R. Co. v. Smith, 76 Ala. 572, 52 Am. Rep. 353 ; Chewacla Lime Works v. Dis-mukes, 87 Ala. 344, 6 South. 122, 5 L. R. A. 100. In this case it is insisted, in the first place, that the express powers of this corporation are limited by the charter to the payment of policies in case of sickness and to provide a funeral in the case of death of the member and by the amendment of its charter to pay policies upon the birth of any child, or upon decease, sickness, or physical disability of members, and that the stipulation in this instance to pay policies at the expiration of 10 years is ultra vires and unauthorized by the charter. [175] In the next place it is insisted that the mutuality of the obligations and benefits is destroyed by levying assessments upon the membership at large to pay the holders of the 10-year policies upon their maturity. Upon consideration, Ave are of the opinion that both of these contentions are correct. Taking up the first question, Ave find that there is nothing in the charter authorizing the maturity of policies at any given period, or upon any eA’-ent Avliich could be predetermined. They are authorized only on birth of a child, or sickness, death, or physical disability. So strict is the laAv in this regard in reference to these particular corporations that it is held that they have no poAver to consolidate with other like associations, and that they have no poAver to receive a bond of indemnity to provide for lawful maturing obligations. Such corporations can neither do things not authorized nor use means not contemplated in the scheme of association.— Bankers’ Union of the World v. Crawford, (Kan.) 73 Pac. 79, 100 Am. St. Rep. 465 ; Simmons v. Troy Iron Works, 92 Ala. 427, 9 South. 160 ; Kennan v. Rundle, 81 Wis. 212, 51 N. W. 430 ; Dietrich v. Association, 45 Wis. 79 ; Jemison v. Bank, 122 N. Y. 135, 25 N. E. 264, 9 L. R. A. 708, 19 Am. St. Rep. 482, Rundle v. Kennan, 79 Wis. 492, 48 N. W. 516 ; Bank v. Earle, 13 Pet. (U. S.) 588, 10 L. Ed. 274 ; Rockhold v. C. M. M. B. Soc. 129 Ill. 440, 21 N. E. 794, 2 L. R. A. 420 Taking up the second question, and bearing in mind that the essential and distinguishing feature of the mutual aid association is its mutuality of obligations and benefits, it seems evident that the class of contracts assailed in this case violates this principle. Holders of ordinary certificates must pay assessments to meet the death, sickness, and other legitimate claims as they occur, and they get nothing back until accident or misfortune has fallen to their lot. This is strictly mutual. But a holder of the 10-year policy does not at all contribute to pay the losses of others, since at the end of 10 years, though in perfect health, he receives back all his contributions, less Avhat he has already received. And in case of his death or sickness before the expiration of 10 [176] years, he receives the full benefit of his policy, to be paid from the general fund of the society; that is, from assessments upon the members at large. There is no mutuality in this, and any such contract is unauthorized by the charter of the organization, and destructive of the organic law of the association prescribing mutuality of obligations and benefits as absolutely essential. The case of Kennan v. Rundle, 81 Wis. 214, 51 N. W. 426, treats the subject of mutual aid associations very fully, and in the opinion the leading authorities are cited sustaining this view, and we deem it unnecessary to refer to them specifically. The aid association^ as a trustee and as a corporation, has no right to enter into a stipulation to return to a class of members their contributions at-the expiration of 10 years, less what they have already been paid. The lower court, therefore erred in not. granting the full relief prayed for by complainants, and did not err in enjoining the collection of assessments from the members at large for the payment of the 10-year policies. On the cross-appeal of the complainants below the decree is reversed, and a decree Avill be here enterd granting the relief prayed for in their bill; and on the appeal of the respondents, beloAV the decree of the lower court is. affirmed. Affirmed in part, and in part reversed and rendered. Weakley, C. J., and Simpson and Anderson, JJ.,. concur.