Rochester Insurance v. Martin

Wilson Oh. J. By the Court On the 30th day of April, 1866, the plaintiff issued to the defendant a policy of insurance, by which it assumed to indemnify him tor three years from its date, from any loss by accident, or disease resulting-in death, of any of certain horses described in the policy, and the note in suit was given for the premium, demanded by the plaintiff for the contract of indemnity. The plaintiff was organized under Chap. 55 of the General Laws of 1858, as amended by Chap. 66 of the General Laws of 1860, and by Chap. 52 of the General Laws of 1864. Section 2 of its charter or articles of incorporation provides : “ Said company is formed for the purpose of making insurance upon dwellings, stores, and all kinds of buildings, and upon household furniture, merchandise, and other property, against loss or damage by fire, lightning, and inland navigation and transportation.” * * Appended to a printed copy of the articles of incorporation, which are attached to the paper-book, is the following resolution, dated January 25, 1865 : “ Resolmed, That section two of the articles of incorporation be amended so as to read after the word transportation ‘ also Uve stock aga/mst death. ’ ” , The defendant, among other things, alleges in his answer that he executed and delivered to the plaintiff the note mentioned in the complaint, and another note for $93; and at the same time, and as part of the same transaction, the plaintiff executed and delivered to him a policy of insurance, together with its charter and by-laws ; and he “avers that said note in the complaint, and the note, fol- $93, and said policy of insurance, with the said application, charter and by-laws, constitute but one contract and transaction, and the sole and only consideration for each and both said notes was the said policy of insurance.” “The defendant further avers that the plaintiff never [64] amended its charter; that the pretended amendment thereof appended thereto was never adopted or approved by the members of the corporation or by the directors thereof; and was never signed, or sealed, or acknowledged, or certified by the members of said corporation, or by its directors or officers, or any of them ; and that said amendment is not authorized by law.” “The defendant further avers that he is ignorant and unable to read or write; and was informed by the plaintiff, by its agents, at the time he executed said notes, that the said plaintiff had, by its charter, authority to issue said policy and make said contract of insurance; that said statements and representations were then and there false and fraudulent, and were made to defraud this defendant; and this defendant believed said representations and assurances, and relied upon them, and did not discover the contrary, or said fraud or falsehood, until after this suit was commenced. "Wherefore the defendant demands judgment, &c.” To this answer the plaintiff demurred, “for that upon its face it does not constitute a counter claim nor a defense.” The Court sustained the demurrer, and ordered judgment for the plaintiff, from which the defendant -appealed. We think the answer sets up a defense to the action. The legal entity called a corporation being the creature of law, and having such- powers only as are conferred on it by the statute creating it, or under which it is organized, of course cannot legally exercise a/ny power not thus conferred. All powers not conferred are withheld and denied, just as much as if the Legislature used express negative language for that purpose. 2 Kent's Com. 299, and cases cited in note. Bank of Augusta vs Earle, 13 Pet. R. 588, and cases cited. Angell & Ames on Corp., Secs. 111, 271, and cases cited in notes. [65] “ It may be safely assumed,” say the Supreme Court of the .United. States, “ that a corporation can make no contracts and do no acts either within or without the statute which creates it, except such as are authorized by its charter.” Bank of Augusta vs. Earle. The facts admitted here show that the .plaintiff had no authority to insure against death by accident or disease, and the note must stand or fall with the policy of insurance, for it was part of the same transaction, and the policy was the only consideration for the note. This action must therefore fail, for no person, natural or artificial, can enforce a contract that is void, illegal, or contrary to the policy of the law. It is true that a jiarty by his own acts may be estopped from questioning the validity of his contract; but the doctrine of equitable estoppel can have no application to this case against the defendant. It is only invoked to prevent injustice and wrong, and when the party claiming its protection would in the eye of the law be defrauded, and the other party be guilty of a fraud by the allegation or proof of the truth. The defendant alleges that he was induced to enter into the contract by the false and fraudulent representations of the plaintiff’s agent, and that he did not discover the fraud until after the commencement of this action. Under these circumstances he is justified in law and morals in repudiating the contract. He has received no consideration, except the promise which the plaintiff’s agent had no right to make, and which the defendant could not enforce, at least without proof that the corporators assented to or authorized the act. It would be a strange perversion of language to say that the doctrine of equitable estoppel would shut the mouth of a defendant from proving the truth to free himself from liability on a contract into which he had been induced 'to enter by the fraud and falsehood of the plaintiff. Judgment reversed.