Seymour v. Chicago Guaranty Fund Life Society

Gilfillan, C. J. As the defendant’s articles of incorporation provide that certificates (of insurance) will be issued only to persons who are above the age of eighteen years and not above the age of sixty years, and that no person shall become a member of the corporation who is under eighteen or over sixty years of age, the contract of insurance with George M. Seymour, who, when the certificate was issued to him, was over sixty years of age, and the agreement of the defendant with the Northwestern Guaranty Life Insurance Company by which the former agreed to substitute its certificates of insurance' for those surrendered to it by the holder of like certificates of the latter, so far as it assumed to bind defendant to make the substitution as to persons who at the time of the substitution should be over the age of sixty, and all certificates substituted in such cases, were outside of the purposes for which defendant was incorporated. They were ultra vires. But there are few rules better settled or more strongly supported by authorities, with fewer exceptions, in this country, than that when a contract by a private corporation, which is otherwise unobjectionable, has been performed on one side, the party which has received and retained the benefits of such performance shall not be permitted to evade performance on the ground that the contract was in excess of the purpose for which the corporation was created. The rule may not be strictly logical, but it prevents a great deal of injustice. The decisions are found referred to in the following text [150] books: Mor. Priv. Corp. (1st Ed.) § 100; Beach, Priv. Corp. §§ 422-425; Field, Priv. Corp. §§ 263-266; Spelling, Priv. Corp. § 766. Seymour had iully performed the contract on his part, and the defendant received and appropriated the benefits thereof, and it must accordingly perform on its part. And this brings the case to the question of how much' plaintiff is entitled to recover. The amount of the insurance was on the face of the certificate $5,000. But the articles of incorporation provided for the creation of a reserve fund, by deducting from the face of any policy twenty-five per cent, if the member should die within the first year from its date, twenty per cent, if within the second year, fifteen per cent, if within the third, ten per cent, if within the fourth, and five per cent, if within the fifth. The policy to Seymour contained this provision: “If this policy be terminated by death on or before the first anniversary of the date hereof,” and then stating the percentage to be deducted in case of death within the several years, respectively, according to the articles of incorporation. The policy was dated December 19, 1891, and Seymour died April 11, 1892, so that by the terms of the policy, standing alone, there was to be deducted for the reserve fund twenty-five per cent, of its face, to wit, $1,250. The policy, however, contained this clause: “This certificate is issued and accepted in lieu of the certificate issued to the assured within named by the Northwestern Guaranty Life Insurance Company of St. Paul, Minn., and in consideration thereof ■the certificate issued by said Northwestern Guaranty Life Insurance Company is hereby surrendered, and the application, statements, and representations made therein by the within named assured to said Northwestern Guaranty Life Insurance Company for such insurance shall apply to and become a part of this policy, and aré warranted by the assured within named to be true.” This recital makes it proper, in construing the policy, to inquire into its origin, and the nature of the transaction in which it was issued. It appears that the substitution of policies was pursuant to a contract between this defendant, party of the first part, and the Northwestern Company, party of the second part, which provided for the defendant taking up and continuing the insurance by the Northwestern Company, which was agreed to be effected by each holder of a policy in the Northwestern surrendering it to defendant, and [151] the defendant issuing in lien thereof its policy for the same amount, based on the original application to the Northwestern, and the contract contained this covenant on the part of defendant: “And further agree that the holder of such substituted policy, who shall comply with the terms and conditions thereof, shall be entitled to all the contracts, rights, privileges, and protections that such holder would have had had he taken out a policy from the first party in the first instance.” This we construe to mean, in brief, that, so far as might affect any rights under it, the substituted policy should be deemed to have been issued at the date of the surrendered policy of the Northwestern; that is, each policy taken in substitution should stand and be construed as though issued and dated at the date of the surrendered policy. The policy to Seymour was issued to carry out, so far as he was concerned, that agreement, and to determine the effect of the policy and the rights of the assured under it it may be read in connection with the contract pursuant to which it was issued. It is to be presumed that the parties intended the policy to be construed (if possible) consistently with the contract; and as this was not and does not purport to be an original insurance, but rather the continuation of insurance effected by a previous policy, there is no difficulty in construing the words, “and if this policy shall be terminated by death before the first anniversary of the date hereof,” to refer, not to the date of the substitution, but of the policy of which this is a continuation. So construing it preserves to the holder the rights assured to him by the contract between the two companies, to preserve which this policy was substituted for the other. To construe it alone and by the letter, these rights would be defeated. Seymour’s policy in the Northwestern was issued and dated July 27, 1888, so that by the terms of the contract between the two companies and of this policy, if it is to be deemed as issued of the date of the original policy, there could be deducted but ten per cent, of the face of the policy. {Opinion published 55 N. W. Rep. 907.) Order affirmed.