Alexander v. Bankers Union of Chicago

Mr. Justice Gridley delivered the opinion of the court. Several grounds for a reversal of the judgment are here urged by counsel for the defendant. We shall consider two. They are: That the defendant, as a fraternal beneficiary society organized under the Act of June 22,1893, as amended, relating to such societies (Hurd’s St. 1912, ch. 73, secs. 258-272, J. & A. TTTT 6646-6662) was without power or authority to make or perform the so-called “reinsurance contract,” dated April 28, 1909, (1) because said act does not confer authority upon such society to assume and agree to pay benefits stipulated to be paid by another society; and (2) because at the date of said contract Dr. Alexander was over sixty years of age, and hence, the contract was void and plaintiff cannot recover. By the terms of said contract of April 28, 1909, it is provided that the defendant Society, “hereby insures and accepts into membership Lawrence Alexander, under certificate No. 6050, issued to him by the Boyal Fraternal Union, and agrees to pay all benefits stated in said certificate according to its terms and conditions, subject to the provisions of the constitution and by-laws of the Boyal Fraternal Union in force at this date, April 28, 1909.” By section 1 of the Act in question it is in part provided: “A fraternal beneficiary society is hereby declared to be a corporation, society or association formed, organized or carried on for the sole benefit of its members and their beneficiaries and not for profit. Each society * ® may make provisions for the payment of benefits in case of disability and death, or of either, resulting from either disease, accident or old age of its members. Any such society, order or association may create, maintain and disburse a reserve fund in accordance with its constitution and by-laws. Such reserve fund, if any, shall represent certain prescribed accumulations or percentage, retained for the benefit of its members or their beneficiaries, and no part thereof shall be used for expenses, nor for any purpose except the payment of death and disability claims. The payment of such benefit in all cases being subject to compliance by the members with the contract rules and laws of society. * * * The funds from which the payments of such benefits shall be made * * * shall be derived from assessments or dues collected from its members. * * All such societies shall be governed by this act, and shall be exempt from the provisions of all insurance laws in this state, and no law hereafter passed shall apply to them unless they be expressly designated therein. * * * ” By section 7 of the Act it is in part provided: “Any ten or more persons, citizens and voters of this State, may associate themselves together for the purpose of forming a corporation under this act; for this purpose they may make, sign and acknowledge * * * a certificate of association, in which shall be stated the name or title of the proposed society; * * * the limits as to age of applicants for membership, which shall not exceed sixty years, and that medical examinations are required. * * * ” We have been unable to discover anywhere in the act any provision which expressly or by implication confers upon such a society the power or authority to assume and agree to pay benefits contracted to be paid by another society. Counsel for plaintiff do not contend that such power is either expressly or impliedly conferred, but only that it is not expressly prohibited. In National Home Building Ass’n v. Home Sav. Bank, 181 Ill. 35, 40, it is said: “A corporation has no natural rights or capacities, such as an individual or an ordinary partnership, and if a power is claimed for it, the words giving the power or from which it is necessarily implied must be found in the charter or it does not exist. The law on this subject is stated by the Supreme Court of the United States in Central Transportation Co. v. Pullman Palace Car Co., 139 U. S. 24, as follows: ‘The charter of a corporation, read in the light of any general laws which are applicable, is the measure of its powers, and the enumeration of those powers implies the exclusion of all others not fairly incidental.’ ” In Wallace v. Madden, 168 Ill. 356, 360, referring to the Catholic Order of Foresters, a fraternal beneficiary society, it is said: “When the order adopted its constitution and by-laws and became organized under the statute it became subject to all the provisions of the statute. It became clothed with such power, and such only, as was conferred by the statute, and any provision of its constitution or by-laws inconsistent with the statute, or not authorized by the statute, would be a nullity.” In Fritze v. Equitable Building & Loan Society, 186 Ill. 183, 196, it is said: “The rule of construction applicable to statutory provisions is, ‘that every power that is not clearly granted, is withheld, and that any ambiguity in the terms of the grants must operate against the corporations and in favor of the public. ’ * * * If the power claimed is withheld, ‘it is regarded as a prohibition against the exercise of such a power.’ * * * Corporations can only exercise such powers, as may be conferred by the legislative bodies creating them, either by express terms or by necessary implication. Implied powers are presumed to exist in order to enable such bodies to carry out the express powers granted and to accomplish the purpose of their creation. By an implied power is meant one that is directly and immediately appropriate to the execution of the specific power granted, and not one that has slight or remote relation to it.” After a careful reading of the act in question, we are of the opinion that the making of the contract of April 28, 1909, whereby the defendant Society agreed to pay all benefits according to the terms and conditions of the certificate, issued to Dr. Alexander by the Boyal Fraternal Union, another society organized in another State, was ultra vires the defendant Society. We think that the contract is contrary to the whole scope and purpose of the act under which the defendant Society was organized. In this connection reference may be made to the following cases, decided by the courts of other States: Twiss v. Guaranty Life Ass’n, 87 Iowa 733; Whaley v. Bankers’ Union of the World, 39 Tex. Civ. App. 385; Bankers’ Union of the World v. Crawford, 67 Kan. 449; Gordon v. American Patriots, 141 S. W. Rep. (Tex. Civ. App.) 331. Furthermore, at the time the contract of April 28, 1909, was delivered to Dr. Alexander, in which contract it was stated that the defendant Society “hereby insures and accepts into membership Lawrence Alexander,” he was considerably over the age of sixty years, and the defendant Society was absolutely without power to admit into membership and insure a man who was over that age, because of the statutory prohibition contained in section 7 of the Act above mentioned. (Steele v. Fraternal Tribunes, 215 Ill. 190, 194; State v. Bankers’ Union of the World, 71 Neb. 622, 632.) Counsel for plaintiff place considerable reliance upon the case of Williams v. Bankers’ Union of Chicago, 166 Ill. App. 495. In that case it appears that the deceased had been a member of a Nebraska fraternal benefit society, which was reorganized into an Illinois fraternal beneficiary society bearing a slightly different name, and the latter society continued the business of the former. The deceased took a medical examination on becoming a member of the Nebraska society, but was not again examined after the reorganization. It further appears from the opinion that the plea of the defendant of ultra vires was withdrawn before the trial and that question was not considered by the court. It is contended by counsel for plaintiff that even though the contract be regarded as ultra vires, yet the defendant society is estopped from raising that defense because Dr. Alexander from the date of the contract, April 28, 1909, up to the time of his death paid all premiums and dues to the defendant Society and the Society had the full benefit of the performance of the contract on his part. The same point was made in the case of Steele v. Fraternal Tribunes, 215 Ill. 190, 193, and decided adversely to counsels’ contention. The Court in that case said:- “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 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.” In Fritze v. Equitable Building Loan Society, 186 Ill. 183, 199, it is said: “The doctrine, however, that a corporation cannot avail itself of the defense of ultra vires when a contract has been in good faith performed by the other party and the corporation has had the full benefit of its performance, was never held to have any application where such contract is immoral or illegal or prohibited by statute or where its enforcement would be against public policy.” See also National Home Building Ass’n v. Home Sav. Bank, 181 Ill. 35; Converse v. Emerson, Talcott & Co., 242 Ill. 619; Durkee v. People, 155 Ill. 354; United States Brewing Co. v. Dolese & Shepard Co., 259 Ill. 274, 278. As appears from plaintiff’s statement of claim she sought to recover the sum of $1,100 by reason of the so-called reinsurance contract of April 28,1909, issued by the defendant Society. She filed no other claim, or count, that she was entitled to recover back from the defendant Society any moneys paid to it by Dr. Alexander from April 28, 1909, up to the time of his death, and it is not shown by the evidence what sums he did pay the defendant Society, and we, therefore, express no opinion on this question. We hold, however, that there can be no recovery on said so-called reinsurance contract, and that the trial court erred in overruling defendant’s motion for a new trial and in entering the judgment, and, accordingly, the judgment of the Municipal Court will be reversed and the cause remanded. Reversed and remanded.