Fraternal Tribunes v. Steele

Mr. Presiding Justice Adams

delivered the opinion of the court.

The “ certificate of association ” required by section 7 of the act under which appellant was organized, is analogous to the statement required to be made by section 2 of the act concerning 'corporations, Rev. Stat. ch. 32, and is the measure and limit of the corporation’s powers. If it were otherwise, there would be no limit to the powers of a corporation organized under the act of June 22, 1893, as amended by the act of 1895. Hurd’s Stát. 1895, p. 923. In that case the corporation might do anything which an individual might do; but the distinction, as to powers, between an individual and a corporation, is that the former may do anything which is lawful, while the latter can only do what it is expressly authorized to do, or what is necessary to do in order to exercise its expressly granted powers. Its certificate of association, together with the insurance superintendent’s certificate of organization, is appellant’s charter, and in that charter it is expressly provided that no person shall become a member of the appellant corporation who is under eighteen or over fifty-one years of age. This is a material provision of the charter. The “ certificate of association ” could not legally have been approved by the superintendent had it not contained a limit as to the age of applicants for membership, because section 7 expressly requires that “ the limits as to age of applicants for membership, which shall not exceed sixty years,” shall be stated in the “certificate of association.” That the statement of some limit was regarded as material by the legislature, is obvious from the provision in the section that the limit “ shall not exceed sixty years.” Section 7 also provides that, in the certificate of association shall be stated “ the name or title of the proposed society, the plan of doing business, clearly and fully defined.” Paragraph 4 of the certificate of organization states, “ The object for which this corporation is formed is to unite all white persons of good moral character, who are socially acceptable, and, if for beneficiary membership, of sound bodily and mental health, who are between the ages of eighteen and fifty-one years, and whose associations are regarded as not too hazardous.” This statement of the object of the proposed corporation is material. Section 7 provides: “If the insurance superintendent shall find, after careful examination, that the objects of organization and plan of doing business are fully and definitely set forth, and are clearly within the provisions of this act * * * he shall approve the same, and shall forthwith issue a certificate of organization of the society. Thereupon said society may proceed to transact business according to the flan of its organization.” It is familiar doctrine that a corporation can only exercise such powers as are conferred by its charter, and it should be unnecessary, in this year of our Lord 1904, to say that a corporation cannot do that which it is expressly prohibited from doing by its charter. Here the admission of beneficiary members over fifty-one years of age is expressly prohibited by appellant’s charter. Appellees, citing Benefit Ass’n v. Blue, 120 Ill. 121, say that appellant having received the benefits of the contract, is estopped to plead ultra mires for a mere abuse of power, and that the statute does not prohibit the insurance of persons over fifty-one years of age, the limit of the statute being sixty years. It is true that under the statute appellant’s corporators might have fixed the extreme limit of age at sixty years in the certificate of association. The statute permits the fixing of such limit at less than sixty years, and the corporators, availing of this permission, fixed it at less than fifty-one years, and this limit is now a part of appellant’s charter. In Norwegian Old People’s Home Society v. Wilson, 176 Ill. 94, the question was whether the appellant society could take as a beneficiary by virtue of a benefit certificate issued by the Policemen’s Benevolent Association of Chicago. The object of the latter association was expressed, in its certificate of incorporation, to be : “ To create a fund and provide means for the relief of the distressed, injured, sick or disabled members of the association and their immediate families.” It was contended that, under the statute the Old People’s Home could take, but the court held not, saying : “ It is no answer to say that the statute of the state, under which the association was organized, was broad enough to permit such society to take. The incorporators of the association chose to restrict the objects of its benevolence to the immediate family of the member, and the courts must construe the contract as they find it.” The court further say : “ The Policemen’s Benevolent Association is -an Illinois corporation, which has voluntarily chosen to restrict its benevolence to the immediate families of its members, and we must apply the restrictions found in the statement of the object of the association, as specified in the certificate of incorporation, and not the statute itself, in its broadest' scope.” The case of Benefit Association v. Blue, supra, is clearly distinguishable from this case, and not only so, but is modified by subsequent decisions. In that case the court say : “ It will be observed that the contract involved is not absolutely prohibited by statute.” In the present case the contract is absolutely prohibited by appellant’s charter. See, also, Canton M. M. B. Society v. Rockhold, 26 Ill. App. 141, 155.

As to the contention of appellees’ counsel that the admission of the deceased as a member of the order was a mere abuse of power, it is sufficient to say that to abuse a power the power must exist, and that in the present case it was non-existent. In the later decisions, the Supreme Court has clearly distinguished between the mere abuse of a power vested in a corporation, and the entire absence of the power, and held that, in the latter case, an unauthorized act is' void, and the corporation is not estopped to plead ultra vires. Nat. Home Bldg. Ass’n v. Bank, 181 Ill. 35; Best Brewing Co. v. Klassen, 185 Ill. 37; Fritze v. Eq. B’g & Loan Society, 186 Ill. 183. In the case last cited the court say : “ But it is claimed by the appellant that, even though the contract in question may be regarded as one which is ultra vires, yet a corporation cannot avail itself of the defense of ultra vires when the contract has been in good faith performed by the other party, and the corporation has had the full benefit of such performance. In support of this claim various decisions, heretofore rendered by this court, are referred to and relied upon. Bradley v. Ballard, 55 Ill. 413; Darst v. Gale, 83 Ill. 136; Benefit Ass’n v. Blue, 120 Ill. 121; Kadish v. Garden City Eq. Loan and Building Ass’n, 151 Ill. 531; McNulta v. Corn Belt Bank, 164 Ill. 427. A new construction has recently been given to these decisions, which is materially variant from that heretofore put upon them, (National Home Building Ass’n v. Bank, 181 Ill. 35), but which must be regarded as the construction now held by this court. Best Brewing Co. v. Klassen, 185 Ill. 37. 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. That this is so may be seen by reference to the authorities last above referred0 to.” See, also, Chicago Pneumatic Tool Co. v. H. W. Jones Mfg. Co., 91 Ill. App. 547.

Appellees’ counsel further contend that the receipt and retention by appellant of the dues and assessments of the deceased, with knowledge of the falsity of the statements iu the application, operated as a waiver of the right to forfeit the benefit certificate. Ho question of waiver is presented by the record. When a fraternal association admits a person to membership, having power so to do, and, subsequently, by the action or non-action of such person, the association acquires"the right to declare the membership forfeited, a question of waiver may arise; but, when such association, without authority so to do, and being expressly prohibited from so doing by its charter, formally admits to membership one totally ineligible, its action is void; the person formally admitted is not, in legal contemplation, a member of the society; there is nothing for him to forfeit, and, consequently, no right of forfeiture in the society, and no question of waiver can arise.

We think it unnecessary to consider the question of warranty argued by counsel. The alleged contract between Steele, deceased, and appellant being void, there can be no recovery on it. 1

The judgment will be reversed.

Reversed.