Commonwealth v. Equitable Beneficial Association

• Decision Date: 03 February 1890
• Docket Number: 40
• Citation: 137 Pa. 412,18 A. 1112
• Parties: COMMONWEALTH v. EQUITABLE BENEFICIAL ASSOCIATION
• Court: Pennsylvania Supreme Court

18 A. 1112

137 Pa. 412

COMMONWEALTH v. EQUITABLE BENEFICIAL ASSOCIATION

No. 40

Supreme Court of Pennsylvania

February 3, 1890

Argued January 6, 1890

APPEAL BY DEFENDANT FROM THE COURT OF COMMON PLEAS OF DAUPHIN COUNTY.

No. 40 May Term 1889, Sup. Ct.; court below, No. 32 January Term 1889, C.P.

On September 28, 1888, upon suggestion of the attorney general filed, the court below awarded a writ of quo warranto against the Equitable Beneficial Association of Pennsylvania requiring the defendant to appear and show by what authority it claimed to have and use the franchises, liberties and privileges of being "a body politic and corporate by the name of the Equitable Beneficial Association of Pennsylvania to make contracts of insurance, and to issue policies of insurance in pursuance thereof."

In answer to the writ, the defendant corporation filed pleas, in substance as follows: (1) averring that the warrant and authority of the defendant for the exercise of the franchises of a body corporate, was derived from a charter of incorporation, set out in extenso in the plea; and (2) denying that the defendant had made contracts of insurance and issued policies of insurance, as alleged in the suggestion of the attorney general.

The charter of incorporation, set out in the first plea, was granted by the Court of Common Pleas No. 2 of Philadelphia county, on November 19, 1884, under the act of April 29 1874, P.L. 73, and its supplements, and was duly recorded in the office of the recorder of deeds of Philadelphia county on November 22, 1884. The character and objects of the corporation were stated in the certificate of incorporation to be "for beneficial purposes, to aid its members in times of sickness or injury by the payment of weekly or monthly benefits, or to the widows, heirs or assigns of members, in case of death, or for funeral expenses, or to revert to said members at a more advanced age, by collecting funds either by weekly, monthly, or quarterly dues from the members; and for these purposes, to have, possess and enjoy all the rights, benefits and privileges, of the said act of assembly and the supplements thereto."

Issue being joined, the cause by agreement of the parties was tried by the court, SIMONTON, P.J., without a jury, under the act of April 22, 1874, P.L. 109, on December 18, 1888, and on February 12, 1889, the following decision was filed:

This is a proceeding in which the attorney general has obtained a writ of quo warranto against the corporation defendant, calling upon it to show by what authority it claims or exercises the right to issue policies of insurance. Defendant, in its answer, denies that it has issued policies of insurance or that it claims the right so to do; and the question in the case is whether it has been issuing such policies, and has therefore been doing an insurance business. It is in effect conceded that its charter, which was granted by the Court of Common Pleas of Philadelphia, under paragraph IX. of the act of April 29, 1874, P.L. 73, does not authorize it to do an insurance business.

The object of the association, as stated in its charter, is [as quoted above].

The facts of the case are substantially the same as in the case of the Commonwealth v. Mutual Aid Union and Beneficial Association of Philadelphia, No. 36 January Term 1889, Dauphin County Common Pleas, in which an opinion has this day been filed, ^[*] and for the reasons in said opinion given, we find, as matter of law, that the commonwealth is entitled to a judgment of ouster against this defendant. We do not think the evidence shows any wilful intent on the part of the officers of the defendant association to violate the law, or to usurp powers not conferred by the charter; and we therefore think that the judgment to be entered must be so framed as to preserve to defendant whatever rights are really conferred upon it by its charter. The form of judgment will therefore be settled on proper application to the court.

On April 19, 1889, exceptions to the decision, filed by the defendant, were overruled, and subsequently judgment was entered as of February 12, 1889, "that the defendant, the Equitable Beneficial Association of Pennsylvania, has, without authority of law, usurped the franchise of making contracts of insurance and issuing policies pursuant thereof; and it is further adjudged that the defendant, the Equitable Beneficial Association of Pennsylvania, be ousted and altogether excluded from the exercise of the said franchise of making contracts of insurance and issuing policies of insurance in pursuance thereof, and that the plaintiff, the commonwealth of Pennsylvania, have and recover of the defendant the costs of this proceeding."

Thereupon, the defendant took this appeal, filing the following assignment of error:

1. The learned court below erred in overruling the exceptions of defendant below, and entering judgment of ouster for the commonwealth:

(a) In not finding the facts as required by the act of April 22, 1874; and in not specially finding as the facts, those agreed upon as the facts, and submitted to the court by the parties.

(b) The learned court below erred in finding as a matter of law "that the commonwealth is entitled to a judgment of ouster" against appellant.

The judgment is reversed, and a procedendo awarded.

Mr. John Walker Shortlidge, for the appellant:

1. The decision of the court does not conform to the requirements of the act of April 22, 1874, P.L. 109. It is not a compliance with that act to say that the facts which the act directs to be found separately and distinctly in writing, are substantially the same as those found in some other case. The record of the case must contain a distinct and separate finding of the facts: Lewars v. Weaver, 121 Pa. 286; Harris v. Hay, 111 Pa. 565; Sweigard v. Wilson, 106 Pa. 213; Marr v. Marr, 103 Pa. 468; Butterfield v. Lathrop, 71 Pa. 229.

2. The primary question in the case is to determine what a beneficial association is, and whether the defendant association, as chartered and carried on, is such. Three reasons seemed to incline the court below to the opinion that the defendant's operations were not to be disting uished from life insurance, viz.: (a) that it employs paid agents; (b) that a relation, in the nature of a contract, exists between it and its members, and (c) that it uses certain printed blanks in its business, somewhat similar to those used by insurance companies.

3. The corporation was expressly authorized by the act of April 29, 1874, to employ and compensate agents. And at the time that act was passed the term, beneficial association, had a settled and defined meaning, presumably known to the legislature, which embraced associations conducted in the same manner as this one: Swift v. Beneficial Soc., 73 Pa. 363. Moreover, § 54, act of May 1, 1876, P.L. 67, in excepting from the regulations enacted for insurance companies beneficial associations, whether "issuing policies" or not, plainly recognizes the definition of the term given in the case cited: See also Commonwealth v. Aid Ass'n, 94 Pa. 488.

Mr. John F. Sanderson, Deputy Attorney General, (with him Mr. William S. Kirkpatrick, Attorney General,) for the appellee:

The evidence before the court below showed that by the contracts which the defendant makes with its members, the former engages, in consideration, inter alia, of the payment of certain weekly dues, to pay to the member, or other person legally entitled to receive the same, upon receipt of satisfactory proof of the member's sickness or death, the sum of money stipulated in a certain schedule, as weekly sick benefit or as death benefit. Such a contract is one of life insurance as defined in Commonwealth v. Wetherbee, 105 Mass. 149. The association considered in Commonwealth v. Aid Ass'n, 94 Pa. 481, did not engage to pay a fixed sum on the death of the member. The defendant does so, and issues a contract to that effect, enforceable by law. Such contracts are unauthorized by its charter. If the act of May 1, 1876, does not apply to the defendant, the result is simply that it is not within the jurisdiction of the insurance commissioner. The excepting section of that act cannot enlarge the defendant's charter rights.

Before PAXSON, C.J., STERRETT, GREEN, CLARK, WILLIAMS, McCOLLUM and MITCHELL, JJ.

OPINION

JUSTICE CLARK:

This writ of quo warranto issued out of the Common Pleas of Dauphin county, upon the suggestion of the attorney general against what is known as the Equitable Beneficial Association of Pennsylvania, commanding the said association to appear and show by what authority they were exercising the franchises, rights, and privileges of a body politic and corporate, by the name stated, and in that name making contracts and issuing policies of insurance. In response to the writ, the association sets forth that their warrant and authority is derived from a charter of incorporation, which they hold under the decree of the Court of Common Pleas No 2, of Philadelphia, bearing date November 19, 1884, and recorded in the office for the recording of deeds, etc., in and for the city and county of Philadelphia, in Charter Book No. 9, p. 484, etc., on November 22, 1884, according to law; that the said charter was granted pursuant to the provisions of the act of assembly of April 29, 1874; that the character and objects of the association, as set forth in their charter, are, by the accumulation of a fund from weekly, monthly, or quarterly dues, or contributions from its members, to aid and protect them in time of sickness or injury, by payment of "benefits," either to the members directly in their life-time, or to the widows, heirs, or assigns of members, in case of death, for funeral or other purposes,...