Farmer v. State

• Decision Date: 31 January 1888
• Citation: 7 S.W. 220
• Parties: FARMER <I>et al.</I> v. STATE <I>ex rel.</I> CARRUTHERS.
• Court: Texas Supreme Court

Page 220

7 S.W. 220

FARMER et al. v. STATE ex rel. CARRUTHERS.

Supreme Court of Texas.

January 31, 1888.

Appeal from district court, Tarrant county; R. E. BECKHAM, Judge.

Information in the nature of quo warranto on the relation of J. S. Carruthers against S. R. Farmer and others. The facts appear in the opinion.

Hogsett & Greene, for appellant. R. L. Carlock, D. P. Ayers, and J. S. Hogg, Atty. Gen., for appellee.

WILLIE, C. J.

This was an information in the nature of a quo warranto, instituted in the court below, for the purpose of ousting the appellants from certain corporate franchises, which they were claiming to exercise under the name of the "Masonic Mutual Benevolent Association of Texas." The result of the trial below was a judgment of ouster against the appellants, upon the ground that they were acting together as an insurance company under the above name, without having been incorporated in accordance with the laws of our state, regulating the incorporation of insurance companies. From this judgment the appellants have appealed to this court. The appellants claim to be a corporation under a charter dated September 3, 1883, amended February 23, 1885, obtained under title 20, Rev. St. The charter states the object of the association to be "to provide for its members during life, and their families after death, by issuing to its members certificates payable from one to three thousand dollars at death; and also for the purpose of issuing endowment certificates, payable during life at intervals, to its members; and other charitable purposes set forth in the constitution and laws governing the body." The only purposes set forth in its constitution are "to give financial aid and benefits to members during life, and to their families, or those depending upon them, after death, and to pay weekly sick benefits to its members," etc. The evidence disclosed that the original incorporators were seven in number, and that five of these were, by the charter, made directors. The constitution provides that the incorporators of the association shall be its directors, and that its officers shall be chosen from its incorporators. None others but master masons in good standing, or those who had demitted, and their wives, their widows, and unmarried daughters, were made eligible to membership in the association; and if from age or infirmities the husband could not become a member, the wife might do so. The theory of the constitution was that three forms of certificate might be issued, but in practice only two were used. One of those, (form "A") was issued to each member for $1,000, upon consideration of $7 cash, and the payment of an advance assessment 30 days thereafter, and an agreement to pay the mortuary assessments for each month thereafter till death. Within 90 days from the required proof of death, payment was to be made to the beneficiaries as follows: If the death occurred within one year, one-fifth, $200; if after one and before two years, three-fifths, $400; if after second but before expiration of third year, $600. Form "B" entitled each member to $200 death benefit fund for his heirs, and permitted him to participate in the "endowment fund" of $1,000, by installments of $200 each, during his life from time to time, as the five coupons attached thereto matured. This form, too, seems to have fallen into disuse. No person could become a member who was under 21 or over 60 years of age, or who suffered from age or infirmities. The application for membership provided that it should form part of the contract with the association, and the agreement of the association to make payments is based upon the consideration of the payments made or to be made by the members. The assessments upon these certificates were graduated according to the age of the member holding one, the younger members being required to pay less than those of more advanced age. The same rule was observed in the collection of assessments upon the death of a member. If assessments were not paid within 30 days after notice to a member, he was to be suspended from the benefits of the association. What is termed a "Permanent Fund" was formed from the admission fees, by taking at the rate of 25 cents out of each assessment paid by a member upon $1,000, and this was to be invested by the directors and used (1) to defray the necessary expenses of management, and (2) to secure stability and perpetuity by paying claims in forms "A" and "B," when the rate of mortality was so great that 12 assessments per annum would not suffice. General traveling agents were to be appointed to solicit members, and the membership fee generally went to pay for their services. Twenty per cent. of assessments went to pay expenses of the association, including salaries of officers. The president received a salary of $40 per month; the secretary, $60, and the treasurer 2½ per cent. of the money received and paid out. Members totally incapacitated for work from sickness, or who were in actual distress, received $3 per week, during their sickness, if sick not less than one week nor more than five. Persons applying for membership were required to be examined by a physician, and could not be received unless they certified that they were in good health.

These are some of the leading features of the association, and the first question we are to determine is whether it was entitled to be incorporated under title 20 of our Revised Statutes. This title defines corporations to be of three kinds: First, religious; second, corporations for charity or benevolence; and third, corporations for profit. This corporation is not of a religious character, and it is admitted by the appellants that its purposes are not charitable. It is claimed, however, that it was chartered for a benevolent object, and its incorporation was therefore legal under this title, and it should be allowed to exist without interruption from the state authorities. It is clear from the division into classes made by the statute, taken in connection with subsequent articles under the same title, that corporations for benevolence are entirely distinct from those whose main object is pecuniary profit. In article 566 are enumerated in 27 subdivisions the different purposes for which corporations may be chartered under that title. Under the twenty-second subdivision only can the present body claim to be chartered as a benevolent association. In none of the other subdivisions is the subject of benevolence referred to; and in all which relate to corporations of profit the special object of of the charter is particularly stated, except in the twenty-seventh subdivision, which seems intended to cover all purposes of mutual profit or benefit not embraced in the preceding portions of the article. This twenty-seventh subdivision was repealed by act of 27th March, 1885. In other titles of the Revised Statutes are found special provisions for the incorporation of insurance and railroad companies, and these must be followed in all cases where it is sought to have these institutions chartered by general law. If the body under consideration is a benevolent institution, it was properly incorporated under title 20; but if its object is profit, then its incorporation under that title will be valid or not according as it comes under any of the heads named in article 566, to which we have referred. What then are the purposes of the body under consideration? Its charter makes its object to provide for its members during life, and their families after death. This is apparently a benevolent object; but how is this to be accomplished? The association makes a contract with each member when he joins it, that for the consideration of a certain sum of money paid in cash, and other sums to be paid in future, which he agrees to do, that they will, 90 days after proper proof of his death, pay to certain beneficiaries a certain sum, graduated in amount, according to the length of time he lives, and, of course, according to the amount of assessments he has paid into the treasury. Before any one can enter into such a contract he must undergo a regular examination as to his health, habits, occupation, and as to his family, and how much insurance upon his life, etc. A physician must make an examination as to his bodily condition, and according as he is sufficiently sound and of a certain age is he accepted into the fraternity. This contract has all the features of a life insurance policy. It is a contract by which one party, for a consideration, promises to make a certain payment of money upon the death of the other;...