First Nat. Bank of Marshalltown v. The Church Federation of America

• Decision Date: 09 January 1906
• Parties: FIRST NATIONAL BANK OF MARSHALLTOWN, IOWA, v. THE CHURCH FEDERATION OF AMERICA and M. G. ALBROOK, Appellants
• Court: Iowa Supreme Court

105 N.W. 578

129 Iowa 268

FIRST NATIONAL BANK OF MARSHALLTOWN, IOWA, v. THE CHURCH FEDERATION OF AMERICA and M. G. ALBROOK, Appellants

Supreme Court of Iowa, Des Moines

January 9, 1906

Appeal from Marshall District Court.--HON. G. W. BURNHAM, Judge.

IN June, 1902, M. G. Albrook and others conceived the notion of organizing a fraternal beneficiary society to be known as the "Church Federation of America." Albrook was to be superintendent, and was authorized to arrange for a satisfactory location. On November 24th he addressed the following proposition to the secretary of the Commercial Association at Marshalltown:

Head Office Church Federation, Vail, Iowa Nov. 24, 1902. Mr. R. E Sears, Marshalltown, Iowa--Dear Sir: We see that it will be necessary to have some one push matters for us in Marshalltown. We believe that Marshalltown is the best point in Iowa for our head office, and, as we are compelled, for lack of facilities, to move very soon, now, if we are to move to Marshalltown, we want to know it soon. We realize that it means some extra trouble and expense to you to push a matter of this size and do it rapidly. We place the campaign in your hands to find such help as needed, and will allow you for such expense at the rate of ($ 1.50) one dollar and fifty cents for each thousand dollars of insurance written for us in Marshalltown and vicinity between now and February 1 1903. Such insurance must pass medical examination. Trusting this will meet the necessary cost of a rapid campaign, Yours fraternally, M. G. Albrook, General Superintendent.

An extension of time indorsed thereon was signed "M. G Albrook." Sears accepted the proposition, and by the aid of solicitors paid by Albrook procured agreements for insurance with citizens of Marshalltown aggregating $ 440.500, and on February 21, 1903, the Commercial Association of Marshalltown and the Church Federation, by Albrook, as general superintendent, and the general secretary, entered into a contract by which, in consideration of these agreements, the Church Federation agreed to establish its head offices and headquarters at Marshalltown and continue them there for twenty years. The articles of incorporation of the Church Federation of America were not executed until February 20, 1903, and were recorded on the following day. Two days later Sears delivered the agreements to Albrook, who receipted therefor, signing his name with "Gen Supt." underneath. Sears demanded payment, but this was refused, and a written agreement to arbitrate entered into. Albrook postponed the hearing several times, and finally declined to proceed, and refused to pay, owing to advice received from an attorney in Des Moines that the Federation was forbidden by law to pay for soliciting membership. Sears had assigned his claim to plaintiff February 16th, and this action was begun, August 20, 1903. At the conclusion of the evidence each party moved for a verdict in his favor. The motion of plaintiff was sustained, and verdict for $ 294.75 returned, and judgment entered thereon. The defendants appeal. Reversed in part; affirmed in part.

Judgment against Albrook affirmed, and against the association reversed.

Albrook & Lundy, for appellants.

Boardman & Laurence, for appellee.

OPINION

LADD, J.

I.

This action is on a claim of R. E. Sears, assigned to the plaintiff, and is based upon a proposition to allow him for "expense at the rate of ($ 1.50) one dollar and fifty cents for each thousand dollars of insurance written for us in Marshalltown and vicinity," the same to pass medical examination, signed "M. G. Albrook, General Superintendent." This was dated November 24, 1903, and though Albrook and several others previously had in contemplation the organization of a fraternal association to be known as the "Church Federation of America," the articles of incorporation were not executed or recorded until February 20, 1903. All of the agreements with citizens of Marshalltown to take insurance in the Federation, were procured by Sears prior to February 15th. This, then, was before the defendant association had come into existence, and for this reason it was not bound by the contract with Sears. Agreements with those promoting the organization of a corporation are, because of the situation, necessarily unauthorized by it, and depend for their validity as corporate acts upon the ratification of the company or association subsequently formed. Purdy's Beach on Private Corporations, 1177. But the association could not ratify an agreement which it was prohibited...