Marshall v. Knights of the Maccabees of the World

• Decision Date: 03 March 1925
• Docket Number: No. 18915.,18915.
• Citation: 270 S.W. 418
• Parties: MARSHALL v. KNIGHTS OF THE MACCBEES OF THE WORLD.
• Court: Missouri Court of Appeals

270 S.W. 418

MARSHALL v. KNIGHTS OF THE MACCBEES OF THE WORLD.

No. 18915.

St. Louis Court of Appeals. Missouri.

March 3, 1925.

Rehearing Denied March 31, 1925.

Appeal from Circuit Court, Audrain County; Ernest S, Gantt, Judge.

"Not to be officially published."

Suit by William B. Marshall against the Knights of the Maccabees of the World. Judgment for plaintiff, and defendant appeals. Affirmed.

R. P. & C. B. Williams, of St. Louis (John E. Owen, of Detroit, Mich., of counsel), for appellant.

Rodgers & Buffington, of Mexico, Mo., for respondent.

SUTTON, C.

There is no controversy about the facts in this case. The defendant is a fraternal beneficiary association, organized under the laws of Michigan, and duly authorized to transact business in this state. This suit is founded upon a benefit certificate, designated in the laws of the defendant association as an endowment certificate. The membership of the association is composed of lodges designated as Great Camps, Junior Camps, and subordinate tents. The certificate holders or individual members of the subordinate tents seem to be recognized in the association as Sir Knights. The certificate sued on, so far as material to the issues for decision here, is as follows:

"This certifies that Sir Knight William B. Marshall is a member of Washington Tent, No. 9, located at Mexico, Mo., and that he is a beneficiary in good standing; that in accordance with and under the provisions of the laws governing the order he is entitled to receive one assessment on the membership, but not exceeding in amount the sum of two thousand dollars as a benefit to Clarissa E. Marshall, his wife, upon satisfactory proof of his death and the surrender of this certificate, provided he shall have in every particular complied with all the rules and regulations of the order. In case of permanent and total disability, or upon attaining the age of seventy years, he will be entitled to receive such part of said endowment as provided in the laws of the order."

The certificate was issued in 1889. Section 13 of the by-laws of the defendant in force at that time provides:

"Any member holding an unconditional certificate of endowment who shall become totally and permanently disabled from any cause not the result of his own voluntary act, or from intemperance or any immoral or unlawful conduct, or from a violation of the laws of the country, and be unable to perform or direct any kind of business or labor, or who shall arrive at the age of 70 years, and who has paid all legal dues and assessments from the date of the initiation to the date of such disability or period of life, shall be entitled to receive annually one-tenth part of the sum for which his endowment certificate is issued: Provided, however, that the aggregate of such installments received by him shall in no case exceed the sum specified in such certificate. * * * On the death of such certificate holder the amount payable on such endowment certificate shall be paid to the beneficiary or beneficiaries designated in such certificate, less any amount which may have been paid to the member while living. From the date of the first payment to such member, and while receiving such benefits, he shall be exempt from the payment of all dues and assessments."

The application for membership, signed by the plaintiff and made a part of the contract, provides:

"That any * * * neglect to pay any assessment which shall be made upon the death of a member, within the time provided by the constitution, or neglect to pay the dues fixed by the said constitution, in the manner and at the time provided by said constitution, or by the by-laws of the tent to which I may belong, shall vitiate my beneficiary certificate and forfeit all payments made thereon."

The by-laws provide that any member failing to pay an assessment within 30 days after notice thereof shall be deemed not in good standing, and shall stand suspended without notice from all the rights and benefits of an endowment member.

At the time the plaintiff was admitted to beneficial membership in the society and received his benefit certificate, his assessments were $1.25 per month. Such assessments were afterwards raised from time to time, and he continued to pay the same as raised. He paid all his dues and all assessments required of him from the time of his admission to membership until he attained the age of 70 years in 1922. He thereupon declined to pay further dues and assessments, claiming that, having attained the age of 70 years, he was exempt from further payment of dues and assessments, and that defendant was liable to him for the payment of one-tenth of the amount of the certificate annually, until the whole amount be paid, without the further payment by him of dues and assessments. The defendant declined to make payment of one-tenth, or any part, of the amount of the certificate, claiming that the plaintiff's failure to pay such dues and assessments automatically suspended him from the society and deprived him of all rights under the certificate.

This action is for the recovery of one annual installment of $200, being one-tenth of the amount of the certificate sued on. The cause was tried to the court without a jury. The court gave judgment for the plaintiff for the full amount sued for, with interest. Defendant appeals.

Defendant upon this appeal insists that the contract of insurance sued on, as evidenced by the benefit certificate, the application for membership, and the laws of the society, amounts to endowment insurance, unauthorized by defendant's charter and the statutes of this state, and is therefore ultra vires the corporation and void, and that, because such contract is contrary to the statutes and the public policy of this state, the defendant is not estopped to set up the defense of ultra vires, though the plaintiff has fully performed the contract on his part by paying the dues and assessments required of him, and though the defendant retains the dues and assessments so paid and does not offer to restore the same to the plaintiff. The plaintiff insists that the contract is not ultra vires the corporation, but that, if it is, the defendant is estopped to set up such fact as a defense herein.

It is well settled in this state that the defense of ultra vires is not open to a corporation when the contract in suit has been fully executed on the part of the other contracting party, and it is not expressly prohibited by law. For acts merely in excess of charter authority, corporations cannot set up the defense of ultra vires when the consideration has been received and the transaction executed by the other party. Where a certain act is expressly prohibited to a corporation by statute, its performance is to be held void, because such is the legislative will. So where the consideration of a contract is by law illegal, as where the cause of action arises ex turpe. But where the act is not wrong per se, and the contract is for a lawful purpose in itself, and has been entered into with good faith, and fairly executed by the party who seeks to enforce it, the plea of ultra vires by the contracting party which has received the benefit of the contract is an unconscionable defense, which may not be set up to exempt from liability the party so pleading it. In a collateral proceeding to declare the ultra vires acts of a corporation void, it must be shown to be the intention of the charter, as gathered from its terms, not only to restrict the business of the corporation to certain things, but in addition to declare that when it exceeds these restrictions the act should be void. If such intention does not exist in the charter, the state alone can question such acts as ultra vires, except when the contract is against public policy or good morals. In general, the defense of ultra vires will not be allowed to prevail when it will not advance justice, but, on the contrary, will accomplish a legal wrong. The defense is never sustained out of regard for the defendant, but only where an imperative rule of public policy requires it. A distinction is made between the act of a corporation which is merely without authority and one which is illegal. In the one case it is a question of authority; in the other, of legality. A corporate act becomes illegal when committed in violation of an express statute on a specific subject, or when it is malum in se, or malum prohibitum, or when it is against public policy. Where the contract entered into, though in excess of the charter powers of the corporation, has been fully performed by the party seeking its enforcement, the corporation cannot refuse to proceed, and, when sued for a breach of contract, shelter itself behind the defense of ultra vires. An act or contract merely in excess of the power granted to a corporation, but which is not expressly forbidden either by its charter or the general law, although lacking affirmative authority for its performance on account of the silence, on that subject, of its charter, or the general law, may yet, if the contract has been executed by the other party and its consideration received by the corporation bind the latter on the principle of estoppel, so that it cannot be annulled by the corporation without the return of the consideration received. The safety of men in their daily contracts requires that this doctrine of ultra wires should be confined within narrow bounds. Certificates of life insurance are not to be treated as valid for the purpose of collecting assessments, and invalid for the purpose of escaping liability. Thus the courts have expressed, with great unanimity, though in variant phraseology, the...