North American Union v. Johnson

• Decision Date: 01 March 1920
• Docket Number: 208
• Citation: 219 S.W. 769,142 Ark. 378
• Parties: NORTH AMERICAN UNION v. JOHNSON
• Court: Arkansas Supreme Court

219 S.W. 769

142 Ark. 378

NORTH AMERICAN UNION v. JOHNSON

No. 208

Supreme Court of Arkansas

March 1, 1920

Appeal from Pulaski Circuit Court, Third Division; G. W. Hendricks Judge; affirmed.

Judgment affirmed.

T. E Helm and Sherrill, Buchanan & Mallory, for appellant.

1. No proper service was had upon appellant, and the court had no jurisdiction, as it was a fraternal beneficiary society of Illinois with its office in Chicago, and it never applied for a license and was never authorized to do business in Arkansas. Acts 1917, § 17, art. 462; 59 Ark. 593, 606-7; 218 U.S. 573; 197 N.Y. 279; 139 Am. St. Rep. 879; 251 F. 171; 204 U.S. 8, 21-2. The attempted service upon the State Insurance Commissioner of Arkansas was invalid.

2. The merger between appellant and the Knights & Ladies of Honor was ultra vires and void. Rev. Stat. of Ill., ch. 73, § 7; Ib., § 9; Acts 1917, art. 462; 168 Ill.App. 328; 94 Ark. 27, 31-2; 87 Id. 587; 95 Id. 371; 96 Id. 602; 157 Ill. 651; 191 Ill. 40; 168 Id 360; 186 Id. 196; 215 Id. 193; 187 Ill.App. 469; 141 S.W. 333; 88 Id. 261; 118 Id. 396; 81 Neb. 380. The powers conferred upon appellant are not such as would permit any implied power to reinsure members of another company.

3. The appellant having no power, either express or implied, to issue the contract involved can not be estopped from setting up ultra vires. 185 Ill. 40; 181 Id. 44; 186 Id. 199; 91 Ill.App. 547; 97 Id. 70; 215 Ill. 193; 187 Ill.App. 459.

4. The trial court failed to give full faith and credit to the decisions of the courts of Illinois defining the powers and liabilities of fraternal benefit societies. 185 Ill. 183, 196; 215 Id. 193; 187 Ill.App. 469; 237 U.S. 543; 89 Md. 631; 82 Conn. 318.

5. The trial court in failing to follow the decree of Kenniston v. Fraternal Aid Union, N. Am. Union and K. & L. of Honor, failed to give full faith and credit to the judgment of the courts of Illinois. 191 U.S. 319; 85 Va. 901; 60 Md. 93; 37 Ala. 626; Const. U.S. art. 4, § 1; 218 U.S. 1; 247 Id. 151; 245 Id. 149; 237 U.S. 545.

6. The court erred in refusing to direct a verdict. The certificate was void. The evidence is conclusive that Johnson's health was impaired by use of narcotic drugs. 129 Ark. 159; 104 Id. 545.

7. The court should have given special interrogatory requested by defendant. 36 Ark. 371; 12 L. R. A. (N. S.) 88; 50 Id. 900; 87 Kan. 719.

8. The court erred in refusing instruction 6 for defendant. 253 Ill. 462; 31 S.W. 493; 140 F. 978; 104 Ark. 544.

W. H. Pemberton, for appellee.

1. The testimony shows that defendant was "doing business in this State." 213 U.S. 245; 115 Ark. 272, 293; 115 Id. 528. Service was had upon the Insurance Commissioner and J. L. Hawkins, an agent of appellant, and a certified copy of the complaint was served upon it. 90 Ark. 48.

2. This was a proceeding in rem as well as in personam, and appellant was properly in court. The entry of appearance by counsel for appellant as to the ownership of funds garnished was full and complete for all purposes.

3. The alleged merger and ultra vires does not prevent a recovery in this case. 208 Mass. 411, 94 N.E. 685; 36 L. R. A. (N. S.) 597. This case is on all-fours with this. See also 131 Mass. 258; 96 Ark. 595; 74 Id. 377; 91 Id. 376; 77 Id. 109; 86 Id. 287; 82 N.W. 965; 70 Iowa 461.

4. The courts of Illinois have never passed favorably upon the contention of appellant that liability could be escaped by the plea of ultra vires, but if so the decisions are clearly in the teeth of the other State and U. S. decisions. 23 Ark. 523; 50 So. 248; 119 S.W. 946; 11 Cyc. 663; 32 Ark. 332; 1 Cyc. 36; 155 Ill. 617. When foreign corporations come into this State to do business they must conform to our laws. 173 Ill. 621; 182 Ill. 551.

5. The verdict of the jury and its answer to interrogatory is amply supported by the evidence and the certificate was not void. In conclusion the court had jurisdiction by service and entry of appearance and the doctrine of ultra vires does not apply and there is no reversible error.

Gardner K. Oliphint, amicus curiae.

1. The court had jurisdiction. Defendant's exceptions to the motions to quash were en masse. 78 Ark. 7; 105 Id. 157. Nor is the first motion abstracted. 81 Id. 327; 111 Id. 509. The exceptions were waived. 27 Id. 506; 79 Id. 176. Defendant entered its appearance. 140 F. 921; 1 Id. 471; 19 Okla. 115; 91 P. 864; 136 Id. 584; 95 Ark. 307. Defendant waived all objections to jurisdiction by failing to preserve its objections and exceptions and by its special appearances. 77 Ark. 416; 214 S.W. 1.

2. The alleged ultra vires of defendant's failure to insist upon compliance with certain of its own requirements. In the absence of proof of Johnson's age, the reinsurance was not contrary to Illinois law. This court need not consider the decisions cited in brief of appellant like 215 Ill. 190, 74 N.E. 121. The corporation, having made a contract of reinsurance and having received full consideration, can not avoid its contract by the plea of ultra vires. 120 Ill. 128; 11 N.E. 331; 212 Ill. 532; 74 N.E. 121; 79 Id. 133; 102 Id. 753; 187 Ill.App. 469; 208 Mass. 411; 94 N.E. 685.

OPINION

WOOD, J.

The Knights and Ladies of Honor was a fraternal insurance corporation organized under the laws of the State of Indiana and licensed to do business in Arkansas. On the 26th of April, 1916, it issued to Richard T. Johnson its certificate or policy of insurance for $ 2,000 in which Bonnie B. Johnson, the appellee, was named as the beneficiary.

On the 24th of August, 1916, the Knights and Ladies of Honor attempted to merge with the North American Union, the appellant. The appellant is a fraternal insurance society of the State of Illinois. It has never been licensed to do business in this State. After this attempted merger, the appellant on the 25th of October, 1916, issued its "certificate of membership" to Richard T. Johnson, which among other things provides:

"That, under and by virtue of merger and consolidation, made and entered into by and between the North American Union and the Supreme Lodge, Knights and Ladies of Honor, which became of full force and effect on the 24th day of August, 1916, and which said agreement, and all the terms and conditions thereof, together with the constitution, laws, rules, and regulations of the said North American Union, are hereby made a part thereof; that Richard T. Johnson, holder of benefit certificate No. 15422, issued by the said Supreme Lodge, Knights and Ladies of Honor, is entitled to the privileges of membership in the said North American Union, as acquired under, to the extent of, and according to the terms and conditions of said agreement of merger and consolidation, and the laws, rules, and regulations of the said North American Union.

"The North American Union hereby assumes and agrees to pay to the lawful beneficiary or beneficiaries of said member, in the event of the death thereof, while in good standing, and the furnishing of satisfactory proof as to the fact and cause of the death of said member, the amount of insurance in force and effect, and payable upon the death of said member, according to the provisions of the said benefit certificate and the constitution, laws, rules, and regulations of the said Supreme Lodge, Knights and Ladies of Honor, in force and effect at the time of the execution of said agreement, provided that said member has made all payments in the time, manner and amount required and has complied with the laws, rules, and regulations of the said North American Union now in force, or thereafter enacted or adopted and the terms and conditions of the aforesaid agreement.

"This certificate shall be null and void, unless said member, at the time of the issuing thereof, is in good standing, etc."

Richard Johnson died on the 31st of October, 1917.

The appellee instituted this action against the appellant on the above certificate, alleging that the insured at the time of his death was in good standing with the Knights and Ladies of Honor and with appellant; that the appellant was a foreign corporation and doing business in this State, but had not complied with the laws of Arkansas by appointing an agent upon whom the service of process could be had. She further alleged that one J. L. Hawkins, the garnishee, was the collector and secretary of the appellant and had in his hands money belonging to the appellant. She prayed for a writ of garnishment against him, and that he be enjoined from paying over the funds in his hands to appellant and that she have judgment against the appellant for the amount of the policy.

Summons was issued and was returned "duly served by delivering a true copy thereof to J. L. Hawkins, agent for the within named North American Union and a copy to Bruce Bullion, State Insurance Commissioner, as therein commanded."

The appellant entered its appearance specifically for the supreme purpose of moving to quash service alleging that J. L. Hawkins was not its agent and further alleging that appellant had never engaged in business in the State of Arkansas and had never consented to having summons served upon the Insurance Commissioner. The court overruled the motion to quash the service. The appellant then filed its answer but without waiving its plea of insufficient service.

In its answer the appellant set up three defenses. First, that the certificate issued by it was void for the reason that the attempted merger between the appellant and the Knights and Ladies of Honor was in violation of law and ultra vires. Second, that no application for membership in appellant had ever been made by Richard T. Johnson and no medical examination of him was ever made, and that he therefore, never became a member of appellant in the...