Rindge v. New England Mut. Aid Soc.

• Decision Date: 02 March 1888
• Parties: RINDGE v. NEW ENGLAND MUT. AID SOC.
• Court: United States State Supreme Judicial Court of Massachusetts Supreme Court

146 Mass. 286

15 N.E. 628

RINDGE v. NEW ENGLAND MUT. AID SOC.

Supreme Judicial Court of Massachusetts, Suffolk.

March 2, 1888

COUNSEL

Hutchins &amp Wheeler, for plaintiff.

The certificate in question was issued for the benefit of creditors of Rice, under chapter 204, St.1877, referring to chapter 375, St.1874. Power to make contracts usual in the course of business, for which a private corporation is created, is implied where there is no positive restriction in the charter. Morville v. Society, 123 Mass. 129 136. Mor.Corp. (1st Ed.) § 189. Although the contract may have been ultra vires when made in 1883, yet the act of 1885 c. 183, gave the defendant power to make it; and, having treated the contract as in force since the act of 1885, c 183, was passed, the defendant ratified the contract when it had acquired power so to do, and cannot now object to being held liable upon it. A contract made in the name of a professed corporation, and acted upon by the corporation after its formation as being binding, is valid. Whitney v. Wyman, 101 U.S. 392; Kelley v. Railroad Co., 141 Mass. 496, 6 N.E. 745. Contracts, ultra vires, when made, have been afterwards ratified by the legislature, and held to be valid. Shaw v. Railroad Co., 5 Gray, 162, 179, 180; Canal Co. v. Vallette, 21 How. 414; Mor.Corp. (1st Ed.) § 30, note 1. Even in the absence of the act of 1885, c. 183, the case comes within the rule that when a contract is not prohibited by statute or good morals, and has been executed on one side, and the sole defect is a want of authority on the part of the corporation, the defendant is not permitted to set this up as a defense. Woolen Co. v. Lamb, 143 Mass. 420, 9 N.E. 823; Glass Co. v. Dewey, 16 Mass. 94; Mor.Corp. §§ 100, 103, 108; Arms Co. v. Barlow, 63 N.Y. 62; Sedg.St. & Const.Law, 73, approved by Bank v. Matthews, 98 U.S. 621; Township v. Talcott, 19 Wall. 666. The statute does not state that such a contract shall be void, nor even that no such contract shall be made. "If it is not necessary to hold the contract void in order to accomplish the purposes of the statute, the inference is that it was intended to be directory and not prohibitory of the contract." MORTON, C.J., in Bowditch v. Insurance Co., 141 Mass. 292, 4 N.E. 798. The plaintiff, the administrator of Rice, is the proper party to maintain this action; the agreement being to pay the beneficiaries of Rice. Flynn v. Insurance Co., 115 Mass. 449. He will hold the amount recovered in trust for the persons entitled. Legion of Honor v. Perry, 140 Mass. 580, 5 N.E. 634. The utmost that can be claimed of the defense of ultra vires is that the creditor cannot sue the defendant on the contract. This action is not brought by the creditor, and the question, who is beneficially entitled to receive this money, may be left open for future determination.

Ely, Gates & Keyes, for defendant.

The defendant had no power or authority, under the laws of Massachusetts or its certificate of incorporation, to issue the certificate declared on in this action, and said certificate never had any validity. St.1874, c. 375; St.1877, c. 204; Pub.St. c. 115, §§ 2, 8; St.1882, c. 195; Legion of Honor v. Perry, 140 Mass. 580, 5 N.E. 634; Daniels v. Pratt, 143 Mass. 216, 10 N.E. 166; Briggs v. Earl, 139 Mass. 473, 1 N.E. 847; Davis v. Railroad Co., 131 Mass. 258. St.1885, c. 183, did not affect the validity of the certificate. It does not repeal existing statutes except by implication. In section 3 it recognizes existing assessment insurance corporations. In section 5 it indicates an intention not to interfere with the terms of certificates then in existence. Section 10 clearly refers to future certificates, not to past. If this is not the true interpretation, the statute is unconstitutional. King v. Bank, 15 Mass. 447; Com. v. Essex Co., 13 Gray, 239. By the receipt of assessments from Rice after St.1885, c. 183 was passed, the defendant is not estopped to deny that he was still a member. Burbank v. Association, 144 Mass. 434, 11 N.E. 691; Webster v. Insurance Co., 2 McCrary, 348. The certificate issued to Rice was a settlement in trust for the benefit of his wife, irrevocable without her consent. Hence the defendant is not liable on the certificate declared on in this action. Pingrey v. Insurance Co., 144 Mass. 374, 11 N.E. 562. If a power of revocation had been reserved, it would not affect the validity of the trust, unless exercised according to the terms in which it was reserved. Stone v. Hackett, 12 Gray, 227.

OPINION

C. ALLEN, J.

The designation of beneficiaries in the policy or certificate of membership is invalid, as the statutes under which the defendant corporation was organized did not authorize it to grant insurance for the benefit of friends. Daniels v Pratt, 143 Mass. 221, 10 N.E. 166. But an invalid designation of beneficiaries does not render the whole contract invalid. The contract in terms recognizes that there may be a change or substitution of beneficiaries, and there is a provision that, if the member shall survive all original or substituted beneficiaries, then his membership shall be for the benefit of his legal heirs. This provision is within the authority of St.1882, c. 195,§ 1, heirs being included under the head of relatives, and, if there is no other legal designation, this may take effect. Daniels v. Pratt, ubi supra. By an amendment, the action is now prosecuted in the name of the administrator of the estate of the assured, and he is the proper party to maintain the action. Bailey v....