able that the company should be estopped from denying the binding force of this limitation as against those who, in good faith, relying upon this provision to protect them from a liability which otherwise, they might be unable to meet, had become members of the company." The case however turned upon the question of liability of insured for losses after surrender of his policy.17 § 350f. Same subject: contract to return dues.-While an association has power to contract to pay sick benefits still it is ultra vires to stipulate that at the expiration of a specified time the amount of dues received during that period will be returned, less the amount if any drawn for sick benefits.18 § 350g. Same subject: paid-up or extended insurance: non-forfeitable and incontestable insurance.-In Missouri it is not lawful for a fraternal beneficiary association to issue life insurance under a twenty-year paid up policy plan, nor under a plan making the policy non-forfeitable after payment of premiums for a certain number of months.19 But under a Pennsylvania decision an insurance company on the mutual plan, may issue paid up or term policies, instead of life as the mutual principle is not affected thereby, and the term or life of a policy is not a determining factor in respect to the principle upon which insurance is carried on, nor is its charter mandatory on the company as to the manner of conducting its business.20 And a company organized and doing business on the assessment plan, under the Indiana statute, may contract for extended insurance. But an incontestable clause with an exception for fraud in a certificate of a fraternal benefit society is not ultra vires.2 17 Moore, Receiver, v. Frey, 29 Pa. Co. Ct. Rep. 298. There were sixteen other policies before the court in all of which the policies contained the same provision or limited liability clause. As to defense to actions: assessments, see § 1311 herein. 18 Southern Mutual Aid Assoc. v. Watson, 154 Ala. 325, 45 So. 649; Southern Mutual Aid Assoc. v. Cobb, 60 Fla. 198, 53 So. 505. As to endowment policies: ultra vires, see § 2518 herein. 20 Commonwealth v. Provident Life & Trust Co. 6 Lack. Leg. N. 140, 9 Pa. Dist. R. 479, 56 Leg. Int. 339, 3 Dauph. Co. Rep. 130. As to right to issue paid-up insurance, see State (ex rel. Grand Fraternity) v. Lemert, 66 Ohio Bull. 118; Ohio Laws 423, art. 97, sec. 9, Gen. Code 9470. 1 Federal Life Ins. Co. v. Arnold, 46 Ind. App. 114, 90 N. E. 493, 91 N. E. 357, under Laws 1897, p. 318, c. 195. The case of Mutual Reserve Life Ins. Co. v. Roth, 122 Fed. 853, 59 C. C. A. 63, considered and held in nowise parallel. 19 State (ex rel. Supreme Lodge Knights of Pythias) v. Vandiver, 213 Mo. 187, 15 Am. & Eng. Ann. Cas. 283, 111 S. W. 911. Citing (Id. 202) Westerman v. Supreme Lodge Knights of Pythias, 196 Mo. 670, 5 L.R.A. (N.S.) 1114, n. 94 S. W. 470. 2 Loyal Americans of the Republic As holding that there could be no such v. Mayer, 137 Ill. App. 574. thing as a paid-up policy issued by a fraternal society. § 350h. Same subject: waiver by association, or mutual benefit company. A waiver by a fraternal beneficiary association under a by-law is not an ultra vires act, where the code provides that such a society shall make provision for payment of benefits in case of death or disability "subject to compliance by its members with its constitution and by-laws." Such statutory statement, however, adds nothing to the general law governing corporate action. The by-law was not prescribed by statute, and such a provision is inherent in the law governing corporate obligations to members of all corporations having a constitution and by-laws. And a corporation itself can waive the compliance by an intended member with any of its requirements not prescribed by its charter or the laws of the state, for his admission to membership and the conclusion of a binding contract of insurance. If a fraternal beneficiary association itself has made a contract within its general powers, knowing it to have been made without compliance with the provisions of its own regulations, and has received the full consideration for which it stipulated it cannot afterwards avoid its contract as ultra vires by reason of such non compliance; this being a rightful limitation of the application of the general principle or rule as to the powers of a corporation being limited to its charter, etc. And a town or county co-operative company will be precluded from contending that a resolution, under which it has extended its limits of business operations, was not regularly passed, when it has acquiesced for several years in dealings with agents and insurers in such extended limits. And by accepting and retaining the dues and fees of a member, with knowledge of the facts, a mutual benefit association waives all irregularity in the organization of a subordinate lodge.7 § 350i. Same subject: estoppel: defense of ultra vires.-Mutual benefit societies are estopped from defending on the ground of ultra vires against one of its contracts where it has received assessments 3 Johnson v. Modern Brotherhood of America, 114 Minn. 411, 131 N. W. 471, 40 Ins. L. J. 1424, Code sec. 1822. Assoc. 73 Minn. 297, 76 N. W. 37; 5 Timberlake v. Supreme Commandery, United Order of the Golden Cross of the World, 208 Mass. 411, 36 L.R.A. (N.S.) 597n, 94 N. E. 685, 40 Ins. L. J. 1177. 6 Skaneateles Paper Co. v. American Underwriters' Fire Ins. Co. 114 N. Y. Supp. 200, 61 Misc. 457. 4 Timberlake V. Supreme Commandery, United Order of the Golden Cross of the World, 208 Mass. 411, 36 L.R.A. (N.S.) 597n, 94 N. E. 685, 94 N. E. 1177, 40 Ins. L. J. 1177. (The above rule was sanctioned by the court although it was declared not necessary to consider the question.) 7 Perine v. Grand Lodge of AnCiting Watts v. Equitable Mutual cient Order United Workmen, 48 Life Assoc. 111 Iowa, 90, 82 N. W. Minn. 82, 50 N. W. 1022, 21 Ins. L. 441; Wiberg v. Scandinavian Relief J. 213. thereon. And if a mutual fire insurance company without power so to do, under the limitations of its charter, insures country property and receives premiums or levies assessments therefor it is estopped to plead ultra vires. Nor can an assessment company defend on the ground of ultra vires an action on an old-line policy, issued by it without authority, where it has received premiums thereon.10 So, the question of power to contract for an endowment policy cannot be raised where such policy has been issued, and premiums and assessments have been accepted by a mutual benefit association." So, where a fraternal association, consolidates with and assumes the contracts of another association, and issues to one of the members of the latter company, and assumes his contract and accepts his assessments, said member being over the age limited by its charter, it cannot avail itself of the defense of ultra vires. 12 And, the relief department of a railroad company, in the nature of a mutual insurance association, organized for the benefit and protection of railroad employees, in case of sickness or death, and which places an employee's name upon the roll of its members at his solicitation, and deducts from his wages his assessment for benefits, on the basis of membership, with knowledge of the fact that no formal application had been made and no physical examination had, as required by the by-laws, is estopped from disputing such employees membership, upon the suit of a widow to recover a death benefit, notwithstanding a rule of the department, defining and limiting its liability in cases of regular and formal application.13 Again, if the contract sets forth verbatim a charter clause purporting to authorize such insurance a beneficial association is estopped to deny its power to provide in its contract for payment of a definite specified sum in case of permanent disability, and in such case a provision is not applicable, that benefits should be due until disability ceased.14 Matt v. Roman Catholic Protective Soc. 70 Towa 455, 30 N. W. 799. On estoppel of corporation to set up plea of ultra vires, see note in 20 L.R.A. 765. 9 Garner v. Mutual Fire Ins. Co. Iowa, 86 N. W. 289. 10 Knott v. Security Mutual Life Ins. Co. 161 Mo. App. 579, 144 S. W. 178, 41 Ins. L. J. 842, criticising, as mere dictum and opposed to the unbroken current of authority, Smoot v. Bankers' Life Assoc. 138 Mo. App. 438, 120 S. W. 719. 11 Wagner V. Benefit Assoc. 8 Pa. Dist. Rep. 231, 56 Leg. Int. 192. 12 Edwards v. American Patriots, 162 Mo. App. 231, 144 S. W. 1117. See Wood v. Supreme Ruling of Fraternal Mystic Circle, 212 Ill. 532, 72 N. E. 783, rev'g Supreme Ruling of Fraternal Mystic Circle v. Wood, 114 Ill. App. 431. 13 Burlington Voluntary Relief Department v. White, 41 Neb. 547, 43 Am. St. Rep. 701, 59 N. W. 747, 751, 26 Ins. L. J. 224. See this case under § 346e herein. Keystone Mutual 14 Binder v. National Masonic Ac Members of a mutual fire and marine insurance company are estopped to dispute the power of such corporation to carry on two separate departments, without recourse by either to the assets of the other, where such act has been fully advertised for more than twenty years, and members have had full knowledge of the arrangement.15 § 350j. Same subject: reinsurance.-Where the purpose of the legislature is to limit the risks, and to confine the business of mutua! fire insurance companies to the insurance of tangible property owned by their members a contract of reinsurance made by such company is ultra vires and assessments cannot be collected on account of such policy.16 But where it is beyond the power of mutual fire insurance companies to reinsure, the law under which they were organized not having specifically granted such authority, but on the contrary had limited the risks which such companies might write, so that none but owners of property might become members and non-members property could not be insured, and such contract of reinsurance is not executed, the reinsuring company is not estopped from urging the defense of ultra vires." 17 § 350k. Same subject: power as to other business or risks.-A casualty company on the assessment plan has no power to issue sick benefit certificates where it is restricted by statute to risks of accidental death or disability from accident.18 So, a corporation of another state, authorized to issue policies on the lives of members, upon the assessment plan, for the benefit of any person who has an insurable interest is not entitled to carry on business under the Ohio statutes, which allow assessment companies to insure lives of mem cident Assoc. 127 Iowa 25, 102 N. W. 190. 15 Doane v. Millville Mutual Mari. e & Fire Ins. Co. 43 N. J. Eq. 522, 11 Atl. 739. See also Citizens' Mutual Fire Ins. Co. v. Sortwell, 8 Allen (90 Mass.) 217. 16 Allison v. Fidelity Mutual Fire Ins. Co. 81 Neb. 894, 129 Am. St. Rep. 634, 116 N. W. 274, 37 Ins. L. J. 602. Applies to mutual companies organized under Neb. Laws Sess. 1897, c. 45, p. 257. See §§ 115a, 115b herein. As to reinsurance by life or casualty corporations on co-operative or assessment plan, see N. Y. Ins. Law 1909, c. 33, Consol. L. c. 28, sec. 209, Parker's N. Y. Ins. L. (ed. 1915) p. 321. As to contract of reinsurance by fraternal benefit societies by transfer etc. of entire membership or funds of another society, see N. Y. Ins. Law 1909, c. 33, Consol. L. c. 28, sec. 236, L. 1911, c. 198; Parker's N. Y. Ins. L. (ed. 1915) p. 352. As to diversion of funds, and ultra vires, by paying losses of another association, see Twiss v. Guaranty Life Assoc. 87 Iowa, 733, 43 Am. St. Rep. 418, 55 S. W. 8, considered under § 350 herein. 17 Allison v. Fidelity Mutual Fire Ins. Co. 81 Neb. 494, 129 Am. St. Rep. 694, 116 N. W. 274, 37 Ins. L. J. 602. See §§ 115, 115a, 115b herein. 18 Knowlton, Att'y Gen. (ex rel.) v. Berkshire Health & Accident As 19 bers only for the benefit of their families and heirs, as a company cannot carry on a business not authorized by the laws of the state.1 And a corporation authorized by its charter to insure against fire, whether caused "by accident, lightning, or any other means," cannot insure against damage by lightning not resulting in fire, although their by-laws provide for their doing so.20 Nor can a mutual fire insurance company, organized under the general laws of Wisconsin, effect insurances on property other than that mentioned therein. And policies issued by a mutual company on farm property in violation of the express prohibition of the statute are ultra vires, illegal and void. But such company incorporated in New York, and having a general power to insure under its charter, may issue policies on personal property in Canada owned by parties there.3 Under the Indiana statute a mutual life company cannot engage in the business of a building and loan association or establish a building and loan department and enter into contracts of that character as such act is ultra vires, even though it is empowered by statute to loan or invest its funds, and so, although it obtains a legalizing act from the legislature where such act contains nothing as to the above ultra vires business.* But where the code authorizes insurance against fire or other casualty and by an amendment burglary insurance is authorized, and prior to said amendment a company, the general nature of whose business was to insure the property only of members against loss or damage by casualty etc., adopted articles of incorporation expressly assuming to transact the business of burglary insurance, and secured soc. 171 Mass. 458, 50 N. E. 930; Stat. 1890, c. 421, s. c. 171 Mass. 455, 50 N. E. 929. 19 State (ex rel. Att'y Genl.) v. Western Union Mutual Life Ins. Co. 47 Ohio St. 167, 8 L.R.A. 129, 24 N. E. 392, under Rev. Stat. secs. 3630, 3630e. "Whatever powers such companies possess, are derived exclusively from the laws of this state, and the limitations and restrictions imposed upon them by those laws, both with respect to the classes of business they may transact, and the mode of doing it operate upon them as well when doing business outside of the state, as within it. Their corporate capacity in these respects cannot be enlarged by the laws of any other state in which they are permitted to do business." Id. 172, per Williams, J. See Ordelheide v. Modern Brotherhood of America, 158 Mo. App. 677, 139 S. W. 269. 20 Andrews v. Mutual Ins. Co. 37 Me. 256. That by-laws must not contravene terms of charter, see § 375 herein. On nature of risk under insurance against loss by lightning, see note in 26 L.R.A. 267. 1 O'Neil v. Pleasant Prairie Mut. Fire Ins. Co. 71 Wis. 621, 38 N. W. 345. 2 Ely v. Oakland Circuit Judge, 62 Mich. 466, 17 Det. Leg. N. 62, 125 N. W. 375, 127 N. W. 769. 3 Western v. Genesee Mutual Ins. Co. 12 N. Y. 258. Huter v. Union Trust Co. 153 |