Case Name: Kentucky Masonic Mutual Life Ins. Co., &c. v. Miller's Administrator
Court: Kentucky Court of Appeals
Jurisdiction: Kentucky
Decision Date: 1877-12-12
Citations: 13 Bush 489
Docket Number: 
Parties: Kentucky Masonic Mutual Life Ins. Co., &c. v. Miller’s Administrator.
Judges: 
Reporter: Kentucky Reports
Volume: 76
Pages: 489–494

Head Matter:
Case 60 — PETITION ORDINARY
Dec. 12.
Kentucky Masonic Mutual Life Ins. Co., &c. v. Miller’s Administrator.
APPEAL PROM HARRISON CIRCUIT COURT.
1. A CERTIFICATE OF MEMBERSHIP IN THE KENTUCKY MASONIC MUTUAL Life Insurance Company, obligating the company to pay to a member’s “heirs, or as he may direct in his will, the sum of,” etc., upon his dying intestate, did not entitle his administrator to recover the fund required by the charter of the company to be paid by the company at his death.
The charter presa-ibes who may become members of the company and their obligations, and who shall be the beneficiaries of the mem bership after the death of the member, and it is not in the power of the company or the member, or of both, to alter the rights of those who by the charter are declared to be the beneficiaries, except in the mode and to the extent therein indicated.
2.The widow of a member of said company is entitled to the fund required by its charter to he paid by the company at his death, he having died leaving no child. .
C. W. -WEST, THOMAS H. HINES, and JOHN M. PORTER for APPELLANTS.
1. A corporation possesses only those properties which the charter confers on it (Dartmouth College v. Woodward, 4 Wheat. 518); can perform no acts, enter into no transactions, and incur no responsibility but -such as spring out of or are otherwise incidental (Green’s Brice’s Ultra Vires, 24, 28); are not bound by deed, if it appears by the express provisions of the statute creating the corporation, or by reasonable inference from its enactments, that the deed was ultra vires. (lb. 32). And a company incorporated for a special purpose can not devote any part of its funds to objects unauthorized by the terms of its corporation, fib. 397, 398.)
2. Appellant (insurance company) was incorporated by act of December 18, 1867 (Sess. Acts 1867-8, p. 131), and an amendatory act of March 21, 1871. (2 Sess. Acts 1871, p. 340.)
3. The acts aforesaid provide that no person can be a beneficiary in said company except the widow and children of the party who holds a certificate of membership, and that the proceeds of such certificate can not be assets in the hands of the personal representative.
4. The stipulation in the contract declared on in this ease, “ that this company will pay to his heirs” the proceeds of the certificate of membership, is ultra vires inoperative and void, because it was beyond the power of the company to make any such contract. (Bissell v. Michigan R. R., 22 N. Y. 258; Head v. Providence Ins. Co., 2 Oranch, 127; North River Ins. Co. v. Lawrence, 3 Wend. 483; Herman on Estoppel, sec. 541; May on Insurance, 623-625; Couch v. City Eire Ins. Co., 38 Conn. 181; Dwarris, p. 237, et seq.; secs. 12 and 17 of charter of appellant.)
J. Q. WARD and J. K. LAKE for appellee.
1. The appellant contracted with appellee’s intestate to “pay to his heirs as he might direct in his will the sum,” etc. “Heirs” means those who take by legal representation, etc.
2. Sections 10, 11, and 12 of the charter authorized the company to make the contract payable to his heirs, and then as matter of law the proceeds must pass into the hands of the personal representative. (1 Dana, 212.)
3. Executed and executory contracts ultra vires. If executed as in this case, it would devolve on those who claimed it to be ultra vires to show such to be case, if the contract was not itself illegal. (Green’s Brice’s Ultra Vires, 40 and note.)
If the contract has been executed in good faith by a third party, and the corporation had received value for that which it was asked to pay for, nothing short of a vicious consideration or a plain negative of the right to make such contract could excuse the corporation. (Green’s Brice’s Ultra Vires, 73, 373; 21 Howard, 443 ; 21 N. Y. 127; 22 N. Y. 258, 494; 5 B. Mon. 129.)
The dealings of a corporation which are so on their face, or according to their apparent import, are within its charter. (4 Wheat. 518'; 21 N. Y. 124; 5 B. Mon. 129.)
A corporation may transact all such matters as) being ancillary to its primary business, are transacted by ordinary individuals under similar circumstances. (Green’s Brice’s Ultra Vires, 66; Angelí & Ames on Corporations, sec. 271; 1 Barbour, 584; 25 Ind. 537.) The company in this case having power to contract in its corporate name, and having actually contracted, it is bound thereby according to the terms of the' contract.
The power of a man to make a contract of life insurance for the benefit of his widow and children, and to the prejudice of his creditors, is in derogation of the principles of common law and common honesty, and is at best a law which the courts would be reluctant to enforce ; yet in this case the court is not only asked to decide that the corporation had authority to make such a contract, but that it had no authority to make any other.
The right to make a contract carries with it all of the consequences which usually flow from such contracts.

Opinion:
JUDGE COFER
delivered the opinion oe the court.
It appears from tbe pleadings in this case, that April 9, 1868, the Kentucky Masonic Mutual Life Insurance Company issued to Isaac N. Miller a certificate of membership, in said company; that said Miller died intestate, leaving a widow, but no child or children, surviving him; that the widow has been judicially found to be of unsound mind; that the appellant B. G. Thomas is her committee; that the appellee is administrator of the goods, chattels, and credits of Miller; and that there is due from the said Masonic Mutual Life Insurance Company on said certificate the sum of $2,696, which is claimed by both the administrator and widow, and which the company is willing and ready to pay to whomsoever shall be adjudged entitled to it.
The certificate obligates the company upon certain considerations and conditions, all of which have been performed, to pay to Isaac N. Miller's "heirs, or as he may direct in his will, the sum of $1 for each and every member belonging to said company at his death," unless the number should exceed five thousand, in which event no more than $5,000 are to be paid.
The company was organized under the act of the general assembly entitled " An act to incorporate the Kentucky Masonic Mutual Life Insurance Company," approved December 18, 1867. (Acts 1867-8, vol. 1, p. 131.) Its charter was amended by an act approved March 21,1871. (Acts 1871, vol. 2, p. 340.)
The first section of the original act, after naming the corporators, creates the parties named a body corporate, with power "to have perpetual succession, with the right to obtain, hold, sell, and convey and dispose of every class of property, and to make and retain their capital stock to the amount of $50,000, with the power to confer charities as herein provided, or as the company may determine, and to malee contracts that shall be binding, and transact all business in its corporate name for its corporate purposes," etc.
The second section authorizes the corporators, or a majority of them, to organize and to receive as members only sound and healthy master masons of Kentucky under sixty years of age, and in good standing in their respective lodges.
The third section provides, that " each person upon becoming a member shall pay into the treasury of the company $6 (and by section 1 of the amendment, from $6 to $20, according to the age of the person), to become a permanent fund of the company, which, with the other qualifications prescribed, shall entitle him to membership for life, or during good behavior," etc.
The 10th, 11th, and 12th sections provide as follows:
" 10. In addition to the permanent fund, upon notification of the death of a member, each surviving member shall pay into the treasury $1.10; $1 of which from each member to constitute a fund to be paid for the benefit of the widow and children of the deceased member-, and the balance to defray the expenses of the company.
" 11. The fund created in section 10, for the benefit of the widow and children of the deceased member, shall be paid to them by said company as soon as it can be collected, or to their trustee, in the discretion of the company, subject, however, to be appropriated for their benefit, equally, according to will of deceased member, or if he should leave no widow or child, then to be appropriated according to his will; or if he makes no will, and leaves no widow or child, it shall vest and remain in the company and be added to its capital stock, or be appropriated as they may deem expedient.
"12. No part of the stock or interest which any member, or his widow and children, may have in said institution shall be subject to any debt, liability, or legal or equitable process ¿gainst him or any of them."
Counsel for the administrator concede that if the language of sections 10, 11, and 12 of the charter had been pursued in the certificate of membership, the widow would have been entitled to the fund in contest. But they contend that the company had power, under the fii-st section of its charter, to make contracts; and having contracted to pay to Miller's heirs, the administrator is entitled to recover the money due on the certificate of membership.
We need not stop to inquii-e what may be the extent of the power of the company to make contracts, nor whether a covenant with the ancestor to pay to the heir after his death xvill pass to the personal representative of the ancestor, or to the heir for whose benefit the covenant was made, because we are of the opinion that whatever might be the answers to those inquiries, they could have no influence on the decision of this case.
, The charter prescribes who may become members of the company, and their obligations, and who shall be the beneficiaries of the membership after the death of the member, and it is not in the power of the company or of the member, or of both, to alter the rights of those who by the charter are declared to be the .beneficiaries, except in the mode and to the extent therein indicated.
The company and Miller could decide the question whether he should become a member, and having- done so, from that moment the rights of the beneficiaries attached, subject to be defeated by his failure to comply with the terms of his membership, but subject to no other contingency whatever.
If therefore the stipulation to pay to Miller's -heirs should be construed to have been intended to secure the fund payable on account of his membership to his administrator or his creditors, such stipulation could not prevail over the unequivocal provisions of the charter, that it shall be paid to his widow and children; and that it was the intention of the legislature that the fund due on account of membership should not be diverted from the destination indicated by sections 10 and 11, is made certain by sections 12 and 17.
Section 12 declares that no part of the'stock or interest of any member, or of his widow or children, shall be subject to any debt against him or them; and section 17 declares that the object of the company is merely to provide for the widows and orphans of master masons.
We are therefore of the opinion, that the court erred in adjudging the money in contest to Miller's administrator, and the judgment is reversed, and the cause is remanded with directions to dismiss the administrator's petition, and to adjudge the fund to Mrs. Miller's committee.