DeLoach v. Ozark Mutual Life Insurance

McCulloch, C. J.,

(dissenting). The majority pre-termit a decision of the question as to whether or not the statement with reference to the age of the assured constituted a warranty, and I will content myself with merely saying that under the terms of the policy the statement was not, in my judgment, a warranty. Nor was it a false representation for, according to the undisputed evidence, the mistake as to the age of the assured was an innocent one and free from any intention to misstate the facts. Nor does the policy, in terms, make the correct statement of the age of the assured a condition precedent, so as to avoid the contract.

One of the by-laws of the association prescribes the restriction as to the age, hut it does not provide that a policy shall he void if the age of the assured is above the limit. Therefore, the decision of the case comes down, I think, to the question whether or not the contract is ultra vires.

Now a rule of law of very general application, sustained by the great weight of authority, is that, if a corporation enters into a contract not immoral in itself and not forbidden by any statute and which has been in good faith performed by the other party, the plea of ultra vires by a corporation will not be sustained in order to defeat recovery under a contract. That rule has been adopted by this court. Minneapolis F. & M. Mut. Ins. Co. v. Norman, 74 Ark. 190.

The rule is applicable to the present case, and results in establishing appellant’s right to recover, since there was no breach of warranty, no false representations and no unperformed condition precedent. No statute forbids such a contract, and it is'not one of immoral nature. Appellees has enjoyed the benefits of the contract by receiving the premiums paid, and ought not be permitted to éscape liability on the ground that the contract is beyond the powers prescribed under its by-laws. It is unimportant that the premiums were received by the company without knowledge that the age of the assured was not within the limit prescribed in the by-laws, for, since there was no breach of warranty and no false representation to defeat the contract, the parties must be deemed to have contracted with inference to the life of the particular individual mentioned, and the fact that there was a mutual mistake with respect to the age of the assured does not render the contract unenforceable. This does not result from an application of the doctrine of estoppel, hut from the principle that when a corporation has received all the benefits of an executed contract which is not forbidden either in law or in good morals, it should be be compelled to perform its part of the contract even though contrarv tr> its own by-laws. Knowledge on the part of the corporation of the fact that there has been a departure from the by-laws is not essential to liability, if the corporation has received all of the benefits of performance by the other party and there has been no breach of warranty nor false representation.

It seems to me that the decision in this case is in conflict with our decision in Mutual Aid Union v. Blacknall, 129 Ark. 450. In that case there was found to be a waiver of the misstatement of age by reason of the knowledge of it being brought home to the company through its agent. But if, as the court below now decides, the contract was one beyond the power of the company to execute, we ought to have decided in that case that the contract was void on that account.

My conclusion is that, according to the undisputed evidence, appellant is entitled to recover the full amount of the policy.