Mr. Justice Ricks
delivered the opinion of the court:
The appellant does not claim that sections 2 and 3 of article 7 of the constitution of the company were changed or modified after the certificate or policy in question was issued, but contends that the bond is in substantial compliance and" conformity with those sections; and further contends that if it be held that the bond is more favorable to it than the constitution authorized, or is not in substantial conformity to the constitution, then the rights of the parties were fixed by the terms of the bond as a matter of contract, and that the acceptance of the bond by the assured was, as to all its terms, binding upon the assured and the beneficiary. By section 1 of article 4 of the constitution it is provided that the policy of membership “shall constitute the basis of settlement with the beneficiaries.” The constitution, as it then existed, together with the application, comprised a part of the policy of membership, which, by express contract of the parties, was binding until constitutionally changed.
In determining whether the so-called bond in question is in substantial compliance with the constitution, it is necessary that we take into considération the statute authorizing the formation of such company, and which constitutes its charter; the constitution, and the contract or policy of membership.
It may first be observed that appellant is not an ordinary insurance company, which pays tribute to the State upon the theory that it reaps from the business pecuniary profit, but, on the contrary, its existence is only authorized upon the theory, as the title of the act authorizing it provides, that it was organized “for the purpose of furnishing life indemnity or pecuniary benefits to widows, orphans, heirs, relatives and devisees of deceased members, or accident or permanent disability indemnity to members thereof.” In the eye of the law the members, and those bearing certain relations to them, are the beneficiaries of all the funds realized by such corporation, and not the corporation itself. The corporation stands but as a trustee handling the funds paid by the members, and to be re-paid to them and the beneficiaries authorized by the act according to the plain restrictions provided by the act. As such trustee, and in the absence of authority conferred by section 8 of the act, appellant would have had no right to collect funds from the membership, by way of dues or assessments, in excess of the amount necessary to pay death losses, indemnities and the legitimate and reasonable expenses of conducting the business of such company. ' By authority of section 8 a greater sum than was necessary for the purposes last above mentioned was in fact collected from the members of the company to create the guaranty fund therein authorized. By that section the appellant was authorized to appropriate that fund to the payment of mortuary benefits, future assessments, or for other objects not therein specifically mentioned but to be provided for by the company. The company saw fit, by its constitution, to devote that fund only to the payment of future assessments, with the provision that such part of it as should not be used in the payment of future assessments should be paid, with the policy, at the death of the holder. It is true, the constitution says that the member shall receive a bond, bearing three per cent annual interest, for his proportion of this surplus after his policy shall have run ten years. The statute expressly says that the fund thus set apart “shall not be deemed or construed to mean a profit received by members within the meaning of the statutes of this State,” and in fact and in reason it could not reasonably be so considered, because, by the constitution of appellant providing for this fund, the member received the benefit of only that portion of the surplus which he himself had paid, and the enjoyment of this benefit w7as postponed to him until he had paid upon his policy for the full period of ten years.
By section 3 of said article 7 it is said such bond can be used at par, and accrued interest, at any time, without notice, in payment of assessments, and the contention now is that, the constitution using the word “bond” as a medium of payment instead of the share of the surplus fund, such provision was binding upon the member, and that the bond in question is in compliance therewith. To this conténtion we cannot assent. If this association was of a fraternal character, as it purports to be, and its existence depended upon the continuance and enlargement of its membership, and it was not financially interested in the business but was acting as trustee for the members of it, then it was to its interest and to the interest of the company, both in the light of a corporation and an aggregation of members, that the policies of the members should be kept up and continued. This company was not supposed to profit by lapses and derive and have in its possession a large surplus from that source, which it could apply toward its individual profit or to the payment of its liability on policies, generally. When, by its constitution, it devoted this surplus fund to the one particular object of paying assessments, and provided that such payment should be made without notice, it could not, as we think, make the payment in bonds or require the assessment to be paid with bonds issued by it. By issuing, this bond it was not divested of the fund, and did not promise to pay to the member, or to his order, or to anybody except to the beneficiary at his death, the sum of money therein mentioned, but the bond did contain the provision that the holder might, by presenting the bond and at once devoting the whole amount provided for in the bond to the payment of future assessments,—or, rather, to the payment of advance assessments, which was even more than the statute or the appellant’s constitution required or authorized,—have the benefit of his proportionate share of this fund. The statute is, “the payment of future assessments,” and the appellant’s constitution is, “in payment of assessments.” The condition of the bond is, that the bond must be surrendered and the money at once appropriated to the advance payment of assessments. In other words, by this bond the policyholder was required, at the very moment that he used any part of this fund, to then and there appropriate the whole of it, and at once, as a payment upon assessments in advance of their accruement. We think the intention of the legislature, and of the membership when it formed its constitution, was, that this fund should5 rest in the hands of the company, and that if, as in the case at bar, by misfortune, oversight, accident or otherwise a member should fail to pay an assessment when called upon and within the provisions of the law, it was then the duty of appellant, without notice, so long as there was sufficient of that fund to pay the assessments, to apply, and pay the same. Appellant’s constitution, which was incorporated in the policy, does not require the policyholder to give notice, but the expression is, absolutely, “without notice,” yet the bond that it issues not only requires notice, because the surrender of the bond must be upon the express application of the holder, with the statement that he wants to pay an assessment out of the fund, but, in addition thereto, as we have said, he must, by the terms of the bond, then and there appropriate the whole of it to the advance payment of assessments.
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Mr. Justice Ricks
delivered the opinion of the court:
The appellant does not claim that sections 2 and 3 of article 7 of the constitution of the company were changed or modified after the certificate or policy in question was issued, but contends that the bond is in substantial compliance and" conformity with those sections; and further contends that if it be held that the bond is more favorable to it than the constitution authorized, or is not in substantial conformity to the constitution, then the rights of the parties were fixed by the terms of the bond as a matter of contract, and that the acceptance of the bond by the assured was, as to all its terms, binding upon the assured and the beneficiary. By section 1 of article 4 of the constitution it is provided that the policy of membership “shall constitute the basis of settlement with the beneficiaries.” The constitution, as it then existed, together with the application, comprised a part of the policy of membership, which, by express contract of the parties, was binding until constitutionally changed.
In determining whether the so-called bond in question is in substantial compliance with the constitution, it is necessary that we take into considération the statute authorizing the formation of such company, and which constitutes its charter; the constitution, and the contract or policy of membership.
It may first be observed that appellant is not an ordinary insurance company, which pays tribute to the State upon the theory that it reaps from the business pecuniary profit, but, on the contrary, its existence is only authorized upon the theory, as the title of the act authorizing it provides, that it was organized “for the purpose of furnishing life indemnity or pecuniary benefits to widows, orphans, heirs, relatives and devisees of deceased members, or accident or permanent disability indemnity to members thereof.” In the eye of the law the members, and those bearing certain relations to them, are the beneficiaries of all the funds realized by such corporation, and not the corporation itself. The corporation stands but as a trustee handling the funds paid by the members, and to be re-paid to them and the beneficiaries authorized by the act according to the plain restrictions provided by the act. As such trustee, and in the absence of authority conferred by section 8 of the act, appellant would have had no right to collect funds from the membership, by way of dues or assessments, in excess of the amount necessary to pay death losses, indemnities and the legitimate and reasonable expenses of conducting the business of such company. ' By authority of section 8 a greater sum than was necessary for the purposes last above mentioned was in fact collected from the members of the company to create the guaranty fund therein authorized. By that section the appellant was authorized to appropriate that fund to the payment of mortuary benefits, future assessments, or for other objects not therein specifically mentioned but to be provided for by the company. The company saw fit, by its constitution, to devote that fund only to the payment of future assessments, with the provision that such part of it as should not be used in the payment of future assessments should be paid, with the policy, at the death of the holder. It is true, the constitution says that the member shall receive a bond, bearing three per cent annual interest, for his proportion of this surplus after his policy shall have run ten years. The statute expressly says that the fund thus set apart “shall not be deemed or construed to mean a profit received by members within the meaning of the statutes of this State,” and in fact and in reason it could not reasonably be so considered, because, by the constitution of appellant providing for this fund, the member received the benefit of only that portion of the surplus which he himself had paid, and the enjoyment of this benefit w7as postponed to him until he had paid upon his policy for the full period of ten years.
By section 3 of said article 7 it is said such bond can be used at par, and accrued interest, at any time, without notice, in payment of assessments, and the contention now is that, the constitution using the word “bond” as a medium of payment instead of the share of the surplus fund, such provision was binding upon the member, and that the bond in question is in compliance therewith. To this conténtion we cannot assent. If this association was of a fraternal character, as it purports to be, and its existence depended upon the continuance and enlargement of its membership, and it was not financially interested in the business but was acting as trustee for the members of it, then it was to its interest and to the interest of the company, both in the light of a corporation and an aggregation of members, that the policies of the members should be kept up and continued. This company was not supposed to profit by lapses and derive and have in its possession a large surplus from that source, which it could apply toward its individual profit or to the payment of its liability on policies, generally. When, by its constitution, it devoted this surplus fund to the one particular object of paying assessments, and provided that such payment should be made without notice, it could not, as we think, make the payment in bonds or require the assessment to be paid with bonds issued by it. By issuing, this bond it was not divested of the fund, and did not promise to pay to the member, or to his order, or to anybody except to the beneficiary at his death, the sum of money therein mentioned, but the bond did contain the provision that the holder might, by presenting the bond and at once devoting the whole amount provided for in the bond to the payment of future assessments,—or, rather, to the payment of advance assessments, which was even more than the statute or the appellant’s constitution required or authorized,—have the benefit of his proportionate share of this fund. The statute is, “the payment of future assessments,” and the appellant’s constitution is, “in payment of assessments.” The condition of the bond is, that the bond must be surrendered and the money at once appropriated to the advance payment of assessments. In other words, by this bond the policyholder was required, at the very moment that he used any part of this fund, to then and there appropriate the whole of it, and at once, as a payment upon assessments in advance of their accruement. We think the intention of the legislature, and of the membership when it formed its constitution, was, that this fund should5 rest in the hands of the company, and that if, as in the case at bar, by misfortune, oversight, accident or otherwise a member should fail to pay an assessment when called upon and within the provisions of the law, it was then the duty of appellant, without notice, so long as there was sufficient of that fund to pay the assessments, to apply, and pay the same. Appellant’s constitution, which was incorporated in the policy, does not require the policyholder to give notice, but the expression is, absolutely, “without notice,” yet the bond that it issues not only requires notice, because the surrender of the bond must be upon the express application of the holder, with the statement that he wants to pay an assessment out of the fund, but, in addition thereto, as we have said, he must, by the terms of the bond, then and there appropriate the whole of it to the advance payment of assessments. It was not to the benefit of the members unless sickness or inability to pay should require the appropriation of the whole of it to the advance payment of assessments, and in the case at bar the assured paid his assessment for several months after he received the bond.
It is said, however, that the policyholder, by receiving the bond, contracted with appellant that it should hold the fund according to the provisions of the bond. If the bond was not in accord with the provisions of appellant’s constitution at the time the policyholder received his policy, and if that constitution was not changed in the manner therein provided, which was, that the policyholder should have the right to vote upon the change, then how can it be said that there was any contract between the policyholder and appellant which changed his right? What consideration did he receive for releasing to appellant a valuable right he had? It cannot be claimed that he received any consideration, and if this bond can be binding upon any theory, it must be upon a supposed theory of estoppel. But how can appellant insist upon an estoppel? The only change in its course was, that it undertook to hold the money longer than, and to require of the policyholder more than, its constitution authorized. There is no pretense that through reliance upon the acceptance of such bond by the policyholder appellant pursued a course of business that if it be now required to change would be to its injury. In fact, there is no show of claim of injury to appellant. The bond purported, on its face, to be issued “for value received, and in pursuance of the provisions of sections 2 and 3, article 7, of the constitution of said company.” Whether it did comply with the provisions of that constitution and the policy was a question of law, which we think the policyholder was not required to pass upon until the necessity arose. We think the policyholder had a right to receive and retain the bond as an evidence of the amount of the surplus which the company had, and which might be used for the benefit of his policy, without thereby waiving any of his rights in the premises and without consenting to any modification of the contract or supposed variation from the provisions of the constitution of the appellant company. Pray v. Life Indemnity Co. 104 Iowa, 114; Shakman v. United States C. S. Co. 92 Wis. 366; Chicago Life Ins. Co. v. Warner, 80 Ill. 410; Welsh v. Chicago Guaranty Fund Life Society, 81 Mo. App. 30; Symonds v. Northwestern Life Ins. Co. 23 Minn. 491.
The laws and rules of such associations as the appellant should be liberally construed in favor of the policyholder and beneficiary, and where an attempt is made to work a forfeiture by a benevolent association, its laws, rules and regulations will be most strictly construed against it. Coverdale v. Royal Arcanum, 193 Ill. 91; Grand Lodge v. Brand, 29 Neb. 650; Union Mutual Accident Ass. v. Frohard, 134 Ill. 228.
Under the view we entertain, appellant had in its possession; from the time of the last payment made by the assured to the time of his death, ample funds in its hands which it was authorized by the constitution and contract with the assured to apply toward the payment of his assessments without' notice to him or without request from him and without the surrender of the supposed bond. In Supreme Lodge O. M. P. v. Meister, 204 Ill. 527, we said (p. 530): “In Girard Life Ins. Co. v. National Life Ins. Co. 97 Pa. St. 15, the Court held that where an insurance company has in its possession dividends belonging to a policyholder more than sufficient to pay an assessment it cannot declare a forfeiture for non-payment, on the ground that the law does not favor forfeitures and never enforces them cheerfully, and will decline to enforce them when they are against equity and good conscience, and that it is not conscionable for a company to forfeit a policy when it has in its treasury more than enough of the assured’s money to pay the assessment. And in Elliott v. Grand Lodge, 2 Kan. App. 430, it was held that where money sufficient to pay an assessment is in the treasury of the subordinate lodge, even though the latter may have made an appropriation of the fund which would show the assured in arrears, no forfeiture can be declared.” See also Niblack on Benefit Societies, sec. 271.
The trial court did not err in refusing the propositions of law as complained of or in holding that the policy in question was not forfeited, and the Appellate Court properly affirmed its judgment.
The judgment of the Appellate Court is affirmed.
Judgment affirmed.