author: Shauck, J.

text:
    The State of Ohio v. Gage.

      Act of April 19, 1898 — Defining trusts and prohibiting them— Is a valid act — Authorizing punishment and imprisonment— Valentine-Stewart law — Constitutional law.

    The act of April 19, 1898, defining trusts and prohibiting them under penalties (93 O. L., 143) by a valid exercise of the police power, authorizes the punishment by fine and imprisonment of a person who is an active member of, and assists in carrying out the purposes of, an association formed to prevent competition in the sale of an article of merchandise.
    (No. 8681
    Decided March 21, 1905.)
    Error to the Circuit Court of Delaware county.
    Gage was indicted in Delaware county under the act of April 19,1898, entitled “An act to define trusts, and to provide for criminal penalties and civil damages, and punishment of corporations, persons, firms1 and associations, or persons connected with them, and to promote free competition in commerce and all classes of business in the state. ’ ’
    The indictment charged “that Perley W. Gage of said county, on the first day of November-in the year of our Lord, one thousand nine hundred and two, with force and arms, in said county of Delaware, and state of Ohio, and until this sixth day of January in the year of our Lord, one thousand nine hundred and three, said Perley W. Gage, late of said county of Delaware, was an active member of, acted with and in pursuance of, aided and assisted in carrying out the purposes of The Delaware Coal Exchange, an association of persons organized for the purpose of preventing competition in the sale, and to maintain a uniform and graduated figure for the sale of coal, and to directly preclude a free and unrestricted competition among the members of said association, purchasers and consumers in the sale and transportation of coal, contrary to the form of the statute in such case made and provided, and against the peace and dignity of the state of Ohio.”
    To this indictment the defendant demurred upon the two grounds that the. facts charged do not constitute an offense against the laws of Ohio and that the statute under which the indictment was presented is unconstitutional and void. The demurrer having been overruled, the defendant entered a plea of guilty, and then moved in arrest of judgment upon the same grounds stated in his demurrer. The court overruled this motion and adjudged that the defendant pay a fine of $100 and the costs of prosecution and that he stand committed to the jail of the county until the fine and costs should be paid. On Gage’s petition in error the judgment of the court of common pleas was reversed by the circuit court.

      Mr. Wade H. Ellis, attorney general; Mr. E. T. Humes, prosecuting attorney; Mr. E. M. Wickham and Mr. H. Kenneth Rogers, for the State.
    The Valentine law, sections 4, 5, 6 and 7, do not contravene the provisions of either the federal constitution or the constitution of Ohio.
    The affirmative of this proposition we maintain.
    The sections declared by the circuit court to be unconstitutional are 4, 5, 6 and 7.
    On reading the opinion of the circuit court,* it appears that its decision was based on the theory that the law is unconstitutional because it is in general restraint of trade, and makes criminal an act of making an agreement or contract in partial restraint of trade, which is legal at common law.
    It is a sufficient answer to the argument above that the Valentine act affirmatively recognizes partnerships, corporations, and other associations of persons, with their incidents, as legal entities, by naming them in the first section of the act in defining a trust, and also in section 7.
    An additional answer is that such agreements are not within the statute. Courts never construe an act to be within the prohibition of'a statute merely because it comes within the terms of the statute. When a statute is penal it is not enough to make an act criminal that is within the mere terms of the statute; it must come within the logic, reason and spirit of the statute; it must be within the motives and purposes of the legislators. People v. Utica Insurance Co., 15 Johns., 358.

      The Valentine act never intended to prohibit and make criminal the formation of partnerships, corporations, or joint stock companies, or to prohibit snch organizations from making any. agreement about their production and prices.
    The reasons given by the circuit court to sustain its decision, in the main, are the same as those given by counsel in their arguments to show that the act is unconstitutional, in all the cases under the federal law, known as- the Sherman anti-trust act, and the anti-trust laws of other states.
    We cite the cases of State v. Smiley, 69 Pac. Rep., 199, decided by the supreme court of Kansas, in which was involved the question of the constitutionality of an act precisely the same as the Valentine law; indeed, it appears from a comparison of the two, that the Valentine law is a copy of the Kansas statute. Domats, Rules; Dwar. St., 138.
    And in answer to the argument of counsel against the constitutionality of the law, the Kansas court expressed itself in this vigorous language: “It is certainly competent for the legislature to make penal the doing of that which the courts themselves recognize as hurtful to the body politic, and for-that reason to refuse to countenance. The legislature of 1897 did that; nor did it do anything more. It is no argument to launch the platitudes of personal liberty, and freedom of contract, and due process of law, etc., against this statute. What specific prohibition does' it contain that the common law has not contained for ages past? Absolutely none. :
    Another reason for holding the act unconstitutional the circuit court said: ‘ ‘ There can be no legal injury to the public, unless there be legal injury to some individual or class of individuals, from the act which is the object of the agreement or combination,” and the case of State ex rel. v. Buckeye Pipe Line Co., 61 Ohio St., 520, is cited to sustain the proposition. There can be no doubt of the correctness of the principle, but it can have no application to the case, except on the assumption that such matters as the formation of partnerships, the organization of corporations and joint stock companies, the sale of the good will of a business concern, and other acts mentioned by the circuit court are within the provisions of the Valentine law. We have already shown that such acts are not within the spirit of the statute, and, therefore, not within its prohibition; the state of Ohio in this case did not prosecute Gage for being a member of a partnership, or for assisting in the organization of a corporation, or joint stock company, or for the sale or purchase of the good will of any business concern, or for making any contract or agreement that is valid at common law; no such case was before the court; and all that was said by the circuit court in its opinion on that head does not exceed in importance the merest obiter dictum.

    A corporation has the same right and freedom of contract that an individual possesses, unless it is limited by its charter or the laws that create it; the contracts of a corporation in restraint of trade, or in restriction of competition would be as hurtful to the public, as those of an individual; no substantial difference in their effect could be discovered ^therefore, the law would be equally applicable to both, and the language of the Supreme Court in State v. Buckeye Pipe Line Co., 61 Ohio St., 520, is applicable in any case in which, individuals combine to restrain trade or to restrict competition in business.
    It was held by the circuit court that the Valentine law is an infringement on the freedom of contract. The liberty, or freedom of contract is guaranteed by both our state and federal constitutions. There is no difference in meaning in the guarantee of our state constitution and that of our federal constitution. Section 1 of article 1 of our state constitution is substantially the same as section 1 of article 14 of the constitution of the United States; it was intended to be the same, but is expressed in slightly different terms. Our contention is, that if the Sherman law is a valid enactment, so is the Valentine law for the same reason; that if the federal act does not infringe upon the citizen’s rights under the federal constitution, so neither does the Valentine act conflict with the guarantee of the state constitution.
    Sections 1, 2 and 3 of the criminal part of the federal anti-trust law, are just as drastic and comprehensive in their scope as sections 4, 5, 6 and 7 of the Valentine law. If the ■ liberty of contract is infringed upon by those sections of the. Valentine law, so it is by the first three sections of the federal act. The federal statute prohibits all combinations and contracts, no matter what form they may assume, that are in restraint of trade or commerce among the states, and also prohibits a monopoly of such trade or commerce. The Valentine act prohibits combinations whose purpose is the restraint of trade, or the limiting of competition. The objects of both statutes are the same. The one applies to interstate commerce only, the other to commerce among the citizens of the state of Ohio.

      The close relationship of these two laws was recognized in State ex rel. v. Buckeye Pipe Line Co. And to support this view Judge Shauck in that case cites United States v. Trans-Missouri Freight Assn., 166 U. S., 290; United, States v. Joint Traffic Assn., 171 U. S., 505; and United States v. Pipe & Steel Co., 85 Fed. Rep., 271, and he further observed in substance, that the fact that the federal act was limited to interstate commerce, was not material.
    In explicit language the United States Supreme-Court held that the Sherman law did not conflict with any of the provisions of the federal constitution, and was a valid enactment. Frisbie v. United States, 157 U. S., 160.
    Our own Supreme Court, on several occasions, has. expressed itself on the subject of competition in trade. Salt Co. v. Guthrie, 35 Ohio St., 666; State ex rel. v. Standard Oil Co., 49 Ohio St., 137.
    To those who are afflicted with the delusion that, competition may be ruinous to business; that business and trade combinations and trusts are a blessing to the country, because they, temporarily, or permanently, have reduced the prices of some commodities we recommend a perusal of the opinion of the Supreme Court of the United States in the Trans-Missouri case, supra. People v. Sheldon, 139 N. Y., 251; s. c. 34 N. E. Rep., 785.
    After reviewing all the authorities on the question, in our humble judgment the conclusion is irresistible that the Valentine act does not violate the-provisions of either the state or federal constitution. If the Sherman anti-trust law is constitutional, we-repeat, for the same reason the Valentine law is •valid; and the constitutionality of the federal act. can not now be questioned. It was held constitutional by the court in United States v. Addyston Pipe & Steel Co., supra, and tbe judgment of that court was affirmed by tbe Supreme Court in 175 U. S. S. C. Rep., 210, and after a modification of the decree to make it apply only to interstate commerce. The Sherman law has been sustained on constitutional grounds by not less than fifty federal authorities, in addition to the cases above cited.

      Mr. George W. Carpenter and Mr. H. W. Jewell, attorneys for defendant in error.
    The indictment simply alleged that defendant was a member of an association without describing in any manner the nature or character of the association. The word “association” is defined in Anderson’s Dictionary of Law as follows: “1. The act or state of. being joined in common interest. 2. An organization of persons without a charter, for business, humanity, charity, culture, or other purposes; any unincorporated society or body.” Among other definitions of a partnership the same author gives the following: “An association for the purpose of prosecuting any lawful business, formed by contract between two or more persons.” This definition is taken from Payne v. Thompson, 44 Ohio St., 204. And in the Standard Dictionary the terms “association” and “partner-ship” are considered synonymous.
    ■"'•The legal effect of the charge in the indictment -:fbMéfóre is not different than it would have been if -it‘had'charged specifically that the defendant was a member of a partnership and that the purpose in forming the partnership was to prevent competition among its members.
    We contend that the statute, 93 O. L., 143, insofar as it creates criminal offenses and prescribes punishment therefor, is in violation of the first section of the fourteenth amendment to the federal constitution and of section 1, article 1 of the constitution of Ohio: Because it makes it a crime to enter into contracts which have always been regarded as embraced within those inalienable rights essential to the liberty of the citizen.
    It is made criminal for two or more persons to combine as partners, corporations or otherwise in ordinary business affairs to prevent competition between themselves, to limit their production or to increase or reduce the price of their commodities. The practical effect of the statute is to prohibit and make criminal all associations for business purposes. The act defines a trust as follows: “A trust is a combination of capital, skill or acts by two or more persons, firms, partnerships, corporations or association of persons, or of any two or more of them, for either, any or all of the following purposes.” (93 O. L., 143.)
    In penal and criminal laws a combination is “a coalition, union, mutual agreement, or other blending for any purpose whatever.” Anderson’s Dictionary of Law, 196.
    A partnership is “the combination, by two or more persons, of capital, labor or skill, for the purpose of business for their own benefit.” Parsons on Partnership (3 ed.), 6; 1 Lindley on Partnership (4 ed.), 3; Anderson’s Dictionary of Law, 750.

      What the statute regards as a “purpose” within the meaning of the act is clearly indicated by the provisions of section 5, where the words “purposes” and ‘ ‘ effects ’ ’ are used in the same sense. If there be infraction of the law the intention to break the law must be inferred. * * * A man must' be taken to have had the intention implied from the act. Broome’s Legal Maxims (7 ed.), 307.
    A man is presumed to intend the necessary and natural consequences of his own act. If therefore the effect of every combination is necessarily and naturally to prevent competition, the law must infer that such was the purpose of the combination, and it matters not whether this was the main purpose, a subsidiary purpose or only a necessary consequence. Bishop on Criminal Law, sec. 337.
    There is no possible escape from the obvious and self-evident proposition that any association in business prevents competition among the persons associated and that, if prevention of competition is made .criminal, association is made impossible. Prevention of competition is a purpose or effect of every copartnership, joint stock association, or corporation. It is a purpose or effect of every contract, agreement or understanding by which men associate or co-operate. In re Grice, 79 Fed. Rep., 642.
    We also cite upon this point the brief of counsel for defendant in State ex rel. v. Buckeye Pipe Line Co., 61 Ohio St., 520, which is directly applicable to this case and contains a most able and exhaustive argument upon the questions involved.
    Moreover, agreements are frequently made between two or more persons to form a corporation, partnership or other business association for the express purpose of preventing competition Between them. Such agreements are sometimes made for the purpose of creating a monopoly in which case they are clearly illegal and void and may he prohibited. Ford v. Chicago Milk Shippers’ Association, 155 Ill., 166; Harding v. American Glucose Co., 182 Ill., 551; 55 N. E. Rep., 577; People v. Milk Exchange, 145 N. Y., 267; Richardson v. Buhl, 77 Mich., 632.
    Sometimes such agreements are made for the express purpose of preventing competition, but without any intent to create a monopoly or to unreasonably restrain trade, in which case they are valid and binding agreements. Oakdale Mfg. Co. v. Garst, 18 R. I., 484; Meredith v. New Jersey Zinc & Iron Co.,. 55 N. J. Eq., 211.
    Counsel for the State contend that members of partnerships, corporations and other business associations are not within the prohibitions of the law, for the reason that the “act affirmatively recognizes, partnerships, corporations and other associations, of persons, with their incidents, as legal entities, by-naming them in the first section of the act in defining a trust, and also in section 7. ’ ’ This position is. untenable, and is neither supported by reason nor authorities. On the contrary, it is in direct conflict, with the authorities above cited.
    If the formation of a corporation does not create-such a legal entity as will have the effect of exempting its members from the prohibitions of the law either in their agreements to form the corporation, or those made in the conduct of their business after-wards, does it not necessarily follow that a partnership is not such a legal entity as will exempt its. members from the operation of the law? Corporations have always been regarded as legal entities for many purposes, but partnerships have been so regarded for but few.
    The validity of the anti-trust law of Illinois has recently been passed upon by the Supreme Court of the United States in a case in which it was claimed that it was invalid by reason of discriminations which deprived citizens of the equal protection of the law; and the court held the act unconstitutional. Connolly v. Union Sewer Pipe Co., 184 U. S., 540; 46 Law. Ed., 679.
    ■ When we consider the radical and extreme provisions of this act, is it reasonable to suppose that the legislature did not intend to prevent the creation of a monopoly under whatever form and in whatever manner it might be attempted? The conclusion seems irresistible that the legislature intended the prohibitions of the act to apply to members of corporations, partnerships and other associations.
    The right to form partnerships and to make all reasonable contracts in reference to the conduct of their business has always been recognized by the common law. And contracts of members of partnerships, corporations and other business associations not to compete in the same business in which ■ such associations were engaged, and contracts not to compete made by the parties for the purpose of protecting the good will of the business, which are reasonable and not injurious to the public or other individuals have always been held valid.
    Contracts between partners not to compete in any business have also been sustained. Matthews v. Associated Press of New York, 136 N. Y., 333.

      The right to enter into-contracts which are not injurious is comprehended within- the inalienable rights of the citizen; and any statute which deprives the citizen of such right is unconstitutional and void. Palmer et al. v. Tingle, 55 Ohio St. 423; 2 Eddy on Combinations, sec. 658 on page 676 and note 1, also secs. 903, 904, 905 and 906; In re Grice, 79 Fed. Rep., 627.
    The act is unconstitutional' because it makes it a crime for two or more persons to enter into, execute, or carry out agreements, and to do other acts, which are not injurious to the public or to other individuals.
    We have heretofore been considering the right of citizens to make lawful contracts, which has always been held to come within the protection of the constitution. But the right to make lawful contracts is not the limit of the liberty guaranteed the citizen. The liberty guaranteed is unlimited, except so far as it may be found necessary to restrain it for the general welfare. Tiedeman on Limitations of Police Power, 68.
    The right of the legislature to pass laws restraining the liberty of the citizen and making his acts criminal is limited. The power to restrain the citizen in the exercise of absolute personal liberty to do whatever he may choose arises from the necessity of protecting the public and other individuals in the enjoyment of their rights, and is limited by such necessity. Tiedeman on Limitations of Police Power, sec. 1, also page 196; Palmer et al. v. Tingle, 55 Ohio St., 423; 2 Eddy on Combinations, see. 681.
    The legislature cannot under the pretense of exercising the police power, or under any other claim or pretense enact laws, prohibiting harmless acts not concerning the health, safety, or welfare of society, and the courts may examine into and annul such illegal legislation. Railway Co. v. Jacksonville (City), 67 Ill., 37; State ex rel. v. Buckeye Pipe Line Co., 61 Ohio St., 520; Ruhstrat v. People, 185 Ill., 133.
    If an act is injurious only when done at a certain place or under certain circumstances, and is not injurious when done elsewhere or under different circumstances, the place where or the circumstances under which the act is done are, if the act is injurious, essential elements of the injury, and must be made the grounds of the prohibition. State v. Speyer, 67 Vt., 502; In re Ah Jow, 29 Fed. Rep., 181.
    The statute prohibits agreements of every kind and description made for any such purpose. Anderson’s Dictionary of Law, 45.
    The word “agreement” is undoubtedly used in that sense in the statute as “contracts,” and “obligations” are previously mentioned.
    The statute, therefore prohibits an ag’reement between two farmers to hold their farm1 products until the market price shall reach a certain figure; an agreement between two merchants to ship together in .order to secure car load rates; and numerous others of a like character, from which no reasonable apprehension of injury can arise. Niagara Fire Insurance Co. v. Cornell, 110 Fed. Rep., 816.
    The language of the statute is plain and unambiguous. It comprehends within' the same terms, without discrimination, acts which are injurious and acts which are not injurious. Contracts and agreements, the terms of which are in all respects identical, the innocent or injurious character of which depends entirely upon the circumstances under which they are made, are embraced within the same provisions of the statute. In the face of this declaration, how is the court to determine that the legislature intended to prohibit some acts of agreements of the character mentioned but not others ? It either prohibits all or none. It is an undoubted rule of construction that, where the language used in the statute is capable of two interpretations, one of which would render the act invalid and the other not, such interpretation should be adopted as would sustain' the act. But that rule clearly has no application here. The same words can not be held to have different significations when applied to different contracts and agreements which are in terms identical.
    We submit that none of the acts or agreements mentioned by us can.be exempted from the operations of the law under established or recognized rules of construction. On the contrary, to exempt them would be in direct violation of all such rules. United States v. Fisher, 2 Cranch, 358; Schooner Paulina’s Cargo v. The United States, 7 Cranch, 52; United States v. Freeman, 3 H., 556; McPherson v. Blacker, 146 U. S., 1; State v. Peck, 25 Ohio St., 26; Brower et al. v. Hunt et al., 18 Ohio St., 312; Endlich on Interpretation of Statutes, sec. 180; State v. Smiley, 69 Pac. Rep., 199.
    We do not question the well recognized rule that where some of the provisions of an act are valid and others invalid, and the different provisions are separable the entire act will not be held invalid. To give effect to this rule, however, that which is constitutional and that which is unconstitutional must be capable of separation so that each may be read by itself, and so that the constitutional provisions would be capable of enforcement with the language used in the unconstitutional portions entirely eliminated. United States v. Reese, 92 U. S., 214; Baldwin v. Franks, 120 U. S., 678; Daggett v. Hudson, 43 Ohio St., 548; City of Canton v. Nist, 9 Ohio St., 439.
    It is no argument to inveigh against trusts and monopolies. We do not question the authority of the legislature to prohibit them and to make it penal for persons to enter into them. Neither do we claim that the legislature is without authority to prohibit and make penal acts which are in fact injurious to the public whether they were or were not so considered at the common law. But as shown above they must be clearly injurious. Our contention is that the statute under consideration fails to discriminate between acts which are injurious and those which are not, and comprehends both within the same terms and makes both alike criminal. 2 Eddy on Combinations, secs. 901, 902.
    Where, as in this case, the acts within the terms of the statute may be either innocent or injurious, the fact which distinguish them as injurious must be alleged in the indictment. 1 Eddy on Combinations, sec. 433, last clause; Fouts v. State, 8 Ohio St., 98.
   Shauck, J.

The material provisions of the statute under which the defendant was convicted are in substance as follows:

‘ ‘ Section 1. Be it enacted by tl%e General Assembly of the State of Ohio, That a trust is a combination of capital, skill or acts by two or more persons, firms, partnerships, corporations or associations of persons, or of any two or more of them for either, any or all of the following purposes:

“1. To create or carry out restrictions in trade or commerce.

“2. To limit or reduce the production, or increase, or reduce the price of merchandise or any commodity.

“3. To prevent competition in manufacturing, making, transportation, sale or purchase of merchandise, produce or any commodity.

“4. To fix at any standard or figure, whereby its price to the public or consumer shall he in any manner controlled or established, any article or commodity of merchandise, produce or commerce intended for sale, barter, use or consumption in this state.

“5. To make or enter into or execute or carry out any contracts, obligations or agreements of any kind or description by which they shall bind or have bound themselves not to sell, dispose of or transport any article or any commodity or any article of trade, use, merchandise, commerce or consumption below a common standard figure or fixed value, or by which they shall agree in any manner to keep the price of such article, commodity or transportation at a fixed or graduated figure, or by which they shall in any manner establish or settle the price of any article, commodity or transportation between them or themselves and others, so. as to directly or indirectly preclude a free and unrestricted competition among themselves, or any purchasers or consumers in the sale or transportation of any such article or commodity, or by which they shall agree to pool, combine or directly or indirectly unite any interests that they-may have connected with the sale or transportation of any such article or commodity, that its price might in any manner be affected. Every such trust as is defined herein is declared to be unlawful, against public policy and void.”

The second section relates to proceedings in quo warranto in case of the violation of the act. The third section relates to foreign corporations. The fourth section is as follows:

“Section 4. Any violation of either or all of the provisions of this act shall be and is hereby declared a conspiracy against trade, and any person who may become engaged in any such conspiracy or take part therein, or aid or advise in its commission, or who shall as principal, manager, director, agent, servant or employer, or in any other capacity, knowingly carry out any of the stipulations, purposes, prices, rates, or furnish any information to assist in carrying out such purposes, or orders thereunder or in pursuance thereof, shall be punished by a fine of not less than fifty ($50) dollars nor more than five thousand ($5,000) dollars, to be imprisoned not less than six months nor more than one year, or by both such fine and imprisonment. Each day’s violation of this provision shall constitute a separate offense. ’ ’

The fifth section relates to practice and the sixth to evidence in the prosecution. The ninth section is as follows:

“Section 9. That the provisions hereof shall be held cumulative of each other and of all other laws in any way affecting them now in force in this state.”

We have the benefit of the carefully considered opinion of the circuit court which conducted it to the conclusion that the conviction was erroneous, and this conclusion is supported by elaborate arguments by counsel for the defendant in error. It is clearly shown that there are contractual rights with reference to the use of one’s property and faculties which the general assembly is powerless to destroy, that a valid enactment to prohibit the.making of contracts must be within the police power, and that to be within that power the prohibited contract must be hurtful to the public, and hurtful in a legal sense. That view of the subject has been taken by this court in many cases, and in State ex rel. Attorney General v. The Buckeye Pipe Line Co., 61 Ohio St., 520, we applied it to this statute, concluding, nevertheless, that the inhibition involved in that case is valid.

Effective illumination of the present case may be promoted by concentrating the rays of light which have been diffused upon it. Two propositions comprehend all that has been urged against the validity of the conviction in the court of common pleas. They are that the act is void because its terms do not except from its prohibitions contracts, acts and transactions which are protected by the constitution, and that the indictment is fatally defective because its allegations do not exclude them. Obviously that which is not within the terms of an inhibition need not be excepted from it. Confining our view to the provisions of the act upon which the validity of the conviction in. the present case depends, it is quite .clear that they do not prohibit any contract or transaction which according to the view of the subject taken in State ex rel. Attorney General v. The Buckeye Pipe Line Co., the general assembly .may not prohibit in the exercise of the police power. The Delaware Coal Exchange, as its purpose is defined in the indictment, is a trust within both the third and fourth subdivisions of the first section of the act, and that section defines the combinations which the act prohibits. The purposes named in these subdivisions do not relate to any contract with respect to the use of one’s property or his faculties. They are purposes which made contracts void at common law as being opposed tó public policy, which, according to legal views which still prevail,' requires that the conditions of competition be maintained. They are also within the combinations which were prohibited by many ancient statutes. By the use of the distributive terms, “either, any or all,” these purposes are as completely separated as though each subdivision constituted the subject of a different statute and the ninth section of the act provides that all of the provisions shall be held cumulative of each other and of all other laws now affecting the subject. There is, therefore, in the terms of the act authority for the conclusion that the general assembly intended to prohibit combinations for the purposes mentioned in the subdivisions of the first section severally, and to its operation it is only necessary that the particular contract or transaction charged in the indictment be within one of the subdivisions of the first section and that it be a contract or transaction which it is competent for the general assembly to prohibit. In view of these distributive terms and of the ninth section giving an independent and cumulative relation to the different provisions of the act, the language employed requires that the act be interpreted as though the subdivisions of the first section were severally followed by the provisions of the fourth, fifth, sixth and seventh sections which prescribe prohibitions and penalties aud which the circuit court held to be unconstitutional. The case, therefore, offers no opportunity for the' application of the principle urged with vigor and supported by the citation of numerous authorities that where an act contains an indivisible prohibition whose terms include contracts which the legislature is powerless to prohibit the courts cannot save the act by restricting the natural and obvious meaning of its terms. It may be conceded that the principle is sound and that it derives sufficient support from the consideration that, in the cases to which it applies, it prevents the substitution of the judicial for the legislative department of the government.

But it is said that the third subdivision of the first section, “to prevent competition in manufacturing, making, transportation, sale or purchase of merchandise, produce or any commodity,” is void because it would prevent the formation of partnerships and corporations to conduct business, the sale of property which has been used in competition and other like inalienable rights, because of the abatement in competition which would result therefrom, and that this conclusion is so obvious that argument in its support is unnecessary. Brief attention to the development of the law upon the subject will show that argument to that end would be unavailing rather than unnecessary. So long recognized and so frequently applied in the same jurisdictions that their congruity must be admitted are the doctrines that every contract in restraint of trade is void if nothing else appears; but nevertheless, that property used in the competition of trade may be sold, including the good will of the vendor’s business, and that to effectuate the sale of the good will the vendor may make a valid stipulation to abstain from competition if the stipulation is limited to that purpose; and courts of equity have even required members of a co-partnership to abstain from the conduct of a rival business. ' In short, the courts have uniformly denounced' contracts in restraint of trade unless the restraint results as an incident from the use of one’s property and his faculties. The distinction is of easy grasp and it is too late to question its importance. Within the limits of the present case, it is obvious that the effect of the statute is to prohibit affirmatively such contracts and transactions as were previously unlawful, but which could be so adjudged only when the aid of the courts was invoked for their enforcement.

It must be obviously unavailing to urge the constitutionally protected right to make contracts with reference to one’s property and his faculties as an objection to a statute which does not prohibit or restrain the power of making such contracts.

Examination of the numerous cases cited in the briefs shows that legislation having the same object as this and making similar, if not identical, prohibitions has been quite generally sustained as a valid exercise of legislative power. The prohibitions of. the statute of Kansas upon the subject do not differ from those of the present statute in any substantial respect, though we are not informed that it contains the provision of the ninth section of the Ohio act. In the State v. Smiley, 65 Kan., 240, a conviction under the statute was held valid and the judgment of the supreme court of Kansas in that case was affirmed by the Supreme Court of the United States at the October term, 1904. The opinion of the latter court is before us, but in the absence of an authorized syllabus we cannot know to what extent the case should be regarded as authority here. In the opinion the judgment is placed upon two grounds: that the federal court is bound by the interpretation which the state court had given to the statute, although it was alleged to be repugmant to the federal constitution, and that the interpretation of the state court was correct. The case can, of course, .be regarded as an authority only to the extent to which the opinions of the concurring judges were influenced by the belief that the statute had been correctly interpreted by the state court. In support of the conclusion that the conviction in the court of common pleas was proper we think no further additions need be’made to what was said in the case of the State ex rel. Attorney General v. The Buckeye Pipe Line Co.

Judgment of the circuit court reversed and that of the common pleas affirmed.

Davis, C. J., Price, Crew, Summers and Spear, JJ., concur.


source: Caselaw Access Project

author: Davis, C. J.

license: Public Domain

text:
    Tisch v. The Protected Home Circle.

      A by-law of a fraternal benefit association — Providing that certificate issued to a member shall be void in case of beneftci- ' ary’s suicide — Is consistent with the purposes of the association — Such by-law adopted after issue of certificate— Violates no vested right of beneficiary — Laws of beneficiary associations — Law of contracts.

    1. A by-law, adopted by a fraternal benefit association, which provides that a benefit certificate issued to a member shall be void and all benefits thereunder forfeited in ease the insured shall die by suicide, felonious or otherwise, sane or insane, is consistent with the purposes of the association and with its corporate charter, and imposes a reasonable condition upon which the parties to the contract may agree.
    2. Sluch a by-law, although adopted after the benefit certificate was issued to the insured and before the death of the insured by suicide, violates no vested right of the beneficiary.
    3. inhere a benefit certificate issued by a fraternal benefit association is silent in regard to suicide by the insured, hut the application therefor contains agreements, signed by the insured, to conform in all respects to the laws, rules and usages of the order then in force, or which might thereafter be adopted by the association, and that such compliance is the express condition upon which the insured shall be entitled to participate in the beneficiary fund, which application is made a part of the contract, and such benefit association afterwards and before the death of the insured adopts a by-law which provides that “the benefit certificate issued to a member shall be void and all benefits thereunder forfeited in case the insured shall die by suicide, felonious or otherwise, sane or insane,” such by-law thereby becomes a condition in the contract which, if broken by the insured, will defeat a recovery thereunder.
    (No. 8901
    Decided March 21, 1905.)
    Error to the Circuit Court of Ashtabula county.
    The plaintiff brought suit against The Protected Home Circle, alleging that the defendant entered into a written contract with his wife, Nell A. Tisch, the material parts.of which contract are as follows:
    MONTHLY PAYMENT.
    No. 15334. $.78 $1,000.
    The Protected Home Circle.
    SHARON, PENNA.

      Incorporated under the General Laws of the State of Pennsylvania, August 7, 1886.

      Benefit Certificate.

      This Certificate Witnesseth, That the Supreme Circle of the Protected Home Circle, in consideration of the representations and declarations made in the application of Nell A. Tisch, of Rock Creek, state of Ohio, for benefit membership therein, which application is filed in the office of the Supreme Secretary as part of this contract, and 78-100 dollars as the first monthly payment upon the same, on or before the delivery hereof, and a like amount to be paid by her to this Supreme Circle at the beginning of each month after the receipt of these presents, such payment to be made within thirty days after becoming due, and in case such payment is not made before the expiration of said thirty days this benefit certificate shall become null and void, and may not be thereafter revived except upon the filling out of and acceptance by the Supreme Accountant of a reinstatement blank furnished by the Supreme Circle, does promise and agree to pay to P. P. Tisch, husband, or the legal representatives of the member to whom this benefit certificate is issued the sum of one thousand dollars, pursuant to the provisions of the laws of the order governing the benefit fund and relating to the granting and payment of benefit certificates within ninety days after the receipt by the Supreme Circle of satisfactory evidence of the death of the member to whom this benefit certificate is issued, provided, always, that said member shall be in good standing in this order at the time of death. * * *

    I accept this certificate oh the conditions above named.
    Nell A. Tisch,

      Signature of Holder.

    Signed and delivered in our presence,
    C. E. Perris, President.

    H. L. Miller, Secretary.

    Rock Creek Circle No. 154, P. H. C.
    In witness whereof, the said Supreme Circle of the Protected Home Circle has caused its corporate seal to be hereunto affixed and these presents to be subscribed by its President and Secretary, at Sharon, Penna., this first day of August, A. D., one thousand eight hundred and ninety-four.
    (Seal of the Protected Home Circle)
    P. D. Stratton,

      Supreme President.

    J. W. Mason,
    (Local Circle Seal) Supreme Secretary.

    The petition alleged that the said Nell A. Tisch paid all dues according to the agreement and performed all other conditions to be performed by her, and at her death was in good standing in the order; that the plaintiff had made satisfactory proof of her death, and that more than ninety days elapsed after the delivery of the proof before the beginning of the-action, bnt that the defendant refuses to pay the sum due thereon; and asking judgment for the sum of one-thousand dollars with interest from December 20r 1900.
    The answer of defendant, after sundry admissions- and denials, alleges that it issued the said benefit certificate to the said Nell A. Tisch in consideration of the representations, declarations and statements contained in a written application of Nell A. Tisch, signed by her, which application is made a part of said benefit certificate and is so made by the terms of said application and by the terms of said benefit certificate; that the said application, among other things, contained the following agreement, to-wit: “I agree-to make punctual payment of all dues and monthly payments for which I may become liable and conform in all respects to the laws, rules, and usages of the order now in force or which may hereafter be-adopted by the same.” Attached to the report of the medical examiner and referred to and made part, of said answer was an agreement signed by. said Nell A. Tisch, which was in part as follows: “I do hereby agree that compliance on my part with-all the laws, rules, regulations and requirements,, now in force or that may hereafter be enacted by the association, is the express condition upon which I am to be entitled to participate in the beneficiary fund to the amount named in the constitution and laws of the association.” The said answer also-set out certain parts of the charter under which the-defendant was incorporated, as follows:
    “Article IV. The term for which said corporation shall exist shall be -unlimited.

      “Article V. Said corporation shall have power to institute a Supreme, and such State, District and Local Circles as may he deemed necessary in accordance with its constitution and laws; also to draft a constitution and laws for their government which shall determine the time, place and manner of the election of officers, their number, names and terms of service; the reception of members, their rights, privileges, obligations, duties, dues, fees and penalties; the right to control all funds raised for the prosecution of its work in accordance with its laws, to determine the qualifications of its own members, and also the right to have and use a common seal.
    “Article VI. The business, property and affairs of the said corporation shall be under the general control and management of a board of directors and such other officers as may be provided for in the bylaws, as provided in the act of assembly and to be chosen as therein provided.”
    And also the constitution and laws of the defendant which were in force at the date of the application by Nell A. Tisch as aforesaid, which are as follows:
    “Constitution and Laws or The Protected Home Circle.
    “ARTICLE I. COMPOSITION AND DIVISION.
    “Section 1. Composition. The Protected Home Circle shall be composed of all of its members, duly received and in good and regular standing.
    “Section 2. Division. This Order shall be divided into Supreme and Local Circles, whose powers, privileges, obligations and duties are set forth under their respective constitutions herein contained.
    “Constitution op the Supreme Circle.
    “ARTICLE II. NAME, JURISDICTION, POWERS, ETC.
    “Section 1. Name. This body shall be called The Supreme Circle of the Protected Home Circle.
    “Section 2. Jurisdiction. This Circle shall have jurisdiction over all such Local Circles as may be instituted through its influence, and governed by its laws, wherever located, and the term of its existence shall be perpetual.
    “Section 3. Powers. This Circle shall have power to institute such Local Circles as may be deemed necessary in accordance with the constitution. Also to draft constitutions and laws for their government, which shall determine the time, place, and manner of their meetings and the election of their officers; their number, name and terms of service; the reception of members, their rights, privileges, obligations, duties, dues, fees and penalties. The right to control all funds raised for the prosecution of its work in accordance with its laws; to determine the qualifications of its own members, and also the right to have and use a common seal.
    “Section 4.' Membership■. The membership of this Supreme Circle shall comprise the original incorporators, during their membership in the order, and such faithful Deputy Supreme Presidents and other members of the order as shall be chosen by a two-thirds vote of the members present at any annual meeting, together with such regular representatives as are provided for in section 5 of this article.

      “Section 5. Representatives. Each Local Circle comprising one hundred (100) or more beneficial members shall he entitled to send one (1) male representative to the Supreme Circle, who, when he has received the degree of protection according to the ritual adopted by this body, whose provisions are hereby made authoritative, and in which all of the official business of the Supreme Circle must always he transacted, shall he entitled to a seat in the Supreme Circle, participate in its discussions and have the same privileges as any other member of the Supreme Circle except tó vote for the officers and such amendments to the constitution as refer to the election of officers; and when he shall have served his Circle by his personal presence as its representative for three consecutive years he shall, by virtue of such service, become a member of the Supreme Circle with the same rights of voting, holding office, etc., as any other member or representative, except mileage and per diem..
    “ARTICLE X. BY-LAWS AND AMENDMENTS.
    ‘ ‘ Section 1. By-Laws. This Supreme Circle may, at any regular session, adopt such by-laws, rules of order and order of business as may he found necessary for its government and control, and change the same by a two-thirds vote of the members.
    “Section 2. Amendments. This constitution, and the constitution of Local Circles, may he altered or amended only by the Supreme Circle at a regular annual session. ’ *

    And that at the tenth regular and first biennial session of the Supreme Circle of the Protected Home Circle held in pursuance of the laws»of the Protected Home Circle in the city of Detroit, in the state of Michigan, on May 18, 19 and 20, 1897, section 13 of article 11 of the constitution and laws of the Protected Home Circle was amended so as to provide and read as follows:
    “article si. benefit certificates.
    “Section 13. Suicide. The benefit certificate issued to a member shall be void and all benefits thereunder shall be forfeited in case the insured shall die by suicide, felonious or otherwise, sane or insane, or by his own hand, sane or insane. Provided, that in such case there shall be refunded to the beneficiary named in said certificate the amount of all payments made, together with interest thereon at the rate of 3 per cent, per annum.”
    It was also alleged that the proofs of the death •of the said Nell A. Tisch, as submitted, signed and sworn to by the plaintiff and attending physician, show that her death was caused by a pistol shot fired purposely by herself, with suicidal intent.
    The reply of the plaintiff admits the proofs attached to the answer to be a correct copy, and admits that the suicide by-law, as set forth in the answer, was passed by the Supreme Circle at its meeting in Detroit in 1897 as alleged in the answer; admits that the death of said Nell A. Tisch was caused by a pistol shot fired by her own hand with suicidal intent, and denies every other allegation, and statement in the answer. For further reply the plaintiff says that when said Nell A. Tisch so fired said shot she was insane and irresponsible, and that at the time said application was made and said benefit certificate accepted by said Nell A. Tisch there was no rule, bylaw, or other provision of the Protected Home Circle making said certificate void if death should be by-suicide. It is also alleged in the reply that no notice or knowledge of any change or attempt to change the rules, by-laws or constitution of the defendant in regard to suicide or other matters mentioned was ever given the insured in her lifetime or to the plaintiff until after her death, and no consent or agreement to change said contract was ever given by the holder of said benefit certificate or by the beneficiary named in the same. It is also alleged in'the reply that at the meeting of the said Supreme Circle held in Canton, Ohio, May, 1895, which was after the issuing of said benefit certificate, said Supreme Circle changed section 2 of the constitution and laws of the Protected Home Circle mentioned in the answer to read as follows: ‘1 This order shall be divided into Supreme, Grand and Local Circles, whose power, privileges, obligations and duties are set forth under their respective constitutions herein named,” and changed sections 2, 3 and 5 of article 2, quoted in the answer, to read as follows:
    “Section 2. This Circle shall have jurisdiction over all such Grand and Local Circles as may be instituted through its influence, and governed by its laws wherever located, and the term of its existence shall be perpetual.”
    “Section 3. This Circle shall have power to institute such Grand and Local Circles as may be deemed necessary in accordance with the constitution.” (Balance of the section the same as quoted in answer.)
    “Section 5. Every Grand Circle shall be entitled to send one beneficial member as a representative to the Supreme Circle for the first five hundred members or less, and an additional representative for each additional one thousand members over and above.the first five hundred as shown by the books of the Supreme Circle on the fifteenth of December preceding the session of the Grand Circle, which representative shall have the same rights of voting, holding office, etc., as any other member of the Supreme Circle while serving as such representative; provided that after the membership of any Grand Circle’s jurisdiction reaches 5,500, the basis of representation over and above that shall be one additional representative for each additional 2,000 members; and provided this amendment does not change the relation of any who are already members of the Supreme Circle.
    “Section 7. Representation in the Grand Circle. Every Local Circle within the jurisdiction of a state, province or territory, and comprising twenty-five or more beneficial members, shall be entitled to send one representative to the Grand Circle and one additional representative for each additional one hundred members above the first hundred, such representative to be a beneficial member.”
    It was also alleged that the Supreme Circle which met at Detroit in May, 1897, and which passed the suicide by-law, was entirely composed and made up in accordance with section 4 as quoted in the answer and section 5 as changed at Canton and not according to said section as it was then said benefit certificate was issued. Also that by the terms of article 5 of the charter of said association, the power to enact constitutions and laws for the government of all circíes instituted by said association is vested in the corporation, and that at the time said application was made and said benefit certificate was issued and accepted by said Nell A. Tisch, and at all times since said date the corporation has been composed of all its members duly received and in good and regular standing. It is denied in the reply that any amendment to the laws, rules, regulations or usages of the defendant in regard to suicide was ever made, passed or adopted by said corporation in any other way or manner than as stated in the answer.
    The defendant demurred to the reply for the reason that the facts stated therein are not sufficient in law to constitute a defense to the answer of the defendant. This demurrer was sustained by the court of common pleas, and the plaintiff not desiring to plead further, and both parties waiving a jury, the cause was submitted to the court upon the pleadings and the exhibits attached thereto, viz., the benefit certificate and the application and without any further evidence. On consideration of which the court found the issues joined in favor of the defendant and that the plaintiff is not entitled to recover thereon any other amount than the amount paid by her upon said certificate, with interest at three per cent, to-wit: the sum of eighty-five dollars, and rendered judgment , accordingly.
    Motion for a new trial was made and overruled, and a bill of exceptions taken, and upon a petition in error in the circuit court the judgment of the common pleas court was affirmed, and this proceeding is prosecuted to obtain a reversal of the judgments of both the lower courts.

      Mr. A. C. White, attorney for plaintiff in error.
    The plaintiff contends—
    1. That, under the charter of this society, and the law of the state under which it is organized, the Supreme Circle had no power to enact such a by-law.
    2. The by-law could not work a forfeiture of this contract because the member never knew of the bylaw nor consented to it.
    3. The by-law, if intended to apply to contracts made before its enactment, is unreasonable, inconsistent with the law of the state, and void.
    4. This by-law cannot operate retroactively as it does not clearly indicate that such was the intention of the body enacting it.
    5. No forfeiture was declared or premiums returned.
    By the charter the power to pass by-laws is vested in the corporation, not in the Supreme Circle, which is only a creature of the corporation. There is nothing in the charter which gives the Supreme Circle any power whatever to manage or control the business affairs of this corporation. This authority so vested by the charter cannot be delegated.
    Unless delegated by the charter to a select body, the power to make by-laws resides in the body of members themselves and is to be exercised by the majority. Bacon on Mutual Benefit Societies, sec. 80; Morawetz on Corporations, sec. 491; Beach on Private Corporations, 311, 421; Thompson on Corporations, 955-960.
    In this case the power is not delegated but is specifically declared to be vested in the corporation. The Knigths of Pythias v. La Malta, 31 S. W. Rep., 493 (30 L. R. A., 838); Accident Association v. Wind-

      over, 137 Ill., 417; Railroad Co. v. Hatch et al., 12 Dec. Re., 501; 1 Disn., 94.
    The Supreme Circle is the mere agent of this corporation, created by the corporation, having no power to pass by-laws relating to contracts made by it in behalf of the corporation. Knights of Pythias v. Stein, 37 L. R. A., 775; Knights of Pythias v. Trebbe, 74 Ill. App., 545; Knights of Pythias v. McLennan, 171 Ill., 417; Knights of Pythias v. Kutscher, 72 Ill. App., 462; Tempel v. Dodge, 32 S. W. Rep., 514; Joliffe v. Mutual Ins. Co., 39 Wis., 111; Insurance Co. v. Bachman, 39 W. L. B., 324 (affirmed by the Supreme Court without report, April 2, 1898).
    The contract sued upon in this case is one of simple life insurance. The fact that the defendant is a fraternal society does not affect in any degree the obligations of the parties in respect to this contract. Bacon on Mutual Benefit Societies, secs. 51, 78 and 162; Commonwealth v. Wetherbee, 105 Mass., 149; Rochhold v. Benevolent Soc., 129 Ill., 440; State v. Life Assn., 38 Ohio St., 288.
    By the charter the Supreme Circle had no power to enact this by-law, and the courts will not lend their aid to support this usurpation of authority. Bacon on Mutual Benefit Societies, sec. 71; Bauer v. Samson Lodge, 102 Ind., 262; 2 Am. & Eng. Ency. Law, 174.
    Counsel for defendant have heretofore claimed, and will doubtless still contend that the Supreme Circle is the corporation. This claim is inconsistent with the terms of the charter and laws under which the society is organized, and inconsistent with the constitution adopted by the corporation at its beginning and which has ever since been part of its constitution.
    By the terms of this charter the Supreme Circle is a creature of the corporation, instituted by the corporation, and subject to the constitution and laws enacted by the corporation for its government.
    The relation which the Supreme Circle bears to the corporation is more analogous to a board of control ; and that is more nearly in accord with the charter, and with the law of the state of Pennsylvania, which contains . the following: Such corporation shall have power “to carry on its operations through supreme and subordinate bodies or lodges and to issue beneficiary or relief certificates in accordance with its constitution and general laws.”
    By the authorities already cited it is established that boards of control and boards of directors have no power to enact by-laws, and in this law of Pennsylvania that power is vested in the corporation.
    It is contended by the defendant that the charter, constitutions and laws governing this society are part of the contract; that Nell A. Tisch, when she became a member was presumed to know them and that she and her beneficiary were bound by them.
    If she was presumed to know the power and rights conferred by this charter and the laws then in existence, she was equally presumed to know the limitations upon the powers and rights of the Supreme Circle, and also the extent and nature of the powers reserved to the corporation and to have contracted, in pursuance of the same.
    When Mrs. Tisch became a member and received the benefit certificate all of the rules and regulations governing the insurance feature of this association were known and named in its manual as “Laws of General Application.” This is in accordance with the act under which the charter is granted, which provides that the corporation shall have power “to make a constitution and general laws for the management of its affairs,” etc. The charter provides that the corporation shall have power “to draft a constitution and laws” which shall determine the matters mentioned.
    It is to be presumed that the word “constitution” as used in the state law, in the charter, and in said article X of the constitution of the Supreme Circle, is used in the same sense in all places and does not refer to the “Laws of General Application.” Beals v. Rubber Co., 11 R. L, 381. The words “general laws” in the act of the legislature, and “laws” in the charter, cannot be treated as mere surplusage.
    There never v/as any other article, section or law giving the Supreme Circle the right to make, amend or alter constitutions or laws, except the above •mentioned article X; and section 1 of that article, the only one relating to by-laws, does not pretend to confer upon the Supreme Circle power to pass any "by-laws except for its own government and control.
    It is claimed that this is a contract between the Supreme Circle and Nell A. Tisch as shown by the face of’the benefit certificate.
    The certificate admits of no such construction when read in the light of the charter and the state law under which the charter is granted which are part of the contract. The Supreme Circle is merely the agency through which the business operations are carried on as provided by law, which gives the corporation power—

      “(XI.) To carry on its operations through, supreme and subordinate bodies or lodges and to issue beneficiary or relief certificates in accordance with its constitution and general laws.”
    By a co-ordinate section of this same law, quoted above, the power to make a “constitution and general laws” is vested in the corporation; and the agent employed must operate according to “such constitution and general laws;” and in this certificate the Supreme Circle agrees to pay “pursuant to the provisions of the laws of the order.”
    The section just quoted confers the power to issue certificates upon the corporation, and this certificate is entitled “The Protected Home Circle, * * # benefit certificate,” and bears the seal of the corporation.
    If it be true that Mrs. Tisch was presumed to know of by-laws enacted while she was a member the presumption exists only as to valid by-laws; those passed by the proper authority, reasonable, and such as the society had the right to 'enact, and which were applicable to her membership. She was not presumed to know nor bound to notice any other. So that before any argument can be predicated upon the fact that she did not complain, it must be established that the by-law is valid and applicable to her membership. Silence cannot be construed as a consent to the change. Hamilton Ins. Co. v. Hobart, 2 Gray, 543.
    In the same opinion it is said that beneficiary associations resemble mutual insurance companies in regard to their methods of government and operation. Section 3690, Revised Statutes of Ohio.

      The suicide hy-law cannpt affect the contract with Nell A. Tisch because she never knew of it or assented to it.
    It is claimed that, by the agreement contained in the medical examiners’ report, she is bound by subsequently enacted by-laws without notice.
    It will be observed that by this agreement she is only to be bound by the “rules, laws and regulations enacted by the association. ’ ’ She does not agree to be bound by new rules or laws, without notice of them, or by-laws passed by anybody but the association.
    Furthermore we contend that that agreement has nothing to do with the rights of the plaintiff under this contract. It is not referred to in the benefit certificate nor in the laws which form a part of the contract. That agreement, as well as similar language used in the application, refers only to rules and laws regulating the fraternal membership or good standing of the member, and cannot be construed as agreeing to the interference with her contract rights without notice. Besides if it is construed to apply to contract rights it only affects the rights of the member personally under the disability clause of the certificate, and does not affect the beneficiary. Forfeitures are strictly construed. Webster v. Insurance Co., 53 Ohio St., 558; Starling v. The Royal Templars, 66 N. W. Rep., 340; Seiverts v. National Benefit Association, 64 N. W. Rep., 671.
    The same holding was made by the New York court of appeals in Kent v. Quicksilver Mining Co., 78 N. Y., 159; Morrison v. I. O. O. F. Ins. Co., 18 N. W. Rep., 13; Becker v. Farmers’ Mutual Ins. Co., 12 N. W. Rep., 874; Gaut v. American Legion of Honor,
      55 L. R. A., 465; Wheeler v. Iron Hall, 68 N. W. Rep., 229; Cox v. Farmers’ Mutual Assur. Assn., 48 N. J. Law, 53; Strauss v. Mutual Reserve Fund, 54 L. R. A., 605; Hale v. Equitable Aid Union, 168 Pa. St., 377 (31 Atl. Rep., 1066); May on Insurance, sec. 552; see especially 29 Am. St., 903, where this question is discussed; Bacon on Mutual Benefit Societies, sec. 85; Bragaw v. Knights of Honor, 54 L. R. A., 602; Rosenberger v. Washington Fire Ins. Co., 87 Pa. St., 208; Bradfield v. Union Mutual Ins. Co., Berryman’s Dig., 859; American Legion v. Smith, 45 N. J. Eq., 466; Becker v. Beneficial Soc., 144 Pa. St., 232.
    The suicide by-law, if applied to previously issued certificates, is unreasonable, inconsistent with the law of the state and inimical to the common law of the land. Weber v. Knights of Maccabees, 172 N. Y., 490; Parish v. Produce Exchange, 169 N. Y., 34; Tebo v. Royal Arcanum, 93 N. W. Rep., 513; Thibert v. Knights of Honor, 81 N. W. Rep., 220; Beach v. Knights of Maccabees, 177 N. Y., 100; Langan v. Legion of Honor, 174 N. Y., 266; Bacon on Mutual Benefit Societies, sec. 116; Grant v. American Legion of Honor, Tenn.
    What right of Nell A. Tisch or of this beneficiary did the suicide law tend to preserve? None whatever. The monthly dues or premium was not reduced after the law was passed. This is not an assessment company in which the cost of insurance depends upon the death rate of its members. This bylaw could have no effect whatever upon her contract except to destroy it.
    By-laws, to be part of the contract, must be consistent with its validity. Davidson v. Mutual Ben.

      Soc., 39 Minn., 303; Luthe v. Insurance Co., 55 Wis., 543 (13 N. W. Rep., 490); Fry v. Insurance Co., 31 Fed. Rep., 197; Morrison v. Insurance Co., 18 N. W. Rep., 13; Wiberg v. Relief Assn., 73 Minn., 301; Brewer v. Insurance Co., 14 Gray, 203.
    If this by-law had been in existence at the time this certificate was issued and the certificate had in terms insured against suicide, the by-law would not have been part of the contract. This certificate, though not expressly, did insure against suicide. Can a subsequently enacted by-law be more potent to destroy a contract right than one existing when the contract was made? The power reserved to enact by-laws to preserve the contract rights of members cannot be extended by implication into a power to destroy them. Nor does the rule seem to me consistent and reasonable that one, who, by reason of insanity, has no power to make a contract —has power to destroy one.
    But they say there were no vested rights under this certificate. Any contract right is a vested right even executory. Fletcher v. Peck, 6 Cranch, 87; 8 Ill., 241; Butler v. Palmer, 1 Hill (N. Y.), 325-335; Cochran v. Van Surlay, 20 Wend., 381; Varick v. Briggs, 6 Paige, 332; Beadleston v. Sprague, 6 Johns., 101.
    Here is an absolute, executory, vested right to have this payment made according to the laws existing when the promise was made. Langan v. Legion of Honor, 174 N. Y., 266, supra.

    The suicide by-law cannot be regarded as retroactive in its operation. 8 Ill., 241; Carnes v. Association, 76 N. W. Rep., 683; Benton v. Brakemen, 146 Ill., 570; Templars, etc., v. Jarman, 104 Fed. Rep., 638; Pulford v. Fire Department, etc., 31 Mich., 458; 14 Am. St. Rep., 94; 18 Ill.; Knights v. Jarman, 187 U. S., 197.
    All laws that provide for a forfeiture, suspension, or abridgment of the rights of a member of a beneficiary society are to be strictly construed against the society. Webster v. Insurance Co., 53 Ohio St., 558; West v. Insurance Co., 27 Ohio St., 1; Folmer’s Appeal, 87 Pa. St., 133; Berlin v. March, 82 Pa. St., 166; Knights v. Abbott, 82 Ind., 1.
    No forfeiture of this certificate was declared by the association or by the Supreme Circle, and no return of premiums was offered.
    The insurance contracts of the defendant are in all respects similar to those made by other mutual companies. The forfeiture provided for in the suicide by-law could not take effect or render this certificate void without the action of the association and a repayment to the beneficiary of all premiums with three per cent, interest. Mutual Life Ins. Co. v. French, 30 Ohio St., 240.
    No such action was ever taken by the society, or by the Supreme Circle, and no payment or offer of payment of the premiums and interest was ever made to the beneficiary in the amended answer filed in this cause. A tender in the answer is not sufficient. Tipton v. Tipton, 49 Ohio St., 364; Simmons v. Green, 35 Ohio St., 107; Armstrong v. Spears, 18 Ohio St., 373; Fike v. France, 12 Ohio St., 624.

      Mr. A. W. Williams and Messrs. Perry & Roberts, attorneys for defendant in error.
    The rights of the parties to this action are to be' governed and controlled by the terms of the contract between them. This contract is found in the constitution of the defendant association, the application and agreement upon admission thereto, and the benefit certificate thereafter issued. Finch in Hallenberg v. I. O. of B. B., 94 N. Y., 584; Sanger v. Rothschild, 123 N. Y., 579; Sabin v. Phinney, 134 N. Y., 428; Masonic Mut. Beneficial Society v. Burkhart, 110 Ind., 192; Knights of Pythias v. Knight, 117 Ind., 489; Bacon on Benefit Societies, sec. 161; Elstner v. Insurance Co., 12 Dec. Re., 703; 1 Disn., 412.
    Did the association have the right to contract against liability in case of suicide, sane or insane?
    While we are not aware that this precise question has been passed upon by this court, we apprehend that the law is well settled that an insurance company may so limit its liability. It is a matter of contract between the insured and the insurer. Many policies limit liability to certain kinds of accidents and causes of death, the validity of which are not questioned. Insurance Co. v. Maguire, 10 Circ. Dec., 562; 19 C. C. R., 502; Aetna Life Ins. Co. v. Dorney, 68 Ohio St., 151; De Gogorza v. Life Ins. Co., 65 N. Y., 232; Travelers’ Ins. Co. v. McConkey, 127 U. S., 661; Tritschler v. Benefit Association, 180 Pa. St., 205; Kerr on Insurance, 337; Richards on Insurance, 209; May on Insurance, 380; Beach on Insurance, 911; Bacon on Benefit Societies, sec. 336.
    Did the Supreme Circle have power to pass the suicide amendment, was it reasonable and did it apply to Nell A. Tisch and her beneficiary?
    The power to amend was as much a part of the contract entered into between the parties, as any other provision of the benefit certificate sued upon.

      We submit that if it be possible for a member of a beneficial order to consent to future amendments to its laws, such consent is disclosed by tbe record in this case, and again, if tbe laws in force at tbe date of tbe application are binding. upon tbe member, section 2 of article X made adequate provision for amendments. We desire to suggest that by section 2 of article X, above quoted, tbe Supreme Circle is tbe only body that bad power to alter or amend tbe constitution, and that right could only be exercised at a regular annual session. This law was in full force at the date of the application of Nell A. Tisch, and when the Supreme Circle issued, to her the benefit certificate it reserved to itself the right to amend the constitution and bylaws in conformity to the provisions of this section, and in the application signed by Mrs. Tisch, she expressly agreed to be bound by the exercise of this power. Poultney v. Bachman, 31 Hun, 49; Hutchinson v. Supreme Tent, etc., 68 Hun, 355; People ex rel. Goett v. Grand Lodge, 32 Misc., 528.
    There is no question made in this record but that the suicide amendment was passed as alleged in the answer, the contention of the plaintiff in error being that the Supreme Circle had no power to amend the by-laws and that it is therefore not binding upon Nell A. Tisch or her beneficiary. In so claiming the plaintiff ignores section 2 of article X of the constitution above quoted and relies on a close, technical construction of article 5 of the charter, which says that the corporation shall have power to draft a constitution and laws, etc. And therefore argues that the Supreme Circle had no such power.

      It is evident from a perusal of the pleadings and the exhibits attached thereto, that the defendant is indiscriminately referred to as, “The Corporation,” the “Association,” “The Order,” “The Protected Home Circle,” and “The Supreme Circle,” and that evidently no distinction, in a technical sense, is intended when reference is made to the corporation as drawing a line of demarkation between it and .the Supreme Circle, the association that adopted the suicide amendment.
    In a mutual benefit society, a substantial compliance with its by-laws is sufficient, and strict performance is not required. Earley v. Earley, 13-23 O. C. C., 618.
    We submit that the suicide amendment is clearly within the powers granted to the Supreme Circle, that the whole question was, by the constitution, placed in its hands; that section 3, article 2, above quoted, makes the Supreme Circle the legislative and governing body of the corporation.
    This is a beneficiary association, organized with the contemplation, presumably, of thousands of members, scattered over many states. If the corporation be composed of all certificate holders it would not be feasible or possible to get them or any considerable number of them present as stockholders to legislate for the corporation or to get an expression from the members which would reflect their sentiment or desire as a whole. The only reasonable and possible scheme of government of such a society is by delegated power, to representatives as in this society. The Local Circles speak by their representatives through Grand to the Supreme Circle. The whole organization graduating through different Circles to the Supreme, in which is vested the ultimate power and control and which in a representative way is composed of all the members. It is not something apart from the corporation, but is that form of it in which the legislative power is reposed. •
    It is clear that there is nothing unreasonable in the amendment here complained of, as the defendant association, if its experience has shown that it was for the best interests of its members that it protect them against the payment of suicide claims, would have the undoubted right to incorporate such provision in its constitution and laws. Society v. Burford, 70 Pa. St., 321; Supreme Tent v. Hammers, 81 Ill. App., 560; Bigelow v. Insurance Co., 93 U. S., 284; DeGogorza v. Insurance Co., 65 N. Y., 232; 3 Am. & Eng. Ency. Law (2 ed.), 1064; Supreme Com. v. Ainsworth, 71 Ala., 436; Ritter v. Insurance Co., 169 U. S., 139; Knights of Pythias v. La Malta, 95 Tenn., 157; Hughes v. Life Ins. Co., 98 Wis., 292; State ex rel. v. G. L. A. O. U. W., 70 Mo. App., 456; Daughtry v. Knights of Pythias, 48 La. Ann., 1203; Bogards v. Mutual Ins. Co., 79 Mich., 440; Knights of Pythias v. Knight, 117 Ind., 498; Hobbs v. Association, 32 Ia., 107; West v. Grand Lodge, 14 Tex. App., 471; Stohr v. Association, 82 Cal., 557; Fullenwider v. Royal League, 73 Ill. App., 322; Niblack on Benefit Societies (2 ed.), secs. 25, 26 and 27; Knights of Pythias v. Clarke, 88 Ill. App., 600.
    Is the suicide amendment in any sense retroactive or is it subversive of vested rights ? Bacon on Benefit Societies, sec. 91a; Poultney v. Bachman, supra; Sanger v. Rothschild, supra; Brown v. Catholic Mu

      tual Benefit Association, 33 Hun, 263; Boasberg v. Cronan, 30 N. Y., 483; St. Patrick’s Male Society v. McVey, 92 Pa. St., 510; 3 Am. & Eng. Ency. Law (2 ed.), 1064.
    These authorities would seem to be conclusive and fully sustain the contention of the defendant. Wist v. Grand Lodge, 22 Ore., 271; Association v. Tuttle, 87 Ill. App., 309; Bagley v. Grand Lodge, 131 Ill., 498.
   Davis, C. J.

The plaintiff sues upon a contract which was entered into by and between The Supreme Circle of the Protected Home Circle and Nell A. Tisch, the plaintiff’s wife, alleging it to be a contract with The Protected Home Circle, a fraternal benefit society incorporated under the laws of the state of Pennsylvania. He is therefore precluded from claiming that the acts and declarations of the Supreme Circle, which may - affect this contract, are not the acts and declarations of the corporation; for, if the Supreme Circle may manage the business and property of the corporation, notwithstanding article 4 of the charter, it is not very clear why it may not control the affairs of the corporation under both article 5 and article 6 of the charter. Moreover the Supreme Circle is constituted a body representing the whole membership of the corporation, and for that reason alone, if the power were not expressly conferred, it might legislate within the charter powers of the corporation, as to “the reception of members, their rights, privileges, obligations, duties, dues, fees and penalties.” It is provided also in the constitution of the Protected Home Circle (article 10, section 1), that “this Supreme Circle may, at any regular session, adopt such hy-laws * * * as may he found necessary for its government and control, and may change the same hy a two-thirds vote of the members.” Thus having full power to do so, the Supreme Circle did enact a by-law which declares that a benefit certificate issued to a member shall he forfeited in case the insured shall die by suicide. In view of the adjudications upon the subject, there is scarcely room to dispute the proposition that such a by-law is both consistent with the charter of the organization and reasonable. Supreme Tent of Knights of the Maccabees v. Hammers, 81 Ill. App., 560; Bigelow v. Insurance Co., 93 U. S., 284; Be Gogorza v. Life Ins. Co., 65 N. Y., 232; Travelers Ins. Co. v. McGonkey, 127 U. S., 661.

The plaintiff, however, insists that it does not appear that the member upon whose application this certificate was issued, ever consented to or knew of the existence of this by-law, and for that reason the by-law cannot apply in this case. The contract which is the foundation of this action is expressly made in consideration of the representations and declarations made in the application, which application, it is stated, is filed in the office of the supreme secretary as part of the contract. 'In that application Mrs. Tisch agrees to conform in all respects “to the laws, rules and usages of the order now in force or which may he adopted hereafter.” She also signed an agreement, which appears in the medical examiner’s report, to the same effect and as “the express condition” upon which she was to he entitled to participate in the beneficiary fund. Having entered into such an explicit agreement with reference to by-laws subsequently to he made, and being a voting member of a local circle wbicb was presumably represented in the supreme circle, she must be held to have had that knowledge of this by-law which she well might have had, and inasmuch as she never, so far as appears, in any manner objected thereto, she must be regarded as consenting to it, both in person and by her representatives in the Supreme Circle.

But the plaintiff also contends that the by-law, having been enacted after the benefit certificate was issued to Nell A. Tisch and before her death, could not deprive the beneficiary of his rights as they existed when the certificate was issued. That proposition might prevail if the contract of the parties had not read into the certificate all of “the laws, rules and usages” then enacted and in force or which might thereafter be adopted. But a subsequently enacted by-law should not be permitted to impair rights which have already vested under the contract. The by-law which is the subject of the controversy in this case is as follows: “The benefit certificate issued to a member shall be void and all benefits thereunder shall be forfeited in case the insured shall die by suicide, felonious or otherwise, sane or insane, or by his own hand, sane or insane. Provided that in such case there shall be refunded to the beneficiary named in said certificate the amount of all payments made, together with interest thereon at the rate of three per cent, per annum.” This bylaw applies to all benefit certificates issued, whether past,'present or future; but if at the time of its passage the death of a member holding a benefit certificate had already occurred it is clear that the certificate could not be forfeited under this by-law, because the right of the beneficiary to the fund had accrued and he already had the vested right to sue for and recover the money due under the contract. But prior to the death of the insured, what enforceable rights can accrue to the beneficiary? That is the question which is presented in this case. The insured may acquire rights in his or her lifetime which may be protected by law; but before the death of the insured the contract is, in general, executory as to the rights of the beneficiary. It may be rescinded by the parties or it may be defeated by failure of the insured to perform. Mrs. Tisch lived more than three years after this by-law was enacted, and then, as it is conceded, shot herself with suicidal intent. There was no condition on the part of the association which had become absolute in her lifetime and which was countervailed by the by-law and we can discover no vested right of the beneficiary, the plaintiff in this action, which has been violated. Supreme Commandery of the Knights of the Golden Rule v. Ainsworth, 71 Ala., 436; Supreme Lodge K. of P. v. LaMalta, 95 Tenn., 157; Supreme Tent of Knights of the Maccabees v. Hammers, 81 Ill. App., 560; Benton v. Brotherhood of Railroad Brakemen, 146 Ill., 570.

It has been suggested that Weber v. Supreme Tent of Knights of the Maccabees of the World, 172 N. Y. 490, is an authority against the views stated here. We do not think so. When the insured in that case took out his policy the rules of the association and the contract provided that the contract should be void if the insured committed suicide within one year, whether sane or insane. It appears in the opinion by Parker, C. J., that “long subsequent to the taking ont of the policy ’ ’ and ‘ ‘ after the lapse of a year from the making of the contract, ’ ’ and while the insured was still living, the by-laws were amended so as to provide that if the insured should commit suicide within five years from the time of admission into the order, whether sane or insane, the contract should be void. It was held that such an extension of the time, after the lapse of the original contract period, was a deprivation of vested rights. The facts of this case are obviously different.

It is also urged in behalf of the plaintiff in error that the certificate has not been declared forfeited by the association, and that no return of premiums was offered. That point is disposed of by Ohio Farmer’s Ins. Co. v. Wilson, 70 Ohio St., 354. The language of the by-law is: ‘ ‘ The benefit certificate issued to a member shall be void,” etc.; and judgment was entered in the court of common pleas against the association, by confession, for the amount of payments made under the certificate, with interest thereon at the rate of three per cent, per annum. The judgment of the circuit court is

Affirmed.

Shauck, Price, Crew and Spear, JJ., concur.