Page images
PDF
EPUB

States, as regards its Territories, to limit this right to the holding of a specified amount, which was accordingly done in a late statute, And, in perhaps all of the States, statutes of similar purpose and import exist, or else the limitation is to “real estate necessary to their use," or their powers in this regard are made similar to those of the domestic corporations of the State.”

It is also settled that, where a foreign corporation is incompetent to take title to real estate because of statutes prohibiting or limiting its powers, a conveyance to it is not void but voidable. The question cannot be raised in collateral proceedings, but is only assailable in a direct proceeding by the State.3 could take land in Michigan. Thompson ing, mortgaging, leasing, and conveying v. Waters, 25 Mich. 214.

real estate to pursue the conduct of such A foreign corporation may take a deed business in the State of New Jersey, and of land in Illinois where a domestic cor- to that end to acquire, hold, mortgage, poration could. Hence, foreign corpora- lease, and convey real estate therein. New tions, for pecuniary profits, may acquire Jersey act, 1887, April 11 (L. 1887, ch. real estate in Illinois as far as is necessary 124). to the transaction of their business. And New York Statute, 1887.-Corporations whether, in taking it, the corporation has organized under laws of any other State, exceeded its powers is a question with doing business in the State of New York, which only the State is concerned. Illi- authorized to hold and purchase real esnois Rev. Stat. 1874, ch. 32, S 26; Barnes tate within that State necessary for their v. Suddard, 117 Ill. 237.

use, and to convey same by deed or A foreign corporation of an American otherwise. N. Y. act, May 24, 1887 (L. State may purchase Kentucky land, or take 1887, ch. 450, p. 551). mortgage thereon to secure the same. At A Pennsylvania statute provides that common law, there was nothing to prevent no foreign corporation shall acquire and corporations from taking land, and, in the hold any real estate in that State, 'diabsence of discrimination by statute against rectly in the corporate name, or by or foreign American companies, which can- through any trustee or other device whatnot be considered aliens, they have the soever,” unless authorized by statute of same rights, and the restrictions in regard that State (act April 26, 1855, $ 5). thereto, as are possessed or encountered Held, that such a corporation could not by domestic corporations. Lathrop v. evade the statute by purchasing the franCommercial Bank of Scioto, 8 Dana (Ky.), chise of a Pennsylvania corporation own114, 120 (1839).

ing such real estate as allowed by its 1. United States Statute, 1887.-Owner- charter, and that the real estate would, ship of real estate in the Territories and on such purchase, escheat to the State. in the District of Columbia restricted to Commonwealth v. New York, etc., R. Co., American citizens, excepting cases of 114 Pa. St. 340. aliens acquiring land by inheritance, or in 3. In Cowell v. Colorado Springs Co., payment of existing debts, or where the 100 U. S. 55, it was held that, when a right to acquire and hold land is secured corporation is authorized by statute to to them by existing treaties; land to be hold real property necessary to enable it acquired, held, or owned by corporations, to carry on its business, the inquiry except railway, canal, or turnpike cor- whether any particular property is necesporations, limited to 5000 acres, and in sary for that business is a matter between case of such excepted corporations to so the government of the State and the much as shall be necessary for purposes corporation, and is no concern of third of operating their railway, etc., unless parties. It would create great inconheld by grant from United States; viola- veniences and embarrassments if, in actions of the act to result in forfeiture of tions by corporations to recover the posthe land. U. S. act, March 3, 1887, 24 session of their real property, an investiStat. at L. ch. 340, p. 476.

gation was permitted into the necessity 2. New Jersey Statute, 1887.—The act of such property for the purposes of their concerning corporations (Rev. p. 195, S incorporation, and the title made to rest 99) amended so as to authorize foreign upon the proof of that necessity. See corporations having charter authority to also National, etc., Co. v. Clarkin, 14 engage in the business of acquiring, hold. Cal. 552; Barnes v. Suddard, 117 Ill. 237.

(a) Mortgages.—Foreign corporations may also make and execute mortgages, receive and foreclose them ;' but the burden is upon the corporation, or those claiming under it, to show that by its charter it is a body politic authorized to take or convey lands.?

A foreign corporation which has not complied with statutory conditions regulating its transaction of business in a State, is not thereby rendered incapable of taking a mortgage upon real estate.3 It may buy land at an execution sale in its favor, 4 there being

The capacity of a foreign corporation poration upon its real estate situate in to take and hold title to land cannot be Massachusetts, in accordance with the raised collaterally. Such a question can laws of the State, by which it was created, only be made in behalf of the State in a is valid in Massachusetts. The court direct proceeding. Hough v. Cook Co. observes: “While the general principle Land Co., 73 III. 23; Brown v. Phillips, no doubt is that the law of the place 16 Iowa, 210; People v. Mauran, 5 Den. where real property is situate exclusively (N. Y.) 389: Page v. Heineberg. 40 Vt. 81; governs as to the title of the parties Tarpey v. Deseret Salt Co. (Utah Ty. therein, the disposition and mode of 1888), 17 Pac. Rep. 631. Compare Alex- transfer thereof, and the solemnities at. ander v. Tolleston Club, 110 III. 65; S.C., tending such transfer, and while we do 8 Am. & Eng. Corp. Cas. 239.

not doubt that it would be possible to 1. A foreign corporation may take a provide by legislation that foreign cormortgage to secure a claim. It may en- porations permitted to own real property force the remedy and may levy execution, situate in this State should only transfer with all the rights of any other levying the same by authority of the stockholders, creditor. American Mut. Life Ins. Co. no such provision has been mad AtV. Owen, 15 Gray (Mass.), 491; Silver torney-General v. Bay State Mining Co., Lake Bank v. North, 4 Johns. Ch. (N. 99 Mass. 148. While they must comply, Y.) 370; Lathrop v. Commercial Bank of in their forms of conveyance, with those Scioto, 8 Dana (Ky.), 114; Lumbard v. here required, they derive their authority Aldrich, 8 N. H. 31; New York Dry Dock to make them from the rules imposed v. Hicks, 5 McLean (U. S.), 111; Farm- upon them by the State where they are ers' Loan Co. v. McKinney, 6 McLean created.” (C. C.), 1; Hards v. Connecticut, etc., 2. Angell & Ames Corp. (Ed. of 1882) Ins. Co., 8 Biss. (C. C.) 236; Life Ins. $ 162, and authorities cited. Co. v. Overholt, 4. Dill. (C. C.) 287; 3. Colorado Territory act requiring Stevens v. Pratt, 101 Ill. 206; National filing in 30 days, of evidence of incorporaTrust Co. v. Murphy, 30 N. J. Eq. 408; tion of foreign corporation, entering thereLebanon Savings Bank v. Hollenbeck, in, but containing nothing to indicate that 29 Minn. 322; Leasure v. Union Mut. this was a condition on which they might Life Ins. Co., 91 Pa. St. 491; Bard v. continue in business, but providing penPoole, 2 Kern. (N. Y.) 495. Compare U. alty on the officers failing to comply, was S. Morigage Co, v. Gross, 93 Ill. 483. held not to render the non-complying for

In New York, it was held that if an in- eign corporation incapable of taking a corporated bank of another State lend mortgage on real estate in the late Terriinoney and take a mortgage in New tory: and it was held that no prohibition York State, it is not a violation of New to continue in business could be implied York act of 1818 relative to banks, etc., from these enactments. Northwest. Mui. for restraining unincorporated associa. L. Ins. Co.v. Overholt, 4 Dill.(C. C.) 287. tions from carrying on banking business. 4. Elston 2'. Piggott, 94 Ind. 14: S. c., Silver Lake Bank v. North, 4 Johns. Ch. 8 Am. & Eng. Corp. Cas. 185. A foreign (N. Y.) 373.

corporation had commenced a suit to foreIn Saltmarsh v. Spaulding (Mass. 1888). close a mortgage, in the United States 20 Am. & Eng. Corp. Cas. 514, it was circuit court, before Indiana R. S. $$ 3029, held that the provisions of the Mass. 3030 were enacted, and obtained a decree Pub. Stat., ch. 106, § 103, relating to afterwards. It began another suit against conveyances or mortgages by corpora- another party, in that court, after that tions, refers only to corporations subject statute took effect, and still later it beto the provisions of that chapter, and is came the purchaser of lands sold at not applicable to foreign corporations. judicial sale to satisfy its first decree, and A mortgage executed by a foreign cor- took a deed therefor. Held, that the

no statute to prevent it, and can convey the title thus acquired. 1

But a non-complying company cannot enforce a mortgage for money loaned by its agent; the mortgage is not void, but its enforcement must await compliance by the company."

(6) Devise.--The power of all corporations to take property by devise is regulated by statute in various States. The implied power of corporations, both domestic and foreign, to take and hold real estate, except as limited by law, is well recognized. But it seems to be an unquestioned principle that a State may place

corporation took title, notwithstanding such company. In that State, mortgages the statute, which is void so far as by its are but securities and do not entitle terms it undertakes to affect the title. to possession; and, even though the

“We know, as matter of general foreign corporation obtain a decree history, that for many years foreign cor- directing sale upon it, which as between porations have loaned money on mort- the parties is res adjudicata and settles gage security, and that there is no decision the question as to that suit, yet, as mort. questioning their right to buy land at gages are but security, the possession or sales on decrees in their favor. We conveyance by the sheriff is another know also that their right to make such matter, and the title conveyed to the forloans has been expressly recognized. eign corporation is void. Semple v. Bank Pancoast v. Travelers Ins. Co., 79 Ind. of British Columbia, 5 Sawy. (C. C.) 88. 172. We know too that the legislature Ejectment.--A foreign corporation may has tacitly, if not expressly, recognized bring an action of ejectment. New York this general right by enacting laws re- Dry Dock v. Hicks, 5 McLean (C. C.), stricting and limiting it. If there is no III. And real actions. American, etc., such general right, then for a long series Ins. Co. v. Owen, 15 Gray (Mass.), 493; of years the legislature has been paying Smith v. Little, 67 Ind. 549. deference to a mere shadow." Elston v. Real action by foreign corporations has Piggott, 94 Ind. 14; s. C., 8 Am. & Eng. been sustained by the United States cirCorp. Cas. 185.

cuit court in Society for Propagation of 1. In Lumbard v. Aldrich, 8 N. H. the Gospel v. Wheeler, 2 Gall. (U. S.) 31, it was said: “If foreign corporations 105; and by the supreme court of the may sue here, they must be entitled to United States, in Runyan 0. Coster's the benefit of their judgments, according Lessee, 14 Pet. (U. S.) 122. to the ordinary course of law. They Chattel Mortgage. — Arkansas statutes may therefore levy on land in satisfac- require chattel mortgages to be recordtion of their executions.” Again : “If ed in a county where the mortgagor rethey may thus acquire a title, it would be sides. Such a mortgage executed by a. exceedingly absurd to say that they foreign corporation doing business in a might not obtain an action for possession, certain county was recorded there. Subor that they could not convey the title sequently certain creditors obtained judgthus acquired." Lumbard v. Aldrich, 8 ment against the corporation and seized N. H. 31; Cooley Const. Lim. (5th Ed.) the personal properiy under execution. 152.

The mortgagees afterwards sought to fore2. Daly v. Nat. L. Ins. Co., 64 Ind. 1. close the mortgages joining the judgment Non-compliance with statutory require- creditors as defendants. Held, that, as ment as to consent to be sued, and author- the corporation had no residence in Arizing service on agent, does not make void kansas, the recording the mortgage did a mortgage taken by a foreign corpora- not give the mortgagees a lien as against tion, though it can be set up by plea in creditors who had sued upon the foreabatement as showing the premature closure proceedings. Watson v. Thompbringing of the action. Daly v. Ins. Co., son Lumber Co. (Ark. 1887), 17 Am. & 64 Ind. 5; Walter A. Wood, etc., Co. v. Eng. Corp. Cas. 211. Caldwell, 54 Ind. 270.

3. See CORPORATIONS (PRIVATE), PowIn Oregon, the United States circuit ers as to Real Estate, 4 Am. & Eng. court held that the non-complying cor. Encyc. of Law, 230. poration could not purchase at the 4. See. supra, this title, Powers AS TO sheriff's sale on a mortgage executed to REAL ESTATE.

upon corporations of its own creation such limitations or prohibi. tions in this regard as its policy may dictate ; and, if a State may not also regulate the acquisition by foreign corporations of real property within its boundaries, the essential doctrines of real estate law and the established limitations upon the law of comity must be overthrown. It is accordingly settled that foreign corporations cannot acquire by purchase large quantities of land in a State if the State's implied policy forbids it;2 nor can a corporation, with power under its charter to take by devise, so take property in a State whose laws prohibit such devises.

In some of the States, devises to corporations are forbidden except under certain conditions; and the question of the application of such statutes to foreign corporations has arisen. They clearly apply to foreign corporations attempting to so take property in a State where they are in force;+ but they belong to that class of local statutes which do not necessarily follow foreign corporations. into other jurisdictions. It has been pointed out that they are intended to regulate the testamentary capacity of citizens in the State where they are adopted, and not to affect citizens of other States, and that their primary purpose is to define such testamentary capacity rather than to regulate corporations in the acquistion of property. Accordingly, where a foreign corporation is generally competent to take land, the prohibition in the Statute of Wills. of the State which created it against all devises of lands to corpo

[ocr errors]

nole.

1. See authorities cited, supra, Powers York which had no power to take by deAS TO REAL ESTATE.

vise wished to take by devise in Massa2. “In Carroll v. East St. Louis, 67 Ill. chusetts, being a charity, it was entitled to 568, the question was whether the Con- the favor of the court, and the devise nection Land Co., a corporation created would be kept in abeyance to permit of in another State for the sole purpose of the passage of an enlarging act in New buying and selling lands, had power to York which would authorize the corporapurchase and hold title to lands in the tion to so take the property. Compare State of Illinois. The decision was that Baker v. Clarke Inst., 110 Mass. 38; Ould it could not, for the reason-and no other v. Washington Hospital, 95 U. S. 313. is assigned-that, if the company were 4. See authorities cited in preceding permitied to exercise its functions in Illinois to the full extent authorized by its 5. In White v. Howard. 38 Conn. 342, charter, it could acquire lands without the court observed: “ There is no prohilimit as to quantity and hold them in per- bition in the charter; the inability is petuity; that such privileges had never created by the New York Statute of Wills, been accorded by Illinois to her own do- expressly excepting corporations from mestic corporations, and were inconsis- taking by devise. Now, this corporation tent with her settled public policy against brings with it from New York its charter, perpetuities, as indicated, not by direct but it does not bring with it the New York express enactment, but with absolute cer. Statute of Wills, and cannot bring it to tainty by the general course of its legis- be recognized as law within this jurisdiclation from the very organization of tion. There is an obvious distinction bethe State." American, etc., Christian tween an incapacity to take created by Union v. Yount, ion U. S. 352.

the statute of a State which is local, and 3. United States v. Fox, 94 U. S. 315; a prohibitory clause in a charter which White v. Howard, 46 N. Y. 144; Boyce everywhere cleaves to the corporation." v. City of St. Louis, 29 Barb. (N. Y.) 6. Thompson v. Swoope, 24 Pa. St. 650.

474; Morawetz Corp. (2d Ed.) § 332. In Fellows v. Miner, 119 Mass. 541, it Compare Van Sant v. Roberts, 3 Md. 119; was held that when a corporation of New Brown v. Tompkins, 49 Md. 423.

rations, does not prevent it from taking and holding land in a State, by devise of one of that State's citizens, if such devise is not there unlawful. In the absence of some such restrictions, the implied power of foreign corporations to take and hold real and personal property by devise or gift is undoubted.?

1. In Starkweather v. American Bible in that State under a conveyance from Soc., 72 III. 50, there was a devise by a one of its citizens, duly executed and recitizen of Illinois, of land in that State, to corded as required by its laws. The cona corporation of New York, which was in- veyance to the appellant can be sustained capable, under the laws of that State, of without in any degree impairing or doing taking property by devise. It was held violence to the fundamental principle that New York had no power to create a enunciated in the Carroll case, viz., that body incapable of taking land in that the corporations cannot acquire lands in State by devise, and yet with power to so Illinois, in large quantities, to be held, or take lands in a foreign jurisdiction. The which may be held, in perpetuity. It can principles announced in Carroll v. East also be sustained, without violating the St. Louis, 67 Ill. 568, were regarded as main proposition laid down in the Starkconclusive against the claim of the Bible weather case, viz., that a foreign corpoSociety; "as," said the court, “all of the ration, forbidden, by the laws of the State inconveniences and injuries are as likely creating it, to acquire lands there by deto ensue in this, and other cases like it, as vise, could not, by that mode, take lands in that."

in Illinois, in the absence of a stalute of In American, etc., Christian Union v. that State assenting thereto. We cannot Yount, 101 U. S. 352, the devise was presume that it is now, or was in 1870, made in Illinois, by a citizen thereof, to a against the public policy of Illinois that corporation of New York made capable one of its citizens should convey real esof taking, receiving, purchasing, and tate there situated to a benovelent or mis. holding real estate for the purposes of its sionary corporation of another State of incorporation, and for no other purpose, the Union for the purpose of enabling it to certain specified amounts, and no ques- to carry out the objects of its creation, tion was raised of its power, consistent when that State permitted its own corpowith its own charter and the laws of New rations, organized for like purposes, to York, to acquire, for the purposes of its take real estate within its limits, by purcreation, real estate within these limits. chase, gift, devise, or in any other manIn holding that the devise was valid, and ner.' distinguishing the cases of Carroll 2. East In Santa Clara Female Acad. v. SulliSt. Louis, 67 III. 568, and Starkweather v. van, 116 Ill. 375, it was held that a cor. American Bible Soc., 72 Ill. 50, Harlan, poration created by the laws of Wisconsin J., observes:

for educational purposes, with the power “ The Starkweather case was held to to acquire and hold real estate, is capable be concluded by the principles announced of taking by devise lands in Illinois. The in the Carroll case, for the reason per- court revieved the Illinois statutes, and haps that the property devised could, showed that they were not only not proconsistently with the will of the testator hibitory of corporations for educational and the charter of the society, have been purposes holding land in that State, but held for a period of time beyond that al. expressly empowered such corporations lowed to similar corporations of Illinois to take by devise and grant, without limit holding lands in that State. Upon no in quantity and value, except when held other ground are we able to understand beyond a certain length of time, and said how the Starkweather case was concluded that there was no discrimination against by the principles announced in Carroll v. foreign corporations, which were to be East St. Louis, 67 III. 568. Neither de. hospitably received on footing equal with cision warrants the conclusion that, at the those domestic. Receiving tuition fees, date of the deed to appellant, a benevo- or “ pecuniary profit,” all of which are lent, religious, or missionary corporation applied to educational purposes, does not of another State, having authority under alter the decision. its own charter to take lands in limited 2. American Bible Soc. v. Marshall, 15 quantities for the purposes of its incor- Ohio St. 537; Thompson v. Swoop, 24 poration, was forbidden, by the statutes Pa. St. 480; Sherwood v. American Bible or public policy of Illinois, from taking Soc., 4 Abb. Ct. App. Dec. (N. Y.) 227; title, for such purposes, to real property White v. Howard, 38 Conn. 342; Hollis

« PreviousContinue »