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11 Otto 352,
25 L.Ed. 888
U.S.
Supreme Court
CHRISTIAN
UNION v. YOUNT
101
U.S. 352
October
Term, 1879
APPEAL
from the Circuit Court of the United States for the Southern
District of Illinois.
The
facts are stated in the opinion of the court.
West
Headnotes
Corporations
k388(5)
101k388(5)
Neither
the grantor nor those claiming under him can question a
corporation's power to take the conveyance.
Corporations
k656
101k656
The
supreme court cannot presume that it is now, or was in 1870,
against the public policy of Illinois that one of her citizens,
owning real estate there situate, should convey it to a
benevolent or missionary corporation of another state of
the Union, for the purpose of enabling it to carry out the
objects of its creation, since she permitted her own corporations,
organized for like purposes, to take such real estate by
purchase, gift, devise, or in any other manner.
*353
Mr. W. J. Henry for the appellant.
Mr.
E. S. Terry, contra.
MR.
JUSTICE HARLAN delivered the opinion of the court.
This
suit was brought by Yount and others against the American
and Foreign Christian Union to set aside a conveyance of
certain lots or parcels of land in the State of Illinois,
alleged to be of the value of $10,000, which was executed,
May 19, 1870, by Stephen Griffith, a citizen of that State,
to the Christian Union, a corporation created in the year
1861 under the laws of New York, providing for the incorporation
of benevolent, charitable, scientific, and missionary societies
in the latter State.
A
decree was rendered against the corporation, and it appealed
here.
The
place of business and principal office of the appellant
was and is in the city of New York, but there seems to be
no inhibition, in its charter, upon the exercise of its
functions in other States. The declared object of its incorporation
was, 'by missions, colportage, the press, and other appropriate
agencies, to diffuse and promote the principles of religious
liberty and a pure evangelical Christianity, both at home
and abroad, wherever a corrupt Christianity exists.'
The
appellees, who are the children and heirs-at-law of Griffin,
pray for a decree declaring the conveyance to be null and
void, and requiring the appellant to convey to them the
premises in dispute. They broadly claim that by the settled
law of Illinois a foreign corporation cannot take or hold
lands in that State, and that, consequently, no title passed
to the *354 appellant from their ancestor. That is
the fundamental proposition in the case, and is the only
one which counsel for the appellees, in support of the decree
below, has deemed it necessary to discuss with any fulness.
By
the statute of New York under which the appellant was organized,
it was made capable of taking, receiving, purchasing, and
holding real estate for the purposes of its incorporation,
and for no other purpose, to an amount not exceeding the
sum of $50,000 in value, and personal estate for like purposes
to an amount not exceeding $75,000 in value, the clear annual
income of such real and personal estate not, however, to
exceed the sum of $10,000. No question is made here as to
its right, consistently with its own charter and the laws
of New York, to acquire, for the purposes of its creation,
real estate within, at least, the quantity designated by
its charter.
The
appellant, then, having this capacity by its charter, and
not being expressly prohibited from exercising its powers
beyond the State which created it, we proceed to inquire
whether it was forbidden by the laws of Illinois in force
in the year 1870 from taking title by conveyance to real
property within the limits of that State, for the objects
designated in its charter. For, besides the admitted incapacity
of a corporation of one State to exercise its powers in
another State, except with the assent or permission, expressed
or implied, of the latter, it is a principle 'as inviolable
as it is fundamental and conservative, that the right to
hold land, and mode of acquiring title to land, must depend
altogether on the local law of the territorial sovereign.'
Runyan v. The Lessee of Coster, 14 Pet. 122;
Lathrop v. Commercial Bank of Scioto, 8 Dana
(Ky.), 114.
By
a general law of Illinois, enacted in 1859, any three or
more persons of full age, citizens of the United States,
a majority of whom were also required to be citizens of
that State, could become a body politic and corporate for
benevolent, charitable, educational, literary, musical,
scientific, religious, or missionary purposes, and in their
corporate capacity take, receive, purchase, and hold real
and personal estate, and, for charitable purposes only,
sell and convey the same. Laws of Ill., 159, p. 20; Gross's
Rev. 124.
*355
Corporations formed under that law were made capable of
taking, holding, or receiving any property, real estate
or personal, by gift, purchase, devise, or bequest,
or in any other manner. Authority was given to sell real
estate purchased by them for their own use, with any building
erected thereon, and invest the proceeds in the purchase
of another lot, or the erection of another building, or
both. As to such as was devised or given to them for any
specified benevolent purpose, authority was conferred to
sell the same and apply the proceeds in aid of that purpose,
such real estate, however, not to be held more than five
years.
This
general statute was in force when the conveyance to the
appellant was executed. It thus appears that when its rights
accrued under that conveyance the statutes of Illinois expressly
provided for the incorporation of societies having objects
similar to those of the appellant, and with capacity to
take, receive, and hold real property, by gift, purchase,
devise, bequest, or in any other manner, for the purposes
of their creation. Shortly after the passage of the general
law of 1859, to wit, at its session of 1861, the General
Assembly created a large number of religious and charitable
corporations, with like capacity to take, receive, and hold
real and personal property; and in the year 1863 it expressly
exempted from taxation real and personal property which
the American Bible Society, a corporation of New York, then
owned or might thereafter acquire in the State of Illinois,
not exceeding $50,000 in value; also all Bibles and Testaments
in its depositories, and any articles of personal property
necessary for the prosecution of its objects. Pri. Laws
Ill., 1863, p.26.
The
conclusion is not to be avoided that the State, prior to
1870, authorized, if it did not steadily encourage, the
organization of societies for benevolent, charitable, religious,
and missionary objects, and endowed them with capacity to
acquire by purchase, gift, or devise, real estate for the
purposes of their creation. It had not then, nor, so far
as we are informed, has it since, passed any statute expressly
forbidding corporations of other States, having like objects,
from taking, receiving, purchasing, or holding real property
in that State to the same extent and for the same purposes
as were allowed to its own corporations *356 of that
class. Nor is our attention called to any statute in force
in 1870, or subsequently, which expressly forbade foreign
corporations from exercising, within the State of Illinois,
the functions with which they were endowed by the respective
States creating them, or which made the express permission
by statute of that State a condition precedent to the recognition
within its jurisdiction of the corporations of other States.
Although, as a general proposition, a corporation must dwell
in the State under whose laws it was created, its existence
as an artificial person may be acknowledged and recognized
in other States. 'Its residence in one State creates no
insuperable objection to its power of contracting in another.'
Rungan v. The Lessee of Coster, 14 Pet. 122.
In Cowell v. Springs Company (100 U. S. 55)
we said: 'If the policy of the State or Territory does not
permit the business of the foreign corporation in its limits,
or allow the corporation to acquire or hold real property,
it must be expressed in some affirmative way; it cannot
be inferred from the fact that its legislature has made
no provision for the formation of similar corporations,
or allows corporations to be formed only by general law.
Telegraph companies did business in several States before
their legislatures had created or authorized the creation
of similar corporations; and numerous corporations existing
by special charter in one State are now engaged, without
question, in business in States where the creation of corporations
by special enactment is forbidden.' In harmony with the
general law of comity obtaining among the States composing
the Union, the presumption should be indulged that a corporation
of one State, not forbidden by the law of its being, may
exercise within any other State the general powers conferred
by its own charter, unless it is prohibited from so doing,
either in the direct enactments of the latter State, or
by its public policy to be deduced from the general course
of legislation, or from the settled adjudications of its
highest court. There was here no such direct legislation
during or prior to the year 1870, nor can the existence
of such a public policy to the inferred from the general
course of legislation or judicial decisions in Illinois
up to and including that year, in relation to religious,
benevolent, charitable, or missionary societies created
in other States.
*357
But it is contended that the precise question now under
consideration has been heretofore decided by the Supreme
Court of Illinois adversely to these views in Carroll
v. The City of East St. Louis (67 Ill. 568) and
Starkweather v. American Bible Society (72 id.
50), and that this court is obliged to follow the construction
of the State law and give effect to the public policy of
Illinois, as announced by the highest court of that State.
Our obligation to follow, without question, these decisions
arises, it is claimed, out of the express provisions of
the act of Congress declaring that the laws of the several
States, except when the Constitution, treaties, or statutes
of the United States otherwise require or provide, are to
be regarded as rules of decision in trials at common law
in the courts of the United States in cases where they apply.
This provision was incorporated in the original judiciary
act, and has been retained in the statutes of the United
States to the present time. Under it we have often declared
that the construction given to a State statute by the highest
judicial tribunal of such State is to be accepted in the
Federal courts as a part of the statute whenever they are
required to determine questions, or ascertain rights arising
out of or dependent upon such local statute. But how far
the Federal courts, in the ascertainment and enforcement
of property rights, dependent upon the statute law, or the
settled public policy of a State, are bound by the decisions
of the State court, rendered after such rights were acquired
or became vested, is a different question, and one of the
gravest importance. The rule upon this subject has been
announced, with some qualifications arising out of the circumstances
of the particular cases, heretofore decided in this court.
Its extended discussion is not, however, essential in this
case, since the decisions of the Supreme Court of Illinois,
upon which counsel for appellees rely, do not, in our judgment,
necessarily conclude the precise point here involved.
In
Carroll v. The City of East St. Louis (supra),
the question before the court was whether the Connecticut
Land Company, a corporation created in another State for
the sole purpose of buying and selling lands, had power
to purchase and hold title to lands in the State of Illinois.
The decision was that it could not, for the reason--and
no other is assigned--that the company, *358 if permitted
to exercise its functions in Illinois to the full extent
authorized by its charter, could acquire lands without limit
as to quantity, and hold them in perpetuity; that such privileges
had never been accorded by Illinois to her own domestic
corporations, and were inconsistent with her settled public
policy against perpetuities, as indicated not by express
enactment, but with absolute certainty, by the general course
of its legislation from the very organization of the State.
Two
of the judges dissented from the opinion, so far as it held
invalid a transfer of land by the corporation to a purchaser.
The
subsequent case of Starkweather v. American Bible
Society (supra) involved the title to certain real estate,
an undivided interest in which was devised by one Starkweather
to the trustees of the American Bible Society, established
in 1816, to have and to hold the same for its use, but not
to be entitled to the same, or its income, until his youngest
child became of age. The claim of the Bible Society was
denied, by the court, upon the following grounds: 1. That
by the laws of New York, as declared by the highest court
of that State, it had not the capacity to take title to
real property in New York by devise. 2. That New
York had no power to create a body incapable of taking land
in that State by devise, and yet with power to so
take lands in a foreign jurisdiction. 3. And by way of argument,
that if New York was to so enact, and other States were
to so consent, then such bodies might so receive and hold
lands; but, said the court, the former had not so enacted,
nor had Illinois so consented, since, when the will of Starkweather
was probated, Sept. 16, 1867, there was no statute of Illinois
which authorized foreign corporations to hold lands by
devise in that State. 4. The principles announced
in Carroll v. The City of East St. Louis were
regarded as conclusive against the claim of the Bible Society,
'as,' said the court, 'all of the inconveniences and injuries
are as likely to ensue in this, and other cases like it,
as in that.' 5. The devise being illegal and void, the court
could not decree a sale of the real estate devised and direct
the payment of the proceeds to the society.
We
are of opinion that the Starkweather case does not determine
*359 the particular question we have been considering.
It does not decide that the devise to the Bible Society
was void solely because of the absence of some statute expressly
and affirmatively authorizing or permitting devises of real
estate in Illinois to corporations of other States. The
absence of such a statute was referred to, as we suppose,
for the purpose of showing that the admitted incapacity
of the Bible Society, under the law of its own creation,
to take real estate by devise, and its consequent inability
to acquire in that mode real estate situated elsewhere,
could not be removed or be met by any thing in the legislation
of Illinois, since no statute in force when the will was
probated conferred upon foreign corporations the right to
acquire real property in that State by devise.
The
Starkweather case was held to be concluded by the principles
announced in the Carroll case, for the reason, perhaps,
that the property devised could, consistently with the will
of the testator and the charter of the society, have been
held for a period of time beyond that allowed to similar
corporations of Illinois holding lands in that State. Upon
no other ground are we able to understand how the Starkweather
case was concluded by the principles announced in Carroll
v. East St. Louis. Neither decision warrants the
conclusion that, at the date of the deed to appellant, a
benevolent, religious, or missionary corporation of another
State having authority under its own charter to take lands,
in limited quantities, for the purposes of its incorporation,
was forbidden by the statutes or the public policy of Illinois,
from taking title, for such purposes, to real property
in that State, under a conveyance from one of its citizens,
duly executed and recorded as required by its laws. The
conveyance to the appellant can be sustained without in
any degree impairing or doing violence to the fundamental
principle enumciated in the Carroll case; viz., that corporations
cannot acquire lands in Illinois in large quantities, to
be held, or which may be held, in perpetuity. It can also
be sustained, without violating the main proposition laid
down in the Starkweather case; viz., that a foreign corporation,
forbidden by the laws of the State creating it, to acquire
lands there, by devise, could not, by that mode, take lands
in Illinois, in the absence of a statute of that State assenting
thereto. We cannot presume that it is *360 now, or
was in 1870, against the public policy of Illinois that
one of its citizens should convey real estate there situated
to a benevolent or missionary corporation of another State
of the Union, for the purpose of enabling it to carry out
the objects of its creation, when that State permitted its
own corporations, organized for like purposes, to take real
estate within its limits, by purchase, gift, devise, or
in any other manner.
We
have considered these questions with reference to the law
of Illinois at the date of Griffith's conveyance. But our
conclusions are strengthened by her subsequent legislation.
We refer particularly to the general statute passed in 1872,
providing for the organization of corporations for pecuniary
profit, or for any lawful purpose except banking, insurance,
real-estate brokerage, the operation of railroads (other
than horse and dummy railroads), and the business of loaning
money, with authority to own, possess, and enjoy so much
real and personal estate as shall be necessary for the transaction
of their business, and to sell and dispose of the same when
not required for the uses of the corporation. All real estate
acquired in satisfaction of any liability or indebtedness,
and not necessary and suitable for the business of the corporation,
was required to be annually offered at public auction, and
if not sold within five years, its sale could be enforced
by information in the name of the State against the corporation.
Sect. 26 of that general statute expressly recognizes the
right of foreign corporations to acquire real estate in
Illinois. Its language is: 'Foreign corporations, and the
officers and agents thereof, doing business in this State,
shall be subjected to all the liabilities, restrictions,
and duties that are or may be imposed upon corporations
of like character organized under the general laws of this
State, and shall have no other or greater powers. And no
foreign or domestic corporation established or maintained
in any way for the pecuniary profit of its stockholders
or members, shall purchase or hold real estate in this State,
except as provided for in this act.' Hurd's Ill. Rev. 1879,
p. 290.
Distinct
provision was made in the same statute for the organization
of societies, corporations, and associations, not for pecuniary
profit, with capacity to take, purchase, hold, and dispose
of real and personal estate for purposes of their organization.
*361 The statute imposes on the corporations last described
no restrictions as to the quantity of estate they may take
and hold, except that it must be for the purposes of their
organization. Churches, congregations, or societies formed
of religious worship, when incorporated under that statute,
in addition to grounds for burying and camp-meeting purposes,
were limited to ten acres of ground for houses, buildings,
or other improvements for the convenience and comfort of
such congregations, church, or society.
If
the settled public policy of Illinois in 1870 forbade a
benevolent missionary corporation of another State from
taking title to real estate in Illinois for purposes of
its organization, a general statute would hardly have been
passed in 1872 recognizing the right of foreign corporations
organized for pecuniary profit to hold real estate in Illinois,
to the same extent and under like powers with domestic corporations
of the same class.
Appellees,
in their pleadings, allege that the lots conveyed by their
ancestor to the American and Foreign Christian Union were
not required or necessary for the convenience or transaction
of its business. These allegations are both insufficient
and immaterial: insufficient, because they may be true,
and yet the appellant, with the lots in dispute added to
its property, may not have had more real estate than its
charter permitted; immaterial, because if, as we hold, the
appellant could consistently with its own charter and the
law of Illinois take title to real property in that State
for the purposes of its creation, its acquisition of a larger
quantity of real estate than its charter allowed, or its
business required, or was consistent with the law of Illinois,
was not a question which the appellees have any right to
raise. If the title passed by valid conveyance from their
ancestor, it is of no concern to them that the appellant
has acquired or is holding more real estate than its charter
authorizes.
We
forbear the discussion of any other question arising upon
the assignments of error. It is apparent from the record
and the argument of counsel that the decree of the court
below was based upon the conclusion that the appellant,
being a foreign corporation, was forbidden by the law of
Illinois from *362 taking title to the property in
controversy. No proof was taken, nor was the case heard
upon the issue as to the mental capacity of Griffith to
execute the conveyance of 1870, or as to its having been
obtained by fraudulent solicitations and representations
upon the part of the agents of the appellant. The parties
should have an opportunity to prepare the cause, and have
it heard upon those issues.
The
decree will be reversed, with directions to overrule the
demurrer to the cross-bill and the exceptions to the answer,
and for such further proceedings as may be consistent with
this opinion.
So
ordered.
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