Case ID: ohio_8/html/0557-01.html
Source: Caselaw Access Project
Author: {"author": "Judge Lane", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Austin Webb v. Vandeveer B. Moler.
    The franchises of a corporation can not be forfeited except by judicial sentence, nor can real estate conveyed to it be lost to its object by non-user.
    Error to the common pleas of Montgomery.
    The suit below was for trespass upon land, part of the southeast quarter of section 17, township 2, range 6, lying in Dayton township. The defendants pleaded the general issue (which was joined), with a notice, that before suit Richard Stephens was seized in fee and possessed of a part of said quarter section (describing the metes and bounds), and conveyed the same by deed to Charles Morgan, Jacob Darst, Luke T. Dorsey, G-eorge Patterson, and William. Hatfield, trustees of the Columbian school of Dayton, and their successors in office, under which said trustees were seized and possessed; and that afterward, said Darst, with A. and D. John and A. Hosier, then trustees of said school, bargained and sold said land to Webb, the defendant, put him into possession thereof, and entered into a written contract with him, signed by said A. John, as president, and said Darst, Hosier, and D. John, as trustees of said school, to convey the same to him, when he paid the purchase; that he entered under said agreement and exercised acts of ownership as it was lawful for him, and such acts are the supposed trespass complained of.
    The case upon said pleadings was tried by a jury, and there was a verdict and judgment for the plaintiff, Moler. In the progress of the trial, a bill of exceptions was tendered and sealed in substance as follows:
    That Moler, having given evidence of his possession of the. premises described in the declaration, and a deed from Stephens and wife of December 1, 1819, conveying the land in fee to Morgan and others and their successors in. office, trustees of the Columbian school, to the. only use and benefit of said school, agreeably to their constitution, forever; and, having further *given in evidence a deed from the same Stephens and wife, dated April 23, 1836, which, reciting the deed made by them “many years since” to said Columbian school, for school purposes, and nothing else; that said coiqnoration had long ceased to exist as a corporate body, and the premises to be occupied for school purposes, by which the premises had reverted to them, therefore, they conveyed the same to Moler forever, for the consideration of three dollars; and having also read in evidence the'articles of association of said Columbian school, which, among other things, designated the object of the association to be, to secure to themselves, and their heirs, such property as might be donated to them for literary purposes and the good government of their school; established the” corporation government of a president and trustees to be annually elected, and that “the president and two of the trustees shall form a quorum, do all business pertaining to the association, hold all property, real and personal, to the only use and benefit of the association, and dispose of the same when three-fourths of the members of the association shall deem it expedient and to apply the property and fund wholly to literary uses; and the said Webb having, in defense, given in evidence a title bond made by the trustees of said Columbian school, dated May 2,1836, reciting, that for the consideration of the receipt of an obligation for $50, they bound themselves to make him a good and sufficient deed for the same, so soon as he or his assigns paid said $50; and proven, that at the sale of the premises at public auction, about April 29, 1836, they put Webb into possession. The evidence closed, whereupon the defendant, Webb, prayed the court to instruct and charge the jury as follows:'
    That “if they were satisfied that said corporation of the Columbian school had a valid and legal right to the premises in question, and that in April, 1836, the trustees of said corporation put said defendant, Webb, into possession of the premises, it was immaterial whether he was put into possession under a sale made by said corporation, or its trustees, or not; or whether that sale was a valid one or not; and that if he was so put into possession by said trustees, it operated as a license to the defendant to enter and occupy.” And said defendant further moved the court to instruct the jury, “that no non-user bjT said corporation of the Columbian school under which the defendant, Webb, claimed to hold the premises in question, of any of its ^corporate rights, or any of its corporate property, will operate a forfeiture of any such rights or property, unless such default or forfeiture shall be first judicially determined in a legal proceeding, instituted for that purpose, according to law” — which said instruction the court refused to give; but as to the last question of law so prayed to be given in charge to the jury, the court instructed them, “that no non-user by said corporation of its corporate franchises would operate as a forfeiture of such franchises, unless such default and forfeiture had first béen judicially determined in a legal proceeding instituted for that purpose; but that the corporate property of said corporation might and would be forfeited by the non-user thereof, amounting to an abandonment by said corporation, without such forfeiture being first judicially ascertained in a legal proceeding instituted-for that purpose; and that said plaintiff might avail himself of such forfeiture, to sustain his legal title to the premises in question, derived by said conveyance from said Eichard Stephens and wife by the deed, dated April 23, 1836, admitted in evidence.” And on the matter of law, on which the defendant, Webb, first prayed the court to instruct and charge the jury, the court instructed and-charged, “that the defendant could not avail himself of any matter of license or authority from said corporation, or its trustees to enter or occupy the premises in question under the pleadings as made ' up in this cause, if the said corporation had abandoned and forfeited their right and title to the premises.” Webb excepted to said charges and refusal, and assigns them as error, on which he claims to reverse the judgment.
    IT. Stoddard, for plaintiff in error :
    1. The first deed from Stephens divested him of all title, and the subsequent deed to Moler conveyed no title.
    2. The license pleaded should not have been ruled out; the evidence showed a conveyance from the trustees of the school, who held, the fee; they contracted with him lor all their title, and put him into possession. This license was a good defense. 3 Ohio, 89, 93.
    3. The true principle is, that so long as the corporation exists, neither its corporate franchises, nor its property held in its corporate character, is divested by any mal, or nonfeasance. .-A forfeiture must first be judicially determined. 3 Burr. *1866, 1871; 2 Term, 515 ; 3 Term, 199, 244 ; 5 Johns. Ch. 366, 376-380 ; 2 Kent, 289-291, 278, 304-306, 312, 313; Ang. on Corp. 510, 511; 2 Chase’s Ohio L. 1918 ; 4 Com., tit. Fr. G. 5, F. 10 ; 10 Coke, 30.
    Odlin and Sohenok, contra.
    Insisted that the deed from Stephens to the corporation, for special objects, was conditional, and created only an estate in the corporation liable to be defeated, by non-user or misuser, in violation of the terms of the grant. The oral proof established the perversion of the property from the uses of the grant, and the reversion to the grantor was a legal consequence, and the next step at the trial was to make title to the party under the reversioner himself. Such reversion, resulting from matter in pais, could only be proved by oral testimony. The uses of the grant are sufficiently expressed in the deed; but if they were not, its legal effect should be judged of in reference to the act incorporating the grantees, which declares that “ no part of the property to be owned by such association, shall at any time be applied to any other purpose than the establishment and support of a school or a library, as the case may be.” The grantees could not abandon the estate, nor desecrate the house for literary purposes, nor sell it, without violating the grant'.
    Corporations have a determinable fee only for the purposes of enjoyment. 2 Kent’s Com. 282.
    2. The question is only one of inquiry into the title of real estate, not blended with corporate franchises. If a grant be made to the Dayton Bank, to be used only for banking purposes, and the bank should convert the property into a hotel or livery stable in violation of the condition of the grant, that would work a forfeiture of the estate, although the bank with all its franchises would still continue to exist. The common pleas, therefore, drew a proper distinction between corporate franchises and corporate property We admit that the corporate franchises can only be forfeited by the judgment of a competent court to that end. But surely as to property, a corporation, like a natural person, may forfeit or occasion its reversion, and still remain in esse. The very license rer lied upon by Webb, was itself a forfeiture of the estate.
    *A. Harlan, in reply:
    Cited 9 Cranch, 51.; 6 Cowen, 23; 1 Hall, N. Y. 191; 2 Term, 515.
   Judge Lane

delivered the opinion of the court:

No proposition is more thoroughly established, than that the franchises of a corporation can not be forfeited without a judgment either on scire facias or quo warranto. Abundant authorities are cited to this effect in the argument.

The court of common pleas seem to have considered, that although corporate franchises can not be divested without a judicial sentence, corporate property might be lost by non-user alone. No such distinction is known in law. The capacity to hold land in one franchise. The grant of land to a corporation is called, by Blaekstone, “ an estate for life, which may endure forever, or which reverts to the donor only when the life of the donee is terminated.” 1 Black. Com. 484.

Among the multitude of authorities bearing on this point, it is. enough to refer to two from New York: 6 Cowen, 23; 1 Hall, 97. The doctrine these authorities declare is, “that proceedings of trustees of a corporation, de facto, are valid until ousted by,a judgment in a proper suit, and that no advantage can be taken of any non-user, on the part of a corporation, by any defendant in a collateral action.”

The trust of a charity is not lost by the trustees’ neglect of duty. If it can not be carried into execution, the land may revert to the donor. But where it can be enforced, a court of chancery will furnish all needful relief.

Judgment reversed.