Case ID: sc-eq_28/html/0471-01.html
Source: Caselaw Access Project
Author: {"author": "DuNKiN, Ch. Wardlaw, Oh.", "license": "Public Domain", "url": "https://static.case.law/"}
Date Created: 2024-08-24T03:29:51.129683

Ex Parte The Trustees of the Greenville Academies.
    Petition by the trustees of the Greenville Academies, a body corporate, for leave to transfer their land and trust to the Baptist State Convention, also a body corporate, on-condition that the transferee perform the trusts on which the petitioners held their land. The Circuit Court passed an order authoris-ing the transfer: — On appeal, held, that the petitioners required no aid or authority from the Court to make the transfer of the land, and that the change of trustees was unnecessary and inexpedient. Petition dismissed.
    The act of a majority of the trustees upon any matter within their competency, is the act of the corporation.
    An appeal lies from an order of the Circuit Court for the change or substitution of trustees.
    A corporation may be appointed trustee.
    BEFORE WARDLAW, CH., AT GREENVILLE, JULY, 1854.
    This was a petition by the Trustees of the Greenville Academies, a body corporate, in which the petitioners prayed “ that they may be allowed to transfer their land which they hold in trust for the Academies, to the Baptist Society, for the purpose of endowing a Female College, on condition tbat the said Baptist Society will forever keep up in the village of Greenville, both a male and female school, wh'ere all the branches usually learned in a male and female academy, shall be taught by competent and able teachers, and which shall be open to the whole community.”
    - The prayer of the petition was strongly opposed by a minority of the trustees.
    His Honor made the following order :
    “ On hearing the petition, answer, evidence, and argument in this case, it is adjudged and decreed, that the petitioners have leave to transfer their trust and trust estate to the Baptist Convention of Squth Carolina, or to the Trustees of Furman University, who, thereupon, shall be substituted as trustees in place of the existing Board of Trustees ; on the express condition, however, that such substituted trustees shall, in all respects, execute the trusts declared in the deed of Y. McBee, dated August 12, 1820, and particularly shall keep up and maintain at, or near, Greenville, C. IT., institutions of learning for the instruction of boys and girls in all the departments of education usually taught in male and female academies, for the use of the community, and without preference as to terms of admission of any particular sect of Christians. Parties have leave to apply at the foot of this decree for an order confirming the transfer and substitution when negotiated, or for other order in execution of the decree.”
    ^George F. Townes, one of the trustees, appealed, and moved the Equity Court of Appeals to reverse the order, on the grounds
    1. Because the male and female academies of Greenville were endowed, by private contributions, with money and land, secured in trust for the use of the community at large, without regard to religious sects or creeds of any kind, and made permanent by an Act of Incorporation; and the transfer of the trust and trust estate, to the Baptist State Convention of South Carolina, or to the Trustees of the Furman University, never was contemplated by the founder’s of said academies, and is in violation of said trust and their charter of incorporation.
    2. Because one corporation has no power, except by legislative grant, to transfer its franchise and property to another corporation; and by so doing it forfeits its charter, and causes a reversion of its estate to the founders.
    3. Because neither the Baptist Convention, nor the Furman University, having been made a party, nor any assurance given by either of them that the trust and trust estate would be accepted, the case before the court was merely a speculative one, in which no binding judgment could be pronounced, and the petition ought to have been dismissed.
    4. Because the decree is in other respects contrary to equity and good conscience, and in violation of the law of the land.
    By an order of the Equity Court of Appeals, the case was transferred to this Court, where it was now heard.
    
      Sullivan, for appellant.
    
      Perry, contra.
   The opinion of the Court was delivered by

DuNKiN, Ch.

On 12th August, 1820, Vardry McBee, “for the consideration of having a Male and Female Academy established near Greenville Courthouse,” conveyed to Jeremiah Cleveland and others, the then “ acting Trustees of the Green-ville Academy,” thirty acres of land in that vicinity, to be held by them, their successors in office, (or a majority of them,) or their assigns forever. By an Act passed in December of the same year these trustees were incorporated under the name and style of “The Trustees of the Greenville Academies.” The charter of incorporation has been renewed, and by the Act of December, 1851, it was renewed for fourteen years with power of holding real estate to the value of twenty-five thousand dollars.

At the period of the grant by Vardry McBee the lands were of comparatively inconsiderable value, not exceeding (it was said) three hundred dollars. But other persons had subscribed liberally for the same purpose — valuable buildings were erected on the lands, and for many years the academies thus established were ably conducted and successfully maintained. For reasons very fully set forth in the petition these institutions have gradually declined — the buildings are in a state of dilapidation and pupils have ceased to attend. The establishment of a male academy in the village, under the superintendence and patronage of the Baptist Convention of South Carolina, with a staff of learned and able professors, has not only superseded the necessity of any other male academy at that place, but has rendered the success of any other hopeless, if it were desirable. For some time past the Baptist Convention had it in contemplation to establish also a female seminary, which, according to the construction of (their charter given by this Court, they had authority to do. In order to induce the convention to locate the seminary at Greenville, the Board of Trustees of the Greenville Academies proposed to transfer to the Baptist Convention, what are called, the Academy lands, “for the purpose of endowing a female college, on condition, that the said Baptist Convention would forever keep up in the village of Greenville both a male and female school, where all the branches usually learned in a male and female academy shall be taught by competent and able teachers and which shall be open to the whole community.” It has been said that this was the proposition of the board of trustees. It is true that some members of the board objected and for reasons which they have set forth in their answer. But, as well from the express terms of McBee’s deed,_as_up.on general principles, theJiotjon,ofjhe.majority of the_trustees. upon..any matter within their, .competency is .the act of the corporation. The trustees state in their petition the conviction of their board that they have the right to make the proposed transfer under the deed of Y. McBee and the terms of their charter, but that in deference to the objections that have been made as well as to avoid involving the Baptist Convention in any litigation, they had deemed it proper to ask the permission of the Court to do so.

Upon the hearing of this petition and answer, and the evidence submitted, a decretal order was made, on 15th of July, 1854, “ that the petitioners have leave to transfer their trust and trust estate to the Baptist Convention of Sóuth Carolina, or to the trustees of the Furman University, who, thereupon, shall be substituted as trustees in place of the existing board of trustees; on the express condition however, that such substituted trustees” shall, in all repects, execute the trusts declared in the deed of V. McBee, dated August 12, 1820, and particularly shall keep up and maintain, at or near Greenville Court House, institutions of learning for the instruction of boys and girls in all the departments of education usually taught in male and female academies, for the use of the community, and without preference asjto terms of admission of any particular sect of Christians.” From this decretal order an appeal was taken, upon the various grounds submitted in the brief.

In the argument of the cause here the decree pronounced at the Circuit has been treated by the appellees as no more than an ordinary act of the Chancellor for the change or substitution of trustees, and it has been intimated that it was an application addressed to the discretion of the Judge, from whose decision an appeal would not properly lie. Upon motions for a continuance, or any such question arising in the carriage of the cause, this Court, principally from considerations of convenience, never interferes with the decision of the Circuit Court. But it is certainly a misapprehension to suppose that upon questions addressed to the judicial discretion of a Chancellor, an appeal will in no case be entertained from his decision. No motion can be more emphatically for the discretion of a Chancellor than an application for an issue at law. But, in Hampton vs. Hampton, 3 Ves. & Bea. 41, Lord Eldon held, that “ a refusal to send a cause to a jury was a just “ ground of appeal if the Court of Appeals should think that the contrary decision would have been a sounder exercise of discretionand so it was ruled in this Court in Jaggers vs. Estes, 3 Strob. Eq. 34, following Drayton vs. Logan, decided in 1824. In Jaggers vs. Estes, the Appeal Court refused to interfere with the judgment of the Chancellor on the question of continuance, but reversed his decision on the motion for an issue. But the amation and substitution of a trustee is sometimes the most difficult question in a cause, and, it may be, the most important, involving not only property, but character. A trustee may be removed for misconduct, or incapacity, and for other reasons. The principal object of proceedings is sometimes to remove an executor, or other trustee, for incompetency. Supervening insolvency is sometimes regarded as sufficient cause to change the trustee. But if a son known to be insolvent, should be appointed executor by his father, and should afterwards be removed by order of the Chancellor on the ground of insolvency, it might be said, and properly, that the removal and substitution of trustees is for the discretion of the Chancellor, but it is, nevertheless, a proper subject of appeal, and if, as in the case supposed, in the opinion of the appeal tribunal he has miscarried in judgment, it is their duty to revise the same and re-instate the executor.

I think no doubt is entertained that a corporation may be appointed trustee, either by an individual or by the act of the Court, provided the duties to be discharged are within the powers granted by the charter. The general principle is stated by all the modern elementary writers, and is well illustrated by Mr. Justice Story, in Vidal vs. Mayor of Philadelphia, 2 Howard, 128 — a case involving the validity of Stephen Girard’s will. But it is insisted on the part of the appellant that this is only nominally an order for the change and substitution of trustees — that it is, substantially, and in effect, a transfer of one incorporation with all its rights and privileges to another and different corporation, a power which it is not competent for this Court to exercise, but is essentially a political power and belongs to another department of the government. In this view some members of the Court concur, but it is not deemed necessary to express any definite opinion on that construction of the order.

Corporations are divided into ecclesiastical (or religious) and lay. Lay corporations are again divided into civil and eleemo-syn'ary. Among eleemosynary corporations are classed colleges and academies established for the promotion of learning and piety, and endowed with property by public and private donations. The State Convention of the Baptist denomination was incorporated essentially as a religious society, although vested with large powers in relation to education. The Trustees of the Greenville Academies are a lay corporation of an eleemosynary character. It is conceded that by the decretal order the Baptist Convention become the Trustees of the Greenville Academies, become the Corporation established by that name in 1820, and entitled, as such, to the escheated property in Greenville District, granted by the Act of 1822, and to all other rights and privileges appertaining to that Corporation. If it may be gravely questioned whether it be within the scope and purview of the charter incorporating the Baptist Convention that they should be permitted to accept this additional charter: it is very clear that such amalgamation should only be sanctioned from considerations of pressing necessity. It is not perceived that any such necessity exists. The prayer of the petition does not seek it. They ask for leave to transfer the property for the consideration stipulated, and not for a change of trustees. The subsequent resolutions of the Convention, to which the Court was referred by the appellees, treat the proposal as an offer to transfer the lands on stipulated conditions in which they formally acquiesce.

By the deed of Y. McBee, the title to the land is vested in the trustees and their successors, or a majority of them; and by the charter of incorporation, the trustees have authority in the most ample terms, to lease, sell, alien and convey the real estate belonging to the Corporation. The purposes of the trust were to maintain and keep up a male and female academy in the vicinity of Greenville. In carrying out these objects the trustees were unrestricted.

In the choice of instructors, in the amount and mode of compensation, the will of the majority of the trustees was necessarily the only rule of action. They might select for teachers, Baptists, Episcopalians, Roman Catholics, or persons of any other religious denomination; and they might stipulate to pay them by the quarter, by the year, or in any other mode upon which they could agree. If they could find a corporation or individuals who would undertake to keep up the schools in a satisfactory manner for a term of years, or in perpetuity, the trustees are not restrained from making a contract to that effect, or from compensating the contracting party by a transfer of so much of the corporate property as they may deem an adequate equivalent.' But the party contracting may fail in his stipulations. In that event, the trustees of the Gi'eenville Academies have a plain and adequate remedy. But if the trustees of the Greenville Academies are merged in the Baptist Convention — if the two corporations are united under the decretal order which has been made — although this Court has the power to correct any abuse of a trust, it is not very easy to perceive upon whose motion the application would he made. As a matter of expediency and in furtherance of the objects of tbe trust, it is better that the Baptist State Convention and the Trustees of the Greenville Academies should continue to exist as separate and distinct corporations — that the petitioners should be left to make their own arrangements with the Baptist Convention, and to see to the fulfilment of them. Being of opinion that the petitioners required no aid or authority from this Court in making the transfer of the lands, and that the change of trustees was unnecessary and inexpedient, it is the judgment of this Court that the petition should be dismissed, but without costs. It is so ordered and decreed.

Wardlaw, Withers, and Glover, JJ., concurred.

Wardlaw, Oh.

I concur in the result which has been attained in this Court, as I believe that the process preferred here will achieve the end aimed at in the Circuit Decree, and that it is not substantially different from the scheme of the decree. I propose, however, to say something in vindication of the precise plan adopted by the Chancellor.

Upon the petition of the trustees of the Greenville Academies, the Chancellor gave the trustees leave to transfer their trust estate and the trusts connected with it, to either of two other corporations, the Baptist Convention of South Carolina, or the trustees of Furman University, on the condition that the trusts originally declared concerning the estate, should be fully executed; with further leave to the trustees to apply at the foot of the decree, when the transfer of estate and substitution of trustees should be negotiated, for the order of the Court confirming the substitution or other order in execution of the decree. The Chancellor did not definitively confirm any particular substitution; but he did adjudge that the trustees of the G-reenville Academies had the right to transfer their trust and estate, and that both the Baptist Convention and the Eurman University might receive the trust estate, and execuce the trust. The trust estate in question consists of the remnant of a tract of land conveyed by Vardry McBee, August 12, 1820, to six persons described as “ the present acting trustees of the Greenville Academy,” and to their successors in office, or a majority of them or their assigns ; and of buildings which have been erected on this land, at the expense and by the contribution of many persons of different religious belief.

The deed of Y. McBee purports to be executed on “ the consideration of having a Male and Female Academy established near Greenville C. H.,” and on the “ trust for the use of the said Academy.” The persons named in this deed did not at the time constitute a corporation; but they, with others added to their number, were incorporated as trustees of the Greenville Academies, in December, 1820, with the usual powers of corporate bodies, and with express power to hold and alien real estate. — 8 Stat. 312.

First, as to the power of the Court to make the decree in question. Independently of the Act of 1796, (5 Stat. 278,) the Court of Equity has inherent jurisdiction to appoint new trustees, in substitution of former trustees, wherever application is properly made, and the circumstances make the change advantageous. This jurisdiction is equally exercised, whether the instrument creating the trust contains a power to appoint new trustees, or is silent on the subject. Webb v. Earl of Shaftesbury, 7 Ves. 480; In re Fauntleroy, 10 Sim. 252; Finlay v. Howard, 2 Dr. & W. 490. And the fact that the original trustees were appointed by an Act of the Legislature, imposes no limit to the power of the Court to substitute other trustees. Buchanan v. Hamilton, 5. Ves. 722. The Act of 1796 simply provides for the substitution of new trustees, in exoneration of former trustees, where the beneficiaries consent to the substitution ; and it does not apply to the cases, iu which the jurisdiction is frequently exercised, of the death and misconduct of the trustees. In the present case, resort is necessarily had to the prior and inherent jurisdiction of the Court. The beneficiaries cannot be individually ascertained, and of course cannot consent to a substitution of trustees, for all the people in the Commonwealth are interested in the subject of education, and incidentally in the establishment of a Male and Female Academy at Greenville C. H. InjMs^predicament, the voice of Jdie, trustees speaks not only the consent of the corporation, but the, consent ais A of the beneficiaries. In a corporation, the voice of the majority is declarative of the will of the whole; for a cor-'"poralion ís one""artificial person, and can have one. will only, manifested by the resolution of the majority. Insurance Co. v. Sebring 5 Rich. Eq. 342. Dissentients from, the majo.rir ty can be noticed by Courts, _onIy. as_.the.y-_ present facts operating on the discretion of Courts, in executing,the regular applications" of the corporation. In the ease of natural persons appointed as trustees, it is against the usage of the Court of Equity to remove them, without their consent, even where the beneficiaries desire the removal, unless the trustees be dead or resident without the State, or be shown to mismanage the trust» or to be otherwise unfit for the office, Gibbes v. Smith, 2 Rich. Eq. 131. But the authority of the Court to remove and substitute at judicial discretion, is unquestionable. In an old ease, in the reign of Charles 2, (Uvedale v. Patrick, 2 Ch. Ca. 129,) a trustee was removed, and another substituted, altnough he was desirous of acting, because his co-trustees declined to act with him. The Lord Chancellor remarked, that he liked not that a man should be ambitious of a trust, where he can get nothing but trouble by. it, and declared that, without any reflection on the trustee, he should meddle no further with the trust.

It is clear that the trustees of the Greenville Academies have the power to alien the estate belonging to them, and of course to impose conditions and trusts in any particular alienation.— All corporations, if not disabled by statute, have by law a general right of alienating their property; and their consequent power of appointing trustees, on any disposition made by them, is co-extensive with this right. Att’y Gen. v. Aspinwall, 2 M. and Cr. 613; Att’y Gen. v. Wilson, 1 Cr. and P. 1. In the case before us, the estate was conveyed to the trustees, and to their assigns, and when afterwards incorporated, express power was conferred on the corporation to alien the estate: a fortiori, the corporation may appoint trustees and impose trusts on any alienation.

It seems to me equally clear, that both of the corporations, to one of which it was proposed to transfer the estate and surrender the trust, were competent to accept the trust, and compella-ble to execute it,„if excepted. The Baptist Convention of South Carolina was incorporated in 1825', (8 Stat. 346,) with the usual powers of corporate bodies, and with express power to take and alien real or personal estate; and its objects and purposes were declared to be to erect and establish an academical and theological seminary, for the education of youth generally, and of indigent, pious young men particularly, who may be designed for the gospel ministry, and for all other purposes necessary for carrying the foregoing objects into effect.” It is quite obvious that the promotion of education wr.s the general purpose of this corporation, and that it had express power to establish a “ seminary for the education of youth generally,” without limitation to the male sex. The Furman University was incorporated in 1850, (12 Stat. 37,) with express power to take real or personal estate to the extent of thirty thousand ■dollars, and to prescribe the course of study to be pursued by students, and to do all things for the benefit of the university, as amply as a private person or a body politic could do. Here again, the business of the corporation is education, and there is no restriction as to sex. A chartered university has authority to teach all knowable. things, and as a necessary incident, to establish subordinate schools for this purpose.

It was faintly suggested that a corporation could not be a trustee. It is the familiar doctrine of the Court, that a trust shall not fail for lack of a trustee. All persons capable of taking a beneficial interest in property, and some others, may hold as trustees for the benefit of other persons. Femmes coverts, infants, idiots, lunatics, and other persons not sui juxis, may be trustees, subject of course to their legal incapacity to deal with the estate vested in them! In early times, it was held that none but those who were capable of being seised to a use, (and under the statutes of mortmain, not of force here, a corporation was not thus capable in England,) could be a trustee ; and .that a corporation was further disqualified as trustee, as lacking the requisite of confidence in the person; but this doctrine has been long exploded as too artificial and unsound. It is now settled that a corporation may be a trustee, in the same manner and to the same extent as any private person. Green v. Rutherforth, 1 Ves. Sen. 468; Att’y Gen. v. Foundling Hospital, 2 Ves. jun. 46; Att'y Gen. v. Landerfield, 9 Mod. 287; Vidal v. Girard, 2 How. 187. In truth, nearly all corporations are trustees; as an incorporated Bank for the stockholders.

If a particular trust be inconsistent with the purposes for which the corporation was created, the corporation is an unsuitable trustee, and not compellable to execute the trust; but if the purposes of the trust be germane to the objects of the incorporation, if they relate to matters which will promote and perfect those objects, a corporation is as fit a trustee as any natural person, and equally under the control and direction of the Court. As Judge Story remarks, in delivering the opinion of the Supreme Court of U. S., in Vidal vs. Girard, “there is no positive objection, in point of law, to a corporation taking property upon a trust not strictly within the scope of the direct purposes of its institution, but collateral to them; nay, for the benefit of a stranger or of another corporation.” Thus in Green vs. Rutherforth, 1 Ves. 462, where there was a devise to St. John’s College, in Cambridge, of the perpetual advowson of a rectory in trust that the presentments to the church should be made in an order prescribed, it was determined that the College, although having a visitor appointed by the founder, ■was obliged to execute this additional trust under the direction of the Court. So too, in Vidal vs. Girard, it was held that the city of Philadelphia, incorporated with ordinary powers for B" unicipal government, was competent to receive and execute a trust for the establishment of a college. In the case of Thomas vs. Ellmaker, Parson’s Select Cases in Equity, 118, it is said that a corporation cannot be a trustee in a matter in which it has no interest; but counsel misapprehend this doctrine when they insist that it imports any restriction on the acquisition of further property, in trust, not existing at the date of the charter. A corporation cannot have an interest in estate until acquired; but no impediment to the acquisition of further estate for corporate purposes, in trust or otherwise, could be imposed by a Court. The whole force of the dictum is, that a corporation cannot be a trustee for objects and purposes in which it has no interest. For example, a bank would be an unfit guardian for an infant. But in the case before us, both of the corporations suggested as substitutes for the trustees of the Greenville Academies, were incorporated for the same general purpose of education as the original trustees were, and have full power to execute the trusts under the direction of the Court.

It was gravely argued, that the substitution proposed in the circuit decree involved an utter perversion of the trust, and overran the provision of the Constitution of the United States inhibiting the passage, by a State, of any law violating the obligation of contracts. The case of Dartmouth College vs. Woodward, 4 Wheat. 518, which was principally relied upon, contains sound and approved doctrine, but it has no application to the present case. There the legislature of New Hampshire undertook to set aside provisions previously made by legislative authority in favor of special trustees, and conferring a beneficial interest on the trustees, against their consent. Here the old trustees consent to the substitution and apply for it, and^ have ;nq beneficial interest in the trust. The obligation of no contract is infringed.' It is supposed that, as the contributions for the erection of the Academy buildings were made by persons of variant faith, it defeats the wishes of the contributors, and violates freedom of opinion, to devote the lands and buildings to the supervision of a particular sect of Christians. Undoubtedly, under our constitutions, there should be no ratification or preference by Courts of any particular creed. But the placing of a school under the patronage and supervision of a particular sect, implies no preference of this sect. The decree attempted to provide carefully against such preference. It is always desirable to enlist, in support of a school, many persons associated by any common bond or tie. I have no special fondness for the sect to which the benefit of my decree might enure; and I frankly avow, that under the proof given of the advantages of the substitution, I should, under like circumstances, have directed a substitution to the College of Jesuits, the Sisters of Mercy, the Abolitionists of Slavery, or any other person, natural or artificial, capable of executing the trust. A school, under the patronage of a particular denomination of Christians, is not necessarily sectarian. Teachers of different faith are frequently employed, and students of all classes are earnestly invited. ■ In my private opinion, denominational schools are more likely than any others to be successful in our State, and that any evils from them may be corrected by our College, which admits and brings into communion persons of every faith, who possess competent scholarship.

It is further objected to the circuit decree, that it amounts to the extinction or complete transfer of the original charter, which can be rightfully effected by the legislature alone. It may be conceded that the Court has no authority to diminish the powers of one corporation, or add to those of another; but it is a misconception of the decree to suppose it contemplates any such thing. It simply deals with particular estate, and the trusts connected with it, and does not tamper with charters. The trustees of the Greenville Academies are left, with all their, powers, to acquire other estate by escheat or otherwise, and if the Baptist Convention, or the Furman University, did not have competency, before the decree, to accept and execute an educational trust, neither can do so now. The Court did no more than, in the exercise of an established jurisdiction, to change the trustees, with their consent, who held a tract of land in trust.

If the Court had the power to decree the substitution of trustees, and if the one corporation could surrender and the other could receive and execute the trust, as I have endeavored, to show, then the selection of the new trustees was altogether within the discretion of the Chancellor, and is not a subject for. review by an appellate tribunal. It would be easy, if necessary, to show that this discretion was judiciously exercised in this instance, particularly as it was desired by the founder of the charity, and demanded by the interests of the local community most immediately concerned in the charity.

In conclusion, I repeat that the order on circuit was inchoate, and that it was contemplated, when the final order for substitution should he proposed, to secure, by the appointment of a visitor and other guards, the faithful execution of the trust by the substituted trustees.

Daegan, Ch., concurred.

O’Neall, J., being a trustee of the Furman University and of the Baptist State Convention, gave no opinion.

Munro, J., was sick, and therefore absent.

Motion granted. 
      
       when this opinion was prepared, I understood the judgment of the majority of the Court to he, that the petition should he retained, and the petitioners be instructed that they already possessed the power, by conveyance of their estate on the same trusts to their proposed successors, of achieving substantially the object of the petition. It seems to me that the doubts and obstructions in the way of the petitioners as to the transfer of their estate and trusts, entitled them as trustees of a charity to apply to a Court of Equity for advice and aid. If I had supposed the Court intended to dismiss the petition, I should not have intimated acquiescence in the result.