Court Opinion

ID: 5144569
Source: CourtListenerOpinion
Date Created: 2022-01-02 01:24:10.14051+00
Date Added: 2024-06-11T08:24:42.394358
License: Public Domain

RILEY, J.
(dissenting). By constitutional prohibition (sec. 2, art. 22, Const, of Okla.) a corporation doing business in this state shall not “buy, acquire, trade or deal in” rural real estate “except such as shall be necessary and proper” for carrying on the business for which such corporation was chartered and licensed.
The majority deem the constitutional prohibition not self-executing and rely on State v. Prairie Oil & Gas Co., 64 Okla. 267, 167 P. 756, Parwal Investment Co. v. State, 71 Okla. 121, 175 P. 514, Sheridan Oil Co. v. Superior Court, Creek Co., 183 Okla. 372, 82 P. 2d 832, and the rule stated in 10 R.C.L. 607. The rule stated constitutes a fundamental error, destructive of the public policy which is directed against the evils of corporate and alien ownership of land.
It will be readily observed from the text of 10 R.C.L. 607, supra, that the general rule stated is based upon vthe statute laws of certain states” which, unlike the constitutional prohibition, are not directed against the acquisition of lands by corporations, but, to the contrary, prohibit corporations from “holding” such lands beyond a prescribed period of time except from proper purposes.
While section 1636, O.S. 1931, of the statutory laws in Oklahoma, applicable in the case at bar, prohibits a corporate holding of rural real estate not within the exception, there is a paramount prohibition of Constitution which by its terms denies the corporate capacity to acquire rural lands unless within the exception provided.
State v. Prairie Oil & Gas Co., supra, relied upon by the majority, constitutes no basis for the rule of nonself-execution as applied to the constitutional prohibition, for, in that case, the lands involved were lawfully acquired prior to statehood. The issue there involved was not the. constitutionally prohibited acquisition of the land, but the holding of lands lawfully acquired beyond a period of time specified by the statute.
The obiter dictum stated in the body of the opinion constituted the fundamental error in Parwal Investment Co. v. State, supra. In the Parwal Investment Co. Case rural lands were corporately acquired after statehood, contrary to the constitutional prohibition. This court, in that case, erroneously relied upon Louisville School Board et al. v. King, 127 Ky. 824, 107 S.W. 247, 15 L.R.A. (N.S.) 379, and it is to be observed that the present majority opinion likewise adverts to the rule prevailing in Kentucky. It is noteworthy that the constitutional prohibition in Kentucky, like the statute in Oklahoma, is directed, not against the corporate acquisition of land, but merely as against *577the corporate holding of such land for a period of time longer than five years under penalty of escheat.
Sheridan Oil Co. v. Superior Court, Creek Co., 183 Okla. 372, 82 P. 2d 832, without examination, merely reiterated the error.
In the case at bar, it is disclosed that since statehood title to rural lands involved was sought to be vested in the Texas Company as result of conveyances to the corporation. Some of these conveyances were executed in the year 1927 and others were sought to be acquired .by reason of a merger with the parent corporation. If title to the lands was in fact vested in the corporation, necessarily the acquisition was under the exception to the constitutional prohibition, i. e., acquisition of the lands was necessary and proper for the corporate enterprise as measured by the state’s public policy. Otherwise, the constitutional prohibition is dormant, meaningless, and dependent upon legislative discretion in the enactment and judicial sanction in approval of particular procedure for es-cheat and a reiteration of grounds upon which escheat may be based. Thus, despite denial by basic law, a corporation is permitted, by operation of law, to do the very thing which is against the policy of the law. This view is expressed in State ex rel. Short v. Benevolent Investment & Relief Ass’n, 107 Okla. 228, 232 P. 35, 37 A.L.R. 190.
The effect of the nonself-executing rule is that by violation of the prohibition, constitutionally provided, title to the lands would not vest at once in the state but remain imperfect and inchoate until established by decree. The question may be illustrated by construction of an analogous provision:
“No alien or person who is not a citizen of the United States shall acquire title to or own land in this state.” Sec. 1, art. 22, Const.
Except for disposition of lands acquired by aliens, as a result of inheritance, within a limited time, there is no room in the simple and sweeping mandate of the Constitution for an abeyance or suspension as to the title of lands sought by purchase to be vested in an alien. The state, as the ultimate owner, is in effect the grantee. Remedial expedients, such as ejectments or inquest, suffice to establish the fact of an escheat and record the title of the state. The fact, and not the record, is the origin of the state’s title to such lands. And while it is true that to establish an escheat at common law “an entry or other seisin was once required,” 2 Bl. Com. ch. 15, p. 245, yet seisin and title should not be confused.
At the common law, an inquest in such instances was merely a proceeding to ascertain the title of the Crown, but it was never an essential condition to the vesting of title, because, otherwise, a freehold would be in suspense, “which may not be”. Cardozo; Re Carnegie Trust Co., infra.
Therefore, the failure to mention es-cheat in the constitutional prohibition, or to provide particular procedure by statute to effect an escheat, is wholly immaterial to the preservation and enforcement of the public policy denoted by the Constitution. Upon the happening of the event and the existence of facts constituting an escheat, the state possesses a right in land which, upon resistance, may hot constitute a possession in deed and consequent power to grant until established by procedure. But such procedure is supplied by the usual and customary remedies at law. Ejectment is one of these and it may be joined with an action to establish and quiet title. These provisions of the Code are supplemented by procedure of the common law existing in aid of the statutes.
Entry upon lands is unnecessary to perfect title of an heir and it is likewise unnecessary to establish the right of escheat in the state. There is no distinction under modern law between the right of the state upon (1) death of a citizen seized and possessed of land, without heirs or devisees, or (2) a prohibited attempt by conveyance to vest title to lands in an alien, and (3) *578the right of the state, in like circumstances, relating to a constitutionally prohibited eorporate/ act attempting to “buy, acquire, trade or deal in” rural real estate.
Neither an entry upon land nor a judgment of court in such circumstances is necessary to the existence of the state’s right. McCormack v. Coddington, 184 N.Y. 467, 77 N.E. 979; Re Carnegie Trust Co., 206 N.Y. 390, 46 L.R.A. (N.S.) 260.
The judgment does not create the title which it registers.
In all instances, however, where the title is defeasible, i.e., good until defeated, if in circumstances suggested by the statute prohibiting holding of lands lawfully acquired by a corporation, wlien no longer necessary or proper for the corporate enterprise, or the holding of lands inherited by an alien beyond the time prescribed for disposition of the land, there is need for an adjudication to establish the wrong as measured by the public policy and the state’s right which ensues upon establishment of the wrong. Wallahan v. Ingersoll, 117 Ill. 123, 7 N.E. 519, 23 A.L.R. 1237.
I do not agree that the exception contained in the constitutional prohibition constitutes the grant or “affirmation of . . . the power” relating to the corporate acquisition of rural real estate. The source of the corporation’s power to acquire rural lands does not spring from its charter, for the corporate aims are limited by the public policy. Upon inquiry and determination that acquisition of lands was not necessary and proper for corporate purposes, the title of the state relates back to the time of the unlawful acquisition. McCaughal v. Ryan (N.Y.) 27 Barb. 376. So that if the corporation acquired land in contravention of law, purporting to act under the exception contained in the constitutional provision, the burden is cast upon it to defend the acquisition as of the time of acquisition, and if the corporation fails to do so, the judgment should find that while the corporation has possession, it never acquired title because of corporate incapacity, effected by the constitutional prohibition.
Under the general rule prevailing in other jurisdictions, an alien, in the absence of law to the contrary, may take land by purchase and hold the same against everybody but' the state; but, under the general rule elsewhere prevailing, an alien can never inherit. Therefore, the land which by rules of relationship goes to the alien, if he were competent to take, immediately vests in the state without the necessity of judicial proceedings to effect the result. In short, under the general rule, the alien may take by act of party (deed) but never by operation of law (inheritance). The underlying reason is because the law will be deemed to do nothing in vain and therefore it will not cast a descent upon one who cannot by law hold the estate. Wilbur v. Tobey, 16 Pick. 177; 15 L.R.A. (N.S.) 380; Fairfax v. Hunter, 7 Cranch, 603, 3 L. Ed. 453.
But in Oklahoma the reverse is true. By Constitution, sec. 1, art. 22, an alien’s acquisition of land by purchase is not defeasible; it is prohibited. Title never vests; it fails, and the judgment relates back to the failure. Re Melrose Avenue, 234 N.Y. 48, 136 N.E. 235, 23 A.L.R. 1237.
And so it is, as applied to corporate acquisition of rural lands not necessary or proper for the corporate enterprise at the time of an attempted acquisition of title to the lands.
Instances of lawful corporate acquisition of lands, which became no longer necessary or proper for the corporate enterprise, are fully covered by the statute prohibiting a corporate holding of such lands beyond a specified period of time.
Marland v. Gillespie, 168 Okla. 376, 33 P. 2d 207, is the foundation and basis of the majority opinion. The rule stated in the Marland Case is obviously in error. It relates to the corporate *579ownership of the fee, rather than an easement for right-of-way purposes. That error was brought to attention in Corbyn v. Oklahoma City, 197 Okla. 483, 172 P. 2d 384 et seq. This court, in the Marland Case, erroneously avoided the decisions of Kansas as being based on statutes “not found in the Oklahoma statutes”, whereas the statutes of Oklahoma and those of Kansas are without substantial difference. It also appears that the lands involved in the Marland Case were acquired by the railroad corporation at a time long prior to statehood, and therefore at a time when the constitutional provision did not affect the title conveyed. But the constitutional prohibition, if properly entering into the consideration, should have been deemed merely as a subsequent enactment, harmonious to the Territorial statute existing, restricting the capacity of the railroad corporation to take, for railroad right of way, the fee or title extended beyond that denoted by “right of way”, which signifies, in law, a perpetual easement or public thoroughfare which reverts when the public use is ended. The public policy relating to such conveyances for the purpose expressed by section 24, art. 2, Const, of Okla., restricting the capacity of common carriers to take for right of way without the consent of the owner the fee of the land and provided the fee of the land so taken shall remain in the owner, subject only to the public use, seems to have confused the result reached and led to an opposite holding in the Marland Case, contrary to the existing statute limiting the corporate capacity to acquire fee-simple title and contrary to authorities and decided cases.
The phrase “necessary and proper,” as employed in the exception to the constitutional prohibition against corporate acquisition of rural real estate, has variety in construction and application, dependent upon whether the phrase is employed in a grant or restriction in power.
Instances of construction of the phrase “necessary and proper” involved in a grant of power are recited in the majority opinion, but even in such instances as recorded in McCulloch v. State of Maryland, 17 U.S. 316, 4 L. Ed. 579, consistency “with the letter and spirit of the Constitution” measured the grant. Plaintiff in error has sought, and apparently secured, a construction equivalent to the terms “useful and convenient”, so that the corporation is not restricted under the public policy from a choice of means in acquiring petroleum and its products, when something less than a fee would serve the purpose. The majority opinion indulges a rule of usefulness and suitability to the corporate enterprise. It may be noted in Preston County Coke Co. v. Elkin Coal & Coke Co., 82 W. Va. 590, 96 S.E. 973, where only the surface of land was sought for mining operations, that limited estate was found reasonably appropriate and therefore necessary and proper, but as to the fee in land outside of cities and towns and additions thereto, consideration should be given to the use to which the property is designed to be put, and while the extent of the title acquired need not be necessary in the sense of being indispensable to the legitimate objects of the corporation (Fletcher on Corporations, vol. 6, sec. 2788), the corporate right to acquire or hold the fee in rural real estate ought also to be measured by the public policy, particularly where these powers sought to be exercised are “precluded by restrictions and exceptions specified in the Constitution”. Knox v. Lee, 79 U.S. 457, 20 L. Ed. 287.
But assuming that “suitable” or “useful” or “implying an actual need”, as stated in the rule adopted in the case at bar, are synonymous with the word “necessary” employed in the exception, it does not follow that it would be proper for the defendant corporation to transgress the spirit and purpose of the public policy by acquiring fee-simple title to rural lands, based merely upon needs of the corporation nor suitability of the land. “Proper,” says the Kentucky court, in Griswold v. Hepburn, 63 Ky. 20, is not synonymous with *580“necessary” nor a superfluous addition to it, as it would be if the import were merely fitting or appropriate or adaptable. The true test is whether the preferred'means is congenial with the spirit and purpose of the Constitution.
No one would deny to a corporation, engaged in the oil business, the right to acquire or hold a leasehold estate for the purpose of production of petroleum and its products. Certainly such an interest in land is necessary and proper. It is equally certain that a future corporate ownership of land is denied when lands lawfully acquired are not presently “required for use of the corporation”. Oklahoma Natural Gas Co. v. State ex rel., 187 Okla. 164, 101 P. 2d 793. The spirit and purpose of the constitutional prohibition exists ' to deny the corporate capacity to acquire rural lands “for any purpose” except as the ownership of land may be incidental to the legitimate corporate ends.
Thus it is believed mere relief, to the corporate ownership of a leasehold estate in lands, from the burdens incidental to the lease under which the corporation may operate, does not justify corporate ownership of royalty such as ordinarily conveyed by mineral grants or retained by a specific reservation in the conveyance of land by the corporation, for the rule stated contemplates corporate ownership of rural lands, whereas the constitutional prohibition is directed against the capacity of the corporation to buy, acquire, trade or deal in such lands.
It is to be observed that under the majority opinion, as to tract (c), it is said “there exists no lawful basis for the ownership of this land except to the extent of the mineral rights or oil and gas rights that passed with the conveyance of the fee to the defendant”, the judgment of the trial court, with the exception noted, is held to be “correct in its conclusion”. Therefore, it is apparent that an escheat is directed. In view of the fact that an escheat has been directed, it would seem that either the rule that the constitutional prohibition (sec. 2, art. 22) is not self-executing is in error, or sufficiency of the constitutional prohibition to effect an escheat of corporately owned rural lands is wholly immaterial, to the result of effecting an escheat in contravention of the public policy in the case at bar. However, in view of the legislative repeal of section 1631, O.S. 1931, ch. 46, S.L. 1937, 18 O.S. 1941 §86 et seq., and the substitution of a tax or character of license upon rural lands corporately held, it would seem that preservation of the public policy denoted by the constitutional prohibition would require a decision upon the issue presented as to whether the repealed statute providing for the escheat of “land” held in contravention of statute embraces the corporate acquisition of real estate in contravention of the public policy, for, in view of the repeal of the statute providing procedure and the majority determination that the constitutional prohibition is not self-executing, it is evident that under the present law the es-cheat of land corporately acquired in contravention of the public policy has ended.