Court Opinion

ID: 6661145
Source: CourtListenerOpinion
Date Created: 2022-07-20 21:02:08.221946+00
Date Added: 2024-06-11T16:00:11.086354
License: Public Domain

Hamer, J.,
concurring.
The corporation seems to have been organized as a charitable institution to maintain a home for orphans and aged people — persons who are unable to provide for themselves. The purpose of the existence of the institution is not for profit. It has no property except that in controversy. The aged persons, for the benefit of whom the Home in part exists, appeared to have contributed all their means to establish and maintain it. This was done under a contract so that the inmates should have a home that would shield them in their old age, infirmity, and feebleness.
It is provided in its articles of incorporation that the transaction of the business of the Home “shall be vested in five trustees to be elected by the members of the corporation.” These trustees have no authority to bind the corporation and create a debt against it, unless they act within the purposes of the corporation as set forth in its *505articles. The thing proposed to be built and for which it is claimed the indebtedness on mechanics’ liens was incurred was a hospital. I am unable to see how these people needed a hospital. Suppose that the trustees had undertaken to construct a flour-mill, would they have had authority to do it? Could they engage in any sort of commercial venture? Could they do anything outside of that which the articles of incorporation would naturally include? The character of the occupation of the trustees Avas such that it demanded of the one who would do business with them a critical inspection of their powers. The hospital was to be built without expense to the Home. The doctors who were going to build it so represented to the trustees. Therefore the mechanics’ lien people can only look to the doctors. They certainly cannot look to the trustees, who never intended to incur an obligation against this charitable institution. If there is to be a loss, let those whose vigilance in getting business made the loss possible suffer for it. The helpless orphans and the feeble old people should not be turned out of their refuge because the doctors overestimated what they could do, or because they conceived the idea of building a hospital for a charitable institution which did not need it, and whose articles of incorporation did not contemplate it.
Section 153, ch. 16, Comp. St. 1911, contains a provision that all funds received by any such corporation (charity society) shall be used in the first instance, or shall be vested, and the income thereof used (after paying the necessary expenses) “for the exclusive purpose set forth in the articles of association, and no portion thereof shall be used for any such purpose except within this state, and no portion of the funds of any such corporation shall be used or contributed toward the erection, completion, or furnishing of any building not OAvned or used by such corporation.”
Section 154c of the same chapter provides that “the books, records and files pertaining to any such Home shall be subject to the inspection of the auditor of public accounts of this state or any deputy or clerk authorized by *506him to inspect the same.” It is further provided in the same section that, “in case of any diversion of the funds or other property acquired by any organization under this act from the object and purposes of such Home or Homes, or funds therefor, the attorney general is hereby authorized to bring suit in any court having general jurisdiction in equity matters in the state, to restrain and prevent any diversion of such funds or property, and to adjust any and all wrongs concerning the same.”
It wall be seen that the spirit of this legislation tends to prevent any diversion of the property from the charitable purpose intended. It seems to the writer that, if the trustees undertook to endanger the safety of the property by engaging in a contract which might incumber it with mechanics’ liens in carrying out a purpose not contemplated by the articles of incorporation, such effort of the trustees would be beyond their jursdiction, and forbidden by the general spirit of our laws towards charitable institutions.