Court Opinion

ID: 6233758
Source: CourtListenerOpinion
Date Created: 2022-02-17 20:27:48.843854+00
Date Added: 2024-06-11T08:57:58.183010
License: Public Domain

The opinion of the court was delivered,
by Agnew, J.
— The claim of the Commonwealth to the surplus fund of Philadelphia Saving Fund Society is clearly unfounded. Neither the Act of 26th April 1855, relating to literary, charitable, and religious societies, nor the Act of 17th April 1869, for the escheat of equitable interests without a rightful owner, applies to this society. It has not the semblance of a charity. It is specifically a business corporation for pecuniary purposes; to receive deposits of money, invest them for the security of the depositors, and repay them with interest. The preamble sets forth, in precise terms, its sole purpose to be that of receiving and investing in public stocks, or substantial security on real estate, the small sums saved from the earnings of tradesmen, mechanics, laborers, servants and others, and of affording to industrious persons the advantages of security and interest.
The charter authorizes the society to receive, take and hold real and personal estate by gift, devise and bequest, as well as by purchase, loan, deposit and advance. But all these modes of acquisition, whether by gift ■ or purchase, are expressly declared to be for the “ uses, ends and purposes” of the institution, which are pecuniary, and not charitable in any sense of the term, legal or popular. The words gift, devise, bequest and legacy, denote only additional means given to effectuate the purpose of the charter, and are not indicative of its purpose or design. These terms are used in many old charters to describe modes of acquisition, not ends to be subserved. In this charter they are evidently subsidiary to the power to invest to enable the society to strengthen its securities, by the use of all the various forms of assurance. If a father desire to reinforce the failing or doubtful security of his son, his aid might come in any of these modes.
Power is also given to the society to “improve and augment ” its property, evidently for the purpose of creating a fund for increased security against losses and fluctuations in the value of investments. The rents, income and profits of the property are to be applied to the “uses, ends and purposes ” of the institution, according to the rules and regulations of the society itself, made or to be made by it as fully and effectually as it could be done by a natural person. This is a broad grant of power, vesting the fund to be created under this authority in the corporation itself, not for any particular cestui que trust, but for the general uses and purposes of the corporation. It cannot be said, therefore, to be property without an owner. It has not only a lawful owner, but a continuing, valuable and special purpose to subserve. The *194property thus improved and augmented as a safety fund for the protection of depositors, the society is expressly authorized to hold, enjoy and retain to the use, end and purposes of the institution, without any limitation whatever. Nor is danger to be apprehended from this large grant of powers, the legislature having reserved the power to revoke and annul the corporation. The want of stockholders and prohibition on the corporators or managers to derive emolument from the fund does not rob the society of the express powers thus given. If there were no beneficial purposes to which the fund was devoted, the argument that it is without an owner might have some force. But the obvious purpose of producing a fund by improving and augmenting the property of the society is to furnish an adequate security for the repayment of depositors. The success attending the administration of the investment, in producing the large surplus now existing after nearly half a century of good management, detracts nothing from the charter right to enjoy the accumulation for the true purposes of the society. Besides the internal evidence afforded by the charter itself, of the business character of the corporation for pecuniary purposes, the general legislation of the state has heretofore classed such institutions with other business associations, such as bank, loan, insurance companies, &c., for various purposes, such as taxation, unclaimed dividends, and deposits.
This being the true character of this society, it is obvious it is not the subject of escheat, and the proceeding to condemn its surplus fund (especially in a mode not prescribed by law) is illegal and injurious. Let us, then, examine the proceedings. The ninth section of the Act of 1855 directs the proceeding to escheat property held by a corporation contrary to the true intent of that act, to be by “ quo warranto, in all respects as is provided by law in the case of the usurpation of any corporate franchises.” Viewing this as a case of charity, the commission of the auditor-general to the deputy escheator is without authority and confers no power to proceed under the Act of 1855.
If the proceedings be considered as under the Act of 1869 to escheat property without a rightful owner, another obstacle presents itself. The Act of 1869 wholly omits to provide for its enforcement. If we might supply by intendment the mode of proceeding according to the Act of 1787, because of the title of the Act of 1869, as “ a further supplement ” to that law, yet the proceeding would be inapt and defective as applied to cases of trust property. Under the Act of 1787, the inquiry is simply whether an intestate has died, seised or possessed, without lawful heir or known kindred. It is true, it permits a claimant or party in possession to traverse the finding of the inquest, and thus to raise a question of property in a court of law; but the difficulty would be to apply *195this to the varied cases of trust. Can the property be seized and sold or rented by the sheriff, under process directed to him in the mode prescribed by the Act of 1787 ? This would displace the trustee who holds the legal title, is bound to use. it to maintain the purpose of the trust, and whose title and control may have to remain in order to preserve the estate, and to protect ulterior, contingent or alternative interests.
The proceedings under the Act of 1787 would do to determine an ordinary question of property, hut judicial intendment would be insufficient — it would require legislative power to adapt it to the peculiarities of a trust. Perhaps nothing short of equity powers would be available to mould the proceedings to suit the exigencies of each particular trust.
The proceeding to escheat the surplus fund being illegal both in its object and its mode, the judge at Nisi Prius was right in enjoining it. The act is contrary to law, and is also prejudicial to the interest of the society and its depositors. No one can doubt that an attempt to wrest from it its surplus fund with the apparent approbation of this court must impair its credit and curtail its business and might subject it to a recall of its deposits, forcing it either to suspend payment or impair its assets by the sacrifices necessary to maintain its solvency. We cannot view the proceedings of the auditor-general and his deputy as that of a sovereign, neither to be resisted nor to be arrested; but by reason of its entire want of authority, we must declare it to he illegal and void of sovereign sanction. Persons thus proceeding illegally do not represent the state, which is presumed to do no wrong, and are, therefore, to be restrained, not because they are acting as agents or officers under its commission, but because they are proceeding in violation of right and contrary to law, and have no legal commission to do the act they are seeking to perform. The process of this court acts upon them as individuals, and not upon the state. The decree of the Court of Nisi Prius is therefore affirmed.