United States Trust Co. of N.Y. v. Lee

• Citation: 24 Am.Rep. 236,1874 WL 8940,73 Ill. 142
• Parties: UNITED STATES TRUST CO. OF NEW YORKv.ANNA D. LEE.
• Decision Date: 30 September 1874
• Court: Supreme Court of Illinois

73 Ill. 142

1874 WL 8940 (Ill.)

24 Am.Rep. 236

UNITED STATES TRUST CO. OF NEW YORK

v.ANNA D. LEE.

Supreme Court of Illinois.

September Term, 1874.

OPINION TEXT STARTS HERE

APPEAL from the Circuit Court of Cook county; the Hon. W. W. FARWELL, Judge, presiding.

Mr. OBADIAH JACKSON, for the appellant.

Mr. W. G. RANDALL, for the appellee.

Mr. CHIEF JUSTICE WALKER delivered the opinion of the Court:

It appears, from the record, that David Lee, a citizen of New York, died, having executed his will, vesting authority in certain trustees named in the will, to whom he devised his property, real and personal, to pay the income from the same to his children, during their lives, and to divide the principal at their deaths amongst such persons as the children should, by will, respectively, designate, and should they die intestate, then to the legal heirs of such children.

In March, 1870, Mr. Fales, the surviving trustee, resigned his position as such, whereupon the Supreme Court of New York, after accepting his resignation, appointed complainant a trustee in his stead. The widow and children of Lee not only assented to the appointment, but requested that it should be made. By the statute of New York such a corporation may be appointed such a trustee.

Mr. Lee, at the time of his death, owned a large amount of property in New York, also large and valuable real estate in the vicinity of Chicago, in this State. This real estate is vacant and unproductive. Complainant has had the charge and management of the estate since 1870; has paid taxes on the same, and being desirous of selling a portion of this property, complainant applied to be appointed trustee by the circuit court of Cook county, but that court, upon the ground that complainant was a foreign corporation, having been created by the legislature of New York, and unable to hold lands in this State, refused to make the appointment, and dismissed the bill. From that decree this appeal is prosecuted, and errors are assigned, and the case is submitted, by stipulation of counsel, on appellant's abstracts and briefs.

The question, whether foreign corporations may purchase and hold real estate in this State beyond what is necessary for the transaction of their business or in collection of their debts, was presented to this court in the case of Carroll v. East St. Louis, 67 Ill. 568. It was held in that case, that such a power did not exist, it being contrary to a sound public policy. A petition for a rehearing was presented, and after mature consideration it was denied. The question was again presented in the case of Starkweather et al. v. The American Bible Society, 72 Ill. 50, which involved the devise of real estate lying in this State. The same rule was announced as in Carroll's case. In that, as in the former case, a petition for a rehearing was presented, but, on mature consideration, was denied. Nor are we now disposed to change the rule announced in those cases, but must regard the rule as settled in this court, and must leave it to the General Assembly to make any change they may deem for the best interests of our community, when it shall be demanded.

But, it is urged that this case is clearly distinguishable from the cases we have named, inasmuch as the complainant would, whilst taking the fee to the premises, only hold it in trust for the purposes of the will and for the use of the children of Lee. Conceding this to be true, in what does it differ from the other cases? The law is well settled that a corporation and the officers who govern and control it and its operations, are only trustees for the benefit of the stockholders, creditors and others having an interest in its affairs. Such bodies are largely under the control of courts of equity, on the principle that they are trustees; and if appellant should be appointed a trustee for this property, the trust would devolve upon them, as does the holding of their corporate property--the one they would hold for the use of the heirs, the other for the use of the stockholders. No difference in principle is perceived in the two classes of cases.

To permit such bodies to hold lands in trust by deed of conveyance or by devise, would be to accomplish the same, and precisely the same thing as to permit the corporation to receive the property without declaring the trust in the deed or will. In this latter mode, the law creates and implies a trust that it is held for the use of the shareholders, and requires them to account to the shareholders for all profits arising from the property of the corporation; and a deed or will that declares the trust only, does what the law does with corporations without the declaration. It is obvious to all minds, that if an individual were to convey land to a corporation, to hold for the use of the shareholders of the body, he would thereby do no more than if he conveyed it without declaring any trust, unless, in the former case, the company would be powerless to sell and be compelled to hold in perpetuity, even beyond the power of the law to break in on the trust and to divest the title, whilst in the latter case the corporation would have power to sell.

If such trusts were allowed to be created, then perpetuities would be established beyond all control. If permitted, a person desiring to create a perpetuity in favor of his posterity, would only have to convey land to a corporation having a perpetual charter, declare the trusts, and induce the corporate body to accept the trust. The body would then be under the control of equity, which would require the trust to be executed and the profits of the estate applied according to the terms of the deed. And if the General Assembly were to require the sale of the property thus vested, the court would be met with the objection that the General Assembly is powerless to affect vested rights. Nor is it any answer to say that our statutes require real estate, beyond such as is...