American Mortg. Co. of Scotland v. Tennille

• Decision Date: 23 March 1891
• Citation: American Mortg. Co. of Scotland v. Tennille, 87 Ga. 28, 13 S.E. 158 (Ga. 1891)
• Parties: American Mortg. Co. of Scotland, Limited, v. Tennille.
• Court: Georgia Supreme Court

13 S.E. 158

87 Ga. 28

American Mortg. Co. of Scotland, Limited, v. Tennille.

Supreme Court of Georgia

March 23, 1891

Syllabus by the Court.

1.Under the act of February 28, 1877, providing that the state of Georgia will not consent to foreign corporations owning 5,000 or more acres of land in this state, unless they shall become incorporated under the laws of Georgia, the state alone can make the question as to the right of such corporations to hold said land.

2.A motion to dismiss an affidavit of illegality was rightly denied when at least one of the grounds thereof presented a legal defense against the further progress of the execution.

Error to superior court, Quitman county; Guerry, Judge.

Lumpkin J.

Tennille executed and delivered to J. K. O. Sherwood a promissory note, and at the same time, in order to secure the same, made and delivered to said Sherwood a deed to certain land.Sherwood transferred the note, and conveyed the land to the American Mortgage Company of Scotland, Limited, who sued the note to judgment in the superior court of Quitman county, and an execution issued thereon was levied upon the land described in the aforesaid deed; the mortgage company having previously filed in the clerk's office a deed purporting to reconvey the land to said Tennille, for the purpose of making this levy.To the levy of the execution Tennille filed his affidavit of illegality, containing several grounds, one of which was as follows, viz.: That "the said plaintiff was a foreign corporation, has never been incorporated by the laws of Georgia, and owned more than 5,000 acres of land in said state, (so far as to claim the same and hold deeds thereto,) in conflict with and against the laws of said state, and therefore could not hold the title to lands, or convey the same to the defendant legally."The defendant served on the plaintiff a notice to produce at the trial a number of papers, and among them the charter of the plaintiff, and deeds from 14 persons to Sherwood, and from Sherwood to the plaintiff, covering various lands in Randolph and Quitman counties; the use intended to be made of said deeds being to prove the ground of illegality above quoted.The court held that said charter and these deeds should be produced, and, upon the plaintiff's failure to do so, ordered the levy of the execution to be dismissed.We can see no error in requiring the production of the charter, as it might contain evidence supporting one of the grounds of the illegality.The main question, therefore, upon which this court is asked to pass in this case, is whether or not the ground of illegality setting forth plaintiff's inability to hold land, in excess of 5,000 acres, is good in law, and consequently whether or not the plaintiff should have been required to produce said deeds.

1.It seems to be well settled that, in a case of this kind, the state alone is authorized to assert her policy in prohibiting foreign corporations from holding 5,000 or more acres of land in Georgia, and that individuals have no right to make the question in controversies with each other.Numerous decisions may be found to the effect that, where a corporation acquires or uses land to any extent or for any purpose not authorized by its charter, the question of its right so to do cannot be made by an individual in a legal controversy with the corporation, or with those claiming under it, but must be raised directly by a proceeding instituted for that purpose by the state wherein such corporation is exercising such powers ultra vires.Some of these decisions were made by the courts of the states in which the corporations themselves were created, and others in states outside of which the corporations involved had been chartered.None of them are directly in point as to the precise question made in the case now before us, because the disability of the corporations arose under the provisions of their own charters.They are referred to merely to show the trend of judicial opinion on...