Chambers v. Baptist Education Society

• Decision Date: 27 April 1841
• Court: Kentucky Court of Appeals
• Parties: Chambers <I>vs</I> Baptist Education Society.

Page 215

40 Ky. 215

Chambers vs Baptist Education Society.

Court of Appeals of Kentucky.

April 27, 1841.

APPEAL FROM THE SCOTT CIRCUIT.

JUDGE EWING delivered the Opinion of the Court.

ISSACHAR PAWLING, being desirous to set apart a fund for the education of Baptist ministers, and candidates for the Baptist ministry, application was made to the Legislature of Kentucky for an act of incorporation, with a view to its reception and permanent and secure investment, for the object intended. At the session of 1828-9, an act was passed, constituting twenty-four persons therein named, trustees, with corporate powers, by the name and style of "the Trustees of the Kentucky Baptist Education Society," and giving to them and their successors, the authority to exercise all the powers, rights, and privileges, which are exercised by the trustees of any academy of learning in the state, and especially "with the power and authority, in their corporate capacity, to purchase or receive, by donation, demise or bequest, any lands, tenements, or hereditaments, monies, rents, goods, and chattels, and to hold the same, by the name aforesaid, to them and their successors forever, for the use and benefit of the said institution, and according to the intention of the donor or donors, and no otherwise."

In the following month, Pawling made his will, by which he devised and bequeathed to the trustees, in ther corporate capacity, all his estate, (except some small specific bequests,) amounting to about $20,000, with express instructions, and upon the express terms and conditions, "that the whole of the principal should be a perpetual fund, no part of which was to be used, and the interest to be applied exclusively to the education of such Baptist preachers, or candidates for the Baptist ministry, as adhered to the articles of general union of Baptists in Kentucky no part of it to be applied to either teachers or scholars of any other description whatever," and constituted the trustees his executors, and died some short time thereafter.

The trustees, after holding out similar inducements to the citizens of the adjoining counties, at length proposed, that if the citizens of Georgetown and of the county of Scott, would subscribe to the institution $20,000, payable in five years, with interest from the date, and convey to them the College ground and buildings at said town, that they would locate the College at Georgetown. The amount was subscribed, and terms proposed complied with, and the College was located as promised.

U. B. Chambers was one of the subscribers, in a small amount, and a small sum of the Pawling fund was loaned to him by the trustees. For both of these sums, judgments at law were recovered against him; and he filed his bill in chancery, against the trustees and others, injoining their collection, in which he charges various acts of misfeasance and abuse of their corporate powers, but mainly in the misapplication of the Pawling fund, to other objects and purposes than those designated by Pawling, the founder and donor.

The trustees demurred to the bill, which was joined, and the demurrer sustained by the Circuit Court, and the bill dismissed, from which decree an appeal has been taken to this Court.

As to the charges, which involve a forfeiture of the charter, a Court of Chancery has no jurisdiction over such matters. It cannot inquire into a usurpation or misuser of powers, by the corporation or any of the trustees, nor into acts of misfeasance or nonfeasance, with a view to the amotion of any of its members, or the dissolution of the corporation. These are subjects exclusively of common law jurisdiction, and appertain exclusively to the common law tribunals: 2 John. Chy. Rep. 376-78-88; Attorney General vs The Utica Insurance Company, 5 Term Rep. 85; The King vs Whitwell, 3 John. Rep. 134; 5 John. Chy. Rep. 380; Slee vs Bloom, &c. 17 Vesey, 491; Attorney General vs Bank of Clarendon, 1 Equity Cases Ab. 131; Attorney General vs Reynolds, 1 Vesey, 468; 2 Atkins, 406-7.

But though a Court of Equity cannot take cognizance of acts of forfeiture, nor amove members, nor pronounce a dissolution of the corporation, for a breach of the franchises conferred by the charter, yet where a corporation is made the depository of trusts, and property has been invested in its hands as a trustee, a Court of Chancery can exercise jurisdiction over such corporate trusts, in the same manner, and with like powers, that it may exercise jurisdiction over other trust estates. And it may be compelled, in good faith, by the order and decree of the Court, to perform its trusts: 1 Vesey, 462-68-70, &c. 2 John. Chy. Rep. supra; Kent's Commentaries, 2, 226, and the authorities referred to; 2 Maddock's Chy. 75, and the authorities referred to; Moon's heirs vs Moon's devisees and executors, 4 Dana, 355.

The charter, in the case under consideration, authorises the trustees to receive donations, &c. for the use of the institution, but requires them to apply them according to the intention of the donors or donors, and not otherwise. But if there were no such requisition in the charter, by the acceptance of a donation there is an acknowledgement and acquiescence in the terms prescribed, and an implied obligation to carry out the terms in good faith. As Pawling has prescribed and designated the uses, in unequivocal language, to which the fund donated by him shall be applied, those terms should be carried out, and faithfully executed by the trustees. It is a trust fund, placed in their hands as such, to be vested in good stocks, yielding an interest, or loaned out into good hands, on good security, and the interest applied to the precise objects designated by the donor and founder, and not to any other.

It would seem, therefore, to be their duty, as faithful trustees, invested with the funds of the founder, and the discipline and internal government of the College, to provide a suitable teacher or teachers, as far as the funds will justify, with the requisite qualifications to instruct the beneficiaries, in that manner which will best qualify them to perform the high functions of preachers of the gospel in that sect or denomination of Baptists, designated by the donor; likewise to use all reasonable exertions to select and call to the institution, beneficiaries of the class and denomination prescribed, and to fit and qualify them for the high functions contemplated by the founder; literary as well as theological instruction should be afforded them, if the funds will admit, and to accomplish the latter object, it would certainly comport more with the fair intention of the donor, and will contribute more surely to the accomplishment of the object contemplated by him, to employ teachers, if attainable, belonging to the same sect of christians, with the class of beneficiaries on whom be conferred his bounty, especially in the theological department. But some discretion is to be allowed to the trustees, in the faithful execution of their trust, as well in the selection of teachers and beneficiaries, (provided the latter be of that class designated,) as in the nature and extent of the instruction to be afforded, having an eye to the amount of the fund bestowed. For though Pawling is the perficient founder, and he and his heirs, as such, were entitled to the visitorial power, in the exercise of which, the institution might have been regulated and controlled at discretion, without responsibility or appeal to any other tribunal; yet he, by the terms of donation, has yielded up the power, and the same is invested, by the charter, in the trustees of the College, who, as assignees, and standing in the place of the founder, "may exercise all visitorial power, in their sound discretion, without being liable to any supervision or control, so far as respects the government and discipline of the institution, exercising their powers in good faith, and within the prescribed limits of their charter: 4 Wheaton, 674-5; 1 Black. Com. 482; case of Sutton Hospital, 10 Coke, 33 a. b.; Green vs Rutherford, 1 Vesey, 462; Attorney General vs Middleton, 2 Vesey, 327; Kent's Com. 2, 242-3.

But admitting the power of a Court of Chancery, in the control and application of the Pawling fund, to the uses designed by the donor, it is contended that the proceeding, in...