Church Extension of M.E. Church v. Smith

• Decision Date: 28 June 1881
• Citation: Church Extension of M.E. Church v. Smith, 56 Md. 362 (Md. 1881)
• Parties: THE CHURCH EXTENSION OF THE METHODIST EPISCOPAL CHURCH, and others v. MARGARET ANN SMITH, by her next friend, FERDINAND GUERKE. MARGARET ANN SMITH, by her next friend, FERDINAND GUERKE v. THE CHURCH EXTENSION OF THE METHODIST EPISCOPAL CHURCH, and others.
• Court: Maryland Court of Appeals

56 Md. 362

THE CHURCH EXTENSION OF THE METHODIST EPISCOPAL CHURCH, and others v. MARGARET ANN SMITH, by her next friend, FERDINAND GUERKE.

MARGARET ANN SMITH, by her next friend, FERDINAND GUERKE v. THE CHURCH EXTENSION OF THE METHODIST EPISCOPAL CHURCH, and others.

Court of Appeals of Maryland

June 28, 1881

The cause was argued before BARTOL, C.J., MILLER, ROBINSON and IRVING, J.; and submitted on brief for The Home of the Aged of the Methodist Episcopal Church.

R W. Baldwin, and John Carson, for The Church Extension of the Methodist Episcopal Church, of Pennsylvania.

The appellant is a corporation created by a special Act of the Legislature of Pennsylvania, of March 13th, 1865.

By the first section of its charter, unlimited power is given to it to take personalty by gift or bequest, but its power to take realty is limited to an income of $100,000 per annum. It is admitted, however, that its income is below that amount, and its power to take and hold personalty being unlimited, there is no question of the power of the corporation to take this legacy.

The 38th Article of our Bill of Rights does not affect this legacy, as the appellant is a foreign corporation, and it is a matter of no concern to our State, whether property shall accumulate in the hands of a foreign corporation or not. Vansant vs. Roberts, 3 Md., 119; Brown Adm'r vs. Thompson, et al., 49 Md., 431.

Judge GILMOR'S chief objection to this legacy is, that it is too indefinite, because its beneficiaries are such necessitous Methodist Churches, as may be selected by a committee of the corporation. The proposition is this--if a corporation is created by law for certain purposes, and is authorized by law to receive money for these purposes, and to use this money for such corporate purposes as the corporation may determine, and a legacy is absolutely given to the corporation for corporate purposes as aforesaid, yet, it is competent for any Judge to say that in his opinion the purposes of such corporation are too indefinite, and cannot therefore, be legally accomplished. If this view be sound, it practically ends all corporations for religious or charitable purposes.

The case of Dashiell vs. Att'y-Genl., 5 H. & J., 400, is relied on as authority for the above view. There, the Court said, "no discretion is here given to the trustees to select the poor; if there was a discretion in them to select, the case, &c." and Judge GILMOR wholly overlooks the fact that one of the very objects of a corporation is to provide the discretion and selection above mentioned.

This objection of uncertainty and indefiniteness has been well answered by the Supreme Court, in Ould vs. Washington Hospital, 95 U. S., (5 Otto,) 303. The Court there say "the objection of uncertainty in this case, as to the particular foundlings to be received, is without force. The Hospital being incorporated, nothing beyond its designation as donee is necessary. Who shall be received, with all other details of its management, may well be committed to those to whom its administration is entrusted."

So here, what necessitous Methodist Churches are to be aided together with the details of management, may well be left to the corporation to whom its administration has been absolutely committed by the testatrix. The general rule is that a corporation may take property given in trust for any object not foreign to the scope of its incorporation. 1 Perry on Trusts, secs. 42, 45; Angell & Ames, sec. 168; Vidal vs. Girard, 2 How., 189; Perin vs. Carey, 24 How., 495, 505; Ould vs. Washington Hospital, 95 U. S., 303; Chapin vs. Schort, 35 N. H., 445; In re Howe, 1 Paige, 214.

Judge GILMOR says, "the testatrix did not give this legacy to the corporation generally, but as part of the Perpetual Loan Fund; and in so doing she carved out a sort of ulterior special bequest, creating a trust in favor of an object not clearly defined. This is insufficient, for, by the agreement of facts, the beneficiaries of the Loan Fund are such 'necessitous' Methodist Churches as may be selected by a committee of the corporation."

Now, the agreement of facts shows the workings of this corporation. It aids necessitous Methodist Churches in two ways, 1st, by donations; 2nd, by loans. By the first mode, the money is absolutely given away; by the second, it is only loaned, the fund being always kept intact. Her will shows that when she made this bequest, she had in view the two modes of working of the corporations, and she chose one and rejected the other. She did not wish her money to be given away in donations, but to be perpetuated as part of the Loan Fund. By this bequest, therefore, she intended to create a trust in four respects, viz., 1st. That the corporation should loan this fund to necessitous Methodist Churches. 2nd. That the principal should never be diminished. 3rd. That it should be a separate Loan Fund, having the name of "The Durham Loan Fund." 4th. The proper officer is to report annually the investment, and the work accomplished.

These four trusts the testatrix wished, and these four trusts the corporation is performing daily. None of them are illegal, or opposed to public policy, and the first two are, as charitable trusts, manifestly for the public good; and this is all the Court need determine.

If the corporation failed to perform any of the above trusts, the fund would not revert, there being no clause to that effect in the will, but performance could be enforced in equity. 2 Perry on Trusts, sec. 747. The bequest being absolute, it is unnecessary to consider whether naming the fund, or keeping it separate, are of the essence of the testatrix's bequest and binding on the corporation. (See 2 Perry, sec. 738; 2 Red. on Wills, p. 548, sec. 71;) because this corporation has performed both of these trusts, as is shown in their reports, and has pledged itself to continue to perform them in the resolution offered in evidence.

It is further objected that so much of this bequest as is the proceeds of realty is bad, because a foreign religious corporation cannot take realty,--at least without the sanction of the Legislature, as provided for by the Bill of Rights. We submit that an immediate devise of the realty to this corporation would be good. Vansant vs. Roberts, 3 Md., 119; Christian Union vs. Yount, 101 U. S. (11 Otto, 352.) Moreover, the will works a conversion of the whole estate into personalty. Thomas vs. Wood, 1 Md. Ch. Dec., 296; Carr vs. Ireland, 4 Ib., 251; Newcomer vs. Orem, 2 Md., 297; Hurtt vs. Fisher, 1 H. & G., 88; Smithers vs. Hooper, 23 Md., 273; Cronise vs. Hardt, 47 Md., 438; Orrick vs. Boehm, 49 Md., 105.

The general rule is that where a part of the residuary bequest fails, it goes to the next of kin, and not to the residuary legatee. 2 Red. on Wills, p. 119, par. 8. But in this case, that rule would defeat the manifest intention of the testatrix, if the clause giving "all the rest and residue of her estate," is treated as the residuary clause. The true construction of this will is that, while the bequest is in form residuary, it is a bequest of particular legacies; (2 Red. on Wills, p. 120, par. 9;) and the real residuary clause is the gift of the surplus to be divided pro rata among the several legatees. The first clause contemplates that there may still be a surplus; that being the real residue, is divided pro rata. In no other way can the intention of the testatrix be accomplished. In re Lyne's Estate, 8 Eq. L. T., 485; Page vs. Leapingwell, 18 Ves., 463; Easum vs. Appleford, 5 My. & Cr., 56; 2 Red. on Wills, p. 120, par. 9, n. 39.

A particular residue will take lapsed legacies, belonging to that particular fund, the same as a general residue in ordinary cases. De Trafford vs. Tempest, 21 Bea., 564.

J. Upshur Dennis, James A. McClure, and Danl. B. Lucas, for the heir-at-law and next of kin, contended:

I. Art. 38 of our Bill of Rights declares that every devise or bequest of lands and of goods or chattels, to or for the benefit of any minister, public teacher or minister of the Gospel, as such, or any religious sect, order, or denomination, without the prior, or subsequent sanction of the Legislature, shall be void.

The bequest to the New York and Pennsylvania corporations, in so far as they are the proceeds of realty, and the bequests in toto to all of the domestic religious corporations, are void for the reason that none have ever received a sufficient sanction by the Legislature.

1. It is contended that the prior sanction of the Legislature has been given to these bequests, by those provisions of the laws under which these institutions were incorporated, which provide that they may take and hold property, by gift, grant, devise or otherwise up to a certain limit.

We deny that such provisions can be construed as in any sense the sanction of the Legislature which is required by the Bill of Rights.

A corporation, being an artificial creature, has no powers or rights whatever except such as are given either expressly or by fair implication. It being essential to the usefulness and efficiency of every corporation that it should have the power to acquire and hold property, every Act of incorporation whether under the general or a special law, must contain a provision giving the corporation such power. This is true of every corporation, lay as well as ecclesiastical; the corporate capacity to take must be given it. To vest such a power was the sole effect and extent of the provisions which have been invoked here as constituting the legislative sanction. Otherwise, the requirement of the Bill of Rights is meaning-less, and only supererogation; for its framers must have known that every corporation, just from the fact of its being one, must have already had the power to take...