Appeal
from Chancery Court, Mobile County; Thomas H. Smith
Chancellor.
Bill by
A.J. Melville against the Fairhope Single Tax Corporation.
Decree overruling demurrer, and defendant appeals. Reversed
and remanded.
McCLELLAN
J.
The
following act (Acts 1903, p. 342) was approved, and, if
valid, became operative on October 1, 1903:
"An act to provide for the organization and regulation
of corporations not for pecuniary profit in the sense of
paying interest or dividends on stock, but for the benefit of
its members through their mutual co-operation and
association.
"Section 1. Be it enacted by the Legislature of Alabama
that ten or more persons desiring to associate themselves
together, not for pecuniary profit in the sense of paying
interest or dividends on stock but for mutual benefit through
the application of co-operation, single tax, or other
economic principles, may become a body corporate in the
manner following:
"Sec. 2. The parties proposing to form such corporation
shall file with the probate judge in the county in which it
proposes to establish itself, a declaration in writing,
setting out the name of said proposed corporation, the names
of the charter members, and the purposes of said corporation.
"Sec. 3. Upon the filing of such declaration the judge
of probate shall issue to such corporation a charter which
shall be perpetual--subject to revocation at any time by the
Legislature of Alabama.
"Sec. 4. It may elect such officers as it may deem
necessary, in such manner and for such terms as it may
provide and remove the same at any time, and adopt such
constitution and by-laws as it may see fit not in conflict
with the Constitution and laws of this state.
"Sec. 5. Such corporation shall have the power to buy,
sell, and lease and mortgage real estate, to build and
operate wharves, boats and other means of transportation and
communication, build, erect and operate waterworks, electric
lighting and power companies, libraries, schools, parks, and
do any other lawful thing, incident to its purpose, for the
mutual benefit of its members; and may admit such other
persons to participate in its benefits as it may see fit and
upon such conditions as it may impose."
The
like provisions appear in Code, § 3573. The Fairhope Single
Tax Corporation was undertaken to be made a body corporate,
in virtue of and in accordance with the authority of the
above enactment, on August 9, 1904. The declaration of
incorporation contained these recitals or assertions:
"We, the undersigned, desiring to form a corporation
under the provisions of an act for the organization of
corporations not for pecuniary profit, in the sense of paying
interest or dividends on stock, but for the benefit of its
members through their mutual co-operation and association,
approved October 1, 1903, do hereby declare:
"The purpose of said corporation is to demonstrate the
beneficiency, utility and practicability of the single tax
theory, with the hope of its general adoption by the
governments of the future, in the meantime securing for
ourselves and our children and associates the benefits to be
enjoyed from its application as fully as existing laws will
permit, and to that end to conduct a model community free
from all forms of special privileges, securing to its members
therein equality of opportunity, the full reward of its
individual efforts and the benefits of co-operation in
matters of general concern, holding all land in the name of
the corporation and paying all taxes on the same and
improvements and other personal property of lessees thereon,
charging the lessees the fair rental value, and in the
prosecution of its plans for the general welfare of its
members to do and perform all the acts and exercise all the
powers permitted under section 5 of said act."
The
charter of the incorporation, omitting presently unimportant
features, contains these provisions:
"*** I do hereby declare the parties aforesaid, their
successors and associates, duly incorporated under the name
of the Fairhope Single Tax Corporation; that the existence of
said corporation shall be perpetual subject to the right of
revocation by the Legislature. Said corporation has the power
to elect such officers as it may deem necessary in such
manner and for such terms as it may provide, and remove the
same at any time, and adopt such constitution and by-laws as
it may see fit, not in conflict with the Constitution and
laws of this state. Such corporation shall have the power to
buy, sell and lease real estate, to build and operate
wharves, boats and other means of transportation and
communication, build, erect and operate waterworks, electric
lighting and power companies, libraries, schools, parks, and
do any other lawful thing incident to its purpose for the
mutual benefit of its members, and may admit such other
persons to participate in its benefits as it may see fit and
upon such conditions as it may impose."
The
constitution adopted by the incorporation embraces these
provisions:
"Believing that the economic conditions under which we
now live and labor are unnatural and unjust, in violation of
natural rights, at war with the nobler impulses of humanity,
and opposed to its highest development, and believing that it
is possible by intelligent association, under existing laws,
to free ourselves from the greater part of the evils of which
we complain, we, whose names are hereunto subscribed, do
associate ourselves together and mutually pledge ourselves to
the principles set forth in the following constitution."
"Its purpose shall be to establish and conduct a model
community or colony, free from all forms of private monopoly,
and to secure to its members therein equality of opportunity,
the full reward of individual efforts, and the benefits of
co-operation in matters of general concern."
"Any person over the age of eighteen years, whose
application shall be approved by the executive council and
who shall contribute to the corporation one hundred dollars,
shall be a member of the corporation: Provided, that on
petition of ten per cent. of the qualified membership filed
with the secretary within thirty days after action on any
application by the executive council, such application shall
be submitted to a vote of that membership."
"There shall be no individual ownership of land within
the jurisdiction of the corporation, but the corporation
shall hold as trustee for its entire membership the title to
all lands upon which its community shall be maintained."
"Its lands shall be equitably divided and leased to
members at an annually appraised rental which shall equalize
the varying advantages of location and natural qualities of
different tracts and convert into the treasury of the
corporation, for the common benefit of its members, all
values attaching to such lands, not arising from the efforts
and expenditures of the lessees."
"Land leases shall convey full and absolute right to the
use and control of lands so leased and to the ownership and
disposition of all improvements made or products produced
thereon so long as the lessee shall pay the annually
appraised rentals provided in the foregoing section and may
be terminated by the lessee after six months' notice in
writing to the corporation and the payment of all rent due
thereon."
"Leaseholds shall
be assignable, but only to members of the corporation. Such
assignments must be filed for record in the office of the
secretary, and the person to whom the same is assigned
thereby becomes the tenant of the corporation."
"The corporation shall have a prior lien on all property
held by any lessee upon the lands of the corporation for all
arrearages of rent."
"If any lessee shall exact or attempt to exact from
another a greater value for the use of the land, exclusive of
improvements, than the rent paid by him to the corporation,
the executive council shall, immediately upon proof of such
fact, increase the rental charge against such land to the
amount so charged or sought to be charged."
"No taxes or charges of any kind other than heretofore
provided for shall be levied by the corporation upon the
property or persons of its members."
"All taxes levied by the state, county or township on
the property of the corporation or any of its members held
within its jurisdiction, moneys and credits excepted, shall
be paid out of the general fund of the corporation."
Two
forms of leases, types of which are exhibited with the bill,
have been used by the corporation since its organization, and
approximately
266 leases, to members and non- members, were in effect when
this bill was filed. The corporation owned, at first, about
140 acres of land, and subsequently, mainly by donations,
notably that of 2,200 acres made by Joseph Fels, now
deceased, it became the owner of about 4,000 acres of land.
Some of the land is unimproved and unleased, and some of its
lands, leased and unleased, are in the town of Fairhope, and
others outside thereof.
The
complainant, appellee, is a member of the organization and a
tenant of the corporation. The contract of lease in general
use by the corporation landlord contains this stipulation:
"The said lessee, his heirs and successors, shall pay to
the Fairhope Single Tax Corporation, its successors and
assigns, the annual rental value of said land [described in
the instrument], exclusive of his improvements thereon, to be
determined by the said corporation through its executive
council or board of directors, under its avowed principle of
so fixing the rentals of its lands as to
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