Healy v. Shedd

• Decision Date: 14 October 1909
• Citation: 89 N.E. 332,241 Ill. 155
• Parties: PEOPLE ex rel. HEALY, State's Atty., v. SHEDD et al.
• Court: Illinois Supreme Court

241 Ill. 155

89 N.E. 332

PEOPLE ex rel. HEALY, State's Atty.,

v.SHEDD et al.

Supreme Court of Illinois.

June 16, 1909.

Rechearing Denied Oct. 14, 1909.

Appeal from Circuit Court, Cook County; Thomas G. Windes, Judge.

Action by the People, on the relation of John J. Healy, against Edward A. Shedd and others. From a judgment of ouster as prayed for, defendants appeal. Affirmed.

Harry S. Mecartney, for appellants.

F. A. Bingham, for appellee.

DUNN, J.

An information was filed in the circuit court of Cook county against appellants charging them with acting as a corporation, under the name of ‘The Merrimac Building Company,’ without being legally incorporated. Appellants filed five pleas, to which demurrers were sustained, and, appellants electing to stand by their pleas, judgment of ouster was rendered, and this appeal was taken.

The first plea justified under the articles of incorporation of the Merrimac Building Company, which were formally regular, the final certificate bearing the date of April 20, 1896. The duration of the corporation was to be [241 Ill. 159]99 years, and its objects were stated as follows: ‘The object for which it is formed is to purchase a leasehold estate in the premises situate in Chicago, Cook county, Illinois, known as sublots thirteen (13) and fourteen (14) of lots one (1), two (2), seven (7) and eight (8) of block thirty-seven (37), in the original town of Chicago, to construct, operate and maintain a building thereon, to lease space therein, and to supply the tenants thereof with power, light, water, heat and other service in connection therewith.’

The second plea sets out that the Merrimac Building Company, immediately after its incorporation, as mentioned in the first plea, acquired the leasehold of the two sublots described in its charter on April 30, 1896; constructed the building in that year; has been in possession of the building and leasehold ever since; has put into the same over $600,000; has constantly used such franchises and privileges ever since; and claims waiver and acquiescence on the part of the state. It avers that said company constructed and has always operated in said building an elevator plant and a heating plant for the use of all the tenants therein, has always furnished water and other conveniences to them, and has operated said building as a business, furnishing engineers, janitors, firemen, carpenters, repairmen, and agents therefor at its own expense, and has itself maintained an office in said building for such management and operation.

The third plea avers that there is no public interest to be subserved by the proceeding; that it is being prosecuted solely at the instance of Patterson, who has merely a life estate in one-twelfth of the fee of the two lots described in the charter; that he is estopped to question the franchise, and has been expressly adjudicated to be so estopped in a proceeding heretofore pending between him and the company.

The fourth plea avers the due incorporation of the Merrimac Building Company, referring to the first plea, and making the allegations of the second and third pleas a part of the fourth. It alleges that ever since the passage of the act of the General Assembly of April 18, 1872 (Laws 1871-72, p. 296), under which the said company was chartered, the various Secretaries of State and Attorneys General, and all the public officials having to do with the chartering of corporations or with their supervision or control, have consistently and uniformly treated the said act as authorizing the formation of corporations for building purposes and for the construction and operation of buildings upon real estate, in some instances the charters being limited to specific real estate described therein and in many instances the said charters not being so limited; that immediately or shortly after said act was passed some such charters were issued, under which buildings were constructed which have been operated by such corporations ever since; that from time to time the Secretary of State has issued such charters upon application therefor; that various buildings have been constructed under such charters and operated by such corporations, and many thousand of dollars of taxes have been paid by such companies regularly from year to year; that prior to the present year (1908) none of the officials of the state having to do with the chartering, supervision, or control of corporations have ever officially questioned, in any manner, the right of such corporations to exercise their said franchise or privileges; that many of such corporations have been chartered for large sums of money, and that during the last 35 years or more in the city of Chicago alone upwards of $100,000,000 have been invested in the stock of such building companies and upwards of $50,000,000 have been invested in the bonds of such companies, and all upon the faith of the validity and legality of such charters a list of some of such corporations being attached to the plea.

The fifth plea expressly adopts all of the averments of fact in the prior pleas, and alleges that the defendants are stockholders in said company, and that two of them are holders of the bonds of said company issued July 1, 1896, to the amount of $250,000, which were purchased in February, 1905, on the faith that the charter of said company was good and valid, and that any judgment of ouster entered upon the information will impair the obligation of the contracts existing between the said company and its stockholders, bondholders, and tenants, and will deprive them of their property without due process of law.

All the reasons urged by the appellants for a reversal of the judgment have been substantially determined adversely to their position in the recent case of Imperial Building Co. v. Chicago Open Board of Trade, 238 Ill. 100, 87 N. E. 167. They insist, however, that that case was wrongly decided and should be overruled, and that in some features this case may be distinguished from it. We have therefore re-examined the question in the light of the arguments with which we have been favored in this case. The basis for the attack upon the incorporation of the Merrimac Building Company is that the object of the incorporation is the acquisition and holding of real estate, and that the statute does not authorize incorporation for such purpose. In Carroll v. City of East St. Louis, 67 Ill. 568, 16 Am. Rep. 632, the question arose whether a corporation created in the state of Connecticut, with power to receive, grant, convey, dispose of, and transfer real estate, to take the management and charge thereof and sell and exchange the same for other property, could take and convey the title to real estate in this state. The question was thoroughly examined, the prior legislation of the state was considered in detail, and the conclusion reached that the General Assembly has from the very organization of the government manifested a clear and decided opposition to permitting corporate bodies to hold lands to any great extent in perpetuity, but has limited them to only enough real estate to enable them to carry out and accomplish the purpose of their organization, other than buying and selling real estate. The present general incorporation law, then recently passed, was also reviewed, and considered to adhere strictly to the policy manifested by previous legislation. The court held that the same limitation which existed against domestic corporations extended to foreign corporations, and that the latter for that reason could not take and convey title to real estate, in this state, though having competent authority in the states of their creation. The exercise of their powers in this state was permitted to the extent, and only to the same extent, that similar bodies of our own were allowed under our general laws.

In the case of United States Trust Co. v. Lee, 73 Ill. 142, 24 Am. Rep. 236, it was again held that the Legislature manifestly intended to absolutely prohibit corporations from acquiring or holding real estate except so far as necessary for the transaction of their business, and except such as might be acquired in the collection of their debts. The Carroll Case was cited, and the court followed the rule there announced, saying: ‘We * * * 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 interest of our community when it shall be demanded.’ Up to this time, however, the Legislature has not made any change in the doctrine announced in those decisions. The Carroll Case arose before the passage of the general incorporation law of 1872 (Laws 1871-72, p. 487), but since its decision in 1873 it, as well as the Lee Case, has been frequently cited and approved, and in various cases under the general incorporation law this court has decided that the General Assembly has declared by its legislation that the public policy of the state will not allow corporations to hold real estate beyond what is necessary for the business or specific corporate purposes of such corporation. People v. Pullman's Palace Car Co., 175 Ill. 125, 51 N. E. 664,64 L. R. A. 366;First Methodist Church v. Dixon, 178 Ill. 260, 52 N. E. 887;National Home Building Ass'n v. Home Savings Bank, 181 Ill. 35, 54 N. E. 619,64 L. R. A. 399, 72 Am. St. Rep. 245;Bixler v. Summerfield, 195 Ill. 147, 62 N. E. 849. Irrespective of statutory restrictions,the doctrine is...