John Beaty, Plaintiff In Error v. the Lessee of Knowler and Others, Defendant In Error

• Decision Date: 01 January 1830
• Parties: JOHN BEATY, PLAINTIFF IN ERROR v. THE LESSEE OF A. KNOWLER AND OTHERS, DEFENDANT IN ERROR
• Court: U.S. Supreme Court

29 U.S. 152

4 Pet. 152

7 L.Ed. 813

JOHN BEATY, PLAINTIFF IN ERROR v. THE LESSEE OF A. KNOWLER AND OTHERS, DEFENDANT IN ERROR.

January Term, 1830

FROM the circuit court of Ohio.

This was an ejectment for lands in the state of Ohio; and on the trial in the circuit court the defendant excepted to the charge of the court, and prosecuted this writ of error.

The facts are fully stated in the opinion of the court.

The case was argued by Mr J. C. Wright, for the plaintiff; and by Mr Vinton for the defendant.

Mr Wright contended, that the court below erred in their instruction to the jury.

1. In instructing the jury, that the directors of the company incorporated by the legislature of Connecticut in the year 1796, designated as the 'the Proprietors of the half millions of acres of lands lying on the south of lake Erie,' and by a law of Ohio passed the 15th of April 1830, had no legal authority to assess the tax on the land, for the non-payment of which it was sold.

2. That the proprietors of the land included in the provisions of the acts, who were minors, were not bound by the assessment of the tax, and the sale of the land.

He said the only questions which arose on the case are these; nothing else was excepted to on the trial

Those instructions involve the construction of certain laws of Connecticut, and of the state of Ohio; which, in general, have received no interpretation from the courts in those states.

The correctness of the instructions will depend on the law of Ohio; that of Connecticut having been introduced to show the history of the transaction out of which this controversy has arisen. But as the company was organized under the law of Ohio, and in a manner entirely different from that of the law of Connecticut, and the tax was laid according to its provisions, that is to be put out of the question.

It was objected to the validity of the assessment of the tax, that the charter does not authorise the directors to assess a tax to pay that levied by the legislature of Ohio. It is conceded at once, that the power is not given in express terms, but is fully included in the several powers to assess a tax. Act of the 15th of April 1803, sec. 2.

The plain and obvious reading of this grant of power is, 'to defray all necessary expenses of the said company in purchasing and extinguishing the Indian claims of title, surveying, locating, making partition of the land; and to defray all other necessary expenses of said company, power is given,' &c.

Two descriptions of powers are confided to the directors by this provision. The first relates to expenses necessary for specified objects; and the second is equally plenary to all purposes; 'to defray the necessary expenses of the said company.'

This power is also included in the tenth section of the act, 'to do whatever shall to them appear necessary and proper for the well ordering and interest of the company, not contrary to the laws of the state.

If the directors, in the exercise of their discretion, thought the money to be raised by this assessment was proper to defray necessary expenses, or useful for the well ordering of the company, they had full power to lay the tax. It would be difficult to employ words to convey a more unlimited discretion to the directors; and their view in laying the tax is clearly developed in the vote.

'Voted unanimously that a tax of two cents on the pound be assessed to defray the expenses of a tax laid by the legislature of Ohio, &c. and all other necessary expenses for the good of the proprietors of the said land.'

If the directors had power to assess the tax, then, 2. Were the infant lessors bound by the assessment?

It will hardly be contended that minors cannot in any event be clothed with powers as corporators; that is indisputable. The resolve of the state of Connecticut released and quit claimed to eighteen hundred individuals named in the act, the half million of acres, 'and to their legal representatives where dead, and to their heirs and assigns for ever.' Swan's Ohio Land Laws, 81 to 100. The ancestor of the lessors of the plaintiff was then alive, and one of the persons named in the resolve. He took an estate in fee as a tenant in common with all the others. In 1792 Connecticut constituted these grantees a corporation, and gave them, their heirs and assigns, succession as corporators; and provided that the expenses and taxes should only be a charge on the land. The ancestor of the plaintiff's lessors, with the other grantees, organized the corporation under this act, and partook of all the powers it conferred. By his death in 1800 the interest he held in the land devolved upon his heirs, subject to the corporation; and by the very terms of the charter they took his place as corporators, representing together in the corporation the interest their parent had represented alone. These heirs were owners and proprietors of their ancestor's share in the lands, when Ohio incorporated them with all 'the owners and proprietors.' This suit was brought in 1825 when all the heirs were probably of age, as the tax was laid in 1808.

Under the law, the lands were divided, and two thousand four hundred acres were set apart for the interest of Douglass, the ancestor of the lessors of the plaintiff. This division, the lessors recognize and ratify. They bring suit for a part of the allotment assigned to them in the division; and not for an undivided sixth of the two thousand four hundred acres, part of the five hundred thousand acres. They avail themselves of the act of incorporation, and yet claim they are not corporators, nor bound by the acts of the directors under it.

The adult, as well as the minor heirs, have all gone on as corporators. No dissent was ever expressed; but, on the contrary, all, as one, represent the share. If these minors are not bound by the acts of the corporation, all remains as at the death of their ancestor in 1808; and the partition must be gone into anew; and the separate allotment, under which the forest has disappeared, and the wilderness has been made to blossom as the rose, is all to be done away, and the lands thrown into common. Every thing in the country will thus be thrown into confusion.

Would this be just to the co-tenants? and yet it is the inevitable result of the principles given in the instructions to the jury.

Mr Vinton, for the defendant in error, contended,

1. That the lessors of the defendant in error were not parties to, or bound by said acts of incorporation.

2. That the directors under the Ohio act of incorporation had no power to assess a tax to pay a state tax of that state.

3. That the tax was void for uncertainty, it being assessed in part for undefined purposes.

4. That the sale being conducted contrary to the manner prescribed by the laws of Ohio, was void.

5. The sale was void, because the collector omitted to give the notice required by said act of incorporation of the time when the tax would become due.

It has been holden by this court, that a grant to a private corporation is a contract; and consequently, to bind the corporators, their assent, express or implied, must be had. Dartmouth College vs. Woodward, 4 Wheat. 659, 657, 682. Ellis vs. Marshall, 2 Mass. 275, 279.

It therefore becomes necessary to inquire if this is a private corporation; and if so, whether the defendants in error had, by their assent, express or implied, made themselves parties to it. In 4 Wheat. 668, 669, public corporations are defined 'to be such only as are founded by the government for public purposes, where the whole interests belong also to the government.' This definition will test the character of the corporation in question. The entire interest of this corporation consisted of private property, and the purpose of the act was the regulation of that property for the benefit of the proprietors.

The government of Ohio had no interest in the corporation; nor did it seek to attain any purpose of its own by the act of incorporation. The declared objects of the act were, to enable the proprietors of the sufferers' lands, 'to extinguish the Indian title; to survey them into townships or otherwise, and make partition of them among themselves.' These are all private purposes, intended for their own emolument and advantage. The corporation is therefore, in its nature, a private corporation. Here an inquiry arises as to the effect of the last section of the act of incorporation, which declares that act to be a public act. A similar enactment has been introduced into the bank charters of that state, which no one ever imagined to be public corporations on that account. The evident intention of this declaration is not to change the nature of the corporation; but to relieve the corporators from the inconvenience of special pleading, and making proof of their corporate existence, according to the usages of the common law. To this extent the provision is politic and reasonable; but to go beyond that, and give it the effect of making the corporation a public corporation, in the sense of the definition laid down, would be unreasonable, and according to the principles settled by this court in the Dartmouth College case, not in the power of the legislature of Ohio. 4 Wheat. 671, 672.

This brings us to the question of assent. No express assent by the defendants in error to this act of incorporation is pretended.

An implied assent is relied upon. Jonathan Douglass, the ancestor of the defendants in error, died in 1800. The act of incorporation, by the legislature of Ohio, was passed in 1803. And in 1808 the land in controversy was sold to pay a tax assessed under that act. At the time of the sale, four of the defendants in error were minors; and consequently not able in law to contract or assent to become corporators.

Assent, in such a case, is not one of the exceptions to the legal disabilities of infants. Lapse of time is relied upon to raise a presumption of assent; the common law fixes the...