Land v. Coffman

• Decision Date: 31 July 1872
• Citation: 50 Mo. 243
• Parties: GARRETT C. LAND, Appellant, v. COFFMAN & CHURCHILL, Respondents.
• Court: Missouri Supreme Court

50 Mo. 243

GARRETT C. LAND, Appellant,

v.COFFMAN & CHURCHILL, Respondents.

Supreme Court of Missouri.

July Term, 1872.

Appeal from Johnson Court of Common Pleas.

Elliott & Blodgett, for appellant.

I. The second exception taken by the plaintiff, on the trial of his cause, was to the reading in evidence of the deed from Johnson and others to Billon, trustee for the railroad company. The plaintiff objected “for the reason that said deed shows upon its face that the town lots therein described were sought to be conveyed to the company for speculative purposes, and that the same was therefore void.”

By reference to the deed we find that it purports to convey to the company, 1st, five and a half acres of ground (as therein described by metes and bounds), designated upon the plat of said town as depot grounds; 2d, it seeks to convey to the company one hundred and fifty-one separate and distinct town lots, embracing every alternate lot in twenty-six different blocks, throughout said entire tract of eighty acres, and all separated by streets, avenues and alleys, from the right of way and depot grounds of the company and from each other.

In the case of The Pacific R.R. Co. v. Seeley, 45 Mo. 212, the action was to compel a specific performance of a contract to convey to such person as the directors of said company should designate, one-fourth of all the town lots contained in one hundred and sixty acres of land. This court held upon demurrer, in that case, that the contract sued on was void upon its face, for the reason that the company had no power under its charter to engage in town speculations or in the purchase of lands, and holding them for villages and towns, either to rent or sell.

If the contract with Seeley was void upon its face for the reason that this same company had no power to purchase or speculate in one-fourth the town lots in one hundred and sixty acres of land at Tipton, then by what parity of reasoning can the defendants contend that a deed to the company by Johnson and others of one-half the town lots in eighty acres at Knob Noster (being the same amount in both cases) would be within the corporate powers of said company? The fair deduction would rather seem to be that, if the contract with Seeley was void for the reason that the company had no power under its charter to deal in town lots or other real estate, then the deed from Johnson to the company was likewise void for the same reason.

II. The third objection assigned by the plaintiff for the exclusion of said deed, and overruled by the court, was “because the deed shows upon its face that the town lots therein described were not necessary for any purpose connected with the general business of locating, constructing, managing or operating said railroad, or necessary for the purpose of carrying said road into complete and successful operation.” In support of this proposition we submit that when the Legislature, by the twentieth section of the original charter, confined the operations of this company to the business of locating, constructing, managing and operating its road, and the acts necessary for the purpose of carrying the same into complete and successful operation, it was certainly intended to keep the business of the company within certain fixed limits, and to prohibit it from engaging in any kind of business wholly foreign to the purposes for which the company was created. The only acts which the Pacific Railroad Company could lawfully do under its charter were, 1st, to locate its road; 2d, to construct its road; 3d, to manage and use its road.

The company, then, being organized for the purposes and possessing only the powers aforesaid, and the deed showing upon its face the extraordinary fact of a railroad company purchasing one hundred and fifty town lots (in addition to its depot grounds), which, in the very nature of things, and according to the common understanding of every one, could not be used for any known business connected with a railroad company, and the purchase of that number of lots being an exception to all common experience, the natural presumption is that the lots were purchased for speculation, and that they were not required by the company in its legitimate operations, and the burden of proof was upon the defendants to show the contrary; and until the contrary was shown, the deed should have been excluded. (Downing v. Mt. Washington, etc., 40 N. H. 233; 3 Zabr., N. J., 510.) Had the company possessed a general power to buy and sell lands, the rule might be otherwise, but there are no presumptions in favor of a corporation of limited powers.

The defendant's fifth instruction declares “that the question of whether the Pacific Railroad Company has the power, under its charter, to take and hold the lots sued for, cannot be inquired into in this suit, but can only arise in a proceeding instituted directly by the State for the purpose of ascertaining whether said company has or has not exceeded the powers granted in its charter.” If this theory ever had any footing in this country, it was applicable only in those cases in which corporations were authorized by their charters to purchase real estate, but not to hold beyond a certain limited amount, and even then the doctrine has been applied only in those States where the English statutes of mortmain have been held to be in force. This distinction between the power to purchase and the power to hold was taken by the courts of Pennsylvania at an early day, and those early cases are often referred to, both by courts and counsel, in subsequent cases in other States, where the doctrine could have no possible application whatever; for upon examination of those cases (Leazure v. Hillegas, 7 Serg. & R. 313, and Baird v. Bank of Washington, 11 Serg. & R. 411) it will be found that they are decided expressly upon the point that the banks had the power to purchase but not to hold real estate, and that, such being the case, the property escheated to the State under the operation of the English statute of mortmain, which the courts declared to be in force in that State. The reason why it was held in these and similar cases that the grantee held an estate defeasible at the will of the State, is readily perceived when it is considered that when a grant was made to a corporation in violation of the statute of mortmain, the estate thereupon escheated to the crown or to the State by the express terms of the statute; or in other words, the State became seized of the estate by operation of law. The State, then, being seized of the estate by force of the statute, was, as a matter of course, the only party who could properly institute proceedings for possession. The statute, not the deed, estopped the grantor in those cases. The theory of those cases can have no application to the case at bar, for two reasons: 1st, because the Pacific Railroad Company is prohibited both from purchasing and from holding real estate for purposes foreign to the objects specified in the seventh section of its charter; 2d, because the statutes of mortmain have no application in this State and are not held to be in force here. (See 2 Kent, 282; Chambers v. City of St. Louis, 29 Mo. 575.)

The real point of difference between the case of Chambers v. The City of St. Louis and the case at bar is this: the city of St. Louis had, under its charter and the general law concerning corporations, the power to purchase and hold real estate without reference to quantity or location, and it was therefore capable of acquiring rights to be enforced; whereas the Pacific Railroad Company has neither the power to purchase or hold, except for certain specific purposes, which are defined in its charter, and beyond those purposes it could acquire no rights to be enforced or title to be questioned. The same questions presented in the case of Chambers v. The City of St. Louis were also presented in Boyce v. The City of St. Louis, and in that case the court held that the city could not hold real estate for purposes foreign to the objects of its incorporation. (29 Barb. 650; The People v. Mauran, 5 Den. 389; The Bank v. Poitiaux, 3 Ran., Va., 136; Baird v. Bank of Washington, 11 Serg. & R. 411; Silver Lake Bank v. North, 4 Johns. Ch. 370.) In each of these cases (and in all others cited by defendants in support of the theory of their fifth instruction) it will be noticed that the corporations had the power to purchase real estate. So in the case of Bogardus v. Trinity Church, 4 Sandf. Ch. 758, and in Barrow v. Nashville & Charlotte Turnpike Co., 9 Humph. 304, the proceedings were to set aside conveyances made to corporations, and the courts held that the corporations having the power to purchase, and having acquired complete titles at the time the conveyances were executed, they could not afterwards be set aside or avoided at the suit of a private individual.

The position which we take in this case is that the Pacific Railroad Company is a private corporation, and that it possessed no power to take or hold real estate for any purpose or to any amount beyond the limits prescribed by its charter, and that all deeds of land or lots to said company beyond the amounts authorized by its charter, or for purposes foreign to the objects of its creation, are utterly void, for the want of capacity in the corporation to take the title. In this position we believe we are sustained by all the books and authorities. “There can be no doubt that if a corporation be forbidden by its charter to purchase or take lands, a deed to it would be void, as its capacity may be determined from the instrument which gives it existence.” A prohibition, reservation or exception in a charter must stand in full force, though it destroy or make nugatory all the powers given to the company. (Commonwealth v. Erie & N. E. R.R. Co., 27 Penn. 351; Ang. & Ames Corp., § 152.) The Pacific Railroad Company is prohibited by its charter from holding real estate beyond a certain amount....