Lathrop v. Commercial B'K of Scioto
| Decision Date | 06 May 1839 |
| Citation | 38 Ky. 114 |
| Parties | Lathrop <I>vs.</I> The Commercial Bank of Scioto. |
| Court | Kentucky Court of Appeals |
Mr. David Trimble and Mr. Apperson for appellant: Mr. Hord for appellee.
FROM THE CIRCUIT COURT FOR GREENUP COUNTY.
"THE COMMERCIAL BANK OF SCIOTO," in Ohio — which was authorized, by its charter of incorporation granted by that State, to issue and discount bill &c. and to acquire land in payment of debts, or for securing debts to which it should become entitled, in the authorized sphere of its business — obtained, in the year 1833, a mortgage on a tract of land in Greenup county, Kentucky, executed, in the said county, by Jacob Clingman, (the owner,) for the purpose of securing a debt due to it by the mortgagor, upon a contract, made in the State of Ohio, within the scope of its prescribed authority. Afterwards, the Bank procured form Clingman an absolute deed for the same land, and, before the expiration of the time given by the mortgage for payment, it placed a tenant on the land; after which Aden Lathrop purchased Clingman's title to the land, under executions issued on judgments which had been obtained against him by other creditors; and, having received a conveyance from the sheriff, brought an action of ejectment against the tenant of the Bank: upon the trial of which, verdict and judgment were rendered against the plaintiff.
Lathrop now urges a reversal of the judgment.
In revising the case, the only question we shall consider is whether the bank acquired a legal title to the land, or the legal right of entry thereon; for if it did, Lathrop's subsequent deed did not vest in him a legal right of entry; which, however, he undoubtedly had, if neither the mortgage nor absolute conveyance to the bank passed any title.
As to the absolute deed, we shall not now express any opinion; because, even if it be invalid for alleged duress or fraud, still, if the mortgage be valid, we have no doubt that it vested in the bank the legal right to enter upon and take the profits of the land by its agent, and to retain the possession until payment or redemption.
The objection made to the mortgage is threefold: — First — that the agent, who made the contract, was not legally appointed. Secondly — that the bank had no authority to make any contract in Kentucky; and, thirdly — that it cannot hold a legal title to land in this State.
First. An agency for collecting and securing the debts of a corporation, may be created without a written power of attorney authenticated by the corporate seal. And the conduct of the Bank, and especially in defending this suit, as it did, and yet does, as a party, is a sufficient recognition of the authority and acts of its agent, concerning the mortgage and the occupancy of the land.
Second. The debt, for securing which the mortgage was given, having been created by a legal contract in Ohio, there can be no doubt that the bank might have maintained a suit upon it, in a court of Kentucky. The right of a foreign corporation of a friendly nation or state to prosecute such a suit, is now conceded by an international comity recognized in England and in all the States of this confederacy, whenever the maintenance of the action is not inconsistent with some local law or policy of the forum. In this respect, so far as mere national comity is concerned, no distinction is now made by just and enlightened nations, between natural and artificial persons. Although no foreign law can, by its own vigor, have an extra-territorial operation, yet wherever any such law creating a corporation, shall be authenticated and recognized, the artificial personage so constituted will be also recognized as a legal being.
As the charter of incorporation imparts to a body politic legal individuality and personality, such a being possesses inherent capacity to act as a person, within the scope of its prescribed authority, so far as may become necessary and proper for effectuating the ends of its creation. And this capacity, to this extent, it possesses as certainly as it could, had it been a natural instead of a merely legal person, or as the natural persons, who are its constituents, possess in their individual rights. Beyond, as well as within, the limits of the domestic sovereign, the only difference between a natural and an artificial person, as to the recognition of their personal existence, would be that, whenever the law creating the latter should be recognized, the existence of such a being would be legal only, whilst that of the other would be actual, as well as legal. And this is the reason why, in the absence of any local law or policy to the contrary, the same code of comity will equally apply to each of them in the courts of all liberal and enlightened nations.
The corporate name and capacity of a body politic are not necessarily local; wherever enlightened law prevails, they may be as ubiquitous and effectual, within the bounds prescribed by the law of their creation, as they could be if they were natural as well as civil. Though a corporation is itself local, yet, like a natural person remaining at the native domicil, it may act through the locomotive agency of a natural person, wherever he could go and act for himself, unless its legal capacity be confined by its charter, within prescribed territorial limits, or unless the act to be done be prohibited by the lex loci acti.
And the same reason which would entitle a corporation to sue wherever a natural person might sue as a foreigner, should permit it to make contracts authorized by its charter, and not interdicted by the local law or policy of the place of contracting; for the right to prosecute a suit necessarily implies an authority to employ counsel or other agency, and to compromise the suit; none of which may be effectually done without making a contract in the country of the forum; and moreover, whereever a corporation shall be recognized as a person with capacity to do one act, it should be admitted to possess equal capacity to do any other act within the scope of its charter, and not inconsistent with the law or policy of the place where the act is to be done. Surely, in the absence of any statute in Kentucky to the contrary, a company incorporated by the Legislature of Ohio, for manufacturing iron, or flour, or tobacco, and whose capacity is not expressly circumscribed by the limits of that State, might, according to universal law, make a valid contract, in Kentucky, for selling its manufactured articles, or for buying the raw material. And certainly the State of Ohio herself might, by her authorized organ, make a binding contract beyond her own jurisdictional limits.
It seems almost selfevident therefore that the capacity of a corporation may not be confined by the territorial limits of the country of its domicil; that it may exist wherever the law of its creation shall be recognized, and may act — there being no local law to the contrary — wherever an agent may go and could act in his own right.
These deductions are confirmed by the history of corporations, and judicial decisions concerning them, for more than a century past. Unless, therefore, its capacity shall be confined within territorial limits prescribed by the law of its creation, a corporation, conformably with the authority of that law, may make, in a foreign country, any contract which it is not incapacitated or forbidden to make by the lex loci contractus. As a corporation derives its faculties from its organic law, it may have no inherent capacity, either at home or abroad, beyond the limits prescribed by that law. But within the boundary of authority thus defined, it may have capacity to sue or to bind itself by contract any where. The same comity which will recognize the law creating a foreign corporation should, in the absence of any local policy or enactment to the contrary, recognize the existence and capacity of the corporation itself.
Although that clause in the federal constitution which declares that "the citizens of each State shall be entitled "to all privileges and immunities of citizens in the "several States" — may not fully apply to corporations in the several States, yet, as, without that fundamental guarantee, an established comity, almost as inviolable, would entitle a citizen of one of the States to make contracts and prosecute suits in any of the other States, we can perceive no reason why the same international law may not, in the absence of any local interdict, equally apply in all the States, to the corporations of each other.
And surely, at least as much of comity as is recognized by the practice of nations perfectly sovereign and independent, must be admitted to prevail among these confederate States. So far as their own local laws and local courts are exclusively concerned, each of the States of our Union acts as a sovereign, independently of each other, and of course, in enacting and administering her own peculiar laws, each State has a perfect and indisputable right to determine, for herself, how far the laws of any other State shall be permitted to operate. So far as the national constitution does not control, each of the States is an independent sovereign, in the enactment of her own laws and in the exposition and enforcement of them by her own local tribunals. And the harmony of the Union, the nature of the commercial and social intercourse among the States, and the family likeness that characterizes all their institutions, should operate as powerful incentives to the observance, by each towards each other, of a comity peculiarly liberal and expansive. Among no other people on earth can comity be so necessary or so useful.
According to the common law, every corporation has a legal capacity to think, and to act, and to make binding contracts. And there is no statute or policy of Kentucky, either incapacitating corporations — merely as such — to make contracts, or outlawing...
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