Prairie Slough Fishing & Hunting Club v. Kessler

• Decision Date: 17 June 1913
• Citation: 252 Mo. 424,159 S.W. 1080
• Parties: PRAIRIE SLOUGH FISHING & HUNTING CLUB v. KESSLER et ux.
• Court: Missouri Supreme Court

159 S.W. 1080

252 Mo. 424

PRAIRIE SLOUGH FISHING & HUNTING CLUB v. KESSLER et ux.

Supreme Court of Missouri, Division No. 2.

June 17, 1913.

Rehearing Denied October 14, 1913.

1. CORPORATIONS (§ 370)—CONSTRUCTION OF CHARTERS—POWERS.

When the organic or statutory law specifies the powers a corporation may exercise, or the property it may hold, such specification by implication excludes all other powers or rights, except such incidental rights and powers as may be necessary to an exercise of the powers expressly granted.

2. CORPORATIONS (§ 435)—POWERS—RESTRICTIONS AS TO REAL PROPERTY.

Rev. St. 1909, § 2990, subd. 4, provides that corporations may hold such real estate as its purposes shall require, "not exceeding the amount limited in its charter or the law creating it." Rev. St. 1909, §§ 3432-3445, authorize incorporations for purposes benevolent, religious, scientific, or educational. Rev. St. 1909, § 3443, provides that such corporations may hold such real estate and buildings as may be necessary for assembly, library, laboratory, and other rooms requisite for its purposes. Held, that a corporation, organized under this law, could not acquire and hold land for hunting and fishing purposes.

3. CORPORATIONS (§ 435)—CORPORATE POWERS—CONSTRUCTION OF ARTICLES OF AGREEMENT.

The fact that the articles of agreement of a corporation organized under Rev. St. 1909, §§ 3432-3445, authorizing incorporations for purposes benevolent, religious, scientific, or educational, enumerated purposes other than benevolent, religious, scientific, or educational, could not give it power to acquire real estate for such additional purposes.

4. CORPORATIONS (§ 446)—CORPORATE POWERS —PERSONS ENTITLED TO QUESTION CORPORATE POWERS.

Though ordinarily an unwarranted exercise of corporate power cannot be questioned in a collateral and indirect way by an individual, yet where, in a suit by a corporation against its president, the corporation sought to have a trust declared in land, the title to which was taken in the president's name, the president could defend on the ground of the incapacity of the corporation to hold the land, since a court of equity will not enable the corporation to do that which the law forbids.

Appeal from Circuit Court, Lincoln County; J. D. Barnett, Judge.

Suit by the Prairie Slough Fishing & Hunting Club against William P. Kessler and wife. Decree for plaintiff. Defendants appeal. Reversed and remanded.

In this suit plaintiff, proceeding on the theory of a constructive trust, seeks to have a court of equity declare a trust in favor of plaintiff with reference to approximately 426 acres of land situated in Lincoln county, Mo., and by its decree to divest the title thereto out of defendants (the holders of the legal title), and vest the same in the plaintiff corporation, upon plaintiff's reimbursement to defendants of the amount paid by them for said land, and to compel defendants to account to plaintiff for the crops and rents received from said land.

The plaintiff is a corporation organized under the provisions of article 11, c. 12, R. S. 1899 (article 10, c. 33, R. S. 1909), by pro forma decree of the circuit court of the city of St. Louis, on December 4, 1900. A short time after the corporation was organized it acquired a ten-year lease on the land in controversy, whereby the company and its members were given the absolute and exclusive right and privilege to hunt and fish upon said land, and the right to erect a clubhouse, outbuildings, and fences upon a two-acre portion thereof. At this time the land in controversy was owned by Fred Naxera and Edward H. Knight. The clubhouse was erected, and the land leased was enjoyed by the corporation members as a place to hunt and fish. In 1906 defendant William P. Kessler was elected president of the plaintiff corporation, and served as such president until the latter part of 1908. During the time he was president of the club there was considerable discussion of the club's future among the members thereof, and of the propriety of procuring a renewal of the lease or purchasing the land outright. No formal action with reference to the matter was taken at any of the meetings of the board of directors, but some of the members testified that they discussed the matter with the president, William P. Kessler, and that he assured them he would look after the matter for the club and would try to get an option on the land for the club with a view to its purchase by the corporation. Later the said defendant procured an option from the landowners, taking the option in his own name, and informed some of the members of the corporation that he had procured an option for the "club." In October, 1907, defendant closed the deal for the purchase of the land, and had the owners of the land convey the same to himself and wife, his codefendant herein. The purchase price was $6,500; defendants paying $500 in cash, and executing their note, secured by deed of trust on the land, for $6,000, due ten years after date, also separate notes for interest at 8 per cent. on said sum.

The testimony on the part of the plaintiff is that its members were not aware of this transaction until some time in July, 1908, when, at a meeting of the members of the corporation, Kessler submitted a proposition to the club, through its secretary, to the effect that he would sell the land to the club at a certain stipulated price, but that he would not renew the lease. A committee was appointed by plaintiff to investigate the matter, and upon investigation it was learned that the price asked was approximately $6 an acre in excess of that paid by defendant for the property. A short time thereafter this suit was instituted, resulting in a decree for plaintiff as prayed.

Further facts necessary to a fuller understanding of the case are set forth in the interlocutory decree of the circuit court, which decree, omitting formal parts, is as follows:

"Now at this day, at the March adjourned term of the circuit court of Lincoln county, Mo., come again the parties to this suit, both plaintiff and defendants, by themselves and by their respective counsel, and all and singular the matters and things heretofore submitted to the court and taken under advisement, having been seen, heard, and considered, the court doth find: That the plaintiff, the Prairie Slough Fishing & Hunting Club, is a corporation organized under and by virtue of the provisions of article 11, c. 12, Revised Statutes of Missouri 1899. That the defendants, William P Kessler and Lena Kessler, are husband and wife. That on the 1st day of August, 1900, a certain lease was executed by Fred Naxera and Edward H. Knight, and their respective wives, to one Adolph Vogler. That said lease covered the lands mentioned in plaintiff's petition, and described as follows: (Here follows description of said real estate.) That said lease ran for a term of ten years, and until the 31st day of July, 1910, and that the yearly rental as fixed in said lease was the sum of $50 per year. It is further found by the court: That under and by virtue of the terms of said lease it was provided that a frame building for residence and clubhouse purposes, outbuildings, and fences, should be erected on said premises by the lessee thereof, to cost at least $1,000. That shortly after the execution of said lease said Vogler transferred and assigned all his right, title, and interest in said lease to the plaintiff, the Prairie Slough Fishing & Hunting Club, and that said Vogler, when he secured said lease from said Knight and Naxera, was acting for and on behalf of the plaintiff in securing said lease, and the same was taken for and on behalf of said club by said Vogler. The court further finds that the terms of said lease have in all respects been complied with by the plaintiff, and that the improvements have been erected by the plaintiff as provided for in the terms of said lease. The court further finds that the defendant, Wm. P. Kessler, on the ____ day of ____, 1906, was a member of the board of directors of said Prairie Slough Fishing & Hunting Club, and at said time was duly elected the president of said club, and was re-elected for the year 1907, and that he assumed the duties of said office as president, and occupied the said position during the years 1906 and 1907 and at all times mentioned in plaintiff's bill The court further finds: That said plaintiff through its members, and that various members of such corporation, for themselves as such members and for said club, as early as the fall of 1906, and at frequent times in the year 1907, informed said Kessler, while president of said club, that it was desirable on the part of plaintiff and its members to acquire the property mentioned and described in said lease and on which the said corporation had erected its clubhouse and other substantial improvements, costing more than the sum of $1,000, and to purchase the same. That said Kessler, while acting as president, agreed with said members and promised them that he would purchase said property for the use and benefit of said club. That said defendant Wm. P. Kessler, while acting as president of said club, negotiated for the purchase of said property, from Knight and Naxera, the owners thereof, and that on the ____ day of ____, 1907, he procured the said Knight and Naxera, owners of said land, to execute to him and his wife, his codefendant, Lena Kessler, a warranty deed for all of said lands, at and for the price and sum of $6,500. The court finds that the entire negotiations concerning the purchase of said lands were conducted by said Wm. P. Kessler alone; that said negotiations and the transfer of said property were kept secret from plaintiff and from the members of said organization; and that said Lena Kessler, wife of Wm. P. Kessler, contributed nothing toward the purchase of said property, but all moneys that were paid were paid out of the funds of Wm. P. Kessler alone. The...