Simler v. Wilson, Civ. No. 5619.

• Citation: 110 F. Supp. 761
• Decision Date: 05 March 1953
• Docket Number: Civ. No. 5619.
• Parties: SIMLER v. WILSON et al.
• Court: U.S. District Court — Western District of Oklahoma

110 F. Supp. 761

SIMLER v. WILSON et al.

Civ. No. 5619.

United States District Court, W. D. Oklahoma.

March 5, 1953.

Leslie L. Conner and Arnold B. Britton, Oklahoma City, Okl., and James E. Grigsby, Oklahoma City, Okl., for plaintiff.

Suits & Weiss, Oklahoma City, Okl., for defendants.

Omer Louellen, Hinton, Okl., for State of Oklahoma.

WALLACE, District Judge.

The plaintiff, A. J. Simler, a resident of Arkansas, brings this action, under the Declaratory Judgment Act,¹ against the Sisters of St. Francis, a Missouri Corporation, the residuary legatee in the "Will" of Birdine Fletcher, and against W. H. Wilson, executor of this Will. The plaintiff requests this court to construe this Will and to judicially determine whether or not under Oklahoma law the defendant religious corporation can receive and hold certain real estate of the decedent which is situate outside the incorporated limits of any city or town.

The State, through the County Attorney of Caddo County, filed its application to intervene.²

The first question to be determined is whether or not this court has jurisdiction over the original parties to the suit.

Although the Will in question is now being probated in the state court doubtless this court has the authority to construe the provisions of the Will.

In Ferguson v. Patterson³ the court held that where an independent action for construction of a will could have been maintained in a court of general jurisdiction in the State of Oklahoma, and diversity of citizenship of parties existed and requisite jurisdictional amount was involved, the federal district court has jurisdiction to hear and determine action to construe the will.

However, the primary problem now before us is whether under the Oklahoma law the plaintiff, a brother of the testatrix, can challenge the right of the defendant religious corporation to take and hold such real estate.

In 13 Am.Jur. § 782 it is said:

"The decisions upon the right of the heirs or next of kin of a testator to attack a devise to a corporation on account of its incapacity to take and hold real estate are conflicting. The better and majority rule is that the question of the legal capacity of a corporation to take a devise of realty in excess of the amount prescribed by its charter or by reason of its incapacity to take and hold real estate, no restrictions on the power to devise being involved, cannot be raised collaterally by private persons, such as the testator's heirs or next of kin, but can be raised only by the state in a direct proceeding." (Emphasis supplied.)

The majority and minority rules regarding the "right of heirs or next of kin to attack devise to corporation on ground of its incapacity to take" are analyzed in 69 A.L.R. 1359. There it is stated:

"The rule adopted in a majority of jurisdictions in the United States is that the question of the legal capacity of a corporation to take a devise of realty cannot be raised collaterally by the testator's heirs or next of kin, but can be raised only by the state in a direct proceeding."⁴

It is further stated:

"In several jerisdictions, however, it is held that the heirs or next of kin of the testator may attack the validity of a devise to a corporation on the ground of its incapacity to take."⁵

It is incumbent upon this court to determine which rule Oklahoma follows inasmuch as we have no recorded cases wherein the Oklahoma Supreme Court has passed on this specific question.

The underlying difference in the rationale of the two views is aptly illustrated in the Kansas case of Kennett v. Kidd.⁶ In holding that an heir at law had the right to dispute a corporation's power to take title to devised realty the court said:⁷

"As a general rule, when corporations do acts or attempt to hold property ultra vires, private parties may not be heard to complain for the reason that corporations, being the creatures of the state and subject to its sovereign will, are to be corrected only by the state. The rule more frequently applies when the assumed powers render the conveyance voidable and not absolutely void. Approaching the matter from the point of reason and logic, we have this situation: The law directs how property undisposed of according to law shall descend at the death of the owner. The law prohibits the devisee in question from taking and holding the property sought to be devised by the testator. Such conveyance is not voidable but void; therefore the persons whom the law has selected as the proper heirs to this property have a right to object to being deprived thereof, and have the right to assert their statutory claim in opposition to that of the camp corporation which has no legal basis whatever." (Emphasis and insert supplied.)

Thus, it is clearly depicted that whether or not an heir, such as the plaintiff in this action, can maintain a suit of this nature, is directly dependent upon whether such devise under the governing substantive law is deemed to be void or merely voidable. If such a devise is deemed void, unquestionably under the logic just quoted an heir should be permitted to question a corporation's right to take title;⁸ if such a devise is merely voidable then the state alone can bring suit.

The pertinent section of the Oklahoma Constitution provides:⁹

"No corporation shall be created or licensed in this State for the purpose of buying, acquiring, trading, or dealing in real estate other than real estate located in incorporated cities and towns and as additions thereto; nor shall any corporation doing business in this State buy, acquire, trade, or deal in real estate for any purpose except such as may be located in such towns and cities and as additions to such towns and cities, and further except such as shall be necessary and proper for carrying on the business for which it was chartered or licensed * * *." (Emphasis supplied.)

An examination of the cases construing this particular provision unmistakably indicates that insofar as this constitutional prohibition is concerned any transfer of title inter vivos in violation thereof is not void, but is voidable, and then only upon a proper action brought by the state.¹⁰

In Texas Co. v. State ex rel. Coryell, County Atty., Creek County the Oklahoma Supreme Court said:¹¹

"The effect of the constitutional limitation and the language of the statute making unlawful the acquiring of land in violation of such limitation is to make voidable and not void conveyances made to corporations in contravention thereof, and voidable only in a direct proceeding by the State. In recognition of this rule, which is of general acceptation * * * this court * * * quotes with approval from Louisville School Board et al. v. King, 127 Ky. 824, 107 S.W.2d 247, 15 L.R.A.,N.S., 379 the following statement: `"The general rule is that, although a corporation may be disabled or forbidden by the organic or statute law of a state from holding land except for particular purposes, or from holding land beyond a prescribed limit or quantity, yet, if it does hold land in the face of such disabilities or prohibitions, its title will be good except as against the state alone; and that it will be deemed to have a good title until its title is invalidated in a direct proceeding instituted by the state for that purpose; and this rule prevents the title of the corporation from being assailed by its grantor or grantee."'"

Accordingly, it was held in Local Inv. Co. v. Humes, that:¹²

"* * * it appears to be well settled that a conveyance to a corporation in violation of said section of the Constitution § 2, Art. 22 is not absolutely void, but merely voidable in its ordinary aspects. Citing cases." (Insert supplied.)

Also, in Union Trust Co. v. Hendrickson¹³ the court said:

"The law seems to be well established by the great weight of authority that, if a corporation is not authorized to acquire real estate except in a limited amount for prescribed purposes, the acquisition of additional property cannot be questioned by a private individual, but can only be questioned by the state. Citing cases."

In an Oklahoma case involving the taking of title by a County this same principle was applied:¹⁴

"The mere fact that the county may have taken a deed conveying to it the fee-simple title for a purpose not authorized by law, does not render the deed absolutely void. Neither the parties who conveyed the land, nor their heirs can complain or maintain an action to set aside the deed, or recover the land; the state alone can, as a general rule, complain, and it alone can maintain an action to divest the county of title thereto. * * * The Supreme Court of the United States in the case of Reynolds v. First Nat. Bank, 112 U.S. 405, 5 S.Ct. 213, 217, 28 L.Ed. 733, held: `Where a corporation is incompetent by its charter to take a title to real estate, a conveyance to it is not void, but only voidable. The sovereign alone can object. It is valid until assailed in a direct proceeding instituted for that purpose.' * * *"

In Brown v. Capps, the court said:¹⁵

"* * * The trial court found that plaintiff could not raise the question of the constitutional inhibition of the defendants under section 2, article 22, of the Constitution, to hold lands, as this question could only be raised by the state. This question is also well settled in this jurisdiction, contrary to the contention of plaintiff. * * *"

In the case at bar, in addition to the constitutional provision limiting a corporation's right to hold, we must also consider the effect of section 543 of Title 18, Okl.Stat.Ann., which pertains specifically to religious, educational and benevolent corporations. This section provides:

"All such corporations may hold all the property of the association owned prior to incorporation, as well as that acquired thereafter in any manner and transact all business relative thereto; but no such corporation shall own or hold more real property than may be reasonably necessary for the business and objects

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