Southern Realty Co. v. Tchula Co-operative Stores

• Citation: 75 So. 121,114 Miss. 309
• Decision Date: 30 April 1917
• Docket Number: 18277
• Court: Mississippi Supreme Court
• Parties: SOUTHERN REALTY CO. v. TCHULA COOPERATIVE STORES

75 So. 121

114 Miss. 309

SOUTHERN REALTY CO. v. TCHULA COOPERATIVE STORES

No. 18277

Supreme Court of Mississippi

April 30, 1917

APPEAL from the chancery court of Holmes county, HON. J. F. MCCOOL Chancellor.

Suit by Tchula Co-operative Stores against the Southern Realty Company. From a decree overruling a demurrer to the bill defendant appeals.

The appellee is a corporation organized and existing under and by virtue of a charter granted to it by the state of Mississippi, on the 3rd day of November, 1888. By the express provisions of its charter, it had the right granted to it of perpetual succession, and was expressly empowered to have hold, purchase, acquire, and enjoy real and personal estate in fee simple, or otherwise, as it might deem proper. The corporation is also authorized to lease and operate lands, do a general mercantile business, and to take securities of all sorts to guarantee the payment of debts owing to it. It was further given the general powers conferred upon corporations by the provisions of sections 1027, 1028, 1031, and 1032 of the Mississippi Code of 1880, and of chapter 26 of the Laws of 1882, and of chapter 86 of the Laws of 1884. The charter was granted under the provisions of the sections of the Code above mentioned, as amended by the session laws above stated of 1882 and 1884. After the granting of the charter, the corporation organized and began business, and thereafter acquired considerable land and other estate and property of various kinds.

It owns lands adjoining a tract of eighty acres of land, which is the property of appellant, which lands are all situate in Holmes county, Miss., and on March 3, 1914, entered into a contract whereby it agreed to purchase the said lands from the appellant, and whereby the said appellant agreed and undertook to sell and convey the said lands to the appellee upon terms therein mentioned, and for a valuable consideration which passed between the parties, upon the approval of the title of the appellee, and thereupon the appellee tendered performance of the contract on its part and demanded a conveyance of the lands to it by the appellant. The appellant refused to execute a conveyance of the property to the appellee, because of its expressed contention that the appellee was prohibited from acquiring, and the appellant was prohibited from conveying to the appellee, the lands above mentioned, because they were agricultural lands, and a conveyance thereof to appellee in pursuance of the agreement mentioned would be in violation of chapter 162 of the Laws of 1912, which undertook to prevent corporations from acquiring agricultural lands in Mississippi.

Appellee filed a bill in chancery setting out the above facts and praying that appellant be compelled to carry out its contract of sale. It is the contention of appellee that chapter 162 of the Laws of 1912, prohibiting corporations from acquiring title, in fee or for a term of years, to, or owning lands for agricultural purposes, has no application to the charter granted appellee since said charter was granted before the Constitution of 1890, section 178, which contains a provision that:

"The legislature shall have power to alter, amend, or repeal any charter of incorporation now existing and revocable, and any that may hereafter be created, whenever in its opinion it may be for the public interest to do so."

Appellee contends that the said act of 1912 if applicable would defeat appellee in the full enjoyment of its property and rights and prevent it from enjoying the privileges, immunities, and franchises and property rights conferred upon it, acquired by it, and vested in it by virtue of its charter, and the attempted application of said act would be in violation of section 10, article 1, of the Constitution of the United States, as a law impairing the obligations of the state's contract with appellee.

The appellant demurrer to the bill, and from a decree overruling the demurrer this appeal is prosecuted.

Affirmed and remanded.

George H. Ethridge, assistant attorney general, for the State.

To the contentions of the complainant, the appellee here, I contend that the charter claimed does not constitute a contract within the meaning of the Federal and state Constitutions, forbidding the states to impair the obligation of a contract:

(1) In the first place I contend that by section 17 of article 12 of the Constitution of 1869, the legislature reserved the full power of legislation over all corporations whatever. Said section reads as follows:

"Sec. 17. Liabilities of banks, associations, and other corporations, shall be secured by legislative enactments; but in all cases, no stockholder shall be individually liable over and above the stock by him or her owned, unless so specified in the articles of association, or act of incorporation." If mistaken in this, I contend.

(2) That inasmuch as the land was not acquired prior to 1890, it is not a vested right and became subject to section 84 of the Constitution of 1890, specifically authorizing the legislature to limit and restrict power of corporations to acquire or hold lands in this state.

(3) I contend that this charter contains the power of doing a banking business and is therefore affected with the public use and subject in all respects to the police power of the state.

(4) I contend that as the Acts of 1912, chapter 162, was an exercise of the police power of the state to prevent and suppress monopolies in land and in all respects the police power of the state was adequate to enact chapter 162, regardless of the contract clause of the Constitution.

(5) That the bill seeks specific performance of the contract as to a matter clearly contrary to the general public policy of the state, and that equity will not enforce such contracts regardless of whether it is legal or not, but will leave them where they found them.

(6) I contend that charter does not warrant the contention of the complainant but is to be construed more strongly against the complainant and that the power to acquire real estate is a mere license granted by general law and subject to be modified and restricted by the legislature at will. 3 Words and Phrases (N. S.), page 98; Equitable Life Ins. Society v. Brown, 213 U.S. 25, 29 S.Ct. 404, 53 L.Ed. 682.

On all questions of the construction of the meaning of state statutes and state Constitutions the Federal courts are bound by the decisions of the states' supreme courts, and with such interpretation placed on the statute the court will then decide whether or not the statute or Constitution as construed by the state court makes an irreparable contract or not. The Federal court must follow the adjudications of the state upon the question as to whether a particular law of the state has been passed in such manner as to become a valid law under the state Constitution. Peters v. Gilchrist, 722 U.S. 483, 32 S.Ct. 122, 56 L.Ed. 278; G. W. H. Banks v. Armstrong, 208 U.S. 481, 28 S.Ct. 372, 52 L.Ed. 582; Hunter v. Pitts, 207 U.S. 161, 28 S.Ct. 40, 52 L.Ed. 151; Lindsley v. Natural Carbonic Gas Co., 220 U.S. 61, 31 S.Ct. 337, 55 L.Ed. 367; Virginia Carolina Chemical Co. v. Kirven, 215 U.S. 252, 30 S.Ct. 78, 54 L.Ed. 179; Brown Foreman Co. v. Ky., 217 U.S. 563, 30 S.Ct. 578, 58 L.Ed. 883. See note to Share & Trieste Co. v. Friedman, 40 L. R. A. (N. S.) 393; et seq., title "Constitutional and Statutory Questions." See, also, Forepaugh v. Delaware, etc., R. Co., 5 L. R. A. 509, Headmark 5 which reads as follows:

"The law declared by the state courts to govern contracts made within their jurisdiction is conclusive everywhere and the valid or binding effect of such contracts cannot be affected by any so called 'Commercial Law.'" See, also, case, note and authorities cited therein under heading "U. S. Supreme Court Follows Decision of State Court.'

SECOND PROPOSITION.

Inasmuch as the land involved in this suit was not acquired prior to the adoption of the Constitution of 1890, it has not a vested right and becomes subject to section 84 of the Constitution of 1890, specially authorizing the legislature to limit or restrict the power of corporations to acquire or hold lands in this state. Penn R. R. Co. v. Miller, 132 U.S. 75, 33 L.Ed. 267; Providence Bank v. Billings, 29 U.S. (4 Pet.) 514 (7; 939); Charles River Bridge v. Warren Bridge, 36 U.S. 11, Pet. 420, 733; Christ Church v. Philadelphia County, 65 U.S. 24 How. 300 (16; 602; Gilman v. Sheyboyan, 67 U.S. 2 Black, 510 (17; 305); Tucker v. Ferguson, 89 U.S. 22 Wall. 527 (22; 805); Northwestern Fertilizing Co. v. Hyde Park, 97 U.S. 659 (24; 1036); Newman v. Mahoning County, 100 U.S. 548, 561 (25; 710, 719); 2 Hare Am. Const. Law, 661, 663, 664. See, also, Memphis City Bank v. Tenn., 161 U.S. 186; Cooke on Corporations, section 494, and Pearsall v. Great Northern Railroad Company, 161 U.S. 646, 4 L.Ed. 838; Stone et al. v. Farmers Loan, etc., Co., 29 U.S. (L. Ed.) 636; Stone et al. R. R. Commission v. N. J. & C. R. R. Co., 67 Miss. 646.

Section 190 of the state Constitution establishes a rule of construction which requires the court to construe such charters in such manner as to retain power for legislature to promote the general welfare. The concluding clause of said section provides that: "The exercise of the police power of the state shall never be abridged or so construed as to permit corporations to conduct their business in such manner as to infringe upon the rights of individuals or the general well being of the state. This rule was a rule of construction independent of the Constitution and has existed throughout the history of the state and it has always been considered that a grant of charter rights could not contest with or destroy the police power of the state but that such...