St. Philip's Church v. Zion Presbyterian Church

• Decision Date: 22 July 1885
• Citation: St. Philip's Church v. Zion Presbyterian Church, 23 S.C. 297 (S.C. 1885)
• Parties: ST. PHILIP'S CHURCH v. ZION PRESBYTERIAN CHURCH.
• Court: South Carolina Supreme Court

23 S.C. 297

ST. PHILIP'S CHURCH v. ZION PRESBYTERIAN CHURCH.

Supreme Court of South Carolina.

July 22, 1885

1. An action (1) for the recovery of a lot of land, or, failing in this, (2) for an order limiting the use of such lot, involved in its first phase an issue of title to real estate, which could be tried only by a jury, a jury trial not having been waived.

2. It seems that upon the dissolution of a corporation (other than a moneyed, trading, or municipal corporation) by expiration of charter, all of its property not validly alienated before dissolution reverts to the grantors.

3. Where a corporation, having no adopted seal, directed a conveyance to be made of a lot of land, and a deed was accordingly executed professing to be under the seal of the corporation, attested by the signature of its president, and was signed by such president, and a wafer was attached, which was intended to be the seal of the corporation. Held , that the wafer was the corporate seal to this deed.

4. The charter of a church, under act of the legislature, being about to expire, a petition was filed with the clerk for renewal, which petition, without fault of the petitioners was not granted until two years afterwards. Meantime the legislative charter had expired. Held , that the clerk's charter was a renewal of the original charter and related back to the filing of the petition, and prevented the property of the corporation from reverting to the grantors.

5. A lease for 99 years, perpetually renewable, having been made with certain conditions attached, and subsequently a deed of conveyance of the same land executed between the same parties, for valuable consideration, reciting the lease, but without conditions. Held , that the lease was merged in the conveyance, and that the grantees held the property freed of the conditions in the lease.

Before KERSHAW, J., Charleston, March, 1884.

This was an action by the Protestant Episcopal Church of the Parish of St. Philip, in Charleston, in the State of South Carolina, against the Zion Presbyterian Church of Charleston of Charleston County, commenced September 30, 1882. The opinion of this court sufficiently states the case. The Circuit decree was as follows:

This action was tried by the court without a jury on the pleadings, the testimony taken before the master, and the argument of counsel. There were numerous objections made to the testimony, which I do not deem it necessary to consider severally. It is sufficient to say that few of the matters objected to (if any) involved facts which in any way affect the result I have reached, and I do not consider any of them well taken.

It will be noticed that plaintiffs' title to the land is controverted by the answer. This raises an issue which can only be determined by a jury trial, unless waived by the defendants. It has not been so waived. Dewalt v. Kinard , 19 S.C. 291. In so far, therefore, as plaintiffs seek to recover possession of the premises, they cannot have that relief at the hands of the court without a jury. In this view of the case it would not be necessary for me to pass upon the question of legal title as presented by the pleadings and the evidence. Lest, however, a different view may prevail elsewhere, I will proceed to give my conclusions in regard thereto.

I will premise by saying that the plaintiffs have established a perfect title in them at the time that the lots in question were conveyed to the Glebe Street Presbyterian Church, nor do I entertain a doubt that the law contended for by the plaintiffs is correct: that lands granted to a corporation, other than a moneyed or trading company, revert to the grantor on its dissolution by the expiration of its charter, unless there be a valid alienation during its existence. The doctrine is well stated by Chancellor Kent (2 Com. , *282), thus: " Corporations have a fee simple for the purposes of alienation, but they have a determinable fee for the purpose of enjoyment. On the dissolution of the corporation, the reverter is to the original grantor or his heirs; but the grantor will be excluded by the alienation in fee, and in that way the corporators may defeat the possibility of a reverter." And again, he says: " According to the old settled law of the land, where there is no special statute provision to the contrary, upon the civil death of a corporation, all its real estate remaining unsold reverts back to the original grantor or his heirs." 2 Com. , *307. Says Mr. Blackstone: " A body politic may be dissolved, which dissolution is the civil death of the corporation, and in this case the lands and tenements shall revert to the person, or his heirs, who granted them to the corporation; for the law doth annex a condition to every such grant, that if the corporation be dissolved, the grantor shall have the land again, because the cause of the grant faileth. The grant is, indeed, only during the life of the corporation, which may endure forever; but when that life is determined by the dissolution of the body politic, the grantor takes it back by reversion, as in the case of every other grant for life." 1 Bl. Com. , 484.

It is not denied that this was the common law rule, but it is contended that it has generally been rejected in this country as to private corporations. The text writers, Angell & Ames, Dillon, Fields, and others, and even Chancellor Kent himself, are cited to this effect. Chancellor Kent in a note (2 Com. , 307) says: " The rule of the common law has, in fact, become obsolete. It has never been applied to insolvent moneyed corporations in England. The sound doctrine now is *** that the capital and debts of banking and other moneyed corporations constitute a trust fund for the payment of creditors and stockholders." " The rule of the common law in relation to the effect of dissolution upon the property and debts of a corporation has, in fact, become obsolete and odious. *** Indeed, at this day, it may well be doubted whether, in the view at least of a Court of Equity, it has any application to other than public and eleemosynary corporations, in which it had its origin." Angell & Ames Corp. , § 779, a .

Mr. Dillon says: " Since this doctrine has, in this country, been generally rejected as to private corporations, organized for pecuniary profit, and rests upon no foundation in reason or justice, it may perhaps be safely affirmed that it would not, on full consideration, be applied to the dissolution of a municipal corporation, by an absolute and unconditional repeal of its charter, or (if that may be done) to the case where the charter of such corporations is forfeited by a judicial sentence." (Dillon Mun. Corp. , § 113.) Mr. Field says on this: " If, in the case of municipal corporations, a Court of Chancery will treat the corporation's assets as a trust fund in case of the dissolution of a corporation by legislative action, and will assume the execution of the trust, or see that it is properly executed, as has been noticed, the same rule ought to prevail in cases of private corporations for pecuniary gain, and the tendency of recent opinions seems to support this view; and to sustain the doctrine that the surplus assets, after the satisfaction of the claims of creditors, and the payment of expenses, even in the absence of statutory provisions on the subject, belong to the stockholders; that lands conveyed to such a corporation for full consideration in fee do not revert to the grantor, and the doctrine of the old common law in such cases as to reversion and forfeiture of the corporate property, if applicable at all, is not applicable to private corporations for pecuniary emolument." Field Corp. , § 491.

A number of cases is cited to sustain the doctrine so laid down, the most authoritative of which, perhaps, is that of Bacon v. Robertson , 18 How. , 480, in which Judge Campbell says: " Modern legislation has modified the odious rule of the common law, that upon the dissolution of a corporation its remaining real estate unsold reverts to the grantor and his heirs, and the courts, in a similar spirit, hold that where a corporation is authorized to acquire a fee simple to lands belonging to private persons for public use, and such acquisition is had, and compensation accepted, no reversionary estate remains, but the property may be used for any purpose, or may be disposed of by the corporation." That was the case of a municipal corporation dissolved by a decree of the court, and there seems to be no doubt that upon the dissolution of the charter of a private moneyed corporation, or of a municipal corporation, by an act of legislature or judicial decree, the assets of such corporation will be applied to the payment of the debts of the corporation, and the remainder be divided among the stockholders.

Mr Field says (§ 492): " This right of creditors and stockholders is based not only upon natural justice and manifest equity, but it has recently been held that it is protected by the provisions of the constitution of the United States." The principal case referred to there is that of Curran v. Arkansas (15 How. , 305), which is a very instructive authority on this point reviewing the previous cases. Curtis, J., delivering the opinion of the court, quotes from Mumma v. Potomac Company (8 Pet. , 281), where it is said, " The obligation of these contracts survives, and the creditors may enforce their claims against any property belonging to the corporation which has not passed into the hands of bona fide purchasers, but is still held in trust for the company, or for the stockholders thereof, at the time of its dissolution in any mode permitted by the local laws." The learned judge then proceeds: " Indeed, if it be once admitted that the property of an insolvent...