State ex rel. Higby v. Higby Co.
| Decision Date | 07 March 1906 |
| Citation | 106 N.W. 382,130 Iowa 69 |
| Parties | STATE OF IOWA, EX REL. PEARL HIGBY ET AL. BY CHARLES J. WILD, next friend, Appellants, v. THE HIGBY COMPANY, Appellee |
| Court | Iowa Supreme Court |
Appeal from Black Hawk District Court.--HON. A. S. BLAIR, Judge.
Quo warranto proceedings to test defendant's power and authority to administer a trust. The trial court dismissed the petition, and plaintiffs appeal.
Affirmed.
Alfred Grundy, for appellants.
Courtwright & Arbuckle, for appellee.
Defendant is a corporation for pecuniary profit, organized under the laws of this State permitting the formation of such artificial bodies for the transaction of any lawful business and giving them power to acquire and transfer property "possessing the same powers in such respects as natural persons." See Code, sections 1607, 1609. The general nature of its business, as defined by its articles, was "owning, buying, selling, renting, and otherwise handling real estate for pecuniary profit, with power to act as trustee, to hold real and personal property, including shares in itself, for any person capable of becoming a member, in trust, but in such cases the consent of the directors must be obtained;" and to do any other business not inconsistent with its articles, when deemed wise and prudent, with the consent of each of the directors.
About August 21, 1904, and after the organization of the corporation, Alice M. Higby, one of the stockholders, and the president of the corporation made, executed, and delivered to defendant a trust deed, whereby she conveyed one hundred shares of stock in said corporation to said corporation, to be held, managed, and controlled by it, paying to said Alice Higby all dividends accruing thereon during her natural life and using enough thereof after her death to provide a suitable vault or monument for herself and husband, and the remainder of the stock with its dividends to be used for the benefit of one Seward Higby, and after his death to be divided among the heirs of his body as they became of age. If Seward should fail to marry, or fail to have issue, these shares were to go to the heirs of the body of Jesse Higby. Other shares were to be held in trust for the heirs of the body of Jesse Higby. In certain contingencies the trust was to cease and vest at once in the heirs of Seward and Jesse Higby. The trustee was given power to manage the trust as it saw fit. Each and all of the directors accepted this trust.
It appears that Seward Higby is unmarried, and that relator is next friend for the grandchildren of Alice M. Higby, who died May 29, 1905. Defendant has possession of the aforesaid stock under the deed of trust, and is administering it according to the terms thereof. Jesse Higby sold some of the stock held by him to one Hieber, and Hieber sold part of this to one Benson. Defendant has never been appointed trustee by any court, has not given bond, and has made no report, save to Seward and Jesse Higby.
This action was brought to oust defendant and to exclude it from the privilege of acting as trustee. It is claimed that defendant cannot act in that capacity, that neither under the law nor under its charter may it act as such, that it is contrary to public policy to allow private corporations to administer trust estates without protective limitations and safeguards, and that in no event should it be allowed to act for minors or other persons under the sovereignty or protective care of the State. We have it settled for this State that a corporation may purchase and hold its own stock. Iowa Lumber Co. v. Foster, 49 Iowa 25; Rollins v. Shaver Co., 80 Iowa 380, 45 N.W. 1037. In the former case it is said that corporations may assume such powers as are deemed advisable, provided such powers do not exceed those possessed by natural persons. In the instant case the articles of incorporation expressly authorize such transactions as were attempted to be exercised; and there is nothing in the general statutes to which our attention has been called, or which we can find, expressly forbidding them. Indeed, as a natural person may hold property as trustee, we can see no objection to a corporation's doing so, provided its articles are broad enough to authorize it.
At common law, originally, a corporation could not hold land or other property as trustee. 1 Black. Com. 477; Minnesota Co. v. Beebe, 40 Minn. 7 (41 N.W. 232, 2 L.R.A. 418). The reasons for this were technical in the extreme, and since the statute of uses (St. 27 Hen. VIII, chapter 10) corporations may hold as trustees. Sinking Fund v. Walker, 7 Miss. 143, 185, 6 Howard 143 (38 Am. Dec. 433).
The general rule in this country now is that a corporation may hold real or personal property in trust for any purpose that is not foreign to...
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