Taylor v. Alliance Trust Co.

• Decision Date: 15 January 1894
• Citation: 71 Miss. 694,15 So. 121
• Court: Mississippi Supreme Court
• Parties: E. B. K. TAYLOR ET AL. v. ALLIANCE TRUST CO

15 So. 121

71 Miss. 694

E. B. K. TAYLOR ET AL. v. ALLIANCE TRUST CO

Supreme Court of Mississippi

January 15, 1894

FROM the chancery court of Lee county, HON. BAXTER MCFARLAND Chancellor, being disqualified by reason of relationship to parties in interest, did not preside in this cause. By agreement, E. H. BRISTOW, ESQ., a member of the bar, presided as special chancellor.

Bill by appellee to cancel as a cloud upon its title to certain land in Lee county, a deed made by the sheriff of said county under an execution at which the appellant, E. B. K. Taylor purchased, and also a deed made by her for a part of the land to appellants, Clarke & Clarke. The appellee is a corporation created by the laws of Missouri, and domiciled at Kansas City, in said state. A copy of its charter was filed with the amended bill, showing that the purposes for which it was incorporated were "to buy, sell, exchange and rent real estate, also to loan and borrow money on real estate securities, and to transact any and all business in relation to buying, selling, exchanging, renting and mortgaging the same."

It was urged by defendants in their demurrer and in their answer, as an objection to granting any relief, that complainant had no power to sue in any of the courts of this state; that the bill does not show that it had complied with the law and policy of this state by recording its charter in the office of the chancery clerk; that it was a mere volunteer, and neither privileged nor required to pay to the Lombard Investment Company the $ 2,700 alleged to have been paid by it in consideration of the purchase of the land at the trustee's sale mentioned in the opinion. It was also urged as an objection to complainant's right to relief that all the notes executed by S. H. Taylor, and secured by one of the trust-deeds in favor of the Lombard Investment Company, were not due at the time of the sale of the land thereunder, and that the authority conferred by the trust-deed to declare all the notes due, in case of failure to pay any one or more of them, did not authorize a foreclosure of the trust-deed in advance of the maturity of all the notes, there being nothing in the notes providing for thus declaring the entire debt due in advance of the maturity of all the notes.

After demurrer sustained to the original bill, an amended bill was filed, and a demurrer thereto was overruled. Defendants answered, denying the principal allegations upon which relief was Sought. They also filed a cross-bill, in which they asked that, if for any reason the execution sale under which they claimed should be held invalid, they might be decreed to have the equitable title to the judgment, and that it be enforced against the lands in controversy. A demurrer to the cross-bill was sustained. The cause was then heard on amended bill, exhibits, answers and proof. A decree was rendered for complainant, establishing its title under the trustee's sale, and canceling the deed to defendant, E. B. K. Taylor and her deed to Clarke & Clarke. The opinion contains such further statement of the case as is necessary to an understanding of the questions decided.

Decree affirmed.

Clarke & Clarke, for appellant.

1. Section 1032, code 1880, provides that domestic corporations not specially provided for by act of the legislature may hold property necessary for its purposes, in value not exceeding $ 50,000, and that any such corporation offending against the section shall forfeit its charter and property. From this, it is manifest that the legislature intended to prohibit such bodies from acquiring property, except so much as may be necessary for transacting their business. In Illinois, under a similar statute, it was held that a corporation could not hold property beyond that which was necessary for its business or the collection of its debts, giving as the reason that it was contrary to the policy of the state and tended to create perpetuities. Trust Co. v. Lee, 73 Ill. 142. See also Houqh v. Land Co., Ib., 23; 67 Ib., 568.

The property purchased here--a plantation--was not necessary or proper for the business of appellee, and it was not taken in payment of debt. Buying this land did not come within the power conferred by the charter. Comity does not authorize a corporation to do an act in conflict with the laws or policy of the state. 13 Peters, 589; 8 Wall., 168.

It is true that, as a general rule, objections like this can only be raised by the state, but this is not the case where the contest arises between the corporation and a stranger to the contract. But, if it was the rule, it was changed by § 1042, code 1880, which provides that foreign corporations shall not do any act in this state contrary to the laws or policy thereof, and shall not be allowed to recover on any contract made in violation of the laws or policy of the state.

The analogy between this statute and § 589, code 1880, as to privilege taxes is apparent. In the last mentioned section the question of the default in payment of the privilege tax is a matter between the state and the defaulter, but the section provides that the contracts of such persons shall be null and void, and no suit shall be maintainable thereon.

2. On payment of the money by Mrs. L. T. Freeman, who was surety, a receipt in full for the judgment was given her, specifying that "she is authorized to do therewith as she sees proper." By this, we contend that she became subrogated to all the rights of the judgment creditor. Code 1880, § 998; Partee v. Mathews, 53 Miss. 140; 1 John. (N. Y.), 409; 10 Ib., 524; 14 Varb. (N. Y.), 481; 20 N.Y. 98.

3. Appellee is not a bona fide purchaser. It bought at a trustee's sale long subsequent to the rendition of the judgment, with full notice, actual and constructive, of the rights of the parties in the premises, and as a mere volunteer.

4. It is true that § 998, code 1880, provides for the affidavit to be made by the surety. But this was not intended to limit the rights given the surety. One of these was the right to assign or transfer the judgment, and we submit that the assignee of a judgment creditor could exercise this right, and the surety, on paying, became, in effect, a judgment creditor. Partee v. Mathews, supra; Freeman on Judgments, §§ 421, 431.

The right to make the affidavit and have the execution issued was one of the rights which the owner of the judgment had, and which he could assign with the judgment. The assignee was as much entitled to make the affidavit as the assignor. 22 Am. St. R., 570.

At most, the objection as to this is based upon a mere irregularity, which would not render the sale under the execution void. 52 Mo. 43; 5 Lawson's Rights & Rein. &Prac., 4330; Freeman on Judgments, § 43; 1 Am. & Eng. Enc. L., 125, notes; 2 Am. St. R., 174; Ib., 207; 9 Smed. & M., 216; 25 Miss. 156; 31 Ib., 440.

5. The defect in reference to tile ownership of the land in controversy by complainant, a foreign corporation, was not cured by the act of 1882 (Laws, p. 50). Section 1027, code 1880, provides for corporations to be created thereunder, and § 1032 provides that every corporation not otherwise provided for by act of the legislature, may hold real and personal property necessary for its purposes, in value not to exceed $ 50,000. The act of 1882 was intended only to enlarge the number and character of corporations to be created under the code chapter. Section 1032 of the code embraces all corporations in reference to the amount of property they may hold. It is a general law relating to corporations. The act of 1882 left this law intact, and the appellee, not belonging to the class mentioned in the statute, is unaffected by it, and must stand or fall by the general law.

6. A negotiable promissory note, due and payable in the future, cannot be brought to immediate maturity through a clause in the mortgage given to secure it, authorizing the mortgagee to declare the debt due. White v. Miller (Minn), 54 N.W. 736. See also Railway Co. v. Sprague, 103 U.S. 756.

Clayton & Anderson, on the same side.

1. Under the laws and policy of this state, the appellee, a foreign corporation, could not acquire or hold the land in controversy. The policy of the state, as shown by the general course of legislation on the subject of ownership by domestic corporations, will be applied to foreign corporations. By the law of comity, foreign corporations will be allowed the same privileges as are granted to domestic corporations, but no greater. By § 1032, code 1880, corporations generally were authorized to hold real estate necessary for their purposes, in value not to exceed $ 50,000. Under this section and under the amendatory act of 1882, the only property allowed to be held by corporations was for the purpose of providing a means for their doing business. The only change made by the act of 1882 was that the power was extended to hold and own property, to all unlimited amount, necessary and proper to carry into execution the purposes of the corporation.

According to the construction of the court below, the appellee could buy, and hold in perpetuity, all the property in the state, and this in the face of our stringent laws against individuals having such a right. As a case directly in point on this subject, and under a statute very similar to ours, we refer to Carroll v. East St. Louis, 67 Ill. 568, s.c. 16 Am. R., 632.

Appellee did not acquire this land as the result of loaning money in this state, or as the result of doing any business, but solely for the purpose of speculation. On this point, we refer to the language of the court in Williams v. Creswell, 51 Miss. 817. Further, as to the present policy of our state on this subject, we refer to code 1892, § 838.

3. While the general rule, in the absence...