The Omnium Investment Company v. Company

• Decision Date: 10 May 1902
• Docket Number: 12,573
• Citation: 68 P. 1089,65 Kan. 50
• Parties: THE OMNIUM INVESTMENT COMPANY, LTD., v. THE NORTH AMERICAN TRUST COMPANY et al
• Court: Kansas Supreme Court

68 P. 1089

65 Kan. 50

THE OMNIUM INVESTMENT COMPANY, LTD., v. THE NORTH AMERICAN TRUST COMPANY et al

No. 12,573

Supreme Court of Kansas

May 10, 1902

Decided January, 1902.

Error from Barton district court; ANSEL R. CLARK, judge.

Judgment reversed and case remanded.

SYLLABUS

SYLLABUS BY THE COURT.

1. FOREIGN CORPORATIONS -- RIGHT TO SUE -- Fraudulent Conveyance -- Alien Land Law of 1891. The plaintiff was a foreign corporation and, as such, subject to the disabilities in the matter of holding title to real estate imposed by chapter 3 of the Laws of 1891, which provided that such corporation should not be capable of acquiring title to or taking or holding, real estate, directed that real estate so held should be forfeited to the state, made it the duty of the county attorney of the county where such real estate was situate to enforce such forfeiture by an action for that purpose brought in the name of the state, and required that, after the sale of the lands so forfeited and the payment of the costs of such action, the residue of the money realized should be paid to the persons entitled thereto. An agent of the plaintiff had wrongfully taken title to real estate in his own name, which should have been taken in the name of the plaintiff, and subsequently conveyed the same without consideration to the defendant, with knowledge on its part of the wrong of the agent. Held, that the plaintiff could maintain an action to compel the defendant to convey to it such title, notwithstanding the disability imposed upon it by said statute.

2. FOREIGN CORPORATIONS -- RIGHT TO SUE -- The State only may Interfere. Under the provisions of said statute, the state is the only one that can insist upon the forfeiture therein denounced, and, even as against the state itself, the plaintiff is interested in such real estate, as it would be entitled to the net proceeds of the sale thereof.

Cook & Gossett, and Elrick C. Cole, for plaintiff in error.

William J. Patterson, for defendant in error.

CUNNINGHAM, J. JOHNSTON, POLLOCK, JJ., concurring.

OPINION

CUNNINGHAM, J.:

The plaintiff in error was plaintiff in the court below. Its action was for the purpose of compelling the defendant in error to convey to it the legal title to certain lands in Barton county, Kansas, the equitable title to which the plaintiff in error claimed to hold, the allegations of the petition being such as to show that an agent of the plaintiff, without its knowledge or consent, had taken the title thereto, while acting for and on behalf of the plaintiff, and thereby had wrongfully become a trustee of such title, for the benefit of the plaintiff, and that the defendant had obtained such title with full knowledge and in contravention of plaintiff's rights. The defendant answered by several defenses, one of which was as follows:

"It admits that plaintiff is a corporation organized and existing under the laws of the United Kingdom of Great Britain and Ireland, and avers that plaintiff is a corporation, more than twenty per cent. (20%) of the capital stock of which is owned by persons who are not citizens of the United States; that plaintiff is not competent or qualified, under the laws of the state of Kansas, to acquire, hold or own real estate in said state, as prayed for in its petition."

To this defense plaintiff demurred, which demurrer was by the court overruled, and, plaintiff standing upon the demurrer, judgment was rendered against it, from which judgment it brings error to this court.

This action was had while chapter 3 of the Laws of 1891 was in full force. The question is, therefore, whether a foreign corporation, when more than twenty per cent. of its stock is owned by those other than citizens of the United States, at that time may compel a conveyance to it of the legal title to land wrongfully taken by its agent in his own name.

By sections 1 and 2 of chapter 3 of the Laws of 1891 it was provided that no corporation, like the one specified in defendant's answer as above quoted, could acquire title to or take or hold any real estate in the state of Kansas. By section 5 of the same chapter it was provided that real estate held or owned in violation of the act should be forfeited to the state of Kansas, and the county attorney of the county in which the real estate was situated was directed to enforce such forfeiture by a civil action. Another section provided for the sale of such lands and payment of the costs of such action, and directed that the proceeds of such sale should be paid into the treasury of the state of Kansas, and there remain subject to the order of the person or persons entitled thereto. The entire, act must be read together, and from it we deduce the conclusion that the title which was or should become vested in the alien was liable to be defeated at the instance of the state by an action in its name only; that if the state elected to waive a forfeiture by neglecting to bring an action therefor, the alien would continue to hold and enjoy the real estate; that the question of the power of such alien to take and hold such title could not be raised by a private individual. This indeed was the rule at common law, the rule being thus stated in the American & English Encyclopedia of Law (2d ed.), volume 2, pages 70, 72:

"It is well settled that at common law an alien may take real estate by act of the parties, as by deed or grant, or devise, or by other act of purchase, but he cannot hold against the state. Under this rule, therefore, an alien takes a defeasible estate, good against all excepting the state, and good against it until it institutes proceedings and obtains a judgment by inquest, of office or office found, or some legislative act equivalent thereto."

See also, 1 Washburn on Real Property (5th ed.), 79. In Racouillat v. Sansevain, 32...