Thompson v. West
| Decision Date | 07 March 1900 |
| Docket Number | 9,136 |
| Parties | FRANK THOMPSON ET AL. APPELLANTS, v. GEORGE W. WEST ET AL. APPELLEES |
| Court | Nebraska Supreme Court |
APPEAL from the district court of Lancaster county. Tried below before HOLMES, J. Affirmed.
AFFIRMED.
Morning & Berge, for appellants, cited Compiled Statutes of Nebraska 1897, sec. 1717, and argued that this provision of the statute expressly gave the church authority to acquire, hold enjoy and dispose of all property, real and personal, which the defendant church may acquire by purchase, donation or otherwise, for the purpose of carrying out the intention of such church corporation. It was not contended by the defendant church that the money it received from the plaintiffs was used for any other purpose than to carry on the work of the church. It did not contend that it did not have legal capacity to borrow money. It did allege, however in its answer, that it purchased from Ward S. Mills a certain tract of land for the sole and only purpose of speculation, and that such speculation was in nowise necessary for the purpose of carrying out its intention as a corporation. While it made this allegation in its answer, yet it expressly admitted that the money it received from plaintiffs was used by said trustees for the payment of debts of said church, and in the construction of its church building. Defendant church might now call it what it would, it did admit that whatever it did in connection with this matter was done by its trustees to further the interests of the church. If, in the case at bar, the church did go into a real estate speculation, and if that speculation had to do with the issues in this case, yet there was not a word of evidence that it was not all done to carry on the work of the church more successfully. The board of trustees was charged with the responsibility of managing the financial affairs of the church, and the board purchased said real estate for no other purpose but to build up and strengthen the financial interests of the church, which we contend it had a right to do. Counsel cited Wright v. Hughes, 12 Am. St. [Ind.], 416; Spear v. Crawford, 28 Am. Dec. 515, 14 Wend. [N.Y.], 20; Rivanna Navigation Co. v. Dawsons, 46 Am. Dec. 183, 3 Gratt. [Va.], 19; Bissell v. Railroad Cos. 22 N.Y. 271.
The defense of ultra vires can not be urged by a corporation to the injury of an innocent third party. See Bank of Genesee v. Patchin Bank, 13 N.Y. 313; Gansevoort v. Williams, 14 Wend. [N.Y.], 133; Catskill Bank v. Stall, 15 Wend. [N.Y.], 364; Evans v. Wells, 22 Wend. [N.Y.], 324; Bank of Genesee v. Patchin Bank, 19 N.Y. 312; Mechanics' Banking Ass'n v. N.Y. Saugerties White Lead Co. 35 N.Y. 505; Olcott v. Tioga R. Co. 84 Am. Dec. 298, 27 N.Y. 596.
Powers granted to a corporation may always be used by it subject only to express limitations imposed by its charter. See Wright v. Hughes, supra; New England Ins. Co. v. Robinson, 25 Ind. 536; Booth v. Robinson, 55 Md. 419; Green's Brice's Ultra Vires, p. 223.
Whatever irregularities there may have been in the proceedings of the board, when this money was borrowed by the defendant church from plaintiffs the trustees and the entire church had ratified said acts; and the defendant church is now estopped from pleading these irregularities. See Scott v. Middleton, 86 N.Y. 200; Scott v. Trustees First M. E. Church of Jackson, 15 N.W. 892, 50 Mich. 528.
Case was argued orally for appellants by George W. Berge.
T. F. A. Williams, for the First Christian Church of Lincoln, Nebraska, argued that the transaction upon which appellants based their claim to a deficiency judgment against the church was beyond the powers of the church corporation, citing Compiled Statutes, 1899, ch. 16, secs. 42 and 55; Taylor, Private Corporations, [3d ed.], sec. 297.
On the question of ratification and estoppel, counsel argued that the thing done by the trustees of the church was not ultra vires simply on account of a defect of power, nor was it a case of the irregular exercise thereof. What they did was absolutely prohibited by that section of the statute granting them whatever authority they possessed, as well as by the general statutory provision. Counsel cited 7 Thompson, Corporations, sec. 8320.
The district court had no jurisdiction to enter deficiency judgment in this action. In the absence of statute, at common law, the mortgagee, after default, could maintain ejectment to recover possession or sue on the note or foreclose the mortgage. All of these remedies he could pursue concurrently. See Dimick v. Grand Island Banking Co. 37 Neb. 399; Bing v. Morse, 51 Neb. 842; 1 Beach, Modern Equity Jurisprudence [ed. 1892], sec. 499. A court of chancery could enter a deficiency judgment in the foreclosure action, if at all, only where the debt, without the mortgage, was such that a court of chancery would have jurisdiction of it and could enforce it. See Jones, Mortgages [3d ed.], sec. 1711; Morgan v. Wilkins, 6 J. J. Marsh. [Ky.], 28. In the case at bar there were no equitable elements, aside from the mortgage, on which to base a jurisdiction of the court to render a deficiency judgment herein. It is not a case of loss of securities or of mistake or of fraud, and the mortgagor never sold the property to anybody.
C. S. Rainbolt also appeared for appellees.
Morning & Berge, in reply, cited: Barnitz v. Beverly, 163 U.S. 118; State v. City of Kearney, 49 Neb. 325; Bishop, Contracts, sec. 565; Jackson v. Creighton, 29 Neb. 310; White v. Rourke, 11 Neb. 519; State v. Clarke, 25 Neb. 250; State v. McPeak, 31 Neb. 139.
Counsel argued that the decisions of this court were numerous in which it had been held that the laws which prescribed the mode of enforcing a contract, and which were in existence when such contract was made, were so far a part of the contract that no change in these laws which seriously interfered with that enforcement was valid, because they impaired its obligation within the meaning of the constitution of the United States. Federal decisions are to the same effect.
This was a suit to foreclose a real estate mortgage executed and delivered by one George W. West to Ward S. Mills to secure the payment of one principal note and coupon notes thereto attached. The principal note was transferred by the payee, Mills, to the First Christian Church of Lincoln, and by two of its trustees sold and indorsed to James Thompson, now deceased. A decree of foreclosure was entered, the mortgaged premises were sold and the sale confirmed, and a deficiency existing after the proceeds of sale were applied on the debt, a judgment therefor was asked against said church as an indorser of the paper, which request was denied. Plaintiffs appeal.
The only question raised is whether the court below erred in refusing to render a deficiency judgment against the church. It is disclosed by the record that certain of the trustees of the First Christian Church of Lincoln, and who assumed to act for it, purchased of Mills a number of vacant and unimproved lots situate in Mills' Second Addition to University Place. The lots were purchased for the purpose of speculation, or with the view of being resold at an advance over the cost price, but the title to the property was permitted to remain in the name of Mills, who, on the trustees making the sale of a lot, at their request executed a deed to the purchaser and the latter gave to Mills a note, secured by a mortgage on the property, for the unpaid purchase money. Mills thereupon indorsed and transferred the note and mortgage to the First Christian Church of Lincoln. One of these lots was sold to West, who executed the note and mortgage in suit to Mills for the amount of the purchase price remaining unpaid, and this note was indorsed without recourse by the payee and delivered to said church. Subsequently, the note and mortgage were transferred by certain of the trustees, in the name of the church, to James Thompson, plaintiffs' decedent. The governing board of the trustees of the church corporation never held any meeting for the purpose of taking any action relative to, nor did such board, as a body, authorize, the purchase and sale of the lots, or the transfer of the note and mortgage in question.
The defendant church contends that no deficiency judgment could properly be rendered against it for the following reasons:
1. No judgment for a deficiency can be lawfully rendered in this state in a suit to foreclose a mortgage.
2. The contract relative to the purchase of the lots of Mills for the purpose of speculation was without the power of the First Christian Church of Lincoln, and therefore ultra vires and void.
3. The indorsement of the note and the sale thereof to plaintiffs' decedent was never authorized or sanctioned by the board of trustees of said church.
These propositions will receive consideration in the order stated. Prior to 1897 the following sections were parts of the Code of Civil Procedure of this state:
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