1. While a corporation must dwell in the state which created it,
its existence may be elsewhere acknowledged and recognized. Its
residence creates no insuperable objection to its power of
contracting in another state.
2. In harmony with the general law of comity among the states
composing the Union, the presumption is to be indulged that a
corporation, if not forbidden by its charter, may exercise the
powers thereby granted within other states, including the power of
acquiring lands, unless prohibited therefrom, either in their
direct enactments or by their public policy, to be deduced from the
general course of legislation or the settled adjudications of their
highest courts.
3. This Court cannot presume that it is now, or was in 1870,
against the public policy of Illinois that one of her citizens
owning real estate there situate should convey it to a benevolent
or missionary corporation of another state of the Union, for the
purpose of enabling it to carry out the objects of its creation,
since she permitted her own corporations, organized for like
purposes, to take such real estate by purchase, gift, devise, or in
any other manner.
Page 101 U. S. 353
4. Where land in Illinois was conveyed to a New York
corporation, the children and heirs at law of the grantor, who file
their bill to set aside the conveyance upon the ground that it was
against the public policy of Illinois, can not raise the question
that the grantee acquired a larger quantity of lands than its
charter allowed.
5.
Carroll v. The City of Fact St. Louis, 87 Ill. 568,
and
Starkwather v. American Bible Society, 72
id.
50 distinguished.
The facts are stated in the opinion of the Court.
MR. JUSTICE HARLAN delivered the opinion of the Court.
This suit was brought by Yount and others against the American
and Foreign Christian Union to set aside a conveyance of certain
lots or parcels of land in the state of Illinois, alleged to be of
the value of $10,000, which was executed, May 19, 1870, by Stephen
Griffith, a citizen of that state, to the Christian Union, a
corporation created in the year 1861 under the laws of New York,
providing for the incorporation of benevolent, charitable,
scientific, and missionary societies in the latter state.
A decree was rendered against the corporation, and it appealed
here.
The place of business and principal office of the appellant was
and is in the City of New York, but there seems to be no inhibition
in its charter upon the exercise of its functions in other states.
The declared object of its incorporation was
"by missions, colportage, the press, and other appropriate
agencies, to diffuse and promote the principles of religious
liberty and a pure evangelical Christianity both at home and abroad
wherever a corrupt Christianity exists."
The appellees, who are the children and heirs at law of Griffin,
pray for a decree declaring the conveyance to be null and void and
requiring the appellant to convey to them the premises in dispute.
They broadly claim that by the settled law of Illinois, a foreign
corporation cannot take or hold lands in that state, and that
consequently no title passed to the
Page 101 U. S. 354
appellant from their ancestor. That is the fundamental
proposition in the case, and is the only one which counsel for the
appellees, in support of the decree below, has deemed it necessary
to discuss with any fullness.
By the statute of New York under which the appellant was
organized, it was made capable of taking, receiving, purchasing,
and holding real estate for the purposes of its incorporation, and
for no other purpose, to an amount not exceeding the sum of $50,000
in value, and personal estate for like purposes to an amount not
exceeding $75,000 in value, the clear annual income of such real
and personal estate not, however, to exceed the sum of $10,000. No
question is made here as to its right, consistently with its own
charter and the laws of New York, to acquire for the purposes of
its creation real estate within at least the quantity designated by
its charter.
The appellant then having this capacity by its charter and not
being expressly prohibited from exercising its powers beyond the
state which created it, we proceed to inquire whether it was
forbidden by the laws of Illinois in force in the year 1870 from
taking title by conveyance to real property within the limits of
that state for the objects designated in its charter. For, besides
the admitted incapacity of a corporation of one state to exercise
its powers in another state except with the assent or permission,
expressed or implied, of the latter, it is a principle
"as inviolable as it is fundamental and conservative, that the
right to hold land and mode of acquiring title to land must depend
altogether on the local law of the territorial sovereign."
Runyan v. The Lessee of
Coster, 14 Pet. 122;
Lathrop v. Commercial Bank
of Scioto, 8 Dana (Ky.) 114.
By a general law of Illinois enacted in 1859, any three or more
persons of full age, citizens of the United states, a majority of
whom were also required to be citizens of that state, could become
a body politic and corporate for benevolent, charitable,
educational, literary, musical, scientific, religious, or
missionary purposes, and in their corporate capacity take, receive,
purchase, and hold real and personal estate and, for charitable
purposes only, sell and convey the same. Laws of Ill., 159, p. 20;
Gross's Rev. 124.
Page 101 U. S. 355
Corporations formed under that law were made capable of taking,
holding, or receiving any property, real estate or personal, by
gift, purchase, devise, or bequest, or in any other manner.
Authority was given to sell real estate purchased by them for their
own use, with any building erected thereon, and invest the proceeds
in the purchase of another lot, or the erection of another
building, or both. As to such as was devised or given to them for
any specified benevolent purpose, authority was conferred to sell
the same and apply the proceeds in aid of that purpose, such real
estate, however, not to be held more than five years.
This general statute was in force when the conveyance to the
appellant was executed. It thus appears that when its rights
accrued under that conveyance, the statutes of Illinois expressly
provided for the incorporation of societies having objects similar
to those of the appellant, and with capacity to take, receive, and
hold real property, by gift, purchase, devise, bequest, or in any
other manner, for the purposes of their creation. Shortly after the
passage of the general law of 1859, to-wit, at its session of 1861,
the general assembly created a large number of religious and
charitable corporations with like capacity to take, receive, and
hold real and personal property, and in the year 1863 it expressly
exempted from taxation real and personal property which the
American Bible Society, a corporation of New York, then owned or
might thereafter acquire in the State of Illinois, not exceeding
$50,000 in value; also all bibles and testaments in its
depositories, and any articles of personal property necessary for
the prosecution of its objects. Pri.Laws Ill., 1863, p. 26.
The conclusion is not to be avoided that the state, prior to
1870, authorized, if it did not steadily encourage, the
organization of societies for benevolent, charitable, religious,
and missionary objects and endowed them with capacity to acquire by
purchase, gift, or devise, real estate for the purposes of their
creation. It had not then, nor, so far as we are informed, has it
since passed any statute expressly forbidding corporations of other
states, having like objects, from taking, receiving, purchasing, or
holding real property in that state to the same extent and for the
same purposes as were allowed to its own corporations
Page 101 U. S. 356
of that class. Nor is our attention called to any statute in
force in 1870 or subsequently which expressly forbade foreign
corporations from exercising, within the State of Illinois, the
functions with which they were endowed by the respective states
creating them or which made the express permission by statute of
that state a condition precedent to the recognition within its
jurisdiction of the corporations of other states. Although, as a
general proposition, a corporation must dwell in the state under
whose laws it was created, its existence as an artificial person
may be acknowledged and recognized in other states. "Its residence
in one state creates no insuperable objection to its power of
contracting in another."
Runyan v. The Lessee of
Coster, 14 Pet. 122. In
Cowell v. Springs
Company, 100 U. S. 55, we
said:
"If the policy of the state or territory does not permit the
business of the foreign corporation in its limits or allow the
corporation to acquire or hold real property, it must be expressed
in some affirmative way; it cannot be inferred from the fact that
its legislature has made no provision for the formation of similar
corporations or allows corporations to be formed only by general
law. Telegraph companies did business in several states before
their legislatures had created or authorized the creation of
similar corporations, and numerous corporations existing by special
charter in one state are now engaged without question in business
in states where the creation of corporations by special enactment
is forbidden."
In harmony with the general law of comity obtaining among the
states composing the Union, the presumption should be indulged that
a corporation of one state, not forbidden by the law of its being,
may exercise within any other state the general powers conferred by
its own charter unless it is prohibited from so doing either in the
direct enactments of the latter state, or by its public policy to
be deduced from the general course of legislation, or from the
settled adjudications of its highest court. There was here no such
direct legislation during or prior to the year 1870, nor can the
existence of such a public policy to the inferred from the general
course of legislation or judicial decisions in Illinois up to and
including that year in relation to religious, benevolent,
charitable, or missionary societies created in other states.
Page 101 U. S. 357
But it is contended that the precise question now under
consideration has been heretofore decided by the Supreme Court of
Illinois adversely to these views in
Carroll v. The City of
East St. Louis, 67 Ill. 568, and
Starkweather v. American
Bible Society, 72
id. 50, and that this Court is
obliged to follow the construction of the state law and give effect
to the public policy of Illinois, as announced by the highest court
of that state. Our obligation to follow without question these
decisions arises, it is claimed, out of the express provisions of
the act of Congress declaring that the laws of the several states,
except when the Constitution, treaties, or statutes of the United
states otherwise require or provide, are to be regarded as rules of
decision in trials at common law in the courts of the United states
in cases where they apply. This provision was incorporated in the
original judiciary act, and has been retained in the statutes of
the United states to the present time. Under it, we have often
declared that the construction given to a state statute by the
highest judicial tribunal of such state is to be accepted in the
federal courts as a part of the statute whenever they are required
to determine questions, or ascertain rights arising out of or
dependent upon such local statute. But how far the federal courts,
in the ascertainment and enforcement of property rights, dependent
upon the statute law or the settled public policy of a state, are
bound by the decisions of the state court rendered after such
rights were acquired or became vested is a different question, and
one of the gravest importance. The rule upon this subject has been
announced, with some qualifications arising out of the
circumstances of the particular cases heretofore decided in this
Court. Its extended discussion is not, however, essential in this
case, since the decisions of the Supreme Court of Illinois upon
which counsel for appellees rely do not in our judgment necessarily
conclude the precise point here involved.
In
Carroll v. The City of East St. Louis, supra, the
question before the court was whether the Connecticut Land Company,
a corporation created in another state for the sole purpose of
buying and selling lands, had power to purchase and hold title to
lands in the State of Illinois. The decision was that it could not,
for the reason -- and no other is assigned -- that the company,
Page 101 U. S. 358
if permitted to exercise its functions in Illinois to the full
extent authorized by its charter, could acquire lands without limit
as to quantity and hold them in perpetuity; that such privileges
had never been accorded by Illinois to her own domestic
corporations, and were inconsistent with her settled public policy
against perpetuities, as indicated not by express enactment, but
with absolute certainty, by the general course of its legislation
from the very organization of the state.
Two of the judges dissented from the opinion so far as it held
invalid a transfer of land by the corporation to a purchaser.
The subsequent case of
Starkweather v. American Bible
Society, supra, involved the title to certain real estate, an
undivided interest in which was devised by one Starkweather to the
trustees of the American Bible Society, established in 1816, to
have and to hold the same for its use, but not to be entitled to
the same or its income until his youngest child became of age. The
claim of the Bible Society was denied by the court upon the
following grounds:
1. That by the laws of New York, as declared by the highest
court of that state, it had not the capacity to take title to real
property in New York by devise.
2. That New York had no power to create a body incapable of
taking land in that state by devise, and yet with power to so take
lands in a foreign jurisdiction.
3. And by way of argument, that if New York was to so enact, and
other states were to so consent, then such bodies might so receive
and hold lands; but, said the court, the former had not so enacted,
nor had Illinois so consented, since, when the will of Starkweather
was probated, Sept. 16, 1867, there was no statute of Illinois
which authorized foreign corporations to hold lands by devise in
that state.
4. The principles announced in
Carroll v. The City of East
St. Louis were regarded as conclusive against the claim of the
Bible Society, "as," said the court, "all of the inconveniences and
injuries are as likely to ensue in this, and other cases like it,
as in that."
5. The devise being illegal and void, the court could not decree
a sale of the real estate devised and direct the payment of the
proceeds to the society.
We are of opinion that the
Starkweather case does not
determine
Page 101 U. S. 359
the particular question we have been considering. It does not
decide that the devise to the Bible Society was void solely because
of the absence of some statute expressly and affirmatively
authorizing or permitting devises of real estate in Illinois to
corporations of other states. The absence of such a statute was
referred to, as we suppose, for the purpose of showing that the
admitted incapacity of the Bible Society, under the law of its own
creation, to take real estate by devise, and its consequent
inability to acquire in that mode real estate situated elsewhere,
could not be removed or be met by anything in the legislation of
Illinois, since no statute in force when the will was probated
conferred upon foreign corporations the right to acquire real
property in that state by devise.
The
Starkweather case was held to be concluded by the
principles announced in the
Carroll case, for the reason,
perhaps, that the property devised could, consistently with the
will of the testator and the charter of the society, have been held
for a period of time beyond that allowed to similar corporations of
Illinois holding lands in that state. Upon no other ground are we
able to understand how the
Starkweather case was concluded
by the principles announced in
Carroll v. East St. Louis.
Neither decision warrants the conclusion that, at the date of the
deed to appellant, a benevolent, religious, or missionary
corporation of another state having authority under its own charter
to take lands, in limited quantities, for the purposes of its
incorporation, was forbidden by the statutes or the public policy
of Illinois, from taking title, for such purposes, to real property
in that state, under a conveyance from one of its citizens, duly
executed and recorded as required by its laws. The conveyance to
the appellant can be sustained without in any degree impairing or
doing violence to the fundamental principle enunciated in the
Carroll case,
viz., that corporations cannot
acquire lands in Illinois in large quantities to be held or which
may be held in perpetuity. It can also be sustained without
violating the main proposition laid down in the
Starkweather case,
viz., that a foreign
corporation forbidden by the laws of the state creating it to
acquire lands there by devise could not by that mode take lands in
Illinois in the absence of a statute of that state assenting
thereto. We cannot presume that it is
Page 101 U. S. 360
now or was in 1870 against the public policy of Illinois that
one of its citizens should convey real estate there situated to a
benevolent or missionary corporation of another state of the Union
for the purpose of enabling it to carry out the objects of its
creation when that state permitted its own corporations, organized
for like purposes, to take real estate within its limits, by
purchase, gift, devise, or in any other manner.
We have considered these questions with reference to the law of
Illinois at the date of Griffith's conveyance. But our conclusions
are strengthened by her subsequent legislation. We refer
particularly to the general statute passed in 1872 providing for
the organization of corporations for pecuniary profit or for any
lawful purpose except banking, insurance, real estate brokerage,
the operation of railroads (other than horse and dummy railroads),
and the business of loaning money, with authority to own, possess,
and enjoy so much real and personal estate as shall be necessary
for the transaction of their business, and to sell and dispose of
the same when not required for the uses of the corporation. All
real estate acquired in satisfaction of any liability or
indebtedness and not necessary and suitable for the business of the
corporation was required to be annually offered at public auction,
and if not sold within five years, its sale could be enforced by
information in the name of the state against the corporation. Sec.
26 of that general statute expressly recognizes the right of
foreign corporations to acquire real estate in Illinois. Its
language is:
"Foreign corporations and the officers and agents thereof doing
business in this state shall be subjected to all the liabilities,
restrictions, and duties that are or may be imposed upon
corporations of like character organized under the general laws of
this state, and shall have no other or greater powers. And no
foreign or domestic corporation established or maintained in any
way for the pecuniary profit of its stockholders or members shall
purchase or hold real estate in this state except as provided for
in this act."
Hurd's Ill. Rev. 1879, p. 290.
Distinct provision was made in the same statute for the
organization of societies, corporations, and associations, not for
pecuniary profit, with capacity to take, purchase, hold, and
dispose of real and personal estate for purposes of their
organization.
Page 101 U. S. 361
The statute imposes on the corporations last described no
restrictions as to the quantity of estate they may take and hold
except that it must be for the purposes of their organization.
Churches, congregations, or societies formed of religious worship,
when incorporated under that statute, in addition to grounds for
burying and camp meeting purposes, were limited to ten acres of
ground for houses, buildings, or other improvements for the
convenience and comfort of such congregations, church, or
society.
If the settled public policy of Illinois in 1870 forbade a
benevolent missionary corporation of another state from taking
title to real estate in Illinois for purposes of its organization,
a general statute would hardly have been passed in 1872 recognizing
the right of foreign corporations organized for pecuniary profit to
hold real estate in Illinois to the same extent and under like
powers with domestic corporations of the same class.
Appellees in their pleadings allege that the lots conveyed by
their ancestor to the American and Foreign Christian Union were not
required or necessary for the convenience or transaction of its
business. These allegations are both insufficient and immaterial --
insufficient because they may be true and yet the appellant, with
the lots in dispute added to its property, may not have had more
real estate than its charter permitted; immaterial because if, as
we hold, the appellant could consistently with its own charter and
the law of Illinois take title to real property in that state for
the purposes of its creation, its acquisition of a larger quantity
of real estate than its charter allowed or its business required or
was consistent with the law of Illinois was not a question which
the appellees have any right to raise. If the title passed by valid
conveyance from their ancestor, it is of no concern to them that
the appellant has acquired or is holding more real estate than its
charter authorizes.
We forbear the discussion of any other question arising upon the
assignments of error. It is apparent from the record and the
argument of counsel that the decree of the court below was based
upon the conclusion that the appellant, being a foreign
corporation, was forbidden by the law of Illinois from
Page 101 U. S. 362
taking title to the property in controversy. No proof was taken,
nor was the case heard upon the issue as to the mental capacity of
Griffith to execute the conveyance of 1870, or as to its having
been obtained by fraudulent solicitations and representations upon
the part of the agents of the appellant. The parties should have an
opportunity to prepare the cause, and have it heard upon those
issues.
The decree will be reversed with directions to overrule the
demurrer to the cross-bill and the exceptions to the answer and for
such further proceedings as may be consistent with this
opinion.
So ordered.