The Legislature of the State of New York, on 18 April, 1823,
incorporated "The New York & Schuylkill Coal Company." The act
of incorporation was granted for the purpose of supplying the City
of New York and its vicinity with coal, and the company having, at
great expense, secured by purchase valuable and extensive coal
lands in Pennsylvania, the Legislature of New York, to promote the
supply of coal as fuel, granted the incorporation with the usual
powers of a body corporate, giving to it the powers to purchase and
hold lands to promote and attain the objects of the incorporation.
The recitals in the act of incorporation show that this power was
granted with special reference to the purchase of lands in the
State of Pennsylvania. The right to hold the lands so purchased
depends on the assent or permission, express or implied, of the
State of Pennsylvania.
The policy of the State of Pennsylvania on the subject of
holding lands in the state by corporations is clearly indicated by
the Act of the Legislature of Pennsylvania of April 6, 1833. Lands
held by corporations of the state or of any other state without
license from the Commonwealth of Pennsylvania are subject to
forfeiture to the commonwealth. But every such corporation, its
foeffee or foeffees, hold and retain the same to be divested or
dispossessed by the commonwealth by due course of law. The plain
interpretation of this statute is that until the claim to a
forfeiture is asserted by the state, the land is held subject to be
divested by due course of law, instituted by the commonwealth
alone, and for its own use.
The Supreme Court of Pennsylvania having decided that a
corporation has, in that state, a right to purchase, hold, and
convey land until some act is done by the government according to
its own laws to vest the estate in itself; the estate may remain in
a corporation so purchasing or holding lands, but such estate is
defeasible by the commonwealth. This being the law of Pennsylvania,
it must govern in a case where land in Pennsylvania had been
purchased by a corporation created by the Legislature of New York
for the purpose of supplying coal from Pennsylvania to the City of
New York.
The case of
Fairfax v.
Hunter, 7 Cranch 621, cited with approbation.
In the case of
Bank of Augusta v.
Earle, 13 Pet. 584, and in various other cases
decided in the Supreme Court, a corporation is considered an
artificial being, existing only in contemplation of law, and being
a mere creature of law, it possesses only those properties which
the charter of its creation confers upon it, either expressly or as
incidental to its very existence. Corporations created by statute
must depend for their powers, and the mode of exercising them, upon
the true construction of the statute.
A corporation can have no legal existence out of the sovereignty
by which it is created, as it exists only in contemplation of law
and by force of the law, and when that law ceases to operate and is
no longer obligatory, the corporation can have no existence. It
must dwell in the place of its creation, and cannot migrate to
another sovereignty. But although it may live and have its being in
that state only, yet it does not follow that its existence there
will not be recognized in other places; and its residence in one
state
creates no insuperable objection to its power of contracting in
another. The corporation must show that the law of its creation
gave it authority to make such contracts. Yet, as in the case of a
natural person, it is not necessary that it should actually exist
in the sovereignty in which the contract is made. It is sufficient
that its existence as an artificial person in the state of its
creation is acknowledged and recognized by the state or nation
where the dealing takes place, and that it is permitted by the laws
of that place to exercise the powers with which it is endowed.
Every power which a corporation exercises in another state
depends for its validity upon the laws of the sovereignty in which
it is exercised, and a corporation can make no valid contract
without the sanction, express or implied, of such sovereignty,
unless a case should be presented in which the right claimed by the
corporation should appear to be secured by the Constitution of the
United States.
Page 39 U. S. 123
This was an action of ejectment brought in the Circuit Court of
the District of Pennsylvania by the defendant in error, the lessee
of John S. Coster and Thomas K. Mercien, citizens of New York, for
the recovery of a tract of land in Norwegian Township, Schuylkill
County, Pennsylvania. The defendant in the circuit court was in
possession of the land.
The title of the lessors of the plaintiff below was founded on a
patent from the Commonwealth of Pennsylvania dated December 23,
1824, to Benjamin Pott, granting three hundred acres of land to
him, in Schuylkill County; a survey of the land, and a deed
executed on 17 March, 1830, by which the patentee conveyed the land
to John G. Coster, John Hone, Moses Jaques, and Thomas K. Mercien,
of the City of New York, trustees for the stockholders of the
corporation known under the name of the New York & Schuylkill
Coal Company, as well for such persons as were then stockholders as
for such persons as might afterwards become stockholders
The New York & Schuylkill Coal Company was incorporated by
the Legislature of New York on 18 April, 1823.
Moses Jaques, one of the trustees, by direction of the company,
conveyed the right and interest in the land held by him under the
deed from Benjamin Pott and wife to the other trustees on the same
uses and trusts. The lessors of the plaintiff in the circuit court
survived John Hone.
The defendant below, without offering any evidence, insisted and
prayed the court to charge the jury that the plaintiff, upon the
evidence, was not entitled to recover, but the court gave the
contrary direction.
The jury having given a verdict for the plaintiff below in
conformity with the directions of the court and a judgment having
been entered on the same, the defendant prosecuted this writ of
error.
Page 39 U. S. 128
MR. JUSTICE THOMPSON delivered the opinion of the Court.
This is an action of ejectment brought to recover possession of
about two hundred and thirteen acres of land in the Township of
Norwegian in the County of Schuylkill. Upon the trial, the lessors
of the plaintiff gave in evidence a warrant issued by the Secretary
of the Land Office in the Commonwealth of Pennsylvania authorizing
a survey for Benjamin Pott for the quantity of land applied for by
him, bearing date 23 December, in the year 1824. And also a survey
of the land, containing two hundred and thirteen acres and fifteen
perches, accepted on 11 August, 1825, embracing the land in
controversy, together with a deed from Benjamin Pott and his wife,
to John G. Coster, John Hone, Moses Jaques, and Thomas K. Mercien,
for the same premises, bearing date 17 March in the year 1830,
conveying to them in fee simple the said lands, upon certain trusts
therein specified, to the sole use and behoof of the several
individual stockholders of the corporation known under the name,
style, and title of the New York & Schuylkill Coal Company. And
further gave in evidence, a deed from Moses Jaques, one of the
trustees, to John G. Coster and Thomas Mercien, the two surviving
trustees named in the last mentioned deed, bearing date 25 July,
1837, releasing and conveying to his said co-trustees, in fee
simple, all his right, title, interest, and trust, in law
Page 39 U. S. 129
or equity, in the premises, to have and to hold the said tract
of land to them, their heirs and assigns forever, to such uses and
upon such trusts as are mentioned and contained in said deed. The
death of John Hone, one of the trustees named in the first
mentioned deed, having been proved, and that the defendant, John
Runyan, was in possession of the premises when the suit was
commenced, the plaintiff rested the cause, and thereupon the
defendant, without offering any evidence, insisted and prayed the
court to charge the jury that upon this evidence the plaintiff was
not entitled to recover. The court refused to give such charge,
but, on the contrary, directed the jury that the plaintiff was
entitled to recover, whereupon the defendant tendered a bill of
exceptions.
The question presented by this bill of exceptions is whether the
lessors of the plaintiff, being trustees of a corporation in the
State of New York, could, under the laws of the State of
Pennsylvania, take the estate conveyed by Benjamin Pott and his
wife to the trustees of that incorporation. If the lessors of the
plaintiff had the legal estate in the premises in question vested
in them, their right to recover followed as matter of course,
nothing having been shown on the part of the defendant to impugn
that right.
The rights and powers of a corporation were very fully examined
and illustrated by this Court, at the last term, in the case of
Bank of Augusta v.
Earle, 13 Pet. 584. In which case, and in various
other cases decided in this Court, a corporation is considered an
artificial being, existing only in contemplation of law, and being
a mere creature of the law, it possesses only those properties
which the charter of its creation confers upon it, either
expressly, or as incidental to its very existence. That
corporations created by statute must depend for their powers and
the mode of exercising them, upon the true construction of the
statute. A corporation can have no legal existence out of the
sovereignty by which it is created, as it exists only in
contemplation of law and by force of the law, and that when that
law ceases to operate and is no longer obligatory, the corporation
can have no existence. It must dwell in the place of its creation,
and cannot migrate to another sovereignty. But although it must
live and have its being in that state only, yet it does not follow
that its existence there will not be recognized in other places,
and its residence in one state creates no insuperable objection to
its power of contracting in another. The corporation must show that
the law of its creation gave it authority to make such contracts.
Yet, as in the case of a natural person, it is not necessary that
it should actually exist in the sovereignty in which the contract
is made. It is sufficient that its existence as an artificial
person in the state of its creation, is acknowledged and recognized
by the state or nation were the dealing takes place, and that it is
permitted by the laws of that place to exercise there the powers
with which it is endowed. Every power, however, which a corporation
exercises in another state, depends for its validity upon the laws
of the sovereignty in which it is exercised, and a corporation can
make no valid contract,
Page 39 U. S. 130
without the sanction, express or implied, of such sovereignty,
unless a case should be presented in which the right claimed by the
corporation should appear to be secured by the Constitution of the
United States.
Under this general view of the rights and powers of a
corporation and the limitation upon the exercise of such powers in
places out of the jurisdiction where granted, the application of
them to the case now before the court is the next subject of
inquiry.
The powers vested in the trustees of the New York &
Schuylkill Coal Company, and the right to take the estate, and
execute the trusts vested in them by the deed from Benjamin Pott
and his wife, will depend upon the act of incorporation by the
Legislature of New York of 18 April, 1823. The recital in that act
shows that the incorporation was granted for the purpose of
supplying the City of New York and its vicinity with coal, and that
the company had at great expense secured the purchase of valuable
and extensive coal lands in the State of Pennsylvania, and that the
legislature being disposed to encourage the development of our
internal resources, and being sensible of the importance of a
supply of fuel to the city, and for the better security of the
persons investing their money in an undertaking so extensive, and
requiring so large a capital, granted the incorporation, with the
usual powers of a body corporate, and giving to the corporation the
right to purchase, hold, and convey any estate, real or personal,
for the use of the said corporation, provided, that the real estate
or their interest therein, so to be holden, shall be such only as
shall be requisite to promote and obtain the objects of the
incorporation. The right to purchase and hold real estate is
therefore expressly vested in this corporation, and the recitals
show that this power was granted with special reference to the
purchase of lands in the State of Pennsylvania. And the deeds given
in evidence show that the legal estate in the lands in question is
vested in the lessors of the plaintiff, in trust for the
stockholders, and the trusts therein declared, are for the purposes
of carrying into execution the great and leading object of the
corporation. The capacity, therefore, of the lessors of the
plaintiff to take the lands in question for the use of the
stockholders of this incorporation is very clearly shown. And the
right to hold the lands must depend upon the assent or permission,
either express or implied, of the State of Pennsylvania.
The policy of that state upon this subject is clearly indicated
by the act of 6 April, 1833, relative to the escheat of lands held
by corporations without the license of the commonwealth. It recites
that whereas it is contrary to the laws and policy of the state for
any corporation to prevent or impede the circulation of landed
property from man to man, without the license of the commonwealth,
and no corporation, either of this state or of any other state,
though lawfully incorporated, can in any case purchase lands within
this state, without incurring the forfeiture of said lands to the
commonwealth, unless such purchase be sanctioned and authorized
Page 39 U. S. 131
by an act of the legislature, but every such corporation, its
feoffer or feoffers, hold and retain the same, subject to be
divested or dispossessed at any time by the commonwealth, according
to due course of law.
The plain and obvious policy here indicated is that although
corporations, either in that or any other state (no distinction
being made in this respect), may purchase lands within the State of
Pennsylvania, yet they shall be held subject to be divested by
forfeiture to the commonwealth. And the act then points out the
mode and manner in which proceedings shall be instituted and
carried on to enforce the forfeiture, necessarily implying that
until such claim to a forfeiture is asserted by the state, the land
is held subject to be divested by due course of law, instituted by
the commonwealth alone, and this conclusion is fortified by the
provision in the fourth section of the act, that the rights of
common informers in relation to escheats, shall not apply to
proceedings under this statute. But it is made the exclusive duty
of the escheator to prosecute the right of the commonwealth to such
lands.
The doctrine of the Supreme Court of Pennsylvania in the case of
Leasure v. Hillegas, 7 Binney 313, is directly applicable
to this case. The question then before the court was as to the
right of the Bank of North America to purchase, hold, and convey
the lands in question, and the court took the distinction between
the right to purchase and the right to hold lands, declaring them
to be very different in their consequences, and that the right of a
corporation in this respect was like an alien, who has power to
take, but not to hold lands, and that although the land thus held
by an alien may be subject to forfeiture after office found, yet
until some act is done by the government, according to its own
laws, to vest the estate in itself, it remains in the alien, who
may convey it to a purchaser, but he can convey no estate which is
not defeasible by the commonwealth. Such being the law of
Pennsylvania, it must govern in this case. But the principle has
received the sanction of this Court in the case of
Fairfax v.
Hunter, 7 Cranch 621, where it is said that it is
incontrovertibly settled upon the fullest authority, that the title
acquired by an alien, by purchase, is not divested until office
found.
We do not enter at all into an examination of the question
whether any, and if any, which of the English statutes of mortmain
are in force in Pennsylvania, but place our decision of this case
entirely upon the act of that state of the 6 April, 1833, and the
doctrine of the Supreme Court in the case of
Leasure v.
Hillegas, which we think clearly establish the right of the
lessors of the plaintiff to hold the premises in question until
some act shall be done by the Commonwealth of Pennsylvania,
according to its own laws, to divest that right and to vest the
estate in itself. The legal estate is accordingly in the lessors of
the plaintiff, and the defendant cannot set up any right of
forfeiture which the State of Pennsylvania may
Page 39 U. S. 132
assert. That is a matter which rests entirely in the discretion
of that state.
The judgment of the circuit court is accordingly affirmed
with costs.
This cause came on to be heard on the transcript of the record
from the Circuit Court of the United States for the Eastern
District of Pennsylvania and was argued by counsel. On
consideration whereof, it is now here ordered and adjudged by this
Court that the judgment of the said circuit court in this cause be
and the same is hereby affirmed with costs.
