No. 25659. | Miss. | May 10, 1926
"The charter of incorporation of ____.
"1. The corporate title of said company is ____.
"2. The names of the incorporators are:
"____ Post-office ____.
"____ Post-office ____.
"____ Post-office ____.
"____ Post-office ____.
"3. The domicile is at ____.
"4. Amount of capital stock ____.
"5. The par value of shares is ____.
"6. The period of existence (not to exceed fifty years) is ____ years.
"7. The purpose for which it is created is ____.
"8. The rights and powers that may be exercised by this corporation are those conferred by the provisions of this chapter.
"9. The ____ which it is proposed to build and operate as (here described the line and state the points it will traverse) ____."
It is provided that said application shall be acknowledged, etc., and presented to the secretary of state, and by him referred to the Attorney-General, who shall pass upon its legality and return the same to the Governor with his opinion thereon, and that the powers specified in the charter shall by the approval of the charter be vested in such corporation which shall go into operation at the time and on the terms and conditions specified.
Paragraph (b) of the said section reads as follows:
"The local lodges, chapters, councils or by whatever name known, of the Masons, Odd Fellows, Knights of Pythias, Elks, Woodmen, of the World, and other such fraternal organizations, together with temperance societies, charitable associations, schools, literary institutions, lyceum associations, religious societies, fire companies, *909 mechanics' associations, fair associations, agricultural societies and civic improvement societies, may be likewise incorporated, on the application of any three members, authorized by the organization, on its minutes, to apply for the charter.
"Such corporation shall not be required to make publication of their application for charter, shall issue no shares of stock, shall divide no dividends or profits among its members, shall make expulsion the only remedy for the non-payment of dues, shall vest in each member the right to one vote in the election of all officers, shall make the loss of membership, by death or otherwise the termination of all interest of such member in the corporation assets, and there shall be no individual liability against the members for corporate debts, but the entire corporate property shall be liable for the claims of ceditors."
It will be seen from the statement in the charter that the purpose for which the corporation was created was to promote and extend benevolence, charity, and fraternity among its members and to organize subordinate lodges and chapters in the state of Mississippi; that the rights and powers to be exercised were those conferred by law in such case; that it was provided in the charter, as in the statute (paragraph [b], section 1, chapter 229, Laws of 1920), that no shares of stock shall be issued, and no dividends or profits among the members shall be divided, and that nonpayment of the dues could only be enforced or provided for by expulsion, and that the death of any member forfeited all rights in the property of the corporation, and that there should be no individual liability against the members for corporate debts, but that the entire corporate property should be liable for the claims of the creditors. As the charter of incorporation did not set forth by what means and methods the work of such corporation would be carried on, nor whether it would have a ritual, degree, signs, and passwords, etc., or what particular principles would be *910 adopted within the classification mentioned in the charter and by the statute, although the title did indicate from the name of the corporation something of its general purpose, it was not represented in the charter that the degrees to be conferred would be regular degrees of Masonry or of any particular Masonic organization.
The state, of course, is not concerned with questions of whether the principles or degrees of lodges are regular and authorized by Masonry or not. The court cannot judicially know what the principles and degrees of free Masonry are, or of any particular brand of doctrine known as free Masonry, if there be differences of organizations and principles. That is a matter with which the state is not concerned so long as no fraud is used to deceive a person solicited to join or be received into these orders. Unless protected by the copyright laws, or embracing property rights, these rituals, forms, and ceremonies will not be controlled or protected by the court. In other words, before the court will interfere in such a case, there must be an infringement of property rights, property damage, or personal injury. But the bill charged that the appellants were representing to prospective members and to those who were received into membership that the degrees conferred were regular and that they would give Masonic affiliation in other jurisdictions and other rights throughout the world, and that these statements were untrue and false and knowingly made to the parties to deceive.
Of course, the court is not concerned with the length of time it would require to confer the degrees administered to an initiate, nor is it concerned with the price charged to candidates or initiates for the degrees, but the state is concerned with the question as to whether its charters are used as instruments of fraud and wrongdoing. Is the case of JacksonLoan Trust Co. v. State,
"Where a loan company by means of attractively worded literature and by representations of its soliciting agents, seeks to induce the public generally, and prospective customers particularly, to believe that all purchasers of its contracts will receive loans from the company upon easy terms with which to purchase homes, and the funds of the corporation and its method of business render it impossible for the company to make loans to all purchasers of its contracts, its promises so to do evidence an intention to defraud, and its whole course of business constitutes such a systematic violation and abuse of the rights and privileges conferred upon it by its charter as to justify either the revocation of its charter or the issuance of a writ of injunction enjoining the further prosecution of such business."
The opinion in this case shows that the state may use the injunctive process to prevent a continuation of fraudulent practices whereby the public is defrauded under the guise and through the instrumentality of a charter. The demurrer admitted the allegations of the bill, and the allegations of the bill are sufficient to show that a considerable portion of the public has been defrauded by false representations, resulting detrimentally to those who acted upon such representations and parted with their money thereunder. The court will not undertake to supervise or control the affairs of a corporation when it is properly conducting the business granted by its charter unless in case of such corporations as are affected by a public use; but when a corporation in order to obtain business uses its charter in aid of a scheme to defraud people of their money, and the practice is general and affects a large number of people of the state, the state may restrain such fraudulent practices.
In 14 C.J. 1107, section 3711, it is said:
"A corporation may forfeit its charter and right to corporate existence by a misuser of its franchise or corporate powers." *912
At pages 1108 and 1109, section 3713, it is said:
"The misuser must inflict injury on the public generally, although a forfeiture has sometimes been declared in cases where the violation of the charter has resulted in a public benefit. It is not necessary to prove actual injury to the public; if the inevitable tendency of the act is injurious to the public, a sufficient ground of forfeiture exists. Wherever the transgression of a corporation threatens the welfare of the people, they may summon the offender to answer for the abuse of its franchise or the violation of its corporate duty. And it has been held that any conduct which destroys their normal function and maims and cripples their separate activity and takes away their free and independent action must so far disappoint the purpose of their creation as to affect unfavorably the public interests. Generally speaking, if no public detriment is involved, a statute which provides in general terms that a failure to comply with the provisions of its charter or an abuse of its corporate powers, shall be ground for forfeiture, but omits to specify any particular for which a forfeiture will be granted, will be liberally construed. If it is not shown that the act of corporation is detrimental to the public interest, or if it is shown that the forfeiture of the charter would itself amount to a public misfortune, this will be taken into consideration by the court in determining whether a forfeiture should be granted under the circumstances."
We think, therefore, there was a sufficient case made by the bill to grant injunctive relief at the suit of the state. We think, however, the writ was too extensive in its scope. The state had a right to restrain the defendants from perpetrating fraud upon the public by means of the misrepresentation, and as a means of preventing fraud might restrain the taking in of new members pending the hearing, but we think the organization and the officers thereof had a right to hold their regular meetings and conduct their regular business affecting only themselves. The prayer of the bill was entirely too *913 broad, and as the writ was coextensive with the prayer of the bill, we think the judgment must be modified, and it will be accordingly modified so as to restrain the appellants only from taking in new members pending the hearing and from making any fraudulent representations to citizens or persons who may seek to become members; but the holding of the Grand Lodge ought not to have been restrained further than is herein indicated. It is said that we ought not to modify or reverse because since the filing of the bill the state has won its suit in quo warranto adjudging a forfeiture of the charter, and that, consequently, the judgment should not be reversed here. A certified copy of the judgment of the court below in the quo warranto proceedings is exhibited in the brief of the appellee, but is not contained in the record proper in this hearing.
We do not know what the status of the quo warranto suit is, or whether an appeal has been prosecuted or not, nor do we know what the record in that suit may contain. It may be that the judgment would be reversed, and, if it should be, it would not be proper to affirm in its entirety the judgment here, but it should be dealt with as though the cause was still pending. If the appellee had desired to present that judgment in bar to this appeal, the proper manner of doing so is to file a plea in bar, or in abatement, as the case might be.
The judgment of the court below will therefore be affirmed in part and reversed in part.
Judgment modified.
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