Evangelische Lutherische St. Thomas Gemeinde v. Congregation of the German Evangelical Lutherische St. Matthews Church of Milwaukee

191 Wis. 340 | Wis. | 1926

Owen, J.

The deed executed by the plaintiff to the defendant was not executed pursuant to an agreement of purchase and sale, and the question whether the plaintiff church had power to sell and dispose.of its property for a valuable consideration is not here presented. The dominant purpose sought to be accomplished was not a mere transfer of the church property but a union of the two church societies or congregations into one. The transfer of the church property was but an incident in the accomplishment of that dominant purpose. If there was a failure in the accomplishment of that dominant object, then there was no consideration for the conveyance of the church property, and under well settled principles of law the plaintiff may rescind the conveyance and procure its cancellation. 1 Black, Rescission and Cancellation, ch. 5.

It is well established that there can be no consolidation or merger of independent corporations in the absence of legislative authority, any more than there can be an original corporation without legislative sanction. 5 Thompson, Corp. (2d ed.) ch. 165. “Legislative authority is just as essential to a valid consolidation or merger of existing corporations as it is to the creation of a corporation in the first instance. It follows that an agreement between two or more corporations to consolidate, in the absence of legislative authority, is ultra vires, and will not be enforced even though it may have been partly performed.” .7 Fletcher, Corp. §4670. This applies to religious as well as other corporations. 5 Thompson, Corp. (2d ed.) §6071, and cases there cited.

Prior to the enactment of ch. 258, Laws of 1919, which now appears in the statutes as sec. 187.14, there was mo legislative authority in- this state for the consolidation or merger of religious corporations, and this court has most emphatically held fhat under our statutes providing for the organization of church corporations, two or more separate and distinct congregations cannot lawfully be organized into one' corporation. Evenson v. Ellingson, 67 Wis. 634, 31 N. W. 342. In that case it was'said (p. 645) :

■ “There is not a single clause or word of our statutes that can possibly be tortured into any reference to the formation of a corporation over more than one single church, and corporations can exist only by the authority and sanction of the law. It is most remarkable that any one should have ever conceived the idea that more than One church or religious society could be embraced in one corporation. What is the policy of our statutes in this respect is the policy of all statutes and laws in this country, and always has been since the formation of our government. . .'. I do not think that another case can be found in this country where it is even claimed that one corporation embraced more than one church or religious society.”

In that case it was held that one religious corporation could not be organized under our statutes to include two churches or two congregations of the same religious sect, creed, or denomination that were nine miles distant from each other.

As already stated, there was no attempt or pretended attempt to comply with the provisions of sec. 187.14, Stats., relating to the consolidation of church corporations, and if there had been it would have resulted in the formation of a new corporation. That statutory provision does not authorize one existing religious corporation to acquire the property and swallow up the congregation of another existing religious corporation. So it appears that there is no vestige of authority under the statutes of this state for the merger of these corporations in the manner attempted. No merger, therefore, has resulted. The existing corporations retain their identity. They have not been wound up or dissolved. The members of each corporation retain all rights and privileges in such corporation's as such members. The communicants of the plaintiff church have not become communicants of the defendant church by virtue of these proceedings. If some members of the plaintiff church have transferred their membership to the defendant church, it was through their own voluntary acts. Such change of membership was not brought about by virtue of the negotiations and agreements having for their objects a union of the two church societies.

The legal result is that the plaintiff corporation has conveyed to the defendant-corporation its church property without any consideration whatever. The plaintiff corporation still exists. The greater portion of its congregation still remains, but it has no church in which to hold its meetings, conduct its religious services, and pursue the objects and purposes of its organization.

The right of the plaintiff to maintain this action is assailed on various grounds. It is said that, even though the contract be ultra vires, it is an executed contract and the plaintiff cannot maintain this action for its annulment. Such principles .do not apply. This is not a mere ultra vires contract. It is not a contract merely outside the scope of the powers of this particular corporation because not authorized by its charter. It is no contract at all. It was an effort to accomplish that which the law does not permit. It is more analogous to an attempt to organize a corporation in the absence of any statutory authorization. It was a mere nullity so far as the accomplishment of the dominant purpose of the transaction is concerned. Under such circumstances, there can be no doubt of the right of the plaintiff corporation to rescind the conveyance and to procure a cancellation of the deed. It follows that the judgment appealed from should be affirmed.

By the Court. — So ordered.

Eschweiler, J., dissents.