| Ky. Ct. App. | May 6, 1839
delivered the opinion of the Court.
“ The Commercial Bank of Scioto,” in Ohio — which was authorized, by its charter of incorporation granted by that State, to issue and discount bilis &c. and to acquire land in payment of debts, or for securing debts to which it should become entitled, in the authorized sphere of its business — obtained, in the year 1833, a mortgage on a 'tract of land in Greenup county, Kentucky, executed, in 'the said county, by Jacob Clingman, (the owner,) for the .purpose of securing a debt due to it by the mortgagor, upon a contract, made in the State of Ohio, within the scope of its prescribed authority. Afterwards, the Bank procured from Clingman an absolute deed for the same land, and, before the expiration of the time given by the mortgage for payment, it placed a tenant on the land; after which Men Lathrop purchased Clingman's title to the land, under executions issued on judgments which had been obtained against him by other creditors; and, having received a conveyance from the sheriff, brought an action of ejectment against the tenant of the Bank: upon the trial of which, verdict and judgment were rendered against the plaintiff.
Lathrop now urges a reversal of the judgment.
In revising the case, the only question we shall consider is whether the bank acquired a legal title to the ¡land, or the legal right of entry thereon; for if it did, Lathrop's subsequent deed did not vest in him a legal right of entry; which, however, he undoubtedly had, if neither the mortgage nor absolute conveyance to the bank passed any title.
As to the absolute deed, we shall not now express any opinion; because, even if it be invalid for alleged
The objection made to the mortgage is threefold:— First — that the agent, who made the contract, was not legally appointed. Secondly — that' th'e bank • had .no authority to make any contract in Kentucky; and, thirdly — that it cannot hold a legal title to land in this State.
First. An agency for collecting and securing the debts of a corporation, may be created without a written power of attorney authenticated by the corporate seal. And the conduct of the Bank,, and especially in defending this suit, as it did, and yet does, as a party, is a sufficient recognition of the authority and acts of its agent, concerning the mortgage and the occupancy of the land.
Second. The debt,' for securing which the mortgage was given, having been created by a legal contract in Ohio, there can be no doubt that the bank might have maintained a suit upon it, in a court of Kentucky. The right of a foreign corporation of a friendly nation-or state to prosecute such a suit, is now conceded by an international comity recognized in England and in all the States of this confederacy, whenever thé maintenance of the action is not inconsistent with some local law or policy of the forum. In this respect, so far as mere national comity is concerned, no distinction is now made by just and enlightened nations, between natural and artificial persons. Although no foreign law can, by its own vigor, have an extra-territorial operation, yet wherever- any such law creating a corporation* shall be authenticated and recognized^ the artificial personage so constituted will be also recognized as a legal being.
As the charter of incorporation imparts to a body .politic legal individuality and personality, such a being possesses inherent capacity to act as a person, within
The corporate name and capacity of a body politic are not necessarily local; wherever enlightened law prevails, they may be as ubiquitous and effectual, within the bounds prescribed by the law of their creation, as they could be if they were natural as well as civil. Though a corporation is itself local, yet, like a natural person remaining at the native domicil, it may act through the locomotive agency of a natural person, wherever he could go and act for himself, unless its legal capacity be confined by its charter, within prescribed territorial limits, or unless the act to be done be prohibited by the lex loci acti.
And the same reason which would entitle a corporation to sue wherever a natural person might sue as a foreigner, should permit it to make contracts authorized by its charter, and not interdicted by the local law or policy of the place of contracting; for the right to prosecute a suit necessarily implies an authority to employ counsel or other agency, and to compromise the suit; none of which may be effectually done without making a contract in the country of the forum; and moreover, where-ever a corporation shall be recognized as a person with capacity to do one act, it should be admitted to possess equal capacity to do any other act within the scope of
It seems almost selfevident therefore that the capacity of a corporation may not be confined by the territox’ial limits of the country of its domicil-, that it may exist wherever the law of its creation shall be recognized, and may act — there being no local law to the contrary— whex-ever an agent may go and could act in his own right.
These deductions are confirmed by the histoxy of corporations, and judicial decisions concerning them, for more than a century past. Unless, therefore, its capacity shall be confined within territoi'ial limits prescribed by the law of its creation, a corporation, conformably with the authority of that law, may make, in a foreign country, any contract which it is not incapacitated or forbidden to make by the lex loci contractus. As a corporation derives its faculties from its organic law, it may have no inherent capacity, either at home or abroad, beyond the limits prescribed by that law. But within the boundary of authority thus defined, it may have capacity to sue or to bind itself by contract any where. The same comity which will recognize the law creating a foreign corporation should, in the absence of any local policy or enactment to the contrary, recognize the existence and capacity of the corporation itself.
Although that clause in the fe'deral constitution which declares that “ the citizens of each State shall be en- “ titled to all privileges and immunities of citizens in the “ several States” — may not fully apply to corporations in the several States, yet, as, without that fundamental
And surely, at least as much of comity as is recognized by the practice of nations perfectly sovereign and independent, must be admitted to prevail among these confederate States. So far as their own local laws and local courts are exclusively concerned, each of the States of our Union acts as a sovereign, independently of each other, and of course, in enacting and administering her own peculiar laws, each State has a perfect and indisputable right to determine, for herself, how far the laws of any other State shall be permitted to operate. So far as the national constitution does not control, each of the States is an independent sovereign, in the enactment of her own. laws and in the exposition and enforcement of them by her own local tribunals. And the harmony of the Union, the nature of the commercial and social intercourse among the States, and the family likeness that characterizes all their institutions, should operate as powerful incentives to the observance, by each towards each other, of a comity peculiarly liberal and expansive. Among no other people on earth can comity be so necessary or so useful.
According to the common law, every corporation has a legal capacity to think, and to act, and to make binding contracts. And thet'e is no statute or policy of Kentucky, either incapacitating corporations — merely as such — to make contracts, or outlawing foreign corporations, merely because they are foreign.
Nor is there any statute of Kentucky disabling the Bank of Scioto to collect, or to secure by contract here, its debt due under a contract made in Ohio, A statute of 1812 concerning “ unchartered banlcs,” was, as we are inclined to think, intended to apply only to such associa
A foreign corporation may, therefore, make some valid, contracts in Kentucky.
Third. We are thus brought to the last question to be considered: may a foreign corporation, according to the general law of this State, acquire a legal interest in land here by any contract made here or elsewhere?
As to a corporate capacity to make contracts, the common lato never discriminated between a contract for land and a contract for any other thing. And no doctrine of the common law is more clearly and undeniably established, than that which concedes to corporations an inherent or resulting right to acquire and hold title to land by contract, except so far only as they may be restricted by the objects of their creation, or the limitations of their charters. Co. Litt. 44, a. 300. b; 10 Co. 30. b; Dyer, a. pl. 70; Com. Dig. tit. Franchise, 11. 15. 16. 17; Kyd on Corp. 76; 2 Kent's Com. 277; The Banks vs. Poitiaux, 3 Randolph's Rep. 141.
And that common law capacity now exists, even in England, except so far as it may be restricted by the statutes of mortmain and the royal prerogative of withholding licenses from a certain class of corporations in that kingdom.
Now, as we have decided that the Bank of Scioto has a legal capacity to make a valid contract here within the scope of its charter, and as that charter concedes to it the right to make contracts for land, either as mortgagee, or as absolute purchaser, for the purpose of securing or collecting debts' due to it in its prescribed sphere of business, the mortgage in this case cannot be illegal and void for want of capacity to take it and hold under it, unless, in this particular, the common law of England has been abolished in Kentucky, or, in other
It is an universal principle of sovereignty, as inviolable as it is fundamental and conservative, that the right to hold, land, and the mode of acquiring title to land, must depend altogether on the local law of the territorial sovereign. Neither the terra firma nor other immovable property in a State, and under its exclusive dominion, has ever been subjected to any foreign law. All such property is included within an admitted exception from the radical principle of all comity among distinct sovereignties.
The local law of Kentucky must, therefore, decide whether the mortgage in this case be valid or void.
As to legal capacity to make binding contracts the law of Kentucky does not discriminate between movable and immovable property. Nor is the right to acquire land, in Kentucky, by contract or otherwise, confined by our law, either to citizens or residents here, or even to natural persons.
A citizen of Ohio — not being, in the legal sense, an alien — may hold land in this State by purchase or descent. And our own corporations may also acquire title to land here, by contract, except so far as their common law right to do so may be restricted, expressly or impliedly, by their charters. Nevertheless, we are not prepared to decide that a positive enactment forbidding the corporations of any other State in the Union to enjoy the same privilege, would be inconsistent with the guarantee herein before quoted from the federal constitution.
But is there any such legislative interdiction? As the natural citizens of Ohio may purchase lands in Kentucky, are the same persons disfranchised, in this respect, by the unsubstantial fact that, being incorporated into one aggregate body, by a law of their own State, they make all their contracts in their corporate name and merely legal capacity, instead of making them in their individual names and natural capacities?
The common law of England is the common law of Kentucky, excepting only so far as it has.been modified or abolished by the peculiar institutions or the positive enactments of the State. Then, 'as to the common law right of bodies politic to purchase and hold land, has there been any such modification or abolition in. Kentucky? If not, then the mortgage in-this case is legal and valid; because, by the law of its being, the Bank of Scioto was endowed with the capacity to take such a security on land'; and therefore, as it could, by its agent, make a valid contract in. this State, it had a right, through the instrumentality of that agent, to take a mortgage on land here, unless prohibited by our local law.
There is no such inhibitory enactment by the Legislature of this State. And certainly, there is nothing in our fundamental institutions-inconsistent with the right of any foreign corporation, (composed of persons who are not aliens,) to hold land in this Commonwealth.
We are satisfied, therefore, that the- mortgage to the Bank of Scioto was sanctioned, and should be upheld’ by the law of .this State, unless the “mortmain acts” of England, or so much of them at least as applies-to civil corporations, should be deemed to be in force in this State.
By an ordinance of 1776., Virginia adopted “ the com- “ mon law of England, and all statutes or acts of Par-- “ liament made in aid of the common law, prior- to the “ fourth year of King James I. and which (were) of a “ general nature and not local to that Kingdom.”
And the eighth section of the sixth article of the constitution of Kentucky adopted, with certain qualifications, “ all laws which, on the 1st of June, 1792, were in force in the State of Virginia.” ' "
Unless the British mortmain acts were in force in Virginia, on the 1st of June, 1792, they have never been in operation in Kentucky. Virginia had nev.er, prior to June, 1792, specially enacted any mortmain statute; and therefore, if the mortmain acts of England,' prior to the 4th Ja. I. were all “ local to-that Kingdom,” no part
The matter we are now considering is, therefore, brought to the single question — what were the objects and character of the ancient British statutes called “ mortmain actsV5
When the feodal system prevailed in its fullest vigor in England, the inalienability of land, without the license of the King, as Lord paramount, and that also of the intermediate Lord or Lords, was a fundamental law of tenure. And even after most of the feodal restraints on alienation, as between natural persons, had “ worn away,” still a corporation could not purchase land without the license of the King; because, otherwise, by the vesting of land in tenants that could never die nor be attainted, he might, without his consent, have been deprived of escheats and other feodal profits to which he was entitled, as ultimate Lord of the fee. This doctrine, however, which was the foundation of all the mortmain acts, was the offspring of the feodal system, as it once prevailed in England, and is inapplicable to free allodial titles to land. And therefore, it never could have been recognized as an operative principle of the common law in this country; and should not now prevail even .in England, had it not been re-enacted by the statutes of mortmain.
The prime objection of the mortmain acts was to repress the alarming influence of ecclesiastical corporations, which had, even as early as the Norman conquest, monopolized so much of the land in England, that the Jib-hot of Sí. Jllbans told the conqueror, that the reason why he had subjugated -the country by the single victory at Hastings, was — “ because the land, which was the main- “ tenance of martial men, was given and converted to «pious employments, and for the maintenance of holy u votaries.”
The 36th ch. of magna charta, which was the first statutory enactment on this subject, declares that, “ it “ shall not be lawful from henceforth, to any to give his “ lands to any religious house, and to take the same “ lands again to hold of the same house &c. upon pain
A statute of 7 Ed. I. — after reciting that “ services ” incident to fees, “and which, at the beginning, were “provided for the defence of the realm, are wrongfully “ withdrawn, and the chief Lords lose their escheats of “ the same ” — therefore, “ ordained that, no persons re- “ ligious, or other whatsoever body politic, ecclesiasli- “ cal or lay, sole or aggregate, shall buy or sell any “ lands or tenements — whereby such lands may, in any- “ wise come into mortmain, under pain of forfeiture of “the same; and within a year after the alienation, the “ next Lord of the fee may enter; and for defaults of all “ the mesne lords, the King shall have the lands so alien- “ ated forever, and shall enfeoff others- by certain ser- “ vices.”
The ecclesiastics having evaded those enactments-, by contriving recoveries, and introducing uses, a statute of the 13th Ed. I. and one of 15th R. II. were enacted,' for preventing those evasions-. The statute of wills of H. VIII. did not allow a devise of land to any corporation. And after the feodal rights of intermediate Lords had been much circumscribed, and mesne seigniories had almost ceased to exist in consequence of the operation of the statute of Quia Emplores — a statute of 7- and 8 W. 3, provided that the King alone might grant licenses in mortmain. And this was a prerogative right, not congenial with our institutions, and never claimed or exercised by any department of our government, towards artificial, any more than natural persons.
These are the only enactments which' can have any material application to the present subject of enquiry;, and it is evident that the statutes of 7 E. I. and that ©f wills of H. VIII., are the only ones which apply to civil corporations.
Mortmain, or mort maine in French, meaning a dead hand, was applied to prescriptive and prerogative corporations, anciently existing to a mischievous extent in England; because, according to Hotloman and Polydore Virgil, they were immortal; and therefore land held by them, was considered as in dead hands, so far as feodal
According to Lord Coke and others who have written on the subject, two objects only were contemplated by tjje mortmain acts" which we have quoted: first — to prevent a withdrawal of the feodal services in defence of the realm; and,, second — to secure to the Lords and Crown their escheats and other seigniorial privileges and profits. And the statute of 7 E. I. which is the only one which could affect this case, shows expressly, on its face, that it was enacted for effectuating those two ends alone.
Now, whether we consider the objects or the peculiar provisions of those statutes, it seems to- us, that they should be deemed to have been local in their policy and operation.
Neither .of the objects of them was ever consistent with the. allodial titles and the pecüliar habits ,and institutions- of the North American colonies, and the more especially, after they became free and independent States.
Their corporations were comparatively few, and were generally statutory and limited in their power and duration. Their lands were superabundant, and cheap, and to a great extent, unappropriated and uninhabited. They tolerated no feodal vassalage, exacted no feodal service, and desired no escheats to .Lords or to Kings. Generally, in Virginia, there could have been no forfeitures to Lords, and the very opposite of the motives in England for a forfeiture to the Crown was eminently the interest and policy of Virginia.
Who would have been entitled to the .forfeiture — the King, or Virginia? If the^King, why should the Colony have recognized any law enacted for such an end? And if Virginia — how could she execute the statutes by enfoeffing others to hold “ by military services,” which would have been subversive of her fundamental institutions f '
The provisions of those statutes could never have been literally executed in Virginia. Moreover, it has been the settled policy of Virginia and of the other
Chancellor Kent says, in his Commentaries, that none of the British statutes of mortmain were in force in any of the Colonies or'States of North America, excepting only Pennsylvania. And the'only reason why they were ever considered to be operative in that State, to any extent, was because the charter to Penn was understood as embracing and- adopting them. The same eminent jurist decided, in the case of Silver Lake Bank vs. North, (4 Johnson's Ch. Rep. 370,) that a corporation in Pennsylvania could enforce a mortgage- on'land- in New York, taken to secure a debt contracted in the course of its regular business, as prescribed by its charter..
Our researches have not enabled us to find any intimation, legislative or judicial, in the State of Virginia, at any time or in any way, that any of the mortmain acts of England have ever been considered in force in that State. And not only is this a-strong fact against the assumption that those acts-were operative there, but there are some positive indications of an opinion that they were never recognized as the law of. that Commonwealth. In-l_661, just after the restoration, the colonial Legislature of Virginia passed a declarative act for certifying what statutes were in force -in that, colony; and among all these, we find none of the mortmain acts. And, in the case of The Banks vs. Poitiaux, (3 Randolph, 141,) Judge Green used the following language“ The “ creation of a corporation gives to it, amongst other “ powers, as incident to its existence, and without any “ express grant of such powers, that of buying and selling. 10 Coke, 306. This power .may be limited, re- “ strained, or prohibited, either by. the charter creating “ the corporation, or by a general law, as in England, by “the statutes of mortmain, which provide that if lands “ be conveyed to a corporation, the next Lord "may enter
And in England, too, it has been decided, more than once, that those statutes were local in their policy and operation, and not applicable to any of the British colonies. In the case of the Attorney General vs. Stewart, (2 Merivale, 161,) Sir Wm. Grant, Master of the Rolls, decided that, the mortmain acts of England were inapplicable to the British colony of Grenada: and speaking of the mortmain act of Geo. II., which was but an extension of the prior statutes of mortmain, he said — “ The “ thing to be prevented was a mischief in England, and “ it was by the quality and extent of the mischief, as it “ there existed, that the propriety of legislative interfer- “ ence upon the subject was to be determined. The “ statute begins by referring to the ancient law's made “ against alienations in mortmain. None of the causes in “ which those laws originated had ever had any existence in the “ colonies. It was in England that the mischief had in- “ creased, and in England only, was it thought necessary “ to impede its progress. To no other part of the do- “ minions of the crown was, this law extended. In Ja- “ maica, the wealthiest of our West Indian possessions, “it has not, to this day, been thought necessary, to “ guard against any such evil. I do not, indeed, know “ that any colonial legislature has made any regulation “ on the subject, although, in none of the old colonies can “ the mortmain act have any operation.”
In Rex vs. Vaughan, Lord Mansfield said — “ The argu- “ ment is strong that certain statutes do not extend to “ Jamaica, though enacted before that Island belonged to “ the crown of England. If Jamaica was a conquest,
And Blacks tone says: — “ Colonists .carry with them “ only so much of the English law as is applicable to “ their own situation and the condition of an infant “ colony.”
Without further amplification, the foregoing considerations are sufficient, in our judgment, to authorize the conclusion, that the mortmain acts of England were altogether local, and that none of them were ever applicable or considered applicable to Virginia, where the peculiar evils felt in England, never existed; where there never was a monopoly of lands by corporations, either religious or civil; where there never was any trace of the feodal system, which begot and nourished those statutes; where corporations wére few and not only harm-less, but useful, and, for many purposes, necessary, and therefore were favored; where, too, they were generally limited in their powers and duration, and where most corporate bodies were permitted to purchase land, and all were allowed to acquire it by devises.
And if those statutes were not applicable to Virginia in 1776, they were not adopted by the ordinance of that year, which embraced only such statutes as were “ of a general nature and not local” to England.
It is therefore our opinion that none of the mortmain acts of England are, or ever have been, in force in Kentucky.
The fact, that most acts of incorporation in this State concede a special authority to purchase land for specified, purposes, does not imply that there is any mortmain act which can operate here. That course of legislation has arisen, either from a prevailing opinion that statutory corporations in this country should possess no other powers than those expressly granted, or from a prudential determination to limit and define théir rights and ca
We are strongly inclined to the opinion also, that the policy of the British mortmain acts is inapplicable to such a corporation as the Bmk of Scioto, whose existence is limited to the short period of a few years. Such a being cannot be considered “ immortal,” nor should its hand be deemed or called, in the English sense, “ a dead hand.”
We are also inclined to the opinion that a mortgage, taken in good faith for securing a just debt, should not be considered as a purchase of land within the scope and objects of the mortmain acts of England; such a conveyance is only a collateral security, and may be avoided, at any time, by payment or redemption; and therefore, it would seem that land thus mortgaged, should not be deemed to be in the unyielding grip of a dead hand.
We conclude that no mortmain act operates in this case.
Nor are we able to perceive that any known policy of Kentucky will be violated by permitting a corporation of another State to hold land here as mortgagee, or even purchaser, as well as devisee — in which latter character its right would be unquestionable. When the legislative department has not indicated any such local policy, it is not the province of the Judiciary to assume its existence, or to establish it. On the contrary, we should rather presume its non-existence, especially as to the corporations of a sister state, and as our own institutions, of the same kind, are permitted to acquire lands by devise and purchase. Such an invidious policy might possibly be deemed inconsistent with a becoming comity between kindred and united States, one and indivisible, in a national sense, and for the same common ends.
If such a policy should ever be deemed proper and useful, the legislative counsels of Kentucky may, at any time, announce it; and thus guard against any possible mischief that might be apprehended from permitting any
But even were the mortmain acts in force here, they would be unavailing to Lathrop, in this suit; because they would have the effect only of forfeiting the land, the title to which would, nevertheless, have passed to the bank, by the mortgage, and would have there abided until office found in favor of the Commonwealth.
A sale of land to an unlicensed corporation in England, was not void. The title passed from the vendor.
Consequently, if the mortmain act of 7 Ed. I. were admitted to be in force in this State, there was no legal right of entry in Clingman, when Lathrop purchased his interest under execution; and therefore, whether the Bank of Scioto had a title indefeasable by the Commonwealth or not, Lathrop had no right to evict its agent or tenant in this action.
We have not considered any question concerning alien corporations.
Nor have we considered the common law doctrine as to perpetuities; because, even if it could be applicable to a conveyance to an endless corporation, without any limitation on the right of alienation, still it would be clearly inapplicable to the mortgage to the Bank of Scioto, whose legal existence is limited to a few years.
Wherefore, as, upon the whole case as presented by the record, we perceive no substantial error to the prejudice of the plaintiff in error, the judgment against him is affirmed.