Regents of the University of Michigan v. Detroit Young Men's Society

| Mich. | Dec 5, 1863

Christiancv J.:

All the questions in this case arise upon the demurrer to the declaration. Several causes of demurrer are assigned; and as the judgment of the Court below, sustaining the demurrer, was general, and it does not appear upon what particular ground the declaration was held insufficient, it will be necessary to notice all the special causes of demurrer assigned, unless the objections which relate to the form of the declaration rather than to the right of action, shall be found to be well taken. If any of these are sustained, no question can properly* arise upon those which relate to the canse of action itself, and which would be the same under any form of declaration. We shall therefore first notice those which relate to the form of the declaration, and the manner in which the cause of action is set forth.

The first objection is, in substance, that there is no allegation that the persons purporting to sign the contract for the defendant corporation, were their duly constituted agents for the purpose, or in ,anv manner authorized to do so by ány competent action of the defendants.

Upon this point the declaration alleges that the “ defendant entered into the contract.” The contract is made a part of the declaration, and set forth at large in its words and figures, and it is declared upon its face to be a contract “between the corporation known as ‘The Regents of the University of Michigan,’ of the first part, and the corporation known as ‘The Detroit Young Men’s Society, of the second part;” and the contract in all its stipulations, is, in form, that of the respective corporations. The attestation clause is in the following form: “ In witness whereof the party of the first part, by the undersigned, Regents of the University, present at a meeting of the Board of said Regents, held in the city of Detroit, on the day first above written, and the party of the second part, by their committee duly appointed for this purpose, have mutually signed and sealed this instrument, and delivered the same, the day and year first above written.” The persons purporting to sign for the defendants do so by affixing their individual names, describing themselves collectively as “committee on real estate of the Young Men’s Society of the city of Detroit.” The declaration states the liability of the defendant upon the contract, and alleges the promise of the defendants in consideration of that liability. We think, therefore, the contract set forth, and the allegations of the declaration, are ample to admit full proof of the authority or agency of the persons purporting to execute on the part of the defendant, in any form in which it was competent for that authority to be given. Had the pleader only purported to set forth the contract by its legal effect, it would not have been necessary to notice the fact that it was executed by agents; it might have been stated as executed by the defendant directly; the agency would be mere matter of proof. If it became necessary to allege the agency because the contract set forth purported to be executed by the agency of the committee, then the contract which is set forth as part of the declaration, and which asserts the agency, and the allegation of the declaration that it is the contract of the defendants, must be held sufficient to admit the proof of the fact. The particular manner of constituting the agency— if not the agency itself — was matter of proof, not of pleading.

The next objection is, that the instrument set forth does not conform to the allegations of the declaration, inasmuch ■as it does not purport to have been executed by the plaintiffs, or defendants, or any person for them, nor that the same was sealed by the respective corporations or either of them. It needs but a glance at the attestation clause, and the signatures, to show that so much of the above objection as claims that the instrument set forth does not purport to be executed by the plaintiffs or defendants, or any person for them, is not well founded. But there is more plausible ground for that portion of the objection which relates to the allegation in respect to the seals.

The declaration, before setting out the instrument in its words and figures, does allege that “ the said plaintiffs and defendant entered into their certain contract or obligation in writing, which said contract in writing the said plaintiffs now bring here into court, sealed by the several parties and their agents executing the same, and which contract in writing, with the certificate of acknowledgment thereon, is in the words and figures following,’5 [setting it forth].

The attestation clause of the instrument (above cited), might indicate an intention of attaching the seals of the parties — the respective corporations — though it is not in the usual form of the attestation clause where corporate seals are to be affixed. But the actual execution is, on the part of the Regents, by signing their individual names as Regents, and by affixing their separate seal (or scroll) at the end of each respective name; and the committee for the defendant corporation sign their individual names as a committee, with a similar seal at the end of each of their names.

We do not think these seals can be treated as the seals of the respective corporations or either of them. They are but the individual seals of the several persons signing the instrument; and as the contract does not purport to be that of the individuals thus executing, but of the respective corporations, these individual seals are merely nugatory, and can not alter the legal effect of the instrument. It must therefore be treated as an unsealed instrument, or simple contract in writing; and, as such, we think the respective corporations are bound by it, if it is in other respects valid in law: — Angell & A. on Corp. §§ 295 and 223, and cases there cited ; see also (by analogy) Sweetzer v. Mead, 5 Mich. 107.

Had the declaration only attempted to set forth the contract according to its legal effect, without setting forth the whole instrument so as to enable the Court to determine its legal effect, doubtless there must have been a variance in proof, as it would not have supported the allegation in respect to the seals. But when the instrument is set forth in full, the Court are to say what is its legal effect; and any allegation in respect to the description or effect of the instrument, in a matter which must appear upon its face as set forth, is, we think, entirely superfluous, and may and should be rejected as surplusage. And if the instrument, as set forth, should correspond with that offered in evidence, no court could, we think, so far dis. regard the dictates of common sense as to reject it because it did not correspond with such superfluous allegation.

The legal effect of the contract, as it relates to the present action of assumpsit, so far at least as any question can arise upon demurrer, would be the same whether under seal or not; since the statute, Comp. L. § 4550, allows actions of assumpsit to be brought upon contracts under seal “in the same manner, in all respects, as upon contracts without seal.”

It is further objected that there is no sufficient proferí of the instrument. Being but a simple contract, no proferí was necessary. But had it been a sealed instrument, not only is the proper proferí made, but oyer j is granted and the copy furnished in advance; and any further proferí, or oyer (the furnishing of another copy) would be but an idle ceremony.

But it is further urged, as a cause of demurrer, that there is no sufficient allegation of the breach of the contract, nor of demand of payment. The interest being due at a fixed time, and without any condition, and alleged to be unpaid, no special demand was necessary: a request is alleged in the usual form. The breach of the contract, in the non-payment of the interest, is directly and positively alleged.

The. declaration is therefore sufficient in every thing relating to the plaintiffs’ cause of action and the defendant’s liability, if the instrument declared upon be a valid contract.

But the first, sixth and seventh causes of demurrer relate to the validity of the contract; and it is insisted that neither the plaintiffs nor the defendant had power to enter into the contract without special legislative authority, and that none is shown.

We will first consider the power of the defendant. By the act of incorporation — Laws of 1836, p. 166 — the corporation is authorized to acquire, by gift, devise, purchase or otherwise, and to hold and convey, any real, personal or mixed estate whatsoever, necessary and proper for the objects of this incorporation; Provided the same shall not exceed the sum'of twenty-five thousand dollars (which is extended to $200,000 by the act of 1859, Laws of 1859, p. 270). But, by section four, the real estate which the corporation is allowed to purchase is to be “only such as shall be required for its accommodation in relation to the convenient transaction of its business.’’ The object of the incorporation is declared to be “for the purpose of moral and intellectual improvement;” and express power is given to establish and superintend a library. We think, it quite clear, therefore, the corporation has the power to acquire, by purchase or otherwise, and to hold real estate for the erection of such buildings as they may see fit, and as their convenience may require, for a library, for lecture rooms and places of meeting. And the power to purchase must include, as a means to an end, the power to enter into a contract for such purchase upon such terms as may be agreed [upon. It is not denied that such would be the result, if it appeared upon the face, of the contract, or were otherwise shown, that such was the object of the purchase. But it is said this purpose does -not appear-upon, the'¡contract, and is not alleged^: and it is urged that [such cannot be its purpose, as the time for acquiring a title is extended over the period of one hundred years, the contract giving no right of possession until the whole price is paid, and requiring the society to pay all taxes in the meantime, indemnifying the Regents against all claim of the city of Detroit for improvements, and giving the right to use the name of the Regents for purposes of litigation.

It is true the contract gives the defendant no right of possession until full payment and conveyance. But, on the other hand, 'as it. was not bound to wait the one hundred years to make payment, but was at liberty to pay and call for a deed the next day after the execution of the contract, we can not say, without any allegation or proof to that effect, that the object of the purchase was not for the legitimate use of the society. The contract is just as consistent with that purpose as any otherj; and we are therefore bound to infer — until the contrary is alleged or proved — that such was the object of the purchase.

The only remaining question, is, that of the power of the Regents to sell this property. ' This question might depend upon the mode and purposes of the acquisition, the objects and terms expressed in the instrument by which the title was acquired. And as the Regents have been held to be the successors of the trustees of the University under its old organization — who had an express power of sale vested in them — and the powers and functions of the present organization are different in many other respects, the question might perhaps be afíected by the fact when and by which organization the property was acquired. But so far as the question of the power of the Regents to sell may depend upon any of these considerations, it can not be definitely decided upon the present record, as the time when the title was acquired does not appear, nor the mode or purpose of its acquisition. No particular title is set forth, nor was this necessary. The allegation is general, that! the plaintiffs, on the third day of August eighteen hundred and fifty-eight, “being the owners’’ of the premises, and the defendant wishing to purchase, the said plaintiffs and defendant entered into the contract. This allegation, being mere inducement, was sufficient, and it is broad enough to admit proof of any legal title or ownership under which a right of sale could exist. The particular title would be matter of proof only. The title of the plaintiffs is therefore well pleaded, if they were competent in law to take or hold a title which would enable them to sell. If, therefore, as a legal possibility, there could have been, at the time alleged, such a title in the plaintiffs as would give them the power of sale, the judgment upon the demurrer must be for the plaintiffs, however they might have failed upon the trial to establish such title by proof.

The abstract question, therefore, of the legal possibility of such ownership by the plaintiffs, is the only question upon this branch of the cause which can be decided upon this demurrer. Upon this question I think there can be little room for doubt. This being an action at law, any conveyance, by grant or devise, vesting in them the whole legal title, though it were upon special trusts, would satisfy the allegation of ownership contained in the declaration, if it conferred the power of sale, as well as if no trust had been declared. The power of taking and holding real estate — as well as personal property — is generally laid down as one of the powers incident to every corporation, unless there be an express prohibition, or such power be clearly repugnant to the purposes of its creation,] or forbidden by some positive law: — A. & A. on Corp. §§ 110, 111; 2 Kent, 224. And the power to convey, except where its acquisition is for some special purpose, not shown here, and inconsistent with the power of sale, is a correlative of the right to acquire: — A. & A. on Corp. ut supra. And see Ibid. §§ 187 to 192. We have no statute of mortmain which can affect the question. And the power of this corporation to take, hold and cbnvey real estate, for any purpose clearly tending to promote the interest of the University, to increase its funds, or otherwise to further the great public objects for which the corporation was created, can not, I think, admit of a reasonable doubt. The right to take and hold property, such at least as. the University grounds and buildings, library and apparatus, and to transmit or continue its ownership by corporate succession, was doubtless one of the main objects of the incorporation in its present form; yet no express power of- this kind is to be found in the act of incorporation. And, though it is clear that they can exercise no power over the land granted by Congress to the State for the support of a University, nor over the principal of the University fund, the disposition of both of which the legislature has placed in other hands, yet if some benevolent individual, desirous of promoting the public interest, should have conveyed this or any other land to these Regents in their corporate capacity, vesting in^them the whole legal title, for the express purpose and upon the express [trust, that they should sell and convey the land in such manner and on such terms as they should deem best for the interest of the institution, and place the proceeds in the State treasury to the credit of the University fund, or expend them for the increase of the library, or the chemical or philosophical apparatus, I can see no possible ground to doubt their power to take and hold the property, or to accept and execute the trust by a sale of the land for such purpose. See Vidal v. Girard's Executors, 2 How. 190; Executors of McDonough v. Murdock, 15 How. 367; Perrin v. Carey (McMickin's will), 24 How. 465.

Many other cases might be put in which their power of sale would be equally clear. But it is unnecessary to multiply -instances, since a title like that above supposed would be admissible under the allegation of ownership contained in this declaration.

But it is said we can not presume a trust, as none is mentioned in the contract. It is sufficient to say that, if such trust existed, it was unnecessary to mention it in the _ contract, or in the declaration. It would be sufficient if the title, when produced in evidence, disclosed a trust which would sustain the power of sale. There is no occasion for any presumption. It is not a question for presumption, but what evidence would be admissible under the allegation; and we are certainly not at liberty to-indulge any presumption against' the truth of the allegation of ownership, which is broad enough to include such title in trust. What right, on the other hand, have the Court to presume that this is a part of the land conveyed to the State for the use of the University ? Or that, though conveyed to the Regents, the conveyance was such as to deprive them of the power of sale, when it may have been so granted as to give them that power? Can we deny them the right to prove their allegation? It is not for the Court, upon demurrer, ■ more than for the opposite party, to deny the truth of the allegation demurred to. The question is not upon its truth, but its sufficiency. Its truth is admitted by the demurrer, unless legally impossible.

It was stated on the argument that the lot mentioned in the contract was conveyed, in the year 1825, by the Governor and Judges of the territory of Michigan, to the “Trustees of the University of Michigan” as organized under the act of 1821, for the use of the University; and we are referred to the decision in The Regents of the University v. The Board of Education of Detroit, 4 Mich. 214, holding ■ the Regents under the present organization to be the successors of said trustees, or, rather, a continuation of the same corporation. But to enable us to decide upon demurrer the .power of the present corporation to sell lands thus conveyed, the fact, date and nature of the conveyance, should . appear upon the pleadings. It is not desirable, if it were competent, to decide a case of this magnitude hypothetically, further than we may be compelled to do by the nature of the question. The question of the power of the plaintiffs to convey, under the supposed deed from the Governor and Judges, is in no way necessary to the decision of the cause, and is not involved in it; since, if this were decided against the plaintiffs, the decision upon this demurrer must still be in their favor. It will be time enough to decide this question when it is presented by the pleadings, or upon objections taken to the proof which may be offered.

The judgment of the Court below must be reversed,.' with costs to the plaintiffs in both Courts. And the defendant must have leave to plead to the declaration.

Martin Ch. J. concurred. Manning J.:

The University of Michigan is a public corporation. The People, in their political capacity, are the corporators. It is a part of the educational system of the State, and is under the control of the Legislature, except so far as it has been placed beyond the reach of that body by the Constitution, and the trust attached to the University fund. In -all other respects it is subject to State legislation, and may be moulded from time to time to suit the actual or supposed wants of the public. The corporation of to-day is the corporation known as the University of Michigan, under “An act for the establishment of a University,” approved April 30, 1821. Laws of Michigan 1827, p. 445. And the corporation under this last mentioned act was the corporation created by the Governor and Judges of the territory of Michigan, on the 26th August, 1817, by an act entitled “An act to establish the Catholepistemiad, or University of Michigan,’’ if an organization in fact ever took place under this last mentioned act. See Regents of the University of Michigan v. The Board of Education of the City of Detroit, 4 Mich. 213. The present corporation has been made to differ from what it was under the two last mentioned acts by the legislation and Constitution of the State. It was a public corporation originally, and has been throughout. It was created to subserve a great public want — the education of the people. For while freedom is the corner stone of our .political fabric, intelligence is the cement that holds its several parts together.

The act of April 30th, 1821, gave to the Trustees of the University the control of both the property and government of the institution. They were declared capable of holding property, real and personal, and of buying and selling and otherwise lawfully disposing of it, with certain restrictions imposed on the disposition of property mentioned in the seventh and eighth sections of the act. Under the State government a different policy was inaugurated. The government of the institution and the control of its property were separated from each other, and no longer trusted to the same hands.

The former was given to the Regents, who took the place of trustees under the territorial organization, while the latter was retained by the State, intrusted by law to the Superintendent of Public Instruction.

This office was created by the Constitution of 1835. And by “An act to provide for the disposition of the University and primary school lands, and for other purposes,” approved March 20th, 1837, the Superintendent of Public Instruction was to have the care and disposition of all lands and other property reserved and granted to the State for purposes of education: — S. L. 1837, p. 209, § 1. He was to sell the University and school lands, and loan the money, the interest on which was- to be paid to the State Treasurer, and by him to be passed to the credit of the University or school fund as the case might be:— §§ 16, 19. He was to submit to the Legislature an annual report, exhibiting the condition of the University and primary school funds; to apply the income of the University fond to the payment of such debts as should accrue from the operation of the law establishing the University; and to prepare annually a table of the amount payable to the University, and also the amount of the aggregate payable to the several counties, and present the same to the Auditor General, who was thereupon to issue his warrant on the Treasurer of the State for the amount payable to the University, and to the several counties: — § 18. And it was made the duty of the State Treasurer to pay such warrant to the Treasurer of the University, or of the county, as the case might be: — § 19. And by “An act. to provide for the organization and government of the University of Michigan,” passed at the same session, the University was organized. See Laws of 1837, p. 102. This act does not, in express terms, repeal the act of 1821, and yet as it and the act already mentioned cover the ground covered by the act of 1821, and are inconsistent with the latter act, it must be regarded as repealed by implication. It is not necessary for our present purpose to point out the differences between the two acts, any further than to say, that the act of 1837, unlike the act. of 1821, does not give the Regents power to sell, or otherwise dispose of the property of the University. It. states the object of the University to be, to provide the inhabitants of the' State with the means of acquiring a thorough knowledge of the various branches of literature, science and the arts, and vests its government in a Board vof Regents, and declares them a body corporate, with the right of suing and being sued, and prescribes their powers, and makes it their duty, as soon as the State shall provide funds for that purpose, to erect the necessary buildings for the University, on grounds to be designated by the Legislature, and in such manner as shall be prescribed by law. No mention whatever is made of the care and disposition of the property of the institution, for the reason, that that had been placed under control of the Superintendent of Public Instruction.

Changes have been made from time to time, but none showing an intention on the part of the Legislature to give to the Board of Regents power to dispose of the property of the institution.

By our present Constitution, “The proceeds from the sales of all lands that have been or hereafter may be granted by the United States to the State, for educational purposes, and the proceeds of all lands or other property given by individuals, or appropriated by the State for like purposes, shall be and remain a perpetual fund, the interest and income of which only is to be expended:” —Art. XIII, § 2. And by § 8 of the same article it is provided, “The Board of Regents shall have the general supervision of the University, and the direction and control of all expenditures from the University Interest Fund.”

Here is a constitutional provision giving the Regents control of the interest of the University fund, -but not of the fund itself. Why this constitutional provision if it was intended the Regents should have the control and disposition of the property of the University, as the trustees had under [the act of 1821 ? If it be said, these lands were deeded to the University, and therefore do not come within the description of lands which the Commissioner of the State Land Office is authorized to sell — that officer, instead of the Superintendent of Public Instruction, now having the sale of the [University and school lands — the reply is, the Legislature can give him the power. It is no reason for giving by implication powers which it is clear the Legislature never intended to give. The property the Board of Regents have contracted to sell amounts to $21,000. What power have they to invest the money? On what security, and to whom, and at what rate of interest is it to be loaned, and who is to collect and account for the interest, and to whom? We can hardly suppose the act would be silent on all these subjects if there was an intention on the part of the Legislature to give the power claimed. And j I can see no reason for dividing the University fund into two parts, and placing one in charge of the State, and the other of the Board of Regents.

I would stop here, but for a suggestion that has been started on which I will say a few words.

It has been ^suggested whether the land contracted to be sold may not be held by the corporation in trust, with power to sell the same. If we suppose such to be the case, I do not see that it removes the difficulty I have stated — the want of power in the Board of Regents to convey. I do not understand that the functions of a corporation can be enlarged by a deed of trust; that is, that a trust can be made the means of communicating new faculties to a body corporate. The admission of such a principle would enable a corporation, after parturition, to be metamorphosed into quite a different being; so much so as hardly to be recognized, if not seemingly to lose its identity. An insurance company might be changed into a bank, and a bank into an insurance company. When a corporation is made a trustee, the execution of the trust must come within the faculties of the corporation, or the trust must go unexecuted until a competent trustee is appointed. If we are correct in these views, the error in supposing the facts suggested would help the plaintiff, lies in taking it for granted that the power of the corporation to convey is in the Board of Regents instead of the State. It must be borne in mind that this Lis„ a public corporation, created for governmental purposes; that the People of the State in their political capacity are the corporators;: and that in creating the corporation they reserved to themselves, through the Legislature, the power of disposing of the property of the corporation instead of giving it to the Regents.

If it he said the suggestion may be carried a step-further, and take it for granted that by the trust deed the power to sell is given to the Board of Regents, and not to the corporation, it does not extricate us from the-dilemma. If the trust is to the Regents of the University of Michigan, that being the corporate name, it is to the-corporation, and not to the persons composing the Board of Regents, as individuals. If it is to them as individuals, they must execute it in their individual capacity, and not in the name- of the corporation. The contract is in the name of the corporation. And the power of the corporation to convey, as I have attempted to show, is not in the Board of Regents, but in the corporators, the People in their legislative capacity; in other words, in the State.

For these reasons, without noticing the other questions made on the argument, I think the judgment of the Court, below should be affirmed, with costs.

Campbell J. did not sit in this case.

Judgment reversed.