Fidelity Insurance v. Niven

10 Del. 416

• Court: Supreme Court of Delaware
• Decided: June 15, 1878
• Status: Published

Opinion

Wales, J.:

This is an action of assumpsit on certain promissory notes and due bills which were made by the intestate of the defendant to the intestate of the plaintiff. The pleas are non assumpsit, the act of limitations, plene administravit, except the sum of two hundred and twenty-two dollars and eighty-four cents, and a special plea to the effect and in substance that the plaintiff is a foreign corporation existing under the laws of another State with power to administer the estates of deceased persons; “ that such power is repugnant to the policy and prejudicial to the interests of this State and of its citizens, and that the action against this defendant being in that character cannot be maintained,” etc. The replication to this plea sets forth that the plaintiff is a corporation created by and organized under the laws of Pennsylvania, and by said laws “is authorized to accept and execute the office and appointment of executor or administrator or other trustee, and to accept and execute all such trusts of every description not inconsistent with the laws of the State of Pennsylvania, as may be committed to it by any person or persons whatever, or by any corporation or register of wills, or by any court of record, whether of the said State of Pennsylvania or any other State or of the United States; that the plaintiff hath been duly appointed and qualified as administrator as aforesaid of Theophilis T. Deringer by the Register of Wills of the City and County of Philadelphia in the State of Pennsylvania, and by virtue of said power, office, and appointmenfc is entitled to maintain this action,” etc. To this replication there was a general demurrer, on which the court below gave judgment for the defendant. The plaintiff assigns this judgment as error.

It is an elementary rule that a general demurrer reaches back through the whole record and attaches upon the first substantial defect in the pleadings. Under the operation of this rule the question of the right of the plaintiff in its capacity as an administrator to maintain an action in the courts of Delaware is brought before us for consideration. For although the special plea may be defective, as contended by the plaintiff’s counsel, yet, if it appears from a full inspection that the declaration is substantially wrong in its inception, in that the plaintiff has no standing in court, judgment cannot be given for the plaintiff because a bad plea is sufficient for a bad declaration (Gould’s Pldg. 475), and cannot give a right of action where none exists. If, therefore, at any stage in the progress of a cause a material error should be discovered, as a want of jurisdiction of the cause of action or of the person of either of the parties, it would be the duty of the court to take notice of the error and render judgment accordingly. Or, if at any time it appears that to sustain an action would be contrary to good morals or public policy, the court will not hesitate to dismiss it. The record in this cause upon an entire view of it, as well as the argument of counsel, presents the question whether the plaintiff can act as an administrator in Delaware.

It is not denied that the plaintiff in the State of its creation is clothed with the power to accept the office of an executor or administrator, and to perform all the duties incident to either trust; but the objection is made that the laws of Delaware regulating the granting of letters testamentary or of administration, while not expressly disqualifying or excluding a corporation, nowhere recognize that a corporation can be an administrator, and, as the power to act in that representative character cannot be granted under the general statute to a domestic corporation, therefore a foreign corporation claiming to act under letters issued in another jurisdiction cannot be permitted to execute its power here or to bring an action in our courts. And it is further objected that in the absence of positive law a corporation is disqualified and incompetent at common law from being an executor or administrator.

To fully understand the extent and force of the first objection it will be necessary to examine the statute. The law provides that the register of the county in which the deceased last resided, or of the county in which he had any real or personal estate, shall grant letters of administration to some one or more of the persons entitled to the residue of the personal estate; if none of those who are capable will accept, then to one or more of the creditors, and lastly, to any suitable person. The first duty of the administrator is to take and subscribe an oath for the faithful performance of his duties, and then to give a bond to the State with surety to be approved by the register, with the usual condition as to the inventory and appraisement of the goods and chattels, collecting debts due and paying claims against the estate, distributing the residue of the personalty according to law, and rendering a just and true account within a certain time. He is also required to make an affidavit verifying the inventory and list of debts in making his return to the register. Amended Code, ch. 89, sec. 8 et seq. These provisions apply to the granting, of original or domiciliary letters to the principal administrator of the deceased, who at the time of his death resided in the State or was possessed of property real or personal within its jurisdiction. But where the domicile of -the deceased was in another State, and letters have been granted to an administrator in that jurisdiction, the law of this State has provided a very simple substitute for ancillary or subsidiary administration, so that the foreign administrator in most cases may proceed without any delay to take possession of the effects of the deceased and to collect the debts due to the estate. The law, in fact, recognizes the foreign administrator upon the mere production of his commission duly authenticated under the seal of the office or court by whom it was issued, and at once invests him with authority to represent the deceased in the same manner as if he had been originally appointed by a register in this State; and it is only upon the happening of certain contingencies that he will he compelled to take any proceedings of a public or judicial nature in order to confirm his authority.

These contingencies are pointed out in the same chapter, sections 46, 7, and 8. “ If the deceased be indebted to an inhabitant of this State in a sum not less than twenty dollars, the executor or administrator, before he shall recover judgment in court, shall cause such letters to be recorded in the register’s office in one of the counties and shall also, with sufficient surety or sureties to be approved by the register, become bound to the State in a penalty double the best estimate of the personal estate of the deceased in this State, with condition to be void if he shall truly account for all the personal estate of the deceased in this State which shall come to his knowledge, and faithfully administer and distribute the same according to law.” The court may stay proceedings in any action by such administrator, and any person in the- State having any personal property of the deceased, may refuse to pay or deliver the same until the letters have been recorded and the security given, but a payment or delivery without such recording or security shall be good. A judgment shall not be reversed nor set aside as irregular on the ground that the recording and security have been omitted unless the special objection shall have been made and overruled, but the court may stay the proceedings in the judgment until those requirements have been complied with. It will be observed that the foreign administrator may act by virtue of the original power granted to him and without any additional warrant from a register in Delaware, and that it is only upon the refusal of a debtor or bailee to pay or deliver money or goods or chattels or upon direct application to the court that he is required to record his letters and give security. He is not obliged to take the oath of office, to make the affidavit verifying the inventory and appraisement, or even to return an account of his receipts and disbursements to the officer who approved his security. The statute leaves him to settle his accounts with' the office or court which first appointed him, and after the letters have been recorded and the security given, exercises no further control over him.

The question then to be determined in this branch of the case is, Does the statute prescribe any condition or duty which the plaintiff, being a corporation, cannot perform, and hence is unable to maintain its action ?

There would be a difficulty, perhaps an insuperable one, in a corporation not being specially authorized by the laws of this State performing the conditions necessary to qualify it to take out original letters as administrator in its corporate name, namely, taking the oath and malting the requisite affidavits, but in the present case no oath or affidavit is required, and the inquiry is brought down to the narrow point whether a corporation constituted as the plaintiff is with power to accept the office of administrator can execute a valid bond, such as is prescribed by the statute. The negative of this proposition was insisted upon by the defendant’s counsel, but both the principle and the authority of adjudged cases lead to an affirmative conclusion.

The law in relation to the power, duties, and responsibilities of corporations, public and private, has been much and frequently discussed of late years both in the courts and by text writers. Many doctrines which were once held to be sound, proving unsuited to the demands and usages of business, have been overturned, while others once considered as of doubtful or uncertain authority have long since been accepted and settled as the law of the land.

It was laid down by Blackstone and the notion prevailed for some time that a corporation could not make a paroi contract, and could speak and act only by its common seal, 1 Bl. Com. 474; but this technical rule of the common law soon gave way and vanished, and to-day a seal is no more necessary to render valid the acts and contracts of a corporation than of an individual, and in all cases where a natural person would be bound without a seal, a corporation would also be bound. 2 Kent’s Com. 288. It was once questioned whether a corporation-could maintain a suit beyond the jurisdiction in which it was incorporated, but Chancellor Kent, in 1820, in answer to such an objection, declared it to be well settled that foreign corporations could sue in their corporate name and could prove as a matter of fact, if it was-denied, that they were lawfully incorporated. 4 Johns. Chan. 372. So, too, in regard to its liability to action it has been held that it may be made a defendant in actions of assumpsit, trover, trespass, and for the publication of a libel, and even be indicted for malfeasance or nonfeasance. As to its power of making contracts and the kind of obligations a corporation may enter into, there would seem to be little room for serious doubt in the light of the later authorities. A corporation, being created for a specific purpose, can make no contract forbidden by its charter, or in general any contract which is not necessary, either directly or incidentally, for the objects of its creation. A. & A. on Corp. 256. The exercise of the corporate franchise, which is the legislative grant of special privileges, cannot be extended beyond the letter and spirit of the act of incorporation ; but the result of all the authorities is, that a corporation may by virtue of its implied powers, unless expressly or by necessary implication prohibited, make any contract, either as principal or surety, proper as the usual and ordinary means of carrying on its business under the circumstances under which it may be placed. Ibid. 258. In fine, a corporation has the power to do all things necessary to carry out the purposes for which it was incorporated which are not in violation of positive law. When acting within the scope of the legislative purposes of its institution, all its contracts, whether sealed or unsealed, written or unwritten, are valid, and it has all the powers of ordinary persons within that limit. Brady v. The Mayor of Brooklyn, 1 Barb. 584. “ It is a well-known principle,” says Judge Thompson, in Philadelphia and Sunbury R. R. Co. v. Lewes, 33 Penn. 37, “ that a corporation, like a natural person, has a right to carry on its legitimate business by all legal and necessary means not prohibited by law.” Every corporation has power to make all contracts that are necessary and usual in the course of the business it transacts, as means to enable it to effect such object unless expressly prohibited by law or the provisions of its charter. Barry v. Mets. Ex. Co., 1 Sandf. Ch. 80. The authorities are numerous on this point. In all the cases the difficulty, if any, was not in ascertaining the principle, but in applying it to a special state of facts. The question here is, Would the execution of the administration bond be within the implied powers of the plaintiff's charter ? Its power to take the office and perform the functions of an administrator in the State of its corporate residence is clear and undisputed, and ex comitate it should be allowed to exercise the same office here, unless to permit it to do so would be in violation of some positive local law. No such law has been referred to and it is believed that none such exists. Neither its charter nor any statute expressly or by implication prohibits it from making the bond, and the rule of law in such a case is, that when both the charter and statute are silent it has power to make all such contracts as are necessary and usual in the course of business as means to enable it to attain the object for which it was created. A. & A. on Corp. 271. In Dartmouth College v. Woodward, 4 Wheat. 636, the court says : “ A corporation is an artificial being, invisible, intangible, and existing only in contemplation of law. 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.”

Secondly, it is objected that by the common law the plaintiff is not capable of being an administrator. Blackstone, among the disabilities of a corporation, includes its inability to be an executor or administrator, “for it cannot take an oath for the due execution of the office.” 1 Bl. Com. 477. In Bacon’s Ab. Tit. Executors and Administrators 2, the same doctrine is laid down on the same ground, but under a semble, and with these additional reasons : First, because corporations cannot be feoffees in trust for the use of others; and second, because they are a body framed for a special purpose. When the reason of a rule ceases, so does the rule itself. The plaintiff is not required to take an oath. It has been incorporated or “ framed for the special purpose ” of acting in the character and capacity in which it has come into court; and it is now well and long established that a corporation may be a trustee in the same manner as an individual, not only of real estate, but of personal property, to the same extent as private persons. Hill on Trustees 48 (and cases cited in the noté). Says Toller: “ It now seems settled that corporations can be executors, and that on their being so named they may appoint persons styled syndics, to receive administration with the will annexed, who are sworn like all other administrators. Such corporations as can take the oath of an executor are clearly competent,” as, for instance, a corporation sole. Toller on Excs. 30. There is, then, no inherent disability or disqualification belonging to á corporation as such which excludes it from acting as an administrator, and it may accept the office if not prohibited by its charter, or forbidden by statute, whenever from the objects of its incorporation and the nature of its business it may become necessary and.proper, and it is able to comply with the conditions prescribed by law as to giving bond, etc. Practically, the position of the plaintiff is meritorious and unobjectionable. With the express power contained in its charter to receive the appointment of administrator, and with its capital stock, pledged as the security required for the faithful performance of its duties, it brings an action in its representative capacity for the recovery of a debt due to its intestate, and is met at the outset by technical rules, which, whatever may have been the reason of their origin and adoption, have either become obsolete or have been so modified and relaxed as to be qo longer of general application. The execution of the bond would, at the best, amount to little more than a form, and be without substantial benefit or necessity ; but still the defendant is entitled to it, if it is insisted upon, and the plaintiff has a full and lawful power to execute it as it would have to make or indorse a promissory note, or accept a bill of exchange, or to execute any other description of bond which may be fairly and legitimately considered as necessary and proper in the usual course of its business. It has not been made to appear in what manner the interests of this State or of its citizens would be impaired, or in what way its policy would be invaded or subverted, by sustaining the plaintiff’s action. Admitting-that a corporation may be unable to act as an original administrator under the provisions of the general statute, it does not follow that it may not be recognized as a foreign administrator on the production of letters duly authenticated and giving bond. The word “ persons ” may extend to and include bodies corporate and politic as well as individuals. Amend. Code, ch. 5. If the plaintiff can give the bond, it does all that the law requires. The rights of our citizens will not be endangered, their property rendered less secure, or the dignity of the State be diminished. If the policy of the State is to be inferred from the history of its legislation, the act of the General Assembly of Delaware of April 9th, 1873, incorporating a company for the special purpose, among others, of acting as administrator would be conclusive of that question. 14 Del. Laws 714. In the Bank of Augusta v. Earle, 13 Pet. 585, cited by counsel on both sides, Chief Justice Taney, in the course of a learned and elaborate opinion, says : “ When a court is called on to declare contracts * * * to be void on the ground that they conflict with the policy of "the State, the line of that policy should be very clear and distinct to justify the court in sustaining the defense. Nothing can be more vague and indefinite than that now insisted on as the policy of Alabama. It rests altogether on speculative reasoning as to her supposed interests, and is not supported by positive legislation.” The point made in connection with this, that a corporation can have no legal existence outside of the sovereignty by which it is created, is not supported by argument or authority. The general principle is that a corporation created in one State can make no valid contract in another without the latter’s sanction, express or implied; but it has been repeatedly decided that not only can a corporation make a contract in other States, but may be sued by service on its agencies in other jurisdictions. It has already been shown that it can sue in another State.

The great rule in the settlement of estates is, that the personal property is distributed by the law of the domicile, and that prevails where it does not conflict with the lex rex sites. To ascertain the existence of such conflict is not difficult. . When a statute or the unwritten or common law of the State forbids the recognition of the foreign law, the latter is of no force whatever. When both are silent, then the question arises, Which of the conflicting laws is to have effect ? Generally, force and effect will be given by any State to foreign laws in cases where from the transactions of the parties they are applicable unless they affect injuriously her own citizens, violate her express enactments, or are contra bonos mores. And courts of justice in one State will, out of comity, enforce the laws of another State when by such enforcement they will not violate their own laws or inflict an injury on some one of their own citizens. Bouv. Law Dic., Comity. Chief Justice Waite, in the Pensacola Telegraph Co. v. The Western Union Telegraph Co., decided at the October term, 1877, of the United States Supreme Court, states the law on this subject briefly and clearly: “ Upon principles of comity, the corporations of one State are permitted to do business in another, unless it conflicts with the law or unjustly interferes with the rights of the citizens of the State into which they come. Under such circumstances no citizen of a State can enjoin a foreign corporation from pursuing its business.' Until the State acts in its sovereign capacity, individual citizens cannot complain. The State must determine for itself when the public good requires that its implied assent to the admission shall be withdrawn.” Albany Law Journal, Vol. 17, p. 309 ; Story’s Conflict of Laws 36, 37.

The law of ancillary administration is founded on the duty of every government to protect its own citizens in the enjoyment of their own property and the recovery of their debts, at the same time having due respect to the rights of foreign creditors. When the estate of a deceased person is solvent, there is no difficulty in applying its assets, and it is only in cases of insolvency that any question can arise as to the order of payment of debts, and in such cases the law of the situs prevails over the law of the domicile. But that question has not been made here, there being no intimation that the estate which the plaintiff represents is not fully able to meet all lawful claims against it. The sole inquiry is as to the incidental or implied power of the plaintiff to comply with the requirements of the statute by giving the bond. This power it has, and, as there is no positive law, or definite and known state policy to prohibit or forbid its exercise of the duties of an administrator, there is no reason why it should not be allowed to maintain this action.

Saulsbury, Chancellor, concurred.

Wootten, Judge, dissented.