President of the Bank of Michigan v. Niles

1 Walk. Ch. 99

• Court: Michigan Court of Chancery
• Decided: December 15, 1842
• Status: Published

Opinion

The Chancellor.

The first objection made by defendant is, that the bank had no authority under its charter to make such a contract as that disclosed by the bill; and that this Court will not, for that reason, decree a performance of it.

The third section of the act of incorporation concludes with these words: “The President, Directors and Company of the Bank of Michigan shall be in law capable of purchasing, holding and conveying any estate, real or personal, for the use of the said corporation.” By the ninth section it is provided, “ That the lands, tenements and hereditaments, which it shall be lawful for the said corporation to hold, shall be only such as shall be required for its accommodation in relation to the convenient transacting of its business, or such as shall have been bona fide mortgaged to it by way of security, or conveyed to it in satisfaction of debts previously contracted in the course of its dealings, or purchased at sales upon judgments, which shall have been obtained for such debts.”

The power given by the third section to purchase, hold and convey real estate, is limited by the ninth section to specific objects. Taking the two sections together, the intention of the legislature is clear, and but one construction can be given to them. It was intended that the corporation should have power to purchase real estate for the convenient transaction of its business, or to secure a debt; but not for the purpose of investing its capital, or of speculating in lands, or of buying them merely to sell again. I have no doubt this is the true construction of the charter. A different construction would enable the corporation to buy and sell real estate at pleasure, and render entirely nugatory the restriction imposed by the ninth section. The corporation, then, exceeded its powers, and contracted to do what it had no right to do under its charter, when it covenanted to purchase the mill property of Pierson, and convey three-fourths of it to defendant. It was an agreement to buy real estate of one individual to sell to another; — a contract to violate its charter, by embarking in a business with which it had no right to meddle ; — a contract which, for that reason, this Court cannot, consistently with equitable principles, assist the complainants to carry into execution. Equity will aid no one in doing that which is unlawful.

The purchase of the mill property of Pierson for $5,000, after the contract was made, makes no difference; for it was done under the contract, and in part performance of it. The case of The Banks v. Poitiaux, 3 Rand. R. 136, goes no further than this, that the corporation having purchased the land, might make a deed of it; not that it might make a contract with A. to purchase the lands of B., and sell them to A., which is the case before me.

It is unnecessary to decide the other questions made on the argument.

Demurrer allowed.

Note. This case was affirmed on appeal.