Snowden v. Crown Cork & Seal Co.

80 A. 510, 114 Md. 650

• Court: Court of Appeals of Maryland
• Decided: February 5, 1911
• Status: Published

Opinions

Urner, J.,

delivered the opinion of the Court.

It is well settled in this State that a gift by will, to an unincorporated association is-invalid. Tn the case now before us it is to he determined whether a gift to such an association consummated inter vivos must he held nugatory.

On April 24th, 1893, Francis .1. Crook endorsed and executed upon his certificate for seventy shares of the capital stock of the Crown Cork and Seal Company of Baltimore City an assignment, under seal-and duly witnessed, as follows: “For value received I hereby assign the within stock and certificate to Mrs. Eliza E. Uhler, Treasurer of the Baltimore Branch of the Woman’s Foreign Missionary Society, or any future Treasurer of the said’Baltimore Branch of said Missionary Society.” The certificate was then surrendered by Mr. Crook to the company, with instructions to transfer the stock on its books in accordance with the assignment. This was immediately done and a new certificate was issued reciting “that Mrs. Eliza E. Uhler, Treasurer of the Baltimore Branch of the Woman’s Foreign Missionary Society, or any other future Treasurer of said Baltimore Branch of that Society is entitled to Seventy Shares of the capital stock of the Crown Cork and Seal Company of Baltimore City, transferable on the books of the Company on return of this certificate duly endorsed.” The new certificate was received from the company by Mr. Crook, and he subsequently delivered it to Mrs. Uhler, after having written and signed upon it at his office the following:

“I hereby certify that on this 24th day of April, 1893, T have transferred, made over and given for value received to Mrs. Eliza E. Uhler, Treasurer of the Baltimore Branch of the Woman’s Foreign Missionary Society, all my right, claim and interest in and thereto of the within certificate of 70 shares of stock, only reserving the payments of the dividends, to be paid by Mrs. Uhler, or by any succeeding Treasurer of said Baltimore Branch, to Mrs. Augusta Isabella Mowinckel (now, in her 76th year, and at present residing at 2006 Mc-Oulloh street, Baltimore), during the term of her natural life; after her decease the stock to be kept and held by said Treasurer in trust and dividends all devoted' to the Madison Avenue Auxiliary Branch of said Society.”

During the succeeding fifteen years and until the death of Mrs. Mowinckel in December, 1908, the dividends on the stock were regularly collected and paid by Mrs. TThler, and her successors as treasurer, to the life beneficiary. The company has declined, however, to pay the dividends which have been declared since the expiration of the life estate because of doubts it entertains as to whether the transfer of the title to the stock, “under the circumstances and in the manner” stated, was effective, “except upon trust for Mrs. Mowinckel for life,” and whether the endorsement on the new certificate might not be construed to be “an attempt to create a trust for an unincorporated voluntary association,” or an infringement of the Rule against Perpetuities, “in which event the stock * * * might be declared to belong to the personal representatives” of Mr. Orook. It was insisted, therefore, by the company that these questions should be judicially determined, or a release obtained from the representatives of Mr. Orook, who died in 1894, before it should be required to assume the responsibility of paying dividends on the stock or permitting its further transfer.

In order to meet this requirement of the company the present proceeding in equity was instituted. An administrator de bonis non was duly appointed and made a co-defendant with the company, to the end that the estate of Mr. Orook might be properly represented. The bill was filed by The Woman’s Poreign Missionary Society of the Methodist Episcopal Church, a corporation, and Margaret D. Rawlings, the present treasurer of the Baltimore Branch of the society.

In addition to the facts we have mentioned, it appears from the bill that the first-named plaintiff was incorporated in 1884 under the laws of the State of Mew York. It was formed by the amalgamation of various local societies, including the one now known as the Baltimore Branch. The constitution of the corporate body provided for the maintenance of a general office in the City of Mew York to servé in part as a central agency for the branches with respect to work common to them all. The management of the corporation was vested in an executive committee in whose membership the branches were represented. There are eleven of these branches, each of which has charge of the work of the corporation in certain specified States of the Union. The plan of organization also includes further, subdivisions of the corporation known as auxiliaries. These are attached to various Methodist Episcopal Churches and are under the direction of the branches within whose respective territory they operate. The Madison Avenue Auxiliary mentioned in the endorsement on the certificate in question is one of these agencies. There.is no membership in the branches and auxiliaries distinct from that in the general society. The function of each auxiliary, as defined by the by-laws of the corporation, is to “aid its branch in interesting Christian women in the evangelizing of heathen women and in raisng funds for this work;” and all such funds “belong to the Woman’s Foreign Missionary Society, and shall not be diverted to other causes.” It is also provided generally that all money raised under the auspices, of the society shall belong to the corporation. The branch treasurer is authorized and directed' to receive all funds of the branch and to disburse them in accordance with particular corporate regulations. There are other provisions quoted in the bill from the constitution and by-laws of the corporation further demonstrating the vital and mutually dependent relationship existing between the society -and its co-ordinate agencies and subdivisions.

The bill states that Mr. Crook and his wife, Mary E. Crook, had been for many years and until their death members of the Madison Avenue Methodist Episcopal Church, in the City of Baltimore; that the former had been a constant and liberal contributor to all the financial enterprises and benevolences of the plaintiff corporation through its Baltimore Branch and the Madison Avenue Auxiliary, and was thoroughly conversant with the objects and purposes of the society and with its organization, management and administration. It is mentioned also that Mrs. Crook was the first president of the Madison Avenue Auxiliary, and that the corporation, -through its Baltimore Branch, has for many years maintaine/l and supported certain mission work in Foo-chow, China, under the name of “The Mary E. Crook Memorial.”

It is asserted in the hill that the stock and dividends in controversy belong to the plaintiffs, but that as the Crown Cork and Seal Company has suggested doubts as to their rights in the premises and has refused to pay dividends on their demand, they are entitled to have the certificate and the endorsement thereon construed and their rights adjudicated. There is a prayer that the plaintiff treasurer of the Baltimore Branch may be declared the owner of the seventy shares of stock for the corporate purposes of the society.

The Crown Cork and Seal Company filed an answer admitting the facts alleged, stating its doubts as already indicated, and submitting to the judgment of the Court; while the administrator de bonis non of the estate of Mr. Crook demurred to the bill upon the grounds: that the gift of tkp stock was void because made to voluntary unincorporated associations; that it is a trust too indefinite to be enforced; and that it violates the rule against perpetuities. From the order of the Court below overruling his demurrer the administrator has appealed.

If the Baltimore Branch was capable of receiving a gift of stock from a living donor under the circumstances shown by the record there would be no occasion to hold the gift invalid simply because of the trust or condition imposed for the application of the dividends to its auxiliary. The capacity to take being recognized, the recipient would occupy the same position with respect to such a trust for its own uses as any other' capable donee.

It has been repeatedly held that where there is a devise or legacy to a corporation for any of its authorized agencies, the gift will he sustained even though the designated beneficiaries may be unincorporated associations. Baltzell v. Church Home, 110 Md. 244; Bennett v. Humane Society, 91 Md. 10; Woman’s Foreign Missionary Society v. Mitchell, 93 Md. 199; Ege v. Hering, 108 Md. 391; Erhardt v. Balto. Monthly Meeting of Friends, 93 Md. 669; Doan v. Ascension Parish, 103 Md. 662; Barnum v. Baltimore, 62 Md. 275; Halsey v. Convention, 75 Md. 275; Hanson v. Little Sisters of the Poor, 79 Md. 434; Baptist Church v. Shively, 67 Md. 493; Trinity M. E. Church v. Baker, 91 Md. 539. The general rule in such cases is that the donation will be regarded as made to the corporation not in trust but merely upon condition that it he applied to the particular corporate use, unless the intention to create a trust he clear; and such a disposition is held, therefore, not to violate the rule against perpetuities or to he void because of uncertainty as to its objects. For example, in Woman's Foreign Missionary Society v. Mitchell, supra, the testatrix directed that certain funds he held “in trust” by the Board of Managers of an incorporated missionary society for specified purposes including the education of girls in India. This was decided not to he a trust, hut a gift to the society for use in the line of its mission work; and it was upheld as against both the objections just stated.

In the case before us the same principle must he applicable if the donee has the requisite capacity to retain the gift it has received. It would he an illogical and unjust discrimination to hold that though a voluntary benevolent society might he fully entitled to a gift when made inter vivos, and though the gift may have been dedicated to the essential purposes of the association, as represented in the franchise of an existing corporation with which it is identified, yet it milst he denied the benefit of the equitable principles upon which similar dispositions to corporate donees are sustained.

The gift here in question was made to the Baltimore branch for the benefit of its auxiliary, an agency operating under the direction of the former body, and both acting under the auspices of a body corporate in aid of the specific cause to which the entire organization was devoted. ' If - the branch were incorporated, it would be perfectly dear that the disposition in question would be ti’eated as having been made for its own defined objects and not subject to such a trust as would offend the rule against perpetuities; and we think the same conclusion is equally necessary if the society, notwithstanding its want of corporate character, is yet' found to be capable of holding the stock it actually received.

It was suggested in argument that as the assignment of the stock and its transfer on the books of the company, as originally made, was in absolute terms, the donor was so completely divested of his interest in the stock as to make inoperative the declaration of trust subsequently endorsed on the certificate; but we do not find it necessary to consider this suggestion.

Independently of the question as to the capacity of an unincorporated society to become the recipient of a gift, there can he no doubt as to the transfer by the donor in this case being absolute and irrevocable. Albert v. Albert, 74 Md. 534; 20 Cyc. 1212; 14 Am. & Eng. Encyc. Law, 2nd Ed. 1009. Every legal requirement was observed to divest him of all title to the stock and to place it securely in the donee. Baltimore Retort Co. v. Mali, 65 Md. 93; Pennington v. Gittinger, 2 G. & J. 208. The assignment, surrender and cancellation of the old certificate, and the issue and delivery of the new one to the assignee, effectually accomplished the purpose of klr. Crook to give the stock to the Baltimore Branch for the objects indicated unless this deliberate intention .must- be defeated upon the theory that the association was incapable of receiving a donation it has in fact held and administered for years.

If, in spite of the completeness of the transfer, the Baltimore Branch is incompetent to retain this stock as against the claim of the personal representatives of the donor, it would be in the same unfortunate position with respect to -any other donations it may have received. As the invalidity of the benefaction would, in such event, depend upon the incapacity of the donee and not upon the nature of the i thing given, it is obvious that if the gift here under consideration had been made in money instead of stock, the society would have held it by an equally precarious tenure.

The controlling question, therefore, is whether an unincorporated association has any capability whatever for the reception or retention of a gift inter vivos; and as such a gift, when perfected, vests as valid a title to personalty" in the donee as one acquired in any other mode (20 Cyc, 1212), .it is apparent that the inquiry we are to make is broad enough to involve the right of a voluntary society to acquire money or. property by any method.

When the gift now in dispute was made the law of Maryland distinctly recognized the existence of such associations as the Baltimore Branch by providing in Code, Art. 23, sec. 415, that: “It shall be sufficient in any suit, pleading or process, either at law or in equity, or before any justice of the peace, by or against any joint stock company or association, to describe the said joint stock company or association by the name or title by which it is commonly known, or by .or under which its business is transacted.” •

The right thus conferred was exercised in the cases of Littleton v. Wells, etc., Council, 98 Md. 456, and 100 Md. 416, and in My Maryland Lodge v. Adt, 100 Md. 238. In the case first cited it was said: “The statute does not take away the right existing at common law to sue the members of an unincorporated association, but the creditor has the option to sue either the association or the members, and when the suit is against the former a judgment obtained can only affect its joint property.” This is a clear recognition of the ownership of community assets by such a society, and its right to sue for their protection or recovery is equally manifest under the statute. In conferring upon an unincorporated association the right to come or be brought into Court in the name of the society as distinguished from the names of its' individual members, the law plainly recognizes not only the existence of a common interest but also its repre sentation by tKe organized body. Tbe power to sue in such a representative capacity presupposes tbe right to acquire and possess in the same capacity the interests which a suit might protect.

If the stock in question had been bought by the Baltimore Branch from Mr. Crook he could have sued it for the purchase price and collected his judgment out of its joint assets. If he had declined to deliver the stock in pursuance of such a sale, the branch could have maintained an action against him for the breach of contract. It is clear that under our law neither of the parties to the transaction would have been1 permitted to escape the obligation it imposed merely because the vendee society was not a body corporate.

Before the enactment of the statute quoted certain persons, as members of The Southern Orphans’ Association of Baltimore, an unincorporated society, sued for the recovery of a fund earned by their joint industry for the purposes indicated by the name of their organization. The money had been depostied in bank and the claim was prosecuted in inter-pleader proceedings as against the opposing claim of a corporation asserting ownership of the fund as successor of the voluntary body. The case was presented on appeal to this Court in Mears v. Moulton, 30 Md. 142, and it was held that “the right of the members of this association, whether incorporated or not, to claim the money cannot be questioned. They cannot sue in a corporate capacity, but as individuals having a common interest. Voluntary associations are recognized by law, and the right of the members to sue in matters pertaining to or affecting their interests is expressly asserted in Fells v. Read, 3 Vesey, 70; Lloyd v. Loaring, 6 Ves. 773; Babb v. Read et al., 5 Rawle, 151, and in Bealty and Ritchie v. Kurtz et al., 2 Peters, 556.”

In Gittings v. Mayhew, 6 Md. 113, it was held that the building committee of a voluntary association formed for the purpose of building an Athenaeum might, in the absence of incorporation, sue for subscriptions on tbe faith of which expenses had been incurred; and in a similar case Judge Cooley said: “There is no doubt that the trustees of any unincorporated society which is organized for a lawful purpose may receive gifts and promises on its behalf.” Allen v. Duffie, 43 Mich. 4.

The recognition thus accorded to unincorporated associations at common law was simply extended by the act to which we have referred so as to permit them to represent for the purposes of litigation the joint interests of its members.

In the case at bar we find a voluntary society possessed of a certificate of stock issued in the name of its treasurer and donated to the association for the specific objects for which the individuals who compose it have combined. Whether the gift be regarded as having been made to the organization as a representative entity or to its members for the promotion of their common enterprise, it has been actually and completely consummated, and to permit it to be revoked could only be upon the theory that such an association, though distinctly recognized by the law, can have no vested property rights which are entitled to be inspected.

The ground upon which we are asked to deny to the Baltimore Branch the capacity to retain the stock it holds is that an unincorporated society has been frequently decided by this Court to be incapable of receiving a devise or bequest, and that there is no distinction in this regard between a gift by will and a perfected gift inter vivos. In our judgment there is a very practical and important difference between these two methods of transferring title. A testamentary gift is simply an expression of the will of the testator which can become effective only by the aid and agency of the law; while a gift from a living person to another is an act wholly in pais. So far as the participation of the donor himself is concerned, the former disposition is merely declared, while the latter is consummated. The one is in fieri and the other is an accomplished fact.

If, instead of making his gift to the Baltimore Branch in his lifetime, Mr. Crook had made a corresponding bequest by will, the conditions would have been altogether different. The title to the stock could have passed, if at all, only through the processes of administration (Rockwell v. Young, 60 Md. 563; Smith v. Wilson, 17 Md. 460); and the identification of the beneficiaries would have been a matter for judicial inquiry. In such a situation the unincorporated legatee, not being an artificial person created by the law, and its membership not being certain and definite, and the Courts of this State having no jurisdiction to enforce charitable iises under the Statute of 43 Elizabeth or apart from its provisions, the bequest could not he given effect. Dashiell v. Attorney-General, 5 H. & J. 392; Same v. Same, 6 H. & J. 1; Rizer v. Perry, 58 Md. 112; State, use Trustees M. E. Church, v. Warren, 28 Md. 338; Orrick v. Boehm, 49 Md. 72; Trinity M. E. Church v. Baker, 91 Md., supra. The law would decline to gratify the expressed intent because, under its established rules, it could not recognize the designated beneficiary for the purposes of the proposed transfer of title. But a deceased donor who speaks through his will and who must make the law the instrument for the accomplishment of his wishes is under limitations which do not apply to a living donor who bestows his bounty by his own act upon objects which he himself identifies. It seems clear to us that the reason for the principle which defeats testamentary dispositions in favor of unincorporated institutions does not exist in a case like the present.

The distinction between gifts inter vivos and those by will, so far as they concern unincorporated associations, has been recognized in a very significant way by the Act of 1888, Chapter 249, codified as section 322 of Article 93 of the Public General Laws, which provides that “Eo devise or bequest of real or personal property for any charitable uses shall he deemed or held to be void by reason of any uncer tainty in respect to the donees thereof, provided the will or codicil making the same shall also contain directions for the formation of a corporation to take the same, and within the period of twelve calendar months from the grant of prohate of such will or codicil a corporation shall be formed, in correspondence with such directions, capable and willing to receive and administer such devise or bequest.”

This clearly indicates that the legislative mind did not entertain the idea that a gift made by a living person to the selected objects of his benevolence required any such statutory assistance, for it is not to be conceived that the act was intended to give any preference to testamentary donations over gifts inter vivos, or to exclude the latter from any recognition as a means of promoting the charitable uses which the statute proposed to favor.

In Brown v. Thompkins, 49 Md. 431, it was held that a statutory authorization to a designated religious body to “take and hold subscriptions or contributions in money or otherwise” contemplated the right to take by gift and did not confer the power to take by will, as against the provisions of Article 38 of the Bill of Rights to the effect that every gift, sale or devise of real or personal property for religious purposes to take effect after the death of the seller or donor, without the prior or subsequent sanction of the Legislature shall be void. The Court said that the “distinction between a 'gift’ and a 'sale’ and a 'devise’ is thus expressly recognized by the Constitution.”

Every case relied upon to support the objection to the capacity of the Baltimore Branch to hold the stock in dispute involved a disposition by will. Not a single decision has been cite°d from any jurisdiction which denied the right of- a voluntary association to retain a gift which it had received in possession and which was susceptible of transfer by the act of the parties without the aid of legal process. The mere fact that the corporation whose stock was donated has suggested doubts as to the capacity of the donee does not render the gift dependent for its original validity upon the aid of the law. Eor all present purposes the case is in the same position as if the administrator de bonis non of the estate of Mr. Crook were suing for the recovery of the stock from the Baltimore Branch. In fact, as the Crown Cork and Seal Company has not appealed, the administrator is the only party in this Court who questions the society’s title. The donee is not seeking to have carried into effect an intention expressed by Mr. Crook, but is asking us not to disturb an act which he himself fully and finally performed. The administrator’s contention, on the other hand, is not that the gift remained unperfected in any respect so far as Mr. Crook was concerned in his lifetime, but that the actual recipient was incapable of legally receiving, and that there is no difference in principle between the nullification by the Court of a gift inter vivos and the inability of the Court to gratify a testamentary intent.

It was argued for the appellant that the Statute of 43 Elizabeth relating to the enforcement of charitable uses places gifts inter vivos in the same ^category with all other charitable dispositions by its recital that “Whereas Lands, * * * Goods, Chattels, Money and Stocks of Money have been heretofore given, limited, appointed and assigned, as well by the Queen’s most excellent Majesty, and her most generous progenitors, as by sundry other well disposed persons.” An examination of the statute discloses that its purpose was to provide for the enforcement of existing donations which had not been employed “according to the charitable intent of the givers and founders,” and to that end it confers certain powers upon the Court of Chancery. It does not purport to give validity to dispositions previously invalid. In view of the tenor of the statute and of the fact that it has never been in force in Maryland, we are unable to see how its recitals can affect the question we have now under consideration.

It is not necessary to discuss the various decisions of this Court holding that a gift by will to an unincorporated society is void, as we do not find the principle of those cases applicable to the wholly different issue here presented.

In our ojoinion the making and acceptance of the gift in this case was a valid and completed exercise of a lawful right on the part of Mr. Crook as donor and the Baltimore Branch as donee, and the latter is entitled to retain in its possession and ownership the stock it has thus received.

The argument on behalf of both the appellant and appellees was directed also to the question whether the Baltimore Branch was an integral part of the incorporated society with which it was connected and as such proper to be regarded as having the ordinary corporate capacity; but a discussion of this question is rendered unnecessary by the view we have taken as conclusive of the case.

The order of the Court below overruling the demurrer to the bill of comjdaint will be affirmed.

Order affirmed with costs-.