Trustees of Vernon Society v. Hiles

6 Cow. 23

• Court: New York Supreme Court
• Decided: August 15, 1826
• Status: Published

Opinion

Curia, per

Savage, Ch. J.

It is settled by the repeated decisions of this court, that when a corporation sues, they are bound, on the general issue, to prove that they are a corporation. (8 John. Rep. 378. 14 id. 245-6.)

Had the irregularities complained of, been confined to a single year, they would have had no effect upon the plaintiffs’ rights, according to the decision in The People v. Runkel, (9 John. Rep. 147, 149.) It was conceded by the court, in that case, that the trustees, chosen under the act in question, and who go out of office at the end of the year, hold over till others are elected. The question there was, whether an election after the day was good. The court said, “ Perhaps the language of the statute is too peremptory, that the seats of one third are to be vacated at the expiration of every year; but the corporation is not thereby dissolved; for two thirds of the trustees continue in office.” There are cases which hold that where an officer is to be chosen annually, he may hold over after the year, until another is chosen, (10 Mod. 146; Str. 625;) and in The People v. Runkel, the court said that trustees elected after the day would be in by color of office ; that the election would not be void; and their acts would be good; that the corporation would still remain ; and the irregularity, if any, would cure itself in a subsequent year. That reasoning, however, is not applicable to this case. The persons claiming to be a corporation in 1817, when the contract was made with them as such, came into office, if at all, since that period. The same irregularity was continued for three years in succession; and if it renders the election void, the corporation was dissolved; or in a situation to be dissolved by appropriate judicial proceedings. For the same reason, the defendant is not estopped to question the plaintiffs’ being a corporation by reason of bis contract with them as such. The estoppel, if any, relates t° the time of entering into the contract; and does not. admit that there cannot be a dissolution.

This view of the subject renders it necessary to inquire whether such a nonuser or misuser as is a sufficient ground to produce a forfeiture of corporate rights, can be taken advantage of in this collateral way; or whether the forfeiture must not first be judicially declared in a direct proceeding by the people.

This point is, I think, settled by the decisions of our own, as well as those of the English courts. In Slee v. Bloom, (5 John. Ch. Rep. 379, 381,) chancellor Kent held that the forfeiture of corporate rights must be judicially ascertained and declared; and that corporate power which may have been abused or abandoned, cannot be taken away but by regular process. He considers the cases; and expresses a belief that there is no instance of calling in question the rights of a corporation, as a body, for the purpose of declaring its franchises forfeited and lost, but at the instance and on behalf of the government.

The decree in Slee v. Bloom was reversed in the court for the correction of errors; not, however, on the ground that the chancellor’s position, so far as it related to acts of nonuser or misuser, was incorrect. Spencer, Ch. J. who gave the almost unanimous opinion of the court, said, “ Upon the authorities and for the reasons given by the chancellor, misuser, or nonuser, cannot be relied on as a substantive and specific ground of dissolution.”

(b) But the reversal proceeded upon the fact that the corporation in question had surrendered, or done what was equivalent to a surrender of their corporate rights.

These cases seem to me conclusive against allowing the objection, coming, as it does, collaterally, that this corporation was dissolved. There is nothing in the statute shewing that the legislature considered religious incorporations as standing on a different footing in this respect from other corporate bodies.

The plaintiffs have acted as trustees upon the matter in question, and in bringing their suit, cotore officii; and before an objection to their right can be sustained by the defendant, on the ground that they were not regularly elected, he must shew that proceedings have been instituted against them by the government, and carried on to a judgment of ouster. (9 John. 159.)

In my opinion, the judgment below was erroneous, and should be reversed.

Judgment reversed.

And vid. Silver Lake Bank v. North, (4 John. Ch. Rep. 373,) per Kent, chancellor.