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the well-known case of Lathrop v. Commercial Bank,' the court, speaking of the fact that most acts of incorporation in Kentucky concede a special authority to purchase land for specified purposes, say: "That course of legislation has arisen either from a prevailing opinion that statutory corporations in this country shall possess no other powers than those expressly granted, or from a prudential determination to limit and define their rights and capacities with precision, and especially in relation to the purchase of real estate." Beyond this, mere ownership by a corporation of real estate in fee is not within the rule against perpetuities.

Still, it may be urged that, admitting technically such ownership does not create a perpetuity, nevertheless it is a fair inference that the State imposed upon her corporations the restrictions referred to in order that land might not, except in certain specified cases, be held in mortmain by an immortal being. The answer to this would seem to be that it is not reasonable to draw such an inference, because there is no necessity for the adoption of the mortmain policy or laws in this country. Land with us has not the privileges which were attached to it in feudal times in the country where the mortmain laws originated; and the reserved power of the State to alter or repeal corporate charters is ample to ensure any needed regulation or control of corporate ownership of real

estate.

In Christian Union v. Yount, the question was as to the validity of a devise of real estate in Illinois to a missionary society incorporated under the laws of New York. Carroll v. East St. Louis was quoted as authority for the broad contention that foreign corporations were prohibited by the settled policy of the State of Illinois from taking, purchasing, or holding lands within its limits. The court, however, held that the decision in this case did not conclude the point involved in the case before it, inasmuch as it appeared that, under the general laws of Illinois, domestic missionary corporations had power to take and hold real estate; and it was decided that the existence of a public policy forbidding a foreign missionary corporation to take or hold real estate in Illinois could not be inferred from the general course of legislation or judicial decisions in that State.

Upon the same ground, it was held in the recent case of Taylor

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v. Alliance Trust Company,' that a foreign corporation may hold real estate in Mississippi. Under the Statutes of this State, domestic corporations are, with a few exceptions, authorized to hold real property to any amount. "It is idle," say the Court, "to talk of the existence of a public policy against ownership of lands by corporations, in the light of this legislation. No distinction is made between foreign and domestic corporations."

In Lancaster v. Amsterdam Improvement Company,2 the New York Court of Appeals, reversing the decision of the General Term, held that under the laws of New York, a foreign corporation formed to deal in the purchase and sale of real estate, can transact its corporate business in that State. The opinion of the General Term went upon the ground, in substance, that the right of the corporation to acquire, hold and convey land within the State was to be determined by reference to two general statutes, which were taken to be the only statutes recognizing the right of foreign corporations to take and hold real property in the State, and by reference also to certain special legislation. The first statute, passed in 1877, authorized a foreign corporation to purchase at a sale under the foreclosure of a mortgage or under a judgment held by it, to hold the land purchased for not exceeding five years, and to convey it. The second, passed in 1887, authorized a foreign corporation doing business in the State to acquire such real property as might be necessary for its corporate purposes in the transaction of its corporate business in the State. The last statute, it was thought, was not broad enough to authorize a foreign corporation to take, hold and convey real estate as a business and for the purpose of speculation; and the first statute was deemed to negative the idea that a foreign corporation has such power. No authority being conferred by the general laws on the subject, it was inferred from numerous special acts of the legislature, authorizing certain foreign corporations to acquire lands by purchase or devise, to be the policy of the State not to permit such corporations to take, hold and convey lands in the State, without being specially authorized to do so. It was said, arguendo, that domestic corporations formed for purchasing, holding, improving and conveying real estate are limited in the amount which they may hold to $1,000,000, unless the corporation is organized for the purpose of erecting in a city a building to be rented

15 Southern Reporter, 121. See also, Reorganized Church, &c. v. Church of Jesus Christ, 60 Fed. Rep. 937.

2 140

N. Y. 576.

for offices and stores; but if foreign corporations may legally acquire, hold and convey land in the State at pleasure, there is no limitation upon the amount which they may acquire and convey, except their ability to purchase and pay for land.

The Appellate Court declared that it was "not confined to any such narrow ground as a construction of the particular acts referred to, and that in its judgment the learned General Term justices, if they had not overlooked, had failed to give due weight and significance to other provisions upon the statute books. A general law passed in 1892 accords to all foreign stock corporations the same right to transact their business in the State as domestic corporations have, if it be one which the latter may also lawfully transact, and provided there has been compliance with certain stated requirements.1 Another general law provides for the formation of domestic corporations to carry on "any lawful business." Dealing in the purchase and sale of lands is held to be a lawful business. While the Statute of 1877 contains a limitation upon the right of foreign corporations to hold real property, with respect to time, the subsequent act of 1887 is in the direction of removing such or any limitation, and, finally, the Statute of 1892 allows all foreign corporations to do business in the State, upon compliance with conditions named, and places them upon a similar footing with domestic corporations as to the transaction of corporate business. The special legislation which has been procured by foreign corporations does not, it is held, indicate any policy of the State in the matter. If special enabling acts have been procured, in particular cases, the Court say, they do not necessarily disprove the general right. Prudence and cautious.

1 The material part of the law of 1892 is as follows:

...

No foreign stock corporation other than a monied corporation shall do business in this State without having first procured from the Secretary of State a certificate that it has complied with all the requirements of law to authorize it to do business in this State, and that the business of the corporation to be carried on in this State is such as may lawfully be carried on by a corporation incorporated under the laws of this State for such or similar purposes. . The Secretary of State shall deliver such certificate to every such corporation so complying with the requirements of law. . . . No foreign stock corporation doing business in this State without such certificate shall maintain any action upon any contract made by it in this State until it shall have procured such certificate. Before granting such certificate the Secretary of State shall require every such foreign corpora tion to file in his office a sworn copy of its charter or certificate of incorporation, and a statement under its corporate seal, particularly setting forth the business or objects of the corporation which it is engaged in carrying on, or which it proposes to carry on, within the State, and a place within the State which is to be its principal place of business, and designating a person upon whom process against the corporation may be served within the State. The person so designated must have an office, &c.

counsels may have dictated their procurement. To the suggestion that if foreign corporations may legally acquire and convey land in the State at pleasure, there is no limitation upon the amount which they may hold, it is answered that it is always within the power of the legislature to interfere and to regulate, if, by the magnitude of the business, the public interests are affected and seem unduly threatened. The case, it is held, does not fall within those which the courts have decided to be against public policy; the business is not immoral in itself, and it is not prohibited by legislation.

The legislation under which this case was decided is quite similar to that existing in some of the States, where as yet no judicial definition of State policy on the subject under discussion has been made; and if the occasion shall arise there for obtaining such a definition, the opinion of the New York Court will doubtless carry much weight.

The enlightened manner in which this court from its earliest history has dealt with questions involving corporate rights and privileges has been an important factor in the maintenance and growth of the commercial supremacy of a great State. Seventy-five years ago, Chancellor Kent said, when the standing of a foreign corporation in the Equity Court of New York was questioned, "This court ought to be as freely open to such suitors as a court of law, and it would be most unreasonable and unjust to deny them that privilege. They might well exclaim:

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Not only has the day gone by when foreign corporations, merely as such, may properly be looked upon with suspicion, but at the present time, the assimilation of real to personal property, for all the purposes of commerce, is such that the necessity for restraining laws has to a very great extent ceased. Judicial construction of legislation upon this subject should therefore be along broad and liberal lines, and not narrowed by the notion that foreign corporations "carry a black flag," or influenced by the ancient learning of English statutes inapplicable to our situation, and never adopted as a part of the law of our land.

In conclusion, it may be well to call attention to a question which might in some contingencies be of great practical importance to a corporation compelled to defend its title to lands in a

1 Silver Lake Bank v. North, 4 Johns Ch. 370

State against an attack based on the contention that the public policy of the State forbade the corporation to take or hold the lands in question. In such a controversy, the right to choose the forum might be decisive of the case. Under the provisions of the Act of Congress declaring that the laws of the several States, except when the Constitution, treaties, or statutes of the United States otherwise require, shall be regarded as rules of decision in trials at common law in the courts of the United States in cases where they apply, the construction given to a State statute by the highest judicial tribunal of such State is generally followed without question by the Federal courts in deciding matters to which the local statute is applicable. If a foreign corporation should acquire real property in a State after the court of last resort in that State had clearly declared the public policy of the State to be opposed to the acquisition of real estate by such a corporation, a Federal court would, if the case should be presented to it, accept the rule of policy announced by the State court as a part of the legislation of the State upon the subject. But suppose the decision of the State court is made after the corporation has acquired lands in the State, and the question of the title of the corporation is then litigated in a Federal court by original suit therein, or by removal of the cause from the State court; is the Federal court bound to accept and follow the construction of the statutes in question adopted by the local court?

On this point, Mr. Justice Harlan, in Christian Union v. Yount, supra, said, after alluding to the general rule: "But how far the Federal courts, in the ascertainment and enforcement of property rights depended upon the statute law, or the public policy of a State, are bound by the decisions of a State court, rendered after such rights were acquired or became vested, is a different question, and one of the gravest importance." The rule upon this subject he did not discuss, because the local decisions upon which counsel relied did not in the view of the court conclude the precise point involved in the case.

In a later case, however, the rule is stated to be that "where contracts and transactions have been entered into, and rights have accrued thereon, when there has been no decision of the State tribunals, the Federal courts properly claim the right to adopt their own interpretation of the law applicable to the case, although a

1 Burgess v. Seligman, 107 U. S. 20, 23.

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