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Published monthly, during the Academic Year, by Harvard Law Students.

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THE EDITORS OF THE HARVARD LAW REVIEW gladly surrender this number to the commemoration of the twenty-fifth anniversary of the coming of Dean Langdell to the chair of a professor at the Harvard Law School.

There is no need that we should undertake to express the significance of that event. It is enough to say that it led to immediate and most important changes in the administration of the School, and to the application here of new principles and methods which have stood the test of time and have been widely adopted elsewhere; and that it has brought to the School not only a great raising of its standards, but also an unexampled prosperity.

All honor to him whose influence has been so great in bringing about these happy results.

On June 28th next, the day before Commencement, the Harvard Law School Association will celebrate this interesting event by an address in Sanders Theatre by Sir Frederick Pollock, LL.D., of London, and by a dinner for the members of the Association at Massachusetts Hall. It is hoped and believed that the occasion will draw to Cambridge a great gathering of the friends and graduates of the School.

This will not be Sir Frederick Pollock's first visit to our country, but it will, we believe, be the first occasion when he has spoken here in public. Of his early triumphs at Cambridge, where he was first Chancellor's medallist, in 1867, and of his place as a scholar, there is not room now to speak. Of his services to the legal profession as the founder and editor of the English Law Quarterly Review, as Professor of Law at Oxford and in the Inns of Court, as the Tagore Lecturer in Calcutta, as the author of valued contributions to the science of Jurisprudence, and especially to the law of Contracts, Torts, Property, Partnership and Sales, we need not speak. Of his last, but not least important work, in cooperation with Professor Maitland of the English Cambridge, namely, a "History of the English Law," in two volumes, a learned and most valuable book, only just published, it may be that our readers are not so generally aware.

And let us not fail to recall Sir Frederick's accomplishments as a poet, and his delightful "Leading Cases Done into English, by an Apprentice of Lincoln's Inn," a work dear to the hearts of law students.

Sir Frederick Pollock's presence will give distinction to our celebration. He will be heartily welcomed.

HARVARD

LAW REVIEW.

VOL. IX.

MAY 25, 1895.

No. 2.

THE DOCTRINE OF PUBLIC POLICY AS APPLIED TO OWNERSHIP OF REAL ESTATE BY FOREIGN CORPORATIONS.

A

STATE may, by legislative enactment, directly and expressly prohibit a foreign corporation from taking or holding land within its borders. But, in the absence of such an enactment, is it for the courts to lay down a prohibitory rule, and, if so, under what circumstances ?

Little is to be found upon this subject in the text-books, and the number of cases in which it has been considered is quite limited. Yet the question is of great practical importance, when boundary lines must be looked to, in passing on the right of a corporation to purchase or become the devisee of lands.

It is elementary that a corporation of one State may not exercise its powers in another State, without the express or implied consent of the latter, and that the right to hold and the mode of acquiring title to land depends upon the local law of the territorial sovereignty; but under what conditions may the courts, speaking for the State, withhold the requisite consent, and what are the guiding rules under which the local law is to be determined in the case stated?

In Bank of Augusta v. Earle,1 Chief-Justice Taney quotes with approval the proposition laid down in Story's "Conflict of Laws,"

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that "in the absence of any positive rule affirming or denying or restraining the operation of foreign laws, courts of justice presume the tacit adoption of them by their own government, unless they are repugnant to its policy, or prejudicial to its interests." He then goes on to say, that "whenever a State sufficiently indicates that contracts which derive their validity from its comity are repugnant to its policy, or are considered injurious to its interests, the presumption in favor of its adoption can no longer be made."

In the Girard Will Case,1 Mr. Justice Story observes that, in seeking to discover the public policy of a State, the court is limited to what "its constitution and laws and judicial decisions make known to us."

In a case2 involving the legality of a certain devise of real estate to a foreign corporation, Mr. Justice Harlan states the law thus: "In harmony with the general rule of comity obtaining among the States composing the Union, the presumption should be indulged that a corporation of one State, not forbidden by the law of its being, may exercise within any other State the general powers conferred by its own charter, unless it is prohibited from so doing either in the direct enactments of the latter State, or by its public policy to be deduced from the general course of legislation, or from the settled adjudications of its higher courts."

The authorities thus quoted are sufficient to show that, notwithstanding the absence of a direct prohibitory statute, the courts of a State may deny the power of a foreign corporation to take and hold real estate within its limits, although authorized thereto by the law of its creation, but that the right to do so depends entirely upon the public policy of the State on the subject, which the courts are to ascertain from the proper sources, and not themselves to inaugurate. The statement that the policy of a State on any given subject is to be sought in its judicial decisions, as well as in its statutes, obviously does not imply that the judicial tribunals of a State may originate such policy; coming from a Federal court, it means merely that when a judicial definition of State policy, based upon a construction of constitutional or statutory provisions, has been made by the local court, it will be accepted and followed by the Federal court in cases to which such provisions apply.

The public policy of the State to be sought and applied is not

1 2 Howard, 127.

2 Christian Union v. Yount, 101 U. S. 352.

that public policy defined to be the principle of law which holds that no subject or citizen can lawfully do that which is injurious to the public or against the public good,1- a principle, the application of which has not infrequently led to judicial legislation, and which, it has been said, "is never argued at all but when other points fail." Apply this rule to the subject in hand, and the result will depend upon what, as a matter of sound policy, a given court thinks the law ought to be, and not upon what the law actually is.2 Instances are not wanting in which courts have inclined to believe they might properly do this. For example, Mr. Justice Christiancy, of the Supreme Court of Michigan,3 enumerates certain consequences which he thought might result from permitting foreign corporations to acquire real property in that State:

"1. The danger of their becoming speculators in lands to large amounts, keeping them unimproved, or introducing a system of tenancies in which the tenants would be in a great measure dependent upon such corporation.

"2. The holding of such lands for a long period of time, as they pass by perpetual succession without any change or break by death, as in the case of natural persons.

"3. The influence which wealthy corporations holding large bodies of land in the State might exercise upon the legislature."

1 Lord Brougham in the Bridgewater Will Case, 4 H. L. Cases, I.

2 Two amusing instances of the extent to which judges have permitted their views o what is contrary to public policy, or the public good, to influence their judgment, may be cited. In King v. Waddington, 1 East, 143, the defendant was sentenced to fine and imprisonment for contracting for one fifth of the hop product of two counties, as a specu lation, with the view to raise the price by telling sellers that hops were too cheap, and planters that the price was too low. It was held that this was against public policy, and Grose, J., in delivering the opinion of the court, said: "It would be a precedent of most awful moment for this court to declare that hops, which are an article of merchandise, and which we are compelled to use for the preservation of the common beverage of the people of this country, are not an article the price of which it is a crime by undue means to enhance."

In Locke's Appeal, 72 Penn. 491, the court, by a majority opinion, sustained the constitutionality of a local option liquor law. Mr. Justice Read, in the course of a dissenting opinion, expressed himself as follows: "The question of license or no license is to be submitted to the citizens of Philadelphia at the general election in October, and if the vote is against license, then the city will be under a prohibitory liquor law during the whole Centennial celebration to which we have invited the whole country. On the 4th July, 1776, every patriot drank to the independence of the thirteen States; shall it be that on the 4th July, 1876, all we can lawfully offer to our guests on this great anniversary will be a glass of Schuylkill water, seasoned with a lump of Knickerbocker ice? I believe in moral suasion as the true means of advancing the temperance cause; but I do not believe in a prohibitory law which would reduce us to the condition of Boston."

3 Thompson v. Waters, 25 Mich. 214.

He then goes on to say: "They are all very proper considerations for a constitutional convention in framing the fundamental law, and for the people in adopting it, as well as for the legislature, who, in all matters not fixed by the Constitution, are properly vested with the power of determining the public policy; and in a case where it should very clearly appear to the court, from the amount of the lands purchased, or the purposes for which they were purchased, or other circumstances, that the dangers mentioned were seriously to be apprehended, it may be that the court would be authorized, without any legislative prohibition to that end, to refuse to recognize the law of the State creating the corporations, or so much of it as had undertaken to confer the right of holding such lands."

On the other

No case, however, it is believed, can be found in which a court of last resort has denied the right of a foreign corporation to hold real estate, as against public policy, solely because in the opinion of the court the exercise of such a right would be injurious to the public, or prejudicial to the interests of the State. hand, whenever the question has been directly presented, the authority to make a decision on such a ground has been disclaimed. Thus, in an early New Hampshire case, it was objected that a banking corporation established in Massachusetts had no right to hold and convey real estate in New Hampshire. The court, in overruling the objection, said: "If any evil is to be apprehended in this respect, the remedy for the correction of it lies not with us." And in an Ohio case, the Chief Justice of that State said: "There is nothing in the legislation of this State to limit the general capacity of the Bible Society to take by devise real estate in Ohio. There are no statutes of mortmain in this State. For myself, I heartily wish there were. But we must declare the law as we believe it to be."

In recognition of the danger that courts in applying the doctrine of public policy may act legislatively, and not judicially, the modern decisions, while maintaining it to be the duty of the courts to keep in sight the public good, set bounds to the domain within which this duty is to be exercised. It would seem that outside of certain well-defined classes of acts which under the common law are contrary to public policy, as, for example, contracts in re

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1 Lumbard v. Aldrich, 8 N. H. 31.

2 American Bible Society v. Marshall, 15 Ohio St. 537, 544.

8 Anson on Contracts (6th ed.), 192.

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