i. Power to Take and Hold.
12 New York, 121. - 1854. [Reported herein at p. 527.]
46 New York, 144. - 1871.
[Reported herein at p. 47.]
34 Vermont, 243. - 1861. [Reported herein at p. 509.]
The Assistant Vice-Chancellor in
1 Sanford's Chancery (N. Y.), 280. - 1844.
Every corporation, as such, has the capacity to take and grant property, and to contract obligations in the same manner as an individual.
This is the general rule. But corporations are usually created for some limited and specific purpose, and therefore the general powers incident to a body corporate at common law are restricted by the nature and object of the institution of each. And every such corporation has power to make all contracts which are necessary and usual in the course of the business it transacts, as means to enable it to effect such object, unless expressly prohibited by law, or the provision of its charter.
Upon this principle, and to the extent stated, a corporation in order to attain its legitimate objects, may deal precisely as an individual may who seeks to accomplish the same ends. If chartered fur the purpose of building a bridge, it may contract a debt for the labor, the materials, or the land upon which the bridge is abutted. If more advantageous, it may borrow money to purchase such land or materials, or to pay for such labor. And as evidence of the indebtedness and as security for its repayment, it may execute to the creditor a promissory note, a bond or a mortgage; whether the debt be for the money borrowed, or for the work, materials or land. * * *
In the last revision of our statutes the Legislature thought proper to enact many of the principles of the common law as then understood. And it is accordingly provided in 1 Rev. Stat. 599, 600, § 1, that every corporation as such has power, among other things, " to hold, purchase, and convey such real and personal estate as the purposes of the corporation shall require, not exceeding the amount limited in its charter." By the third section, "In addition to the powers enumerated in the first section of this title, and to those expressly given in its charter, or in the act under which it is or shall be incorporated, no corporation shall possess or exercise any corporate powers, except such as shall be necessary to the exercise of the powers so enumerated and given." * * *
Having examined some of the usual capacities of a corporation created for a limited purpose or object, I will next inquire with what power it is clothed in regard to real estate.
The Merchants' Exchange Company is expressly authorized by its charter to take, hold and convey real estate. To what extent it may hold real estate is fully discussed in a subsequent part of the case.
At common law a corporation aggregate has an incidental right to dispose of both lands and chattels. Except when restrained by law, all corporations have the absolute jus disponendi, and in its exercise are unlimited as to objects and quantity. 2 Kent's Commentaries, 281, 2d ed.; Comyn's Digest, Franchise, F. 11, 18; 1 Kyd on Corp. 108; Angell & Ames on Corp. 125, 2d ed.; Case of Sutton's Hospital, 10 Reports, 30 b; The Mayor, etc., of Colchester v. Lowten, 1 Ves. & Beames, 226, 244, and the arguments at the bar in that case, pp. 237, 240.
This general right of disposal as to lands was much circumscribed by the various statutes relative to charitable societies in England; and in this country, where all grants of corporate power emanate from the legislature, it is usual to limit the jus disponendi, in religious societies and others of a charitable nature. Again, a corporation which can dispose of its property, may, in general, dispose of any interest in the same, as it deems expedient; and in this respect has the same power as an individual. Thus, it is said that it may lease, grant in fee or for life, mortgage, and even make an assignment for the benefit of creditors, giving preferences, where the law admits of such assignments by natural persons. Angell & Ames on Corp. 126, and the cases there cited. Two of these cases, Jackson v. Brown, 5 Wend. 590, and Gordon v. Preston, 1 Watts, 385, I have stated at large, and they establish the power to mortgage.
2. Power to Convey or Mortgage.
80 Illinois, 263. - 1875.
Mr. Justice Craig delivered the opinion of the Court: This was a bill in equity, brought by appellees, to foreclose a mortgage executed by the Aurora Agricultural and Horticultural Society of Aurora, on the 28th day of December, 1870, to secure the payment of $6,000 loaned by John R. Coulter to the society. The court, on a hearing of the cause, rendered a decree directing a sale of the mortgaged premises in satisfaction of the mortgage debt.
The society has prosecuted this appeal, and in order to obtain a reversal of the decree, it is insisted by the counsel for appellant:
First. - That the society had no power whatever to mortgage.
Second. - That the mortgage in question was wholly unauthorized.
The appellant was organized on the sixth day of March, 1869, under an act approved Feb. 15, 1855, which authorized the incorporation of agricultural societies. Gross' Statutes, 1869, page 119. By the third section of the act the society was made a body corporate, with power to sue and be sued, to acquire and hold real estate not exceeding five hundred acres, to construct the necessary improvements and buildings for its purpose, to have and employ capital, machinery, live stock, etc., not exceeding in value $10,000.
While it is true no section of the act confers direct authority upon the society to sell or mortgage its property, except upon a dissolution of the corporation, yet the act does not prohibit or restrict the society from selling or giving a mortgage upon its real estate. The power to mortgage, when not expressly given or denied, must be regarded as an incident to the power to acquire and hold real estate and make contracts.
We understand it to be the common-law rule that corporations have an incidental right to alien or dispose of their lands and personal property, unless specially restrained by the act under which they are organized or by statute.
It is said in Angell & Ames on Corporations, p. 153: "Independent of positive law, all corporations have the absolute jus dis-ponendi, neither limited as to objects nor circumscribed as to quantity." The same doctrine is clearly laid down by Kent, vol. 2, page 280.
We are, therefore, of opinion, as the society was not prohibited from mortgaging its lands, it possessed the power to do so as an incident to the power to purchase and hold real estate and make contracts. * * *