tions in quo warranto be instituted against all banking corporations in the state that had so violated their charters as to incur their forfeiture, and provided that trustees should be appointed by the court declaring a forfeiture, whose duty it should be to collect the assets, and after paying the debts distribute the surplus, if any, ratably among the stockholders. The charter of the Commercial Bank of Natchez, after due proceedings, was declared forfeited, and Robertson appointed trustee to pay debts and make distribution. After all debts were paid he refused to distribute the $4,000,000 surplus. Bacon and the other shareholders brought their bill in equity to obtain their shares. Upon demurrer the circuit court dismissed the bill and plaintiffs appealed.]

CAMPBELL, J. To comprehend the import of this legislation we must consider the mischiefs it was designed to prevent or remove, and the mode adopted to accomplish the end, for the legislation is of a character wholly remedial. The common law of Great Britain was deficient in supplying the instrumentalities for a speedy and just settlement of the affairs of an insolvent corporation whose charter had been forfeited by a judicial sentence. The opinion usually expressed as to the effect of such a sentence was unsatisfactory and questioned. There had been instances in Great Britain of the dissolution of public or ecclesiastical corporations by the exertion of the public authority, or as a conseqnence of the death of their members, and parliament and the courts had affirmed in these instances that the endowments they had received from the prince or pious founders would revert in such a case. Stat. de Terris Templariorum, 17 Edw. II; Dean and Canons of Windsor, Godb. 211; Johnson v. Norway, Winch. 37; Owen, 73; 6 Vin. Abr., 280. What was to become of their personal estate and of their debts and credits had not been settled in any adjudged case, and as was said by Pollexfen in the argument of the quo warranto against the city of London was perhaps "non definitur in jure."

*

It may be admitted that the courts of law could not give any relief to the shareholders of a corporation disfranchised by a judicial sentence in respect to a corporate right. Their modes of proceeding do not provide for the case, as they have not for many others. I Plow, 276, 277; Richards v. Richards, 2 B. & Adol. 447; Will. Ex., 1129. But this concession does not involve an acknowledgment that the rights of the corporations are extinguished. Courts of chancery have been forced into a closer contact with these associations, and have formed a more rational conception of their constitution and a more accurate estimate of their importance to the industrial relations of society. Those courts have evinced a spirit of accommodation of their modes of proceeding so as to adapt them to the changing exigencies of society. (Citing and quoting as illustrating this doctrine, Lord Cottenham in Wallworth v. Holt, 4 M. & C. 635, Sir James Wigram, V. C., in Foss v. Harbottle, 2 Hare 491; Bank of U. S. v. Deveaux, 5 Cr. 61; Lennox v. Roberts, 2 Wheat. 373; Mumma v. Potomac Co., 8 Pet. 281; Curran v. Arkansas, 15 How. 304.)

The tendency of the discussions and judgments of the court of chancery in Great Britain, and of the courts of this country, is to concede the existence of a distinct and positive right of property in the individuals composing the corporation in its capital and business, which is subject in the main to the management and control of the corporation itself, but that cases may arise where the corporators may assert not only their own rights but the rights of the corporate body. And no reason can be given why the dissolution of a corporation, whether by judicial sentence or otherwise, whose capital was contributed by shareholders for a lawful and perhaps laudable enterprise, with the consent of the legislature, should suspend the operation of these principles, or hinder the effective interference of the court of chancery for the preservation of individual rights of property in such a case. The withdrawal of the charter-that is, the right to use the corporate name for the purposes of suits before the ordinary tribunals-is such a substantial impediment to the prosecution of the rights of the parties. interested, whether creditors or debtors, as would authorize equitable interposition in their behalf within the doctrine of chancery precedents. Stainton v. The Carron Company, 23 L. and E. 315; Travis v. Milne, 9 Hare 141; Travis v. Milne, 2 Hare 491. For the sentence of forfeiture does not attain the rights of property of the corporators or corporation, for then the state would appropriate it. If those rights are put an end to, it would seem to be rather from a careless disregard, or hardened and reckless indifference to consequences on the part of the public authority, than from any preconceived plan or purpose. For, according to the doctrine of the text-writers on this subject, the consequences are visited without any discrimination; the losses are imposed upon those who are not blameworthy, and the benefits are accumulated upon those who are without desert.

The effects of a dissolution of a corporation are usually described to be, the reversion of the lands to those who had granted them; the extinguishment of the debts, either to or from the corporate body, so that they are not a charge nor a benefit to the members. The instances which support the dictum in reference to the lands consist of the statutes and judgments which followed the suppression of the military and religious orders of knights, and whose lands returned to those who had granted them, and did not fall to the king as an escheat; or of cases of dissolution of monasteries and other ecclesiastical foundations, upon the death of all their members, or of donations to public bodies, such as a mayor and commonalty. But such cases afford no analogy to that before us. The acquisitions of real property by a trading corporation are commonly made upon a bargain and sale, for a full consideration, and without conditions in the deed; and no conditions are implied in law in reference to such conveyances. The vendor has no interest in the appropriation of the property to any specific object, nor any reversion, where the succession fails. If the statement of the consequences of a dissolution upon the debts and credits of the corporation is literally taken, there can be no objection to it. The members can not recover nor be charged with them, in

their natural capacities, in a court of law. But this does not solve the difficulty.

The question is, has the bona fide and just creditor of a corporation, dissolved under a judicial sentence for a breach in its charter, any claim upon the corporate property for the satisfaction of his debt, apart from the reservation in the act of the legislature which directed the prosecution? Can the lands be resumed in disregard of their rights by vendors, who have received a full payment of their price, and executed an absolute conveyance? Can the careless, improvident or faithless debtor plead the extinction of his debt or of the creditor's claim, and thus receive protection in his delinquency? The creditor is blameless-he has not participated in the corporate mismanagement, nor procured the judicial sentence; he has trusted upon visible property acquired by the corporation in virtue of its legislative sanction. How can the vendors of the lands or the delinquent debtors resist the might of his equity? But, if the claims of the creditor are irresistible those of the stockholder are not inferior, at least against the parties who claim to hold the corporate property. The money, evidences of debts, lands and personalty acquired by the corporation were purchased with the capital they lawfully contributed to a legitimate enterprise conducted under the legislative authority. The enterprise has failed under circumstances, it may well be, which entitled the state to withdraw its special support and encouragement, but the state does not affirm that any cause for the confiscation of the property, or for the infliction of a heavier penalty, has arisen. It is a case, therefore, in which courts of chancery, upon their well-settled principles, would aid the parties to realize the property belonging to the corporation, and compel its application to the satisfaction of the demands which legitimately rest upon it.

.

In our view of the equity of this bill we have the support and sanction of the legislature of Mississippi. Their legislation excludes all the consequences which have been imputed as necessary to a sentence of dissolution on a civil corporation. From the plentitude of their powers for the amelioration of the condition of the body politic, and the supply of defects in their system of remedial laws, they have afforded a plan for the liquidation and settlement of the business of these corporations in which the equities of the creditors and shareholders respectively are recognized as attaching to all the corporate property of whatever description. And the inquiry arises, who is authorized to obstruct the enforcement of these equities in so far as the stockholders of the Commercial Bank of Natchez are concerned? The creditors have been satisfied. The defendant in the present suit is the trustee appointed under these legislative enactments. His demurrer confesses that he has received money, stocks, evidences of debt, lands, and personal property, which he refuses to distribute. He claims that the stockholders have no rights since the dissolution of the corporation, and if any, they must be looked for in the circuit court of Adams county, Mississippi. But the trustee can not deny the title of the stockholders to a distribution. To collect and distrib

ute the property of the corporation among the creditors and stockholders is his commission-for this end he was placed in the possession of the property, and was armed with all the powers he has exercised.

His title is in subordination to theirs, and his duties are to maintain their rights and to consult their advantage. Pearson v. Lindley, 2 Ju. 758; 3 Pet., 43; 4 Bligh 1; Willis Trus., 125, 172, 173. He is estopped from making the defense of a want of title in the stockholdReversed.

ers.

Note. See following cases, and note, infra, p. 910.

Sec. 255. Reversion of land.

WILSON v. LEARY.1

1897. IN THE SUPREME COURT OF NORTH Carolina. C. Rep. 90-94, 58 Am. St. Rep. 778.

120 N.

[Action to recover land. In 1849, plaintiff's ancestor conveyed the land in fee to an Odd Fellows Lodge, which was incorporated the following year and duly chartered by the grand lodge. This lodge took and held possession till 1872, when it ceased to exist, and was never revived. Under the direction of the Grand Lodge the land was sold in 1873 to the defendants. Suit was brought in 1892, by the heirs of the original grantor, claiming a reverter upon the extinction of the subordinate lodge; and the lower court so found.] CLARK, J. The plaintiff's counsel insist, however, that at the time of the conveyance the Revised Statutes (ch. 26, sec. 17) provided that a corporation, unless otherwise specially stated in its charter, had existence for only thirty years, and as there was no special provision in this charter, the grantor only parted with the property for thirty years and held a resulting trust. But the conveyance was in fee, and a corporation limited in duration can take a fee-simple conveyance just as a natural being, whose existence is also limited. Either may convey away the property, and upon the death of either, without having disposed of it, the property will go to pay creditors, to heirs, to stockholders, or as an escheat, according to the circumstances, but in neither case is there any reverter to the grantors. On the death of a corporation the property is usually administered by a receiver, and on the death of a natural person, by the personal representative, or passes to the heirs.

It is true it was held in an opinion by Gaston, J. (Fox v. Horah, 36 N. C. 358), that by the common law, upon the dissolution of a corporation by the expiration of its charter or otherwise, its real property reverted to the grantor, its personal property escheated to the state, and its choses in action became extinct, and hence that on the expiration of the charter of a bank a court of equity would enjoin the collection of notes made payable to the bank or its cashier, the debtor be1 Statement abridged, and part of opinion omitted.

ing absolved by the dissolution. Judge Thompson (5 Thomp. Corp., § 6720) refers to this decision "in accordance with the barbarous rule of the common law" as "probably the last case of its kind,” and notes that it has since been in effect overruled in Von Glahn v. De Rossett, 81 N. C. 467, and it is now expressly overruled by us. Chancellor Kent (2 Comm., 307, note) says "this rule of the common law has, in fact, become obsolete and odious," and elsewhere he stoutly denied that it had ever been the rule of the common law, except as to a restricted class of corporations (5 Thompson, supra, $ 6730). The subject is thoroughly discussed by Gray on Perpetuities, §§ 44-51, and he demonstrates that my Lord Coke's doctrine rested on the dictum of a fifteenth century judge (Mr. Justice Choke, in the Prior of Spalding's Case, 7 Edward IV, 1467), and is contrary to the only case deciding the point, Johnson v. Norway, Winch. 37 (1622), though Coke's statement has often been referred to as law. But whatever the extent of this rule at the common law, if it was the rule at all, it was not founded upon justice and reason, nor could it be approved by experience, and has been repudiated by modern courts. The modern doctrine is, as held by us, that "upon a dissolution the title to real property does not revert to the original grantors or their heirs, and the personal property does not escheat to the state." Thompson, supra, § 6746; Owen v. Smith, 31 Barb. 641; Towar v. Hale, 46 Barb. 361. The crude conceptions of corporations naturally entertained in a feudal and semi-barbarous age, when they were few in number and insignificant in value and functions, by even so able a man as Sir Edward Coke, and the fanciful reason given by him (Coke Lit., 136) for the reverter of their real estate, to wit, that a conveyance to them must necessarily be a qualified or base fee, have long since become outworn and discredited. That which is termed "the common law" is simply the "right reason of the thing" in matters as to which there is no statutory enactment. When it is misconceived and wrongly declared, the common rule is equally subject to be overruled, whether it is an ancient or a recent decision. Upon the facts agreed judgment should be entered below against the plaintiffs, dismissing their action.

Reversed.

See following cases and note, infra, p.910.

Sec. 256.

Reversion of property of mutual company.

TITCOMB v. KENNEBUNK MUT. F. INSURANCE CO.

1887. IN THE SUPREME JUDICIAL COURT OF MAINE. 79 Maine Rep. 315-317.

WALTON, J. The Kennebunk Mutual Fire Insurance Company was incorporated in 1856. It has issued no policies since 1877.

In 1884, its last policy having expired, the company voted to close