the court held that the Chicago, Burlington & Quincy Railway, a foreign corporation, could not take as lessee.23 "It cannot do by indirection what it is absolutely prohibited from doing directly." With a similar state of facts, the directly contrary conclusion was reached in Iowa.24 There a foreign corporation organized a domestic corporation out of its own stockholders for the express purpose of condemning a right of way for the foreign corporation. This was held to be legal. The question in each case was the interpretation of the domestic Constitution and a declaration of the public policy of the State; and it is not surprising that a difference of opinion should exist. But since in each case the title to the land is in a domestic corporation, and therefore under the complete control of the State, the policy of the Constitution seems not to be violated, and the Iowa decision is preferable.

One or two decisions which are more or less opposed to the great current of authority require notice. Thus where the State Bank of Illinois was given power in its charter to hold land for specified purposes, and forbidden to purchase, hold or convey, land in any other case or for any other purpose, it was held that the conveyance to the bank of land for another purpose was void and passed no title.25 And in one case the Supreme Court of the United States refused to assist a corporation in gaining possession of land fraudulently appropriated by its officers, it appearing that the corporation had no power to hold for such purposes. 26 The doctrine of this case is a

23 State v. Scott, 22 Neb. 628, 36 N. W. 121. See Ogden v. Murray, 39 N. Y. 202; Koenig v. Chicago, B. & Q. R. R., 27 Neb. 699, 43 N. W. 423. 24 Lower v. Chicago, B. & Q. Ry., 59 Ia. 563, 13 N. W. 718. 25 Russell v. Topping, 5 McLean, 194, Fed. Cas. No. 12,163.

26 Case v. Kelley, 133 U. S. 21, 33 L. ed. 513. Miller, J., said: "The question here is, not whether the courts would deprive it of such lands if they had been conveyed to it, but whether they will aid it to violate the law and obtain a title which it has no power to hold. We think the questions are very different ones, and that while a court might hesitate to declare the title to lands received already, and in their possession and ownership void, on the principle that they had no authority to take such lands, it is very clear that it will not make itself the active agent in behalf of the company

novel one, and is inconsistent with several of the earlier cases, where the corporation was allowed to recover the land from a disseisor.27 It is hardly likely to be followed.

As no third party can object to the illegality of the taking by a corporation, still less can the grantor object. Whatever the ultimate fate of the land, it is clearly not to revert to the grantor, who has transferred all his rights, legal and equitable.28 This is sometimes said to be due to the fact that a grantor is estopped to deny his grantee's capacity; 29 but the better view seems to be that first expressed, that the corporation has in the nature of things the capacity of taking property, even though the State has forbidden it to exercise its power.

If the State alone can object to a holding of land ultra vires, it would seem a fortiori that one tracing title from a corporation need not put in evidence the powers of the corporation to hold, and it has so been held.30 Along the same line it was held that if a corporation takes land for purposes of charter, on abandonment for such purposes it does not revert.31 And where a corporation, being forbidden to acquire land, secured the conveyance to one as trustee for its benefit, the trustee could not repudiate the trust.32

The objections of a State to a foreign corporation holding land are usually two; the undesirability of an accumulation of land in the ownership of corporations, and especially of corporations which derive their powers from a foreign State

in violating the law and enabling the company to do that which the law forbid."

27 Cowell v. Springs Co., 100 U. S. 55, 25 L. ed. 547; Chicago, B. & Q. R. R. v. Lewis, 53 Ia. 101, 4 N. W. 842.

28 Ray v. Home & Foreign I. & A. Co., 98 Ga. 122, 26 S. E. 56; Alexander v. Tolleston Club, 110 Ill. 65; Barnes v. Suddard, 117 Ill. 237, 7 N. E. 477; Brown v. Phillips, 16 Ia. 210; Leasure v. Union Mut. Life Ins. Co., 91 Pa. 491. 29 Snyder v. Studebaker, 19 Ind. 462.

30 Lancaster v. Amsterdam Improvement Co., 140 N. Y. 576, 35 N. E. 964, 24 L. R. A. 322; Tarpley v. Deseret Salt Co., (Utah) 17 Pac. 631. Contra Young v. Milne, 28 New Br. 186.

31 Page v. Heineberg, 40 Vt. 81, 94 A. D. 378.

32 Fisk v. Patton, 7 Utah, 399, 27 Pac. 1.

and are in no way responsible to the State of situs; and the policy against having a foreign corporation do any act within the State until it so far submits itself to the power of the State as to be made responsible for its act. The statutory restrictions most commonly made are that a foreign corporation shall not do an act such as acquiring land until it has complied with the provisions for the registration of foreign corporations, and that it shall not take land by devise.

§ 224. Conditions precedent to doing business.

In every State are statutes requiring certain things of a foreign corporation as conditions precedent to doing business,a regular place of business is required, an authorized agent, or the deposit of a copy of the charter. If a deed is given to a foreign corporation before complying with these requirements, What effect is to be given to it? The constitution of Alabama declares, "No foreign corporation shall do any business in this State without having at least one known place of business and an authorized agent or agents therein." Disregarding this prohibition the New York Mortgage Company took a mortgage and sold the land under a power of sale. The court held that the corporation passed a good title. "The penalties inflicted are the only consequences of disregarding the constitutional provision." 33 But a few years later the same court reached a seemingly opposite conclusion. A declaration which did not aver that the company had complied with the requirements of the constitution at the time the mortgage was taken was held demurrable.3

This is evidently a question of the construction to be placed upon a statute. If the statute is interpreted as declaring void

33 Sherwood v. Alvis, 83 Ala. 115.

34 Farrior v. N. E. Mtg. Co., 88 Ala. 275, 7 So. 200. The question was, however, not quite the same; the action was to foreclose the mortgage, and the question involved was rather the validity of the debt than the title to land, which in fact depended upon the validity of the mortgage debt. And compare with this case Boulware v. Davis, 90 Ala. 207, 8 So. 84, 9 L. R. A. 601.

all transactions before the requirements are complied with, there can be no question; for the State has undoubted power to accomplish such a result. But a statute is seldom, if ever, so explicit; and four views have been taken as to the effect of non-compliance with the statute upon the power to hold land. First, that the title is wholly void.35 Second, that the title is good, but the courts will not lend their assistance to the holder of it until the statute is complied with. Third, that the title is good unless the State objects, and forfeits the land by direct proceedings for that purpose.37 Fourth, that the title is unaffected by non-compliance. It is doubtful whether this view really differs from the third.

So far as the title to real estate goes, there can hardly be a doubt that the third view is better, as more in accordance with the analogies, and that it will prevail, even in States where a contract made by the corporation under such circumstances is held void. The contract is an executory obligation, but the conveyance is executed; and there seems no valid reason for a distinction between a prohibition to hold land except for a certain purpose, and a prohibition to hold it until after compliance with a condition.

Whatever be the view generally taken it would seem to be clear that, if the foreign corporation held land before the passage of the statute, it could, if authorized to do business in the

35 Semple v. Bank of British Columbia, 5 Sawy. 88, Fed. Cas. No. 12,659. This, like the Alabama case just cited, is a suit to foreclose a mortgage, and the question involved was the validity of the note. Probably no jurisdiction holds this view in case of an absolute conveyance. See Williams v. Bank of Commerce, 71 Miss. 858, 16 So. 238.

36 W. A. Wood M. Machine Co. v. Caldwell, 54 Ind. 270, 23 A. R. 641; Daly v. Nat. Life Ins. Co., 64 Ind. 1. This too seems to apply only to the case of a mortgage. See Smith v. Little, 67 Ind. 549.

37 Fritts v. Palmer, 132 U. S. 282, 33 L. ed. 317; McKinley-Lanning Loan & Trust Co. v. Gordon, 113 Iowa, 481, 85 N. W. 816; Carlow v. Aultman, 28 Neb. 672, 44 N. W. 873.

38 N. W. Mut. Life Ins. Co. v. Overholt, 4 Dill. 287, Fed. Cas. No. 10,338; Hamilton v. Reeves, (Kan.) 76 Pac. 418; Garfield M. & M. Co. v. Hammer, 6 Mont. 53; Lakeview Land Co. v. San Antonio Traction Co., 95 Tex. 252, 66 S. W. 766.

State, make a valid sale of the property without complying with the provisions of the statute as to corporations holding land." And when a State statute gives a foreign railroad company power to extend its road into the State a distance of five miles to a terminal depot, and the power to acquire right of way to such terminal, it will be allowed so to do though a subsequent section of the same statute giving power to purchase real estate generally requires compliance with State laws before the purchase.40

These statutes have been considered as to their effect upon the doing of business generally.41

§ 225. Mortmain Acts.

By what is known as the Pennsylvania Mortmain Act,42 it is declared that "no corporation other than such as shall have been incorporated under the laws of this State shall hereafter acquire and hold any real estate within this Commonwealth directly in the corporate name, or by or through any trustee or other devise whatsoever, unless specially authorized to hold such property by the laws of this Commonwealth." In 1824 the Supreme Court of Pennsylvania, construing the mortmain act then in force and similar in its provisions to the acts of 1855, held that a deed to land taken in violation of this act is not void but subject to defeasance on the part of the Commonwealth; and until the Commonwealth takes action for this purpose, the corporation may deal with the land as it pleases.43 This construction was followed by the Supreme Court of the United States in Runyan v. Coster.44 The statute of 1855 has been treated in the same way.45

39 Chattanooga, R. & C. R. R. v. Evans, 66 Fed. 809 (C. C. A.).

40 Chattanooga, etc., R. R. v. Evans, 66 Fed. 809.

41 Ante, Chapter VIII.

42 Act of April 26, 1855 (P. L. 329).

43 Leazure v. Hillegas, 7 S. & R. (Pa.) 313; Baird v. Washington, 11 S. & R. (Pa.) 411.

44 14 Pet. 122, 10 L. ed. 382.

45 Hickory Farm Oil Co. v. B. N. Y. & P. R. R., 32 Fed. 22; Grant v.