Dart v. Houston

By the Court. McDonald, J. delivering the opinion, ' It is necessary in the outset, to consider whether the “Trustees of the Glynn County Academy,” be a corporation of the class, which constitutes a contract between the State Government and the corporators, within the meaning of that clause of the Federal Constitution which inhibits a State from passing a law impairing the obligation of contracts. The great and leading case which brings the grant of a charter or an act of incorporation of any sort, within the protection of the Constitution of the United States, as a contract, in the case of the Dartmouth College vs. Woodward, 4. Wheaton, 518. That judgmenl has become the law of the land, irrepealableby Congress, and irreversible, except by the tribunal which pronounced it. It is therefore, a controlling authority in this case. The college, whose charter was the subject of discussion iti that case, was endowed by private donations. With the statement of this simple fact, we shall proceed, at once, to principles conceded or established in the adjudication of that case, applicable to the case before us. The Chief Justice, in delivering the opinion of the Court remarked that “ if the act of incorporation be the grant of political powers if it create a civil institution to be employed in the administration of the government, or if the funds of the College be public property, or if the State of New Hampshire, as a government, be alone interested in the transactions, the subject' is one in which the Legislature of the State may act, according to its own judgment, unrestrained by any limitation of its power imposed by the Constitution of the United States.” — 530 — 4. Wheat. 639, 630. After reviewing the most essential parts of the charter, he says: “it is apparent that the funds of the college consisted entirely of private donations.” Ib. 632. His conclusion was, that it was an eleemosynary, and as far as respected its funds, a private corporation. Ib. 633-4. The argument of the Court admits that education is an object of national concern, and a proper subject of legislation. The Chief Justice in speaking of Dartmouth College asks, “where then can be derived the idea that it has become a public institution, and its trustees, public officers, exercising powers conferred by the public, for public objects? Not from the source whence its funds were drawn; for its foundation is merely private and eleemosynary.” Ib. 635. Itis said again, that “the character of civil institutions does not grow out of their incorporation, but out of the manner in which they are formed and the objects for which they are created. The right to change them is not founded on their being incorporated, but on their being the instruments of the government, created for its purposes.” Ib. 638. Justice Washington places the right of government and visitation in private corporations for charity, on the property in the lands which the founder assigned to support the charity. Ib. 666. Judge Story goes one step further, and says: “ if the charter were a pure donation, when the grant was complete and accepted by the grantees, it involved a contract, that the grantees should hold, and the grantor should not re-assume the grant, as much as if it had been founded on the most valuable consideration.” Ib. 684. For the reasons assigned by the various Judges who delivered opinions at length, a majority of the Court, overruled the judgment of the State Court of New Hampshire sustaining the several acts of the Legislature of that State amendatory of the charter of the college. Judge Du-val dissented, but he wrote out no opinion. The members of the Court who concurred in the judgment of reversal, did not agree in the reasons for that judgment, and those reasons — 531 — involved very important principles ; but it may be safely, averred, we think, that the controlling reason with a majority of the Court was, that the college was endowed by private donations, and that the charter having been granted in consideration of such donations, it had all the requisites of a contract, and was protected against Legislative interference on the part of the State, by the Constitution of the United States. We feel warranted in saying, that if the government had been the founder of the college, the decision would have been otherwise. fAt any rate, the case is not an authority that the Legislature of a State has no control of an eleemosynary institution, where it is the sole contributor of the fund which supports it, and creates a corporation for the purpose, simply of carrying out its objects./ The question as presented in the Dartmouth College case was considered a most important and delicate one, and the opinions delivered by the different Judges, show that it was not without embarrassment. A charter had been granted by the King of England, and at the time of the grant, it was well known to the parties who received the charter, that it was subject to be modified, amended or annulled, at the pleasure of the sovereign power of the Kingdom. The Court, with deference be it spoken, may have experienced some difficulty in arriving at the conclusion, that the law of the land, which recognized this strong, but perhaps necessary power, of modification or repeal, did not enter into the contract and form a part of it. If it did, a mere change of the sovereign power could have no effect upon the contract, but it remained as it was, with all its express stipulations, and subject to all its implied conditions, and among them this power of control. We will now trace the history of the Glynn County Academy, investigate its rights under the several Acts of the General Assembly, on which it, or the defendants for it, claim exemption from legislative control. The 54th clause of the Constitution of February 1777, — 532 — declares that “schools shall be erected in each county, and supported at the general expense of the State, as the Legislature shall hereafter point out.” Watkins’ Dig. 15. The 14th section of the Act for the more full and complete establishment of a public seat of learning in this State, declares that all public schools instituted or to be supported by funds or public monies, in this State, shall be considered as parts or members of the University, and shall be under the foregoing rules and regulations, (being those prescribed for the University.) Cobb 1086. Thoserules and regulations show that the action of the Board of Visitors and the Board of Trustees, was to be submitted to the supervision of the General Assembly. The first appropriation for an academy in the County of Glynn rvas made by the Act of 1st February, 1788. Commissioners were appointed for the town of Brunswick who were authorized to survey the town, and to sell all or any of the vacant lots in said town, except such as were reserved for public use, and the monies arising from the sale, were to be applied to the building and support of an academy in said town, and to no other purpose whatever. Watkins Dig. 381. The Constitution of 1789, is silent on the subject of education, but it gives to the Legislature power to make all laws and ordinances which they shall deem necessary and proper for the good of the State, which shall not be repugnant to the Constitution. In 1796, the Legislature passed an Act, pretty much the same as the Act of 1788, making provision for the support of an academy or seminary of learning, in the County of Glynn. Wat. Dig. 598. In 1797, the Legislature made further provision for said academy. Ib. 669. In 1813, the Legislature enacted that the Commissioners of the town and commons of Brunswick, should be Commissioners of the ocademy, and appointed Commissioners. Lamar’s Dig. 977. In 1814, the Legislature again appointed Commissioners and authorized them to sue, and subjected them to suit. Ib. 978, — 533 — In 1817,- the Legislature passed an Act providing for the ■election of Commissioners of Glynn County Academy, declaring their term of service, and pointing out the mode of Ailing vacancies. Ib. 19. In 1821, an Act was passed to incorporate Glynn County Academy, and five Trustees were appointed, and invested with all manner of property then belonging to the said institution, or which might thereafter be conveyed or transferred to them, to have and to hold the same for the proper use, benefit and behoof of the said academy. Daw. Comp. 6. In 1823, two Commissioners, in addition to those already in office, were appointed for said academy. Ib. 17. In 1829, the Inferior Court of Glynn County, was authorized and empowered to sell the academy building in said county, and to apply the proceeds of the sale to the education of poor children in said county, and for other county purposes. In 1838, five additional Trustees were added to the Board by an Act of the Legislature. Acts of 1838, p. 7. At the same session, the Brunswick Academy was incoporated, and the act to authorize the Trustees of the Glynn County Academy to establish free schools in said county was repealed. Acts of 1838, p. 11. Without looking further into the Legislation on this subject, prior to the year 1854, we will briefly remark of the Act of February of that year, that it changes the mode of electing Trustees, and requires the then existing Board of Trustees to turn over to the Trustees appointed under that act, all the books, buildings, papers, lands and money belonging to the academy fund. By the Constitution of 1777, schools erected in the several counties were to be supported at the general expense of the State. The University was established in 1785, and the act establishing it, made all public schools instituted, or to be supported by the State, members of the University, and subject to the same rules and regulations, which placed them under the control of the General Assembly. In 1788, the — 534 — first appropriation was made for the erection and support of an academy in the county of Glynn, and its endowment proceeded from the State exclusively. The Legislature usually constituted new Commissioners for that academy, without reference to former appointments. This was its practice down to the time of the incoporation of certain persons as Trustees of Glynn County Academy, and by that very act, it displaced Commissioners chosen under the provisions of a prior statute, and which Commissioners had been previously authorized to sue and had been subjected to suit. By the act of incorporation, it does not appear that donations had been made to the academy by private individuals, and when it invested the Trustees with all the property, &c. belonging to the institution, it invested them with the property only which had been contributed by the State. The act authorized the Trustees to accept donations, &c. for the academy, but it is alleged in the bill, that its funds and property consist of those exclusively appropriated by the Legislature to its use. It is therefore not an institution protected by the Constitution of the United States, against the Legislation of the State. 4. Wheat. 629-30. But after the act of incorporation, the Legislature continued, as before, to exercise the power of control over the government of the academy. It appointed^ first, two additional Commissioners, who acted with the Board as Trustees, increasing their number to seven, and after-wards appointed five other Trustees, and repealed the act in which the two were appointed. It is insisted that this last act is u nconstitutional. But it is immaterial to the present enquiry, whether that be so or not The. question is as to the legislative control claimed and exercised over the government of the academy. It was exercised, and its act was acquiesced in, and the new members of 'the Board, claiming title under legislative appointment, subsequent to the act of incorporation, which fixed the number of Trustees at five? had, of course, a controlling power over the affairs of the in — 535 — stitution, the two appointed under the Act of 1823 continuing to act after the repeal of the law. If the act of 1854 is unconstitutional, the acts increasing the number of Trustees are equally so, (unless passed at the instance of the Trustees, which does not appear,) and if the Academy had been founded on private donations and incorporated in consideration thereof, these last named acts would have fallen within the decision of the Dartmouth College case, and according to the judgment there rendered, would have been void. But the funds of the Academy are public property, and the Legislature was not, therefore, restricted by any limitation of State power in the Federal Constitution, from passing the Act of 1854. The opinion of Justice Story, goes farther. He insists that a charter incorporating an eleemosynary institution, whether it be founded on public or private donation, is a contract within the meaning of the Constitution of the United States, on the ground that all corporate franchises are legal estates, that they are powers coupled with an interest, and that the corporators have vested rights in their charter as corpora-tors. Story on Con. §1392. In the case of Allen vs. McKean, he maintained the same doctrine, and when he referred to the Dartmouth College case to support it, he referred to that part of it which contained his own reasons for concurring in the judgment pronounced by the Chief Justice, and in which reasons, Justice Livingston alone agreed with him. In the Courts of the United States, that decision cannot be considered as authority, until it becomes an established principle that a single associate Justice of the Supreme Court, presiding alone, in his own Circuit, may over-rule a decision of the Supreme Court. We cannot recognize it as authority here. We think the decision of the Supreme Court goes far enough, on reasons concurred in by the majority of the Court, and it is not quite certain that a period may not arrive, when there shall be cause of regret that that Court placed a construction on the — 536 — constitutional power of the States which restricts them from repealing or modifying acts of incorporation of any sort passed by them. The Supreme Court itself declared that it was more than possible, that the preservation of rights of the description then under consideration (corporate rights) was not particularly in the view of the framers of the Constitution, when the clause under consideration was introduced into that instrument. A construction of the Constitution was asked which would restrict a State in the exercise of a sovereign power — a power to control a body of its own creation in the exercise of functions and the enjoyment of privileges granted to it for the promotion of local, but of public interests. Before such a construction was given to it, it ought to have been justified, we are disposed to believe, palpably by the letter and intent of the Constitution. There was no greater danger here, where all the constituent parts of the Legislative power are mediately or immediately representatives of the. people, than in England, where onty one of its component parts is chosen by the people, that the Legislature would violate the rights of private property by the repeal or modification of one of its acts, granting a charter; or that it would interfere, in any manner, therewith, except when the public interest required it, and except, also, upon ample security against injury to private property, which had been conveyed under the charter to the corporation, or accumulated by it. As evidence of this, it has become the practice in many of the States for the Legislatures, in granting charters, to reserve the power to alter or repeal them at pleasure, thus putting them, on the footing they were before the decision of the Supreme Court, and in no case has this power been exercised, within our knowledge, to the detriment of private interests. In every case in which it has been exercised, it has been done with great caution, and in no instance, except in cases where the misconduct of the corporation has made it necessary to the public safety. — 537 — But conceding Judge Story’s opinion to be the law of the land, then the act of 1854, was constitutional If the five Trustees appointed by the act of incorporation of 1821, ac quiesced in the subsequent appointment, by the Legislature, of additional Trustees, solely from an impression of the constitutional powers of the Legislature thus to interfere, and it had no such power, this acquiesence amounts to nothing, and did not affirm a void act. From the bill before us we can infer nothing on the subject, as nothing is averred. From the acts of the Legislature it does not appear that the increase of the number of Trustees was petitioned for by the existing Board, but it seems to have been the voluntary action of the Legislature, exercising, as before, its right to manage and control this Academy according to its own discretion. The new Trustees constitute a majority of the Board, and if their appointment was void all their acts are void, and among their acts must of course have been the vote filling of vacancies in the Board. But one of the original members of the Board of Trustees is now a Trustee, the rest are all new Trustees, holding their position either, (according to the premises) by an unconstitutional legislative appointment, or by the election of a body, a majority of whom were incapable, because they held their offices by an unconstitutional appointment. This was the condition of things when the Act of 1854 was passed. Of the legal constitutional corporation, there was, as before remarked, but a single Trustee, and he of course, incapable of holding an election, or of performing any other corporate act. The corporation was then defunct, and incapable of self-resuscitation. The Legislature alone could revive it, and it could revive it upon its own plan, and direct the mode of a new organization. But we do not put the decision upon this view of the case. We think that the Act of 1821 did not create a corporation of the class that is protected from Legislative interference by the Constitution of the United States. — 538 — The second ground of demurrer is, that the Board of Trustees chosen under the Act of 1854, never legally organized. This.ground is answered by the allegations ip the bill, which cannot be controverted in this demurrer. Ten, Trustees were elected by the grand jury under the Act of 1854. Four of them refused to accept the appointment, but the other six met and organized, engaged a teacher and took charge of the Academy building. The six, being a majority of the ten, performed these acts. Without pausing to enquire whether the Board of Trustees consisted properly of ten, it is quite sufficient to say that the Legislature considered and recognized the six as a competent Board, by directing the Treasurer to pay teachers employed by them — referring to them as the Board elected under the Act of 1854. Jlctt of ’56, 299. We will, however remark, that the. title of the Act of 1823, under which two Trustees were added to the Board is, “ An act to authorize the Commissioners of Glynn Academy to established free schools in said county.” It has no reference to the appointment of Trustees. The Act of 1838, which appoints five additional Trustees, is subject to the same objection. But the Board elected by the grand jury, haying been recoguizedAy the Legislature as a,legal Board,, is. sufficient to establish the number which should constitute it without deciding upon former legislation in reference thereto. The third ground of exception is. on the point made in the deniurrer, that the Trustees can only act by a majority of the whole number, and it does not- appear that a majority have given their, sanction to the filing of the bill. It is true that, less than a majority of a board of Trustees cannot do a corporate act unless the charter declares otherwise, but it is also true that when a suit is brought in the name of a, corporate body, it is to be,presumed to be authorized by .the body. If the suit be in the names of members of a corporate body, and they are.less than a majority, it cannot be the suit of the corporation, unless the act creating it authorize a less number than a majority to sue as the corpo — 539 — ration. There is no such authority in this act of incorporation, and the suit being by five, when the board of Trustees consists of ten, the suit cannot be sustained by them as the suit of the corporation. Upon the charges in the bill, however, they may proceed with their suit in their individual names, as citizens of the county of Glynn, and in behalf of the rest of the citizens of Glynn county, by amending their bill, so as to conform to this decision. The complainants, as the bill will stand, can have no higher claim to the possession of the property and funds of the Academy, than other citizens of Glynn county, but as cestui que trusts, they can have an account of the property and funds in which^every citizen of Glynn county has an interest, from those who have them in hand and have assumed, whether rightfully or wrongfully, to manage and control them. They can ask a decree in regard to the matters charged in the bill, and the funds may be secured, and the Court by its decree can compel their application to the objects for which they were given. In regard to the fourth and last ground, to-wit: That a quo warranto, being a proper and sufficient remedy for complainants, Equity has no jurisdiction, it is sufficient to remark, that the government is not moving in this matter, and has not ordered an information to be filed against the defendants; that a quo warranto tries the right only, and gives no relief for breach of trust; that defendants are bound to answer to the grave charges made against them of breach of trust; and there can be no difficulty in settling the right before a Court of Chancery. Judgment affirmed.