St. John's Church v. Steinmetz

The opinion of the Court was delivered, by Lowrie, J. It is admitted, that the seal of the corporation is primó facie evidence that the deed is theirs; but it is argued that this evidence is rebutted by the fact that the corporation had only a qualified interest in the land mortgaged; that, having shown that their title is inalienable, it follows that they have no power to sell or'mortgage, and hence that the mortgage is not their deed. Perhaps the argument that, because they cannot pay this debt, therefore they could not, and hence that they did not contract it, would be equally legitimate. Yet they may run in debt, and then they must provide for payment; and to secure this, they may pledge such property as they have. If they have any title at all, they may pledge that; and, like other people, they may do more than that, if anybody will accept a pledge of moonshine. Moreover, they are not allowed to dispute the title which they have pledged, and the defence is an ingenious attempt to do this. True, this is a proceeding in rem, demanding a sale; but the res is the title of the corporation, and whatever that is, qualified or absolute, it will pass by the sale. The rule that avoids all acts of a corporation which are unauthorized by the purposes of its creation, is only a special form of the logical rule, derivativa potestas non potest esse major primitiva, and here it is entirely misapplied. The fallacy consists in inferring the corporation’s authority from its land, instead of from its character; and in making an accidental defect in its title to land evidence of an essential defect in its own nature. In this instance, the corporation occupies a position very like to that of a tenant in tail who aliens in fee simple, an act which is by no means void. Judgment affirmed.