Montpelier Academy Trustees v. George

Carleton, J., delivered the opinion of the court. The petitioners aver, that they are the trustees of the Montpelier Academy, in virtue of an act of the state legislature, in the year 1833, by which that institution was created and established in the parish of St. Helena ; that they have been for some time in the due exercise of the duties of their office as such, and possessed considerable property appertain — 403 — ing to the academy, viz : one house and lot, in Montpelier, known as the Montpelier Academy, and one other house, known as the steward’s house, of the value, altogether, of three thousand five hundred dollars ; that they are, furthermore, entitled to receive two thousand five hundred dollars, the yearly allowance granted by the state to the institution, and that they hold other funds, by donation, amounting to fifteen hundred dollars ; that, while in the discharge of their legal functions, they were interrupted by the defendants, who have organized themselves into a pretended board of trustees of said academy, and appointed William George, their president, and thereupon passed accounts, drafted for the funds of the institution, demanded the archives, and usurped other rights, legally and exclusively invested in the petitioners, by reason of which they have sustained damage in the sum of two thousand five hundred dollars, and conclude with a prayer for citation, and a writ of quo warranto, requiring the defendants to show by what authority they claim to exercise the rights of trustees of said academy. The writ was accordingly granted. The defendants appeared by their counsel, and after setting up certain exceptions which it is not material to notice, allege that the petitioners are not the only trustees of said academy; that, by a law of the legislature of the 9th January, 1834, six other additional trustees were appointed, and continued to act in conjunction with those appointed by a law of 1833, until they were all ousted by another act of 20th January, 1836, by which the defendants, five in number, were constituted the only legitimate board, duly authorized to act; that the said corporation created by the law of 1833, modified and continued by those of 1834 and 1836, is a public eleemosynary corporation, and wholly under the control of the legislature, and subject to be altered or abolished at their pleasure. The District Court decreed in favor of the petitioners, requiring the defendants to restore the archives, property, revenues and funds of the institution, that had come into their possession. The defendants have brought the cause before us by appeal. — 404 — By a law of 30th March, 1833, entitled an <‘act to incorporate the Montpelier Academy,” &c., it is, in substance, provided, that Dempsey Kemp, Burlin Childers, James Harvey, Thomas Kennedy, R. Mercier, William Mathews, Thomas G-. Davidson, T. Smith, David Hill and James M. Bradford, be constituted a body politic and corporate, by name and style of the Trustees of Montpelier Academy, and by that name shall have perpetual succession, and be capable of appearing in all courts of justice in the state, and shall have a common seal, with power to break, alter or renew the same at their pleasure. Section second provides, that the corporation shall have the power to acquire and possess every species of property, moveable and immoveable, by purchase, bargain, transaction, suits at law, donation, whether inter vivos or mortis causa, or in any other manner known to the laws of Louisiana; that they may again sell, rent, lease or alienate the same for the good of the corporation. That they shall have full and ample power to pass all by-laws, rules and regulations which they may deem necessary for the better government of the corporation ; provided they be not contrary or repugnant to the constitution and laws of the United States, or those of Louisiana. Section third provides, that the trustees and their successors shall administer the property and funds of the institution ; shall establish their academy at St. Helena, and shall have power to employ professors and tutors, and fix their salaries. The fourth section provides for two stated annual meetings for the board of trustees, with power t.o fill all vacancies, by election, that may occur among themselves. Section seventh, provides for the removal of all officers by the corporation, and the appointment of others in their stead. The eighth provides for the payment by the state treasurer, of two thousand five hundred dollars, yearly, on condition that twenty-five indigent children be instructed and boarded in the academy, otherwise a sum in proportion to the number that shall be so instructed and boarded. The ninth, provides for the payment to the trustees, of the — 405 — moneys belonging to tbe parishes of St. Helena and Livingston, which have been heretofore applied to the use of primary Schools. The tenth section declares, that the two thousand five J hundred dollars, appropriated bv the state, shall not be drawn , , , , . from the treasury, until it shall appear, that the trustees have provided sufficient houses, conveniently large for the accommodation of forty scholars, the title of which shall be in the academy. By a supplemental law of the 9th January, 1834, John Holloway, John George, Hillory Kemp, Jos. Killian, Senr., John Killian and William Venables, áre appointed additional trustees to those named in first section of the act of 1833. By an amendatory act, passed the 20th January, 1836, it is. provided, that the first section of the above act be so amended “that the board of trustees of the Montpelier Academy, shall be composed of only five members, and that Robert Duncan, John Killian, B. Spillers, Zachariah Nettles and William George, compose the said board of trustees.” The second section provides for the repeal of all laws or parts of laws, contrary to the provisions of the first. It is contended by the defendants, that the legislature had full power lo alter or abolish at pleasure, the law creating the corporation, and they cite the Louisiana Code, article 438, which declares that “a corporation, legally established, may be dissolved by an act of the legislature, if they deem it necessary or convenient to the public interest; provided, that where the act of incorporation imports a contract, on the faith of which individuals have advanced money, or engaged their property, it cannot be repealed without providing for the reimbursements of the advances made, or making full indemnity to said individuals,” &c. On the part of the plaintiffs, it is insisted that the law of 1833, created a contract between the state, the trustees, and donors of property to the institution, and that the acts of the legislature of 1834 and 1836, are contrary to the constitution of the United States, and of Louisiana, both of which declare in the same language, that no state legislature shall pass — 406 — any law impairing the obligations of contracts. Constitution of the U. S., article 1, section 10; Constitution of Louisiana, article 6, section 20. Where a cor-the3mere* creature of legisla-Ove will, esta-biished for the fndowed by°the state alone, the legislature may, at pleasure, mo-incirporation, ov law by,which it The trustees of tion are^mere thenstateneS °f This, therefore, is the question raised for our consideration. The Civil Code recognizes two classes of corporations, political and private. The private is again divided into civil and religious, to the former of which belongs the corporation of the Montpelier Academy. There can be no doubt, that where a “corporation is the mere creature of legislative will, established for the general good, and endowed by the state alone, the legislature may, . ,1, ° ,n at pleasure, modify the law by which it was created. For that case, there would be but one party affected, the government itself, and therefore not a contract within the . meaning of the constitution. The trustees of such a corpo-fation would be the mere mandatories of the state, having n0 personal interest involved, and could not complain of any law that might abridge or destroy their agency. But it would be otherwise with a corporation, such as that under consideration: for though a part of the endowment of the Montpelier Academy may eventually proceed from the state, yet they bestow nothing, until the institution shall be able, from its own resources, to afford accommodations for forty scholars, when a sum not exceeding two thousand five hundred dollars, is to be annually paid but of the treasury, to be graduated by the number of indigent students that are boarded and instructed in the school. So that the institution does, in truth, originate in private charities, not at all affected in its essential character by the moneys given by the state. The trustees and instructors do not thereby become agents or officers of the government, nor does the property purchased, or the donations made, appertain to the public. The power to appoint all the officers of the institution still abides exclusively in the trustees, who fix the course of studies, the salaries to be paid, fill all vacancies that occur, and administer and apply the funds of the institution at their pleasure. Again, the trustees named in the first section of the charter of 1833, are authorized to acquire property in all the modes — 407 — known to the laws of Louisiana, one of-which, by donation inter vivos, is expressly mentioned. By the documents coming up with the record, it appears that they did accordingly purchase certain real property, and on the 10th January, 1834, receive by donation from I. T. Preston, a house suitable for the academy, and the lands on which it stood. The persons then acting as trustees, were those designated in the charter of 1833, or others appointed as their successors under that law. They accepted the trusts, entered upon the duties prescribed, and became the assigne and donors of all acquisitions made for the benefit of the academy. The donation was made to them, not to the defendants; who were unknown to the donor, and appointed subsequently in a way not recognized by the charter. He could not have anticipated, and never consented that his donation should pass into other hands than those of the trustees created by the law of 1833. The state stipulated with him, through these trustees, that his gifts should inure to the benefit of the academy, and be forever administered by the persons named in that act, and their successors chosen as is therein prescribed. It was clearly a contract entered into between the donor and trustees, for the transfer and perpetual security of property, under the plighted faith of the state. Nevertheless, the legislature have entirely overthrown this board of trustees without observance of any of the forms of law, and transferred, against their consent, all their powers and rights to five other persons, whom they substitute and appoint in their stead. It is plain that two boards of trustees cannot exist at the same time. If the five created by the act of 1836, have a legal existence, then the first board is abolished. And if the legislature can, at pleasure and without judicial proceedings, destroy one board and create another, there is no constitutional limit to their power. They might proceed one step further, abolish both boards and appropriate the funds of the institution to the use of the state. Such would be the alarming consequences to which the doctrines set up by the defendant’s counsel must lead, unless some restraint be set upon legislative authority. — 408 — This view of the subject is abundantly sustained by English authorities, were it necessary to call in their aid. Justice Blackstone, 2, Com. 57, in speaking of a corporation, says, it is a franch'se for a. number of persons to be incorporated and exist as a body politic, with a power to maintain perpetual successjonj anc] t0 do corporate acts, and each individual of such corporation is also said to have a franchise or freedom. There is a grantor and grantee whose assent is necessary; the king parts from his prerogative under an implied promise not to bestow the same franchise on another corporate body. It therefore involves a contract not to re-assert the right, to grant it to another, or impair it. And Justice Butter, in the case of King vs. Passmore, 3 Term Rep. 246, observes, that the grant of incorporation is a contract between the crown and a number of persons, the latter of whom undertake, in consideration of the privileges bestowed, to exert themselves for the good government of the place. If they fail to perform their part of it, there is an end of the compact. To the same effect may be consulted, Powell on Contracts, 6; Fletcher vs. Peck, 6 Cranch, 87; 1 Lord Raymond, 5; 2 Term Reports, 346; 1 Kyd on Corporations, 25. The sanctity of contracts is equally protected by that system of jurisprudence from which our own is derived. Nemo potest mutare consilium suum in alterius injuriam. Digest, tit. 50 ; l. 75. Sicut ah initio libera est potestas habendi, vel non habendi contractus, ita renuntiare semel constitutes obligalioni adversario non consentiente nemo potest. L. sicut initio liberat, 5 Code, de. ob. Upon which a learned commentator remarks, “ II est done certain que nous ne pouvons pas changer de sentiment, sitot que I’acte ne depend plus de notre volonié. Les contrats nous in four-nissent un example famitter, des lorsquHls sont dos et parfaits, Tune des parties ne pent pas s,en dégager malgrb Vautre ni rompre un traité, dont Vexécution est devenue nécesscdre. Dantoine, vol. 2, page 217. Nor does our constitution create or establish any new principle of justice: it only enforces those immutable laws of natural equity that prevail throughout the world, and existed long before codes or constitutions were known. — 409 — This subject has been fully examined by some of the ablest jui'ists in our own country, in the celebrated case of the Dartmouth College vs. Woodward, and the question finally set-tied by the judges then on the supreme bench of the United Stales, with only one dissenting voice. 4 Wheaton, 518. From that case it appears, that the Rev. Eleazar Wheelock, of Connecticut, originated, about the year 1784, at his own expense and on his own estate, a school for the education of Indians ; that thereafter, various contributions and donations were made for the advancement of the institution, which was incorporated by the King of England, and erected by charter into a college, called Dartmouth College, for the general purposes of education. The number of trustees was limited to twelve; and the usual powers of acquiring property, of sueing and being sued, &c., were imparted as to other incorporations. The trustees were, moreover, empowered to appoint all the instructors and officers of the college, and to perpetuate their own body by filling any vacancies that might occur ; no endowment whatever having been made by the crown. The legislature of New-Hampshire, where the college was located, passed various laws, modifying and enlarging the charter of the institution. One of June, 1816, provides, that the trustees shall thereafter be called the trustees of Dartmouth University, and their number increased from twelve to twenty-one, including the old board, and to them were transferred all the powers of the trustees of Dartmouth College. The act, moreover, provides for the appointment of a board of twenty-five overseers, who are invested with a general superintending authority. The court thought that the original charter was a compact between the crown, the trustees and donors of property for the benefit of the institution, and that the acts of the legislature of New-Hampshire, by increasing the number of trustees, appointing twenty-five overseers, new modelling and enlarging the charter, and by transferring the property from the old board to the new, was a violation of that compact and repugnant to article 1, section 10, of the Constitution of the United States above cited. But where certain individuals are incorporated and constituted a body politic, as trustees of an academy, with power to acquire property and receive donations from individuals and the slate, on condition to establish an academy and educate pupils, and also receive a yearly grant from the state, on condition to teach a certain number of indigent children and comply with such conditions: Held, that the corpo-rators acquired vested rights, in the nature of a contract, which cannot be taken from them by the state,without a manifest violation of the constitution of the United States, article 1, sec. 10. The question involved in the cause now under consideration is, in principle, essentially the same with that settled by the Supreme Court of the United States, in the case of the Dartmouth College. The two cases differ only in the degree of injury complained of; thafitribunal thought that the rights of the corporators were infringed, by increasing the board of trustees from twelve to twenty-one members : then', for a much stronger reason, is the charter of the Montpelier Academy violated, by a law entirely removing one board and substituting another in its stead. We are, then, of opinion that the law of the 30th March, 1833, incorporating the Montpelier Academy, was in the nature of a contract between the state, the trustees therein named, and the donors of property for the benefit of that institution, and that the acts of the legislature of the 9th of January, 1834, and of the 20th of January, 1836, above cited, are repugnant to the Constitution of the United States, and that of Louisiana. Wherefore, it is ordered and decreed, that the judgment of the District Court be affirmed, with costs. Lawson, on behalf of the defendants, applied for a rehearing, and the case was suspended until this term, when a re-argument was had. Morphy, J., delivered the opinion of the court. This case has come before us on a re-hearing. The grounds and arguments urged by the appellants, are?substantially the same as were addressed to the court, on the former trial; although, from the zeal and industry of counsel, they have received new illustrations and have been much more fully developed. After the most attentive consideration, we have been able to give to the whole subject, we must declare that the views of this court, as at present organized, have coincided with those expressed in the opinion already delivered : It is, therefore, ordered, that the judgment of this court remain undisturbed.