Middleton v. Georgetown Mercantile Co.

HoldeN, J., delivered the opinion of the court. The appellee, Georgetown Mercantile Company, a corporation, instituted an unlawful entry and detainer suit against II. B. Middleton, appellant, to recover possession of a tract of farm land which was occupied, and formerly owned,_ by appellant. The appellee, Georgetown Mercantile Company acquired title to the land by purchase at a foreclosure sale under a deed of trust executed by appellant to F. H. Carlysle for the benefit of D. Nederlansch-Amerekaansche Land Maatas-chappy. At the time of the purchase of the land by appellee it was in the possession of appellant and was — 139 — farm land used for agricultural purposes. The appellee was the owner of the two unpaid notes executed hy appellant and secured hy said deed of trust upon said land. Appellant had also subsequently executed a deed of trust to the appellee upon the same land to secure a certain indebtedness which was unpaid. The said prior deed of trust to Carlysle, trustee, also secured two unpaid notes due to the beneficiary, D. Nederlandsch-Amerekaansche Land Maataschappy, and upon which the foreclosure sale was made. The appellant, Middleton, defended in the lower court upon two grounds: First, that the plaintiff in the court below should not recover possession of the land because the appellee was a corporation and had acquired the land for agricultural purposes in violation of chapter 162, Act of 1912; second, that the appellant was not indebted to the appellee in any sum, for the reason that appellant had paid appellee all that was due it under the deed of trust held by appellee, and also had paid the two notes held by appellee, and had paid appellee the amount of the other two notes, all of which were secured by the prior deed of trust in which Carlysle was trustee, and that therefore the appellee corporation did not come within the exception of the act providing that corporations may acquire lands for agricultural purposes by deed for collection of debts due the corporation. After the evidence had been introduced, or offered', by the defendant below tending to sustain his contention, the court excluded all of the testimony and granted a peremptory instruction to the jury to find for the plaintiff, from which action this appeal is taken. The appellee contends that the judgment of the lower court is correct for four reasons: First, that the record contains no proof that the land here in question was acquired or owned hy appellee for agricultural purposes; second, that the appellee acquired title to the land hy foreclosure of security or-by deed for collection of its debt against appellant; third, that — 140 — the defense offered by the appellant in the lower court was an equitable defense not available in an action of unlawful entry and detainer; fourth, that if the appellee is wrong in the above contentions, still the judgment should be affirmed because the lower court was correct in holding that, even though the land here in question was acquired in violation of chapter 162, Acts of 1912, the title is nevertheless in the appellee corporation, and cannot be attacked by the grantor in the deed of trust, as this can only be done, if at all, by the state. The position of appellant, we think, is wholly untenable. ■ The meaning of the plain language of chapter 162, Acts of 1912, when read carefully, is clear and convincing that the contentions of appellant are not within the statute. "We here set out the material part of sections 1, 2, 5, and 9 of chapter 162, Acts of 1912, which read as follows: “That no corporation, whether chartered under the laws of the state of Mississippi, or under the laws of' any other state of the United States, or of any foreign country, shall acquire title, in fee, or for a term of years, to, or own land for agricultural purposes, in - this state outside of an incorporated city, town or village. ’ ’ “That this act shall not prevent corporations taking deeds of trust, or mortgages on real estate to. secure loans or debts, or from acquiring title thereto upon foreclosure of such securities, or from acquiring title to land by deed for the collection of debts.” “And if any corporation or other person shall have acquired any right, title or interest in any land in violation of this act, it shall be the duty of the attorney-general, or of the district attorney, of any judicial district in which such land is situated, or the state revenue agent to file or have filed in the chancery court a bill against such corporation or corporations, alleging the illegal acquisition of such lands, which suit shall be proceeded with as other suits brought by the state for — 141 — the dissolution of corporations are proceeded with in said courts, and if the court shall determine that the defendant corporation or corporations, or trustees or other persons acquired the land involved in violation of this Act, the court shall enter a decree to that effect and shall declare the corporation to he dissolved, if it he a domestic corporation, and if a nonresident corporation shall decree that it shall not he permitted to do business in this state, and such court shall thereafter appoint a receiver .to take charge of all property in this state belonging to such corporation or so held in trust and to dispose of the same under order of the court, and after paying all debts of the corporation, and all costs and charges incident to said suit and such receivership, the court shall direct that the remainder of the proceeds of the sale of said property and the funds derived therefrom he distributed among the stockholders of such corporation, or among the parties by whom the land was held in trust, in case of a trustee, or other person holding land in violation of this act, according to their respective interests, and all such corporations shall thereupon be perpetually enjoined from doing-business thereafter in the state of Mississippi.” “Sec. 9. The purpose of this act is to prevent monopolies in agricultural lands in this state, and to prevent corporations from owning farms and plantations and engaging in the business of agriculture, except as herein provided, and it shall be construed liberally by the courts for the accomplishment of such purpose, but it is not the purpose of this act to prevent corporations from acquiring real estate for any legitimate purpose or use other than for farming or agricultural purposes, as hereinbefore provided.” By reading section 9 of this act it will be observed that the purpose of the law is to prevent monopolies in agricultural lands in this state and to prevent corporations from owning farming land and engaging in the business of agriculture. Therefore a corporation does — 142 — not violate the act by acquiring farm lands unless acquired for agricultural purposes, and unless the proof shows that the corporation acquired title to the land for agricultural purposes there is no violation of the statute. The latter part of said section 9 provides: “But it is not the purpose of this act to prevent corporations from acquiring real estate for any legitimate purposes or use other than for farming or agricultural purposes, as hereinbefore provided.” It is not clear to us in this case that the proof shows that the land in question was purchased by this appellee corporation for agricultural purposes. It might be agricultural land, but not acquired for agricultural purposes. However, we shall not pass upon this question at this time because the judgment of the lower court will be upheld upon another ground. It is conceded by all. parties that the appellee corporation could lawfully acquire title to the land in question by valid mortgage foreclosure or by deed for collection of its debts, under the act. And it may be said that the appellee corporation acquired its title to the land in question here “by deed for collection of debts” ás provided in said section 2 of the act. In purchasing at the foreclosure sale under the deed of trust to Carlysle, the appellee corporation may have been acting for its own protection, and, in effect, was collecting on its own deed of trust against. appellant, and also collecting a debt due it by appellant as represented by the two notes owned by appellee and executed by appellant and secured by the trust deed to said trustee Carlysle. However, we shall not pass upon this proposition, as it is not pertinent, but point out that the allegation and proof in each case must govern as to whether it comes within the exception in section 2 of the act. . The defendant in the court below offered to show that he had paid all that was due by him to appellee corporation, and that the sale was therefore void, be — 143 — cause appellant had paid to appellee all that he was due it and all that he was dne appellee under the Car-lysle. deed of trust; that in his dealings with appellee he had overpaid the amount due hy him, and that the ap-pellee was obligated to pay the amount due the Dutch beneficiary under the Carlysle deed of trust, and that if this had been done there would have been no right in the trustee to sell under the Carlysle deed of trust because it should have been fully paid and settled by appellee. This appears to be an equitable defense, involving an accounting, and is really an effort to cancel a legal title in a court of law. But it is unnecessary for us to pass upon this question here, in view of the well-settled principles of law in this state on that subject. Smith v. Williams-Brooke Co., 111 Miss. 393, 71 So. 648. The ground upon which we rest in affirming the judgment of the lower court is that the appellant grantor cannot he heard to assail the title to the land in the appellee corporation in this case. This cannot be done hy the grantor. Land acquired hy a corporation in violation of chapter 162, Acts of 1912, vests the title in the corporation; and such unlawful acquisition of the title pan only be questioned and assailed by the state, through its proper officers, and not hy the grantor in the deed of trust under which the corporation purchased at foreclosure sale. The legislative act plainly prescribes dissolution of the corporation and administration of its assets as the penalty and exclusive remedy for its violation. It does not provide a forfeiture of the title or possession to the grantor of land acquired in violation thereof, in any event. Forfeiture of its charter rights by dissolution may be, and should be, enforced by the proper officers of the state when the purpose and intent of the statute has been violated. — 144 — The title to the laud in question being vested in the appellee corporation by purchase under the trustee’s sale, the right of possession went with the title thereto. Counsel for appellant seems to concede the correctness of this view, but insists that, since the appellant had possession of the land, the appellee cannot invoke the aid of the courts to deprive him of possession, because title to the land was acquired by appellee in violation of the said chapter 162, Acts of 1912. But we think counsel overlooks the fact that the title to the land here in question was already vested in appellee by the trustee’s deed, and that being true, aid of the court to obtain title was not sought, and there was no right of possession left in the appellant upon which he could-rely in the action against him for the possession in the lower court. This is not a case where the offending corporation seeks to acquire title to land by the aid of a court of' justice, as in Southern Realty Co. v. Tchula Co-operative Stores, 114 Miss. 309, 75 So. 121, but title here had already vested in appellee corporation by a deed under foreclosure sale, and carried with it all the rights incident to a good legal title, and the acquisition of title cannot be invalidated by appellant grantor as being ultra vires. This can be done, if at all, only by the state in proper cases where the facts justify it under the Act in question. 10 Cyc. 1134; 7 R. C. L. par. 553. The judgment of the lower court is affirmed Affirmed.