Opinion
No. 32725.
May 3, 1937.
SPECIFIC PERFORMANCE.
Incorporated club held entitled to specific performance of contract to renew lease of land owned by lessors' transferee, which lease had been executed before club incorporated, notwithstanding there was no written assignment of lease to the club after its incorporation, where lease contemplated that club would become incorporated, and trust created by lease vested mere naked legal title to land in trustees for use of club which had unrestricted right to possession and use of land (Code 1930, sec. 2113).
APPEAL from the chancery court of Yalobusha county. HON. L.A. SMITH, SR., Chancellor.
Stone Stone, of Coffeeville, for appellant.
This case narrows down to one single proposition and that is whether the power of renewal of a lease in land, a twenty-year lease, can be exercised by a corporation not in existence at the time of the lease, and holding no pretense of a transfer of the lease in the land, no sort of showing of assignment or transfer of any right whatever in the contract.
We say that whether the lease is called a lease of lands for more than one year, as it certainly is, or whether it is called a trust in the hands of these three men who designated themselves as trustees, that the corporation cannot possibly under the law become clothed with the power to renew this lease without a conveyance. It does not matter whether it is called a lease or a trust, as the statute of frauds catches the complainants on one horn or the other of the dilemma. If it is a lease then section 3343 requires a writing "upon any contract for the sale of lands, tenements, hereditaments, or in case of any lease thereof for a longer term than one year;" if it is called a trust in the hands of these three gentlemen then they are caught by section 3348, equally positive, which says: "All declarations or creations of trusts or confidence of or in any land shall be made and manifested by writing. . . ." Section 3349 which says very plainly: "All grants, assignments or transfers of any trust or confidence shall likewise be in writing signed by the party granting or assigning the same, or by last will and testament, or else they shall likewise be utterly void."
The trouble with complainants in this lawsuit, appellees here, is that they started their litigation in the name of the corporation during the very last days and hours of the existence of this lease, and when they found out that the corporation could not operate as they were not qualified to renew the lease, the lease had expired and there was no right in any other party or parties to be cast into the breach. The lease was a dead thing because the expiration of the twenty years had been accomplished and no qualified applicant had shown up with an effort to renew.
Where the same person is both trustee and beneficiary no trust estate exists.
Flowers v. Rowell, 170 Miss. 44, 154 So. 299.
We would not mention this case, knowing that a corporation is an entirety distinctly different from the incorporators if it had not been for the first amendment to the complainant's bill wherein they said that these three trustees, by their incorporation, that is, the incorporation of the trustees, had conferred on the corporation all this property. We deny, of course, that they had ever conveyed anything or attempted to convey anything, but we are simply showing by this very plain case that if the trustee had incorporated themselves and conveyed to themselves the rights in the lease, as they said they did, then it would be a vain proceeding under the law.
Trust without certain beneficiary who can claim its enforcement is void.
National Bank of Greece v. Savarika, 167 Miss. 571, 148 So. 649.
The mere incorporation of an existing partnership or other voluntary associations, whether by special act or under a general law, does not ipso facto operate to transfer to the corporation the title to the land or personal property of the partnership or association, in the absence of a statutory provision to such an effect, but there must be a conveyance, contract of sale or assignment as in other cases.
14 C.J. 304, sec. 367; Bush v. Bush, 134 Miss. 523, 99 So. 151; Board of Trustees v. Odom, 100 Miss. 64, 56 So. 314.
R.F. Kimmons, of Water Valley, for appellee.
Appellant says there was no formal transfer of the lease by the trustees and, therefore, the O'Tuckolofa Gun and Rod Club have no right under the lease. In answer to this contention we call the court's attention to the principle recognized and enforced by our court that an act done by the promoters in an anticipation of a corporation to be formed is valid, if ratified by the corporation.
7 R.C.L. 109, sec. 85; Sumter Tobacco Warehouse Co. v. Phoenix Ins. Co., 10 L.R.A. (N.S.) 736; Pearl Realty Co. v. Wells, 164 Miss. 310; Bank v. Orgil Bros. Co., 82 Miss. 81.
Appellant says there was no transfer of the lease to the corporation after it was formed and, therefore, no right accrued to it. It is true there was no formal transfer in writing by these trustees to the corporation after it was formed, but we say that no transfer was necessary. It is sufficient if the ratification or approval of the contract are shown from acts or acquiescence of the corporation or its authorized agents.
7 R.C.L., pages 82 and 83, secs. 61 and 62; Pearl Realty Co. v. Wells, 164 Miss. 310.
Again it is said that notwithstanding all of the facts set forth above that no one could exercise the privilege of renewal of the contract by the trustees themselves. We do not so understand the law. The trust in this case was purely passive. The trustees held the naked legal title. No duty rested on them. There was not one thing for them to do. This is shown by the contract itself and by the course of action of the lessors, the trustees and the beneficiary of the trust, and under such conditions the object of the trust may be enforced in equity by the beneficiary.
1 Pomeroy Equity Jurisprudence, sec. 153, pages 174, 175; 26 R.C.L. 1173-1174; Henderson v. Griffin, 8 U.S. (L.Ed.), 79; Carpenter v. Sturgeon, 68 L.R.A. 637.
Argued orally by W.I. Stone, for appellant, and by R.F. Kimmons, for appellee.
The appellee, a corporation, exhibited an original bill of complaint against the appellant for the specific performance of a contract to renew a lease of land owned by the appellant, whose defense thereto is that the appellee has no interest in the renewal clause of the lease. The case was tried on bill, answer, and proof, resulting in a decree in accordance with the prayer of the bill.
In March, 1915, the O'Tuckolofa Gun Rod Club was organized as an unincorporated association. The minutes of the club discloses the following: On March 25, 1915, "the following members were elected Board of Trustees, C.H. Hammond, S.L. Cox, J.W. Mauldin." On April 27th, on motion duly seconded, it was decided to have the O'Tuckolofa Gun Rod Club, incorporated, and a committee was appointed for that purpose. The charter was afterwards secured, and the club was organized thereunder in December, 1915. On May 31, 1915, the lease here in question was executed by the then owners of the land, and recites that: "D.R. Wagner, and W.B. Wagner of the first part hereafter called the Lessors and Dr. S.L. Cox, C.H. Hammond, and J.W. Mauldin of the second part hereafter called the Lessees for an association or incorporation of individuals to be known and called the O'Tuckolofa Gun and Rod Club the said D.R. Wagner and W.B. Wagner for and in consideration of $1.00 cash in hand paid, the receipt of which is hereby acknowledged and other good and valuable considerations including membership fee and all dues in O'Tuckolofa Gun and Rod Club, in favor of D.R. Wagner and W.B. Wagner, we, D.R. Wagner and W.B. Wagner do hereby grant, lease and demise unto Dr. S.L. Cox, C.H. Hammond and J.W. Mauldin, Trustees, for a term of twenty (20) years from this date all that certain lot or parcel of land lying and being situated in the second district of Yalobusha County, Mississippi (description of land omitted). . . . It is expressly agreed and understood that the Grantees herein or their successors in title may at the expiration of this lease renew the same for a period of twenty (20) years at their option upon the payment of the sum of one dollar ($1.00)."
The club thereafter entered into the use and occupation of the land, and has so continued. The land is now owned by the appellant. Prior to the expiration of the twenty-year period of the lease, the club tendered to the appellant $1 in cash, together with the following written instrument, which he declined to sign:
"Whereas the O'Tuckolofa Rod Gun Club, a corporation, on May 31, 1915, leased certain property from D.R. Wagner and W.B. Wagner, described in the said lease which is of record in deed book 'T' at page 270-272 of the record of deeds in the office of the Chancery Clerk at Water Valley, Mississippi, and
"Whereas the title of the said lessors has passed and is now vested in L.D. King and
"Whereas the lessee desires now to execute its option of renewal of the said lease:
"Now therefore, in consideration of the premises and the payment by the O'Tuckolofa Rod and Gun Club to the said L.D. King of $1.00 (One Dollar), all of the terms and condition of the said lease are hereby renewed and extended for the further term of twenty years beginning May 31, 1935, and ending May 31, 1955." Whereupon this suit was begun.
There was no written assignment of the lease of the O'Tuckolofa Gun Rod Club after its incorporation by the trustees therein, or any one else. When the lease was executed, Cox, Hammond, and Mauldin held the land therein described as trustees for the O'Tuckolofa Gun Rod Club, a then unincorporated association, but the lease manifestly contemplated, as the event determined, that the association would become incorporated, for the benefit of which corporation the trustees would thereafter hold the land; consequently, when the unincorporated association thereafter organized under its charter, the use in the land passed from the unincorporated association to the corporation.
The trust created by the lease imposed no duties whatever on the trustees, and vested the mere naked legal title to the land in them for the use of the O'Tuckolofa Gun Rod Club, which had the unrestricted right to the possession and use thereof. The club had "not a mere title to enter upon the property, but an actual estate" therein. 65 C.J. 519; Van Vacter v. McWillie, 31 Miss. 563. The English Statute of Uses, invoked by the appellee, has not been enacted in this state, but without it this equitable estate of the club in the land is "virtually equivalent in equity to the corresponding legal estate." 1 Pomeroy Equity Jurisprudence (3 Ed.), section 153. This being true, in equity the O'Tuckolofa Gun Rod Club has the right to a renewal of the lease direct to it in its corporate capacity. The trustees could not have interfered therewith had they so desired, and had the lease been renewed in their names it would have immediately inured to the benefit of the O'Tuckolofa Gun Rod Club, which could have called on and forced them to execute an assignment thereof to it, a roundabout proceeding unnecessary in a court of equity. These trustees have not only interposed no objection hereto, but some time after the filing of the bill of complaint two of them (the other being dead) in whom the trust survived, 1 Restatement, Trusts, section 103, unaffected by section 2113, Code of 1930, McAllister v. Plant, 54 Miss. 106, voluntarily became parties thereto and joined in its prayer.
The decree of the court below is correct, and will be affirmed.