Opinion
No. 34501.
April 28, 1941. Suggestion of Error Overruled, May 26, 1941.
1. BENEFICIAL ASSOCIATIONS.
Where surviving members of local lodge of fraternal society met and agreed to discontinue affiliation with grand lodge and to divide personalty among themselves, and also appointed one of their number as custodian of realty, the agreement was effective as a basis for adjudicating their rights in absence of formal dissolution, and their status as result of agreement became that of "tenants in common" rather than "joint tenants" (Code 1930, secs. 4170, 4172).
2. CORPORATIONS.
Although there is ordinarily no legal dissolution or surrender of charter of nonstock corporation until it is so decreed pursuant to statute, an equity court may in a proper case treat corporation as dissolved although there has been no legal dissolution, and a dissolution may be implied as by consent of all members when meetings are voluntarily discontinued and activity of members as such comes to an end (Code 1930, sec. 4170).
APPEAL from the chancery court of Wilkinson county, HON. R.W. CUTRER, Chancellor.
Jones Stockett, of Woodville, for appellants.
On dissolution of a corporation all assets, real and personal, vest in the stockholders but subject to the debts of the corporation.
Sec. 4172, Code of 1930.
The words "stockholder" and "shareholder" are identical in meaning in the United States. The shareholders are the equitable owners of the corporate property.
Cook on Corporations (5 Ed.), sec. 10.
The charter of Woodville Lodge No. 3581 expressly limits membership therein to "such other persons as may hereafter be associated with them and become members and officers of said lodge." There was a total failure to show or even to attempt to show and prove that appellee, Sallie Poole, or any of the children and heirs of A.H. Stansberry or Ed Scott had ever become members of this corporation. The sole claim is that Alex Poole, husband of appellee, Sallie Poole, had been a member and was a member at the time of his death.
Membership must be determined at the date of the dissolution just as it must be determined at any other time.
The corporation being the owner of the land described in the pleadings and admitted by all parties to have been owned by this corporation continues to be so owned. It could not have been transferred or conveyed except by a written instrument duly delivered. Sec. 2111, Code of 1930. By the final decree herein, the existence of this corporation is expressly adjudicated, and its right, under the statute, to be dissolved and surrender of its charter is recognized. That being true, and it still being a corporation, all property owned by it continues to be so owned.
Maxwell Bramlette and Clay B. Tucker, both of Woodville, for appellees.
The only step not taken by the members and/or stockholders as required by Section 4170, Code of 1930, was the filing of an ex parte petition for dissolution. How then, on June 20, 1938 could A.J. Glenn and Peter Ashford be the sole and only officers and members of said fraternal society, which in their own language "ceased to function as a fraternal society" in October, 1933? The only possible way that this could be done is to show that they were members and officers at the time the Woodville Lodge No. 3581, Grand United Order of Odd Fellows, ceased to function as a fraternal society in October, 1933.
All the real and personal estate of Woodville Lodge was then and there vested in the members and/or stockholders therein, as of October, 1933, in their respective proportions, who held the same as tenants in common. Section 4172, Code of 1930. The stockholders in Woodville Lodge No. 3581 on its discontinuance and/or dissolution in October, 1933, were A.J. Glenn, Peter Ashford, A.H. Stansberry, Ed Scott and Alex Poole. All five deriving their possession and title of this real estate and personal estate from the same source, to-wit, as members and/or stockholders of Woodville Lodge No. 3581, United Order of Odd Fellows, cannot now dispute that title, and now set up in opposition to that under which they got possession, a better title, from another source, be that source survivorship as claimed in this case or any other source.
Griffin v. Sheffield, 38 Miss. 359; Wade v. Thompson, 52 Miss. 367.
After the death of three of the five members, appellants are now estopped from claiming to be the sole and only members and officers of Woodville Lodge No. 3581, and the sole and only owners of the real estate in question in this suit, as being inconsistent with previous claim and position in general.
Penny Stores v. Mitchell, 59 F.2d 789; Penny Stores v. Rice, 53 S.Ct. 122, 287 U.S. 672, 77 L.Ed. 580; D.L. Fair Tie Co. v. Warrell, 147 Miss. 412, 112 So. 24.
Appellants, Peter Ashford and A.J. Glenn, having secured for themselves the benefit of one-fifth of the cash money on hand in the sum of $90 each, and one-fifth of the rents from the real estate, less commissions to the custodian and taxes and upkeep, due to the agreement of the five members in October, 1933, cannot at this late date repudiate the agreement and acts of 1933 of the then five members and claim the entire property on the ground that the agreement was not authorized, in that the ex parte petition for dissolution of the corporation was not filed during the lifetime of A.H. Stansberry, Alex Poole and Ed Scott.
State v. Terry, 146 So. 140, 167 Miss. 558.
W.F. Tucker, of Woodville, for appellees.
There was no stock issued by the said corporation and therefore there were no shareholders, but each member of the local lodge was a member of the corporation by virtue of his certificate of membership or by virtue of his final acceptance into the lodge as a member thereof. A certificate of membership was not subject to execution or other process and was not subject to sale, transfer or assignment. A certificate of membership of said lodge could only be forfeited or become worthless by expulsion for the non-payment of dues and assessments imposed by the lodge.
Assets shall revert or vest in the stockholders of a corporation after its dissolution.
Secs. 4131, 4172, Code of 1930.
Unity of possession is all that is needed to constitute tenancy in common, regardless of the time of its commencement, quantum of interest or source of title. The unity of possession of the appellants and appellees was created when they took possession of the assets of the corporation in October, 1933, and it was then that the assets of the corporation under the charter vested in the appellants and the appellees and at their death vested in their respective heirs at law.
Laughlin, Surviving Executor, v. O'Reiley, 92 Miss. 121, 45 So. 193.
The petition of the corporation by Glenn and Ashford alleges that Glenn and Ashford take the assets by survivorship and that they divide the assets equally because each has an equal share in the corporation. No stock was issued by the corporation, and therefore the appellants have no shares in the corporation. The appellants have the same title to the assets as the appellees, and if the appellants lose their interest in the assets at death, then the appellants will lose their interest at their respective deaths, then the property of the corporation will escheat to the state.
Argued by A.H. Jones, for appellants.
The decree of the court below was rendered in response to a petition to dissolve the appellant corporation. The petition was filed by A.J. Glenn and Peter Ashford, the surviving members of the lodge, who sought also the distribution between them of the assets thereof, consisting chiefly of real estate. Ignoring the allegations, claims, and counterclaims with which the pleadings are replete, the controlling facts are contained in an agreed stipulation from which the following summary is taken: In October, 1933, the lodge was composed of five members, A.J. Glenn, Peter Ashford, Ed Scott, Alex Poole, and A.H. Stansberry. These met and agreed "not to pay dues to or affiliate with the Grand Lodge further, but to take money on hand and the rents from said property, after paying taxes and expenses, and divide it equally among the five members then in good standing. That then and there each one of the five members received the sum of $90 of the cash then on hand.
"That not any of the five members thereafter paid any dues as members of Woodville Lodge No. 3581, and said Lodge No. 3581 paid no dues to the Grand Lodge and ceased to function as a fraternal Society.
"That the five members appointed Peter Ashford custodian of the property, who rented the property of said Woodville Lodge No. 3581, collected the rents, and for his trouble was paid a commission on the money collected, which after paying the taxes and upkeep of the property was divided among the five members." It was elsewhere admitted in pleadings filed by the appellants that the incorporated lodge "ceased to function as a fraternal organization in or about the year of 1933."
Subsequent to the agreement under which the organization ceased to function and prior to the filing of the petition to have its dissolution formally decreed, all the members died except the two appellants Glenn and Ashford. In the proceeding for dissolution interventions were filed on behalf of the heirs of the three deceased members seeking to have their ratable interest in the property decreed. The court found that the effective date of the dissolution insofar as it furnished a basis for adjudicating the respective rights of the parties was October, 1933, at which time it was agreed by the five existing members unanimously to abandon the lodge as such and to discontinue its corporate functions. In this we hold that the learned chancellor was correct and his conclusion is fortified by the circumstance that an actual division of the personally was then made and the appellant Ashford was designated as custodian of the realty with the right and duty to collect rents, pay taxes, and distribute the net income among these members. Thereupon the status of the parties to such agreement became that of tenants in common rather than joint tenants.
Although it is the general rule that there is no legal dissolution or surrender of the charter of a non-stock corporation until so decreed pursuant to Code, section 4170, a court of equity may in a proper case treat the corporation as dissolved even though in a legal sense no dissolution has occurred, and a dissolution may be implied as by consent of all the members when meetings are voluntarily discontinued and activity of members as such comes to an end. 1 Bacon, Benefit Societies, sec. 57; Spelling, Corporate Management and By-Laws, sec. 193; Mobile Temperance Hall Ass'n v. Holmes, 189 Ala. 271, 65 So. 1020.
The agreement here made in anticipation of dissolution was effective to determine the status of the parties thereto as tenants in common even as would have been their status under Code 1930, section 4172, after formal surrender. Austin v. Wortham (Tex. Civ. App.), 298 S.W. 620, 623; Anderson v. Burgess, 110 Or. 265, 223 P. 244.
As stated in Mobile Temperance Hall Ass'n v. Holmes, supra [ 189 Ala. 271, 65 So. 1024]: ". . . the dissolution for purposes of distribution should date from the time there ceased any meetings and therefore activity of its members ceased. Such may be treated as an implied abandonment of the objects of the association and a dissolution, or by consent of the then existing members. In the authorities we have cited here it appears that the assets remaining should go to those who were members at time of dissolution, to those who, in cases of this character, may be properly termed the `persistent members.' Under the conclusion we here reach, therefore, this would include those who were members (or, if deceased, their representatives or heirs), at the time the meetings of the association ceased and activity of its members therefore came to an end."
Affirmed.