Sage v. Dillard , 54 Ky. 340 ( 1854 )

Judge Crenshaw

delivered the opinion of the Court—

A convention, called the Western Baptist Convention, met in Cincinnati, in the year 1833, at which time they took into consideration, the establishment of a Baptist Theological Institution, in the valley of the Mississippi. The subject was referred to a committee, who were to make their report to the convention, at their meeting the next year. The committee accordingly reported in the year 1834, recommending the establishment of such an institution; and their report was adopted. Thereupon, a society was formed, denominated, The Western Baptist Education Society. The executive committee of this society purchased lands adjoining the city of Covington, for. the purpose, and with the view to the establishment thereon of the contemplated Theological Institution.

In the year ..1840, application was made to the Legislature of Kentucky, and a charter was obtained, incorporating the Western Baptist Theological Institute, at or near Covington. The first section of the act reads thus:

“That Cave Johnson, Henry Wingate, E. Robbins, J. L. Holman, S. W. Lynd, John Stephens, and Thatcher Lewis, who have united themselves together for the purpose of promoting education in the Baptist denomination in the Western States,'and •their successors, be, and they are hereby, created a body corporate and politic, with perpetual succession, to be styled The Trustees of the Western Baptist Theological Institute, with full power to acquire, hold, and transfer property, real and personal, make contracts, sue and be sued, plead and be impleaded in their corporate capacity, to make, have, and use a common seal, and the same to break, change, and alter, at pleasure.”

By other sections of the charter, it is declared that the money,funds, and estate which then belonged to said Institute, or which might thereafter be acquired by it, should be vested in said trustees, to be held by them in their corporate capacity, for the sole use and benefit of the Institute, for the purpose of promoting learning therein; that the trustees and their successors should have power to appoint a chairman out of their own number, to preside over them in their deliberations relative to the business of the Institute, and should have power to fill all vacancies that might occur in the body; that they should have power to appoint a president, and such professors of the various departments of learning to be taught in the Institute, as they might think proper, and to appoint all such other officers, as they might deem necessary for the management of the concerns of the Institute, and remove the same at pleasure, and also fix the compensation which they should receive for their services; that they should have power to make all such by-laws, rules and regulations, for the government of the Institute, and the management of its concerns, as they might deem expedient, and to alter, annul, and amend the same at pleasure, provided that the by-laws, rules, and regulations should not be repugnant to the laws of the Commonwealth, nor inconsistent with the principles of the charter; and the last section declares.that any future Legisla-)^, ture might alter, amend, or repeal the act, whenever? they might deem it right and proper to do so. ^

1. An act of the Legislature incorporated the Western Baptist Theological Institute, in 1840, with seven trustees, by name, reserving the power to amend the charter. In 1841, an act was passed authorizing the trustees to increase their number to thirteen, which amendment was accepted. In 1845 another ' amendment to the charter was passed, author-* izing the trustees to increase their number to thirty-six, which was also accepted. In 1848 a third amendment was passed appointing sixteen additional trustees to the number then in office (which was 21,) which amendment a majority of the seventeen then in office met and refused to accept, or permit the sixteen to act with them as trustees, and adjourned. A minority of the seventeen, and the sixteen appointed by the act of 1848, organized themselves into a board, and claimed the control of the Institute. Held— that the Legislature had no power to add to the number of the trustees without their consent, and that the newly appointed, trustees and a minority of those in office had no right to assume the control of the institution.

After the passage of this act of incorporation, the executive committee of the Western Baptist Education Society, conveyed said lands, purchased by them for the purposes above mentioned, to the said trustees of the Western Baptist Theological Institute, for the purpose of promoting learning in the same. In 1841, an amendatory act was passed, authorizing the board of trustees to increase their number to thirteen, whenever, in their judgment, it might be expedient, and to appoint á secretary, &c. In 1845, another amendatory act was passed, authorizing the board of trustees to increase their body, to any number not exceeding thirty-six, &c.

To these amendatory acts, the board of trustees appear to have had no objection, but received and approved the same. But, in January, 1848, the Legislature passed another amendatory act, increasing the number of trustees to sixteen above the number then in office, and appointed, by name, the persons who should compose the sixteen additional members of the board; and declared that, in all future appointments of trustees under the charter, the persons appointed should be citizens of Kentucky; that no appointment should be made except at a regular meeting of the board, when a majority of all the trustees should be present, concurring in the appointment, &c.

The next meeting of the board of trustees, succeeding the passage of this latter amendment, was held on the 20th of March, 1848, there being then twenty-one old trustees in office, and seventeen present at the meeting. The latter act of the Legislature was presented to them, and they determined not to accept it; and refused to admit or recognize the sixteen additional men appointed by the Legislature as trustees, to be such — some of whom presented themselves, and claimed seats in the board. A majority of the old trustees, after refusing to accept the act of 1848, and after declining to acknowledge the sixteen claimants to be trustees, and refusing to admit them to seats as such, adjourned; and, immediately, a minority of the old trustees, and a part of the new appointees, organized themselves into a board, appointing a chairman pro tern ; and proceeded to abolish the office of general agent, then held by O. N. Sage, and ordered that he should deliver up to them the books, papers, &c., which were in his custody.

Lee, who was chairman of the regular board of trustees, on the 20th of March, 1848, when the new appointees claimed their seats, says, in his deposition that, on that day or the day after, apprehending, from the clamorous behavior of the new trustees appointed by the Legislature, violence, and perhaps a mob, against the Institute, he directed Sage, the general agent of the board of trustees, to deliver over to him the books and papers pertaining to the Institute, which he did.

3. A reservation by the Legislature in a charter to alter, repeal, or amend, does not imply the power to alter or change the vested rights acquired by the corporators un- • der the charter, and to add new parties and managers without the consent of the corporators.

Sage, not having complied with the order of the new board, directing him to deliver over to them the books and papers of the Institute, a minority of the old trustees, and a part of the new ones, brought this suit against Sage, and the majority of the regular board of trustees, praying that Sage be required to deliver up to the order of the complainants the papers, bonds, notes, choses in action, and evidences of debt, belonging to the Institute. The Circuit Court rendered a decree granting the prayer of the bill, and from that decree this writ of error is pros-, ecuted.

The only question presented for our consideration, important to be considered, is, had the Legislature power to pass the amendatory act of 1848, by which they created, and appointed by name, sixteen additional trustees to the number then in office ? When this act was passed, the Legislature did not take away the previously granted power to the old trustees to increase their body to any number not exceeding thirty-six. Had additional trustees been really necessary to the healthful and prosperous and vigorous operation of the affairs of the Institute, the trustees, then in office, were vested with full power to supply the necessity, by an appointment of the requisite number. And their situation as visitors and superintendents of the Institute, certainly gave them the best means of judging as to the propriety of increasing the number of their body. They, though in the most favorable situation for determining this question, had not, it seems, perceived the necessity or propriety of adding to their number. Satisfied with the management of the Institute, and of its healthful and salutary operations, under their supervision and care, having ample power to increase their number at any time, they did not perceive the necessity or propriety of applying to the Legislature to do what they had full and complete power to accomplish. They did not, therefore, apply for, nor obtain, the passage of the act of 1848. The Legislature must have been petitioned upon this subject from some other quarter. It may be, that a minority of the old board saw proper, either alone or in conjunction with others, to procure from the Legislature this enactment. But, the act of a minority, unauthorized by the board either by resolution or order, at any of their meetings, or otherwise, could not be, in any point of view, at all obligatory upon the board, and they declined to recognize the validity of a law involving the exercise of ministerial functions of the Institute, procured against their consent, and contrary to their will. The board of trustees not only gave no authority for the application, but refused to recognize the act of the Legislature as obligatory upon them — the enactment, as they conceived, interfering with privileges previously granted to themselves. And the question is — had the Legislature power — under the reserved right in the original charter, to alter, amend, or repeal, the act incorporating the trustees — to assume to themselves, against the will and consent of the board of trustees, the very privilege which they had granted to the trustees. There can be no doubt that, without the reservation contained in the original act, the Legislature would have no right to make such an enactment without the consent of the trustees. The contrary is not urged in argument. The corporation is a private, not a public one. The charter is a contract between the government and the trustees who were thereby incorporated. By this contract certain rights and immunities were vested in, and conferred upon the trustees who were incorporated, and the Legislature had no right or power to change these rights and immunities, or to impair them, against the will and consent of the corporators, except so far as they had reserved the right to do so. If the act of the Legislature does not come within, but is contrary to, the spirit and meaning of the reservation, it impairs the obligation of the contract, and it becomes our unpleasant duty to declare the act unconstitutional and void.

Then, did the Legislature which granted the charter, or the trustees who were incorporated, and to whom the grant was made, contemplate, that any future Legislature would have the power, under the right reserved, to assume to themselves the right of creating additional corporators, or adding new parties to the contract without the consent of those with whom the original contract was made? Does the right to “alter, amend, or destroy” a contract, include the right to add other parties, and invest them with the same priviliges and franchises conferred upon the original parties? The power to alter or amend a contract, in our conception, is to change it as between the original parties, and such others only, as háve been permitted, by their mutual consent, to come into the enjoyment of its benefits and privileges ; not to compel one of the parties to operate in conjunction with others, and share with them the privileges and benefits of the contract. When such a power is attempted to be exercised by one of the parties over the other, has not the party upon whom the attempt is made, a right to say: “Alter, or amend, or even destroy, the contract subsisting between us, but do not, under the semblance of an alteration or amendment, force us to co-operate with men, (it may be,) between whom and ourselves, there cannot be peace, harmony, and concert of action.” It is easily seen, that the great enterprise in which the corporators embarked — that of educating the Baptist ministry in the valley of the Mississippi — might thus be thwarted, and the whole scheme weakened and crippled in its energies. Surely no such, alteration or amendment as that made in 1848, was contemplated by the parties to this charter or contract, under the reservation contained in the original act. Can it, indeed, be properly denominated an amendment at,all ? Is it not rather a new contract ? Duncan, Justice, in the case of St. Mary’s Church, 7th, S. 4* R- 562, used this language: “My opinion is, that the proposed amendment, striking out an integral part of the corporation, and substituting another class of men in their stead, is not a lawful amendment — is not an amendment at all, but the grant of a new corporation, and a new charter.” Again he says, on page 564: “The charter is a contract between the State, the founder, and the objects of the charity, all of whom are bound by its terms. The contract on the part of the government is, that the property, with which the charity is endowed, shall be vested in a certain number of persons, and their successors, designated by the founder, to subserve the purposes of the founder, and to be managed in a particular way. But, if the alteration changes the character of the trustees, then they are not the same persons, the grantors intended should be the managers. The same identical franchise that has been before granted to one, cannot be bestowed on another, for this would prejudice the former grant.” In this case, it appears that the original founders, or endowers of the Institute, were willing to entrust their charity to the care and management of the original trustees, and such others, of course, as might be necessary, ih their opinion, to effectuate the objects of the charity. To trustees of their own selection, they confided the bounty which they bestowed for a great, a praiseworthy, and a noble purpose. In the hands of these ...men, and others of their choice, they entrusted the management and control of an institution which, by .their munificence, was brought into being, and into ■which their beneficence has infused energy and usefulness. This charity has grown into a valuable estate, and sustains an institution which was designed to promote education in the Christian Scriptures, and qualify a Baptist ministry to disseminate religious knowledge in the West. The object is a laudable one, and can it be, that the Legislature, in retaining the right to “alter” or “amend” the charter, retained the right to take the supervision and control of this opulent charity out of the hands of those to whose care and oversight, the founders confided it, and place it in the hands of strangers, who never breathed, perhaps, a single breath of vitality into this Institution, either to impart to it life or growth ? We think not. The new trustees are, no doubt, honorable and worthy and high-minded gentlemen —the Legislature would not have conferred trusts, so momentous and important, on any other description of men. But, however honorable and worthy they may be, they are not the men selected by the founders, nor by those who were incorporated at their instance, to cany out the great purposes they had in view, in the establishment of the Institute.

The number of new trustees, when added to the minority of the old ones, constitute a majority; and, if the old trustees are compelled to acknowledge the new ones, as composing a part of the board, their power in the management and control of the Institute is completely frustrated. However opposite the views of the new trustees may be to the views of the old ones, in regard to the means proper to be employed to advance the interests and prosperity of the Institute, the old trustees must yield their opinions and judgment to the new, and suffer their energies in behalf of the establishment to be smothered and paralyzed, by the force of superior numbers. If the old trustees had been displaced by the act of the Legislature, and the new ones appointed in their place, the change, for every substantial, practical effect, would not have been more radical. The new trustees could notthen have done more than they willed to do, and, by their union with the minority of the board, they are enabled to accomplish whatever they may will to accomplish. The withdrawal, by the Legislature, of all the privileges conferred upon the old trustees, and their actual displacement, and the creation of an entirely new body, would not more effectually have prostrated their powers, than the making of a sufficient number of new trustees, who, when added to the minority of the former board, constitute a sufficient number to carry all their views and purposes, in defiance of the views and purposes of the regular board. They are not only enabled by force of numbers to achieve any object pertaining to the management of the Institute, but actually to vote themselves into the possession of all its effects, books and papers. They have already entered an order upon the general agent, directing him to deliver up the papers, choses in action, &c., of the Institute, and have brought this suit to enforce that order. And, if the arm óf the courtbe raised in aid of their purposes, the result willbe that the property and effects of the founders of the institute, against their will and consent, will be transferred to the hands of strangers, to be by them disposed of, managed, and controlled, in despite of the wishes of the founders, or their trustees. Can this be done ? Can a court legitimately extend its arm to the accomplishment of such a purpose ? We say not. Cujus est dare, ejus est disponere.

In our opinion, the act of the Legislature, creating sixteen new trustees, without the consent of the board, is not an act coming within the scope and meaning of the powers reserved in the act. As it seems to us, the passage of this act was not so much the exercise of a legislative function, as it was the exercise of the ministerial functions, pertaining peculiarly to the board of trustees. It is an act not changing or amending the mode or manner in which the trustees to whom had been given, by the founders of the charity, the supervision and visitorial power of the Institute, but it is an act by which this supervision and visitorial power is substantially taken away and conferred upon others. True, the Legislature may, by virtue of the reservation, repeal or destroy; but they/ power to destroy does not imply a right to cripple or to maim.

It is said that in the case of Allen vs. McKean, 1 Sumner, 277, which involved a question similar to the one under consideration, Justice Story, in commenting upon the reserved power of the Legislature to limit, annul or restrain the powers vested by the act, uses the following language : “The language of that section is certainly very broad, but it is not unlimited. The founder has a right to have the statutes of his foundation, as to the power of the trustees, strictly adhered to, except so far as he has consented to any alteration of them. But an authority to alter or modify these powers, can never be fairly construed into an authority to take them away from his trustees, and confer the same powers on other persons.” And such is our own conclusion in this case.

The reservation of the right to alter, amend, or repeal the act by which this corporation was created, is certainly prudent and salutary; but it seems to be a necessary implication, that if the Legislature should undertake to make what, in their opinion, is a legitimate alteration or amendment, the trustees have the power to accept or reject it, whatever may be the consequences. If, from mal-administration, or otherwise, the Legislature should, at any time, deem it expedient to put the Institute out of existence, by a repeal of its charter, they have the unquestionable power to do so; but they have, in our opinion, no right or power to compel the trustees to accept any act which they may pass, although, in their estimation it may comport with the power reserved. Indeed, we perceive but little if any utility in a reservation t'' of power to alter or amend, when it strikes us as axiomatic, that the Legislature can impose no alteration or aniendment upon the trustees without their consent, either with or without the reservation. The Legislature can no more force the trustees to accept an alteration or amendment of their charter, than they could have forced them to accept the original charter. Under the reservation, they can repeal or destroy, without any consent on the part of the trustees, but as long as they remain in existence as a corporate body, they necessarily have the power to reject an amendment. What might be the consequences of^ the rejection of a lawful amendment, it is uimecsary for ns to consider.

We deeply regret this unhappy controversy among gentlemen who, doubtless, are equally anxious to promote the best interests of the Christian religion in the West, and who, but for the unfortunate differences existing between them, might see their efforts crowned by ah institution which would shed lustre upon their names, and be a perpetual monument to their united and noble exertions in the best of causes • — that cause which condemns all strife, and enjoins fraternal feelings, good will, peace, harmony and love.

Decree reversed, and the cause remanded with directions that the bill be dismissed.