author: Mr. Justice Stewart,

text:
    Mazaika v. Krauczunas, Appellant.

      Church law — Property rights — Roman Catholic Church — Equity—Act of April 26,1866, P. L. 828 — Bishop—Lay members.

    1. A court of equity will not enforce a resolution passed at a meeting of a Roman Catholic congregation vesting in the bishop of the diocese as such all the property of the congregation to hold all such property as trustee in accordance with the laws, rules and usages of the Roman Catholic Church, where the evidence shows that under the laws of the church the bishop is invested with the absolute control of the church property. To enforce such a resolution would be to violate the express terms of the Act of April 26, 1855, sec. 7, P. L. 328, which provides that church property “shall not be otherwise taken and held, or enure, than subject to the control and disposition of the lay members of such church.”
    2. Under the Act of April 26, 1855, P. L. 328, when property has been bequeathed, devised or conveyed to any person or persons whomsoever for the use of any church, congregation or religious society for religious worship the person so acquiring the legal title is as to the property acquired but a dry trustee without any power of control or management.
    Argued Feb. 23, 1911.
    Appeal, No. 361, Jan. T., 1910, by defendants, from decree of C. P. Lackawanna Co., Nov. T., 1908, No. 1, on bill in equity in case of Alex. Mazaika et al. v. Andrew Krauczunas et al.
    Before Mestrezat, Potter, Elkin, Stewart and Moschzisker, JJ.
    Reversed.

      Bill in equity to obtain a conveyance of property and for an injunction.
    Newcomb, J., found the facts to be as follows:
    1. The property in question consists of three contiguous lots at the northwesterly intersection of North Main avenue and Theodore street, in this city, designated as eleven, twelve and thirteen according to a map or plot of lots known as “Electric City Park,” which is recorded in the proper office of this county. They are the same lots conveyed by Bishop Hoban to the defendants, as trustees, etc., by deed dated May 29, 1908, and are particularly described in the fourth paragraph of the bill. They are improved with a church edifice, built in 1893.
    2. As so improved the property has from that time ever since been in the actual use and enjoyment of St. Joseph’s Lithuanian Catholic Congregation of Scranton — except as hereinafter stated — as a place of religious worship in accordance with the purposes of its organization.
    3. The congregation was organized about 1891 or 1892 as an unincorporated religious association for the support of public worship according to the laws, usages, faith, doctrine and discipline of the Catholic church. For that purpose the property was acquired and paid for with funds furnished and contributed by the members. It is not disputed that the beneficial ownership is in the congregation and that at all times since the purchase the legal title has been held by some person or persons in trust for its uses as such congregation.
    4. The congregation has at all times been subject to the ecclesiastical jurisdiction of the Catholic bishop of the diocese of Scranton, and under the pastoral charge of a priest appointed to it by him, although during the pend-ency of this suit the use of the property for church purposes has been prohibited by Rt. Rev. Michael J. Hoban, who has been bishop of the diocese since 1899.
    5. The trustees who have held the legal title have at all times been certain of the lay members of the congregation. In late years it has been held by the ten defendants. That was objectionable to the bishop as contrary to the prevailing rule of the church on the subject, and eventually brought on a factional controversy between the members. Litigation began in 1906 over a conveyance of the title which had that year been made to the bishop in pursuance of certain action had at a meeting of the congregation. The validity of the transfer was successfully attacked by the faction supporting the ten lay trustees. The nature of that controversy appears by reference to the proceedings therein which have been put in evidence, and its result by official report of the case in 221 Pa., at page 213. It terminated in the reconveyance by the bishop to the defendants mentioned in the first conclusion* supra.
    6. The outcome of that transfer was the congregational meeting of June 8, 1908, — an attempt, no doubt, by the faction supporting the bishop to have the title put in his name in conformity with the statute governing the selection of an ecclesiastical trustee in such cases.
    7. This meeting was called by the pastor for St. Mary’s hall, and announced from the altar at the last service held in the church, to wit, May 31, 1908, in connection with the reading of the bishop’s interdict discontinuing the use of the church, which became effective at that date.
    8. In the first instance the meeting was called for Sun- . day evening, June 7. Upon reflection the priest deemed it advisable to have it on a secular date and so changed it to the eighth. Of this change he caused notice to be given, (1) by advertisement during the week in several daily newspapers of general circulation published in this city, and (2) by handbills in the Lithuanian language generally distributed among the members of the congregation and posted in their business places. At the time of the interdict the religious services of the congregation were by authority of the bishop transferred to the chapel of St. Thomas college in this city where they have been held ever since. At the first service held there, viz., Sunday, June 7, the change of date for the congregational meeting was again announced by the priest. In addition to that, the defendants and a committee of the faction adhering to' them issued handbills in effect joining in the call for the St. Mary’s hall meeting of June 8. These were circulated during the week by the defendants in the same way as those issued by authority of the priest.
    9. An attempt is made to charge the priest with changing the place as well as the date of meeting. The fact is that the notices in two of the newspapers specified the time and place as follows: “In St. Mary’s hall, West Market street, on the 8th day of June, at 7 o’clock p. m., instead of the 7th as heretofore announced,” etc.; while in the third paper it read, “instead of Sunday the 7th and in the Auditorium as heretofore announced,” etc. This on its face implies an earlier .notice of the meeting at the Auditorium. But it was the error of some person who prepared the notice for the printer. There had been no such announcement, and the priest was not aware of the error until long after the meeting had been held. It is not shown that anyone ever understood the meeting to have been called for any place other than St. Mary’s hall. The action of the defendants and those adhering to them precludes the inference of any misunderstanding in the premises on their part.
    10. By the law of the church and the regulations in force in this diocese it is required, (1) that congregational meetings shall be called by the pastor and due notice given from the pulpit; and (2) that the right to vote at such meetings shall be restricted to those who are practical Catholics and have contributed regularly to the support of the congregation by the payment either of pew rent, a seat in its church, or annual dues.
    11. In this congregation the male .members of full age have from the start been accustomed to pay as annual dues the sum of $6.00, very generally in monthly installments of fifty cents. These payments were noted by the secretary in a dues book specially printed in their language for that purpose. Previous to 1906 the congregation had been in harmony and the accounts seem to have been kept by a secretary who turned the books over to the defendant trustees after the litigation started. To what extent payments since then have been made to the committee recognized by the trustees, as distinguished from that recognized by the priest, does not appear.
    12. But to avoid controversy on that ground it was mutually agreed by the factions and announced by authority of the pastor that all male members of full age who had paid dues as late as 1905, the last year when the congregation was harmonious, should be allowed to vote at the meeting without regard to payments since the dissension began. To that end it was mutually agreed and fully understood that the members should be prepared to show their dues books at the hall.
    13. The hall was opened at seven o’clock in the evening of the day appointed and between that hour and eight o’clock the congregation assembled. A committee composed of members of both factions was stationed at the door to see that only those were admitted who were entitled to vote.
    14. As to what took place from that time until the meeting closed at eleven o’clock there is a marked conflict in the testimony. On the weight of the credible evidence it is found: (1) That all male members of voting age were admitted who showed by their due books or otherwise that they had paid as late as 1905; (2) that by eight o’clock all qualified members who so desired had been admitted; (3) at that hour the meeting was called to order by the pastor and was duly organized by the election of a chairman and secretary; (4) its object was stated as well by the chairman as by the priest, namely, to take action on the question of substituting the bishop as trustee in place of the defendants; (5) this was followed by prolonged discussion, pro and con, freely participated in by both factions, the speakers addressing the audience from the platform; (6) eventually the question was submitted in the form of a resolution in writing after its terms had been explained at length; (7) in substance and practical effect it was a proposal that the bishop be chosen as trustee to hold the title to all the property of the congregation in accordance with the laws, rules and usages of the Catholic church in this diocese.
    15. By direction of the chairman the vote was taken by a “division of the house.” Those who favored the proposed change accordingly moved to one side of the hall and those opposed took their station on the other side. Of the 1,000 or more members thus voting an overwhelming majority voted in the affirmative. Exact figures cannot be had; but evidently not more than 100 voted in the negative; and it is so found.
    16. The result was announced by the chairman accordingly, and the meeting closed after the appointment of the plaintiffs as a committee to attend to the details of. procuring a transfer of the legal title from the defendants, with authority to take such proceedings at law or in equity as might be necessary “to secure the conveyance from the trustees above mentioned to the Rt. Rev. Michael J. Ho-ban, Bishop of Scranton, trustee,” for the congregation.
    17. In this way, as between the defendants and the bishop, a majority of the voting membership expressed its choice for trustee. But on demand being made the transfer was refused by defendants and that brought on the present suit.
    The court entered the following decree:
    And now, November 19, 1910, this cause came on to be heard at a regular term of equity court, and was argued by counsel, and upon consideration thereof, it is ordered, adjudged and decreed that the defendants shall within seven days from the date hereof, execute, acknowledge and deliver a proper deed of the premises described in plaintiffs’ bill, held by said defendants in trust for St. Joseph’s Lithuanian Oatholic Congregation of the city of Scranton, to Rt. Rev. Michael J. Hoban, Bishop of Scranton, as trustee for St. Joseph’s Lithuanian Catholic Congregation of the city of Scranton.
    It is further ordered that the defendants pay the costs other than those which plaintiffs were directed to pay by order of the Supreme Court on setting aside the former decree of January 7, 1910.
    October 9, 1911:

      Error assigned was the decree of the court.

      William Jessup Hand, for appellants.

      John G. Johnson, with him T. P. Hoban and John P. Kelly, for appellees.
   Opinion by

Mr. Justice Stewart,

Either the deliverances of this court as reported in 221 Pa. 213, and 229 Pa. 47, with respect to the ownership of church property and congregational power in connection therewith, have been seriously misapprehended, or the present proceeding is a clear attempt to circumvent the law as we have there declared it. In the first of the cases referred to, Krauczunas v. Hoban, the effort was on the part of the ten lay members of the congregation, duly chosen trustees of the legal title to the church property, to compel a reconveyance to them of the title by Bishop Hoban who had previously been designated trustee of the title for a special purpose which had been fully accomplished. The effort of these trustees was resisted, not on the ground that the congregation was without statutory right to choose its own trustee or trustees for the purpose indicated, or that the election of these particular trustees was in any way irregular, but distinctly on the ground that any such election, except as it resulted in the choice of the bishop of the diocese in which the property was located, offended against the rules and regulations of the Catholic church. To make this clear it is only necessary to quote a single finding of fact, and the conclusion derived therefrom, on which the lower court rested its dismissal of the plaintiffs’ bill. The finding was as follows: “The Canons of the Roman Catholic Church provide and require that the title to the property of the Roman Catholic Congregation which is under the jurisdiction of the Roman Catholic Bishop of the Diocese in which the Congregation has its place of worship, must be in the ordinary, or, in the present case, in the Bishop of the Diocese.” This was the conclusion derived: “If a congregation is formed for the purpose of religious worship according to the faith and rites of the Catholic church, and has accepted the pastor assigned to it by the bishop of the diocese, has placed itself under the authority of the bishop and submitted itself to his authority in all ecclesiastical matters, the title to its property must be taken and held as provided by the Canons of the Catholic .Church. The property acquired by the congregation under such circumstances is the property of the church, and is subject to its control and must be held in the manner directed by its laws. . . . The title to the real estate described in plaintiffs’ bill is properly and. legally vested in the defendant, Rt. Rev. Michael J. Hoban, Bishop of Scranton, as trustee for St. Joseph’s Lithuanian Catholic Congregation, in accordance with the laws and usages of the Catholic Church.” Referring to this language, in our review of the case, we said: “ It will be seen from this that what was a controversy over an unimportant result — the right to substitute one dry, passive trustee of a legal title for another — was made to involve a question of ownership of property. . . . Conveyance to the Church is not pretended; nor is forfeiture on the part of the congregation. Nothing is asserted in this connection but ecclesiastical rules and regulations, which, except as they are aided by legal conveyance, are ineffectual to divest any owner of his property. But more than this the position taken by the defendant and sustained by the court, is in direct opposition to the law, whose supremacy, over all -ecclesiastical rules and regulations, when rights of property are concerned, is not to be questioned. The Act of April 26, 1855, P. L. 328, sec. 7, provides that ‘whensoever any property, real or personal, shall hereafter be bequeathed, devised or conveyed to any ecclesiastical corporation, bishop, ecclesiastic, or other person, for the use of any church, congregation, or religious society, for religious worship or sepulture, or the maintenance of either, the same shall not be otherwise taken and held, or enure, than subject to the control and disposition of the lay members of such church, congregation, or religious society, or such constituted officers or representatives thereof, etc.’” We accordingly sustained the appeal, and ordered that Bishop Hoban re-convey the church property to the plaintiffs as trustees. It is to be remarked in this connection that these trustees, because of their attempt to vindicate their right under the law, had been excommunicated by the bishop (Appendix, p. 233). Nevertheless the bishop complied with the decree of the court, and made conveyance of the title; he followed it up, however, with an episcopal interdict which closed the doors of the church against the congregation. This interdict reads as follows: ‘ ‘ The members of St. Joseph’s Congregation; Greeting — The court has decided that the Catholic Bishop of Scranton must hand over to a band of excommunicated apostates the deed of the Catholic Church of St. Joseph’s. As the church cannot be used for any other worship than Catholic Worship, and as it is intolerable to hold Catholic services in a church controlled by members who despise the Church and Her laws, and who have lost their Catholic Faith, I am exceedingly pained to be obliged to place the Lithuanian Catholic Church of St. Joseph’s under interdict until the members of the congregation shall turn these faithless men out and place the Church once more under the care of the Bishop of the Diocese of Scranton, according to the laws of the Catholic Church. I now declare that the Lithuanian Catholic Church of St. Joseph’s, North Main Avenue, in this city of Scranton, is hereby placed under Interdiction from midnight of Sunday, May 31-June 1, 1908, and that no Catholic services of any kind shall be held therein, nor shall any Catholic enter therein without incurring ecclesiastical censure, until the Interdict shall be- removed.” (signed) “Michael John Hoban, Bishop of Scranton.” Simultaneously with the proclamation of this edict a meeting of the congregation was called, elsewhere than in the church, to determine how the title to the property was to be held. We are not now concerned with the factional differences which disturbed that meeting, and resulted in a separate meeting of the dissentients, except to say that the latter repudiated the action attempted at the meeting regularly called, and declined to reconvey the title to the bishop. The present bill was filed to enforce compliance. A protracted hearing resulted, the one issue being the regularity in the proceedings and membership of the meeting which declared for a reconveyance to the bishop. In the course of two or three days— we use the language of the chancellor before whom the case was heard — it became apparent that if the question were to be decided by review of the action taken at that meeting, the result would be unsatisfactory or doubtful. It was consented to by the individual litigants that an election should be held in open court, conducted by the chancellor. Such election was held, covering several days, and resulted, according to the findings of the chancellor, in the election of Bishop Hoban as trustee. A decree followed requiring a reconveyance of the title to him. On appeal to this court, Mazaika v. Krauczunas, 229 Pa. 47, we held that the election before the chancellor in open court was without effect for reasons therein stated at length, and which need not be repeated here, and we accordingly set aside the decree and remitted the record, the case to be proceeded with as though the election in court had not been held. The case was thereupon proceeded with in due form, with like conclusions upon the issues raised by the original bill and answer, and we have this present appeal from a decree requiring a reconveyance to the “Rt. Rev. Michael J. Hoban, Bishop of Scranton, as trustee for St. Joseph’s Lithuanian Catholic Congregation of the city of Scranton.” If the case rested simply on the findings of fact and conclusions of the learned chancellor with respect to the regularity of the proceedings in the meeting of the congregation at which Bishop Hoban was declared to have received a majority of the votes cast, while much that there occurred is open to criticism, we would not feel justified in prolonging this unprofitable controversy by a reversal. But there are other admitted facts which have a significance not to be overlooked. In this we make no reference to the excommunication of the appellants as a punishment for their appeal to the law of the land for a vindication of the right of the congregation they represented to the control of its property, nor to the episcopal edict which followed at once upon our decision, depriving the congregation of the privilege of Christian worship according to its faith and practice in its own sanctuary until such time as it chose to elect the bishop of the diocese the trustee of the legal title to its property. We will assume that these acts were within episcopal authority under the polity of the Roman Catholic Church, however much they may be- at variance with the policy of our civil law which regards with condemnation all interference with freedom of elections. No one is heard complaining in regard to them, and they concern us here only as they help to an understanding of the real purpose of the meeting of the congregation whose action in the election of Bishop Hoban as trustee has been sustained by the court below. The resolution embodying the action of the meeting was as follows: “Whereas, it is deemed advisable and proper, and it is also the desire of the members of St. Joseph’s Lithuanian Catholic Congregation of the city of Scranton, Pennsylvania, to vest the title to all the property of said St. Joseph’s Lithuanian Catholic Congregation of the city of Scranton, Pennsylvania, in Rt. Rev. Michael J. Hoban, Bishop of Scranton, as trustee for said St. Joseph’s Lithuanian Catholic Congregation, in accordance with the laws, rules and usages of the Catholic Church in the diocese of Scranton and state of Pennsylvania.

“ Now, therefore be it resolved, That all the property of said St. Joseph’s Lithuanian Catholic Congregation is, and is hereby declared, subject to the jurisdiction of the Catholic Church and the Catholic Bishop of Scranton, and be it further

“Resolved that Rt. Rev. Michael J. Hoban, Bishop of Scranton, be, and is hereby chosen and designated trustee for said St. Joseph’s Lithuanian Catholic Congregation of the city of Scranton, Pennsylvania, to hold as such trustee all the property of said Congregation, and the title thereto in accordance with the laws, rules and usages of the Catholic Church in the Diocese of Scranton and state of Pennsylvania.” The significance of the language here employed can be fully understood only as we recall what was said by this court in Krauczunas v. Hoban, supra, the language of the interdict of the bishop closely following upon our decision, and the rules and regulations of the Catholic church with respect to the property of the congregation as defined by Bishop Hoban in his testimony in the case. In the case referred to we distinctly held that the case was one involving the right of property, and that the law governing was not to be found in the rules and regulations of the general ecclesiastical system, but in the statute of April 26, 1855, P. L. 328, wherein it is declared that property “devised or conveyed to any ecclesiastical corporation, bishop, ecclesiastic or other person, for the uses of any church, congregation, or religious society for religious worship, or sepulture, or the maintenance of either, the same shall not be otherwise taken and held, or enure, than subject to the control and disposition of the lay members of such church, congregation or religious society, or such constituted officers or representatives thereof.” The contention of the bishop there was that he had a right to hold the title to the property under the Catholic system, virtute officii. This view having prevailed with the court below we sustained the appeal, and expressly held that the position taken “is in direct opposition to the law whose supremacy over all ecclesiastical rules and regulations, when the rights of property are concerned, is not to be questioned.” We further held that the conveyance to the appellees in that case constituted an executed legal estate in the congregation, and created a dry, passive trust which gave the trustees neither interest in the estate, nor power to control it or direct its management in any way; that trustees in such case become simply the depository of the legal title and nothing more. We refer in this connection to only so much of the interdict as decreed that it shall continue in force “until the members of the Congregation shall turn out these faithless men [the acting trustees] and place the Church once more under the care of the Bishop of the Diocese of Scranton according to the laws of the Catholic Church.” We make no question here of the authority of the bishop under the rules of the church for this coercive decree. It was nevertheless a manifest attempt to deny to the congregation freedom of action with respect to property of which, under the law of the land, it was sole owner; notwithstanding, the bishop, as he himself asserts, was acting strictly in line with his episcopal duty and prerogative. He had testified that as bishop of the diocese he had control and disposition of the church property under the general laws of the church. He was asked “Whether under the ecclesiastical law of the Catholic Church the lay members had the right of control and disposition of the property, or whether the bishop had the right?” His answer was as follows: “Under the general law of the church the lay people have not the right to control.” He was again asked, “Under the law of the church, the ecclesiastical law, have the members of the church the right to hold the property as trustee for the congregation?” His answer was, “No, they have not.” In this reflected light we may see the real significance of the language used in the resolution declaring for the election of Rt. Rev. Bishop Hoban, “to hold as trustee all the property of said Congregation and the title thereto in accordance with the laws, rules and usages of the Catholic Church in the Diocese of Scranton;” that is to say, even to a denial to the congregation of the chief incident of its ownership, control of the property which is its own under the laws of the state of Pennsylvania. In the case above cited we took occasion to explain, in the hope that it would end this prolonged controversy, that a trust in such cases gives to the trustee neither interest in the estate, nor power to control it or direct its management in any way; that it creates no duty for the trustee to perform, and leaves nothing to his discretion; that he is simply the passive, silent depository of the legal title and nothing more. In view of the plain words of the statute thus called to their attention as to the exclusive right of property in the congregation, the unquestioned sovereignty of the law where rights of property are involved, the legal inhibition against the bishop, qua bishop, exercising control of the church property, the positive conflict in this respect between the rules and regulations of the Catholic church and the statute laws of the state, what other conclusion can be reached than that the action of the meeting of the congregation, as expressed in the resolution we have referred to, and at which it is claimed Bishop Hoban was elected trustee, was a clear attempt to invest that particular ecclesiastic with an authority over the congregational property which the law expressly forbids? If no other purpose was intended than to elect Michael J. Hoban, in his private and natural capacity — the only capacity in which under the law he was competent to hold the legal title as trustee — was it for the purpose of identification that he was described as “Rt. Rev. Michael J. Hoban, Bishop of the Diocese of Scranton?” We should likely so conclude, were this all; but this is preceded by the express declaration that all the property of this congregation is to be subject to the jurisdiction of the Catholic church and the Catholic Bishop' of Scranton, and followed by the equally express declaration that the bishop is to hold as such trustee all the property of said congregation, and the title thereto, in accordance with the laws, rules and usages of the Catholic church which invested him with absolute control. If it be said that the purpose back of the action is irrelevant in a proceeding of this character, where the formal requirements have all been met in the matter of the call for the meeting, and in the general conduct of the election, our reply is, that the application here is for equitable interference, not in a matter resting in contract, but in a matter having to do with the general policy of the law and express statutory regulation as well, and for so much the greater reason the familiar maxim applies, that equity will respond only as the suitor comes with clean hands. Need we argue the proposition that the suitor comes not with clean hands in such case when the unmistakable purpose of his coming is to accomplish something which the law forbids? Let'us make this plain even though it be only to repeat, What the law does not expressly allow to such trustee, it forbids. The office of trustee simply of legal title is not created by ecclesiastical authority, but created by the law; such trustee can exercise no control whatever over the property held in trust; being an officer created by law, and answerable only to the law, he can derive neither authority nor power from any other source. His duties, privileges, authority and responsibility qua trustee, can neither be enlarged nor impaired by ecclesiastical interference, and any attempt to so interfere would be quite as illegal as though forbidden in express terms.

But suppose we are mistaken in attributing to the congregational meeting that elected Bishop Hoban a purpose to circumvent the law, it follows then that the election was made under a total misapprehension of the law regulating ownership of church property and the rights of the congregation therein. The fact of conflict between the rules and regulations of the Catholic church and the laws of the state in this regard, remains. It is idle to dispute such fact; it is too patent to be questioned, and further discussion of it would be but wasted effort. If in ignorance of its rights on the one hand, and the law’s restriction on the other, the congregation by a majority of votes took the action on which these appellees base their claim, should the court lend its aid to compel compliance? Were contractual rights involved we might feel constrained to do so; but we are embarrassed by no such consideration. No possible prejudice can come to any individual or interest by our withholding our sanction to the decree in this case. If St. Joseph’s Lithuanian congregation desires Michael J. Hoban, whether described by his episcopal office or not, to be the custodian of the legal title to their church property, let them so declare by a majority vote of the adult male membership at a meeting regularly called, and their choice will not only be respected by the courts, but will by. them be enforced if necessary. In either case no other purpose or understanding can be imputed than that the individual so chosen is to hold his office by virtue of the law, with no power of control whatever except what the law confers. However he may thereafter attempt interference with control of the property by the congregation, his action in this regard will be referred to his episcopal office and its legality adjudged accordingly, without regard to his trusteeship of the legal title.

It is urged that the decree from which the appeal is taken does not and cannot subject the church property to the control of the legal title. This is quite true; but the decree, except as it gives effect to the purpose of the congregation as expressed in the resolution which prevailed and which was the basis of its action, must be held extrajudicial, inasmuch as it substitutes for the will of the congregation in the matter of the selection of a trustee, the power of the court. The presumption may not be violent that the congregation would have elected Bishop Hoban trustee to hold under the law, but the court cannot presume that. That he was to hold it under the rules and regulations of the church, in view of what we have said, must be regarded as a condition of his election, which the court had no right to suppress or to ignore.

The eighth assignment of error was the refusal of the court to instruct in accordance with the ninth request for conclusions of law. The instruction asked for was as follows: “The action of the alleged meeting of June 8, 1908, eiinbodied in the resolution claiming to have been adopted by the meeting, and upon which plaintiffs based their right to the relief prayed for in their appeal was illegal, and not binding upon the congregation for the reason that its purpose was to put the control and disposition of the property of the congregation in the Bishop of the Diocese under the laws of the Catholic Church, the same being in conflict with the laws of Pennsylvania.” For the reasons above stated we are of opinion that this point should have been affirmed. We accordingly sustain the appeal. The decree of the court requiring the defendants to execute, acknowledge and deliver a proper deed of the premises described in the plaintiff’s bill held in trust by them for St. Joseph’s Lithuanian Catholic Congregation of the city of Scranton to Rt. Rev. Michael J. Hoban, Bishop of Scranton, as trustee for St. Joseph’s Lithuanian Catholic Congregation of the city of Scranton, is reversed, and it is ordered that the appellees pay the costs of this proceeding.


source: Caselaw Access Project

license: Public Domain

text:
    Delaware, Lackawanna & Western Railway Company v. Welser, Appellant.

      Equity — Reformation of written instrument — Chancellor’s findings of fact — Evidence—Review.
    1. A chancellor’s findings of fact, upon which a decree is based reforming a written instrument, will not be reversed by the appellate court where three witnesses for the plaintiff testify clearly and precisely to the averments of the bill, while the testimony for the defendants is for the most part evasive and inconclusive.

      Railroads — Purchase of land — Right of way — Land in excess of requirements — Contract—Corporations— Ultra vires.

      2. A landowner who has entered into a contract with a railroad company to sell the Company land for its right of way cannot subsequently complain that the contract is illegal because the company purchased more land than it actually required. In such a case it is for the company to determine whether it can secure the necessary accommodation upon better terms by meeting the owner’s demands and purchasing more land than it actually requires, than it can by resorting to condemnation proceedings.
    3. Corporations are restrained by considerations of public policy from engaging in other business than that for which they are chartered; but a corporation in making sale of what it has acquired for a proper purpose, but for which it has no use, is not engaging in business not permitted by its charter.
    Argued March 7, 1911.
    Appeal, No. 321, Jan. T., 1910, by defendants, from decree of C. P. Northampton Co., Sept. T., 1909, No. 3, on bill in equity in case of Delaware, Lackawanna & Western Railway Company v. Alice Welser et al.
    Before Fell, C. J., Brown, Mestrezat, Potter and Stewart, JJ.
    Affirmed.
    Bill in equity for specific performance. Before Scott, P. J.
    The chancellor found the facts to be as follows:
    1. Alice Welser, prior to May 11, 1909, had title to a tract of land in this county; and on said date she and her husband executed and granted, under seal, an option or right of purchase for the same to the plaintiff company “within a period of ninety days.” William Welser signed it also as mortgagee. The land was described in this option, a copy of which is printed in complainant’s bill, to consist of “about twelve acres,” and the consideration was to be $150 per acre, “as shown by a survey to be made.” It was afterwards ascertained to be twelve and four-tenths acres, for which the purchase price would be $1,860. There is no contention that it was indefinitely described. This option, without further expression of its terms, expired on August 9. There was a written acceptance of it by plaintiff, through its superintendent, on August 10, but not before either orally or by writing nor by tender for execution of contract or deed.
    2. The last two paragraphs of the option are as follows: “Should the party of the second part elect to take the benefit of this option within ninety days the five ($5.00) dollars paid on this option shall be considered part of the purchase price. Twenty-five ($25.00) dollars on closing by contract or delivery of gen’l warranty deed free of all encumbrances and the balance within sixty days from thé. execution of said contract or delivery of deed.
    “Contract or deed to be delivered at the Pen Argyl station of the Bangor and Portland Div. of D., L. & W. R. R. Co. between the hours of 9 a. m. and 4 p. m. on or before August 11, 1909.”
    3. On said August 11, 1909, the agent of plaintiff was at the place thus appointed, and tendered to Mr. Welser in the presence of his counsel $25.00 and a contract of sale prepared for signature, both of which were refused upon the ground that the option had expired without acceptance. (The counsel declared he represented Mrs. Welser also, but such authority cannot be established legally by the declarations in pais of the alleged agent: Grim v. Bonnell, 78 Pa. 152). On August 17, he tendered to both the full consideration, in gold, with a deed for execution, which was also declined. The money was then deposited in bank and notice given that it would be paid when deed was delivered.
    4. Mrs. Welser and her husband on August 11 granted an option on the same property for three months (exhibit 4), to Henry Male, the other defendant, for the consideration of $6,000. This was recorded the following morning (August 12), at 7.55 o’clock, preceding by ten minutes the entry of the one now involved in dispute. Subsequently on August 23 they made a conveyance of said premises to Male, by deed, a copy of which appears in plaintiff’s bill. The premises sold to Male embraced those described in the option, and included two and one-half acres more, upon which were erected buildings and improvements; permanent, and of substantial value.
    5. The option now in question was drafted by the real estate agent of plaintiff company who was also a lawyer, in the office of a justice of the peace to whom he was a stranger but selected by the defendant to advise them in the transaction. The husband is a laborer in a slate quarry, can read but little, and nothing that is not printed or typewritten; the wife not at all. The justice read and explained its terms to them before execution. (What was said there will require further attention, for upon it solely, if competent for consideration, depends the question whether the plaintiff shall have relief or be denied it.) Neither of them possess quite the average degree of intelligence of persons similarly situated.
    6. Henry Male on August 11, before the expiration of the hour named for delivery of contract or deed, knew of the existence of this option to plaintiff, by his presence at the tender and refusal between the parties (104 Pa. 460), and the one granted to him that day contains the following reservation: “It is agreed that this option is null and void if the D., L. & W. R. R. succeed in compelling the said party of the first part to convey the land to said railroad company by law.”
    7. I further find, if it be admissible under the pleadings or rules of law to apply these contemporaneous declarations to define the written terms of the option, that in the presence of the two intending grantors and the justice of the peace designated by them as advisor, the agent of the plaintiff company in the act of drafting it said that as misunderstandings sometimes arose about the time expiration, of such limitations the agreement should mean that the ninety days mentioned were to end on August 11. The draftsman who had completed the agreement, except the last clause, proceeded then to finish it; after which it was read over to them by the justice and explained as providing the “option” would expire on this last mentioned date. To which they assented. This explanation of its meaning was accepted by the intending vendors as expressing their purpose and intention before signature.
    The court entered a decree for specific performance.

      Error assigned was the decree of the court.

      Robert A. Stots, with him S. Bruce Chase, for appellant.
    The evidence in the case upon which the court below reformed this contract does not measure up to the standard required by courts of equity for that purpose, to wit: that it must be “clear, precise and indubitable:” Highlands v. R. R. Co., 209 Pa. 286; Graham v. Carnegie Steel Co., 217 Pa. 34; Diman v. R. R. Co., 5 R. 1.130; Fehlberg v. Cosine, 16 R. I. 162 (13 Atl. Repr. 110).
    October 9, 1911:
    Plaintiff has no right to acquire more land than it needs, or for other than railroad purposes, and even though the court should hold that the evidence in the case is sufficient, under the rule, to reform the contract, it would seem plain that the company, admittedly needing only a strip of this land, had no legal right to purchase the whole of it; and, if so, specific performance of this contract should be denied: Hitchcock v. Galveston, 96 U. S. 341; Bank of Michigan v. Niles, Walk. Ch. (Mich.) 99.

      Kirkpatrick & Maxwell, for appellee.
    The findings cannot be reversed: Spencer v. Colt, 89 Pa. 314; Boyer-town Nat. Bank v. Hartman, 147 Pa. 558; Dilworth v. Kennedy, 201 Pa. 388; Com. v. Stevens, 178 Pa. 543; Hancock v. Melloy, 187 Pa. 371; Mackintyre v. Jones, 9 Pa. Superior Ct. 543.
    Railroad companies being fully endowed with the power to acquire and purchase lands, they are the judges of the necessity thereof and a large measure of discretion is left to them in determining for their present and future requirements, the quantity of land to be taken: Chautauqua County Bank v. Risley, 19 N. Y. 369; Farmers’ Loan & Trust Co. v. Curtis, 7 N. Y. 466; Leazure v. Hillegas, 7 S. & R. 313; Goundie v. Northampton Water Co., 7 Pa. 233; Spear v. Crawford, 14 Wend. (N. Y.) 20; Ex parte Peru Iron Co. 7 Cowen (N. Y.), 540.
   Opinion by

Mr. Justice Stewart,

The bill in this case, as amended by leave of court and pleaded to by the defendants, alleged that, before the execution of the contract as prepared by the scrivener, in which it was recited that the option for the purchase of the land in question was for ninety days, it was distinctly understood and agreed between the parties that the date of expiration was to be August 11, following, and that the concluding clause in these words: "Contract or deed to be delivered — between the hours of nine A. M. and four p. M. on or before the 11th day of August, 1909,” was added to express such understanding and agreement. No exception was taken to the order allowing the amendment. The original bill was for specific performance of the contract; the amendment prayed for reformation of the contract to the end that what was supposed to be obscurity of phrase in the last clause might be removed, and the contract be made to read that the option was to expire August 11,1909, instead of at the end of ninety days, which would have been August 9, 1909. It was supposed to be necessary, or at least desirable as a cautionary measure, inasmuch as it was not until August 11, that the plaintiff attempted to exercise the option granted. Whether the contract as written left the date of expiration of the option doubtful is a question we need not consider. The case proceeded on the theory that this was a disputable question, and the errors assigned can be disposed of on the assumption that it was. What is urged upon us is that the evidence introduced by the plaintiff in support of the averment contained in the amended bill was insufficient to warrant a reformation of the contract in the particular referred to. A discussion of the evidence in detail is unnecessary. It is enough to know that three witnesses, one of them a justice of the peace, selected by the grantors to represent them in the transaction as friend and adviser, and a stranger to the parties representing the plaintiff, testified that it was distinctly stated, and as distinctly agreed to by all the parties, that for the purpose of avoiding misunderstanding and dispute as to the limit of the option, August 11 was to be regarded as the last day for its exercise; and that the final clause was added to express this understanding. Counsel for appellants admit that the testimony of these witnesses was both clear and preelse, but insist nevertheless that it does not measure up to the standard required for the reformation of a written contract. To the mind of the chancellor it was not only-clear and precise, but indubitable, in the sense that it was convincing. The opposing testimony- was for most part evasive and inconclusive. It was a matter of controversy whether the one witness who denied directly and unequivocally that any specific date was fixed upon for the expiration of the option was present during the whole of the conversation. If the conversation upon which the execution of the contract followed was as testified to by plaintiff’s witnesses, it requires no argument to vindicate the correctness of the chancellor’s conclusion as to its sufficiency for the purpose for which it was offered. The credibility of the witnesses was for the chancellor; and those for the plaintiff having been unassailed, his findings with respect to the disputed facts are not to be questioned. It is argued that the testimony does not show mutual mistake, but simply a misunderstanding on the part of the plaintiff as to when the option was to expire; that it does not show that the vendors were of the same mind as the vendee as to the purpose and significance of the clause that was to be added to the agreement as originally prepared. The testimony which prevailed with the chancellor was to the effect that August 11 was distinctly agreed upon as the date of expiration; that the final clause of the agreement was added in order to express the entire contract, and that after it had been added the entire paper was read over to the grantors with special explanation that the last clause fixed the date of expiration of option. If credited, and the concluding clause in the contract does not clearly define another limit for the option than the ninety days originally agreed upon, it necessarily follows that the common understanding as to what it should express was disappointed. If the conversation between the parties which led to the insertion of this clause was what the witness testified to, no room exists for any misunderstanding as to what was agreed upon. Indeed misunderstanding is not pretended. What is insisted on is that the conversation did not occur. The evidence was convincing to the chancellor, for reasons which we think entirely adequate that it did occur, and that, without more, established mutuality of mistake.

The other questions raised on the record are quite as free from difficulty. The contract gave the plaintiff an option for the purchase of twelve acres out of a tract of land containing fourteen acres. The negotiation began with an offer from the plaintiff to buy a right of way through the tract for the purpose of laying its tracks thereon. Mrs. Welser, owner of the land, objected to this, giving her reasons, but expressing a willingness to sell the whole tract. After a day’s consideration it was agreed that the company should have an option for the purchase of the twelve acres, a condition being that the company, at its own expense, was to remove the improvements on the twelve acres and reconstruct them on the remaining two. It is argued that the twelve acres are in excess of what is required for the relocation of the company’s tracks, and that therefore the contract on the part of the company is ultra vires and not enforceable. This is talcing a very narrow view of corporate rights and powers. It is not open to question that a railroad company may obtain its rights of way upon such terms as are most favorable to it, and to this end may resort to condemnation proceedings or purchase such estate or interest in the land as may be necessary for its accommodation. Whether it can secure the conveniences it requires on better terms by condemnation or by purchase, is for itself to determine; and so, whether it can secure the accommodation upon better terms by meeting the owners’ demands that it purchase more land than it actually requires than it can by resorting to condemnation proceedings, is for itself to determine. So long as its only purpose in acquiring more land than it actually requires is to secure what it does require upon the easiest terms to itself, it is acting within proper limits. Corporations are restrained by considerations of public policy from engaging in other business tba.n that for which they are chartered; but it has never been understood that a corporation in making sale of what it has acquired for a proper purpose, but for which it has no use, is engaging in business not permitted by its charter. The true test in all such cases is the good faith of the transaction. Was the purchase made to accomplish an object falling within the general purpose and scheme of the corporation? If so, it would be a legitimate exercise of power. It would be otherwise only were it a clear attempt to enlarge the operations of the corporation so as to embrace more than the charter contemplates. There is not a suggestion that the railroad company in this transaction was attempting to combine with its business of common carrier that of dealing in real estate. Says Mitchell, J., in Malone v. Lancaster Gas Light & Fuel Co., 182 Pa. 309: “In considering such questions much weight must be allowed to the judgment of the parties most interested, the officers and stockholders of the corporation itself, and while they will not be permitted, as against the commonwealth or a. dissenting stockholder, to go outside of their legitimate corporate business, yet when the act questioned is of a nature to be fairly considered incidental or auxiliary to such business, it will not be unlawful, because not within the literal term of the corporate grant.” In the same opinion the following from Bigelow, C. J., in Brown v. Winnisimmet Co., 93 Mass. 326, is quoted approvingly: “We know of no rule or principle by which an act creating a corporation for certain specified objects or to carry on a particular trade or business, is to be strictly construed as prohibitory of all other dealings or transactions not coming within the exact scope of those designated. Undoubtedly the main business of a corporation is to be confined to that class of operations which properly appertain to the general purposes for which the charter was granted. But it may also enter into contracts and engage in transactions which are incidental or auxiliary to its main business, or which may become necessary, expedient, or profitable in the care and management of the property which it is authorized to hold.” These authorities are so conclusive as to make further discussion of the question unnecessary. The transaction in this case being lawful on the part of the railroad company mutuality of remedy follows as a matter of course. The case as we read it stands clear of all suspicion of fraud or overreaching, and we see nothing in the record that questions in the slightest degree the right of the plaintiff to a specific performance of the contract as established. The assignments of error are overruled, the appeal is dismissed at the costs of the appellants, and the decree is affirmed.


author: Mr. Justice Brown,

text:
    Kistler v. Chapot Chamois Company et als., Appellant.

      Will — Charge on land — Mortgage.
    Where a testator directs his executors “to invest” the sum of $10,000 in a particular piece of his real estate, and pay the interest on the same to his wife during her life, and directs that “the principal invested shall revert back to my legal heirs and representatives,” and the executors in pursuance of the will execute a mortgage to the widow for the sum of $10,000 on the property specified, providing for the payment of the interest to the widow for life, but wholly omitting any provision for the payment of the principal upon the widow’s death, the owner of the real estate at the time of the death of the widow cannot deny liability for the principal, if it appears that he had full notice in his line of title of the mortgage and what it was intended to embrace, and that his predecessors had always treated it as a mortgage and first lien upon the property for unpaid purchase money. In such a case the mortgage is payable to the executor of the testator, and not his children and the representatives of deceased children.
    Argued March 14, 1911.
    Appeal, No. 65, Jan. T.,. 1911, by The Chapot-Shirlaw Company, etc., defendant, from judgment of C. P. Susquehanna Co., Aug. T., 1904, No. 322, for plaintiffs on case tried by the court without a jury in suit of Wilson Kistler, Michael D. Kistler, Michael D. Kistler, assignee of Rufus Kistler, Milo Kistler, Elizabeth Kistler, Mary Lesh, Andrew M. Kistler, Harriet Camp, H. Frederick Lesh and Maud K. Jacobs v. The Chapot Chamois Company, The First National Bank of Susquehanna Depot, Pa., The Keystone Chamois Company, and The Chapot-Shirlaw Company, now Pennsylvania Tanning Company.
    Before Fell, C. J., Brown, Potter, Elkin and Moschzisker, JJ.
    Reversed.
    Ejectment for land in the borough of Great Bend.
    The case was' tried by Fuller, J., specially presiding, without a jury in accordance with the Act of April 22, 1874, P. L. 109.
    In addition to the facts stated in the opinion of the Supreme Court it appeared that Stephen Kistler by his will gave to his sons, Rufus and Milo, the first choice and privilege1 of taking the land in controversy, which choice and privilege they afterwards exercised. Therein he also provided that “pursuant and according to the authority to me given and reserved in and by an agreement and jointure made and executed in contemplation of and prior to my marriage to my present wife Eliza, bearing date the 16th day of October, a. :d. 1878, in and by which my said wife Eliza A. waives her right, dower or thirds at common law in consideration of my performing certain covenants and stipulations therein provided as by reference thereunto had will more fully and largely appear, I give and bequeath unto my said wife Eliza A. during her natural life or so long as she shall remain my widow, the interest of $20,000, and command that my executors hereinafter named so invest the sum of $20,000 immediately after my decease, or as soon after as they may deem convenient, in or on my tannery property at East Stroudsbur’g and Great Bend, $10,000 in each respectively, for the use of my said wife Eliza A. ánd pay to her semi-annually the sum of $600, the interest thereof, as long as she shall live or remain my widow. . . . And at the death or marriage again of my said wife Eliza A., all her interest in my estate, real, personal and mixed, shall cease and together with the principal invested shall revert back to my legal heirs and representatives.”
    The property therein mentioned as “my tannery property at Great Bend,” is the land in suit.
    He also provided that all the rest, residue and remainder of his estate should be converted into money as soon as convenient and that the net proceeds of his entire estate should be divided in six equal shares among his six children, Charles, Rufus, Wilson, Milo, Michael D., and Mary (married to Lesh).
    He nominated his sons Charles and Wilson as executors, but as the former died a few days after the testator, letters testamentary were issued to his sons Rufus and Wilson.
    Stephen Kistler left surviving, his said widow and children. Charles died March 22, 1880, having made a will appointing his brother Wilson executor and leaving his estate to his wife Elizabeth and his two children, Mary (also married to Leáh) and Andrew M. Mary Lesh the elder died October 1, 1893, without a will, leaving heirs, three children, Harriet (married to Camp), Maud (married to Jacobs) and H. Frederick Lesh, no administrator having been appointed.
    In pursuance of the directions of the will of Stephen Kistler, the executors, on February 11, 1881, executed, acknowledged and delivered a mortgage to the widow Eliza A. Kistler, bearing date February 11, 1881, recorded March 7, 1881, in Mortgage Book No. 11, p. 70, reciting the antenuptial agreement and the testamentary provision as above, and then proceeding, “Now, therefore, in consideration of the said agreement and marriage settlement, and pursuant to the directions of the said last will and testament and the election of the said Eliza A. Kistler, this indenture witnesseth,' that the said Wilson Kistler and Rufus Kistler, executors as aforesaid, for the better securing the payment of the semiannual interest at six per cent on the said sum of $10,000, the amount to be charged on the tannery property at Great Bend in the county of Susquehanna aforesaid, unto the said Eliza A. Kistler, her executors, administrators or assigns, so long as she the said Eliza A. shall live or remain the widow of the said testator, etc., have granted, bargained, sold, released and confirmed, etc., unto the said Eliza A. Kistler, and her assigns, all that certain tannery property (as described in the writ), to have and to hold unto her, her heirs and assigns, during her natural life or so long as she shall remain the widow of the said Stephen Kistler, deceased,” etc.
    Rufus Kistler and Milo Kistler having exercised on March 23, 1885, the first choice and privilege above mentioned, conveyed to Michael D. Kistler an undivided one-third of the land, by deed dated November 7, 1885, duly recorded, thus making the three tenants in common, which deed contained this clause, “And subject nevertheless to the payment by the said party of the second part, to-wit, Michael D. Kistler, of the one-third part of a certain mortgage in the aforesaid office at Montrose in Mortgage Book 11, page 70, bearing date 12th day of February, 1881, and made and executed by Wilson Kistler and Rufus Kistler, executors of said last will and testament, the interest named in said mortgage to be paid semi-annually to said Eliza A. Kistler, etc., during her natural life or widowhood, and after the death or remarriage of the said Eliza A. Kistler, to pay the principal sum of $10,000 to the heirs and legal representatives of the said Stephen Kistler, deceased, as directed in his last will and testament: the said sum of $10,000 is taken and treated as part of the consideration money herein mentioned and is to be deducted therefrom.”
    The interest of the other heirs in the land was later conveyed to the said Milo Kistler, Rufus Kistler, and Michael D. Kistler, by quitclaim deed dated May 21, 1890, duly recorded, which deed was given to confirm the title and cure any defects' or omissions in any of the proceedings, and contained a similar recital of the mortgage.
    Rufus Kistler later conveyed his interest in the land, together with all his other estate, real and personal, by deed of assignment for the benefit of creditors, dated November 29, 1890, duly recorded, to W. D. B. Ainey who by regular proceedings sold that interest to Michael D. Kistler April 4, 1893, although the deed for same was not made until May 9, 1904. Rufus also by writing on May 11, 1904, assigned to Michael all his interest in the charge on the land.
    By suit for partition between Michael D. Kistler and Milo Kistler, the interest of the latter became vested in Michael D. Kistler by sale and deed of trustee in partition, dated September 24, 1896, duly recorded.
    By deed dated January 6,1901, duly recorded March 6, 1901, the said Michael D. Kistler then being the sole owner of the said land, conveyed the same to the ChapotChamois Company, one of the defendants, for the consideration of $15,000, whereof $5,000 was paid in cash and the balance of $10,000 was left as a charge upon the land by the following recitals contained in the deed, viz.:
    “And being the same land described in mortgage given by Wilson Kistler and Rufus Kistler, executors of Stephen Kistler, deceased, to Eliza A. Kistler, dated February 11, 1881, and recorded in recorder’s office of Susquehanna County, Pa., in Mortgage Book No. 11, pages 70 to 73, inclusive. . . .
    “And being part of the same land conveyed to the said Michael D. Kistler, grantor hereof, by E. A. Leonard, Trustee in partition of real estate as No. 181 August Term, 1894, in Common Pleas of Susquehanna County, Pa., which last mentioned deed is duly recorded in Recorder’s office of Susquehanna County aforesaid in Deed Book 90, pages 243 to 247, inclusive. . . .
    “The above and foregoing conveyance is made by the said Michael D. Kistler and wife to the said ChapotChamois Company under and subject to the lien and charge of ten thousand dollars, and interest thereon semiannually in favor of Eliza A. Kistler, widow of Stephen Kistler, deceased, as provided in the Mortgage last above recited, to-wit, from Stephen Kistler’s executors to Eliza A. Kistler, recorded in Recorder’s office of Susquehanna County, Pa., in Mortgage Book 11, pages 70 to 73, inclusive; which said incumbrance so by said mortgage made a charge upon the real estate hereby conveyed, to-wit, the interest on the said sum of ten thousand dollars to the said Eliza A. Kistler, her executors, administrators and assigns; to be paid semi-annually to her so long as she the said Eliza A. Kistler shall live or remain the widow of the said Stephen Kistler, deceased, and after her death the principal thereof to the parties thereunto entitled under the terms and provisions of the last will and testament of the said Stephen Kistler, deceased, and the Mortgage aforesaid the said Chapot-Chamois Company hereby expressly assumes and agrees to pay as part purchase money for this conveyance and the land herein described; interest upon said mortgage, for which the said grantee herein shall be liable, to be computed from January 1st, 1901; all interest prior to that date upon the same to be paid by the said Michael D. Kistler, grantor hereof.”
    On January 22, 1902, a judgment was entered in favor of the defendant bank against the Chapot-Chamois Company whereon execution was issued and the said land was sold by the sheriff to the bank for $50.00 on April 19, 1902. The aggregate amount of said judgment, with other judgments held by the bank against that company at the time, was about $18,000. All of the company’s personal property had been previously sold by the sheriff on February 17, 1902, and its franchises were subsequently sold by him to the bank for $50.00 on May 14, 1902.
    On March 20, 1903, the said bank conveyed the said land for $1.00 to the Keystone-Chamois Company, defendant, by deed of that date, which contained the recital, “All the preceding property is conveyed subject to the Kistler dower mortgage, said mortgage being the first hen upon said property for a number of years.”
    On May 26, 1904, by deed of that date, the said Keystone Company conveyed the said land for $17,500 to the Chapot-Shirlaw Company, defendant, which has since held title to the same with exclusive possession.
    The widow of Stephen Kistler died on March 4, 1904, without remarriage, having received the interest on said $10,000 from the successive owners of the land during her fife; but no part of the principal has been paid; and this action was brought on August 3, 1904.
    The court entered judgment for the plaintiffs. The Chapot-Shirlaw Company appealed.

      Error assigned was in entering judgment for plaintiffs.

      John D. Miller and A. B. Smith, with them Wm. M. Post, for appellant.
    The English rule that where the owner of land conveys the legal title and takes no other security, he retains an equitable hen for such unpaid purchase price as against the vendee and his heirs, and against subsequent grantees with notice, has been repudiated in Pennsylvania: Kauffelt v. Bower, 7 S. & R. 64; Hiester v. Green, 48 Pa. 96.
    In Pennsylvania, while parties may in deeds charge lands with unpaid purchase money, it must be done by clear and express words: Hiester v. Green, 48 Pa. 96; Strauss’ App., 49 Pa. 353.
    The fact that $10,000 purchase price is unpaid should have no weight in deciding if or not it is here clearly and expressly charged. If unpaid, he had a right to create a charge by clear and express terms, but the fact of nonpayment is of no assistance in deciding if or not it is clearly and expressly charged: Hollenberger v. Yaukey, 145 Pa. 179; Hepburn v. Snyder, 3 Pa. 72.
    Massachusetts, like Pennsylvania, has repudiated the English rule: Weed Sewing Machine Co. v. Emerson, 115 Mass. 554.

      October 9, 1911:

      F. W. Wheaton, with him W. D. B. Ainey and T. M. Stevenson, for appellees.
    A conveyance of land “subject nevertheless to the condition and obligation in a certain article of agreement existing'between parties” creates an estate upon condition, and they who are interested in the condition may enforce its performance by an action of ejectment: Bear v. Whisler, 7 Watts, 144; Strauss’ App., 49 Pa. 353; Schnyder v. Orr, 149 Pa. 320; Hottenstein v. Lerch, 104 Pa. 454; Eichelberger v. Gitt, 104 Pa. 64; Dewait’s App., 20 Pa. 236; Ringrose v. Ringrose, 170 Pa. 593; Heist v. Baker, 49 Pa. 9; Rohn v. Odenwelder, 162 Pa. 346; Kensinger v. Smith, 94 Pa. 384; Helfrich v. Weaver, 61 Pa. 385; Westenberger v. Reist, 13 Pa. 594.
   Opinion bt

Mr. Justice Brown,

In the light of the undisputed facts found by the learned trial judge specially presiding, the land which is the subject of this ejectment is so clearly liable for the payment of $10,000, with interest from March 4, 1904, that he could not have concluded otherwise. When the Keystone Chamois Company conveyed the property to the appellant, it knew, from the recital of that company’s title in the deed which it took, that its title would be subject to what was termed “the Kistler dower mortgage, said mortgage being the first lien upon said property for a number of years.” In the antenuptial agreement between Stephen Kistler and Eliza A. Grim, executed September 16,,;1878, there is a stipulation on his part that he would make testamentary provision to secure the payment of the semiannual sum of $600 to her if she should survive him as his widow. This stipulation he carried out, and his primary purpose in doing so in his will was to secure the annuity to his widow in accordance with the antenuptial agreement; but at the same time his intention is clear that the principal sum to be invested by the executors for that purpose should, upon the death of the widow, be distributed as part of his estate. The direction or “command” in the will to invest $10,000 in a property owned by him may seem somewhat strange, but his executors understood that they were to execute a mortgage upon it, and they did so, but failed, for some unaccountable reason, to provide for the payment of the principal sum upon the widow’s death, though referring to the antenuptial agreement and will as their authority for executing the mortgage. The present owner of the property cannot, however, under the facts found, take advantage of this. Michael D. Kistler, from whom it claims title, acquired title for certain interests by deeds which expressly provided that he took the property subject to the mortgage for $10,000, executed by his father’s executors, and, though they may have been careless in executing it, he knew that it was to secure not merely the annuity to the widow, but, upon her death, the payment of the principal as well. In the first deed to him, after a reference to the mortgage as securing the annuity to the widow and the payment of the prinicpal sum, upon her death, to the heirs and legal representatives of Stephen Kistler, as directed in his last will and testament, there appears the following: “The said sum of ten thousand dollars is taken and treated as part of the consideration money herein mentioned, and is to be deducted therefrom.” A similar clause is in the deed of confirmation from Wilson Kistler et al. Michael D. Kistler, having clearly understood what the mortgage was intended to secure, raised no objection as to the effect of it as carelessly executed by the executors, but treated it as a lien upon the property to secure the payment of the principal sum upon his stepmother’s death. Having so understood what the mortgage was intended to secure, when he sold to the Chapot Chamois Company he received from it but $5,000 of the purchase money, the deed to it from him providing that it should assume and pay, as the balance of the purchase money, the principal sum of $10,000 upon the death of Mrs. Kistler. What Michael D. Kistler and his grantees thus treated as a mortgage and first lien upon ■the property for unpaid purchase money became so as between them, and subsequent grantees from them, having had express notice of it and of the effect thus given to it by their predecessors in title, the appellant cannot, either in law or in good conscience, be permitted to repudiate it as a valid lien upon the property. It continues to represent unpaid purchase'money, just as it did through all the changes of title from Michael D. Kistler down to the time the appellant acquired title.

While the learned trial judge was correct in his conclusion that the land of the appellant is bound for the payment of the $10,000, we do not agree with him that the plaintiffs are the proper parties to whom payment should be made. Stephen Kistler left surviving him six children, four of whom — Wilson, Milo, Michael and Rufus — are still living. These are among the plaintiffs, Rufus being represented by his assignee for the benefit of creditors. Charles, the fifth son, died shortly after the father, leaving his entire estate to his widow and two children, who are three of the plaintiffs in the case. Wilson Kistler, his executor, was not made one of them. Mary, the sixth child, died, leaving three children, who are the remaining plaintiffs. In answer to the contention of the appellant that the proper parties had not sued for the $10,000, if its land must pay the same, the learned trial judge answered that, though “a little screw” in the pleadings may have been “loose,” he had concluded to let it stay loose, as the objection was technical and of doubtful validity. In this we cannot concur. Loose pleadings are not to be encouraged and “loose screws” in them are never to be countenanced when they involve a vital question. In this case the appellant is vitally interested in knowing that, if judgment is to be cast upon its land, the proper parties have sued for the money. Objection was raised in limine to the right of these plaintiffs to sue for it. The objection was substantial and not merely technical. The sum of $10,000, with, interest, secured, as already stated, by what must be regarded as a valid mortgage on the land, so far as the appellant is concerned, is still part of the undistributed estate of Stephen Kistler, and his executors are the only persons to receive it, to be by them distributed in accordance with the terms of his will. The seventh assignment of error is sustained and the judgment is reversed.

Subsequent to the handing down of the foregoing opinion a petition was presented asking that the record be amended by substituting the executors of Stephen Kistler as plaintiffs on the record and praying that with the allowance of the amendment a venire facias de novo be awarded. Upon this petition the court made the following

ORDER.

And now, November 3, 1911, upon due consideration of this petition the amendment prayed for is allowed upon the payment by the appellees of all costs incurred to date, and the judgment of this court as announced on October 9, 1911, will be modified upon payment of said costs by awarding a venire facias de novo, the same to be awarded when the prothonotary of the eastern district shall be notified that the costs have been paid.


author: Mr. Justice Moschzisker,

text:
    Workingman’s Loan & Building Association v. Heaton, Appellant.

      Building and loan association — Fines—Contract—Directors and officers —Forfeiture—Act of April 10,1879, P. L. 16.

    1. On a scire facias sur mortgage a claim by the defendant that the plaintiff, a building and loan association, had agreed not to impose any fines upon him after a certain date in consideration of his making certain monthly payments is not supported and cannot be sustained as a contract, where all the defendant shows is that he was desirous of making; such an agreement, and that certain individual members of the board of directors of the association had informed him that his proposition had been acceded to; and where the alleged agreement is contrary to the by-laws of the association and the written contract of the parties, and finds no sufficient support from the minutes of the association.

      2. A building and loan association may impose fines on a borrowing member after six months’ arrearages, where under the by-laws of the plaintiff association as well as under the terms of the bond and mortgage given to secure the loan', the stock of a borrowing member does not become forfeited at the end of six months’ default unless so declared, and the delay.was at the member’s own application.
    3. There is nothing in any of the acts of assembly relating to building associations which compels a forfeiture at the expiration of six months, or which limits the time for imposing fines.
    4. The word “may” in sec. 5 of the Act of April 10, 1879, P. L. 16, is to be construed as a word of permission.
    Argued April 17, 1911.
    Appeal, No. 215, Jan. T., 1910, by defendants, from judgment of C. P. Blair Co., March Term, 1910, No. 551, on verdict for plaintiff in case of Workingman’s Loan & Building Association of Altoona v. Thomas Heaton et al.
    Before Brown, Mestrezat, Potter, Elkin and Moschzisker, JJ.
    Affirmed.
    Scire facias sur mortgage to recover arrears of dues, interest, premium and fines. Before Baldridge, P. J.
    The plaintiff building association claimed in all $2,801.60. The defense was that there had been an oral contract entered into between the association and the defendants under which $50.00 a month was to be paid instead of $37.50, the latter amount being the sum of the regular monthly payments due under the mortgage; that $12.50 of the $50.00 was to go in liquidation of the arrearages of dues, interest and premiums existing on November 22, 1900, and that $37.50 was to be appropriated each month to the accruing dues, interest and premium, and that no fines were to be charged thereafter. The plaintiff association denied that any such contract had been made and appropriated the monthly payments of $50.00 on account of arrearages in dues, interest, premium, and fines, so receipting each month to the defendants.
    The trial judge charged: “The mortgage provides that monthly the defendant should pay dues of $15.00, interest $15.00, and premium $7.50, or a total of $37.50 per month. It seems that he defaulted in the monthly payments, and in November of 1900 he visited the board of directors of the association, and he testified to an agreement relative to him paying $50 per month. We say to you as a matter of law that the testimony in this case does not rise to the requirements of the law, and that you should not, in your deliberations, consider the question of this alleged agreement. As to that question, you have nothing whatever to do. The sole question for your determination is whether or not the defendant in this case made a request when he made his monthly payments how the payments so made should be appropriated.” The court in a general way called attention to the contentions and the testimony concerning the manner in which the defendant Heaton claimed that he had directed the appropriation of his payments, and instructed the jury that if they believed that these directions for such special appropriations had been given, then the plaintiff could not recover the full amount of its claim as made up. The jury rendered a verdict of $2,128 in favor of the plaintiff. /

    Article YII of the plaintiff’s by-laws provides: “Section 1. If any stockholder or trustee shall continue, and neglect, or refuse to pay his, her or their monthly dues and fines for the space of six months, his, her or their share or shares of stock shall, at the option of the Board of Directors be declared forfeited. . . . Section 2. Each and every stockholder who shall neglect or refuse to pay his, her or their monthly dues, interest or premium or either of them, as often as the same shall become due, and payable, shall forfeit and pay the additional sum of two cents monthly on each and every dollar or fraction thereof due by him, her or them, whether it be principal, interest or premium, provided, as hereinbefore mentioned, that no fines shall be charged on fines.” The court reserved the question as to whether or not fines could be charged after six months, with the right to reduce the verdict by $957.13 if the point should be decided in favor of the defendants. Judgment for the plaintiff was entered upon the verdict in the full amount. The defendant appealed.

      Errors assigned were (1) overruling defendant’s objection to plaintiff’s offer in evidence of the mortgage sued upon; (2) admitting the constitution and by-laws of the plaintiff association; (3-16) rulings on evidence concerning the alleged contract not to charge fines; (17) that part of -the charge above quoted in reference to the alleged contract; (20) instruction that the evidence was insufficient in law to support the alleged contract; (23-25) refusal of three of defendant’s requests for charge predicated upon the alleged contract; (18, 19, 21, 26, 27) answers to points relative to the right to charge fines after six months; (22) refusal to instruct that “there can be no interest charged upon interest, premium and fines, since the stock matured;” (28-31) abstracts from the opinion of the court below overruling the motion for judgment in favor of the defendants; (32) entering judgment on the verdict in favor of the plaintiff.

      Thomas H. Greevy, with him E. G. Brotherlin, for appellant.
    Fines for failure to pay installments of dues and interest to a building and loan association cease when the association exercises its option to declare the whole debt due and proceeds to foreclose a mortgage for it: Murphy v. Goodland Bldg. & Loan Assn., 2 Kan. App. 330 (43 Pac. Repr. 863); Lynn v. Freemansburg Bldg. & Loan Assn., 117 Pa. 1.
    Fines cannot be imposed after six months: Houlette’s Est., 2 Chester County, 511.

      J. F. Sullivan, with him C. J. McCullough, for appellee.
    The declarations of the directors were inadmissible: Johnston v. Elizabeth Bldg. & Loan Assn., 104 Pa. 394; Erthal v. Glueck, 10 Pa. Superior Ct. 402; Helping Hand Building & Loan Assn. v. Buss, 13 Pa. Superior Ct. 343; Haspel v. McLaughlin-Lyons, 38 Pa. Superior Ct. 334; Gaynor v. Williamsport, etc., R. R. Co., 189 Pa. 5; Stoystown & Greensburg Turnpike Road Co. v. Craver, 45 Pa. 386.
    Directors must act together as a board: Stoystown
      & Greensburg Turnpike Road Co. v. Craver, 45 Pa. 386; Fisher v. Harrisburg Gas Co., 1 Pearson, 118; Allegheny County Work House v. Moore, 95 Pa. 408; Curry v. Cemetery Association, 5 Pa. Superior Ct. 289; Gaynor v. Williamsport, etc., R. R. Co., 189 Pa. 5.
    October 9, 1911:
    There was no ratification of the alleged contract: Freeman v. Printing Co., 9 Luz. Leg. Reg. 37; Twelfth St. Market Co. v. Jackson, 102 Pa. 269; Farmers’ Bank v. McKee, 2 Pa. 318.
    The association had a right to impose fines after a period of six months’ default: Building Assn. v. George, 3 W. N. C. 239; Howley Bldg. Assn. v. Taylor, 15 Phila. 246; Lynn v. Bldg. & Loan Assn., 117 Pa. 1.
    There is no limitation as to the time in which associa-tions can impose fines: Natl. Saving Fund & Bldg. Association v. Robinson, 19 Phila. 358; Folsom Bldg. & Loan Assn. v. Gogel, 24 Pa. Superior Ct. 539.
   Opinion by

Mr. Justice Moschzisker,

The appellant states two questions involved: (1) “A, defendant, purchased from B, a loan and building association, a number of shares of stock, and became a borrower, giving as security a judgment bond and mortgage. After several years A defaulted in his payments and became in arrearages for more than six months. A appeared before board of directors, and offered to pay a certain amount per month covering his regular payment of dues, interest and premium and a certain amount of the arrearages, provided they would not tax any more fines. This proposition was accepted and agreed to by the board. A continued the payment of the amount agreed upon for four years, and B, notwithstanding the agreement made, continued to tax fines, against objection by A. Upon trial of suit, court refused to submit question as to whether agreement made was such a contract as would bind B. Was this not error?” The trial judge refused the issue thus outlined upon the ground that there was no sufficient evidence to justify its submission. After a careful scrutiny of the testimony and documentary evidence upon the record, we are not convinced that there was any error in this ruling. At the most the defendant Heaton showed that he was desirous of making such an agreement and that certain individual members of the board had informed him that his proposition had been acceded to. But there was no testimony showing that the agreement was expressly entered into, or which would justify the conclusion that as a matter of fact the contract was actually made. The alleged oral agreement not to charge further fines after November 22, 1900, was contrary to the by-laws of the plaintiff corporation and the written contract of the parties, and it finds no sufficient support in the minutes of the association. There is nothing in the constitution or by-laws which authorizes individual officers to enter into such contracts, and the directors could not bind the association in that respect by their individual declarations; nor could such loose declarations bind it upon the theory of ratification: Smith v. Crum Lynne Iron & Steel Co., 208 Pa. 462; Gaynor v. Railroad Co., 189 Pa. 5; Allegheny County Work House v. Moore, 95 Pa. 408; Stoystown & Greensburg Turnpike Road Co. v. Craver, 45 Pa. 386; Curry v. Cemetery Assn., 5 Pa. Superior Ct. 289; Endlich on Building Assn. (2d ed.), sec. 179, 10 Cyc. 774.

While, owing to the lack of adequate evidence, the trial judge refused to submit the issue as to the existence of the contract alleged by the defendants, yet he did permit the evidence to go to the jury upon the question of whether or not Heaton had directed a special appropriation of the monthly payments, and the verdict shows that issue found in favor of the defendants. The evidence bearing upon the dealings between the officers of the plaintiff association and Heaton, was given the full effect to which it was entitled, and we feel that no injustice was done by the rulings in relation thereto.

The other question which the appellants state as involved, is, (2) “Court reserved point to determine as a matter of law whether fines could be charged after six months’ arrearages. Defendants’ motion for judgment on reserved point overruled. Was this not error?” It will be noticed that under the by-laws of the plaintiff association, as well as under the terms of the bond and mortgage, the stock of a borrowing member does not become forfeited at the end of six months’ default unless so declared, at the option of the board of directors. If associations were compelled to declare a forfeiture and proceed on the mortgage of a borrowing member at the expiration of six months’ arrearages, the result would be lamentable; many worthy persons would lose their homes, who, if given a little indulgence, could save them. On the other hand, if the associations were to be deprived of the privilege of imposing fines on borrowing members after the expiration of six months, a failure to foreclose against defaulting stockholders would be inequitable to non-borrowing stockholders and also to debtor stockholders who pay promptly; for the defaulting borrowing members would be apportioned their respective shares of the profits of the association, which would arise from a strict compliance with all the obligations of membership by such other stockholders. Hence, for the protection of all, associations would be obliged to foreclose promptly upon the expiration of the six months period.

The thought back of the whole building association idea is the common good of all stockholders, and the system of fines which has always been fully recognized in the law as an essential part of the plan, tends to maintain the general scheme of mutuality. The one who pays the fine derives the benefits therefrom as a member of the association in common with the other stockholders; no injustice is suffered, for he can always stop the running of the fine by paying the arrearages, or, he can pay off his loan and cease to be a member of the association, or, if he is unable to pursue either of these courses, he can notify the association of his inability to pay and that he desires it forthwith to foreclose upon his property in order to stop the running of further fines. If the present defendants had taken this last course and the association had neglected or refused to foreclose within a reasonable time, they might have been in a position to complain of the fines imposed thereafter, on the theory that such fines constituted an unreasonable penalty which the law would not permit. See Lynn v. Bldg. & Loan Assn., 117 Pa. 1. But the defendants did none of these things; on the contrary, they asked that they should be given time, and that they should not'be proceeded against; the delay was upon their own application, and they were bound under the by-laws of the association and the law of the state to pay the fines as imposed.

There is nothing in any of the acts of assembly governing the subject before us which compels a forfeiture at the expiration of six months or which limits the time for imposing fines. The Act of April 10, 1879, P. L. 16, provides, “Section 5. In case of non-payment of instalments of stock, premiums, dues or interest, by borrowing stockholders, for the space of six months, payment of the same, together with the full principal of the loan, may be enforced by proceeding on their securities according to law; .... Section 6. Fines or penalties for the nonpayment of interest, instalments of dues, and bonus or premium, shall not exceed two per cent per month on all arrearages.” The practice pursued by the plaintiff association was in accord with this act. We have not been referred to an authority from either of our courts of appeal which rules these points, but we are convinced that the verb “may” in sec. 5 of the above act should be construed as a word of permission (26 Cyc. 1590), and that the fines imposed in this case did not in any way exceed those allowed in sec. 6. After considering all of the specifications, we are not convinced of any reversible error upon the record.

The assignments comprehended in the statement of the questions involved are overruled, the others are dismissed, and the judgment is affirmed.