Elvira E. Muck, Appellant, v. S. Edward Hitchcock and Others, Respondents, Impleaded with The American Millennial Association, Defendant

Elvira E. Muck, Appellant, v. S. Edward Hitchcock and Others, Respondents, Impleaded with The American Millennial Association, Defendant. Fourth Department, March 6, 1912. Corporation — religious corporation — contract to convey land—leave of court — specific performance — damages — deposit on contract — equitable lien — sale to other persons — appeal—judgment. At common law a religious corporation could not sell its real property without leave of court. Although under our statute (Religious Corporations Law, § 12) a religious corporation cannot sell its real property without leave of court, and although by section 21 of the General Corporation Law a foreign corporation can convey real property in the State only in the same manner as a domestic corporation, it is error to hold as a matter of law that a foreign religious corporation owning real estate here cannot enter into a valid contract of sale without leave of the court, where no evidence is given of the law of the foreign State on this point. A religious corporation may enter into a contract for the sale of its real estate with the condition that the conveyance is to be made if permission of the court can be obtained. Even if such condition is not expressed in the contract the court will imply it. A court of equity in a suit for the specific performance of such contract has power to inquire into its fairness, to approve the proposed conveyance and direct it to be made, if no valid reason appears for refusing such relief. Where, however, the sale at the price contracted for would be disadvantageous to the corporation, it will be relieved from the contract upon placing the vendee in statu quo. Where the corporation has refused to carry out the contract and has wrongfully refused to return to the vendee her payment thereon and where specific performance cannot be decreed and it appears that the proposed transfer would be disadvantageous to the corporation, the vendee will be adjudged to have an equitable hen on the premises for the amount paid by her and to be entitled to enforce such hen by a sale of the property, if the facts warrant. This, although the corporation had sold the property to other parties. Respondents who subsequently purchased the premises from the corporation with full knowledge of the prior contract and rights occupy no better position than does the corporation itself. Where on appeal in an equity suit the facts are not in dispute, the court has power to direct such judgment as the parties are equitably entitled to. Kruse and Spring, JJ., dissented, with memorandum. Appeal by the plaintiff, Elvira E. Muck, from a judgment of the Supreme Court in favor of the defendants, entered in the office of the clerk of the county of Livingston on the 24th day of April, 1911, upon the décision of the court rendered after a trial at the Monroe Special Term dismissing the complaint upon the merits. The action was commenced on the 12th day of July, 1909, to obtain specific performance of a contract for the sale of a parcel of real property situate in the county of Livingston, entered into between the defendant corporation and the plaintiff, it being alleged that the defendant after the making of the contract deeded the property to the other defendants and refused to carry out its contract with the plaintiff. The plaintiff asked that the defendants be directed to convey the premises to the plaintiff, or if such relief could not be had, that the said corporation be compelled to respond in damages for the breach of the contract. The summons was served by publication upon the defendant corporation and by personal service without the State upon one of its officers. The corporation did not appear or answer in the action. The other defendants answered and set up the defense, in substance, that the plaintiff’s contract was fraudulently obtained from the said corporation and should be canceled; that the plaintiff abandoned the contract, and that thereafter the premises were sold to such defendants. Milton E. Gibbs, for the appellant. Albert C. Olp and J. Hunter Black, for the respondents. [MAJORITY — McLennan, P. J.: Kruse, J. (memorandum for reversal):] McLennan, P. J.: On this appeal the appellant presents none of the evidence taken before the court, but simply the judgment roll in the action. The court made certain findings of fact, from which it appears that the defendant American Millennial Association is a foreign religious corporation, organized under the laws of Massachusetts, and had, at some time prior to the commencement of this action, acquired by devise the premises in question, a farm located in Livingston county, N. T. Thereafter and on February 21, 1908, the plaintiff entered into a written contract with the corporation whereby it agreed to sell the farm to the plaintiff for the sum of $600, $50 of which was paid on signing the contract. The balance was to be paid and the deed delivered on July 1, 1908. The plaintiff notified the defendant before that date that she was ready to fulfill her contract upon delivery of the deed to her. The corporation replied, suggesting that plaintiff prepare the deed. This was not done, however, until about December 1, 1908, when a tender of the balance due was made at the office of the corporation in Boston, but the corporation refused to accept the same or to sign any deed, and also refused to return the $50 which the plaintiff had paid on account of the contract. On or about January 29, 1909, the defendant corporation entered into a contract with the defendant Welch to sell the farm to him for $1,400. Thereafter the corporation took proceedings in the Livingston County Court, and obtained an order authorizing it to sell the farm to Welch for $1,400, and a deed was executed and delivered accordingly to the defendant Hitchcock, the assignee of Welch. So far as appears the plaintiff was not a party to and had no. notice of such proceedings. No proceedings were ever taken to obtain leave of the court permitting the defendant to sell the farm to the plaintiff in pursuance of the contract entered into or otherwise. It is alleged that the plaintiff’s contract was filed in the Livingston county clerk’s office in August, 1908, and the court has found that the defendants Hitchcock and Welch knew of the contract which the defendant corporation had made with the plaintiff before they purchased the farm. Upon these facts the court has found that the contract entered into between the said association and the plaintiff for the sale of said farm cannot be enforced in this action because no permission of the court had been ever obtained for the making of said contract or the sale of the lands to the plaintiff, and that the defendants are entitled to a judgment dismissing the complaint, without costs. Section 12 of the Eeligious Corporations Law of the State of New York provides: “ A religious corporation shall not sell or mortgage any of its real property without applying for and obtaining leave of the court therefor pursuant to the provisions of the Code of Civil Procedure.” (Consol. Laws, chap. 51 [Laws of 1909, chap. 53], § 12, which re-enacted Gen. Laws, chap. 42 [Laws of 1895, chap. 723], § 11, as amd. by Laws of 1902, chap. 208, and Laws of 1908, chap. 363.) Section 21 of the General Corporation Law of this State provides: “ Any foreign corporation may purchase at a sale upon the foreclosure of any mortgage held by it, or, upon any judgment or decree for debts due it, or, upon any settlement to secure such debts, any real property within this State covered by or subject to such mortgage, judgment, decree or settlement, and may .take by devise any real property situated within this State and hold the same for not exceeding five years from the date of such purchase, or from the time when the right to the possession thereof vests in such devisee, and convey it by deed or otherwise in the same manner as a domestic corporation.” (Consol. Laws, chap. 23 [Laws of 1909, chap. 28], § 21, which re-enacted Gen. Laws, chap. 35 [Laws of 1892, chap. 687], § 18, as amd. hy Laws of 1894, chap. 136.) The trial court has held that under these provisions a foreign religious corporation must convey its real property in this State in the same manner as a domestic religious corporation, and that such foreign corporation cannot make a valid contract for the sale of its real property within this State without first obtaining permission of the court. It might be interesting to determine whether a foreign religious corporation can make a valid conveyance under such circumstances without first obtaining leave of court, and we are not prepared to say that section 21 of the General Corporation Law above quoted has the effect of bringing a foreign religious corporation within]the provisions of section 12 of the Eeligious Corporations Law. It is plain that the provisions of section 21 of the General Corporation Law afford to foreign corporations, religious or otherwise, certain privileges in the way óf taking, holding and conveying real property in this State. It may be that, as urged by the appellant, such provisions are merely permissive in their effect, and are intended simply to allow foreign corporations to come into our State and take, hold and convey real property in any manner authorized by their charters under the laws of the State where organized, and that any specific restriction on our own corporations does not apply to a foreign corporation, unless it can be said that such specific provision represents the public policy of our State in relation to all corporations, foreign or domestic. And there may be some force in the suggestion that the restriction in question here does not represent any public policy in that regard, for the reason that no statutory restriction upon the alienation of real property is placed upon religious associations generally, but only upon incorporated religious bodies. And the appellant contends that if this be so, the laws of Massachusetts would govern, in connection with the provisions of the defendant corporation’s charter, and that, in the absence of proof as to such laws or provisions, the presumption would prevail that the common law governs the matter in Massachusetts, and that it does not prevent a religious corporation from transferring its property in the same manner as any other kind of corporation. In our opinion, however, the determination of this question in favor of the appellant would not aid her on this appeal. There is no evidence before us as to what the statutes of Massachusetts provide in such a case, nor are we informed by the record what powers are given to, or what restrictions are placed upon, the defendant corporation in its charter. And if the presumption is to obtain that the common law prevails on this subject in Massachusetts, the appellant still receives no aid from that fact, for our courts have held that the common law forbids a religious corporation from selling its property without first obtaining leave of court. (Madison Avenue Baptist Church v. Baptist Church in Oliver St., 46 N. Y. 131,141.) So that upon the record before us it is apparent that in either event the defendant corporation, in order to make a valid conveyance of the real property in question, must first have obtained leave nf court; and it is immaterial to determine whether such leave was necessary in pursuance of any mandate of our statutes or in obedience to the common law. If the record contained any evidence or finding as to what the statutes of Massachusetts provide in such case, or as to what powers are given or restrictions imposed in the defendant corporation’s charter, we might be called upon to consider the proposition urged by the appellant as to the effect of the provisions of our statutes. We are, however, of the opinion that the trial court erred in holding as matter of law that a religious corporation cannot enter into a valid contract of sale without permission of the court. Ooncededly, under our statutes, .a domestic religious corporation cannot make a valid conveyance of its real property without such leave. But it seems logical and reasonable that a religious corporation may enter into a contract for the sale of its real property with the condition that conveyance be made upon permission of the court, if such can be obtained, and that even if such condition be not expressed, the court would imply such a provision in the contract. And we do not doubt that a court of equity in an action to compel specific performance of such a contract has ample power to inquire into the fairness of the contract and as to its advantage or disadvantage to the religious corporation, and to approve the proposed conveyance and direct it to be made where, upon all the facts, no valid reason appears for refusing such relief. (Congregation Beth Elohim v. Central Presbyterian Church, 10 Abb. Pr. [N. S.] 484.) It is apparent, however, from the record in this case that a court of equity should not compel specific performance of the contract by the defendant corporation, for the reason that at the price contracted for the sale would be to the disadvantage of the corporation, and the defendant corporation is entitled to be relieved from the contract upon placing the plaintiff in statu quo. This the corporation has not done, and the plaintiff is entitled to be protected under her contract against any inequitable act on the part of the defendants in the premises. The corporation could only be relieved from its contract upon returning to the plaintiff the amount paid by her on the contract, and where, as in this case, the corporation has wrongfully refused to do that and specific performance cannot be decreed, the plaintiff will be held to have an equitable lien on the premises for the amount so paid and is entitled to enforce such lien by sale of the property if the facts warrant. (Price v. Palmer, 23 Hun, 504.) In our opinion the facts shown warrant the granting of this relief to the plaintiff. The defendant corporation, so far as appears, has no office for the transaction of business within this State, and the plaintiff is without recourse against it in the courts of this State to recover back the sum so paid, except in this manner in this action. The defendants who purchased the premises knew of plaintiff’s contract and rights and cannot be said to occupy any better position than does the corporation itself in that respect. The facts are not in dispute, and this court has power to direct such judgment in the premises as the parties are equitably entitled to. (Code Civ. Proc. § 993.) The defendants are entitled to judgment directing that the plaintiff’s contract be canceled of record upon condition that plaintiff recover back the sum of fifty dollars paid on such contract, with interest thereon from February 21, 1908, together with the costs of this appeal, and the plaintiff is entitled to judgment declaring such recovery to be a lien upon the premises contracted to be sold to her, and that if the same be not paid within thirty days after the service of a copy of the judgment hereby directed on the defendants S. Edward Hitchcock, Alice Hitchcock and William J. Welch, the premises in question or so much of the same as may be necessary be sold by a referee to be appointed by the court upon application and that the plaintiff be paid from the avails of such sale. The judgment appealed from should be reversed and vacated and a judgment entered as above outlined. All concurred; Kruse and Spring, JJ., voting for reversal in a separate memorandum by Kruse, J. Kruse, J. (memorandum for reversal): I agree to the reversal, but think there should be judgment in favor of the plaintiff requiring the defendant to carry out its contract and convey the premises. I think real property acquired and held by a foreign corporation, such as this, may be conveyed without obtaining leave of the courts of this State, and that the contract is enforcible. Spring, J., concurred. Judgment reversed and vacated, and judgment directed to be entered in accordance with the opinion of McLennan, P. J., with costs to appellant.