Page:Harvard Law Review Volume 8.djvu/35

ACQUISITION OF REAL ESTATE BY A CORPORATION. 1 9 ingly said, that the Commonwealth may have a remedy, by a pro- ceeding to forfeit the charter of a corporation acquiring or holding lands in violation of this section, but it cannot escheat the lands.^ In the absence of such a statute, then, what are the conse- quences of an illegal or ultra vires purchase of real estate by a corporation? The subject may be considered under three heads. First. When a corporation, authorized by the law of its crea- tion, for some purposes or to a limited extent, to purchase and hold real estate, takes a deed for other purposes, or beyond the limit allowed. In such a case, in the absence of any statute to the contrary, it is settled that the deed divests the title of the grantor, and vests it indefeasibly in the corporation. The deed cannot be vacated, but the State chartering the corporation may forfeit its charter for such misuse of its powers. The State alone is concerned, and the State alone can act In the case of a foreign corporation, the Courts of the State wherein the land in question is situated will take the same view as in the case of a domestic corporation, ^ Com. V. R. R. Co., 132 Penn. 591, 596, 605. And now the New York Court of Appeals, in an opinion published after the preparation of this article, holds that the right of the State to object to the holding of land by a foreign corporation does not, without statutory authority, include the right to escheat the land. In this case the defendant, a New Jersey corporation, purchased a lot of land in New York City, and took a deed of the same. Subsequently, the plaintiff and the defendant entered into a written contract whereby they agreed to exchange said lot of land for another lot of land owned by the plaintiff. Pursuant to said contract the defendant executed a deed in due form, by which it assumed to convey the premises to the plaintiff. It was con- tended that it is contrary to the policy of the State of New York to permit a foreign corporation, chartered to deal in lands, to hold or convey lands in the State. On agreed facts the following question was submitted to the General Term: whether the defend- ant possessed, and has conveyed to the plaintiff a good and sufficient title to the premises described in said contract and deed. The General Term adjudged that the defendant's deed did not convey to the plaintiff a good title, and that its title was "sub- ject to the right, title, and interest of the people of the State, whose title was, at the time of the execution and delivery of the deed, superior and prior to that of the de- fendant." On appeal, the Court held that the defendant was not prohibited by any policy of the State from holding or conveying the land in question, and that, if it were otherwise, the right of interference by the State would not extend to any forfeiture of the property held by the corporation. Lancaster v. Amsterdam Improvement Co., 140 N. Y. 576. See also Walsh v. Barton, 24 Ohio St. 28. In Minnesota, corporate real estate acquired, held or owned in violation of certain statutory restrictions, is subject to forfeiture to the State, and it is made the duty of the attorney-general to enforce every such forfeiture by due process of law. 2 General Statutes of Minnesota, p. 770. A similar law as to real estate in the Territories may be found in U. S. St., March 3, 1887, ch. 340 (24 St. 476).