Coke, and the fanciful reason given by him (Coke Lit. 13b) for the reverter of their real estate, to wit, that a conveyance to them must necessarily be a qualified or base fee, have long since become outworn and discredited. That which is termed "the common law" is simply. the "right reason of the thing" in matters as to which there is no statutory enactment. When it is misconceived and wrongly declared, the common rule is equally subject to be overruled, whether it is an ancient or a recent decision. Upon the facts agreed, judgment should be entered below against the plaintiffs, dismissing their action. Reversed.10

STURGES v. VANDERBILT.

1878. 73 N. Y. 384.11

RAPALLO, J. This action was brought to compel the defendants to apply certain moneys received by them as stockholders of the

10 In Heath v. Barmore (1872) 50 N. Y. 302, accord, Rapallo, J. said: "In so far as the plaintiff's right to recover in this action is sought to be sustained, on the ground that at common law real estate held by a corporation at the time of its dissolution reverts to the grantor, it cannot be supported * * * because the rule of law invoked by the plaintiff does not prevail in this State in respect to stock corporations. Under the provisions of 1 R. L., 248, and 1 R. S., 600, §§ 9 and 10, upon the dissolution of a corporation, the directors or managers at that time become trustees of its property (unless some other custodian is appointed), for the purpose of paying the debts of the corporation and dividing its property among its stockholders; and these provisions apply as well to the real as to the personal property of corporations. * Consequently, where lands are conveyed absolutely to a corporation having stockholders, no reversion or possibility of a reverter remains in the grantor." (p. 305.) See Diamond State Iron Co. v. Husbands (1908) 68 Atl. (Del.) 240, 8 Del. Ch. 205, and note, 8 Columbia Law Rev. 222.

*

But see Mott v. Danville Seminary (1889) 129 I11. 403, 21 N. E. 927, and note, 3 Harv. Law Rev. 135; Danville Seminary v. Mott (1891) 136 III. 289, 28 N. E. 54 (eleemosynary corporation); Titcomb v. Kennebunk Mutual Fire Ins. Co. (1887) 79 Me. 315, 9 Atl. 732 (mutual insurance company without stockholders); Mormon Church v. United States (1889) 136 U. S. 1, 34 L. ed. 481, 10 Sup. Ct. 792. In the last cited case, Mr. Justice Bradley said: "When a business corporation, instituted for the purposes of gain, or private interest, is dissolved, the modern doctrine is, that its property, after payment of its debts, equitably belongs to its stockholders. But this doctrine has never been extended to public or charitable corporations. As to these, the ancient and established rule prevails, namely: that when a corporation is dissolved, its personal property, like that of a man dying without heirs, ceases to be the subject of private ownership, and becomes subject to the disposal of the sovereign authority; whilst its real estate reverts or escheats to the grantor or donor, unless some other course of devolution has been directed by positive law, though still subject as we shall hereafter see to the charitable use. To this rule the corporation in question (the Church of Jesus Christ of Latter-Day Saints) was undoubtedly subject." (page 47.)

See also Davis v. Memphis &c. R. Co. (1888) 87 Ala. 633, 6 So. 140; Havemeyer v. Superior Court (1890) 84 Cal. 327, 24 Pac. 121, 10 L. R. A. 627; Erie &c. R. Co. v. Casey (1856) 26 Pa. St. 287; Insurance Co. v. Dunscomb (1902) 108 Tenn. 724, 69 S. W. 345.-Eds.

"Portion of opinion omitted.-Eds.

New Jersey Steam Navigation Company, out of its assets, to the payment of a judgment alleged to have been recovered by the plaintiff's intestate against that corporation in April, 1871, and affirmed by this court in June, 1875 (62 N. Y., 625), upon which judgment, execution has been issued and returned unsatisfied. A decree was rendered in favor of the plaintiff at Special Term, but it was reversed at General Term on the ground that the judgment set up in the complaint was a nullity, having been rendered after the corporation, defendant, had been dissolved by the expiration of the term of its charter, which took place in 1869, and while the action against it was pending.

This court decided in the case of McCulloch v. Norwood (58 N. Y., 562) that the dissolution of a corporation terminates an action then pending against it, and that all subsequent proceedings against it are void, unless the action be continued by order of the court, as provided by chapter 295 of the Laws of 1832. There was no such continuance, and therefore, unless there is some special circumstance in the present case to take it out of the operation of the general rule, the judgment in question is clearly void, and this action can not be maintained as a creditor's suit.

It is claimed on the part of the plaintiff that under the New Jersey statute the corporation after dissolution was not entirely defunct, but was continued in being for the purposes of liquidation and the defense of existing suits, and that it differs in this respect from the statute of this State relating to the liquidation of dissolved corporations. The argument in support of this claim is that by our statute (1 R. S. 600, § 9), upon the dissolution of a corporation, the directors or managers of its affairs at that time, are constituted trustees of the creditors and stockholders of the corporation dissolved; whereas by the statute of New Jersey (Laws of N. J., 1846, Ap. 15, § 29) such directors and managers are in the like case constituted trustees of such corporation, and that this language implies that the corporation still exists as cestui que trust, and is capable of defending in its corporate name. We do not think that the language used has the effect contended for, especially when the corporation, as in this case, has expired by the termination of the period for which it was created, or that its capacity to sue and be sued was intended to be prolonged in any case beyond its own life. For in the same act (section 30) it is provided that the trustees shall have authority to sue by the name of the trustees of such corporation, and shall be suable by the same name, or in their individual names. The laws of New Jersey provide a method of continuing actions pending against corporations at the time of their dissolution, which would be quite superfluous if the plaintiff is right in supposing that the faculty of defending, after dissolution, in the corporate name was preserved by the statute first cited. It is not material to refer to the New Jersey statute as to the mode of continuing an action, as that is a matter of practice which must be governed by our own laws, and in the present

case there was no attempt to continue the action pursuant to the laws of either State.

It is further claimed, that, until a corporation is declared dissolved by judicial decree, creditors may proceed against it by its corporate name, and that it remains in esse until formally adjudged dissolved. All the cases cited in support of this proposition relate to a dissolution in consequence of insolvency or non-user or mis-user of the corporate franchises, or some other cause of forfeiture. In such cases, it is well-settled that the dissolution does not take effect until judicially declared. But the principle upon which that class of cases rests is not applicable to a dissolution by expiration of the charter. The dissolution in such a case is declared by the act of the Legislature itself. The limited time of existence has expired and no judicial determination of that fact is requisite. The corporation is de facto dead. (People v. Walker, 17 N. Y. 503; Greeley v. Smith, 3 Story C. C. R., 658.) Where the charter of a corporation is annulled by act of the Legislature, the corporation is extinct and no judgment can be rendered against it. (Mumma v. Potomac Co., 8 Pet., 286; Merrill v. Suffolk Bk., 31 Me., 57.) We have been referred to no authority holding a contrary doctrine.12

COULTER v. ROBERTSON.

1852. 24 Miss. 278.13

THIS action was founded on the promissory note of the testator of the plaintiffs in error, executed to, and held by, the Commercial Bank at Natchez. Prior to the institution of the suit, an information in the nature of a quo warranto, had been instituted against the bank, under which its charter had been declared forfeited, and the corporation was judicially dissolved, in pursuance of an act of the legislature of Mississippi, passed in July, 1843. Under the provisions of the eighth section of that act, William Robertson was appointed trustee for the purposes set forth in said section, which is in the following words, namely:

"Sec. 8. Be it further enacted, That upon judgment or forfeiture against any bank or banks, corporation or corporations, person or persons pretending to exercise corporate powers in this State, as contemplated by this act, the debtors of such bank or banks, corporation or corporations, person or persons pretending to exercise corporate privileges, shall not be released by such judgment from their debts and liabilities to the same; but it shall be the duty of the court

12 To similar effect, see Venable Bros. v. Southern Granite Co. (1910) 135 Ga. 508, 69 S. E. 822. See also Bradley v. Reppell (1896) 133 Mo. 545, 32 S. W. 645, 34 S. W. 841, 54 Am. St. 685. Cf. Bushnell v. Consolidated Ice Machine Co. (1891) 138 I11. 67, 27 N. E. 596.-Eds.

13 A portion only of the opinion is given.-Eds.

rendering judgment, to appoint one or more trustees to take charge of the books and assets of the same; to sue for and collect all debts due such bank or banks, corporation or corporations, person or persons pretending to exercise corporate powers, and to sell and dispose of all property owned by such bank or banks, corporation or corporations, person or persons pretending to exercise corporate powers, or held by others for its or their use, and the proceeds of the debts, when collected, and of the property when sold, to apply as may hereafter be directed by law to the payment of the debts of such bank or banks, corporation or corporations, or persons pretending to exercise corporate powers. Provided further, that the notes of any such bank or banks, corporation or corporations, or others pretending to exercise corporate power, shall at all times be received in payment of any debts due the same." Hutch. Code, 331.

This action is brought by said trustee, to recover the amount of said promissory note; the declaration setting forth the judgment of forfeiture, the appointment of the trustee, &c.

The questions for consideration are presented in two pleas: Ist. That after the appointment of said trustee, and before the commencement of this suit, the trustee had collected and received of the debts and effects of the said bank, an amount of money sufficient to pay all debts of, said bank, wherewith he had paid the same, and had also collected an amount of money sufficient to pay and discharge all costs, charges, and expenses incident to this trust, &c.

2d. That in the matter of the proceedings in Adams circuit court, in which said trustee was appointed, and at the November term, 1846, of said court, said trustee made and returned to said court a schedule of the effects and evidences of debt of said bank, in his hands, and thereupon, on the motion of the district attorney for said court, it was ordered and adjudged by said court, that said trustee should sell to the highest bidder, for cash, said property and evidences of debt, embracing the note here sued on; which judgment remains in full force and unreversed.

The plaintiff below demurred generally to these pleas, and the court below sustained the demurrers and rendered judgment for the trustee; and, thereupon, the case is brought to this court by writ of error, and the matter for determination is, whether either of these pleas presents a valid defence to the action.

The opinion of the court was delivered by MR. CHIEF JUSTICE SMITH.

A judgment of forfeiture was pronounced against the late Commercial Bank of Natchez upon an information in the nature of a quo warranto, instituted under the provisions of the statute regulating the mode of proceeding against incorporated banks for a violation of their charters.

William Robertson was appointed trustee, and as such brought suit against the plaintiffs in error, on a note made by their testator,

4

which was the property of the dissolved corporation, at the time when the judgment of forfeiture was rendered.

The demurrer to the second and third pleas of the defendants in the court below, presents the questions which it becomes our duty to investigate. For the present, we will direct our attention to that which arises on the demurrer to the second plea. In its general form, the question thus raised is this: Had Robertson, the trustee, title to sue? Could he maintain an action on the note?

In the discussion of this proposition, two points of inquiry naturally suggest themselves. Ist. Whether a full payment of the debts due by the bank, at the date of its dissolution, or the collection from the assets of an amount of money sufficient for that purpose by the trustee, was a full and complete execution of his trust, whereby he became functus officio? 2d. Whether the trusts which had vested in Robertson were, in reality, terminated by the payment of the whole of the debts of the bank, or by the collection of funds by him sufficient for that purpose, such matter constituted the basis of a valid defence, of which the defendants below had a right to avail themselves in bar of a recovery?

1. The effects or consequences at common law of a judgment of forfeiture, rendered against a corporation, have been materially modified by the legislation of this State. Hence, to enable us to respond to the first inquiry a distinct perception, as well of the consequences which followed at common law upon a judgment of forfeiture against a corporation, as of the changes produced by the statutes of our own State, is essential.

The elementary books and the numerous cases decided, are uniform in their language in regard to the consequences resulting from the dissolution of a corporation. They held that, upon the death of a corporation, all its real estate remaining unsold, reverts back to the original grantor and his heirs. The debts due to and from the corporation are all extinguished. Neither the stockholders, nor the directors, nor trustees of the corporation, can recover those debts, or be chargeable with them in their natural character. All the personal estate of the corporation vests in the crown, with us, in the people of the State, as succeeding, in this respect, to the rights and prerogatives of the king. Co. Lit. 13b; 1 Black. Comm. 484; Angell & Ames on Corp. 513; 3 Burr. Rep. 1868; Commercial Bank v. Lockwood, 2 Harr. 8; 1 Blackf. Rep. 283; Fox v. Horah, 1 N. C. Rep. 353; 2 Kent, Comm. 309.

This we understand to be the settled doctrine of this court. It was said by the late learned chief justice, in delivering the opinion of the court, in the case of the Commercial Bank of Natchez v. Chambers, that it had been urged "in argument with much plausibility, that even without the interposition of the legislature, the debts due to and from the bank would have survived its dissolution; that these commercial corporations should be regarded as partnerships, and the fund or property owned by them a trust fund which equity would