Page:Harvard Law Review Volume 8.djvu/31

15 ACQUISITION OF REAL ESTATE BY A CORPORATION. 1 5 CONSEQUENCES OF ILLEGAL OR ULTRA VIRES ACQUISITION OF REAL ESTATE BY A CORPO- RATION. QUITE a number of cases have arisen in the Courts, in which it has been attempted to question the title of corporations to real estate on the ground of a lack of capacity in the corpora- tion to take and hold the lands in question. In applying to the decision of these cases the rule that the corporate title is not sub- ject to such attack, inasmuch as the question whether the corpo- ration in purchasing has violated a Hmiting or prohibitory statute, or has exceeded its charter powers, concerns the State alone, the Courts have often added the dictum that lands thus acquired are necessarily subject to escheat by the State. The corporation may take, it is said, and may hold against all but the State, and against the State until divested by a proceeding instituted for that pur- pose. By a bit of ** mediaeval reasoning," the case of the corpo- ration is likened to that of the alien, who, at common law, was permitted to take and to hold against all but the sovereign ; but, perhaps as Blackstone puts it, on account of his " presumption " in attempting by an act of his own to acquire real property, he was liable at any time to be ousted by the sovereign through the procedure known as an inquest of office. Some text-book writers, relying on this dictum, have assumed it to be the law, and have stated it accordingly .^ 1 Professor Tiedman says that when the amount of property which a corporation may hold is limited, " the State may confiscate whatever lands it acquires above the statutory limit." 5 Amer. and Eng. En. of Law, 431. Mr. Taylor, speaking of a deed of real estate to a corporation rendered incompetent by its charter or enabling act to hold the real estate conveyed, remarks that " all pur- poses of public policy are amply subserved by holding the deed voidable at the suit of the government." Taylor on Private Corporations, 303. Mr. Beach states the law thus : "The Commonwealth alone can object to the legal capacity of a corporation to hold real estate. There must be a direct proceeding by the State for the purpose of vacating the deed." 2 Beach on Corporations, sect. 378. The author of a recent work on corporations states that when a corporation takes a deed in violation of the local law, the " title is good against all but the State " He refers to this principle as simply a development of the common-law rule applicable to an alien's purchase of real estate. He also says that when a purchase of real estate is made by a foreign corporation, in violation of a local statute, the title will upon proper