University of North Carolina v. Maultsby, 43 N.C. 257, 8 Ired. Eq. 257 (1852)

June 1852 · Supreme Court of North Carolina

43 N.C. 257, 8 Ired. Eq. 257

UNIVERSITY OF NORTH CAROLINA vs. JOSIAH MAULTSBY AND AL.

The act of 1850, ch. 62, directing the personal estate .of any deceased person, that might remain in the hands of an executor or administrator for seven years, unclaimed, &c. to be paid over to the President and Directors of the Literary Board, is not unconstitutional, though such property, as ij might accrue, had been directed to be paid to the University, by the acts of 1184 and 1809, Rev. Stat. ch. 46, sec. 20

It is competent for the Legislature to enact, that an administrator should, after a reasonable time, pay an unclaimed surplus of the estate to any person, charged by law with the keeping and securing of the same, for the benefit of the creditors and next of kin. And they may, when they think proper, from time to time, change such depositary.

The University of North Carolinais a public institution and body politic, and, therefore, subject to the Legislative control. It was not only, originally, the creature of the Legislature, but it is absolutely dependant upon the Legislative will for its continuing existence.

The fact, that private donations have been made to the University, does not alter the nature of the foundation, nor the character of the corporation.

Appeal from the Court of Equity of Columbu3 county, at the Fall term, 1851.

This was a bill filed in 1851, by the Trustees of the University of North Carolina, alleging, that one Charlotte Rouse, of Columbus county, died intestate in the year 1841; and that administration on her estate was granted to Josiah Maultsby, at August Term, 1841, of the County Court of the said county ; that the said administrator still has in his possession a large amount of the estate of his intestate, remaining unclaimed ; and the bill prays for an account of such estate, and that the amount may be paid and delivered •over to the plaintiffs.

To this bill, a general demurrer was filed by the defendant.

John H. Bryan, with whom were W. EL. Haywood and Moore, for the plaintiffs,

submitted the following argument:

The constitution enjoins the establishment of one or more Universities, where useful learning shall be encouraged and promoted. The act of 1789, whereby the University of North Carolina is established, declares that a University, supported by permanent funds, and well endowed, would have the most direct tendency to answer the above purpose, “in the education of the rising generation.” The same recital is in substance made in the preamble to the second act of’89, which is as follows: “ And whereas, adequate lunds will be found to be the means which will most effectually secure to the State the advantages to be hoped and expected from such an institution: therefore, Be it enacted, &c. That a gift of all monies, due and owing to the public, to January, ’83, for arrearages, &c. be fully and absolutely made to the University,” &c.

And by the second section, “ all property which has heretofore, or shall hereafter, escheat to the State, is vested in the trustees.” The word “ escheat,” as used in this act* has been held to embrace every case of property falling to the sovereign, for want of an owner — 2 Hay- 198; 4 T R, 243 ; Dig. Fran. A. 1. By the 8th and 9th sections of the original act, subscriptions are invited from individuals, <fcc.

By the act of 1809, Rev. Stat. ch. 46, sec. 20, all sums of money, or other estate, which shall now remain, or shall hereafter remain in the hands or possession of any executor or administrator, for seven years, &c. unclaimed by suit, <fcc. shall be paid over to the trustees, &c.

By the act in question, (1850-1, ch. 62.) this statute (1809,) is repealed, and money, or other estate, remaining in the hands of executors or administrators more than four years, &c. is to be paid to the Literary Board.

The University is, in a legal sense, a private corporation : it was undoubtedly established for public purposes; but that is by no means the test. Banks and Railroads are established for public purposes, and for the public good ; and, although the State may own the greater portion of the stock, they are still private corporations in law. A public corporation is one which exercises some portion of the sovereign power, which is delegated to it, because such powers may be more conveniently exercised by Buch ah instrument. Such are municipal corporations of various kinds. Angel on Corp. 27, 28, 29; Dartmouth Coll, ease, 4 Wheat. (U. S.) Rep. 636; Mills v. Williams, 11 Ired. 558.

The University may sue and be sued, and has a private fund out of which a judgment may be satisfied. A large portion of the funds of the University have been derived from private donations, which were invited by the act of 589, and which, with the donations made by the State, constitute a common fund, solemnly dedicated by the Legislature to a common and most useful purpose — the education of the youth of the State. The State has no more right, in good faith, to resume its grants, than have the individual donors.

The trustees of the University have an interest and a legal right to exercise the powers, and to perform the duties imposed upon them by law, and which they have assumed ; and it by no means follows that these rights are not regarded as valuable in contemplation of law, because they are not attended with individual pecuniary profit-The right of suffrage is the exercise of a public trust, and yet it is a much valued private right.

If, then, the University is to be regarded as a private corporation, as the authorities cited show, then by the acts of 1789 and 1809, a contract was made with this corporation, whereby a vested right to this property accrued, and the act of ’50-51 violates the obligation of this contract, and is thus repugnant to the constitution of the United States.

This act is contrary to our own Bill of Rights: the University is deprived of property “contrary to the law of the land” — this means, as held by our Courts, some judicial proceedings, in which the party whose rights are to be affected can be heard, before judgment. It must, from the force of.the term law, mean a certain established mode of proceeding, noi a single temporary act.

But even public or municipal corporations may stand, in relation to a franchise or property conferred upon them by the Legislature, on the same footing as a private corporation. As in the case of Bailey v. the Corporation of New York, 3 ¿lili (N. Y.) Rep. 531; Angel on Corp. 30,31; with regard to the Croton Water Works. And suppose the case of a grant to a town, by the Legislature, of a lot of ground for the purpose of a park and public walks, although this is for public purposes, and to a public corporation, yet it is submitted, that it cannot be resumed at the pleasure of the Legislature.

An argument in favor of the act of 1850 is sought to be derived from the nature of the property and interest granted to the University : but, as to the interest in the property, it is contended that, however limited and contingent that may be, yet it is a beneficial interest, and at ail events, it is recognised by law (and by this very law,) as such. And, as to the nature of the property, that is unclaimed personal property, or money remaining, <fcc. in the hands of executors or administrators. These are termed in law, “ bona vacantia,” and originally belonged to the sovereign, and may be granted by him as a franchise to a subject or corporation. Co. Lit. 136 ; Fox v, Horah, 1 Ired. Eq. 361. And, although this property may accrue from time to time, yet the right of the University is as perfect to that which may hereafter accrue, as to that which has already been reduced into possession. From the very nature of the franchise, it consists in the right to take whenever the goods become vacant, as in the analogous franchises of waifs, wrecks, &c, and in case of advowsons. The property or franchise* granted to the Literary Board, is the same identical franchise which had been granted to the University, which cannot lawfully be done. Earl of Rutland’s case, 8 Cr. Rep. Ill; 2 Black. Com. 37.

But the Legislature itself, by a strong implication, have admitfed that they do not possess the power which is attempted to be exercised by this act. In 1880, the University was reduced to a very low estate, and the Trustees petitioned the Legislature for aid; and, by the act of 1830, ch. 24, certain propositions were made to the trustees, as a condition upon which aid would be granted. Among these were,..that the trustees should assent that the Legislature may “modify or alter the charter of said institution, so as to assume to the State the management of said institution, and the possession and disposition of all its property real and personal.” The limited aidj which was proffered upon these terms, was declined by the trustees : but the Act of Assembly clearly indicates the opinion of the legislators of that day, that, without the assent of the corporation, no such power could be exercised.

Strange and Troy, for the defendant.

Ruffin', C. J.

The Court had considered this cause, and was prepared to pronounce a decision, and assign the reasons for it, when an application was made on the part of the plaintiff for a further argument. As it is the course of the Court of Equity not to conclude parties on one hearing, the leave must be granted. Yet, as the second argument is in the nature of a rehearing, it is considered proper that some note of the opinions of the Court, on tho points involved, should be communicated to the counsel; as well to prevent any speculation on the idea that the law on these points is deemed doubtful, as to direct attention to the questions for argument.

The Court is clearly of opinion, that it was competent to the Legislature to enact, that an ^administrator should, after a reasonable time, pay an unclaimed surplus of the estate to any person charged by law with the keeping and securing the same, for the benefit of the creditors and next of kin. The duty of secuiing the estates of dead men, is a political trust of high obligation: and the disposition of the surplus in such a case is simply an act in the course of administration, and subject to legislative regulation. The administrator hath no right to retáin it to his own use. He got his office and the possession of the assets from public authority, and he must execute the office, and account for the property, and deposit if, under the direction of the law. Therefore, the plaintiff would be entitled to a decree, if the act of 1850, c. 62, had not made it the duty of the defendant to make the payment to the Literary Board, instead of the Trustees of the University, under the previous act of 1809.

The Court is further of opinion, that the act mentioned-is constitutional.

The same reasons, on which the trustees micht be au-thorised to take the surplus from an administrator, require a power in the Legislature to change the person from time to time, with whom it shall be deposited, as it may be deemed more safe for those having a beneficial interest in it. Accordingly, the payment has been required to be made, at one time, to the wardens of the poor : at another, to the public treasurer: then to the trustees of the University: and, lastly, to the Literary Board. In this par. ticuiar duty, then, the trustees were discharging a political agency, in subjection, necessarily, to ihe legislative discretion : and any incidental advantage from the possession of the assets or even ultimate permanent propert)’, cannot change the nature of the office, even it the corporation might be regarded as private.

But the Court is further of opinion, that the'University is a public institution and body politic, and, hence, subject to legislative control. It is admitted, and the Court is prepared to hold, that charters of corporations, founded by-individuals, on their own funds, either for their own emolument, or for the purposes of education, or other general charity, are contracts of inviolable obligation. The admission and exclusion of members, the qualification of directors or trustees, the mode of keeping up their succession, and the government of such corporations, are absolutely fixed by the charter, and can only be modified by the concurring will of the Legislature and the corporations. The property of such a corporation, also, is as secure as that of the individual citizen. But the University was founded by the State, on the public funds, and for a general public charity. In both senses of the term “ foundation ” — that of fundatio incipiens, and of fundatio perficiens — the State is the founder of the college. The trustees were not of private appointment or designation : nor had they a faculty oí keeping up the succession, of themselves : and no person in particular derived any exclusive advantage from the corporation. But, on the contrary, the election of trustees has ever been by the Legislature, and their number more or less at different periods, as directed for the time being, by the Legislature. There is no power, but their own sense of the public interest, and their representative responsibility, which can' coerce the members of the Legislature to keep up the succession by elections to fill vacancies as they may occur: and therefore the corporation was not only originally the creature of the Legislature, but it is absolutely dependent on its will for its continuing existence1 Hence, it seems to the Court, that there cannot be an instance of a corporation more exclusively founded by the public, more completely the creature of public policy, for public purposes purely, than the University of North Carolina. It is as much so as those other public functionaries, the President and Directors of the Literary-Board, and the Board of Public Works. It is true, that» since the incorporation, there may have been donations to the college: but that would not alter the nature of the foundation, nor the character of the corporation. It is merely a political agent — an instrument of State; and if follows, that its organization, devotion and government: its power of acquiring property: and the disposition of the property belonging to it — at all events, so far as it is of public endowment — are subjects for legislative regulation. Hence, the Court concludes, that the act of 1850 is constitutional, and, accordingly, that the Literary Board, and not the University, is entitled to receive the fund in the defendant’s hands,

Per Curiam. Declared accordingly.