United States v. Church of Jesus Christ of Latter Day Saints , 5 Utah 538 ( 1888 )

Boeeman, J.:

In this suit, brought to wind up the affairs of the late corporation of the Church of Jesus Christ of Latter-Day Saints, a receiver was appointed of the property and effects of said late corporation, and the receiver has filed his petition herein, alleging that certain personal property of said late corporation is in the possession of certain of the defendants, namely, John It. Winder, Bobert T. Burton, and William B. Preston, and prays that an order be made commanding said defendants to deliver the property to the receiver. Said defendants, Winder, Burton, and Preston, answered to said petition, denying that Winder or Burton ' had possession of said property, and denying that Preston had possession of it in the capacity of agent for said church, or for any of the defendants; and they allege, as further and separate answer, that on the 28th of February, 1887, John Taylor was trustee-in-trust for the said church, and was in possession of said property, and assigned and delivered the same to another corporation called the “Church Association of the Salt Lake Stake of Zion;” and that said association, on the 12th day of March, 1887, assigned, transferred, conveyed, and delivered said property -to William B. Preston, presiding bishop of said church, in trust, to be used and employed in the construction of the Salt Lake Temple; said temple being owned by the said Church'of Jesus Christ of Latter-Day Saints,- and at all times used exclusively for religious purposes. That said Preston, presiding bishop, then took possession of said personal property, except such as had been expended in the use and construction of the temple, and that such property now in his possession is being used for said designated purpose and none other. Upon the issues thus raised, a large amount of testimony' has been taken, from which it appears that this property had come into the possession of John Taylor, as trustee-in-trust for the Church of Jesus Christ of Latter-Day Saints; that the purpose of the members of that church in donating the property was that it be used to aid in the construction of the Salt Lake Temple; that said Taylor, as' such trustee in trust, executed a transfer of said property to the Church Association of Salt Lake Stake of Zion, a corporation within the said church, and in said transfer the conveyance was treated as creating a trust in the association, for the purposes therein specified, and among such purposes was the construction of the temple. And, after this association had acted a few days in the matter, it, in turn, conveyed the property to William B. Preston, presiding bishop of said church, in trust to aid in the construction of the temple; it being understood, as the witnesses state, that the property was originally donated for that purpose. The purpose for which the property was to be used was not changed by any of the transfers. It was used by each holder or possessor for aiding in the construction of the temple.

The defendants contend that the receiver’s power is confined and limited to the rights of the corporation of the Church of Jesus Christ of Latter-Day Saints at the date of its dissolution. The receiver’s power is no doubt confined and limited to such property as the corporation owned at the date of its dissolution; but it would not follow that the receiver’s power is confined and limited to the rights of the corporation at the date of the dissolution. The late corporation, or John Taylor, its trustee in trust, might not have had the authority to impeach the assignment or transfer to the church association; yet it vrould not follow that the receiver might not have that power. It is urged that he can have no such power, because he simply represents the court, and that the court’s authority is in the nature of that of an administrator, and it represents only a deceased person. If the statement were correct that the receiver represents only the late corporation, perhaps he could not attack the transfer to the church association; but the fact is that the receiver represents other interests than those of the late corporation. He represents the government, and represents all who have interests in the property. The receiver does not come in as the appointee or the successor of the late corporation. He comes in by authority of the law, to act for the court in holding and possessing all property of the late corporation, subject thereafter to distribution or disposal according to the law and rights of parties. The court is in no sense the representa-live of the late eorpoi’ation. The court takes charge of the' affairs of the late corporation, under an act of Congress, for the purpose of winding fch'em up; the 'corporation itself having become defunct. The receiver acts for the court, and, although the assignment to the church association may be good between the parties, yet, if the assignment or transfer were illegal, the receiver can impeach it by reason of his representing other interests than those of the dead corporation. It must be legal and valid against all parties, to preclude the attack. Porter v. Williams, 9 N. Y., 147-150. The assignment is in the nature of a gift for certain trust purposes.

The matter for our consideration, then, at this point, seems to be, was the assignment or transfer made by Taylor, trustee-in-trust, to the church association illegal? The transfer is dated the 28th day of February, 1887, but no delivery or notice tlfereof to the assignee took place, or is claimed to have taken place, until the 2d day of March following. Whether there was any delivery of the transfer or assignment on the 2d of March is not clear from the evidence; yet, if it took place on the 2d of March, the further . inquiry arises as to whether there was a delivery of property on that day. A delivery at any subsequent time could not have taken place, as with the 2d day of March the life of the assignor corporation went out, and its existence ceased. No single witness swears positively that there was a delivery of the property on that day. Some attempt so to do, but before closing their testimony the inconsistencies and indefiniteness of their statements leave the question in doubt. Mr. A. M. Cannon, who seemed to act as the representative of the church association in the matter, refused to accept the possession of the property until it was listed to him, and that was not done for several days after the 2d of March. He took control in the office on 2d of March, but nothing further wasd one on that day. He claimed to have taken possession on the morning of the 2d of March, but was not positive. He was positive that he took possession in the morning of some day. If such was the fact, it would follow that the accounts should have begun on that day, and that the workmen who were operating under him should have had their pay for that day. But, as appears from the pay rolls in evidence, their pay began on the 3d of March. The inference from this is that he took charge of the office on the 3d of March. The evidence, taken as a whole, does not show that Mr. Cannon took possession on the 2d of March, but rather at a subsequent day. No one could deliver the property to him at any subsequent day. The corporation itself having gone out of existence, no one had authority to act for it. But at a subsequent day he did undoubtedly have possession, as the president of the church association, and retained it for several days. The transfer to the church association did not purport to give an absolute title to the association, but a title for certain purposes. The association was to hold the property in trust, with the privilege of appropriating it for temple purposes, or other specified purposes. It was authorized, under the transfer, to use the property for the erection, or to aid in the erection, of the Salt Lake Temple — a piece of property belonging to the late corporation. It did so .appropriate it by transferring and assigning it to William B. Preston, presiding bishop of said church. We thus see that this property had come to John Taylor as trustee, and it was expected that it would be used for the building of the Salt Lake Temple. He, as trustee, transferred it to the church association, in trust for the same purpose,' among others, and it was transferred by the church association to Preston, presiding bishop of said church, and to be used still for the same purpose. It was always, after donation, in the hands of some trustee, conveyed by one trustee to another and another; yet all the time it was being appropriated to the same purpose — to aid in the erection of the Salt Lake Temple. In all of the alleged changes the actual appropriation to that purpose was never changed. It was at all times being used and appropriated to improve the property of the late corporation, and for no other purpose. In all of these alleged changes there was no change in the manner of the appropriation, nor any important change in the individuals employed, nor in the places of employment, nor in the office, except that for a few days, early in March, 1887, Mr. A. M. Cannon was acting as agent in tbe disbursement o£ tbe money, and appropriation of tbe property. During these few days, Mr. Cannon seemed to have, as agent, charge of tbe work that tbe employees were performing, and that work was for tbe improvement of tbe property of tbe late corporation. Except those few days in which Mr. Cannon bad charge, William B. Preston, presiding bishop, bad charge, both before and after Cannon; first under Taylor, trustee, and afterward under tbe church association. Tbe office where all tbe business connected with this property was transacted was always tbe same, though under different names. There evidently was a private understanding between the parties to these various transfers that all their proceedings were in the interest of, and for the benefit and use of, the late corporation. They were never put to any other use.

. The territorial statute in regard to conveyances made for fraudulent purposes, says: “(1017) Sec. 8. Every conveyance or assignment, in writing or otherwise, of any estate or interest in lands, or in goods, or things in action, or of rents, or profits issuing therefrom, and every charge upon lands, goods, or things in action, or upon the rents or profits thereof, made with the intent to delay, hinder, or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands, and every bond or other evidence of debt given, suits commenced, decree or judgment suffered, with the like intent, as against the person hindered, delayed, or defrauded, shall be void.” Comp. Laws, p. 341. This section is substantially same as 13 Eliz. c. 5, and is merely declaratory of the principles of the common law. Hamilton v. Russel, 1 Cranch, 310. It might be said, perhaps, that the section of the statute which declares invalid, as against creditors, an assignment made in trust for the benefit of the assignor, is not applicable to the case at bar for the reason that the word “creditors” alone was used; yet the section (1017) which we have quoted, makes void every assignment of goods, etc, “made with intent to delay, hinder,'or defraud creditors or other persons of their lawful suits, damages, forfeitures, debts, or demands.” This language is broad enough to reach the circumstances of the present case. John Taylor, trustee, does not, in his transfer, indicate any necessity for making the transfer, nor does he indicate any advantage to be derived to the church or to the church associations thereby. The church association, so far as its directors, at least, were concerned, did not seem to know what to do with the property, but, as it was understood to have been originally donated to aid in building the Salt Lake Temple, the directors concluded' that the proper thing to do was to continue it in that use, and convey it back, but to another trustee, for the identical purpose for which it was originally intended. The evidence does not show that there was any necessity for the transfers, nor an advantage anticipated, nor were the transfers made with any avowed object of bettering the condition of the church or of the assignees. Our attention is not called to any laudable or worthy purpose to be served by the transfer to the church association, or by it to Preston. On their faces, and by the evidence, they seem to have been aimless transactions, made with suddenness, and in a hurried and confused manner, for some purpose not avowed. The Congress of the United States had passed a bill to forfeit the property of the church to the government for school purposes, and that bill was well known to be then awaiting the President’s signature, or to become a law by the expiration of the Constitutional period of 10 days, without his signature. The 10 days expired with the second day of March, 1887. It is not unreasonable to conclude, from all the circumstances, that the object of the transfer by Taylor, trustee, to the church association, was to save that property from the impending forfeiture. The government would be included in the words “other persons.” The forfeiture did not take place until the bill became a law, but it was to avoid the apparently inevitable that the transfer was made. If a man, indicted for a .crime, which, if he should be convicted, would cause a forfeiture of his goods, should give away his goods, the gift is void under the same statute, although made only in anticipation of forfeiture: Pauncefoot's Case, Lane, 44, 45. See Twyne’s Case, 3 Coke, 80; 1 Smith, Lead. Cas., 36; Benj. Sales, (2d Amer. Ed.,) sec. 675, note G. We are referred to Ang. & A. Corp., sec. 778a, for authority in a corporation to dispose of its property on the eve of dissolution. We do not find in that section any such authority, except that, when a moneyed corporation is about to go out of existence, it may assign its property to a trustee for the use of the stockholders, or indorse unexpired paper for the same use. That is an authority simply for dividing the property of the corporation, and not to defeat or delay or hinder or defraud any one; for in the next succeeding sections (779 and 779a) it will be seen that the rule of the common law as to forfeiture has never in England been applied to insolvent or dissolved moneyed corporations.

Taking all the facts together,-we do not think that there was. a delivery of the property to the church association prior to the 3d day of March, 1887, or that there ever was any change in the actual ownership of the property in question. It is now only in the hands of a different trustee, but the transfers were merely made to enable the church to retain what the law said it should not retain. They were not made in good faith, but for the evident purpose of defrauding the government of the benefits to be acquired under the statute. ' The statutes made for the suppression of frauds are to be interpreted liberally for that purpose. Twyne’s Case, 3 Coke, 80; 1 Smith, Lead. Cas., 1. The real gist of the transfers was intended to be a conveyance by the church as incorporated to the church not. incorporated. As this could not be done directly, it was necessary that it be done indirectly through the church association, as no other object for these various transfers appears other than the evasion of the consequences of the new law. The ownership of the property remained with the late corporation, and was evidently so intended, and it is being used by the defendants for the benefit of the late corporation. The church association was made a corporation within the late corporation. It was part and parcel of it, and its officers were officers of the late’ corporation, operating and acting for it. The church controlled them as its officers, and through them controlled the property; and the property was used, and is now being used, for the benefit of tbe late corporation. The defendants, in their arguments, seem to consider that the incorporation of the church still exists, notwithstanding its annulment by the act of Congress. That question has in this case heretofore been settled; this court holding that the incorporation ceased to exist with the enactment of the law of Congress referred to. Yet, if it be not dissolved, but is still existing, then the property still belongs to it as much as it did before the transfer by Taylor, trustee. It was then held by a trustee for the benefit of the corporation; and it is now held by a trustee for the same purpose. It certainly would then be proper for the receiver to have possession of the property, pending the settlement of the questions in issue. The receiver is merely the custodian of it, to await the final decision of the issues in the case. The Salt Lake Temple block was the property of the late corporation, and is now in the hands of the receiver. It is held by trustees, the defendants in this proceeding, said Preston, Burton, and Winder. Preston is the presiding bishop of the whole church, and the only one, and, as such, now holds the property in question, to be used to improve this Temple block. The receiver, it would appear, being in possession of the Temple block itself, is the proper custodian to hold the property in question until a decision be reached upon the final hearing.

The principal ground, however, urged by the defendants against the granting of the prayer of the petitioner is that the court has no authority to act in the matter unless the Church Association of the Salt Lake Stake of Zion, the assignee of Taylor, trustee, be made a party to the suit or proceeding. The point was not raised by demurrer or by answer. It is raised for the first time on the argument. If the church association has any existing interest in the property, or will be affected'by the decree it would be a necessary party. According to the terms and tenor of the assignment by Taylor, trustee, to the church association, that assignment coinmitted to the church association a trust. In turn, the church association, upon the authority of the assignment, transferred all of its rights and powers to another trustee, the presiding bishop of said church. 'If we find tbat the church, association has an existing interest, we would by like reasoning have to find that the original donors — those who donated the property to the church, to be held by Taylor, as trustee — have an existing interest. But there seems to be no question but that the donors parted with their title, although the donations were made for a specific trust purpose — the building of the Salt Lake Temple. The donors possibly might have the right to compel the use of the property for trust purposes, and to prevent its being used for anything else. The church association has, in an equally absolute manner, conveyed away whatever rights they had in the property. It had no interest except for trust purposes; and that is what it transferred to Preston, the presiding bishop of the church. It parted completely and absolutely with its title. The answer alleges that the association “assigned, set over, and transferred and delivered all the property” to Preston; and that is the purport of the transfer itself. If on the other hand, it be true that the church association should be made a party, because it was the beneficiary party in the transfer to it, then it would follow, by parity of reasoning, that the present unincorporated Church of Jesus Christ of Latter-Day Saints should be made a party; for the transfer to Preston, presiding bishop, purports to make the present church the beneficiary. It would not be necessary to make Preston a party to this proceeding if he did not have possession of the property. We see no reason, on any ground, to say that the church association is a necessary party. Its rights will in no manner be affected by any decree in the case. It was, like Taylor or Preston, simply one trustee in the chain of trustees; and when that was ended by -the assignment to Preston its connection with the property ended. Preston was no more its agent than was it the agent of Taylor, trustee, or than Taylor was the agent of the original donors. The character in which each held the property was the same. The church association could, therefore, in no sense be a necessary party. Bailey v. Inglee, 2 Paige, 278. We see no reason to hold that the property in question is, or at any time since February, 1887, has been, the property of any one other than the late corporation. Tbe prayer of tbe petition is granted, witb costs.

Hendebson, J., concurred.