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State, ex rel., v. University.

STATE, ex rel., et al. v. U. S. GRANT UNIVERSITY et al.

1.

(Knoxville. September Term, 1905.)

CORPORATIONS.

Educational corporation is dissolved by conveyance of its property and franchises to another educational corporation, for the payment of its debts, and cannot sue, when.

Where an educational corporation conveys and transfers its franchises, powers, and privileges to another educational merger corporation, and conveys all its property to an educational aid or auxiliary corporation in consideration of the payment of its debts, with the provision and agreement that the property is to be conveyed by the said auxiliary corporation to the said educational merger corporation, when it is financially able to operate and carry on the school, and upon its refunding to the auxiliary corporation the money expended in payment of said debts, and delivers the possession of the property to the said merger corporation, the conveying corporation, both under the common law and under our statutes, by its such conveyance, worked a dissolution and terminated its existence, and cannot afterwards maintain a suit, especially more than five years afterwards under our statutes. (Post. pp. 240-255.)

Code cited and construed: Secs. 2070, 2071, 2525 (S.); secs 1719, 1720, 1984 (M. & V.); secs. 1492, 1493 (T. & S. and 1858). Acts cited: 1875, ch. 142.

Cases cited and approved: State v. Bank, 5 Bax., 108, 116, 117. 118; Railroad v. Kyle, 9 Lea, 691; Pennsylvania College Cases, 13 Wall., 190.

Cases cited, approved, and distinguished: College v. Bartlett, 8 Bax., 231; Railroad v. Kyle, 9 Lea, 691; Bache v. Society, 10 Lea, 437; Parker v. Hotel Co., 96 Tenn., 273.

2. SAME.

State, ex rel., v. University.

Trustee cannot sue when the corporation cannot.

A mere trustee of a defunct corporation cannot maintain a bill in behalf of the corporation where it has no power or right to sue. (Post, pp. 255.)

3. SAME. Trustee cannot sue, unless he requests the corporation to sue, and it refuses.

A trustee of a corporation cannot sue in its behalf, unless he shows that he has requested it to sue, and that it has refused. (Post, pp. 255, 256.)

Cases cited and approved: Gas Co. v. Williamson, 9 Heis., 338, 339; Boyd v. Sims, 87 Tenn., 777, 778.

4. SAME. Same. Facts that excuse request of corporation to sue, and not mere conclusions, must be alleged.

A trustee of a corporation cannot maintain a bill in its behalf upon the allegation that an application to it to sue would be useless formality, which is only a conclusion of law, but the facts which excuse such a demand or request must be stated with particularity and definiteness. (Post, pp. 256, 257.)

Cases cited and approved: Steiner v. Parsons, 103 Ala., 215; Brewer v. Theater, 104 Mass., 378.

5. PARTIES TO SUITS. Intermediate grantee is an indispensable party to conveyor's suit to recover the property and to cancel contract, when.

The educational aid or auxiliary corporation, to which the conveyance of property was made as for the purpose stated in the first headnote is an indispensable party to a suit by the conveyor to recover the property, and to have the contract canceled. (Post, p. 257.)

6. CORPORATIONS. Amendment to charter of educational corporation that is not fundamental does not require unanimous consent of trustees, but majority only.

An amendment to a charter of an educational corporation for the maintenance of schools of law, medicine, theology, and technology, and an academic department, so as to authorize a col

State, ex rel., v. University.

lege of liberal arts, literature, and general culture, is merely auxiliary, and not fundamental, because it does not seek to change the character of the corporate business, and, therefore, the unanimous consent of the trustees of the corporation is not required, but a mere majority is sufficient. (Post, pp. 245, 246, 257-259.)

Cases cited and approved: Deaderick v. Wilson, 8 Bax., 108; Muller v. Insurance Co., 92 Tenn., 167.

FROM MCMINN.

Appeal from the Chancery

Court of

McMinn

County.-T. M. M'CONNELL, Chancellor.

BURKETT, MANSFIELD & MILLER, for complainants.

W. G. M. THOMAS, C. R. EVANS, and WHITE & MARTIN, for defendants.

MR. JUSTICE M'ALISTER delivered the opinion of the Court.

The general scope of this bill is to enforce certain alleged contracts between the Grant Memorial University, situated at Athens, McMinn county, Tenn., and the U. S. Grant University, located at Chattanooga, Tenn., or, in the alternative, to have said contracts canceled, and certain educational property restored to the possession of the Grant Memorial University, and, further, to enjoin the former corporation against interfering with the com

State, ex rel., v. University.

plainant in the control and management of said property.

The complainants to the bill are the State of Tennessee, on relation of Fisher, Bayless, and the Grant Memorial University. Fisher sues in the capacity of a trustee of Grant Memorial University; Bayless sues as a trustee of the defendant the U. S. Grant University and the Grant Memorial University sues in its own right.

The defendants are the U. S. Grant University, J. H. Race, its president and trustee, and seventeen individuals who are charged to be among the alleged trustees of the complainant Grant Memorial University.

A demurrer was interposed on behalf of all the defendants in the court below; some of its specifications being sustained, and others overruled, by the chancellor. On appeal to this court the cause was assigned to the court of chancery appeals, which tribunal sustained all the assignments of the demurrer and dismissed the bill. Complainants appealed to this court and have assigned

errors.

It appears from the allegations of the bill that in the year 1867 a college was located at Athens, McMinn county, Tenn., and placed under the control of the Holston Annual Conference of the Methodist Episcopal Church. This institution was given power by its charter to purchase, acquire, and hold property for educational purposes at or near Athens. The original act of incorporation provided that the charter members should be trustees, and vacancies therein occurring from time to time

115 Tenn.-16

State, ex rel., v. University.

should be filled by the Holston Annual Conference of the Methodist Church. The bill further charged that said trustees acquired property at a cost of $7,200, which sum was raised by donations, for the purpose of establishing a university for higher educational purposes. In 1868 the corporate name of the institution was changed to the East Tennessee Wesleyan University. In 1886 its name was again changed to the Grant Memorial University, and under this name it was conducted up to 1892. It further appears from the bill that in 1886 another college was established at Chattanooga under the patronage of the Methodist Church, which was known and designated as Chattanooga University, and from 1886 to 1889 this university conducted departments at Chattanooga. Another corporation figures in this litigation which was known as the Freedman's Aid & Southern Educational Society, which was also an auxiliary of the Methodist Church. It was incorporated about the close of the civil war, and its object was to extend financial aid to schools connected with the Methodist Church. It was soon discovered that the operation of the two universities under the auspices of the same church in such close proximity to each other would, because of their rivalry, tend to impair the usefulness and prosperity of both institutions, and the idea was conceived of founding a central university, to be composed of the two colleges, and which would operate both under a division of departments at the two places. The college of liberal arts, the departments of law and medicine, under the plan of unifica

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