Opinion
No. 25659.
May 10, 1926.
1. BENEFICIAL ASSOCIATIONS. Where fraternal corporation in soliciting members falsely represents that they will be received into regular Masonic lodges throughout the United States, state may forfeit charter and restrain receiving members by such means pending trial of forfeiture proceedings ( Laws 1920, chapter 299, section 1 [ b] ; Code 1906, sections 897-938).
Where a fraternal corporation whose charter grants it power to promote and extend benevolences, charity, and fraternity among its members and to organize subordinate lodges and chapters in the state, and where in soliciting its members it represents falsely and fraudulently that its members will be received into regular Masonic lodges throughout the world, thereby procuring fees and moneys from such members relying upon such representations, the state has the right to forfeit the charter and to restrain the receiving of members by such means pending the trial of the forfeiture proceedings.
2. BENEFICIAL ASSOCIATIONS. Courts do not entertain jurisdiction of controversy with regard to conflicting claims of different fraternal organizations as to which represent regular and true fraternity; court will not adjudicate controversies between different fraternal organizations as to whether they are duly authorized or regular in doctrine.
The courts of the state do not entertain jurisdiction of controversy with regard to conducting claims of different fraternal organizations as to which represent the regular and true fraternity. It will not adjudicate controversies between such parties as to whether it is duly authorized or is regular in its doctrine according to the true principles of the named associations or fraternities.
3. BENEFICIAL ASSOCIATIONS. Evidence. Court cannot judicially know what are true principles and degrees of free Masonary or of similar organizations, nor adjudicate between conflicting organizations with reference thereto; so long as no fraud is used in procuring membership in fraternal organizations by false representations, court will not undertake to control such societies or lodges in their operations; unless protected by copyright, or unless private property rights are involved, court will not entertain jurisdiction over lodge disputes.
The court cannot judicially know what are the true principles and degrees of free Masonry or of similar organizations, nor adjudicate between conflicting organizations with reference thereto, and so long as no fraud is used in procuring membership by false representations, the court will not undertake to control such societies or lodges in their operations. Unless protected by copyright, or unless private property rights are involved, the court will not entertain jurisdiction over lodge disputes.
4. BENEFICIAL ASSOCIATIONS. Where state undertakes to forfeit charter of fraternal lodge because of fraudulent use, court will not restrain members from meeting for transaction of business among themselves, but will only restrain receiving new members through false and fraudulent representations.
Where a fraternal lodge is organized under a charter of the state, and the state undetakes to forfeit such charter because of fraudulent use of the charter, the court will not restrain the members of such organization meeting for the transaction of business among themselves, but will only restrain the receiving of new members through false and fraudulent representatives.
APPEAL from chancery court of Forrest county; HON. T.P. DALE, Chancellor.
Eugene Palmer and Robt. B. Ricketts, for appellants.
I. It conclusively appears from the bill itself that the State of Mississippi had a plain, adequate and complete remedy at law. See the chapter on Quo Warranto, section 3019, Hemingway's Code (section 4024, Code of 1906). "A complainant seeking an injunction must show that he has exercised strict diligence and availed himself of every remedy otherwise afforded by statute." Brooks v. Shelton, 47 Miss. 243. An injunction will not be granted where the remedy at law is inadequate. Pollard v. Phalen, 53 So. 453; Ricks v. Richardson, 70 Miss. 424, 11 So. 935. The jurisdiction of the circuit court in matters of quo warranto is exclusive. See section 3013, Hemingway's Code (section 4018, Code of 1906).
In this case an injunction is sought at a time when there is pending in the circuit court a suit in which full relief can be given. That suit is a suit of which the circuit court has exclusive jurisdiction. That court could have made any suitable and proper restraining order as against the said Cuney Grand Lodge and its officers. That very circuit judge who issued the flat for the injunction in this cause could have made any proper restraining order in the cause pending in his own court. The sole justification for the issuance of the injunction is the existence of an emergency — of a condition for which there is no other relief. 22 Cyc. (Injunctions) 774. An injunction will not be granted ex parte and without notice except in cases of the greatest emergency Glover v. Falls, 82 So. 4, 120 Miss. 201; Alexander v. Wood, 103 Miss. 869, 60 So. 1017. The case of Water Valley v. State, 103 Miss. 645, is authority for the statement that injunctions are not properly granted in mandamus or prohibition cases.
II. The fact that T.J. Cuney is attempting to confer so-called Masonic degrees and is assuming to be an official of some Masonic organization does not entitle the state to any sort of relief. The determination of the said Cuney's right to confer such degrees and the decision of the question whether he and his grand lodge or the Stringer Grand Lodge are regular or irregular Masons is not a matter for the decision or even the consideration of the courts of this state. See Smith v. Charles, 24 So. 968. There can be no good reason why courts should regard themselves as the guardians of orthodox Masonic doctrines or polity when they consistently refuse to assume to decide such matters as to religious organizations. The attitude of our own court is clearly apparent from the decision in Vicksburg Lodge v. Grand Lodge, 76 So. 572.
The authenticity or spuriousness of the Masonic work being done by Cuney et al. does not constitute a basis for interference by the state. Therefore, charges of irregularities which are such only when viewed from the standpoint of the Stringer Grand Lodge cannot be the basis for jurisdiction herein.
III. But it may be said that the individual defendants are pretending to be officers in a corporation which has no legal existence — a corporation which could not be chartered or exist under our laws.
When the state filed its quo warranto suit against the Cuney Grand Lodge, it thereby became and was concluded as to its corporate existence. So far as the state is concerned the corporate existence of the Cuney Grand Lodge is admitted. The validity of its incorporation cannot be in this suit denied. 22 R.C.L. ( Quo Warranto) 697; Ann. Cas. 1913-A, 570; State v. Commercial Bank, 33 Miss. 474.
The charter of the Cuney Grand Lodge was granted in strict accordance with the law. It was contended for the complainant that the case of Goodman v. Loan Ass'n., 71 Miss. 310, was not the authority for us. It was charged that the general law governing the formation of corporations had been essentially changed since the time of that decision. Section 4069, Hemingway's Code was the general law in effect when the Cuney Grand Lodge was incorporated. Up to the first semicolon of the Hemingway Code section the statute runs word for word exactly the same as it stood in 1880. The Goodman case is, therefore, directly in point. The act of 1920 merely threw certain regulations and restrictions about the formation of local lodge corporations and provided for the fees to be charged. It did not require such local lodges to incorporate. It did not say that no other sort of lodge corporations could be formed. The construction for which we contend has been adopted by the attorney general's office in passing upon the charters of at least three grand lodges of Masons.
IV. It is improper for the attorney general to proceed by quo warranto for the redress of private grievances. The whole proceedings is brought for the benefit of the Stringer Grand Lodge of Colored Masons. The courts will not entertain a quo warranto suit in such circumstances. State v. A.T. S.F. Ry. et al., 63 L.R.A. 761, 776); People v. Gen. Electric Co., 172 Ill. 179, 32 C.J., p. 295.
The sole ground for relief is the alleged invalidity of the charter of the Cuney Grand Lodge. A suit is now pending to try out that question. It is not pending in a court having jurisdiction (on account of venue) of the case. The circuit court has under the statute exclusive jurisdiction of the only controversy in which the state has any conceivable interest. The chancery court of Forrest county was without jurisdiction of the cause.
It is respectfully submitted that the decision of the chancery court should be reversed and the cause dismissed.
Paul B. Johnson and John R. Tally, for the state.
We will undertake to discuss the points raised by the demurrer in order in which they are raised; as follows: (1) "There is no equity on the face of the bill." We contend that there is equity on the face of the bill. The bill, in an historical way, recites how in 1868 in the legal way a grand lodge of colored Masons was established in this state by an authorized negro grand lodge in the State of Ohio, and then it charges that the said T.J. Cuney, who was an expelled Mason, had no authority from any grand lodge jurisdiction to set up a Masonic grand lodge, and could not have any under Masonic law. We then charge that he unlawfully and illegally obtained this charter in question from the State of Mississippi, which appellee would have been abundantly able to prove on the trial of the merits of this cause, as it did prove in the circuit court in the trial of the quo warranto proceeding, that the said T.J. Cuney, Ira Cooper and E.L. Johnston never in any wise complied with chapter 299, Laws of 1920.
The bill further shows that this charter was obtained claiming to promote fraternal relations among its members and yet it charges and shows by its allegations that its powers were converted and perverted into a purely money making scheme; that its officers did not charge its applicants a uniform fee, but would take any sum and whatever sum of money that could be extracted from anybody who could be induced to let this bunch operate on him in the name of Masonry.
The bill charges that they have imposed upon innocent negro citizens, extracting their money and using said charter as authority from said state to rob these ignorant, unsuspecting negroes, thereby operating under what would be termed legalized robbery, and further charges that instead of the State of Mississippi being able to sell many charters to the different local Masonic lodges, that the Cuney Grand Lodge itself, under and by virtue of its charter, claims power under the charter authorizing it to organize sub-ordinate lodges and sell to the sub-ordinate lodges charters and collect fees therefor, instead of the state's being permitted to issue charters to the local Masonic lodges and collect the fee therefor. We contend that the bill of complaint is honey-combed with equity.
(After stating the facts as above). Chapter 299 of the Laws of 1920, section 1 (a), provides that the person desiring to be incorporated (in a corporation of the kind here involved) shall apply to the secretary of state for the necessary form of application for a charter, which form shall be as follows:
"The charter of incorporation of ____.
"1. The corporate title of said company is ____.
"2. The names of the incorporators are:
"____ Post-office ____.
"____ Post-office ____.
"____ Post-office ____.
"____ Post-office ____.
"3. The domicile is at ____.
"4. Amount of capital stock ____.
"5. The par value of shares is ____.
"6. The period of existence (not to exceed fifty years) is ____ years.
"7. The purpose for which it is created is ____.
"8. The rights and powers that may be exercised by this corporation are those conferred by the provisions of this chapter.
"9. The ____ which it is proposed to build and operate as (here described the line and state the points it will traverse) ____."
It is provided that said application shall be acknowledged, etc., and presented to the secretary of state, and by him referred to the Attorney-General, who shall pass upon its legality and return the same to the Governor with his opinion thereon, and that the powers specified in the charter shall by the approval of the charter be vested in such corporation which shall go into operation at the time and on the terms and conditions specified.
Paragraph (b) of the said section reads as follows:
"The local lodges, chapters, councils or by whatever name known, of the Masons, Odd Fellows, Knights of Pythias, Elks, Woodmen, of the World, and other such fraternal organizations, together with temperance societies, charitable associations, schools, literary institutions, lyceum associations, religious societies, fire companies, mechanics' associations, fair associations, agricultural societies and civic improvement societies, may be likewise incorporated, on the application of any three members, authorized by the organization, on its minutes, to apply for the charter.
"Such corporation shall not be required to make publication of their application for charter, shall issue no shares of stock, shall divide no dividends or profits among its members, shall make expulsion the only remedy for the non-payment of dues, shall vest in each member the right to one vote in the election of all officers, shall make the loss of membership, by death or otherwise the termination of all interest of such member in the corporation assets, and there shall be no individual liability against the members for corporate debts, but the entire corporate property shall be liable for the claims of ceditors."
It will be seen from the statement in the charter that the purpose for which the corporation was created was to promote and extend benevolence, charity, and fraternity among its members and to organize subordinate lodges and chapters in the state of Mississippi; that the rights and powers to be exercised were those conferred by law in such case; that it was provided in the charter, as in the statute (paragraph [b], section 1, chapter 229, Laws of 1920), that no shares of stock shall be issued, and no dividends or profits among the members shall be divided, and that nonpayment of the dues could only be enforced or provided for by expulsion, and that the death of any member forfeited all rights in the property of the corporation, and that there should be no individual liability against the members for corporate debts, but that the entire corporate property should be liable for the claims of the creditors. As the charter of incorporation did not set forth by what means and methods the work of such corporation would be carried on, nor whether it would have a ritual, degree, signs, and passwords, etc., or what particular principles would be adopted within the classification mentioned in the charter and by the statute, although the title did indicate from the name of the corporation something of its general purpose, it was not represented in the charter that the degrees to be conferred would be regular degrees of Masonry or of any particular Masonic organization.
The state, of course, is not concerned with questions of whether the principles or degrees of lodges are regular and authorized by Masonry or not. The court cannot judicially know what the principles and degrees of free Masonry are, or of any particular brand of doctrine known as free Masonry, if there be differences of organizations and principles. That is a matter with which the state is not concerned so long as no fraud is used to deceive a person solicited to join or be received into these orders. Unless protected by the copyright laws, or embracing property rights, these rituals, forms, and ceremonies will not be controlled or protected by the court. In other words, before the court will interfere in such a case, there must be an infringement of property rights, property damage, or personal injury. But the bill charged that the appellants were representing to prospective members and to those who were received into membership that the degrees conferred were regular and that they would give Masonic affiliation in other jurisdictions and other rights throughout the world, and that these statements were untrue and false and knowingly made to the parties to deceive.
Of course, the court is not concerned with the length of time it would require to confer the degrees administered to an initiate, nor is it concerned with the price charged to candidates or initiates for the degrees, but the state is concerned with the question as to whether its charters are used as instruments of fraud and wrongdoing. Is the case of Jackson Loan Trust Co. v. State, 101 Miss. 440, 56 So. 293, this court announced that it would use the remedy of injunction in proper cases to restrain the fraudulent use of a charter granted by the state. In the first syllabus of this opinion the court said:
"Where a loan company by means of attractively worded literature and by representations of its soliciting agents, seeks to induce the public generally, and prospective customers particularly, to believe that all purchasers of its contracts will receive loans from the company upon easy terms with which to purchase homes, and the funds of the corporation and its method of business render it impossible for the company to make loans to all purchasers of its contracts, its promises so to do evidence an intention to defraud, and its whole course of business constitutes such a systematic violation and abuse of the rights and privileges conferred upon it by its charter as to justify either the revocation of its charter or the issuance of a writ of injunction enjoining the further prosecution of such business."
The opinion in this case shows that the state may use the injunctive process to prevent a continuation of fraudulent practices whereby the public is defrauded under the guise and through the instrumentality of a charter. The demurrer admitted the allegations of the bill, and the allegations of the bill are sufficient to show that a considerable portion of the public has been defrauded by false representations, resulting detrimentally to those who acted upon such representations and parted with their money thereunder. The court will not undertake to supervise or control the affairs of a corporation when it is properly conducting the business granted by its charter unless in case of such corporations as are affected by a public use; but when a corporation in order to obtain business uses its charter in aid of a scheme to defraud people of their money, and the practice is general and affects a large number of people of the state, the state may restrain such fraudulent practices.
In 14 C.J. 1107, section 3711, it is said:
"A corporation may forfeit its charter and right to corporate existence by a misuser of its franchise or corporate powers."
At pages 1108 and 1109, section 3713, it is said:
"The misuser must inflict injury on the public generally, although a forfeiture has sometimes been declared in cases where the violation of the charter has resulted in a public benefit. It is not necessary to prove actual injury to the public; if the inevitable tendency of the act is injurious to the public, a sufficient ground of forfeiture exists. Wherever the transgression of a corporation threatens the welfare of the people, they may summon the offender to answer for the abuse of its franchise or the violation of its corporate duty. And it has been held that any conduct which destroys their normal function and maims and cripples their separate activity and takes away their free and independent action must so far disappoint the purpose of their creation as to affect unfavorably the public interests. Generally speaking, if no public detriment is involved, a statute which provides in general terms that a failure to comply with the provisions of its charter or an abuse of its corporate powers, shall be ground for forfeiture, but omits to specify any particular for which a forfeiture will be granted, will be liberally construed. If it is not shown that the act of corporation is detrimental to the public interest, or if it is shown that the forfeiture of the charter would itself amount to a public misfortune, this will be taken into consideration by the court in determining whether a forfeiture should be granted under the circumstances."
We think, therefore, there was a sufficient case made by the bill to grant injunctive relief at the suit of the state. We think, however, the writ was too extensive in its scope. The state had a right to restrain the defendants from perpetrating fraud upon the public by means of the misrepresentation, and as a means of preventing fraud might restrain the taking in of new members pending the hearing, but we think the organization and the officers thereof had a right to hold their regular meetings and conduct their regular business affecting only themselves. The prayer of the bill was entirely too broad, and as the writ was coextensive with the prayer of the bill, we think the judgment must be modified, and it will be accordingly modified so as to restrain the appellants only from taking in new members pending the hearing and from making any fraudulent representations to citizens or persons who may seek to become members; but the holding of the Grand Lodge ought not to have been restrained further than is herein indicated. It is said that we ought not to modify or reverse because since the filing of the bill the state has won its suit in quo warranto adjudging a forfeiture of the charter, and that, consequently, the judgment should not be reversed here. A certified copy of the judgment of the court below in the quo warranto proceedings is exhibited in the brief of the appellee, but is not contained in the record proper in this hearing.
We do not know what the status of the quo warranto suit is, or whether an appeal has been prosecuted or not, nor do we know what the record in that suit may contain. It may be that the judgment would be reversed, and, if it should be, it would not be proper to affirm in its entirety the judgment here, but it should be dealt with as though the cause was still pending. If the appellee had desired to present that judgment in bar to this appeal, the proper manner of doing so is to file a plea in bar, or in abatement, as the case might be.
The judgment of the court below will therefore be affirmed in part and reversed in part.
Judgment modified.