SCHWARTZ v. DUSS(1902)
[187 U.S. 8, 10] This suit was brought for the distribution of the property and assets of the Harmony Society, which the bill alleged had ceased to exist. The bill also prayed for an injunction against John S. Duss to restrain him from in anywise dealing with the property of the society, and also for a receiver. The bill was exceedingly voluminous. It stated the origin and principles and plan of government of the society; that many industries were started and conducted by it, including a savings bank; the town of Economy, Pennsylvania, founded by it; and that its acquisitions, including 3,000 acres of land in the city of Pittsburg, amounted in 1890 to upwards of $4,000,000; and 'all of said possessions, up to and until the grievances hereafter complained of, were scrupulously used for the benefit of all its members, and for the advancement, benefit, and continuation of the society;' that until those grievances the society, 'from the period of its inception until a recent date, adhered rigidly to its plan of government, and became illustrious and highly respected by reason of its sincere advocacy of the equality of man, its espousal of the highest principles of Christianity, and its honesty and benevolent administration of all public functions, whether in the management of its internal affairs, or in its many transactions with the citizens of western Pennsylvania.'
The bill also averred that the society 'but once in a period [187 U.S. 8, 11] of ninety years suffered from serious internal disorder,' which arose from the induction into the society of one Count De Leon, his artifices and subsequent secession. That in 1890 there 'began a second conspiracy, the results of which overturned and destroyed the entire government of the society, wasted nearly its entire wealth, depleted its membership to a few aged and infirm women, and placed the management of the society and the control of its remaining assets in the hands of one man, and certain associates and confederates within and without the ranks of the society.'
That the acting and directing mind of the conspiracy was John S. Duss, and he obtained his power as follows: In 1847 a plan of regulation and government of the society was adopted, by which its internal affairs were managed by a 'board of elders,' composed of nine members, and its external affairs were managed by a 'board of trustees,' composed of two members. Romulus L. Baker and Jacob Henrici were chosen the first board of trustees. Baker died in 1868, and Henrici and Jonathan Lenz became the board of trustees; the latter was succeeded, upon his death in 1890, by Ernest Woelful; Woelful also died in 1890, and Duss became his successor. Henrici died in 1892, and one Samuel Sieber was appointed, and, on his retirement from the society, Gottlieb Riethmueller, a relative of Duss, was elected trustee. At the time of the filing of the bill, Duss and Riethmueller were trustees.
The bill detailed the acts and purposes of Duss at great length. It is, however, enough to say that the bill alleged that he became senior trustee and a member of the board of elders, and conceived the purpose of wrecking and dismembering the society, and attempted to execute such purpose. That the condition of the society gave him opportunity; that he caused the expulsion of at least one member, and induced or paid others to withdraw. That the increase in the society could only be through the admission of new members, and he directed that no new members be elected under any circumstances whatever, and as a result thereof the said Duss and Susie, his wife, were the last members admitted in the four years preceding the filing of the bill. [187 U.S. 8, 12] That he entered into certain arrangements with one Henry Hice and John Reeves, of the town of Beaver, Pennsylvania, by which he used $1,000, 000 of the society's money, without the knowledge or consent of its members, 'to pay off the alleged indebtedness of the Economy Savings Bank, of which said Hice and Reeves were the principal officers,' though at the time he knew that the bank was wholly insolvent by reason of the overdrafts made by said Hice and Reeves, and although he knew that they had caused a loss to the society of over $2,000,000, 'as officers and stockholders in said bank, and officers and stockholders in the Beaver Falls Cutlery Works and File Works, the debtors of said bank;' that he had not sued to recover back the money, but, on the contrary, had abetted them in obtaining further assets of the society.
That in pursuance of his scheme to defraud the society, and to pay the indebtedness of the Economy Savings Bank, and for paying off claims upon which the society was only partly liable, if at all, he and his cotrustee, Henrici, executed a mortgage for the sum of $400,000 upon the real estate of the society, but that Henrici, at the time of its execution, 'was in articulo mortis, and wholly beyond any power of comprehension of his act.' And on the-day of June, 1893, he caused to be executed another mortgage, without the knowledge or consent of the members, for $100,000, bearing interest at 6 per cent, upon the land described in the former mortgage, to raise a fund 'wherewith to secretly secure and induce removal of those members most likely to inquire into the validity or propriety of his conduct as trustee.'
It was averred that the society had certain dividend-paying stocks which Duss, in pursuance of his scheme, disposed of without the knowledge of any member of the society, except possibly his wife and Gottlieb Riethmueller. The names of ten persons were stated, who, it was alleged, Duss, 'by representation, coercion, and the payment of large sums of money,' induced, within two years preceding the commencement of the suit, to withdraw from the society, and that he was endeavoring to compel remaining members 'to depart, by means of intimidation and oppression.' [187 U.S. 8, 13] That the membership of the society was reduced to eight persons, none of whom were aware of the actions of Duss, or were consulted by him.
It was further averred that the principle of equality had been departed from. That Duss and his family enjoyed every luxury, while the aged and infirm members were obliged 'to be content with the bare necessaries of life, awarded with grudging, stinting hands.'
And it was finally averred--
Duss, Hice, Reeves, and the Union Company answered separately. The other defendants joined in an answer. By agreement of the parties the case was referred to a master, with 'authority to hear and take all the testimony, and to find all the issues of law and facts, and to report the testimony and such findings to the court; and if the report of such master shall suggest a decree that the plaintiffs, or any of them, are en- [187 U.S. 8, 15] titled to an account against the defendants, or any of them, and the same be confirmed by the court, then the case shall be referred again to the master to state such an account, and report thereon to the court.'
Under the orders of the court the master considered the following questions:
On both propositions the master reported adversely to the claim of the petitioners, and recommended a decree dismissing the bill. His conclusions of fact and law were approved and accepted by the circuit court, and a decree entered dismissing the bill. The decree was affirmed by the circuit court of appeals. The case was then brought here by certiorari on petition of the plaintiffs in the circuit court. Other facts will be stated in the opinion.
George Shiras, 3d, and S. Schover, Jr., for petitioners.
Messrs. D. T. Watson and Johns McCleave for respondents.
Mr. Justice McKenna delivered the opinion of the court:
Two questions were submitted to the master: (1) Have the plaintiffs such a proprietary right or interest as would entitle them, upon the dissolution of the society, to share all its property or assets, or which entitles them to an accounting? (2) Has the society been dissolved by consent or by an abandonment of the purposes for which it was formed? A negative answer to either of the propositions determines the controversy against [187 U.S. 8, 16] petitioners, and both were so answered by the master and by the circuit court and the circuit court of appeals. The case, therefore, seems not to be as broad or as complex as presented in the argument of counsel. The case is certainly clear from any disputes of fact, and we may dismiss from consideration the accusations against Duss, not only as to his motives in joining the society, but also as to his motives and acts as a member and officer of it. We are concerned alone with the legal aspect and consequences of his acts, and those of his associates. They, however, pertain more particularly to the second proposition.
This is not the first time that the Harmony Society has been before the courts. Its history has been recited, and its principles characterized and defined, not only by the supreme court of Pennsylvania, but by this court. Schriber v. Rapp, 5 Watts, 351, 30 Am. Dec. 327; Baker v. Nachtrieb, 19 How. 126, 15 L. ed. 528; Speidel v. Henrici, 120 U.S. 377 , 30 L. ed. 718, 7 Sup. Ct. Rep. 610.
The society was formed by one George Rapp, who, with his son and others, came from the Kingdom of Wurtemberg to the United States in 1803 or 1804, and settled at Harmony, in Butler county, Pennsylvania. In 1814 the society moved to Posey county, Indiana, and later removed to Economy, Pennsylvania, its present abode, in 1825. Its members 'were associated and combined by the common belief that the government of the patriarchal age, united to the community of property adopted in the days of the apostles, would conduce to promote their temporal and eternal happiness.' 19 How. 126, 15 L. ed. 528.
Their relations, principles of government, personal and property rights, were provided for by written contracts, executed respectively in 1805, 1821, 1827, 1836, 1847, 1890, and 1892. The present discussion is concerned with the first four.
By article 1 of the contract of 1805, each subscriber to that contract delivered up, renounced, and remitted all of his or her property of every kind, 'as a free gift or donation, for the benefit and use of the community,' and bound themselves, their heirs and descendants, 'to make free renunciation thereof, and to leave the same at the disposal of the superintendents of the community,' as if the subscribers 'never had nor possessed it.' [187 U.S. 8, 17] In article 2 they pledged obedience and submission to the society, and promised 'to promote the good and interest of the community,' and to that they pledged their children and families. But, recognizing a possible weakness and inability to 'stand to it in the community,' they promised ( article 3) never to demand any reward for themselves or children for 'labor or services,' and declared whatever they should do would be 'as a voluntary service for our brethren.' In consideration of this renunciation of property and dedication of labor and services, George Rapp and his associates promised to supply the subscribers to the contract with all the necessaries of life, not only in their 'healthful days, but when they should become sick or unfit for labor.' And if, after a 'short or long period,' a member should die or otherwise depart from the community, 'being the father or mother of a family,' such family should 'not be left widows and orphans, but partakers of the same rights and maintenance.'
Article 5 was as follows:
The society became the owner of about 7,000 acres of land at Harmony, which, on May 6, 1815, was conveyed by Frederick Rapp, as attorney in fact, to Abraham Ziegler for $100,000. That year, or in 1814, the society removed to Indiana. There a second agreement was entered into January 20, 1821. This agreement expressed, as that of 1805, the submission of the sub- [187 U.S. 8, 18] scribers to the society, the dedication of their service and labor, and contained the same promises of support.
The master found that 'in 1825 the society removed from Indiana to Beaver county, Pennsylvania, where they purchased and settled upon a tract of land containing about 3,000 acres, now known as 'Economy,' where they have since remained, and which has since become very valuable, and on which they have erected many buildings, including dwellings and factories of various kinds, and made many valuable improvements.'
In 1827 another agreement was entered into, the preamble of which was as follows:
This agreement was an amplification of that of 1805. Article 5 of the latter became article 6. This agreement was signed by 522 members of the association, and afterwards, and until February 14, 1836, was signed by 144 additional members. In 1832, dissensions having arisen, a large number of the members withdrew, under the leadership of one Count De Leon. They received $110,000, and granted a release unto George Rapp and his associates of all of their right and title in any of the property 'belonging to the society of George Rapp and his associates.' [187 U.S. 8, 19] In 1836 another agreement was entered into revoking and annulling the 6th article of the agreement of 1827,-5th article of the agreement of 1805. The agreement recited the 6th article--
The agreement was signed by all who were then members, and subsequently by thirty-three others.
Prior to his death, in 1834, Frederick Rapp, a member of the society, had been its business agent, and transacted its external affairs. After his death the members of the society (July 5, 1834) executed a power of attorney to George Rapp, constituting him such general agent, with power to appoint agents and substitutes under him. On the same day he appointed Romulus L. Baker and Jacob Henrici his substitutes. This power of attorney was signed by 402 members, and recited the death of Frederick Rapp, and the consequent necessity for the appointment of a new agent, so that the temporal affairs of the society would continue to be managed in a mode which had proved convenient and satisfactory, constituted George Rapp such agent with power of substitution, invested him with all necessary powers, including the receipt and the execution of conveyances of real and personal property. George Rapp disclaimed any greater interest in the then resources or future earnings of the society than other members.
George Rapp was the founder of the society, and continued to be its head, or superintendent, and to rule and govern it until his death, in 1847. After his death another agreement was executed (August 12, 1847). It was signed by 280 members. The agreement recited the death of Rapp, and expressed the necessity, 'to the good order and well being of the association, that some plan should be agreed upon to regulate its future affairs, promote its general welfare, and preserve and maintain it upon its original basis;' and announced to all immediately concerned, that the surviving and remaining members of the Harmony Society each covenanted with all the others thereof, and with those who should thereafter become members, 'to solemnly recognize, reestablish, and continue the articles of our [187 U.S. 8, 21] association (the 6th section excepted), entered into at Economy on the 9th day of March, A. D. 1827.'
This agreement created a board of elders of nine members to conduct the internal affairs of the society, and a board of trustees of two members to conduct its external affairs. The trustees disclaimed any greater personal interest in the property of the society than other members.
These agreements, the master found, 'are the agreements and documents under which, or some of which, the plaintiffs claim the right to share in the property and assets of the society as heirs of former members.' And as to the relations of the plaintiffs to the society, the master found as follows:
He divided the persons from whom the plaintiffs claim as follows:
Manifestly, the plaintiffs cannot have other rights than their ancestors, and the rights of the latter depend upon the agreements they signed. The agreements we have recited. The signers of them certainly strove to express their meaning clearly, and, whenever occasion arose, declared their understanding, aims, and purposes, and always substantially in the same way.
The cardinal principle of the society was self-abnegation. It was manifested, not only by submission to a religious head, but by a community, instead of individual, ownership of property, and the dedication of their labor to the society. The possibility of some member or members not being able to 'stand to it,' to use the expressive phrase of the agreements, was contemplated, and provision was made for that event. But a very significant difference was made between a performance of service and the contribution of property. For the former it was covenanted by the members no reward should be demanded for themselves or their children or those belonging to them. As to the latter, George Rapp and his associates promised to refund the value of the property brought in, without interest, in one, two, or three annual instalments, as the same might be large or small. It was, however, provided, as to those who 'were poor and brought nothing to the community,' that they should receive, if they departed openly and orderly. 'a donation in money, according to his or their conduct while a member, or as his or their circumstances might require,' as 'George Rapp and his associates shall determine' (agreement of 1805); as 'in the judgment of the superintendents of the association' (agreement of 1827). [187 U.S. 8, 23] Those provisions apply to those who withdrew from the society prior to 1836,-the first class into which the master divided the plaintiffs,-and need not much comment. None of the persons who so withdrew contributed property to the association. We are not informed by the record whether their conduct when in the society, or whether their manner of withdrawing from it, entitled them to the consideration that the articles of agreement permitted as an indulgence to withdrawing members. If they could have exacted anything as a matter of right, it would now be presumed that it had been demanded and the demand satisfied.
There was another class,-the faithful and abiding members; but even these, the master found, contributed no property, and the decision of their rights becomes as easy as the decision of the right of those who 'could not stand to it in the community' and withdrew. They promised, as we have seen, to endeavor, by the labor of their hands, 'to promote the good and interest of the community,' and to hold their 'children and families to do the same.' And for compensation they received instruction in church and school. They received assurance of maintenance 'in healthful days,' and days which might not be such; and assurance, when death should come to them, that their families would be taken care of. It may be presumed that, as the members were faithful to their covenants, the society was faithful to its covenants, and there were no undischarged obligations or rights for distant relatives of deceased members to assert or claim against the community or its property. This seems to be conceded by counsel for petitioners, and we are brought to the consideration of the third class into which the master divided the persons from whom some of the petitioners claim to derive,-those who died members of the society, after having joined in the agreements of 1836 and 1847.
Counsel for petitioners say in their brief: 'The article of 1836 is the only material article bearing upon the property rights of the plaintiffs, while the articles of 1805, 1821, 1827, and 1847 are material in considering the character of the trust, the purposes and principles of the society.'
In other words, as we understand counsel by the propositions [187 U.S. 8, 24] they have submitted and the arguments employed to support them, that by the articles executed prior to October 31, 1836, those who joined the society made 'a free gift and donation of all their property' to George Rapp and his associates, 'for the use and benefit of the community,' upon the condition, however, to have the property returned to them if they should withdraw from the society. But that, 'by the articles of October 31, 1836, all the members of the society agreed with each other to surrender this right of property restitution which each possessed, and to convey the same to all the members in equal shares.' In other words, the gifts before 1836 were to the community; after 1836, to 'all the members in equal shares.' This difference in result in 1836 and afterwards was effected, it is claimed, by the following provision of the agreement of 1836.
To the articles of 1836, it is also contended that the society, as such, was not a party, but nevertheless the property became impressed with a trust for the use of the society, as such, 'by those who then (1836) represented the ownership of this joint and indivisible stock;' and as each new member came in 'he became an owner of an equal share of the property, subject to the trust.' And it is further contended that the members of 1836 and those who came in afterwards became donors of the property, and when the society or the trust failed, from any cause, the 'corpus of the trust property' reverted to them 'by way of resulting trust , . . . not to the surviving members as donees, or beneficiaries of the trust.' In other words, the members became at once donees of each other and donors to the society, and the descendants of members who had not and might not bring a dollar to the society excluded from any interest in the reversion of its great properties the descendants of those [187 U.S. 8, 25] from whom those properties came. And this through the doctrine of resulting trusts, whose fundamental principle is to recognize an equity only in them from whom the consideration has proceeded. And this, too, would result from granting the contentions of petitioners,-a society whose chief purpose was to establish community of property would come back to the assertion and fact of individual ownership, and whose hope was self- sacrifice and self-abasement, would encourage self-interest and self- assertion. Members could go into the society or go out of it, take nothing to it, serve it ever so little, and become ultimate sharers of its property. They might die in the society, or, having withdrawn, die out of it, and will or convey their titles or rights to others. No such right was ever conceived to exist, and no such right was intended to be created. This is demonstrated by the quotations which we have made from the articles of agreement. The permanence of the community was provided for in the articles of 1805; it was continued in those of 1821 and 1827; and, on account of the secession of Count De Leon and his followers, it was asserted with emphasis in 1836. The article of that year became, and was intended to become, the complete and final consummation of community ownership,-did not become, and was not intended to become, the commencement of individual ownership. That article was but an incident in the life and evolution of the society. It asserted constancy to the principles of the association, and annulled the 6th article of 1825,-5th article of 1805,-because that article manifestly departed 'from the great principle of community of goods,' and it was said that, 'with a view to carry out the great principles' of their union 'and in consideration of the benefits to be derived therefrom,' they entered into this covenant:
The purpose was definite and clearly expressed. It was certainly thought to be clear enough by the men who framed it, to declare and accomplish the 'sacrifice of all narrow and selfish feelings to the true purposes of the association,' as the articles fervidly declared. And it was provided that the member who withdrew from the society could make no demand against it 'as a matter of right.' The member who died left no right to his representatives. It needs no argument to show that, as such members had no rights, they could transmit none to the petitioners in this case.
No trust having been created by the agreement of 1836 different from that created by the other agreements, there is no necessity to consider the arguments based on the assumption of its invalidity. That agreement was the affirmation and the continuation of the prior agreements, and they were not to be offensive to the public policy of Pennsylvania, by the supreme court of that state, in Schriber v. Rapp, 5 Watts, 351, 30 Am. Dec. 327. The trial court in that case had instructed the jury that 'there is nothing in the articles of association (those of 1805, 1821, and 1827) given in evidence, that renders the agreement unlawful or void; nothing in them inconsistent with constitutional rights, moral precepts, or public policy.'
The supreme court observed that the point made against the articles, as being against public policy, was attended with no difficulty, and Chief Justice Gibson said for the court: 'An association for the purpose expressed is prohibited neither by statute nor the common law.' And it did not occur to this court, in Baker v. Nachtrieb, 19 How. 126, 15 L. ed. 528, to treat them as invalid contracts. See also Goesele v. Bimeler, 14 How. 589, 14 L. ed. 554; Speidel v. Henrici, 120 U.S. 377 , 30 L. ed. 718, 7 Sup. Ct. Rep. 610.
An analysis of the agreements of 1847, 1890, and 1892 is not necessary. They were made to meet particular exigencies, and expressly affirmed the prior agreements, except the 6th section of that of 1827.
The master, and both the circuit court and the circuit court of appeals, found that the society had not been dissolved, either [187 U.S. 8, 27] by the consent of its members or by the abandonment of the purposes for which it was founded. On account of this concurrence the disputed facts involved in that finding, under the rules of this court, and the circumstances of the record, we do not feel disposed to review. There is left, therefore, for consideration, only the agreements of 1890 and 1892, and the changes in administration effected by them, and the conveyance of the property of the society to the Union Company. So far as those agreements affect the property rights of petitioners, we have expressed an opinion of them; but their effect upon the question of the dissolution of the society, or the effect of the conveyance to the Union Company, we are not called upon to decide. In that question, we have seen, the petitioners have no concern.
Mr. Justice Gray and Mr. Justice Shiras took no part in the decision.
Mr. Chief Justice Fuller, with whom concurred Mr. Justice Brewer, dissenting:
Assuming the validity of the trusts, the questions appear to be, whether the condition of things has resulted in failure to carry out, and of ability to carry out, the principles and purposes of the society, and the defeat of the trusts; and, if so, whether the destination of the corpus of the trust property has, thereupon, become such that complainants, or some of them, have a locus standi to ask relief in a court of equity.
The courts below held that the society still existed in law and in fact and that this case was not one of 'dealing with the assets of a defunct or dissolved association;' or, in other words, that the trusts had not been defeated; and the decrees rested on this conclusion. If erroneous, the inquiry then arises, To whom does the corpus of the trust property go, in the event of the defeat of the trusts?
A brief recapitulation of the facts is necessary to indicate the grounds of my inability to concur in the opinion and judgment of the court: [187 U.S. 8, 28] In 1803 George Rapp and others located at Harmony, Butler county, Pennsylvania, removed in 1814 to Indiana, and returned in 1825 to Pennsylvania, and located at Economy, in Beaver county. They formed a society or association, which, as said by the circuit court of appeals, 'was organized upon the principle of community of goods and land ownership.
Although styled 'George Rapp and his associates,' Rapp aws, from the beginning to his death, in 1847, the absolute and exclusive ruler, in whom all power was vested. Members were admitted by adoption, and on adoption conveyed and transferred all their property, real and personal, to 'George Rapp and his associates,' and, after 1836, to the Harmony Society, for the use and benefit of the community.
By article 5 of a written agreement of February 5, 1805, if for any cause one or more of the subscribers should leave Harmony, 'George Rapp and his associates' promised to refund the value of his or their property brought in, while those who brought nothing in might receive a donation.
The second agreement was dated January 20, 1821, and the third, March 9, 1827.
The first branch of the preamble of this agreement of 1827 read: 'Whereas, by the favor of Divine Providence, an association or community has been formed by George Rapp and many others upon the basis of Christian fellowship, the principles of which, being faithfully derived from the sacred Scriptures, include the government of the patriarchal age, united to [187 U.S. 8, 29] the community of property adopted in the days of the apostles, and wherein the single object sought is to approximate, so far as human imperfection may allow, to the fulfilment of the will of God, by the exercise of those affections and the practice of those virtues which are essential to the happiness of man in time and throughout eternity.'
By the 1st article the subscribers gave, granted, and forever conveyed 'to the said George Rapp and his associates, their heirs and assigns, all our property, real, personal, and mixed, whether it be lands and tenements, goods and chattels, money or debts due to us, jointly or severally, in possession, or in remainder, or in reversion, or in expectancy, whatsoever or wheresoever, without evasion, or qualification, or reserve, as a free gift or donation, for the benefit and use of said association or community.'
Members were to be obedient to superintendents, were bound to promote the interests and welfare of the community, and were to receive support and instruction.
The 6th article (almost identical with article 5 of 1805) was as follows: 'And if it should happen, as above mentioned, that any of the undersigned should violate his or her agreement, and would or could not submit to the laws and regulations of the church or community, and for that or any other reason should withdraw from the association, then the said George Rapp and his associates agree to refund to him or them the value of all such property, without interest, as he or they may have brought into the community in compliance with the 1st article of this agreement, and the said value to the refunded in one, two, or three annual instalments, as the said George Rapp and his associates shall determine. And if the person or persons so withdrawing themselves were poor, and brought nothing into the community, yet, if they depart openly and regularly, they shall receive a donation in money, according to the length of their stay and to their conduct, and to such an amount as their necessities may require, in the judgment of the superintendents of the association.'
The master found, among other things, as follows:
Signed, sealed, and delivered by George Rapp.
October 31, 1836, the following agreement was executed by 391 members of the society, and afterwards accepted and adopted by 33 others:
George Rapp, sole patriarch and ruler, died in 1847, and thereupon, in that year, certain articles were subscribed by 288 persons as the 'surviving and remaining members of the Harmonie Society, and constituting the same.' These articles created and nominated a board of elders of nine members, with the power of filling vacancies, and a board of trustees, consisting of two members of the board of elders, which had power to fill vacancies in the trusteeship. Instead of a single patriarch, a dual patriarchy was substituted, and those boards alone had the power over and control of the property.
The 8th article was as follows:
From these documents it appears that, prior to October 31, 1836, all contributions of property were for the use and benefit of the community on the condition that any member withdrawing was to receive back the value of his contributions.
But that, by the contract of 1836, the property then held in trust was no longer held subject to reclamation on the basis of original contribution, but the whole aggregate was made a common fund in which each member was equally interested, subject to the previously existing trust for the use and benefit of the society; that the corpus of the trust property included all future contributions, accretions, and accumulations; and that the then and subsequently admitted members occupied the relation of donors, and the society, as a society, of donee.
The joint and indivisible stock embraced all present and fu- [187 U.S. 8, 35] ture property, subject to the trusts declared in the articles of 1827, which were reaffirmed in 1836, except the 6th article. That trust was described 'as a free gift or donation for the benefit and use of the said association.' And by the agreement of 1847 the property was to be held and deemed the common property of said society, and each trustee disclaimed all personal interest therein, 'other than that of a member thereof.'
If, then, the trusts are defeated, I concur in the view that the trust property must go either to the owners or donors living, and to the heirs and legal representatives of those who are dead, by way of resulting trust; or to the surviving members of the society, as joint tenants with right of survivorship, or by way of tontine.
It is true that the third clause of the agreement of 1836 provided that, on withdrawal or death, no member or his representatives should be entitled to an account or 'to claim anything from the society as matter of right.' But that clause referred to the society as a going concern, and this bill is not filed against the society, but proceeds on the ground of the termination of the trusts and the existence of a condition of things demanding the winding up of the society's affairs.
And if the system of patriarchal government has been abandoned; if, for the communistic scheme, a capitalistic scheme has been substituted; if the society has become a trading community and lost all its distinctive attributes; if it is undergoing the process of liquidation; if all its property and assets have passed to a trading corporation, and the power of carrying out its original principles has departed; if its membership has become practically incapable of perpetuation,-it follows that the trusts have been defeated, and the society ended to all intents and purposes.
Early in 1890 John S. Duss and two others, employees, but not members, of the society, were elected to fill vacancies in the board of elders.
In April, 1890, certain articles were executed, the number of members being stated to be forty-five.
The junior trustee having died, John S. Duss was elected to fill the vacancy, and soon after, with his wife and children, [187 U.S. 8, 36] took possession of the official residence of the society. In 1892 the senior trustee died, and Duss was elected to that position, one Sieber, the town constable, who had a wife, being elected junior trustee. Later in that year other articles were entered into, describing the then number of members as thirty-seven.
In February, 1893, certain members of the society filed a bill for its dissolution, the winding up of its affairs, and the distribution of its assets.
While the bill was pending, seventeen members received from the assets money and property to the amount of something over $100,000, and gave quitclaims and acknowledgments of full satisfaction of their interest or share in the property of the society. The grantors in nearly all of these instruments acknowledged, in consideration of the money paid or land conveyed, that he or she does 'hereby release, cancel, and discharge any and all claims whatsoever, which I, my heirs, assigns, or lawful representatives, may or could ever have against said society or its trustees, its property or assets, or any part thereof, I hereby declaring all such claims to be fully compensated, settled, released, and discharged;' and, after reciting the various properties and assets, 'I am entirely satisfied to accept as my full share and interest therein,' etc.
Two of the deeds contained this paragraph: 'While it may be that said society may have and be the possessor of several hundred thousand dollars' worth of property after paying all debts, I am entirely satisfied to accept as my full share therein the sum of _____ thousand dollars.'
After these settlements began, the bill was dismissed by consent.
In January, 1894, a corporation styled the 'Union Company' was organized, under the state statute, 'for the purpose of the purchase and sale of real estate, or for holding, leasing, and selling real estate,' its business 'to be transacted in the borough of Beaver, county of Beaver, state of Pennsylvania.'
On April 11, 1894, seventeen persons, purporting to be all the then members of the society, executed a paper stating: 'We, the members of said Harmonie Society, do each hereby [187 U.S. 8, 37] express our consent with and request that John S. Duss and Gottlieb Riethmueller, the present trustees of said society, shall forthwith sell, transfer, and convey to the Union Company, a corporation duly created and organized under the laws of the state of Pennsylvania, all the lands, tenements, and hereditaments situated in the Allegheny and Beaver counties, Pennsylvania, now owned and held by said trustees for the benefit of the said society, to the end that all said lands, tenements, and hereditaments may be owned, held, and managed by said incorporated company, and be sold and otherwise disposed of from time to time in pursuance of proper corporate action, as may be determined by the directors and officers of said incorporated company.
The vast property of the society was conveyed to the Union Company, and the stock of that corporation assigned to the trustees.
Since April 11, 1894, nine of the seventeen subscribers have died, leaving eight, consisting of John S. Duss and his wife, one Gillman, seventy-seven years of age, and unable to read or speak English; and five women of the ages of eighty, seventy-seven, fifty-eight, fifty-four, and forty-seven, respectively.
Duss and Gillman became the sole remaining male members of the society, and the women, with the exception of Mrs. Duss, were mostly old, infirm, or ignorant.
No new member has been admitted since 1893. It is suggested that this was because none desired admission. This may be so, and this would explain the diminishing of over 500 members in 1827 to 288 in 1847, and 45 in 1890. But the result is the same. The eight remaining cannot reasonably be held to represent the great [187 U.S. 8, 38] communistic scheme which the Wurtembergers of 1803 sought to found on 'the basis of Christian fellowship, the principles of which, being faithfully derived from the sacred Scriptures, include the government of the patriarchal age, united to the community of property adopted in the days of the appostles, and wherein the single object sought is to approximate, so far as human imperfection may allow, to the fulfilment of the will of God, by the exercise of those affections and the practice of those virtues which are essential to the happiness of man in time and throughout eternity.'
As the membership diminished, the wealth increased, but not from contributions by new members; and operations were carried on by hired labor.
Not one of the eight contributed to the three or four millions of property accumulated. It is conceded that Duss alone is the active member. But he is not the society, nor does the society, in respect of its avowed principles, any longer exist.
Moreover, the transactions by which seventeen members of the society, not old and infirm, but vigorous and capable, were bought out, were in themselves acts of liquidation. It is idle to say that these payments were 'donations' to withdrawing members. They were purchases in terms and in effect. They were settlements by agreement, instead of through litigation.
Finally, substantially the entire property of the society and its affairs have been turned over to a corporation created under the laws of Pennsylvania, authorized to purchase and sell land. This corporation has none of the powers confided by the articles of 1847 to the board of elders and the board of trustees. It has no power to feed, lodge, maintain, and support, or to care for the spiritual welfare of, members of the society, or to perform any of the duties imposed upon the boards. The trustees have no distinct title to the society's property, but only the rights pertaining to the stock of the Union Company. All the industries carried on in Economy are carried on by tenants and lessees of the Union Company, and the society has ceased to possess the power to carry out the purposes for which its property was accumulated.
The affairs of the Union Company must be wound up under [187 U.S. 8, 39] the state statutes in that behalf, and proceeds derived from the lands by sale or otherwise would go to the stockholders by way of dividends. The legal effect of the transaction was the same as a sale, out and out, for cash, and it was irrevocable. And this point so arises on the record that it must be disposed of as matter of law.
The master found, as matter of law, that the society continued to exist because the surviving members had not formally declared it to be dissolved, and that the purposes and principles of the society could not be held to have been abandoned, unless by the formal action of all its members. But this could only be so on the assumption that the scheme of the trust created a joint tenancy with the right of survivorship, or a system of tontine; and that a single surviving member might be the society, although to the integrity of a community numbers are essential. By the articles, neither the members, nor the board of elders, nor the board of trustees, nor all together, possessed the power voluntarily to formally dissolve the association; and it is for a court of equity to adjudge whether a condition of dissolution, or a condition requiring winding up, is, or is not, created by acts done or permitted.
Such being, in my opinion, the condition here, the trust property must go, as I have said, either to the surviving members as joint tenants, with right of survivorship, or by way of tontine; or to the owners or donors living, and to the heirs and legal representatives of those who are dead, by way of resulting trust.
Appellees contend for the first of these propositions. Their counsel says in his brief: 'It is the society, as a society, which owns this property. It is the entire body as one whole. If at any time the society did dissolve, its property would go to the persons who then were its members. No one else has any legal or equitable claim to it except those members. To them, and to them alone, it would belong, and among them it would be divided.'
It is inconceivable that the creators of the trust contemplated any such result, when they sought to perpetuate Christian fellowship by the renunciation of their property. [187 U.S. 8, 40] The present membership has shrunk to eight members, less than enough to fill the board of elders, and that board consists of Duss and his wife, an old man and five women, aged or ignorant. Practically, Duss is the last survivor, and he claims the ownership of this vast estate as such survivor. By the articles, no period was fixed for the termination of the life of the society. There is no remainder over, nor provision of any kind for the disposition of the trust estate in the event of the society's extinction.
Joint tenancy with survivorship, or tontine, excluding all but living members and casting accumulations on the survivor, are neither of them to be presumed. They are the result of express agreement, and there is none such in these documents.
On the contrary, this property was held in trust for the use and benefit of the society, as a society, and not for the individual members. The trust was for the use and benefit of the society in the maintenance of its principles as declared by its constitution and laws. When the purposes of the society were abandoned or could not be accomplished, or the society ceased to exist, the trust failed, and the property reverted, by way of resulting trust, to the owners who subjected it to the trust, living, and to the heirs and legal representatives of those of them who are dead.
This conclusion does not involve the assertion of a reversion secured by the express terms of the contracts, but rests on the familiar principle of equity jurisprudence, that when the trust clearly created by the documents terminated, a resulting trust arose to the grantors or donors, or their heirs. The distinction is thoroughly elucidated by Mr. Justice Gray in Hopkins v. Grimshaw, 165 U.S. 342 , 41 L. ed. 739, 17 Sup. Ct. Rep. 401. It was there said, among other things:
The titles held by the trustees in this case were held for the benefit and use of the society in the maintenance of its principles. When the purposes of the trusts failed the property reverted, not because of special provision to that effect, but because that was the result of the termination of the trusts.
Complainants, or some of them, are the heirs and next of kin of members who signed the articles of 1836 and 1847, and who died in fellowship. The service of one of these families is said to aggregate three hundred years of unrequited toil. They are entitled to invoke the aid of the court in the winding up of this concern, and these decrees ought to be reversed.
I am authorized to state that Mr. Justice Brewer concurs in this dissent.