This is an action in equity wherein both plaintiff and defendants seek to have the title to certain presumed oil-bearing land in Glacier county quieted. The plaintiff claims title by virtue of possession and title deeds. There is no dispute about the title in plaintiff preceding the negotiations recited herein. The defendants claim title by virtue of a deed of a one-fourth interest in the minerals made to the Northland Petroleum Consolidated which is now presumably in their possession. The plaintiff denies the deed upon the ground that it was procured by misrepresentation and without consideration, and particularly that the grantee is not a corporation or other legal entity. The defendants claim that the Northland Petroleum Consolidated is a common-law trust and that the trustees named as defendants are the trustees of such trust. In brief language, the defendants claim title to a quarter interest in the oils in this particular land by a deed to a common-law trust, the trustees not being named in the deed and for a consideration to consist of a unit in the common-law trust. The plaintiff claims the unit was the only consideration, and that it was never delivered but was tendered fourteen years later, about the time the suit was brought.
Points argued are with respect to the authority of the trust to take title to real property in view of our corporation law, and, second, the validity of the consideration based upon a unit in the common-law trust. In view of the divergence of the opinions of the members of this court, and the fact that hundreds of titles in the oil-bearing sections of the state will be affected by this decision, we extend this opinion beyond the usual length in order to attempt to clarify the situation in respect to the title to this land and hundreds of other tracts dependent upon the same character of title throughout the state. *Page 356
The Montana Constitution, section 18, Article XV, provides: "The term `corporation,' as used in this Article, shall be held and construed to include all associations and joint stock companies, having or exercising any of the powers or privileges of corporations not possessed by individuals or partnerships; and all corporations shall have the right to sue, and shall be subject to be sued in all courts in like cases as natural persons, subject to such regulations and conditions as may be prescribed by law." And section 2, Article XV, provides: "No charter of incorporations shall be granted, extended, changed or amended by special law, except for such municipal, charitable, educational, penal or reformatory corporations as are or may be under the control of the state; but the legislative assemblyshall provide by general law for the organization ofcorporations hereafter to be created; provided, that any such laws shall be subject to future repeal or alteration by the legislative assembly."
The statutes of the state, beginning with section 5900, Revised Codes, and the chapters immediately following pertaining to corporations provide the manner for the organization of corporations specified in the Constitution, and the penal statutes, sections 4026 and 4049, provide the penalty for the violation of the Blue Sky Law. Sections 4026 to 4055, known as the Blue Sky Law, define them and provide the penalties for their violation.
The declaration of the Northland Petroleum Consolidated defines itself as a common-law trust, and the procedure in filing what is known as a declaration of trust and recording it, leaves no doubt that the organizers of this association considered it a common-law trust, and not a corporation. Strange as it may be, the trust even copies in its declaration of trust the language of a portion of section 18, Article XV of the Constitution, and the district court found that the Northland Petroleum Consolidated was a corporation, and also that it was a common-law trust — findings diametrically opposed. We have, then, first to consider whether this organization can be a corporation and a common-law trust and partake of the requisites of both. *Page 357
To meet the requirements of the corporation laws, the company must bring itself within the rules fixed by the laws of the state for the organization of corporations. The term "corporations," as used in the above Article, shall, as stated therein, include all associations and joint stock companies having powers and privileges not possessed by individuals or partnerships, and it is provided that corporations may sue and be sued in their corporate names. The language itself would seem to be amply sufficient to include joint stock companies. The language of section 2, Article XV of the Constitution, which provides that the legislative assembly shall provide by general law for the organization of corporations thereafter to be created, directs the enactment of laws to provide the process of incorporation and rules governing the corporations after organized. The language of the laws providing for corporations very definitely fixes the purposes for which corporations may be organized and their powers after incorporation. These laws are also very definitely inclusive and exclusive.
From a very general reading of the declaration of trust filed by this organization, the laws regarding the organization of corporations are purposely disregarded as not governing this organization. For instance, the shareholders are designated as unit holders instead of stockholders. The trustees are not designated as officers of the company, but as trustees, to hold office during the balance of their natural lives. Vacancies are filled by election of the surviving trustees. The stockholders are designated as beneficiaries and have virtually no authority to superintend or direct the management of the trust property. We therefore face the very conflicting problem of a corporation versus a trust.
The Constitution having defined a corporation and the facts of this corporation, coming squarely within the language of the Constitution, would seem necessarily to make it a corporation and subject to corporation laws, if it be an entity. It is conceded by all that no attempt was made to comply with the requirements for the organization of the corporation. Therefore *Page 358 the "Northland Petroleum Consolidated" is not a legal entity (under the Constitution and the law which is conceded even though so found by the district judge), and could not take title as a legal entity under the name of the association. The officers, having violated the requirements of corporation officers, were guilty under the general law and the Blue Sky Law in particular, and under the penal laws of the state pertaining to the duties of corporation officers — sections 4026, 4027 and 4049, Revised Codes, classifying such acts as a felony.
It is contended that the grantee, Northland Petroleum Consolidated, may be considered as a fictitious name of a group of individuals, and therefore the deed in question was a valid conveyance to these individuals under the fictitious name. Justice Anderson in his opinion suggests that these individuals were the real owners of the property so long as they could be identified. There is absolutely no attempt made in the record to identify the beneficial owners as the grantees. The district court in its finding No. 6 said: "That the defendants, Martin Jacobson, C.E. Frisbee, John F. Lindhe, Daniel Whetstone and Bruce R. McNamer, as trustees of said defendant, Northland Petroleum Consolidated, a common law trust, dealt with said plaintiff under the name Northland Petroleum Consolidated, and that under the terms of the declaration of trust heretofore referred to, and under the provisions of law applicable, said trustees had the right to assume such name under which to conduct the business of the said defendant, Northland Petroleum Consolidated, a common law trust." Here he finds that the trustees, naming them and Bruce R. McNamer, had the right to assume such name and had received the property under such name. And in finding No. 7 the court said: "That the plaintiff, Edwin Hodgkiss, in conveying said real estate as heretofore described to the defendant, Northland Petroleum Consolidated, a common law trust, dealt with said defendant as a legal entity capable of transacting business, and received from said defendant a valuable consideration for such conveyance, and that said plaintiff is therefore estopped from denying the legality of the existence *Page 359 of said defendant, Northland Petroleum Consolidated." The district court held that the existence of the entity was conceded and the plaintiff was estopped from denying its existence under the name used by him as the grantee in the deed. If the grantee is not a legal entity, it cannot take title to property in such name, and a concession by the grantor was impossible and ineffective for any purpose.
Furthermore, the identity of the grantees (as trustees and beneficiaries) of such trust is even in the record left very much in doubt, since the alleged trustee, Bruce R. McNamer, does not appear to be a trustee under the declaration of trust, and no proof whatever appears in the record to show that he ever became a trustee. If the title merely passed to the trustees to the exclusion of the other beneficiaries, it might otherwise be determined that the identity of the grantees was possible, but if it includes all the beneficiaries of the trust, as shown by the records of the company, then the identity of each beneficiary would be very difficult, indeed impossible, to determine, since the unit holders were permitted to sell their units without the formalities of a deed, and no change of title would exist when made if it was a transfer of real property, as the records in the office of the secretary of the trust did not attempt to show the date of the attempted transfer by the parties. It would only show the date of the attempted transfer, without description of the land, filed with the secretary's records. The time of the delivery of the unit representing the beneficiaries' interest would be the true date of the transfer of the property. Therefore, if indeed a transfer from one beneficiary could be effected in such informal way — manifestly an impossibility — the statement in the majority opinion that the true parties to whom the conveyance was made could be easily identified is incorrect.
The true purpose of a common-law trust necessitates the existence of a trustor, a trustee, and a beneficiary at the time of the creation of the trust. The status of the parties by name must be identified in the declaration of trust, as well as the property that is placed under the trust. The declaration must *Page 360 be in writing. (Sec. 6784, Rev. Codes.) A modification of the relation of the parties to the trust would require an amendment of the declaration; otherwise the declaration would be of little purpose. This declaration attempts to authorize a change of the trustors, a change of the trustees, and a change of the beneficiaries, each without reference to the other. It clearly appears to go far afield from the original purpose of creating a trust and violates the fundamental principles of trust relationship. To prevent just such attempts and restrict trust relationship to its true purpose, our statute, section 6783, provides: "Uses and trusts in relation to real property arethose only which are specified in this chapter." And section 6784 provides: "No trust in relation to real property is valid unless created or declared: 1. By a written instrument, subscribed by the trustee, or by his agent thereto authorized by writing; 2. By the instrument under which the trustee claims the estate affected; or 3. By operation of law." And section 6787 further provides: "Express trusts may be created for any of the following purposes: 1. To sell real property, and apply or dispose of the proceeds in accordance with the instrument creating the trust; 2. To mortgage or lease real property for the benefit of annuitants or other legatees, or for the purpose of satisfying any charge thereon; 3. To receive the rents and profits of real property, and pay them to or apply them to the use of any person, whether ascertained at the time of the creation of the trust or not, for himself or for his family, during the life of such person, or for any shorter term, subject to the rules of sections 6723 to 6759 of this code; or, 4. To receive the rents and profits of real property, and to accumulate the same for the purposes and within the limits prescribed by the sections above enumerated." These three sections clearly limit the scope of trust organization and authority. If attempt be made to avoid the organization requirements or exceed the authority therein, the attempt is void.
Here the original declaration becomes a nullity when new parties are attempted to be included in the trust without a new *Page 361 declaration. The same may be said of the attempted inclusion of additional beneficiaries who by this attempted practice of deeding the common trust property become new trustors. The corporation is the modernized trust evolved to make more practical the conveyance to the corporation as an entity, rather than to the trustees who frequently die or are otherwise replaced by court procedure. Because of the many frauds and legal entanglements arising from trusts, they are now by statutes strictly construed and the limitation of section 6783, supra, and such trusts in relation to real property are of those only which are specified in the chapter, two sections of which are quoted and are provisions inserted to limit the authority of trusts.
Looking at section 6784, above, we notice that the trust relation is created by declaration which must be in writing and circumscribe the authority of the trustees. Section 6787 defines the purposes, which are specified in four subdivisions therein. We notice the first subdivision authorizes the trust to "sell real property." No mention is made anywhere of a purpose to buy real estate. That omission is significant. If it was intended to authorize the purchase of property by the trust, it would follow immediately as an alternative. The next subdivision authorizes the trust to mortgage or lease real property, and the next toreceive rents from real property. It is therefore apparent that it is inconsistent with the statutory law for the creation of a trust to permit later purchases of property not specified in the declaration. This would seem very appropriate, since if the declaration is to be in writing, it would have to specify the property and the beneficiaries and later additions of property or of beneficiaries. Without a new declaration, it would make it possible to avoid the purpose of the declaration and thereby obviate a very essential provision of the statute relating to trusts.
The right of common-law trusts, sometimes called "Massachusetts Trusts," to displace corporations has been construed under Constitutions in language similar to our own in the states of Kansas, Washington, Pennsylvania and particularly Arizona, *Page 362 as well as the United States. (Reilly v. Clyne, 27 Ariz. 432,234 P. 35, 39, 40 A.L.R. 1005.) The Arizona case arose from an attempt to collect a note given in payment of a so-called unit of stock in a common-law trust. The language is there so pertinent that we copy very generously from that decision as follows:
It is not necessary to consider what might be the effect of the conduct of defendant by way of estoppel if the transaction out of which the note grew had not been in violation of positive law, and we therefore do not enter into that aspect of the case. The contract, being in violation of law, was incapable of ratification. It is next contended that the state alone can question the legality or capacity of the plaintiffs, and in support of this contention cases are cited holding that ultravires transactions of corporations may be questioned by the state only. This rule has no place in a transaction of the kind we have here. (10 R.C.L. 801, sec. 112; Melody v. Great N.R.Co., 25 S.D. 606, 127 N.W. 543, Ann. Cas. 1912C, 727, 30 L.R.A. (n.s.) 568.)
"It is also contended that the defendant and the plaintiffs were in pari delicto, and that therefore the court should wash its hands of this whole matter. The facts disclosed by the pleadings are that the plaintiffs in their collective name of the International Investment Construction Association sold to the defendant 5,000 units or shares of the association's stock. As we have found, this the plaintiffs had no right to do, not having complied with the Blue Sky Laws. Paragraph 2070, supra, makes the act of the plaintiffs in selling or offering to sell stock of the association a misdemeanor. It does not, however, impose any penalty upon one purchasing such stock. The wrong and the penalty both attach to the seller, not to the buyer. Unquestionably the general law is that a party to an illegal contract cannot come into court and ask to have his illegal objects carried out, but where the parties are not in pari delicto, and where the law which makes the agreement unlawful was intended for the special protection of the one seeking relief, the rule is different. (9 Cyc. 550.) As is said in Tracy v. Talmage, 14 N.Y. 162, 67 Am. Dec. 132: `* * * It is safe to assume that, whenever *Page 363 the statute imposes a penalty upon one party and none upon the other, they are not to be regarded as par delictum. * * * And it is very material that the statute itself, by the distinction it makes, has marked the criminal, for the penalties are all one one side.' * * * The purpose of the Blue Sky Laws is to protect the public against imposition. The defendant was one of the public for whose benefit the law was enacted, and it is said inBrowning v. Morris, 2 Cowp. 790, where a law is enacted `for the sake of protecting one set of men from another set of men * * * there the parties are not in pari delicto.' The rule thus announced has been recognized and enforced in the following cases: Irwin v. Curie, 171 N.Y. 409, 64 N.E. 161, 58 L.R.A. 830; American Nat. Ins. Co. v. Tabor, 111 Tex. 155,230 S.W. 397; Inhabitants of Worcester v. Eaton, 11 Mass. 368;Ferguson v. Sutphen, 8 Ill. (3 Gilman) 547; Gray v.Roberts, 2 A.K. Marsh. (Ky.) 208, 12 Am. Dec. 383; Knowlton v. Congress Empire Spring Co., 14 Fed. Cas. 797 (Case No. 7,903)."
In conclusion of this feature of the case I say most emphatically that common-law trusts are not authorized by the Constitution and laws of the state of Montana, except as definitely provided by sections 6783 to 6797, Revised Codes.
I next consider the question of consideration for the deed. There is no question that the deed presumes a consideration, but that is a rebuttable presumption. (Sec. 7512, Rev. Codes.) The plaintiff in his testimony very definitely stated that he received no consideration for the execution of the deed. Our statute, section 10505, provides: "The direct evidence of one witness who is entitled to full credit is sufficient for proof of any fact, except perjury and treason." That testimony was not disputed, except, possibly, by the inference arising from the testimony elicited from the plaintiff that he was to get one unit of the trust. The burden of proof was originally on the plaintiff. His statement that he received no consideration for the deed shifted the burden. In the law of Presumptive Evidence, by Lawson, page 660, rule 120, we note: "A rebuttable presumption of law being contested by proof of facts showing otherwise, *Page 364 which are denied, the presumption loses its value, unless the evidence is equal on both sides, in which case it should turn the scale. * * * It has been said the presumptions of law derive their force from jurisprudence and not from logic, and that such presumptions are arbitrary in their application. This is true of irrebuttable presumptions, and, primarily, of such as are rebuttable. It is true of the latter until the presumption has been overcome by proofs and the burden shifted; but when this has been done, the conflicting evidence on the question of fact is to be weighed and the verdict rendered, in civil cases, in favor of the party whose proofs have most weight, and in this latter process the presumption of law loses all that it had of mere arbitrary power, and must necessarily be regarded only from the standpoint of logic and reason, and valued and given effect only as it has evidential character." Under this authority, which is very respectable and nowhere disputed, the probative value of the presumption of the deed is almost worthless, as it does not pretend to state any consideration except the $1, and it is admitted that payment of that sum, or any other sum, was not made. The defendants were therefore required to prove a consideration for the deed. In order to do so it must prove a valid payment or tender of property in developing — a consideration — or, in lieu thereof, a tender of property of value. The defendants proved, and it was not disputed, that they tendered one unit of stock in the Northland Petroleum Consolidated, in the language expressed in the unit exhibit, at about the time the suit was commenced. No attempt was made by the defendants to prove that the unit had any value. The attempt of the plaintiff unnecessarily to show that the unit had no value was frustrated by the objections of the defendants' attorney, sustained by the court over the exception of the plaintiff. The mere tender of the unit in the trust by defendants, without showing value, would be fruitless as a proof of tender of a consideration. The tender, however, was ineffective for the further reason that it contained a reservation unauthorized by the terms of the contract of sale. The terms of the contract provide that *Page 365 the plaintiff was to have one unit of the 1,000 units held by the company. There were no conditions attached, but in the unit tendered to plaintiff, the reservation that the unit was "subject to the provisions of the first minutes of the company" was a condition that warranted the plaintiff in refusing to accept it. The declaration of the trust provided that before any unit certificate should be issued, "the holder shall signify inwriting that he is fully conversant with the terms of this declaration of trust," which must be prior to and contemporaneous with the issuance of the trust unit. The plaintiff never did in writing, or otherwise, assent to the condition in the declaration. Therefore the tender of the unit of stock was unavailing for the purpose of showing a consideration. It may be noted further that, by the declaration of the trust, the trusteesshall have the power to decline and refuse to further performthe terms and conditions of any of them specified in any of the agreements. The deed was executed at the same time and is a part of the same agreement as a lease between the same parties; and if the trustees had such power of nullifying any of the agreements of which this is one, then it was not an enforceable contract; in fact, not a contract at all, and thus again the tender of a unit of stock in such an organization was worthless and not sufficient to support proof of consideration. Other provisions of the declaration of trust, such as the provision taking from the beneficiaries all control of the property during the life of any of the trustees, and for twenty years thereafter, were of such a character, so unreasonable on their face, that no sensible man would approve, and I feel confident this plaintiff would never approve the declaration of trust when he learned of its unreasonable provisions practically eliminating him from the control of his property for many years to come. Such provision directly violated the positive statute, above.
In the commonly designated "Blue Sky Laws," section 4026 provides as follows: "That name `investment company' as used in this Act shall include: All domestic and foreign corporations, whether incorporated or unincorporated, associations, joint *Page 366 stock companies, partnerships, firms, trusts, common law companies, syndicates, pools, or any other form of organization or association, organized or proposed to be organized, except as otherwise provided in this Act, who shall sell, attempt to sell, or negotiate for the sale of, or of taking subscriptions for any stock, bonds, units or shares, or debentures, evidence of indebtedness, certificates of interest or participation, certificates of interest in profit sharing agreement, collateral trust certificates, contracts of interest, diversified trustee shares, fixed investment trusts, selected shares corporations, investment contracts, or contracts for the performance of personal services or the furnishing of materials in connection with the burial or cremation of dead human bodies, which contracts are to be performed at a future time determinable only by the death of the person in connection with whose decease said services are to be performed or materials furnished, contracts or agreements or securities of any kind or character, to any person or persons in the state of Montana."
The declaration of trust provides that the trustee shall have power to "draw, accept, endorse, execute, pay, buy, sell and discount promissory notes, drafts, bills of exchange, bonds, warrants, debentures, and any and all other negotiable and non-negotiable evidences of indebtedness of whatever nature, including shares of capital stock of private or public corporations, or certificates representing units in common law trusts or other organizations." It therefore appears to a certainty that this trust organization far exceeded its powers and violated the provisions of the Blue Sky Law. Its contracts and its offer to transfer to the plaintiff herein as a consideration for the deed therefore violated the Blue Sky Law. The punishment is a felony and a fine of not to exceed $1,000. This invalid consideration or proposed consideration is treated at great length in the case of McManus v. Fulton, 85 Mont. 170,278 P. 126, 130, 67 A.L.R. 690. The decision is written by the then Chief Justice Callaway, the attorney for the defendants in this case, respondents here, and concurred in by Justices Angstman and Matthews. *Page 367 I quote rather at length, in view of the importance of the instant case and the very pertinent declarations of that decision:
"`A contract directly and explicitly prohibited by constitutional statute in unmistakable language is absolutely void. That has never been judicially doubted and is unanimously conceded.' (6 R.C.L. 701.) `A contract expressly prohibited by a valid statute is void.' This proposition has no exception, for the law cannot at the same time prohibit a contract and enforce it. The prohibition of the legislature cannot be disregarded by the courts. (Botkin v. Osborne, 39 Ill. 101; Wells v.People, 71 Ill. 532; Board of Education v. Arnold, 112 Ill. 11,1 N.E. 163; Penn v. Bornman, 102 Ill. 523; CincinnatiMutual Health Assur. Co. v. Rosenthal, 55 Ill. 85, 8 Am. Rep. 626; Borough of Milford v. Milford Water Co., 124 Pa. 610,17 A. 185, 3 L.R.A. 122; Berka v. Woodward, 125 Cal. 119,57 P. 777, 45 L.R.A. 420, 73 Am. St. Rep. 31; Levinson v.Boas, 150 Cal. 185, 88 P. 825, 11 Ann. Cas. 661, 12 L.R.A. (n.s.) 575; De Kam v. City of Streator, 316 Ill. 123,146 N.E. 550; Duck Island H. F. Club v. Edward Gillen Dock, D. C. Co., 330 Ill. 121, 161 N.E. 300.) * * * Where a statute designed for the protection of the public prescribes a penalty, that penalty is the equivalent of an express prohibition, and a contract in violation of its terms is void. (Levinson v.Boas, supra; Berka v. Woodward, supra; Goldsmith v.Manufacturers' Liability Ins. Co., 132 Md. 283, 103 A. 627.) * * *
"As was said in Glass v. Basin Bay State Min. Co.,31 Mont. 21, 77 P. 302, quoting from Dean Lawson's article in Cyc., p. 546: `No principle of law is better settled than that a party to an illegal contract cannot come into a court of law and ask to have his illegal objects carried out, nor can he set up a case in which he must necessarily disclose an illegal purpose as the groundwork of his claim. * * * But it seems to be contended that plaintiff might prove his case without reference to the illegality of the contract — by the simple expedient of saying nothing respecting compliance with the Illinois law. In other words, if plaintiff told the truth, but not the whole truth, concealing *Page 368 the fact that the contract was illegal and in violation of the Illinois Act, he might recover notwithstanding the court was advised of the Act, the violation thereof being pleaded. The law does not tolerate such sophistry and subterfuge. "Whenever the illegality appears, whether the evidence comes from one side or the other, the disclosure is fatal to the case." (Coppell v.Hall, 74 U.S. [7 Wall.] 542, 19 L. Ed. 244; Berka v.Woodward, 125 Cal. 119, 57 P. 777, 45 L.R.A. 420, 73 Am. St. Rep. 31; Levinson v. Boas, supra.) `The question is not what the defendant may plead, but what relief can the plaintiff have on the contract if the facts brought to the attention of the court by the answer be true.' (Third Nat. Exch. Bank ofSandusky, Ohio, v. Smith, supra, [17 N.M. 166, 125 P. 632].) `If, from the plaintiff's own showing or otherwise, the cause of action appears to arise ex turpi causa or out of the transgression of a positive law of the country, then the court says he has no right to be assisted.' (Hoffman v. McMullen, (C.C.A.) 83 Fed. 372, 45 L.R.A. 410.)
"When Hoffman v. McMullen reached the United States Supreme Court, Mr. Justice Peckham, speaking for the court, said: `The authorities from the earliest time to the present unanimously hold that no court will lend its assistance in any way towards carrying out the terms of an illegal contract. In case any action is brought in which it is necessary to prove the illegal contract in order to maintain the action, courts will not enforce it, nor will they enforce any alleged rights directly springing from such contract. In cases of this kind the maxim ispotior est conditio defendentis. * * * Upon the point as to the ability of the plaintiff to make out his cause of action without referring to the illegal contract, it may be stated that the plaintiff for such purpose cannot refer to one portion only of the contract upon which he proposes to found his right of action, but that the whole of the contract must come in, although the portion upon which he founds his cause of action may be legal. (Booth v. Hodgson, 6 T.R. 405; Thomson v. Thomson, 7 Ves. Jun. 470; Embrey v. Jemison, 131 U.S. 336, 348 [359], *Page 369 [9 Sup. Ct. 776, 33 L. Ed. 172].) * * * In the case before us the cause of action grows directly out of the illegal contract, and if the court distributes the profits it enforces the contract which is illegal.' (McMullen v. Hoffman, 174 U.S. 639,19 Sup. Ct. 839, 43 L. Ed. 1117; Kennedy v. Lonabaugh, 19 Wyo. 352,117 P. 1079, Ann. Cas. 1913E, 133.)
"In proving a case a party must make a full and fair disclosure of all the facts governing the transaction; he cannot prevail by presenting only such facts as favor him when, if all the facts were presented he could not prevail. Section 7506, Revised Codes 1921, provides: `If any part of a single consideration for one or more objects, or of several considerations for a single object, is unlawful, the entire contract is void.' * * *
"In Dixie Rubber Co. v. Catoe, 145 Miss. 342, 110 So. 670, it was held that a contract between a corporation, which had not complied with the law, and a salesman, respecting the sale of the corporation's stock was unlawful, void, and unenforceable. The court said: `It seems plain that appellant would have been required to prove the contract between it and appellee Cadenhead, by which the latter received the commissions, and rely on its illegality under the law for its right to recover. The illegality of the contract would have been met at every turn in the case from start to finish; it could not have been put out of sight. It would have been the very life of the case. It could not have been shown, except by virtue of the contract itself, that appellee Cadenhead had the illegal commissions in his possession. And the only ground on which appellant could have claimed the right to recover the commissions would have been that the contract itself, by which the commissions had been paid, was illegal. Every move in the case would have depended on the illegal contract. So we are of opinion that, if appellant had sued appellee Cadenhead for the $44,000 commissions, there could have been no recovery because of the illegality of the contract by which the commissions had been paid and received.' * * *
"It is said that justice demands a judgment for plaintiff. `What is justice?' queried Socrates. Whatever it may be, it *Page 370 is not the fiat of the individual judge following his own philosophy, but is in a legal sense `that end which ought to be reached in a case by the regular administration of the principles of law involved as applied to the facts.' (Meeks v. Carter,5 Ga. App. 421, 63 S.E. 517; Sioux Falls v. Marshall, 48 S.D. 378,204 N.W. 999, 45 A.L.R. 447; Nelson v. Wilson, 81 Mont. 560,264 P. 679.) * * *
"A void contract cannot be enforced, no matter what hardship it may work, or how strong the equities may appear. (Howard v.Farrar, 28 Okla. 490, 114 P. 695.)"
It must be understood that the violation of the Blue Sky Law is not the only violation of law by this trust. The general law providing for the organization of corporations is violated in very many particulars too numerous to mention, so that it is very evident that the tender of the unit of stock in the trust was not a tender of any consideration for the deed. Such tender was, as said before, worthless and without a consideration, and the deed was void.
This declaration of trust in its entirety furnishes a very apt illustration of the necessity for a strict compliance with the laws for the creation of corporations. It is an attempt on the part of the trustees to obtain all of the advantages of a corporation and at the same time assume none of the liabilities. They do not attempt to comply with the law requiring initial filing papers, the law requiring annual statements, the law requiring the election of officers to handle the property, the law fixing the time and method of electing such officers; they in fact attempt to fix the duration of the trust as twenty years after the death of the last trustee, in direct defiance of the statute fixing the duration of a trust to a time not exceeding the life of the trustees. None but a fool, or any man wholly ignorant of the provisions of the declaration, would voluntarily subscribe to such conditions. The law should be strictly construed against such attempted evasions and the evident frauds therein attempted discouraged, or in fact punished, as provided by statute in such case. *Page 371
I do not mention the presumption of title arising from the long possession of plaintiff. If the deed was without valid consideration, the plaintiff is entitled to continue that possession even though he might be held (if that were possible under the record in this case) to have been a party to the illegal acts of the Northland Petroleum Consolidated, and the courts, therefore, should refuse to take cognizance of this case on that account.
I therefore insist that the decision of the district court quieting title in the defendant trust or the trustees thereof — if, indeed, the judgment is plain enough in that particular to warrant designating it as a judgment — be set aside, and that the title of the land in controversy be quieted in plaintiff.