St. Lawrence University v. Trustees of the Theological School, 20 N.Y.2d 317 (1967)

A body is considered a corporation if it possesses essential corporate attributes such as the power to sue and be sued in a corporate name, to receive and hold property, enact bylaws, administer its affairs, and maintain perpetual succession, regardless of whether the statute creating it refers to it as a “department” rather than a “corporation.”

Summary

St. Lawrence University sued the board of trustees of its former Theological School, seeking a declaratory judgment that the board was merely a department of the university and that its assets should revert to the university upon the school’s closure. The board argued it was a separate corporation since 1910. The Court of Appeals determined that the 1910 legislation granted the board sufficient corporate attributes to be considered a separate corporation, entitling it to control its assets. Additionally, a parcel of land deeded to the Theological School rightly reverted to the University upon the school’s ceasing operations.

Facts

St. Lawrence University operated a Theological School until 1965. In 1910, the university sought to circumvent sectarian restrictions on charitable donations by establishing a separate board of trustees for the Theological School. The New York legislature amended the university’s charter to create this separate board. The university transferred assets to the board. The board managed the Theological School independently. In 1954, the university conveyed a parcel of land to the Theological School, stipulating the land would revert to the university if it ceased to be used for theological education.

Procedural History

St. Lawrence University sued the board of trustees, seeking a declaration that the board was not a corporation and that its assets should revert to the university. The Supreme Court ruled in favor of the university. The Appellate Division reversed, dismissing the complaint. The Court of Appeals reversed the Appellate Division, finding the board to be a corporation and affirming the reversion of the real property to the university.

Issue(s)

1. Whether the board of trustees of the Theological School possesses sufficient corporate attributes under the 1910 legislation to be considered a separate corporation from St. Lawrence University.

2. Whether the parcel of land conveyed by the university to the Theological School reverted to the university when the school ceased operations in 1965.

Holding

1. Yes, because the 1910 legislation endowed the board with essential corporate attributes, including the power to sue and be sued in a corporate name, to receive and hold property, enact bylaws, administer its affairs, and maintain perpetual succession.

2. Yes, because the deed conveying the property specified that it would revert to the university if it ceased to be used for a Theological School.

Court’s Reasoning

The court reasoned that the 1910 statute vested the board with significant powers traditionally associated with corporations, notwithstanding its designation as a “department.” The court cited Blackstone’s list of corporate attributes, noting that the board possessed nearly all of them. The power to sue and be sued in a corporate name was considered a critical attribute. The court also stated, “While it does not have all the powers normally held by a business corporation, it does have the essential attributes, and just about all the usual powers of a charitable corporation.” The court further emphasized that the label used in the 1910 legislation (“department”) was not controlling when the entity was granted core corporate powers.

Regarding the real property, the court found that the board conceded the property had reverted to the university under the terms of the original conveyance, making further legal action unnecessary. The court concluded that a separate action was unnecessary, affirming the automatic reversion to the university.

The court addressed the procedural aspects, noting that even though the board only sought dismissal of the complaint, the court should declare the rights of the parties, including declaring the board’s corporate status.