Opinion
Nos. 3926 and 3934
Decided October 30, 1946.
Real property — Conveyances — Covenant against sale to non-Caucasian — Injunction against such sale not considered where sale not imminent — Corporations — Identity separate from shareholders — Conveyance to or use by corporation, not that of shareholders — Restriction against use by non-Caucasian, valid and enforceable.
1. It is error for a court to consider a petition for injunction, based on a restriction in a deed, against the sale of land to a non-Caucasian, where there is no imminent or threatened sale contrary to such restriction.
2. The identity of a corporation is separate and distinct from that of its shareholders, and a conveyance to or use by a corporation is not a conveyance to or use by any or all its shareholders.
3. A restriction in a deed against the use or occupancy of the land by a non-Caucasian is valid and enforceable.
APPEAL: Court of Appeals for Franklin county.
Messrs. Davies Davies, for appellants and appellees Fred C. Perkins and others.
Mr. Frank C. Shearer and Mr. D.D. White, for appellants and appellees trustees of Monroe Avenue Church of Christ.
Mr. Milton L. Farber, Mr. Stanley U. Robinson, Jr., Mr. Arthur Garfield Hays, Mr. Osmond K. Fraenkel, Mr. John D. Connor and Mr. Robert N. Gorman, for American Civil Liberties Union, amicus curiae. Mr. Edmund B. Paxton, amicus curiae. Mr. David Clayman, for Columbus Council for Democracy, amicus curiae. Messrs. Pretzman Dillon, for Eastwood Civic Association and others, amici curiae.
The original action appealed by both plaintiffs and the defendant trustees of the church, hereinafter referred to as church, was to enjoin the church from selling or conveying the premises, over which the controversy rages, to any person other than a Caucasian, to evict one Lloyd L. Dickerson, the negro pastor of the church, therefrom, and to forbid the future occupancy and use of the premises, now occupied as the church parsonage, by any person other than a Caucasian.
It is at once apparent that plaintiffs' complaint is twofold.
It, first, involves ownership and future sale and, second, present occupancy and future use.
The suit is grounded and relief sought upon a certain restrictive covenant appearing in the church's chain of title. The trial court concluded that that portion of the covenant, dealing with sale and conveyance, was against public policy, contrary to law and was, therefore, void and unenforceable, and the court disallowed an injunction. However, the court held that that portion of the restrictive covenant, which dealt with occupancy and use, was in accordance with law. It ordered eviction of Dickerson and enjoined subsequent use and occupancy of the church by any one other than a person of the Caucasian race.
The defendant church answers the complaint and sets up some seven defenses. It asks for no affirmative relief, but requests that plaintiffs' petition be dismissed. It is well to note at this point that plaintiffs do not plead that defendant church contemplates or threatens a subsequent sale of the premises to any person other than a member of the Caucasian race. The ultimate facts, as shown by the pleadings and evidence, are as follows:
In 1926, the owners of 29 lots on Ohio avenue in Columbus, Ohio, being all the lots within certain bounds, mutually agreed upon a plan to restrict the sale, use and occupancy of their properties. They quitclaimed their respective holdings to The Guarantee Title Trust Company, which thereafter reconveyed to each owner his respective lot. Each of those deeds of reconveyance was duly recorded. The deeds contain the following covenant:
"Said grantee, as a part of the consideration for this conveyance, and for the mutual benefit of all of the owners of the lots on the east and west sides of North Ohio avenue, between the first alley south of East Broad street and the first alley south of East Long street, and of every other present and subsequent owner of a lot or lots in the territory above described for himself and his heirs, hereby covenants and agrees with the said grantor herein, its successors and assigns, that at no time prior to January 1, 1960, shall any lot or part of a lot, or interest in any of the promises located on Ohio avenue, as aforesaid, be leased, rented, sold or conveyed to any person or persons of any race other than Caucasian, nor shall any such person or persons other than Caucasian be permitted to occupy the same during that period, except as a servant of the occupant of any of said premises.
"And it is expressly agreed that if said grantee, his heirs, executors, administrators or assigns, or anyone holding or claiming by, through or under any of them, shall violate this condition, then these presents and this conveyance shall become null and void, and all the right, title, interest and estate in said premises shall immediately revert to and be revested in the grantor hereof, its successors and assigns, and it shall be seized as of its former estate herein as if these presents had never been executed, and may immediately re-enter, repossess and hold said premises as of a good estate in fee simple, and the grantor hereof hereby gives and grants to the present owners of any or all of the other lots in the location fronting on Ohio avenue in the territory above described, their heirs, executors, administrators and assigns, on a violation of the condition or restriction aforesaid, the right by proper legal proceedings to enforce the above condition, restriction and reversion. And the grantee hereof, by accepting this deed agrees to and with any or all of the owners of the other lots or parcels fronting on Ohio avenue in the territory above described, their heirs, administrators, executors and assigns, that they or anyone or more of them may enforce by proper legal proceedings the aforesaid condition, restrictions and reversion; and the above condition and restriction shall until January 1, 1960, be considered as running with the aforesaid real estate hereby conveyed and shall be made a part of all deeds and conveyances, instruments, leases, transfers, assignments and agreements made by the said grantee, his heirs, executors, administrators or assigns, or any of them of said premises."
"This deed has been executed pursuant to a general plan for the establishment of a highly restricted neighborhood and for the improvement and betterment of all the lots hereinbefore described and the covenants in this deed are entered into as a part of a general plan for the benefit of each lot owner, therefore the grantor and grantee herein covenant, with all deeds, conveyances and contracts of sale for said lots shall recite the conditions and restrictions herein contained."
On or about June 29, 1945, lot No. 6, having thereon a single residence, was owned and conveyed by Amelia Cipriano to Constance Conners, who on the same day conveyed it to a realty company which in turn conveyed it to the defendant church, an Ohio corporation not for profit. The church congregation is largely made up, but not entirely, of colored people. Dickerson took part in the purchase negotiations and knew of the deed restrictions. The church and its negotiating agents had at least constructive notice of the restrictions from the recorded deeds in the church's chain of title.
First, we shall consider the claim of plaintiffs that the trial court erred in holding plaintiffs were not entitled to an injunction restraining the church from selling and conveying lot No. 6 to any person other than a Caucasian. It is the judgment of this court that the trial court did err in passing upon that question and in its failure to dismiss that branch of plaintiffs' case in accordance with the prayer of defendant church's answer, for the reason that a declaratory judgment was not asked for and, under the state of the pleadings and the proof, the question was not made. As previously pointed out there was no threatened sale in the offing contra to the restrictive covenant, and the church's uncontroverted fourth defense was a complete and sufficient answer to plaintiffs' claimed impropriety in the church's purchase and ownership of lot No. 6. Such fourth defense reads:
"Defendants further answering say that the corporation, defendants herein, has no racial identity because the corporation is an entity separate and apart from the members thereof."
Whether a corporation for profit or not for profit is the creature of fact or fiction, as said in 1 Fletcher Cyclopedia Corporations (Perm. Ed.), 84, Section 25, "artificial personality is a corporate attribute * * *. It is generally accepted that the corporation is an entity distinct from the shareholders or members and with rights and liabilities not the same as theirs individually and severally."
That authority further states, ibid., 105, Section 28, that "`its members, as natural persons, are merged in the corporate identity,'" and at page 111, Section 31, it is further observed that "the property of the corporation is its property, and not that of the stockholders, as owners," even though such shareholders or members may have some equities in it.
The high court of this state has recently quoted in Voeller v. Neilston Warehouse Co., 136 Ohio St. 427, 432, 26 N.E.2d 442:
"`A stockholder and the corporation of which he is a member, are separate and distinct persons in law, and their interests are always distinct and sometimes adverse.'"
Shareholders and members of most corporations are constantly changing. The entrance and exit of new and old members or shareholders in no wise affect the title or ownership of corporate property. It ought to be clear that a corporation as a legal entity can have no racial identity. The defendant church has a mixed congregation. The church was not non-Caucasian or negro within contemplation of law. Nowhere in the restrictive covenant do we find that it contemplated nonsale of restricted property to a corporation composed in whole or in part of non-Caucasian shareholders or members. We believe it well settled that it is not the policy of courts of either law or equity to enlarge restrictive covenants to embrace matters therein which are not specifically contemplated or clearly stated. We do not perceive wherein the realty company or defendant church violated any provision of the restrictive covenant. Neither do we find any fact that should cause a court of equity to disregard the theory of separate entity.
The case of Peoples Pleasure Park Co., Inc., v. Rohleder, 109 Va. 439, 61 S.E. 794, is directly in point. The park company was a corporation organized and controlled by negroes for the purpose of operating a place of amusement for colored people. It purchased a tract of ground which bore a restriction that it could not be sold to colored persons. In an action to enforce the covenant, the court held:
"A restriction in the conveyance of land to the effect that `the title of this land is never to vest in a person or persons of African descent,' or `colored persons' is not violated by a subsequent conveyance of the land to a corporation, organized `to establish and develop a pleasure park for the amusement of colored people.' The contemplated use is not prohibited by the restriction nor is the title conveyed to a forbidden person."
The English case of Continental Tyre Rubber Co., Ltd., v. Daimler Co., Ltd. (1915), 1 K.B., 893, is of passing interest. In that case, a company was incorporated in England and carried on business in London. It was subsidiary to a German corporation. All shares of the English company, save one, were held by German subjects residing in Germany. It was held that war did not change the character of such company, even though all its shareholders were nonresident alien enemies; that having been created in accordance with law, it remained an English corporation.
We cite that case to show to what length English courts have gone even in times of war to hold that "a stockholder and the corporation of which he is a member, are separate and distinct persons in law," as was held in the Voeller case, supra.
We now come to that feature of the instant case, of which the church complains in its appeal. Is the covenant against use and occupancy by non-Caucasians invalid, either in that it is contrary to law and antagonistic to federal or state constitutional provisions, or repugnant to public policy?
This state has long held to the rule, as expressed in Anderson v. Cary, 36 Ohio St. 506, 38 Am. Rep., 602, that a restriction against alienation, even for a limited time, is void as repugnant to the grant and contrary to public policy. That case concerned a limitation found in a devise of property. The principle is the same as that found in the leading case of Mandlebaum v. McDonell, 29 Mich. 78, 18 Am.Rep., 61, wherein that illustrious court of the three C's, Cooley, Campbell and Christiancy, held that restrictions upon alienation for any length of time are void, principally for the reason that they are repugnant to law and settled public policy.
Other jurisdictions hold that a certain limitation in point of time cures the evils of such restrictions.
These remarks, of course, pertain to alienation and not to user, between which there is a marked distinction. One may own property and convey it away, yet he or his grantee may be limited in its use. It may be that the sale of liquor is forbidden on the premises; that a structure placed thereon shall not be of a lesser value than a specified sum; that any such building shall not be closer than so many feet from the lot or street line; or that improvements shall not be of a certain character. All such restrictive covenants are matters of individual contract which the parties carry into their conveyancing, prompted of course by financial caution or social security as they see it. Many such instances are found in reported Ohio cases, and the courts have consistently held such restrictions to be valid, recognizing the principle that, even if one does own property, he may not put it to any use that suits his fancy to the detriment of his neighbor with whom he or his predecessors in title have contracted otherwise. Although our highest court has never passed on the question of racial occupancy-restrictions, it is a matter of common knowledge that such restrictions are frequent and extensive practice throughout the state.
Ohio has no statute on the subject. The court, in State, ex rel. Weaver, v. Bd. of Trustees, Ohio State University, 126 Ohio St. 290, 185 N.E. 196, voiced, what ought to be a self-evident truth, the following:
"The purely social relations of our citizens cannot be enforced by law; nor were they intended to be regulated by our own laws or by the state and federal Constitutions."
The distinction must not be lost sight of between those rights and duties that exist by virtue of private contract and those which grow out of specific statutory recognition of public relationships. Examples of the latter are found in laws requiring innkeepers and restaurant proprietors to accommodate the public irrespective of race or color. See Sections 12940 and 12941, General Code.
Comparisons are odious; none are intended. Only for the purpose of developing that which is glaringly obvious do we inquire: Would anyone gainsay that one allotting and selling property for strictly residential purposes may not legally write into a conveyance, for the benefit of the purchasers and their assigns, a restrictive covenant against permitting the property to be occupied and used as a house of prostitution? The absurdity of an affirmative answer negates it. Yet even prostitutes are a class of our citizenry. If one class may by contract be denied the privilege of use and occupancy, why not another? White may exclude black. Black may exclude white.
It is written in 14 American Jurisprudence, 618, Section 208:
"All courts agree that a condition or covenant that property shall not be occupied by persons of certain races is not invalid as a restraint upon the alienation of the property * * *."
Even the Supreme Court of Michigan, which pioneered in Mandlebaum v. McDonell, supra, held in Schulte v. Starks, 238 Mich. 102, 213 N.W. 102, that although a restrictive covenant against alienation to a person of color is void, a restraint upon use and occupancy by a colored person is valid and enforceable. In the earlier case of Parmalee v. Morris, 218 Mich. 625, 188 N.W. 330, 38 A.L.R., 1180, the court quoted:
"`The law is powerless to eradicate racial instincts or to abolish distinctions which some citizens do draw on account of racial differences in relation to their matter of purely private concern. For the law to attempt to abolish these distinctions in the private dealings between individuals would only serve to accentuate the difficulties which the situation presents.'"
To the same effect, see Ridgway v. Cockburn, 296 N.Y. Supp., 936, 163 N.Y. Misc., 511, wherein it is said in the ninth paragraph of the syllabus:
"It is not contrary to public policy for any group of individuals to contract among themselves for the exclusive enjoyment of their own private property."
The Ohio Supreme Court, in P.C.C. St. L. Ry. Co. v. Cox, 55 Ohio St. 497, 515, 45 N.E. 641, 35 L.R.A., 507, has taken a like stand. The court there stated:
"The liberty of contract, being one of those rights secured by our Constitution, is not to be restrained upon any insufficient or mere fanciful conceit of what may possibly happen. The citizen who is sui juris has a right to make a contract beneficial to himself when neither immoral, fraudulent nor illegal, and he should not be restrained in the exercise of such right unless the public welfare clearly compels it."
We well recognize that vociferous minorities of our citizens, instigated by politicians not statesmen, clamor for judicial denial of private rights under the guise of public welfare which is to say public policy. However, the courts ought to be and are ever mindful of that basic thought which underlies representative democracy: "Give all power to the many and they will oppress the few, give all power to the few and they will oppress the many, so that each should retain within themselves the power for their own self-preservation." That reservoir of protection is to be found in our guaranty of constitutional rights, for example, the right to private contract, and in the hesitancy of the courts to be swayed by that which is seemingly popular for the moment but which finds little or no sound reason or precedent, either in law or equity.
Without gathering all the cases supporting the holdings of the Supreme Court of Michigan in their last two cases cited, we direct attention to some few authorities:
White v. White, 108 W. Va. 128, 150 S.E. 531, 66 A.L.R., 518; Wayt v. Patee, 205 Cal. 46, 269 P. 660; Los Angeles Investment Co. v. Gary, 181 Cal. 680, 186 P. 596, 9 A.L.R., 115; Meade v. Dennistone (Maryland Court of Appeals), 196 A. 330, 114 A.L.R., 1227.
The church urges that the restriction against use and occupancy violates Article XIV, Amendments, United States Constitution, and Section 1, Article I of the Ohio Constitution. The case of Corrigan v. Buckley, 271 U.S. 323, 70 L. Ed., 969, 46 S. Ct., 521, ought to and does dispose of this oft asserted and indefensible claim. Paragraph four of the syllabus of that authority unequivocally announces:
"The prohibitions of the Fourteenth Amendment have reference to state action exclusively, and not to any action of private individuals. Individual invasion of individual rights is not the subject matter of the amendment."
Section 1, Article I of the state Constitution encompasses the right of private contract. A holding to the contrary would in fact place it in direct conflict with the federal guaranty of the right of private contract.
We are told that plaintiffs failed to prove the existence of a contract supported by a consideration; that privity is lacking; that conditions have changed; that the contract is vague and uncertain; and that there was a failure to plead or prove damages. Numerous well reasoned authorities may be found denying the efficacy of such arguments and claims all of which we find futile and of no avail.
Although the church appeals on questions of law and fact, its appeal has been treated, argued and presented as one at law. We shall so consider it. The decree of the trial court as to the restriction on sale is reversed. We enter the judgment that the trial court should have entered, that is, dismissal of that portion of plaintiffs' complaint. The decree of the trial court as to use and occupancy is affirmed. If the church would have it otherwise, the same judgment may be entered as was done in the trial court. Judgment is rendered accordingly. Costs are assessed against the appellants in their respective appeals.
Judgment accordingly.
PUTNAM and MONTGOMERY, JJ., concur.
SHERICK, P.J., PUTNAM and MONTGOMERY, JJ., of the Fifth Appellate District, sitting by designation in the Second Appellate District.