Thanks Adam.

It is not quite a question of capacity in the strict sense—in most jurisdictions today, just as in some contexts since long ago, the stated objects of a corporation do not limit its capacity, but acting outside the objects is still unlawful and can be sanctioned in various ways.

A charitable corporation does not hold its property in trust, but it is required to operate according to its constitution which, in the case of charitable corporations, will include stated objects (because without them it would be impossible to say that the entity existed for solely charitable purposes).

Of course, many modern corporate regimes (outside of charity) permit corporations that lack stated objects. So a more difficult question is whether the result in McCorkill could follow if the National Alliance was unrestricted by its constitution, but still carried on its hateful activities.

I think it is germane that the recognition of any legal construct originating in another jurisdiction—a corporation, a trust, a marriage or other contract—is always pursuant to principles of private international law. Most constructs are recognized as a matter of routine comity, but even though we might not notice this, recognition is always subject to the limits of public order.

If an entity is devoted to the carrying on of repulsive activities, that are contrary to the fundamental values of the forum, then the forum court should simply not recognize it as a matter of local law. This would be possible even if that entity was free to carry on other activities, and indeed even if, according to the law of the place of origin of the entity, its activities are permissible.

Perhaps this is the best reading of the judgment: the gift failed because it was made to an entity that, according to the public policy (in the private international law sense) of New Brunswick law, was a non-entity.

Lionel

From: Adam Parachin <aparachi@uwo.ca>
Date: Thursday, July 31, 2014 at 17:12
To: Lionel Smith <lionel.smith@mcgill.ca>, ODG <obligations@uwo.ca>
Cc: "Angela Campbell, Prof." <angela.campbell@mcgill.ca>
Subject: Re: ODG: Unconditional Bequest Struck on the Basis of Public Policy

Thank you Lionel.  There is an indeed an appeal to that reasoning, though it rests on an assumption that corporations hold property for the stated purposes of the corporation.  That needs to be reconciled with the principle - common to many jurisdictions - that corporations have the capacity of natural persons.  I confess that I have not looked at the state of Virginia corporate law on point.  Assuming that principle applies in Virginia, which was not considered in McCorkill, the idea developed by the Court that a bequest to a corporation is readily distinguishable from a bequest to an individual becomes more difficult to sustain. 

 

Even in the charitable context, the most apt analogy is not to a contribution to a charitable trust, which very clearly becomes subject to the purposes of the trust, but rather a contribution to a charitable corporation.  I am not aware of any authority having definitively established that a charitable corporation necessarily holds all donations in trust for its purposes as they existed at the time of the donation.

 

On 07/31/14, "Lionel Smith, Prof." <lionel.smith@mcgill.ca> wrote:

Thanks for this Adam. Very interesting indeed. Surely one could argue that it is not like an unrestricted bequest to an individual, since presumably the foreign corporation has a constitution that requires it to pursue certain goals and/or activities. This point is made by the judge at [73]ff. In the same way, an 'unrestricted' bequest to a charity that was organized in the form of a trust would not be an unrestricted bequest, but effectively an accretion to the existing trust and thus an adoption by the testator of the terms of that charitable trust. (Of course, a corporation can change its constitution, but then again any trust can in principle be varied (in most jurisdictions)). So this testator wanted to make a gift to a corporation but the corporation would not, I presume, be recognized as a legal person under Canadian law, because its constitution (or activities, or both) were unlawful under our laws. In that perspective the decision is not so surprising. Lionel From: Adam Parachin <aparachi@uwo.ca> Date: Thursday, 31 July 2014 at 16:10 To: ODG <obligations@uwo.ca> Subject: ODG: Unconditional Bequest Struck on the Basis of Public Policy Dear All:   A recent decision of the New Brunswick Court of Queen's Bench (McCorkill v Streed 2014 NBQB 148) is attracting some attention here in Canada amongst estates lawyers.  The Court took the unusual step of striking an unconditional residual bequest on the basis of public policy.    The beneficiary of the bequest was the National Alliance, a Virginia corporation with a white supremacist agenda.  Justice Grant assessed the formal validity of the bequest by looking to the purposes to which the National Alliance would apply the bequest.  Finding that the National Alliance engages, albeit in the U.S., in what qualifies as unlawful hate speech under Canadian criminal law, Justice Grant concluded that the bequest was against public policy and thus void.     Justice Grant essentially reasoned that, since the racist purposes to which the National Alliance would presumably apply the bequest could be inferred, and were presumably in the contemplation of the testator, the validity of the bequest could (and should) be assessed from the vantage that the unconditional bequest was in reality an express trust for those racist purposes.    I confess to this being my first experience with this reasoning.  The case equates an unrestricted bequest to a known racist with an overtly racist purpose trust.  It contemplates a judicial discretion to re-characterize facially valid testamentary dispositions into problematic legal forms never intended by testators.  It invites future courts to evaluate not only the express conditions attaching to bequests but also the ways in which beneficiaries are anticipated by testators to use unconditional bequests, or more generally, the deservedness of beneficiaries.   I would be much obliged if anyone can point me in the direction of similar cases or relevant scholarly commentary.   Regards,   Adam   -- Adam Parachin Associate Professor Faculty of Law University of Western Ontario (519) 661-2111 Ext. 81445

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Adam Parachin
Associate Professor
Faculty of Law
University of Western Ontario
(519) 661-2111 Ext. 81445

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Professor Stephen G.A. Pitel
Faculty of Law, Western University
(519) 661-2111 ext 88433