American Cemetery Co. v. United States
| Decision Date | 18 July 1928 |
| Docket Number | No. 1006.,1006. |
| Citation | 28 F.2d 918 |
| Parties | AMERICAN CEMETERY CO. v. UNITED STATES. |
| Court | U.S. District Court — Panama Canal Zone |
Buckland, Black, & Todd, of Wichita, Kan., for plaintiff.
Al. F. Williams, U. S. Atty., and Alton H. Skinner, Asst. U. S. Atty., both of Topeka, Kan.
The sole question presented by this case is as to whether or not payments to a certain trust fund shall be taxed as income of the plaintiff. The facts are agreed upon.
Under date of October 16, 1918, the predecessor of the plaintiff applied to the city of Wichita, Kan., for a permit to develop and operate a cemetery. That permission was granted in consideration of a written agreement, which is binding upon the plaintiff, in which agreement it is recited that the city of Wichita has the power of controlling such cemeteries and may be charged with the responsibility of the maintenance thereof, and in order to protect the city of Wichita, the predecessor of the plaintiff agreed to incorporate under the laws of the state of Kansas, and agreed that a trust fund should be created to the amount of $2,500 per acre, the principal of which fund should be held inviolate as a perpetual care fund, and the interest therefrom should be expended for maintenance. It was agreed that a responsible trust company in the city of Wichita should be made trustee, which was later done. To create this fund there was provided that a portion of the purchase money of each lot should be set aside and paid over to the trustee.
Shortly after such contract was entered into with the city of Wichita, the plaintiff corporation was organized under article 13, chapter 17, of the Laws of Kansas (R. S. 1923). Section 5 of such law, being now section 17-1311 of the Revised Statutes of Kansas of 1923, makes it mandatory upon a corporation to fix and set aside not less than 10 per cent. of the purchase price of each burial lot for the permanent maintenance of the cemetery; the sums so set apart shall be invested in first mortgages upon real estate, and the proceeds of such fund "shall be used exclusively for the maintenance of said cemetery." There is an intimation in the brief of the defendant that this statute does not apply. The statute was in force at the time this corporation was organized, and is the only statute applicable, and it is mandatory in terms. It is suggested in the brief, although not in the facts, that the plaintiff has not complied with some other portions of that statute. If true, it has no bearing here. That the plaintiff has not complied with one section of the statute does not relieve it from compliance with another.
As soon as the corporation was organized it entered into a contract with the First Trust Company of Wichita, which is irrevocable and which provided for the payment to the trust company by the plaintiff of a portion of the purchase price of each lot until the sum of $2,500 per acre was reached; the trust company assumes the obligation of said trust and agrees that the income shall be paid over to the plaintiff, to be expended for the maintenance and care of the cemetery; any sum not necessary for the actual care and maintenance of the cemetery shall be retained by the trustee. If the terms of this agreement are carried out, the proceeds thereof can only be used for the maintenance and care of the cemetery.
In the deeds of conveyance, the plaintiff guarantees perpetual care of the lot as provided in the agreement between the city of Wichita and the American Cemetery Company, above...
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