Brown v. Maplewood Cemetery Association

• Decision Date: 04 April 1902
• Docket Number: Nos. 12,775 - (158).,s. 12,775 - (158).
• Citation: 85 Minn. 498
• Parties: PHILIP E. BROWN and Others v. MAPLEWOOD CEMETERY ASSOCIATION and Others.<SMALL><SUP>1</SUP></SMALL>
• Court: Minnesota Supreme Court

85 Minn. 498

PHILIP E. BROWN and Others v. MAPLEWOOD CEMETERY ASSOCIATION and Others.¹

Nos. 12,775 - (158).

Supreme Court of Minnesota.

April 4, 1902.

Appeal by plaintiffs from an order of the district court for Rock county, Cray, J., sustaining a general demurrer to the complaint. Reversed.

A. J. Daly, for appellants.

Nye & Deutsch, for respondents.

LOVELY, J.

Appeal from an order sustaining a demurrer to plaintiffs' complaint. This pleading was held insufficient by the court below upon the grounds that plaintiffs had no legal right to maintain the suit, and that it does not state a cause of action. We shall attempt to condense the alleged grievances, of which plaintiffs complain at length, into as brief a statement as the essential questions involved will permit.

In 1886 three of the defendants, with three others not joined, incorporated, under G. S. 1878, c. 34, tit. 3 (G. S. 1894, §§ 2913-2929), in the name of the "Maplewood Cemetery Association of Luverne, Minnesota." The purpose of the corporation was declared in the articles to be

"The establishing of a cemetery association for the purpose of opening and maintaining a public cemetery in the vicinity of the village of Luverne."

It is set forth in due form that the specific object of the incorporators and their successors was and always has been declared by them to be to create a legal entity to hold in trust the title of real estate and property acquired by the corporation, and to use and invest the proceeds of sales of lots for the benefit of the cemetery. One of the original incorporators died previous to the commencement of the action, two have resigned their membership, and others, who are made defendants, were elected in their places.

Under the articles of incorporation, new members can be admitted only upon a majority vote of existing members. None of the members contributed anything to the corporation. It had no capital stock, and no contribution was required to become or continue a member. A board of six directors was provided for (who were the incorporators), to hold until the next annual meeting, when their successors were to be elected for a term to be designated in the by-laws. The officers of the corporation were to be a president, vice president, treasurer, secretary, and actuary. By-laws were adopted, providing that all officers must be elected each year thereafter by the board of directors; that no deeds should be issued for burial lots until paid for in cash or bankable paper. It was made the duty of the directors to provide a plan for the improvement of the cemetery, fix prices of lots, and establish rules and regulations, which was done, whereby the corporation retained general control, management, and improvement of the cemetery grounds.

Upon its organization the corporation purchased from one of its members a tract of land of about thirty acres. It then set apart and dedicated to the public, by the record of a plat, as a public cemetery, eight acres thereof. On this plat lots, blocks, sidewalks, and parks were delineated. Since the record of the plat the members and officers of the corporation have at all times held themselves out as the subordinate agents and trustees of the property for lot owners, and not only the plaintiffs, but two hundred other persons, have purchased lots, and received deeds therefor, from the corporation, for which they have paid substantial prices. In the deeds received by such purchasers, the use of the lots was limited to the burial of the dead therein, subject to the rules and regulations of the association. It is charged that the organizers of the cemetery and their successors have conspired together to operate the same for their own private benefit and gain. We do not extend these allegations in full, for the reason that it is substantially alleged that such purposes have been actually consummated as hereafter detailed.

It is also made a matter of complaint that, not more than ten days after the record of the plat, the corporation conveyed to each of its directors a lot in the cemetery, ostensibly for valuable sums of money, but with a corrupt and secret intent to defraud other lot owners neglected to collect or receive the purchase price therefor, and gave away one other lot, whose price had been fixed at $250, to a third person.

It is further stated: That the corporation, through defendants, prior to May, 1900, received upwards of $5,500 for cemetery lots from the citizens of Luverne and vicinity; also large sums of money for other lots sold since that time. That the present defendants, who are members of the corporation, have converted a large portion of this money to their own use. That they have made, and still make, the unfounded and fraudulent claim that the corporation has borrowed money and paid interest thereon to the amount of $900; that it has made expenditures exceeding $1,300 for the services of defendants in managing its business, and now has no more money or credits in its hands than $500 in value. That up to the present time defendants and their associates, while acting as directors, have loaned themselves large sums belonging to the corporation, and have falsely claimed that it was necessary for the corporation to borrow money and pay interest thereon. That they have sold a large number of lots to parties who are insolvent, without receiving payment therefor. That, in the aggregate, the corporation has received for lots sold, for burial permits, for rent of platted ground, and other leases, over $7,000, while it has expended for lawful purposes no more than $3,000. That the balance of the money so received and unexpended has been taken by the members and directors of the corporation and converted to their own use, which fact has been fraudulently concealed from the plaintiffs and other lot owners who are not members of the corporation. That the corporation has failed to keep account books showing lots sold, the names of the purchasers or the prices paid therefor, or what has been done with the moneys received.

It is further alleged that in the year 1900 the citizens of Luverne built a sidewalk to the cemetery, and, in conjunction with the lot owners, asked the defendants to aid in continuing this walk along the grounds; that the defendants refused to comply with this request, for the alleged reason that the corporation had no money on hand or invested with which it could pay for building the same; that an investigation followed, when the discovery was made that defendants had converted to their own use the trust funds and property of the association. It is also set forth that defendants deny that the real estate and property devoted to cemetery purposes is held by the corporation upon any trust, or that the corporation is under any implied duty to act for the interest of the lot owners or the public. It is likewise charged that the defendants are incompetent and improper persons to manage and control the affairs of the corporation; that they have neglected to set out trees and improve the cemetery; that they have failed to secure a sufficient supply of water, and appliances for pumping and distributing it therein, and have prevented lot owners from ornamenting the lots and graves of their dead; that disputes have arisen since the beginning of the year 1900 between the plaintiffs, with other lot owners, and defendants, which have grown to such an extent that the lot owners have lost confidence in the corporation.

This action is maintained by plaintiffs in their own behalf, and for the benefit of all others similarily situated. The prayer for relief asks, among other things, that defendants be relieved from the control of the cemetery; that a receiver be appointed to take custody of the trust property until such time as a competent person or trustee can be appointed to manage the affairs of the association; that the court require the defendants to render a complete account of their receipts and expenditures, and of all doings of themselves and their associates in the management of the property from the time of its organization, and be required to turn over to the receiver or a new trustee the real estate of the association, and all moneys and property arising from the sale of lots and use of the real estate held under the alleged trust, as well as for general relief.

Defendants demurred upon the following specific grounds: First, that plaintiffs have not the legal capacity to sue; second, that there is a defect of parties plaintiff; third, that the complaint does not state a cause of action. This demurrer was in all things sustained, and upon this appeal the plaintiffs' contentions are that defendants hold the title to the real estate purchased for a cemetery in trust for the purchasers of lots, and not for private gain or profit; that the lot owners are the beneficiaries of the trust, and have the right, as such, to a full account of the receipts and disbursements of defendants in their management of the trust estate; that, after payment for the property and all necessary expenditures in maintaining it, the surplus should have been placed in the treasury for appropriation solely to its use as a public cemetery. It is further urged for plaintiffs that the appropriation of the entire surplus after payment for the property, as alleged, without applying any portion of it to its improvement, and the refusal to account for the use of the funds, in connection with a denial of all relation of trust and confidence between the lot owners and defendants, justify, upon equitable grounds, judicial interference to secure to the beneficiaries the relief demanded.

Defendants combine the first two grounds of demurrer, and contend in respect thereto (1) that the Maplewood Cemetery Association is a private corporation, in which there is no trust relation between the corporation and the lot owners; (2) that the complaint does not tend to show that plaintiffs, or those whom they...