State v. Winneshiek Co-op. Burial Ass'n

• Decision Date: 07 May 1946
• Docket Number: 46830.
• Citation: 22 N.W.2d 800,237 Iowa 556
• Parties: STATE v. WINNESHIEK CO-OP. BURIAL ASS'N.
• Court: Iowa Supreme Court

22 N.W.2d 800

237 Iowa 556

STATE v. WINNESHIEK CO-OP. BURIAL ASS'N.

No. 46830.

Supreme Court of Iowa

May 7, 1946

John M. Rankin, Atty. Gen., and Edward S. White, Jr., Sp. Asst Atty. Gen., for appellant.

Connolly O'Malley & McNutt, of Des Moines, and E. P. Shea, of Decorah, for appellee.

MULRONEY Justice.

The Attorney General's petition in quo warranto alleged that the defendant, the Winneshiek Co-operative Burial Association was a cooperative corporation, created under the provisions of Chap. 390, Code of 1927, for the purpose of engaging in the profession of embalming, and that since its incorporation on July 8, 1930, it has been engaged in the practice of embalming and that said practice 'is against public policy and in violation of law.'

The answer in seven divisions, set up numerous defenses, chief of which was a denial by the defendant that it was practicing embalming and an allegation that it conducted its business by a lease arrangement with a licensed embalmer.

At the conclusion of the trial the district court made findings of fact wherein he found that the yearly lease agreements were entered into for 1943, 1944 and 1945 and the court in his conclusions of law held: 'That the plaintiff has failed to prove, by a preponderance of the evidence, that the defendant practiced embalming in violation of the laws of the State of Iowa. That the plaintiff has failed to prove, by a preponderance of the evidence, that the defendant was or is practicing a profession for the practice of which a license is required by law.'

I. Article II of defendant's articles of incorporation provides: 'The purpose of this association shall be to furnish complete funeral service upon the cooperative plan * * * to purchase and supply to its members, caskets, burial vaults and other burial supplies; to own and operate a hearse; to hire and engage an undertaker to embalm bodies and conduct funerals; and to do any and all other things necessary or desirable in connection with funerals for its members and their families as permitted by law * * *.'

The record shows that the defendant did furnish the funeral service for its members, and possibly some that were not members, by hiring licensed embalmers at a monthly salary until 1943. After 1943 the yearly lease with the licensed embalmer supplanted the hiring arrangement. There is no need to review the testimony with respect to the manner in which the defendant carried on its business before 1943, when it hired embalmers, and after 1943 when it executed leases with embalmers. The lease arrangement was a mere subterfuge. After 1943 the company was still engaged in the business of furnishing funeral service by engaging 'an undertaker to embalm bodies and conduct funerals' within its corporate purpose. State v. Kindy Optical Co., 216 Iowa 1157, 248 N.W. 332. The real issue in the case, as we see it, is whether the practice or business of embalming by a corporation, that acts through licensed embalmers, is prohibited by law or contrary to public policy.

II. It is admitted that defendant was organized under Chap. 390, Code of 1927. Section 8486 of this chapter provides for the organization of cooperatives for the purpose of 'conducting any agricultural, live stock, horticultural, dairy, mercantile, mining, manufacturing, or mechanical business * * *.' The attorney general argues that defendant could not be legally incorporated for the purpose of a burial association under the above statute. The defendant answers that it is a mercantile association and therefore within the provisions of the above statute. The record shows that its articles, plainly stating the purpose of the corporation, and plainly stating that its formation was under the provisions of Chapter 390, were sent to the Secretary of State's office on July 8, 1930 and the certificate was issued. Moreover, the legislature in 1937, by an amendment to Section 2585-c1, Code of 1935, legislated with respect to 'cooperative burial associations.' See Chap. 106, Sec. 1, Acts of the 47th General Assembly. It would seem that the corporate creature's legitimate birth was recognized by its legislative and administrative parents. A mercantile business means the business of buying and selling articles of merchandise. Vol. 27, Words & Phrases, Perm.Ed., pp. 61 and 62. Some authority for the conclusion that an undertaking business is a mercantile business is contained in our holding that funeral directors are liable for sales tax. See Kistner v. Iowa State Board, 225 Iowa 404, at page 414, 280 N.W. 587, at page 592, where we stated:

'* * * while it is true that the undertaker renders service, and valuable service, for which he is entitled to adequate compensation, he is also engaged in the sale of tangible personal property--the casket, the vault and other necessary equipment. He does not consume the articles as a plumber or welder would consume gas or electricity in a torch or welding device. He is not a processor. He does not use the articles in the manufacture of other articles. He is not changing their form. He transfers the very articles to the purchaser. He purchased the articles for resale and did re-sell them to the user.'

Under the record we are not disposed to hold that the defendant was improperly organized under Chap. 390, Code of 1927.

III. The attorney general argues that defendant 'is unlawfully practicing the profession of embalming in that it neither holds nor can secure the required license for the practice of that profession, and its practice of the profession of embalming is against public policy and in violation of law.' The attorney general cites Section 2439, Code of 1939, prohibiting persons from engaging 'in the practice of * * * embalming * * *' without a license, and Section 2585.01 defining the practice of embalming. The argument is that the corporate activity is within the definition of 'embalming' and a corporation cannot 'take training and pass examinations preparatory to securing a license * * * and a corporation cannot practice a licensed profession.' We posed the question in State v. Fremont Co-operative Burial Association, 222 Iowa 949, 270 N.W. 320, but we did not answer it for the answer was not necessary for the decision. We have stated that the formation of a cooperative burial association was within the contemplation of the general statutes authorizing cooperatives. It would be inconsistent to hold that a cooperative burial association was contemplated by Chap. 390, governing the formation of cooperatives, but such a cooperative could not carry out the purpose for which it was organized because embalming, as a licensed profession under Chap. 124.1, Code of 1939, cannot be performed by a corporation.

There is no general rule that a corporation cannot own a business, the conduct of which requires licensed operators. The rule is that a corporation cannot in general practice one of the learned professions. 19 C.J.S., Corporations, § 956, p. 400. The rule is thus stated in 13 Am.Jur. 838, sec. 837:

'While a corporation is in some sense a person and for many purposes is so considered, yet, as regards the learned professions which can only be practiced by persons who have received a license to do so after an examination as to their knowledge of the subject, it is recognized that a corporation cannot be licensed to practice such a profession.'

We gave expression to this rule in State v. Bailey Dental Co., 211 Iowa 781, 234 N.W. 260, and in State v. Kindy Optical Co., supra, when we held a corporation could not practice dentistry or optometry. See, also, State v. Superior Court for Chelan County, 17 Wash.2d 323, 135 P.2d 839; Kendall v. Beiling, 295 Ky. 782, 175 S.W.2d 489. In Cummings v. Pennsylvania...