Atlas Fence Co. v. West Ridgelawn Cemetery

160 A. 688, 110 N.J. Eq. 580, 1932 N.J. LEXIS 824

• Court: Supreme Court of New Jersey
• Decided: May 16, 1932
• Status: Published

Opinion

The opinion of the court was delivered by

Parker, J.

The conclusions of the vice-chancellor show quite plainly the utter confusion in the affairs of the cemetery corporation which existed at the time those conclusions were filed, in May, 1931. We may add that the foreclosure decree of $39,706.29 was appealed to this court, but the appeal is listed as No. 130 at the present term and has not yet been reached for argument. In the Jacobs Case, after dismissal of the bill, an amended bill was filed and on the advice of Vice-Chancellor Berry, the sale was set aside. 108 N. J. Eq. 513, decided July 13th, 1931.

The judgment of $4,000 or thereabout, recovered by one Safir, was appealed to this court and affirmed February 1st, 1932. Safir v. West Ridgelawn Cemetery, 108 N. J. Law 315.

The appointment of a receiver in sequestration to collect that judgment was also appealed, and affirmed with modifica tion in Gottlieb v. West Ridgelawn Cemetery, 109 N. J. Eq. 585. We agree heartily in the conclusion of -the vice-chancellor that notwithstanding the immunity of a cemetery from taxation, assessment, execution, and perhaps other liabilities to which ordinary persons and property are subjected by law, the case yet calls loudly for administration of the affairs of this defendant by a general receiver empowered to continue it as a going concern and put a stop to the probable diversion of its cash receipts from creditors who are by law deprived of the usual methods of collecting their claim. And this applies not merely to large creditors who can presumably afford to litigate but particularly to small ones who cannot. On this point the list of seven judgments, the smallest of which is only $25 and the largest just over $500, is illuminating. That a cemetery in existence since 1905, apparently well placed and well known, should default on ordinary current expenses, as is shown by the case before us, points to gross mismanagement somewhere.

Insolvency is patent, and if this were a case to which the Corporation act applies, there would be no difficulty whatever in affirming the orders under review. We agree with the vice-chancellor that it does not apply; and so the question is whether the court below erred in doing as it did.

The situation on the record should be noticed for a moment. The order first appointing a receiver was made on March 25th, 1931. Appeal from that order should have been taken within forty days (Chancery act of 1902, section 111) or at latest, by May 4th. No appeal from that order was taken at any time. Instead, there was a motion noticed for April 8th, to vacate the temporary appointment for several stated reasons, or in the alternative to modify it, or stay it pending appeal. Just when this motion was argued does not appear, but on May 5th, he made the two orders brought up by this appeal: the first, denying the motion to vacate or modify; the second, allowing an amended bill, admitting two new parties complainant, and directing that the receiver appointed on the original bill be continued on the new bill with all the powers conferred by the former order of appointment.

In the interests of clarity, it may be as well to state in advance of detailed discussion the conclusions that we have reached, and then give the reasoning and authorities that in our judgment support them.

1. The West Ridgelawn Cemetery corporation is a charitable trust.

2. As such charitable trust, it is under the peculiar control of the court of chancery, which has the special jurisdiction of supervising and administering trusts of all kinds.

3: In eases where a trustee is found to be violating his trust, the court of chancery may in its discretion and under its general equity powers appoint a receiver to administer the trust.

4. The present case shows a clear and flagrant violation of the trust obligations resting on the cemetery corporation and its agents.

5. Certain statutes invoked by appellant are deemed ineffective to limit the inherent power of the court of chancery to compel the proper administration of the trust in question.

That a public cemetery organized under out statute (Comp. Stat. p, 372) is a charitable use we think is clear. It is true that this court, in Attorney-General v. Linden Cemetery Association, 85 N. J. Eq. 501, 507, reserved its opinion on the point, which the late Vice-Chancellor Howell, in the same case, had expressly decided (Bliss v. Linden Cemetery Association, 81 N. J. Eq. 394, 396), and the late Vice-Chancellor Stevens had twice suggested. Corin v. Glenwood Cemetery, 69 Atl. Rep. 1083 (not officially reported); East Ridgelawn Cemetery Co. v. Frank, 77 N. J. Eq. 36. In the “Old Burying Ground” Case, Stockton v. Mayor, &c., of Newark, 42 N. J. Eq. 531, Chancellor Runyon held that there was a charitable trust; and on appeal, this court, while reversing the decree, took occasion to express its entire concurrence in that view, 44 N. J. Eq. 178, 183. We cannot perceive any substantial difference in the use, between a public burying ground conveyed for burial purposes to a municipality, and a burying ground owned and operated by a cemetery corporation under our statute. In the East Ridgelawn Case, 77 N. J. Eq. 39, the vice-chancellor points out the provisions of the statute committing the management of a cemetery to trustees elected by the lot owners; exempting the lands from taxation and assessment; making lots generally inalienable after an interment therein; conferring limited powers of eminent domain; authorizing the holding of property real and personal, upon trust to apply the income to the improvement and embellishment of the grounds; and the investment of proceeds of sale of lots for the same purpose; and directing by law the application of all proceeds of sale of lots to paying for the property, putting and keeping it in order, improving and “embellishing” it, and for “incidental expenses.” In short, there is to be no stock as the word is generally used (Ransom v. Brinherhoff, 56 N. J. Eq. 149), and the receipts belong to the corporation for the purposes stated in the act, and not to the promoters, officers or other individuals not creditors. So where, in the Linden Case, 85 N. J. Eq. 501, supra, the attempt was to create a speculative value in certificates issued to the seller of lands to the cemetery, by enabling him to participate in the rising value of lots, the court held him to a value of certificates based on the value of the land at the time he sold it to the cemetery.

In Moore’s Executor v. Moore, 50 N. J. Eq. 554, Vice-Chancellor Van Fleet (at p. 558), used this language: “In construing this statute, it is important to remember that the corporations, whose capacity the legislature were defining, are endowed with immortality for the purpose of providing places of burial for the dead, where their dust may rest undisturbed and inviolate forever, and that the use of any part of their lands by the owner of a lot or plot, for the burial of the dead, withdraws such lot or plot from all the ordinary uses to which land may be put, and renders it inalienable forever thereafter except as a place of sepulture. Rev. p. 102 § 11. This legislative declaration gives impression to a sentiment common to mankind. The place where the dead are buried is regarded generally, if not universally, hallowed ground. We express our love for our dead by placing their bodies in the earth tenderly and sorrowfully; we try to perpetuate their memories by the erection of monuments, and we give expression to our veneration for their dust by adorning and beautifying the spot where it reposes. Their dust is sacred to us. Our reverence for it creates a strong natural desire that it shall never be disturbed or desecrated, and that the place where it rests shall be regarded as consecrated ground and its beauty preserved until the end of time.” The question he was considering was whether a legacy to a cemetery corporation for the purpose of forever keeping in order the testator’s lot therein, was void as in contravention of the statute of perpetuities, as of course it would be in the case of a non-charitable use, unless excepted by statute from the perpetuity rule, as the vice-chancellor held it was. Section 7 of the Cemetery act (Comp. Stat. p. 374), which dates back to the act of 1851 (Nix. Dig. (1868) 100 § 9), permits a cemetery association to accept gifts or legacies in trust to use the income for the improvement, maintenance, &c., of the cemetery, or of the lot of any proprietor, or any tomb, monument, fence, &c. This seems to have been re-enacted in 1878 (P. L. p. 209; Comp. Stat. p. 377 pl. 14); and there is a line of cases holding that while in general a legacy for perpetual maintenance of a private burial lot is void, such a legacy to a public cemetery is good, and (under the act) even when limited to a particular lot therein. Detwiller v. Hartman, 37 N. J. Eq. 347; Hartson v. Elden, 50 N. J. Eq. 522; Moore’s Ex’r v. Moore, supra; In re Corle, 61 N. J. Eq. 409; Hilliard v. Parker, 76 N. J. Eq. 447. These cases, because of the statute, are naturally not determinative of the question of charitable use; but it may well be considered that unless the legislature had regarded a public cemetery as a charitable use it would not have authorized it, as it did, to receive general gifts in perpetuity for its general maintenance as a cemetery.

Finally, in the comparatively recent case of Dennis v. Glenwood Cemetery, 96 N. J. Eq. 399, Vice-Chancellor Foster dealt with the questions before him from the standpoint of a charitable trust to be administered. On page 403 he speaks of a cemetery association in express terms as a chari table use; and in affirming the decree, we adopted his conclusions as “sound.”

2. We conclude then, that the defendant corporation is a charitable trust. That point settled, the proposition that it is subject to the jurisdiction of the court of chancery in that aspect, requires no discussion. Attorney-General v. Moore’s Ex’rs, 19 N. J. Eq. 503.

3. The next question, which we answer in the affirmative, is whether in a proper case chancery may appoint a receiver to administer a charitable trust, under its general equitable power. That such jurisdiction exists touching maladministered trusts generally, seems clear. Pom. Eq. Jur. § 1334; Leddel’s Ex’r v. Starr, 19 N. J. Eq. 159. After all, if' a trustee misbehave, equity may and will remove him and appoint another; and a receiver in a case like this is in effect a temporary substituted trustee. In the Linden Cemetery Case, supra, a receiver was appointed by consent. In the case at bar, Vice-Chancellor Bigelow considered, following the first report of the Bliss Case, that a receiver could not be appointed by virtue of the Corporation act, and while the point probably need not be decided, we incline to concur in that view; but we also agree that in a proper case a receiver may be appointed under the general equity powers of the court.

4. The case at bar is conspicuously such a proper case. A glance at the bill and at the conclusions of the vice-chancellor will suffice on this point. No corporate meetings for years; failure to do anything to keep the grounds in order; failure to pay even the grave diggers; no books kept; no one on the ground to attend to funerals; business handled, so far as it is handled at all, at a lawyers’ office in New York; judgment after judgment for wages and current supplies; three receivers in sequestration; a large mortgage under foreclosure; moneys apparently embezzled. The affidavit of Braverman, a certified accountant, indicates an unlawful deduction, perhaps an abstraction, of twenty per cent, of moneys received from sales. The .affiant states that “in all his experience of some twenty years, he has not found a more deplorable condition in so far as the absence of regular books is concerned.” He was obliged to make up such account as he could make, from “a mass of loose data, such as checkbook stubs, canceled checks, available contracts, letters and other memoranda, both of Adam Prank personally and the cemetery, and records which were delivered to me.” A more flagrant case of breach of trust it would be difficult to imagine.

5. Some eighteen pages of appellant’s brief are devoted to the proposition that “the order appealed from constitutes an unconstitutional usurpation by the court of the exclusive function of the legislature.” The general trend of the argument is to this effect: that cemetery lands are by statute immune to judgment and execution, certainly so far as used for cemetery purposes; that in 1881 (P. L. p. 158) it was enacted that “the rents, issues, profits, income and revenues derived from” cemetery lands may be sequestered by the court of chancery to satisfy judgments; but that the lands themselves may not be sold for that purpose. Hence, it is argued, the court of chancery is overriding and express statute by appointing a general receiver. But this, we think, is clearly a non sequitur. The bill, as amended, rests on two theories. The first is that the corporate trustee of a charitable use has been false to its trust, and the cestui lot owners apply to the court to have the trust properly administered until such time as the trustee corporation is fit to resume its duties. The second is that by the statute the moneys received from sale of lots are devoted, among other things, to the payment of what the statute calls “incidental expenses” which would include keeping the grounds in order, repair of buildings, care of monuments and lots, and so on. These should have been paid: they were not paid and some are in judgment; the creditors, like the cestuis, are entitled to insist that these current expenses shall be paid. The. 'act of 1881 is not exclusive of the general equjty powers of the court of chancery. If it were, it would be to that extent unconstitutional, and an infringement by the legislature on the province of the court. Constitution, Article X, Paragraph 1; Hedden v. Hand, 90 N. J. Eq. 583.

An important practical consideration is that of economy in administration. At present three separate receivers in sequestration are in office by authority of the court pursuant to the act of 1881. In addition, the trustees are ostensibly in office, and one of them is attempting to control the cemetery. Nothing but confusion and ruin can come of such a situation, and a general receiver who will supersede all these conflicting claimants is the obvious answer.

So far, therefore, as relates to the power of the court of chancery to appoint a general receiver to take exclusive charge of the affairs of this corporation and carry it on as a charitable trust, and the propriety, not to say necessity, of making that appointment, we are in accord with the general views of the vice-chancellor. The difficulty is with the procedure. "Where a charitable use is involved, the attorney-general should be brought in. Bliss v. Linden Cemetery Association, supra; Trenton Society for Organizing Charity v. Howell, 68 Atl. Rep. 1110. It does not appear that he is a party. It is not clear that the other parties named had been served with process. Failing these requisites, the court should not have appointed any receiver with general powers^ but at best a temporary receiver, until the parties, particularly the attorney-general, could be heard.

The orders under review, so far as they appoint a general receiver, will be reversed, but without prejudice to such appointment when jurisdiction over necessary parties shall have been perfected.

For affirmance — None.

For reversal — The Chief-Justice, Trehchard, Parker, Campbell, Lloyd, Case, Bodine, Dohges, Yah Buskirk, Kays, Hetfield, Dear, Wells, Kerhey, JJ. 14.