Close v. Glenwood Cemetery/Opinion of the Court

This is a bill in equity, filed on the twenty-fifth of October, 1877, by the Glenwood Cemetery, claiming to be a corporation extablished by act of congress, against Joseph B. Close, William S. Humphreys, Randolph S. Evans, and George Clendenin, praying for a conveyance of the legal title in a tract of land containing 90 acres, situated in the District of Columbia, known as the Glenwood Cemetery; and for an account. The bill was afterwards dismissed by consent as against Humphreys and Evans. The material facts, as shown by the proofs, are as follows:

In June, 1852, Humphreys, for the sum of $9,000, bought of     Junius J. Boyle the tract of land in controversy, and took      from him a deed of it, and immediately set about preparing it      for use as a cemetery. He inclosed with a high fence and laid     out with drives and walks, and improved and embellished, 30      acres of it, leaving the other 60 acres in their original      unimproved condition; and in March, 1853, put Clendenin in      charge as superintendent. Humphreys conveyed to Close an     undivided half of the premises in April, 1853, and the whole      tract in June, 1854. The two deeds were absolute in form, but     were, in fact, intended as security: the first for the      repayment of $20,000, advanced to Humphreys by Close, for the      purpose, as Close knew, of converting the estate into a      cemetery; and the second for the repayment of other advances      to the amount of $7,000, already made to him by Close, for      the same purpose, and of subsequent like advances, of the      amount of which there is no evidence but Close's own vague      and unsatisfactory testimony, unsupported by books or      vouchers; and the parties agreed in writing that if Humphreys      should meet his obligations, he should have back one-half of      the land. Humphreys thenceforward managed the property,     acting for himself and Close, through Clendenin as      superintendent, until September, 1859, when, having failed to meet his engagements, he      relinquished all his interest in the property to Close, and      Close became sole owner, and assumed control of the property,      retaining Clendenin as his superintendent to manage the      cemetery.

On the twenty-seventh of July, 1854, congress passed an act     entitled 'An act to incorporate the proprietors of Glen wood      Cemetery,' by which 12 persons named, eight of them residents      of the District of Columbia, and the other four being Close      and William Phelps, (since deceased,) residents of New      Jersey, and Humphreys and Evans, residing in New York, were      created a corporation by the name of 'The Proprietors of      Glenwood Cemetery, in the District of Columbia,' and were      empowered 'to purchase and hold not exceeding 100 acres of      land in the District of Columbia, north of the limits of the      city of Washington; to sell and dispose of such parts of said      land as may not be wanted for the purpose of a cemetery,      provided that at least 30 contiguous acres shall be forever      appropriated and set apart as a cemetery; with authority to      said corporation to receive gifts and bequests for the      purpose of ornamenting and improving said cemetery;' and it      was enacted that the affairs of the corporation should be      conducted by a president and three managers, to be 'elected      annually by a majority of the votes of the proprietors,' and      'each proprietor entitled to one vote for each share held by      him,' and that until the first election the four last-named      persons should be managers; that the president and managers      should have power, among other things, 'to lay out and      ornament the grounds,' 'to lay out and sell or dispose of      burial lots,' and 'to make such by-laws, rules, and      regulations as they may deem proper for conducting the      affairs of the corporation, for the government of lot-holders      and visitors to the cemetery, and for the transfer of stock      and the evidence thereof;' that 'the capital stock of said      company shall be represented by 2,000 shares of $50 each,      divided among the proprietors according to their respective      interests, and transferable in such manner as the by-laws may      direct;' that 'no streets, lanes, alleys, roads, or canals of      any sort shall be opened through the property of said      corporation, exclusively used and appropriated to the purpose      of a cemetery: provided, that nothing herein contained shall authorize said corporation to obstruct any      public road or street or lane or alley now actually opened      and used as such;' that any person willfully destroying,      injuring, or removing any tomb, monument, gravestone, fence,      railig, tree, or plant within the limits of the cemetery,      should be considered guilty of a misdemeanor; that 'each of      the stockholders in the said company shall be held liable in      his or her individual capacity for all the debts and      liabilities of the said company, however contracted or      incurred;' that 'burial lots in said cemetery shall not be      subject to the debts of the lot-holders thereof, and the land      of the company dedicated to the purposes of a cemetery shall      not be subject to taxation of any kind;' that a certificate,      under seal of the corporation, of the ownership of any lot,      should have the same effect as a conveyance of real estate;      and that 'it may be lawful for congress hereafter to alter,      amend, modify, or repeal the foregoing act.' 10 St. 789.

On the second of August, 1854, the ceremony of dedicating the     cemetery by appropriate religious services and addresses was      performed on the spot, in the presence of a number of people. Immediately afterwards a pamphlet was published and generally     circulated, containing a copy of the charter, a list of the      officers, including Close, Phelps, Humphreys, and Evans,      managers; Close, president; Humphreys, treasurer; and      Clendenin, superintendent; a full account of the proceedings      at the dedication in which the property was spoken of as set      apart and consecrated for the burial of the dead, and as      'altogether comprising 90 acres, 30 of which are now fully      prepared for interments;' and the by-laws of the cemetery, of      which the first was, 'All lots shall be held in pursuance of      'An act to incorporate the proprietors of Glenwood cemetery,'      approved July 27, 1854, and shall be used for the purposes of      sepulture alone.'

Close soon after received a copy of this pamphlet from     Humphreys, and from that time to the filing of the bill never      objected to the appropriation of the property in the manner      appearing thereby. In the course of the next 20 years about     2,000 lots were sold, and each purchaser was given a copy of      the pamphlet, and a certificate or deed of his lot, signed by Close, as president, bearing the seal of the      company, and having the by-laws printed thereon. The gross     receipts from the time of the opening of the cemetery to 1876      were $160,000. No stock was ever issued as provided in the     charter.

No taxes were ever paid on any part of the 90 acres. At     different times from 1871 to 1876 taxes were assessed, or      proposed to be assessed, by the municipal authorities upon      the 60 acres which had not been improved. But Close and     Clendenin, by representing to the assessors and collector      that the whole tract had been dedicated to burial purposes in      accordance with the charter, and by exhibiting to them the      charter and the pamphlet containing the account of the      dedication, induced them to recognize the exemption of the      whole tract from taxation.

On the twenty-eighth of February, 1877, congress passed an     act amending the act of the twenty-seventh of July, 1854;      changing the name of the corporation to 'The Glenwood      Cemetery;' providing that its property and affairs should be      under the control of a board of five trustees, any three of      whom should be a quorum, to be elected annually, 'three by      the proprietors of lots in said cemetery' (each to be      'entitled to one vote for each lot owned by him in good      faith, upon which a burial has been made') 'and two by the      original proprietors,' and to have authority to fill      temporary vacancies in the board; that these trustees should      so conduct the affairs of the cemetery 'as to secure the      equitable rights of each and every person having in any way      any vested interest in the said cemetery; and the cemetery      shall be amenable and subject to the jurisdiction of the      equity courts of the District of Columbia for any disregard      of the rights or interests of any person whatsoever;' that      'the words 'the proprietors,' where they occur in the      original act of incorporation hereby amended, shall be      interpreted and construed to mean and shall signify the      proprietors of lots in said cemetery, and which is hereby now      declared by this amendment to be the true intent and meaning      of said words;' and that, of the gross receipts arising 'from      the sale of lots hereafter sold of the ground now dedicated      to burial purposes,' one-fourth should be annually paid by      the trustees to the original proprietors, and the rest be devoted to the improvement and      maintenance of the cemetery. 19 St. 266.

Pursuant to this act, the owners of lots chose three     trustees, who, on the refusal of Close to recognize the      corporation as existing, or to appoint two other trustees,      filled up the vacancies in the board, and, on the refusal of      Close, and of Clendenin as his agent, to deliver up      possession to them, filed this bill to compel a conveyance of      the legal title and a delivery of possession of the whole      tract, and an account of the proceeds of any lots sold since      the organization under the act of 1877.

The defenses set up by Close and Clendenin, in their answers     and at the argument, are that there never was any acceptance      of the act of 1854, or formal organization of the corporation      under it, but the property remained the private property of      Close, except such lots as had been sold, for which he was      ready to give a legal title to the holders; that the act of      1877 was unconstitutional and void, as depriving him of his      property without adequate compensation; and that no part of      the 60 acres not inclosed was ever dedicated to the purposes      of a cemetery in such a way as to interfere with his absolute      control over it.

After Close and Clendenin had put in their answers, Charles     Borcherling filed a petition to be admitted as a defendant to      the bill, alleging that he had been appointed receiver under      a decree for alimony rendered in a suit for divorce brought      against Close by his wife in the court of chancery of New      Jersey, and that, in obedience to an order of that court,      Close had executed to him, as such receiver, an assignment of      all his personal estate, the rents and profits of his real      estate, and 'especially the capital stock of the Glenwood      Cemetery in Washington, in the District of Columbia, and all      profits, dividends, or other moneys to me coming therefrom,      or from any office thereof.' This petition of Borcherling was      granted, and he filed an answer to the original bill, setting      up these facts. He also filed a cross-bill, praying that     Close convey the title in the cemetery to the corporation,      and that the corporation issue and deliver to Borcherling, as      receiver as aforesaid, stock to the amount of $100,000. On     motion of Close and Clendenin, the court afterwards ordered      the cross-bill of Borcherling to be stricken from the files, with leave to him      to apply for leave to file a cross-bill. He never applied for     such leave. But the corporation filed a general replication     to the answers of Close, Clendenin, and Borcherling, proofs      were taken, and the case was heard and decided upon the      merits.

By the final decree of the court below, it was adjudged that     Close convey the whole tract of 90 acres to the plaintiff      corporation in fee-simple; that Close and Clendenin deliver      to the plaintiff all books, plans, records, and personal      property belonging to or used in connection with its      business, and be perpetually enjoined from interfering with      or obstructing the plaintiff in the possession and management      of the cemetery, and the court being further of opinion that      Close was entitled to be compensated for the transfer of his      title in the land as the original proprietor thereof, and      that the provision made for this object by the act of      congress of 1877 was an equitable adjustment of the rights of      Close, and a reasonable compensation for his title and      interest in the property, both in amount and in mode of      payment, regard being had to the needs of the cemetery, it      was further adjudged that the plaintiff annually hereafter      account for and pay to him or his assigns one-fourth of the      gross receipts from sales to be made of lots in the cemetery;      and that an account be taken of his receipts from the      cemetery since the act of 1877 took effect, and that he be      charged in favor of the plaintiff with all sums over and      above one-fourth of the gross receipts from sales of lots,      which had been applied to his own use and not properly      disbursed on account of the cemetery, and that he pay the      costs of suit; and that this decree be without prejudice to      the claims of Borcherling, as receiver as aforesaid.

From that decree appeals have been taken and argued by Close     and Clendenin, and by Borcherling.

The appeal of Borcherling may be briefly disposed of. The order striking his cross-bill from the files reserved leave to him to apply to the court for leave to file a cross-bill. He never made any such application, but, after replication filed to the answers of himself and of the other defendants, suffered proofs to be taken upon the issues so made up, and the case to proceed to a final decree; and the final decree is expressed to be made without prejudice to his rights as receiver. Under these circumstances, there is nothing in the proceedings of the court below prejudicial to those rights, or which entitles him to a reversal of the final decree and to a reopening of the whole case.

Upon the merits of the case, as presented by the appeal of Close and Clendenin, it will be convenient to consider first the question whether, assuming that the charter granted by congress in 1854 must be held to have been duly accepted by the corporation, and the corporation to have been legally organized under it, the act of 1877 is within the power of alteration, amendment, and repeal reserved to congress in the original charter. The terms of that charter show that it was not intended to create a mere land company, for the exclusive benefit of the original associates and their successors holding shares in the stock of the corporation; but that the ultimate and principal object was to establish and permanently maintain a cemetery for the burial of the dead, which, if not a strictly charitable use, is in some aspects a pious and public use, and was evidently so regarded by congress. If the corporation were to be exclusively a private business corporation, created for the sole benefit of the original associates and their successors as holders of shares, congress would hardly have inserted in the charter the provision authorizing the corporation to receive gifts and bequests for the purpose of ornamenting and improving the cemetery, or the provisions exempting the property from all taxation, and prohibiting the future laying out of any public ways through it.

At first, indeed, the whole immediate benefit derived from the property would be that resulting to the shareholders from the sale of lots, by way of dividend out of so much of the moneys received as might not be needed to be expended or reserved for the laying out, ornamenting, and maintenance of the cemetery. But, as fast as lots are sold, the property and interest of those purchasing and holding the land for its ultimate use of the permanent burial of the dead would increase, and the interest of the original associates would diminish. The profits to be derived from the sale of the land would cease, as to each parcel, as soon as it was sold for a burial lot. When the lots were all sold, the pecuniary interest of the associates or shareholders would disappear, but the duty to keep up the cemetery would remain, and the owners of lots would be the only persons having a peculiar interest in keeping it up. The corporation, in short, was established to secure and maintain, not merely the right of sale, but the right of burial, and was the representative, not only of the original proprietors of the land, but also of the subsequent purchasers of lots therein.

At the beginning, before any lots were sold, the owners of shares, divided among the proprietors according to their respective interests, would necessarily be the only persons concerned, or who could elect the officers of the corporation and managers of the cemetery. But with the gradual change of interest, resulting from the sale of lots, it was in full accord with the provisions of the charter, and best tended to carry out the main purpose of permanently maintaining a cemetery for the burial of the dead, that the holders of lots should take part in the election and so have a voice in the management.

After the cemetery had been laid out, improved, and used for the burial of the dead for more than 20 years, and 2,000 burial lots had been sold, it was a reasonable exercise of the reserved power of congress to authorize the owners in good faith of lots upon which burials had been made, to elect a majority of the trustees, in whom should be vested the control and management of the cemetery, with a due regard to the equitable rights of all persons having any vested interest therein; and to provide that a portion only of the receipts arising from the future sale of lots should be paid to the original proprietors, and the rest be devoted to the improvement and maintenance of the cemetery. Every legislative act is to be presumed to be a constitutional exercise of legislative power until the contrary is clearly established; and there is nothing in the record before us to show that the proportion of one-fourth of the gross receipts from future sales of lots, which is fixed by the act of congress of 1877 and by the decree of the court below, as a compensation for the title and interest of the original proprietors and associates, is not a reasonable one.

It follows that the act of congress of 1877 must be deemed constitutional and valid, within the principle affirmed by this court in the case of The Holyoke Dam, that a power reserved to the legislature to alter, amend, or repeal a charter authorizes it to make any alteration or amendment of a charter granted subject to it, which will not defeat or substantially impair the object of the grant, or any rights vested under it, and which the legislature may deem necessary to secure either that object or any public right. Com'rs on Inland Fisheries v. Holyoke Water-power Co. 104 Mass. 446, 451; Holyoke Co. v. Lyman, 15 Wall. 500, 522. In the exercise of such a power by the United States, as was observed by the chief justice in delivering the opinion of the court in the Sinking Fund Cases, 'it is not only their right, but their duty, as sovereign, to see to it that the current stockholders do not, in the administration of the affairs of the corporation, appropriate to their own use that which in equity belongs to others.' 99 U.S. 700, 725.

The question, then, recurs whether, as against Close, the corporation must be held to have been duly organized under the act of congress of 1854.

Upon this question the facts are these: Close knew that the act of incorporation had been granted by congress, in which he was named as one of the original associates; that the cemetery had been dedicated and set apart by public religious ceremonies for the burial of the dead; that a pamphlet had been published, containing a full account of those ceremonies, the names of a full board of officers, including himself as president and one of the managers, and Clendenin as superintendent, and a code of by-laws, by the very first of which all the lots were to be held in pursuance of the act of incorporation and to be used for the purposes of sepulture alone. With full knowledge of these facts, Close, for more than 20 years, exercised through Clendenin the sole management of the cemetery, and issued deeds and certificates of burial lots to the number of more than 2,000, bearing the corporate seal, and his own signature as president of the corporation, and having the by-laws printed on them. Being himself the owner of the whole land, he dealt with it in all respects as if it belonged to the corporation, and so represented it to the purchasers of lots. As no other person owned any part of the land or was entitled to a share in the corporation, the fact that no stock has been issued or divided is immaterial.

One who deals with a corporation as existing in fact, is estopped to deny as against the corporation that it has been legally organized. And in a court of equity, at least, the owner of land, who stands by and sees it conveyed as belonging to another, cannot afterwards set up his own title against the grantee. The present case is yet stronger. Close did not merely deal with the corporation, and permit the corporation to convey parts of his land to purchasers of lots. But he himself assumed to act as the corporation, and himself made the conveyance, and the accompanying representations, to every purchaser.

By his acts he represented to the purchasers of lots that the cemetery had been created and the land was owned by the corporation under the charter of 1854, and, as a necessary consequence, that the corporation, and all rights derived from it, were subject to the provisions of that charter, including the reservation to congress of the power of alteration, amendment, or repeal. It is upon these representations that the purchasers of lots have acquired their title and have parted with their money; and the corporation, whose existence he, at least, cannot deny, has the right and the duty, as the representative and in behalf of all the purchasers of lots, to enforce against him the obligation which he has thereby assumed. He holds the fee of the cemetery in trust for the corporation, and is entitled to nothing, as against the corporation and those whom it represents, but such compensation for his interest as original proprietor or stockholder as is consistent with the state of things which he has represented to exist.

It is argued by the learned counsel for the appellants that the estoppel and the obligation of Close cannot extend beyond the 30 acres which had been actually laid out. This argument appears to us to be fully met and answered in the able and thorough opinion of the court below, delivered by Mr. Justice Cox, who says:

'It was held out to the lot-holders, not only that the ground     immediately available for burial should remain set apart for that object, but that the      cemetery should be forever under the protection of a      perpetual corporation, charged with the duty of laying out      and ornamenting the grounds, capable of receiving gifts and      bequests, and empowered to make by-laws for the regulation of      the affairs of the corporation; and the whole property was      described as dedicated to the purposes of the cemetery, not      necessarily that the whole should be laid out into lots, but      that it should all belong to the institution and be available      for its general objects. This was not to be a mere grave-yard     in which each lot-holder acquired a piece of ground in which      to bury his dead, and at the same time become chargeable with      the sole care of his particular lot; but the lot-holders      themselves became subject to by-laws and regulations having      reference to the institution as an entirety, and the      perpetual preservation of the cemetery as an ornamental and      convenient place for interment, and for resort by the      relatives of the dead.' Glenwood Cemetery v. Close, 7      Washington Law Rep. 214, 218.

Decree affirmed.