Opinion
No. 27108
Decided July 12, 1939.
Corporations — Contract between land company and cemetery association, void — Contract cancelled, land title quieted, distribution enjoined and accounting ordered.
APPEAL from the Court of Appeals of Cuyahoga county.
As in the case of Snyder v. Ridge Hill Memorial Park, ante, 632, this action was instituted to obtain an accounting, quieting of title, cancellation of contracts and the appointment of a receiver.
The plaintiffs are owners of burial lots in Lakewood Cemetery. They have sued on behalf of themselves and all other owners of lots in this cemetery.
Among the defendants are two corporations called the Cleveland Cemetery Association and the Rocky River Land Company. Also joined as parties defendant are the officers, directors and trustees of these corporations.
The Cleveland Cemetery Association, a corporation not for profit, was organized in the year 1912 for the purpose of owning and operating the burial ground known as Lakewood Cemetery; and the Rocky River Land Company, a corporation for profit was organized in the year 1919 for the purpose of buying and selling real estate. Within a few days after its organization, the new corporation purchased certain land for $90,000 and then entered into a contract with the Cleveland Cemetery Association to sell it this additional land for the sum of $500,000. This contract continued in existence until the year 1931 when a new one was executed. These are the contracts of which the plaintiff complains.
The Court of Common Pleas rendered a decree for the defendants.
Upon an appeal on questions of law and fact the Court of Appeals entered a decree in favor of the plaintiffs by holding the contracts invalid.
The case is in this court for review by reason of the allowance of a motion to certify.
Mr. O.D. Eshelman and Mr. Jesse Stephens, for appellees.
Messrs. Friebolin Byers, for appellants.
While there are minor differences between the facts in this matter and those in the case of Snyder v. Ridge Hill Memorial Park, supra, the principle of law involved is the same.
It is unnecessary to more than merely summarize the multitude of facts shown by the record. With reference to the questioned contract of 1919, the Court of Appeals makes the following pertinent observation:
"So that we are presented with the picture of Ross Taylor, a trustee and general manager of the association, acquiring a land contract for ninety-three acres for cemetery purposes from Stecher. Taylor assigns this contract to the company through Graber, Kyle, Bow and Thorne, for the acquisition of which land the company obligated itself to pay $90,000. The association entered into a contract to purchase this same land from the company for the sum of $500,000 to be used for cemetery purposes. Disregarding for the moment the legal conclusion in respect to this set-up, we have the company on the one hand officered by C.E. Kyle as secretary of both companies, and the directors made up of either men who are trustees of the association, or their wives and relatives. On the other hand we have the association officered entirely by the same four men individual defendants with Taylor as constituting the full board of trustees. It would appear that the association by its officers entered into a contract for the purchase of land from the company which in fact and in effect was a purchase from themselves, although under the cloak and apparent protection of separate corporate entities."
The court states also that the sole excuse for the existence of the Rocky River Land Company "was to serve as a conduit for funds of the association into the hands of Graber, Kyle, Bow and Thorne."
With reference to the contract of 1931, the court concludes:
"It is our conclusion that this contract to pay the company fifty per cent of the income of this association is illegal and void and in fraud of the rights of the lot owners in this cemetery and should be cancelled; that the lands covered by the Stecher contract less the acreage released to Stecher, should be quieted in the association; that the officers of the association be enjoined from any further distribution to anyone except for the purposes enumerated and so defined in the statutes; that an accounting be had to ascertain and determine the amount of money received by each of the individual defendants representing profits to them out of the funds of the association for which sums the association be awarded judgment against such defendants in such amounts as each illegally received, and that the cause be retained to await the result of such accounting."
The conclusions of the Court of Appeals are fully sustained by the record, and the decree must be affirmed.
Decree affirmed.
WEYGANDT, C.J., DAY, ZIMMERMAN, WILLIAMS, MYERS, MATTHIAS and HART, JJ., coucur.