7 Buch. East Ridgelawn Cemetery Co. v. Frank. does not set forth the terms of the written trust on which the trust company holds the two thousand shares; it does not show why that trust cannot be enforced by the trust company, and it does not allege that the trust company has ever been called upon to enforce it. It is, moreover, vague and uncertain on a subject of vital importance. It alleges that payment for the land was made by issuing certificates signed by the two companies representing "a certain interest in the proceeds of the sale of the said land" (without telling us what interest) "after deducting certain charges and expenses," without telling us what charges and expenses. It merely says that said interest was fixed at fifty shares per acre and amounted to thirteen thousand five hundred shares as the aggregate amount. No copy of this novel certificate is appended, and we can only gather its terms from the above description. This much is clear. The certificate is the joint certificate of both companies, and purports to give to the vendor thirteen thousand five hundred shares in the proceeds of the sale of the land as the consideration for twice one hundred and thirty-five acres, or fifty shares per acre, the maximum amount which a cemetery company may hold being one hundred and thirty-five acres. Is such a scheme authorized or permitted by the Cemetery act? "A cemetery for the burial of the dead," says Mr. Justice Gray, in Close v. Glenwood Cemetery, 107 U. S. 474, "if not a strictly charitable use, is, in some aspects, a public and pious use." Our courts have taken a similar view (Newark v. Stockton 44 N. J. Eq. (17 Stew.) 180; Toppin v. Moriarty, 59 N. J. Eq. (14 Dick.) 115), and so has the legislature. The Cemetery act gives the management of the cemetery to trustees elected by the lot It exempts cemetery lands from taxation and assessRosedale Cemetery Association v. Linden, 73 N. J. Law (44 Vr.) 421. It provides that lots, from the time of interment, shall, in general, be inalienable. It confers a limited power of eminent demain. It allows the association to hold property, real and personal, upon trust to apply the income to the improvement and embellishment of the grounds. It authorizes the investment owners. ment. East Ridgelawn Cemetery Co. v. Frank. 77 Eq. of money accruing from the sale of lots for the purpose of maintenance and improvement (section 67), and it expressly directs as follows (section 19): "One-half at least of the proceeds of all sales of lots and plots shall be first appropriated to the payment of the purchase-money of the lands acquired by the association until the whole purchase-money shall be paid; and the residue thereof to preserving, improving and embellishing the said cemetery grounds and the avenues and roads leading thereto and to defray the incidental expenses of the cemetery establishment; and after the payment of the purchase-money and the debts contracted therefor and for surveying and laying out the ground, the proceeds of all future sales shall be applied to the improvement, embellishment and preservation of such cemetery and for incidental expenses and to no other purpose or object so long as such embellishment is incomplete." The only intimation that cemetery companies may issue stock is to be found in the supplement of March 14th, 1879 (Gen. Stat. p. 351 16), referred to in the opinion of Vice-Chancellor Pitney, in Ransom v. Brinkerhoff, 56 N. J. Eq. (11 Dick.) 149. It is there provided that "every creditor, in addition to his right to vote by virtue of his owning lots, shall be entitled to one vote for every $100 worth at par value of bonds, stock or other duly authorized evidences of debt he or she may own or hold against such association." As to this, Vice-Chancellor Pitney said: "The existence of stock or shareholders is not contemplated by the act nor consistent with the legislative scheme. By implication, the language recognizes the right of the association to make use of the machinery of certificates of stock to manifest a debt owing by it; but clearly it left the owner a mere creditor, and no more; for it is as a creditor only that he is authorized to vote for the trustees." * It is quite plain that the insertion of the word "stock" in the supplement was a mere inadvertence, and that, if this provision be still in force (see supplement of March 17th, 1893, Gen. Stat. p. 357 §§ 46, 47), the so-called stock can be nothing more than an evidence that a specific sum of money is due and owing by the corporation to the creditor. The question then is, how does the certificate issued by the two companies harmonize with the legislative scheme as thus outlined? 7 Buch. East Ridgelawn Cemetery Co. v. Frank. By the scheme under review no purchase price is fixed. The certificate holder receives either the whole or a part of the proceeds of the sale of the burial lots up to the time that the last lot is sold. He thus gets the benefit of the sums expended for improvement and embellishment, whether those sums be derived from donations or from the proceeds of the sales of lots. He makes a profit out of their exemption from taxation and levy, and even from the possible exercise of the power of eminent domain. The statute contemplates the purchase of the land for a definite price; but under the scheme in question there is no price, in the ordinary sense. The grantor either appropriates the whole of the proceeds of the sale of the lots, "after deducting certain charges and expenses," or at least a part, and if a part we are not told how much. On the face of the bill there is nothing to indicate that the certificate is consistent with the provisions of the statute, and much to indicate that it is not. The certificate appears to be open to the following objections: First. It is the joint certificate of two companies that have no statutory power to enter into a joint undertaking that makes each liable for the moneys received by the other. Second. The contract expressed in the certificate appears, as far as we can gather from its contents, to disregard entirely that provision of the law which obliges the company to appropriate one-half of the proceeds of the sale of its lots for the preservation and embellishment of the cemetery property and for incidental expenses. Third. The certificate does not oblige the companies to pay a definite price for their lands, but, like the ordinary stock certificate, appears to give an indefinite interest in earnings. The certificate holder becomes virtually a partner, sharing in the gains, but not liable for the losses. It is not likely that the legislature intended to confer immunity from taxation and levy, coupled with the power of eminent domain, in order that some individual might make an increased profit out of those extraordinary powers and immunities. At all events, there is no warrant in the statute for such a certificate, and it is out of harmony with the general scheme of the act. In re Senora & Sinaloa Irrigation Co. 77 Eq. It is argued that the court may give relief without passing upon the question of the validity of the certificate. But the relief asked is specific performance of an agreement to convey land and to pay off mortgages; the consideration, and the sole consideration therefor, being the certificate in question. If, on the face of the bill, such a certificate appears to confer no legal right, I do not see how it can be successfully contended that the court can decree for complainant. It only decrees a specific performance where it finds that a valuable consideration has been given. Here the consideration is a stipulation for an interest in the proceeds of the sale of lots; a stipulation that the companies have no right to give. I think the demurrer should be sustained in this as well as in the similar case of the East Ridgelawn company. In the matter of the dissolution of the SENORA AND SINALOA IRRIGATION COMPANY. [Decided April 18th, 1910.] The statute (P. L. 1884 p. 235 § 5) provides that if the tax of any company remains unpaid on the first day of July after the same becomes due, it shall thenceforth bear interest at one per cent. a month until paid, and makes such a tax a preferred debt in case of insolvency (§ 6) for which an action at law may be maintained. The Corporation act (P. L. 1896 p. 296 § 56) provides that, when any corporation is dissolved in any manner whatever, the court of chancery may appoint one or more receivers, with power to prosecute and defend in the name of the corporation or otherwise, and section 54 of that act makes the directors trustees, with authority to recover debts and property in the name of the corporation upon its dissolution in any manuer.-Held, that franchise taxes due from a corporation bear interest at twelve per cent. until paid, even after dissolution of the corporation by executive proclamation; the interest being preferred, as well as the debt. Mr. Robert H. McCarter, for the petitioners. 7 Buch. In re Senora & Sinaloa Irrigation Co. Mr. Edmund Wilson, attorney-general, for the state. STEVENS, V. C. The trustees of the above company which was, on January 5th, 1904, dissolved by proclamation of the governor, ask this court whether they must pay interest at the rate of twelve per cent. per annum on its unpaid franchise taxes. This fax for the year 1901 was $231; for 1902, $300; and for 1903, $300. The trustees concede that they are bound to pay the principal, with interest, at the rate prescribed by the Taxing act, up to the time of dissolution, but they submit that the interest then ceased to run, if not altogether, at least at the rate of twelve per cent. I have not been referred to any case which supports their view, and it seems untenable. The statute (P. L. 1884 p. 235 § 5) pro vides that "if the tax of any company remains unpaid on the first day of July after the same becomes due, the same shall thenceforth bear interest at the rate of one per centum for each month until paid." The argument in behalf of the trustees is that interest is given because of default in payment, and that there can be no default. where there is no existent corporation. There has been no disposition on the part of the court of errors and appeals to relieve corporations in the hands of receivers of their obligation to pay taxes. This is strikingly shown by the case In re United States Car Co., 60 N. J. Eq. (15 Dick.) 514. In that case the chancellor had held that the assets were held in trust by its receiver primarily to pay those who were creditors at the time the trust property passed into his hands, and that a tax upon the corporation subsequently imposed could only be paid. out of the surplus, if any remaining, after such creditors had been paid in full. The court of errors and appeals held that the tax was payable out of the assets and was preferred. It so held, although the statute calls the tax a franchise tax, and although by the express words of section 68 of the Corporation act, the franchises and privileges of a corporation are transferred to the receiver at the time of his appointment. The bare legal entity |