Granara v. Italian Catholic Cemetery Ass'n , 1914 Mass. LEXIS 1428 ( 1914 )

Braley, J.

The defendant corporation having been organized ■under R. L. c. 78, § 1, and c. 123, for the purpose of establishing and maintaining a cemetery, the incorporators had no authority to create a capital stock of $50,000 divided into five hundred shares with a fixed par value of $100 each, and to issue certificates for two hundred and fifty-one shares to themselves and to the plaintiffs, who by purchase are averred to have become and now are the holders of a majority of the shares thus issued. R. L. c. 78, § 7. Monumoi Great Beach v. Rogers, 1 Mass. 159, 163, 165. Donnelly v. Boston Catholic Cemetery Association, 146 Mass. 163, 166. Packard v. Old Colony Railroad, 168 Mass. 92. But § 2 of c. 78 provides, that such corporations shall be subject to the provisions of R. L. c. 109. By § 3 of this chapter, which is a re-enactment of Rev. Sts. c. 44, § 23, Gen. Sts. c. 68, § 41, Pub. Sts. c. 105, §§ 2, 3, “All corporations which are organized under general laws shall be subject to such laws as may be hereafter passed affecting or altering their corporate rights or duties or dissolving them.” It was doubtless under this reserved power that upon the partly diverse petitions of the plaintiffs and the defendants the Legislature enacted the St. of 1913, c. 292, which provides, that, “The by-laws of the Italian Catholic Cemetery Association, a corporation duly established in the year nineteen hundred and five under the general laws and situated in the city of Boston, and the acts of said corporation in voting to issue and in issuing shares of capital stock and fixing the par value and the rights of stockholders thereof, are hereby confirmed and made valid to the same extent as if at that time the said corporation had authority to issue said stock and to fix the par value thereof and to adopt by-laws.” The corporation having been organized while the R. L. c. 109, § 3, were in force, it is subject to those provisions, and is bound by any reasonable amendment and alteration which the Legislature might impose. Roxbury v. Boston & Providence Railroad, 6 Cush. 424, 432. And in Commissioners on Inland Fisheries v. Holyoke Water Power Co. 104 Mass. 446, 451, where the Gen. Sts. c. 68, § 41, were considered, it was said, “This statute, first introduced into the general legislation of the Commonwealth by St. 1830, c. 81, . . . has been as much a part of all charters since granted as if inserted therein; and was manifestly adopted with the intention of reserving for the future a fuller parliamentary or legislative power than would otherwise be consistent with the effect to be allowed to the special terms of particular charters, under the judicial construction of the constitutional prohibition against impairing the obligation of contracts.” It is then said, that while it is unnecessary to define the extreme limits of the power, “it at least reserves to the Legislature the authority to make any alteration or amendment in a charter granted subject to it, that will not defeat or substantially impair the object of the grant, or any rights which have vested under it, and that the Legislature may deem necessary to secure either that object or other public or private rights.”

The act manifestly on the face of the bill occasions no breach of contract or impairment of lawfully vested rights of property. Durfee v. Old Colony & Fall River Railroad, 5 Allen, 230, 241, 242, 243. Agricultural Branch Railroad v. Winchester, 13 Allen, 29, 33. Thornton v. Marginal Freight Railway, 123 Mass. 32, 34.

The purposes for which the association was incorporated are fully-preserved. Its title to the cemetery lands and their management is untouched. The plaintiffs and other purchasers of stock are given their just rights by membership in the corporation where under the averments of the bill the defendants before enactment of the statute had solicited and obtained funds, not as gifts but as investments, under conditions or representations which were unauthorized. Stewart v. Joyce, 201 Mass. 301. And any discussion as to the rights of the plaintiffs against the corporation or the individual defendants independently of the St. of 1913, c. 292, is unnecessary. See Ginn v. Almy, 212 Mass. 486, 505, 506.

The demurrer, of course, admits every essential allegation of the bill. It appears that the defendants have purchased land and established a cemetery wherein interments have been made, and, the statute being constitutional, the plaintiffs as stockholders are entitled under the allegations of the bill to an accounting for the stock which the defendants issued to themselves as a gratuity, and for the dividends declared and paid thereon, as well as for the moneys they have received and disbursed in the management of the association for which they have refused to account, and the fees and compensation paid to themselves, alleged to have been far in excess of any reasonable emolument or rightful demands. Von Arnim v. American Tube Works, 188 Mass. 515, and cases cited.

The bill also asks for the abrogation of the by-law alleged to have been devised by the individual defendants to perpetuate in office themselves, or those whom they might choose to fill vacancies, and that a meeting of the stockholders may be ordered. The enabling statute recognized this by-law as if it had been passed by the stockholders, but, having placed the association upon a basis with corporations organized with a fixed capital divided into transferable shares represented by certificates, the plaintiffs are entitled to attend and vote at corporate meetings held for the election of officers, with the right to participate in dividends and profits. Fisher v. Essex Bank, 5 Gray, 373, 378. The corporation is not insolvent, and the act in question is not a scheme to secure primarily the payment of creditors to which, until accomplished, the rights of stockholders properly may be subordinated as in Phillips v. Eastern Railroad, 138 Mass. 122, 126, relied on by the defendants. It is furthermore apparent that our laws relating to the ownership of stock are applicable. R. L. c. 109, §§ 32, 39. Boston Music Hall Association v. Cory, 129 Mass. 435, 436. If the defendants refuse to call a meeting for the choice of officers and the adoption of by-laws adapted to the reorganized association, no longer composed of the original incorporators or their successors, but of stockholders, the appropriate remedy is mandamus. McCarthy v. Street Commissioners, 188 Mass. 338, 340. Saltman v. Nesson, 201 Mass. 534. Bassett v. Atwater, 65 Conn. 355. People v. Cummings, 72 N. Y. 433. It is for a majority of the lawful stockholders present at the meeting to decide under R. L. c. 109, § 5; c. 123, § 7, what the by-laws of the corporation shall be, subject, however, under c. 78, § 9, to the approval of the State board of health of any by-law which relates to the reception and cremation of the bodies of the dead, and the disposition of the ashes thereof. And until it is manifest that no change can be effected through appropriate corporate action, there is no occasion to determine whether the present by-law is so unreasonable and oppressive as to be invalid. See Saltman v. Nesson, 201 Mass. 534, 541.

The demurrer, however, being a single demurrer to the whole bill, must be overruled. Sears v. Trowbridge, 15 Gray, 184. York v. Johnson, 116 Mass. 482. 1 Danl. Ch. Pl. & Pr. (5th Am. ed.) 597. Emans v. Emans, 1 McCarter, 114. If injunctive relief is also necessary to protect the plaintiffs’ property rights from further impairment until the account is stated, and the title to the stock alleged to have been fraudulently issued is determined, application may be made to a single justice.

By the terms of the reservation the case is to stand for hearing on the merits.

Decree accordingly.