Opinion
02-04-1896
R. L. Lawrence, for complainant. E. P. Wheeler and Charles Meyer, of New York, for defendants.
Action by New York Bay Cemetery Company against John W. Buckmaster and others, wherein a reference was ordered. 24 Atl. 2. A report was made by the master, to which the defendants filed exceptions. Overruled in part, and in part sustained.
R. L. Lawrence, for complainant.
E. P. Wheeler and Charles Meyer, of New York, for defendants.
PITNEY, V. C. The proper execution of the order of reference in this cause required much labor, and the solution by the master of difficult and delicate questions. It is not remarkable that his results have not proven satisfactory to all the parties. The order required him to ascertain the whole number of lots owned by the defendants in the complainant's cemetery. This has been done to the satisfaction of all the parties, with the slight exception hereafter to be noticed. It further directed him to ascertain the amount received by complainant from the sale of burial lots belonging to the defendants between January 1, 1878, and January 1, 1892. This sum he has ascertained at $14,480. Little criticism was made upon this finding. The master was further directed to take an account of the expenses of managing the complainant corporation, and maintaining the fences, grounds, walks, and paths of the cemetery in proper order, including a fair compensation to the officers of the company during the same period, and to charge the defendants with a portion of the same, to be ascertained by taking the proportion which the number of lots owned by the defendants bore to the whole number in the cemetery. The master found this sum to be $95,061.67, and that one-fifth thereof ($19,012.33) should be charged to the defendants, thereby bringing them in debt to the complainant $4,532.33. The proportion of one-fifth is admitted to be correct, but the total of $95,061.67 is attacked on several grounds covered by the exceptions. The complainant produced and handed to the master an itemized account (Exhibit C, 1) of its total disbursements during the period in question, amounting to $98,376.32, all of the items of which it claimed were properly classed as going to maintaining the fences, grounds, walks, and paths of the cemetery, and paying the officers of the company. In addition, it claimed an allowance for salaries for officers actually earned, but not paid because the complainant was too poor to pay its officers a compensation. The master allowed and added on account of unpaid salaries $22,975, but deducted from the schedule of general expenses $400 for counsel fees paidcounsel in this cause, making the total expenses of maintaining complainant's organization and the cemetery grounds, etc., and compensation to officers, $120,951.32, for the 14 years from May 1, 1878, to January 1, 1892. From this sum he made certain deductions for moneys received by complainant for the labor and service of its workmen and officers on various accounts amounting to $25,889.65, which, deducted from $120,951.32, leaves the sum of $95,061.67, above stated, fixed as the amount of net cost of maintenance of the cemetery, a share of which was, under the order, chargeable to defendants. The defendants except to both branches of this finding. They say (1) that many of the items making up the sum total of $98,376.32 should not have been allowed; (2) that the additional compensation to the officers was excessive; and (3) that the credits or offsets against the total charges Were not large enough. These objections give rise to the serious questions in the cause. Before taking them up, I will consider two or three of a general character.
1. The statement or list of lots found by the master as being owned by the defendants omits a few lots covered by an avenue called "Maple Avenue," laid out after the death of Thomas H. Buckmaster, the ancestor of defendants, and during the life tenancy of his widow, by one of his sons, who at that time managed the cemetery. See 24 Atl. 6. The claim of complainant is that this was a dedication of the land to the general use of the cemetery, and binds defendants. They, on the contrary, deny that any binding dedication was or could be made under the circumstances. I do not think it proper to decide this question, for two reasons: (1) The proper materials are not before me; and (2) it is a question of law, and not proper for decision by tins court, and not necessary for its determination. The decree will be declared to be without prejudice to defendants' claim to these lots.
2. It is claimed that the whole matter of the expense of maintaining the cemetery was brought into an accounting between the parties had in 1887, and settled up to that date. In support of that contention, defendants show that Clara Buckmaster, one of the heirs of Thomas H. Buckmaster, procured a partition between herself and her brothers and sisters of certain lots in the cemetery owned by their father, known as the "Zabriskie Lots," and not included in those here in question, and then brought ejectment for her share of them against the complainant, in which she succeeded, as reported in Cemetery Co. v. Buckmaster, 49 N. J. Law, 449, 9 Atl. 591. After that decision the parties settled the controversy so far as those Zabriskie lots were concerned, and the defendants conveyed those lots to the complainant at a price which was arrived at by deducting $25 a lot from the selling price. This deduction was made on account of the cost of maintaining the cemetery, etc., and defendants contend that it included all the cost properly chargeable to defendants on account of their ownership, not only of the lots then conveyed, but also of those here in controversy. I do not think the evidence sustains that contention, and agree with the master that the deduction in question was made on account of the share of expense properly chargeable to the lots then conveyed, and to no others.
3. Further objection was made to the refusal of the master to credit defendants with certain sums (amounting, in the aggregate, to $2,853) received by complainant for the use of a receiving vault belonging to defendants. His refusal was put upon the ground that those moneys were not within the scope of the order of reference. The defendants moved to amend in that regard, and I think the amendment should be allowed, in order that a full settlement may be had between the parties.
This brings us to the serious exceptions. And, first, as to the exceptions taken and objections made to the items of charges amounting to $98,376.32, contained in a schedule marked "Exhibit C, 1." The complainant produced vouchers for most of those items, which were submitted to the inspection of defendants' counsel. Objection was made to many of them orally, and noted by the stenographer. Later on, defendants presented and filed with the master a paper containing written objections to most of the items composing the great sum in question. Little notice was taken of these written objections by either party, and little or no evidence was given beyond the vouchers in support of the items contained on Exhibit C, 1. At the final argument before the master, each party insisted that the burden of proof was on the other. Defendants claimed that the burden of proof was on the complainant to prove and show that each item in its list of charges was a proper charge for the maintenance of the cemetery as provided in the order of reference. On the other hand, complainant contended that the burden was on the defendants to show that any particular item was not so chargeable; and, further, that defendants' so-called "objections" were not sufficiently specific, in that they did not point out how and why any particular item was not properly so chargeable. The master ruled upon all those questions in favor of the complainant, holding that whatever burden in that regard rested on complainant was overcome by the general affidavit of its officers that the expenditures in question were all made for the purposes mentioned, and allowed all the items except those for fees paid counsel in this cause, as above stated. Plainly, the burden was on the complainant to show, first, that the particular sums of money were, in fact, paid; and this burden was sustained by the production of either the vouchers or canceledchecks, or, in their absence, by proper entries on the books of the company, or other secondary evidence. About this part of the proof, I presume, there was no difficulty. This being done, the burden still remained upon the complainant to show, in the second place, that the payments in question were properly applicable to the particular purposes mentioned in the order; for, obviously, the complainant was not necessarily entitled to credit for all disbursements made by it, but only such as were applicable to the particular purposes mentioned in the order of reference. This last burden might be sustained, and undoubtedly was in some instances, by a mere inspection of the vouchers. I have not seen the vouchers. The greater part of the expenses were for payments on pay rolls of laborers in the employ (steadily, as I infer) of the complainant in and about the cemetery grounds. The burden as to those payments would be sustained by showing generally that the work was done for the specific purpose mentioned in the order. But there appear on Exhibit C, 1, a number of items of charges, some of which seem to me to be clearly not chargeable to those purposes, and many others which do not indicate the purpose for which they were made, and which require other evidence to support them. For instance, all the charges for costs, counsel fees, and expenses of the suit with Clara Buckmaster were, in my judgment, clearly not chargeable to defendants: and, in fact, it is difficult to see what lawsuit the complainant had or could have had the expenses of which were so chargeable. Indeed, as to all charges for legal services, it seems to me a heavy burden was cast on complainant to show how they could possibly be considered as within the scope of the inquiry. There are numerous other items of payment which, as before observed, should not be allowed without proof that they were within the scope of the inquiry, and the mere general oath of one of the officers of the company that they were expended for the purpose named would not, generally speaking, be sufficient, for the reason that it would be a mere expression of opinion or deduction made by the witness from facts not disclosed. In short, It must affirmatively appear by consideration of the nature and character of the payment itself that it was made for the purpose in question. It does not appear that the master acted upon such consideration. I think there has been a serious miscarriage with regard to the proof of the items found on Exhibit C, 1, which was due, however, in part at least to the failure of the defendants to properly specify the grounds of their numerous objections thereto.
The next exception relates to the allowance for salaries of officers beyond what was actually paid. This allowance was inserted in the order on the ground that the class of lot owners who had purchased for burial purposes when they organized and assumed control of the corporation found the treasury empty, and the officers were obliged to work for years for little or nothing, and that the defendants had the benefit of their work, and ought to pay for it. The treasurer and acting secretary of the complainant corporation during the first three years of the period in question was a Mr. Van Sann, and from January 1, 1881, was Mr. Haskins, cashier of a bank in Jersey City. The performance of the duties of secretary and treasurer of the complainant corporation did not prevent the performance of his duties as cashier. Mr. Van Sann during his incumbency appears to have been paid $1,000 a year. Mr. Haskins was paid at first $100 a year, then his salary was increased to $300 a year, then to $100, then to $650, then to $750, and at last fixed at $800 a year, at which sum it appears to have stood. The master fixes his compensation at $1,000 a year; finds the amount already paid him during the 11 years of his service up to January 1, 1892, to be $2,025; and adds to that $8,975, which sum he adds to the amount found on Exhibit C, 1. I have not before me the table by which the master made up the sum of $2,025 as having already been paid. I make the amount $3,375. I think the amount allowed ($1,000 a year) is liberal enough, and would have been better satisfied if the master's estimate in this and in the other cases had been made up by personal inspection of the amount of work actually done by the secretary and treasurer, instead of relying upon the estimate of the treasurer himself as to what his services were worth. The evidence of the other witnesses who estimated the value of this officer's services I consider of no value whatever. The treasurer himself swears that for the first years of service the labors were light, and increased as his salary was increased. Upon the whole, I am satisfied to permit this allowance to stand.
The next officer dealt with was the president. He, as well as the cashier, was engaged in other business, and did not devote his whole time to the business of the cemetery. He never made any charge and never received any compensation for his services. The master allowed him $1,000 a year, or, in all, $14,000. The president is now dead, and the amount allowed is not fixed on the basis that, when recovered from the defendants, it will be paid to him or his representatives, but as being what defendants, who were having the benefit, in a commercial point of view, of the services rendered, ought to pay. The same remark applies to the case of the treasurer. Taking all the evidence together, I think the allowance by the master for president's salary was too great, and that $500 a year, or $7,000 in all, was sufficient for his services.
The next objection relates to the amount credited by the master against the cost ofgeneral maintenance, for moneys received by complainant for interment fees, and for the labor of its men for work done for individual lot owners on their lots and for the proprietors of an adjoining cemetery. The amount of interment fees in the complainant's cemetery was $51,597.50. There were also interment fees in an adjoining cemetery, called the "Bay View Cemetery," where the work was done by the same laborers, amounting to $2,722.75. There were other receipts from the labor of the same men for individual lot owners, amounting to $17,132.81. These fees were earned, confessedly, by the labor of the men whose names were on the pay roll, working under the supervision of the superintendent, whose pay was charged as part of the expenses, using tools, implements, buildings, etc., the cost and wear and tear of which were also charged in the expenses, all of which went to make up the sum total of $98,376.32, before mentioned. The master went into an accounting of what was the actual net cost of the labor which produced these results, and credited to expense account only the net sum which he ascertained upon the evidence of the superintendent to be the net cost. Thus, for interment fees in the complainant's cemetery, instead of crediting the sum actually received, $51,597.50, he credited one-quarter of that amount, $12,899,37; for the interment fees in the Bay View Cemetery, instead of crediting the whole, viz. $2,722.75, he credited one-half, $1,361.37; for the other receipts, $17,132.81, instead of crediting the whole, he credited one-half, or $8,566.40. The ground on which this division was made was that all above the net cost was profit, and he was informed that the court had, on an interlocutory motion, decided that the complainant was entitled to all profits that it made by its operations. In that he was misinformed. The decision referred to was made under these circumstances. It appears, as set out in the original opinion (24 Atl. 2), that, when the cemetery speculation was first launched (1850-60), in order to exploit the enterprise a large number of plots or lots were given away or sold at a nominal price to benevolent societies, Odd Fellows, Free Masons, and the like; and when the Buckmaster management was overthrown, and the persons who had bought lots for burial purposes associated themselves under the charter, ousted the Buckmasters, and took possession of the cemetery, as it was held they were entitled to do, they found themselves without means to put it in order, and cast about for sources of revenue, and bought up cheaply, in the market, those lots which had been sold or given away years before, and retailed them out at a large profit to persons who wished to buy for burial purposes. And the question propounded to the court on the interlocutory motion was whether or not the complainant, in the present accounting, should be charged with those profits; and it was decided that it should not, for the simple reason that the care and attention which produced them were not within the scope of the duties of complainant's officers, and, as officers, they were not paid, or supposed to be paid, by complainant to do that work, and, if they chose to turn profits made in an outside enterprise in for the benefit of the company, it was a pure gift, in which the defendants, as owners of unimproved lots, had no interest. But I do not think that the decision so made applies at all to the case of the product of the labor of the pay roll workmen of the complainant. They apparently were at work by the month, with, as before remarked, tools and implements provided by the complainant, and under the supervision of a paid superintendent. They opened, filled, and sodded graves, and placed headstones and monuments, as the demand for that work arose. Necessarily, as in all such cases, in order to make both ends meet at the end of the year, there must be an apparent profit on each transaction, else there would be nothing left out of which to pay the expenses of maintaining the establishment, with the superintendent and all the tools, implements, etc., and to cover the fractions of time when the men must, for various reasons, necessarily be idle. The charge for opening a grave and filling it, and removing the surplus dirt, was $5, and the superintendent swore that the net cost of that was $1.25, and the master allowed only one-quarter of the amount collected. As a juryman, I believe this estimate is grossly erroneous, and that the work could not, taking it from one year's end to another, be done for any such money. The amount for interment fees received from the adjoining Bay View Cemetery was $2,722.75, one-half only of which was computed as profit and allowed. And so, in the case of other receipts amounting to $17,132.81, only one-half of these were allowed against expenses. So that out of $71,453.06, the aggregate of the items just mentioned, there was allowed only $22,827.15, or less than one-third of what was received by the complainant for the labor of the men and the use of the implements and buildings and grounds, all of which had been charged against the defendants. I am unable to approve of that result or perceive upon what principle it can be sustained. Whatever profit there was in it was the result of the business management of men whose salaries are charged against the defendants, making use of offices, buildings, and implements, the cost of which was charged against the defendants. I am unable to see how the cost of taking care of and maintaining the fences, roads, paths, etc., can be properly arrived at without crediting against the outgo the income from those several sources.
The application here of the so-called "rule" that the defendants are not to have the benefit in this accounting of profits made uponthe work of the laborers of the complainant seems to me to work gross injustice. The idea upon which the order was made charging the defendants with their share, according to the number of lots owned by them, of the cost of general maintenance of the cemetery, was that each lot in the cemetery should bear its equal share of that cost. But the plan adopted by the master seems to me not to produce that result. If defendants are to be charged with $19,012.33, actual cash paid into the treasury by reason of their holding one-fifth of the whole number of lots, then the other lot owners owning the other four-fifths should be charged with $76,049.34 in actual cash paid into the treasury. Now, there is no pretense that any such sum has been paid by such lot owners. On the contrary, the proofs show that such payments during the period in question amounted to only a few hundred dollars a year, when they should have amounted to as many thousands if each lot owner had paid at the rate above fixed. The result is that the cemetery has been maintained largely from the proceeds of the sales of defendants' lots, amounting to $14,480, and from fees from the use of defendants' receiving vaults, amounting to $2,853, making a total of $17,333. An examination of the figures will show that this sum covers nearly the whole cost of maintaining the cemetery. The total cost during the period in question (including several thousand dollars expended in litigation) was, as we have seen, $98,376.22. The amount received from all sources except from sales of defendants' lots and vault fees was as follows: Burial fees, $51,597.50; Bay View Cemetery work, $3,062.50; Bay View Cemetery burial fees, $2,722.75; other receipts for work done by complainant's laborers upon individual lots, $19,985.81,—making a total of $77,368.56, which, deducted from $98,376.22, leaves $21,007.66, for the actual cost of maintenance (including costs of litigation), of which sum the defendants contributed, by sale of lots, $14,480; and vault fees, $2,853, —total, $17,333, which deducted from $21,007.66 leaves $3,674.66 as the actual sum coming from all other sources except that contributed by the defendants. And the master's report not only appropriates all the proceeds of the sale of defendants' lots and use of defendants' vault, but brings them still in debt: $4,532.33—$2,853=$1,679.33. This has the appearance of confiscation.
Further, in opposition to the contention that defendants are not entitled to the benefit of what are called "profits," defendants contend that the result of the opinion heretofore filed in this cause is to place the complainant in the position of a trustee of the defendants in the management of the affairs of the cemetery, and that the relation thus established forbids the trustee from making a profit out of the business of its cestuis que trustent. It will be remembered that the theory of the opinion on this part of the case is that the legal title to the lots was in the defendants, and that the right of disposition of them by sale for burial purposes was vested in the complainant corporation, but that the complainant was bound to account to the defendants for the proceeds thereof. This seems to me to create the position of trustee and cestui que trust. The defendants contend that the general rule that a trustee is not entitled to make a profit out of the cestui que trust's business should be enforced without relaxation in this case, because the defendants have no voice, according to complainant's theory, in choosing the officers of complainant, or otherwise in its management. I think this position is well taken. The theory of the opinion was that the actual sales for burial purposes created, under the terms of the corporate act, two classes of lot owners, one including the original proprietors, now represented by defendants, and the other the owners of lots purchased for burial purposes, and that the latter class composed the membership of the corporation proper. That class first asserted it in organization, and assumed control in 1878, and have since exercised exclusive control of the affairs of the corporation, including, as before observed, the right to dispose of the legal title to the defendants' lots, by selling the same for burial purposes. Hence their position is that of trustee, with all its incidents.
Finally, each party charges the other with conduct which, it is contended, ought to influence the court in dealing with the present questions. Complainant says that it was driven to assume control of the cemetery by the neglect of the defendants to keep the grounds in decent order. On the other hand, defendants complain, first, that complainant denied their right in the premises, and drove them to an action at law to establish it, and, when the complainant was there in defeated, it set up in its bill herein an unfounded title in equity; and, further, that, in the management of the cemetery by complainant's officers, they have discriminated against defendants' lots, have purposely avoided selling them, have not given them the benefit of the general improvements of the grounds, and have fenced a portion of them out of the grounds, and have promoted the sale of lots in an adjoining competing cemetery. I think each of these contentions has some solid ground. The evidence indicates that many of the defendants' lots are not favorably situated, and are not naturally available or desirable, and do not command so ready a sale as those already disposed of; that one portion of the cemetery in which they lie is in a state of nature, covered with trees and brush, and is not included in the inclosure. These circumstances certainly make the application of the principle of the decree to these lots somewhat harsh, but I have not taken it into account in arriving at the result above intimated.
The result is as follows: The first, second, and third exceptions are overruled. The fourth to the twelfth, inclusive, have not been examined, and are not passed upon. The thirteenth is overruled. The fourteenth is sustained in part. The fifteenth is sustained in part. The sixteenth, seventeenth, eighteenth, nineteenth, twentieth, twenty-first, and twenty-fourth are sustained. The twenty-second and twenty-third are overruled. The report should be set aside, and the account annexed is referred back to the master, to be restated in accordance with the principles hereinbefore set forth. I will so advise.