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Heck v. Rodgers

March 7, 1972


Castle, Senior Circuit Judge, Kiley, Circuit Judge, and Grant, District Judge.*fn1

Author: Castle

CASTLE, Senior Circuit Judge.

The plaintiffs-appellants, Mary Higbee Heck and Caroline Higbee Goodbar, citizens of Massachusetts and Iowa, respectively, brought this diversity action in the District Court seeking to recover the sum of $267,500 from the defendants-appellees. Examination of the plaintiffs' complaint discloses that this sum is claimed to represent the fair market value of 181 cemetery lots allegedly owned by the plaintiffs and which were rendered unsuitable for burial purposes by acts of certain of the defendants-appellees. The liability of the other defendant-appellee, Elmwood Cemetery Company,*fn2 is asserted on the basis of an allegation that a lien in plaintiffs' favor exists on the property and assets of that corporation which it acquired from another corporation which was the owner and operator of the cemetery involved at the time of the acts of which plaintiffs complain.

In these respects the plaintiffs' complaint alleges, in substance, that in February 1951 the plaintiffs received deeds from Elmwood Cemetery Company to the cemetery lots here involved which entitled them to interment and sepulture therein, and under the applicable rules and regulations to sell or assign such rights to others with the consent of the corporation; that on April 7, 1964, Elmwood Cemetery Company, by defendants Elizabeth Rodgers and Louise Gordon, its vice-president and secretary, respectively, quit-claimed and conveyed the north portion of the cemetery in which the lots involved are located to the defendant Pioneer Trust & Savings Bank in trust; that such conveyance was authorized by defendants Alphonse Cardamone, Marvin Miner, Andrew Kasha, Honora Harris and Louise Gordon, as members of the board of directors of the corporation; and that subsequently the trustee re-sold the property for commercial and residential development, and a shopping center and complex of apartment buildings was constructed thereon, which improvements fully occupy the plaintiffs' lots and render them wholly unsuitable for burial purposes. It is further alleged that the sale and development of the north portion of the cemetery was without the consent of the plaintiffs, violated their rights under the deeds to cemetery lots issued to them, and that the proceeds of the sale was distributed to the shareholders of Elmwood Cemetery Company without making compensation to the plaintiffs for their rights under the cemetery lot deeds. It is also alleged that after first changing its name to MHM Corporation, and then transferring its remaining business and properties to River Grove Cemetery Company, Elmwood Cemetery Company was dissolved in March 1965. After Elmwood Cemetery Company changed its corporate name to MHM Corporation, River Grove Cemetery Company changed its corporate name to Elmwood Cemetery Company. It is this latter corporation, which was organized in July 1964, which is named as a defendant. Plaintiffs allege that the property and assets this latter corporation acquired from the former Elmwood Cemetery Company is subject to a lien in plaintiffs' favor.

Amended answers filed by the defendants*fn3 denied that plaintiffs owned the lots in question; alleged, in substance, that plaintiffs' claim of ownership is without validity as to the defendants because it is derived from and has its origin in deeds to the lots issued in 1930 by officers of Elmwood Cemetery Company to plaintiffs' parents, George G. Higbee and Mrs. George G. Higbee, as a property dividend to shareholders of the corporation, when in fact neither of said persons was a shareholder of the corporation entitled to such a dividend; and asserted that plaintiffs' action is barred by Ill.Rev.Stat.1969, ch. 32, § 157.94.*fn4

With respect to the factual allegations made in defendants' amended answers concerning plaintiffs' claim of ownership and concerning the issuance of the 1930 deeds to the cemetery lots to plaintiffs' parents, the plaintiffs in the reply they filed denied only that the 1930 deeds to their parents were issued "on the erroneous assumption that they were shareholders of said corporation".*fn5

A motion for summary judgment was filed by each group of defendants. It was supported by an affidavit executed by the executive vice-president and general manager of Elmwood Cemetery Company, the custodian of the corporate records of the dissolved Elmwood Cemetery Company, who also had been the Secretary of the dissolved corporation from 1942 to June 1963. The affidavit incorporates the July 1, 1930 resolution of Elmwood Cemetery Company which declares a dividend from capital to stockholders of record August 15, 1930,

". . . of that portion of the company's property, being the exclusive right of interment, in lots shown on blueprint to be incorporated in the minutes of this meeting and made a part thereof, . . . ."

and which authorizes the issuance of deeds to such shareholders, or their assigns, as their respective interests may appear. The affidavit further states that neither George G. Higbee nor Mrs. George G. Higbee was owner of any of the capital stock of Elmwood Cemetery Company, an Illinois corporation, on August 15, 1930.

The plaintiffs filed no opposing counter-affidavit.

The District Court granted each of the motions for summary judgment. It also granted a supplementary motion for summary judgment filed by each group of defendants and grounded on the bar of Ill.Rev.Stat.1969, ch. 32, § 157.94. Judgment for the defendants was entered accordingly, and the plaintiffs appealed.

On appeal the plaintiffs point to the denial in their reply that the 1930 deeds were issued by Elmwood Cemetery Company on an "erroneous assumption" that plaintiffs' parents were shareholders of the corporation, and to plaintiffs' plea therein interposing the 5 year statute of limitations and the 2 year filing period prescribed by § 157.94 as a condition precedent to an action against a dissolved corporation, its directors or shareholders as bars to the 1970 defense asserted by defendants which is grounded on invalidity of the 1930 deeds. On the bases of these two factors the plaintiffs contend that the District Court erred in granting the defendants' motion for summary judgment because (1) the pleadings and the affidavit before the court for consideration left a genuine issue as to a material fact for resolution, i.e., either whether the 1930 deeds to plaintiffs' parents were issued properly under the property dividend resolution, or whether they were transactions unrelated to that resolution and therefore the authority for their issuance not dependent on the resolution; and (2) the defendants' assault on the validity of the 1930 deeds in this 1969 action brought by the plaintiffs is barred by limitations.

From our examination of the record and appraisal of the applicable law we conclude that neither of these two contentions possesses merit. Plaintiffs in their reply to defendants' amended answers did not deny that their claim to ownership of the cemetery lots or burial rights involved was derived through the 1930 deeds to their parents; they did not deny that neither of their parents was a shareholder of the corporation; nor did they deny that the 1930 deeds were issued pursuant to the property dividend resolution. Thus with respect to defendants' allegations concerning the derivation of plaintiffs' claim of ownership and concerning the issuance of the 1930 deeds to plaintiffs' parents, the plaintiffs' singular and conclusory denial that the deeds were issued on an "erroneous assumption" that plaintiffs' parents were shareholders was not responsive. Rule 56 of the Federal Rules of Civil Procedure, which relates to summary judgment, contains the following provision:

". . . The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and ...

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