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Memory Grove Cemetery, Inc. v. Taylor

Supreme Court of Arizona

April 26, 1943

MEMORY GROVE CEMETERY, INC., a Corporation, Appellant,
v.
MELVIN R. TAYLOR and ANITA ROSE TAYLOR, His Wife, Appellees

APPEAL from a judgment of the Superior Court of the County of Maricopa. Dudley W. Windes, Judge. Judgment affirmed.

Mr. William C. Fields, for Appellant.

Messrs. Langmade & Langmade, for Appellees.

OPINION

ROSS, J.

This action was brought by Memory Grove Cemetery, Inc., a corporation, against Melvin R. Taylor and Anita Rose Taylor, husband and wife, upon [60 Ariz. 321] two causes of action, the first being for $10,082 damages for breach of warranty of title to land sold by defendants to plaintiff, and the second seeking to have a mortgage on such land and the note secured by it surrendered and the mortgage declared no lien or cloud on the premises.

The defense, as gathered from the answer, was to the effect (1) that the encumbrances of which complaint was made were of record and were assumed by plaintiff, and (2) that the defendants had sold the premises mentioned in plaintiff's complaint, reserving the right and power to rescind in case of a breach of any of the stipulations contained in the contract of sale.

Plaintiff was organized by E. O. Castle and Charlie W. Clark, who were in fact the promoters of the Memory Grove Cemetery, Inc. Associated with them in promoting the enterprise was one George Golfinos, of Phoenix, who, from what we glean from the record, advanced whatever small amounts of cash that were necessary to organize the plaintiff and to secure to it the title of the Taylor tract of land. Early in the organization, to wit, on June 25, 1938, as the minutes of the corporation show, the stock of the company (100,000 shares of no par value) was distributed as follows:

Melvin R. Taylor

23,000 shares

E. O. Castle

19,250 shares

Charlie W. Clark

19,250 shares

Roy J. Hockery

19,250 shares

George Golfinos

19,250 shares

The record fails to reflect what, if anything, was receivedfor the last four of the above certificates. Thecertificate to Taylor for 23,000 shares was in part paymentof the land. Later, on May 27, 1939, the board ofdirectors of the corporation, acting through Castle andGolfinos, majority members thereof, by resolutionamended the articles of incorporation cutting the capital [60 Ariz. 322] stock from 100,000 shares of no par value to 1,000shares of no par value and providing that such shares"shall be paid for by cash, or real or personal property,or services, or any other right or thing of

Page 457

value."Whether this amendment was properly authenticatedand published the record fails to disclose. Section 53-303,Arizona Code 1939. The amendment to the articleswas evidently intended to conform with section 6, ArticleXIV of the State Constitution, reading:

"No corporation shall issue stock, except to bona fidesubscribers therefor or their assigness; nor shall anycorporation issue any bond, or other obligation, for thepayment of money, except for money or property receivedor for labor done...."

There is no showing that the stock issued to Castle,Clark, Hockery or Golfinos was paid for either inmoney or property received or labor done. The onlystock issued upon a consideration was that to Taylor inpart payment of his property.

The defendants, on or about July 25, 1938, conveyedby warranty deed to plaintiff, Memory Grove Cemetery,Inc., Blocks 1 and 2 of Taylor Estates, being asubdivision of the S.1/2 of the N.W.1/4 of the S.W.1/4 and the N.1/2 of the S.W.1/4 of the S.W.1/4 of Section 1,Township 1 North, ...


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