N.Y. Not-for-Profit Corporation Law § 1511: Cemetery indebtedness

§ 1511. Cemetery indebtedness.

(a) Certificates of indebtedness. (1) If a cemetery corporation be

indebted for lands purchased for cemetery purposes, or for services

rendered or materials furnished in connection with the necessary and

proper preservation or improvement of its cemetery or for moneys

borrowed exclusively for payment of such services or materials, the

directors, by the concurring vote of a majority of their whole number,

with the consent of the creditor to whom such indebtedness is owing, may

issue certificates under the corporate seal, signed by the president and

secretary, for such amount, payable at the times and at the rate of

interest agreed upon but not to exceed six per centum per annum;

provided, however, that there be first obtained from the cemetery board

an order approving the issuance of such certificates. In the case of

certificates of indebtedness issued for moneys borrowed exclusively for

payment for services rendered or materials furnished in connection with

the necessary and proper preservation or improvement of its cemetery the

consent of the creditor to whom such indebtedness is owing shall not be

required. (2) Such approval shall be given by the cemetery board only

if it determines that the amount of the certificates proposed to be

issued does not exceed the fair and reasonable value of the services

rendered or materials furnished or the purchase price of real property

as fixed in accordance with subdivision (b) of this section. No

certificate issued shall be valid or enforceable unless there has first

been issued by the cemetery board an order of approval as herein

provided. No certificate shall be for less than one hundred dollars.

The certificate shall be transferable by delivery, unless therein

otherwise provided. (3) The directors shall keep an account of the

number and amount of such certificates, the persons to whom issued, the

date of maturity, the rate of interest and the purpose for which the

same were issued. Each cemetery corporation shall file with the

cemetery board a verified statement setting forth all changes in such

account during the previous calendar or fiscal year. (4) The directors

shall set aside from the proceeds of sales of lots, plots and parts

thereof such sums to pay such certificates at maturity as they deem

necessary. Until the certificates are paid the holders thereof shall be

entitled at all meetings of the corporation, to one vote for each one

hundred dollars of indebtedness remaining unpaid, except that those

certificates of indebtedness issued for moneys borrowed exclusively for

payment of services or materials shall have no voting power. The

certificates shall not be a lien upon any lot, plot or part thereof

belonging to a lot owner.

(b) Application of proceeds of sales of lots. (1) At least one-half

of the proceeds of sales of lots or the use thereof remaining after the

deductions for the portion thereof required to be deposited in the

permanent maintenance fund and current maintenance fund together with

the expenses of sale shall be applied by a cemetery corporation to the

payment of the purchase price of the real property acquired by it. The

remainder of such proceeds shall be applied by the corporation to

preserving, improving and embellishing the cemetery grounds and the

avenues and roads leading thereto, and to defraying its expenses and

discharging its liabilities. After the payment of such purchase price,

and the expense of surveying and laying out the cemetery, all the

proceeds of such sales shall be applied to the improvement, preservation

and embellishment of the cemetery and to such expenses and liabilities.

(2) Where a corporation has agreed with a person from whom any such

lands were purchased to pay therefor a specified share not exceeding

one-half of the proceeds of sales of lots therein or the use thereof,

such corporation may continue to make payments as so agreed, provided

however that there be first deducted from said proceeds of sales the

amount required to be deposited in the permanent maintenance fund and

current maintenance fund as aforesaid together with the expenses of

sale. The balance of such proceeds shall continue to be applied by the

corporation to the preservation, improvement and embellishment of the

cemetery, and the expenses and liabilities of the corporation. Where

the corporation has heretofore agreed to pay a specified share of the

proceeds as aforesaid in payment of the purchase price of land, the

prices of lots or the use thereof in force when such purchase was made,

shall not be changed, while the purchase price remains unpaid, without

the written consent of a majority in interest of the persons from whom

the lands were purchased or their legal representatives. (3) A

corporation which has hertofore issued certificates of land shares which

entitle the owner to a specified share in the proceeds of the sale of

lots, may purchase such certificates with its surplus or reserve funds

and hold such certificates for the benefit of its surplus or reserve

funds, but such certificates may not thereafter be sold or reissued.

(c) Certificates of stock formerly issued. If a cemetery

corporation, incorporated under a law repealed by the membership

corporations law, prior to September first, eighteen hundred

ninety-five, converted its outstanding indebtedness or certificates of

indebtedness into certificates of stock, in pursuance of law, no

interest shall accrue to the holders of such stock, but they shall

receive annually or semi-annually a dividend thereon for their

proportional part of the entire surplus or net receipts of the

corporation over and above current expenses; or if the proportion of the

net receipts or surplus which stockholders shall be entitled to receive

shall have been fixed by agreement at the time of issuing such stock,

such stockholders shall be entitled to receive dividends in accordance

with such agreement. Such certificates of stock shall be transferable

only on the books of the corporation on the surrender of the

certificate, unless otherwise provided on the face thereof, and on every

such surrender a new certificate of stock shall be issued to the person

to whom the same has been transferred; and the holders of such stock

shall be entitled, in person or by proxy, to one vote for every share

thereof, at each meeting of the corporation. A register of the stock

issued by the corporation shall be kept by its directors showing the

date of issue, the number of shares, the par value thereof, the name of

each person to whom issued, the number of the certificates therefor; and

all transfers of such stock shall be noted and entered in such register,

and the certificates surrendered shall be deemed canceled by the issue

of a new certificate, and the surrendered certificate shall be

destroyed. Any director may become the holder or transferee of such

stock for his own individual use or benefit. No such stock shall be a

lien on the lot of any individual lot owner within the cemetery limits;

and no other or greater liability of the corporation issuing such stock

shall be created or deemed to exist than may be necessary to enforce the

faithful application of the surplus or net receipts of the corporation

to and among the holders of the stock in the manner hereinbefore

specified. A cemetery which has heretofore issued such certificates of

stock is a membership corporation and not a stock corporation.

(d) Retirement of certificates of stock of certain cemetery

corporations. If a cemetery association, incorporated under a law

repealed by chapter five hundred fifty-nine of the laws of eighteen

hundred ninety-five has changed certificates of indebtedness into

certificates of stock, pursuant to chapter one hundred seven of the laws

of eighteen hundred seventy-nine, and such stock remains unimpaired,

such association may retire such stock and issue in exchange therefor

certificates of indebtedness representing the par value of such stock,

such certificates of indebtedness to bear interest at a rate not

exceeding six per centum per annum from the date of the last preceding

dividend payment; provided, however, the exchange of such stock for

certificates of indebtedness shall be authorized at a duly called

meeting of such association by the affirmative vote of at least

two-thirds of the stock issued and outstanding and of at least

two-thirds of all votes cast at such meeting in favor of such exchange.

Any holder of such stock not voting in favor of the exchange of such

stock for certificates of indebtedness may at any time prior to the vote

upon such exchange, or if notice of the meeting to vote upon such

exchange was not mailed to him at least twenty days prior to the taking

of such vote, then within twenty days after the mailing of such notice,

object to such exchange and demand payment for his stock and thereupon

such stockholder or the corporation shall have the right, subject to the

same conditions and provisions contained in section six hundred

twenty-three of the business corporation law, to have such stock

appraised and paid for as provided in such section. Such objection and

demand must be in writing and filed with the corporation. The

provisions of this section relating to certificates of indebtedness and

the rights of the holders thereof shall apply to certificates of

indebtedness issued as provided in this subdivision. The stocks so

retired shall not be reissued by such association and it shall have no

right thereafter to issue any certificates of stock.

(e) Purchase, retirement and exchange of stock. (1) A cemetery

corporation which has issued certificates of stock, pursuant to chapter

one hundred seven of the laws of eighteen hundred seventy-nine, or

chapter two hundred sixty-seven of the laws of eighteen hundred

ninety-four, may purchase such certificates of stock with its surplus or

reserve funds, and hold such certificates for the benefit of its surplus

or reserve funds, but such certificates of stock so purchased may not

thereafter be sold or reissued. (2) A cemetery corporation which has

issued certificates of stock may also effect the retirement of such

stock as follows: The board of directors of such corporation shall

adopt by vote of a majority of the entire number of such directors a

plan for such retirement which shall include the fixing of a price which

the corporation will pay for all shares of stock then outstanding, which

price shall, in the opinion of such directors, represent the fair value

of such stock. The said plan shall be submitted to a duly called

meeting of the members of such corporation and, if approved by the

affirmative vote of at least two-thirds of all votes cast at such

meeting, including the affirmative vote of the holders of record of at

least two-thirds of all shares of stock issued and then outstanding

exclusive of any shares of stock held by the corporation, shall become

binding upon all stockholders, and they shall proceed to transfer and

surrender to the corporation their certificates of stock and to receive

payment therefor in accordance with the terms of such plan. Any holder

of shares of such stock not voting in favor of such plan may at any time

prior to the vote approving such plan, or if notice of the meeting to

vote upon such plan was not mailed to him at least twenty days prior to

the taking of such vote, then within twenty days after the mailing of

such notice, but in any event within ten days after the taking of such

vote, by written notice filed with such corporation, object to such plan

and demand appraisal of his shares. Thereupon, such stockholder or the

corporation shall have the right, subject to the same conditions and

provisions contained in section six hundred twenty-three of the business

corporation law, to have such stock appraised and paid for as provided

in such section. (3) A cemetery corporation which has issued

certificates of stock may also effect the exchange of such stock as

follows: The board of directors of such corporation shall adopt by a

vote of a majority of the entire number of such directors a plan for the

exchange of all shares of stock then outstanding for a like number of

participating certificates. Such participating certificates shall

entitle the owners to a specified share not exceeding, collectively,

one-half of the proceeds of sales of lots therein or the use thereof

after first deducting from such proceeds of sale the amount required to

be deposited in the permanent maintenance fund and current maintenance

fund as provided in and pursuant to subdivision (a) of section fifteen

hundred seven of this article, together with the expenses of sale. Such

plan shall then be submitted to the cemetery board for its approval. In

making its determination the cemetery board shall consider and may

condition its approval on the purposes of this section. Thereafter, if

the cemetery board approves such plan, or in the event the cemetery

board conditioned its approval and the conditions imposed have been

accepted by a vote of a majority of the entire board of directors of the

corporation, such plan shall be submitted to a duly called meeting of

the members of such corporation, and, if approved by the affirmative

vote of at least two-thirds of all votes cast at such meeting, including

the affirmative vote of the holders of record of at least ninety per

centum of all shares of stock issued and then outstanding exclusive of

any shares of stock held by the corporation, shall become binding upon

all stockholders. The stockholders shall then proceed to transfer and

surrender to the corporation their shares of stock and to receive in

exchange therefor participating certificates in accordance with the

terms of such plan. Any holder of shares of such stock not voting in

favor of such plan may at any time prior to the vote approving such

plan, or if notice of the meeting to vote upon such plan was not mailed

to him at least twenty days prior to the taking of such vote, then

within twenty days after the mailing of such notice, but in any event

within ten days after the taking of such vote, by written notice filed

with such corporation, object to such plan and demand appraisal of his

shares. Thereupon, such stockholder or the corporation shall have the

right, subject to the same conditions and provisions contained in

section six hundred twenty-three of the business corporation law, to

have such stock appraised and paid for as provided in such section.

Each such participating certificate issued in exchange for a share of

stock shall entitle the holder thereof to one vote for each certificate

at all meetings of the corporation. The prices of lots or the use

thereof at the time when such exchange is made shall not be changed,

while such participating certificates remain outstanding, without the

written consent of a majority in interest of the holders thereof except

as now or hereafter authorized by law. The shares of stock so exchanged

shall not be reissued by such corporation and it shall have no right

thereafter to issue any shares of stock.

(f) Exchange of certificates for shares. The directors of a cemetery

corporation, which has issued certificates for shares, from time to time

by resolution, may fix the value of each of such shares and authorize

the acceptance by the corporation of such certificates at the value so

fixed in payment for land. All certificates so accepted shall be

immediately cancelled and shall not be again issued.