Although there is little background for this term, some information exists:
"Graves Of Spinsters" was a name used by Morrissey to attribute Sunny's sleeve design to.
At Philipshalle, Düsseldorf, December 15, 2006 - he referred to his latest album (Ringleader Of The Tormentors) as Graves Of Spinsters.
James Maker, in his 2011 book "Autofellatio" directly mentions the name too:
"Linder and Morrissey regularly wandered the vast Southern Cemetery of Manchester which is a gothic Manhattan of the departed. In those days many pastimes were free and did not require expensive peripherals. They enjoyed reading the gravestones of millworkers and clogmakers who once lived, before ruining their eyesight, in the gaslight of the Industrial Era. The celebration of:
“FANNY CRAGG. 1851 – 1890. LOVING MOTHER AND LESBIAN. THY WILL BE DONE.”
On noting the neglect of, and placing flowers at the long-forgotten graveside of:
“MILDRED STENCH. 1866 – 1886. SPINSTER”
Morrissey was determined to form a group called Graves Of Spinsters. The Smiths were almost going to be Graves Of Spinsters. In fact, one of them was. However, it was here that they espied a tatty old van parked at the gates with “Sex Pistols” sprayed on the side of it together with a small flyer advertising: “Tonight at the Lesser Free Trade Hall”."