From Forgotten Ohio:
"This is the grave of Johnny Morehouse and--according to legend--his dog, a pair who are Woodland's most famous ghostly residents. The story might be rooted in nothing more than an unusual tombstone, but this is what they say: Johnny fell into the Miami & Erie canal and froze to death, despite his faithful dog's efforts to pull him out. After he was buried, the dog laid on his gravesite and wouldn't be moved. Eventually it died from starvation and sadness. A special stone was made in 1861 to commemorate Johnny's dog's devotion. People leave toys, candy, and other trinkets on the stone--a ritual the cemetery management tolerates, as you can tell from the photo above."
I've visited this stone twice now (once in the winter when the cemetery was covered in snow and again the following summer). Both times, the monument was decorated with small trinkets and flowers. Someone even tied a bandanna on the dog's neck.
Symbols like this monument are important to perpetuating local legends. I suspect there is some truth to the story, though the Victorian penchant for all things dramatic makes it very likely that there was strong elaboration involved somewhere along the line.
I find it interesting the way in which physical objects with sketchy histories spawn stories that are passed down through the generations. It seems like every small town has a cry baby bridge, haunted cemetery or Satanic church. A creepy old building, a dangerous intersection, or even an abandoned playground likely has a story attached. The fun part is finding the kernel of truth behind the symbol.
Sadly, the dog's head was recently cut off and stolen. A photo of the damage can be found on the Forgotten Ohio site.