## THEAA~TORNEY CmNERAL OF ?I-ExAs

Honorable 3. #I.

Fallmer State Banking Commlssloner Opinion Ho. S-188 Capital latfonal Bank Building Re: Whether a loan of $200 Austin, Texas to a funeralhome, providing an option for a paid funeral, Is subJect to the provisions of Article 548b, V.C.S., requiring a permit from Dear Mr. Falkner: Banking Department.

Your letter of January 27, 1956, requested the opinion of this office concerning the following situationwhloh we quote as described by your letter:

'The Good.%elghborFuneral Home, Inc., LaMarque, Texas, according to our Information, is a corporat&on duly Incorporatedand existing under and by virtue of the laws of the State of Texas with Its domicile and principalplace of business In the City of LaMarque, CIalveston,County, Texas, to conduct a general funeral directors and undertaking buslneas. Seemingly, their charterwas obtained in February, 1955,with a capital stock of $1,050.00. Subsequent to its Incorporation, they proceeded to solicit subscriptions for the erection of a funeral home by obtaining ersonal loans from Individuals In the amounts of !200.00 each, bearing 4s Interest

Vernon's Home. with no securlt V' save and except an optionwhloh provided for a l,OOO.OO funeral service .whlchwas to Include a metal casket, embalming, use of funeral home and chapel,hearse service, register book, and acknowledgmentoards, and with funeral complete with use of the staff of said funeral home."
Your request concerns the appllcablllty of Article 548b, Civil Statutes, to the above operations of the Funeral

Section 1 of Article 548b provides In part: "Any lndlvldual,firm, partnership, corporation, or association (hereinafter called -'organ-Hon. J. M. Falkner - Page 2. '(S-186)

izatlon’) desiring to sell 'prearrangedor prepaid funeral services or funeral 'merchandise (includingcaskets, grave vaults,.andall other articles of merchandise Incidental to a funeral service) In this State under a sales eontract providing for prepaid burial or funeral.benefits or merchandise to be deliveredat an undetermlned future date de of the contracting party fendentupon the death hereinafter called 'prepaidfuneral benefits') shall obtain a permit from the State Banking Department authorlslng the transaction of this type of business before entering Into any such contract. After thirty days from the effective date of this Act, It shall be unlawful to sell prepaid funeral benefits unless the seller holds a valid current permit at the time the contract Is made."
In the subscription agreement, the Funeral Home agrees to furnish the followinga

"In the event of the death of the undersigned or any member of his Immediate family, as herein named, then the COOD NRIQHROR FUNERAL HOME, INC., promises and agrees to provide a One ThousandDollar funeral service, for such deceased one, Includingmetal casket, embalming,use of funeralhome and chapel, hearse service, register book, and aoknowledgement cards, andwith funeral completewith use of the staff of the COOD NRICRBOR FUNRRALHOME, INC." The other party to the agreement agrees to lend Good Neighbor Funeral Home, I,nc., the sum of $200.00 for a term of ten years. By this subscription agreement the funeral home promises to furnish a $l,OOO.OO funeral service in the event of death and In return for this the other party to the agreement promises to loan a sum of money to the funeralhome.

Subsequent to signing the subscriptdonagreement, both parties sign a note a8 described In a form drawn by the corporation. This form contains the following language:

"Option One: As security for the payment of this note and in the event of the death of the payee or any member of his Immediate family, as herein named, within ten (10)years from this date, then the Good Neighbor Funeral Home, Inc., promises and agrees to provide a One Thousand

### ,

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Eon. 3. II. Falkner - page 3. 

### pww I , .?‘,.

Lc’3 -. ‘;; ,‘

_ ~, (‘5

.” I ,:,

Dollarfunex-al

aervloe, 

### for suoh.deoeasedone, lnoludlngmetal;casket,emballsing,.'us& of funeral home aiC3

ahapel,~

he,aqi!e

servlee,~re@itreir

book, and aolmo*ledgmehtoards,and 'ti$th fuiferal

oomplatewlthwe of *he' staff6f the **Qood**

### Helghbor FuneralHome,Inc." Opt& Two Is a8 ~followst


### "Inthe .event

theabovenamedOneThousand Dollar funersl~

Isnotneededduringsaid ten (10)year period;

### And the payee should so eleot, then the @oo~d

Neighbor Funeral Home, Inc.; agrees to furnish to the payee and/or the isembersof the family as

### above named, a Five Hundred Dollar funeral at any-tlae after said ten (10)year period." By this agreement-the corporationpromises and agrees to provide a $l,OOO,OO funeral In case of death If elected b the payee, and also~further promises that It will furnish a 3500.00 funeral If It has not furnished the $l,.OOO.OO funeral during the ten year 

### period,If thepayeeshould'so

### eleot,after 

### the tenyears elapse. In return for these promises on the part of the funeral home, the other party lends the suqof money sought by the funeral home.

It la clear from the two contracts that the corporation Is binding Itself to furnish funeral sefvlces In return for the u8e of the other party'smoney for a term

### not to exceeatenyears. Both parties are bound by their pSamlse8

### describedIn the crony tract. Therefore, It Is the dpinion of this offlce that the activities of the funeral home comewithin the provisions of Article 5&8b, and the funeral homes operating in the mapner outlined in your letter must obtain permits from Me State Banklng Department before entering Into sqoh contracts..



### SUMMARY Individuals, firms, partnerships, corporatlons or assoclatlons providing prepaidor prearranged funeral benefits In return for aHon. J. n. Falkner - page 4. (S-188)

APPROVED: loan of money are required by Artlcle 548b,V.C.S., to obtain permits from the State Banking Department before entering Into such oontraots.

J. C. Davis, Jr. County Affair,8

Division
J. A. Amls, Jr. Reviewer Mert Starnes Reviewer L, W. Gray Reviewer Davis Want First Assistant
JOHR BEN SHEPPERD Attorney Gleneral Yours very truly,
JOHN i&N SHEPPERD Attorney Oeneral

Philip Sanders , Assistant ,AttorneyQeneral

PS:zt