December 31, 1962

Honorable J. M. Falkner Commissioner of Banking Department of Banking Austin, Texas

Dear Mr. Falkner: Opinion No. WW-1515 Re: Whether au existing, nonprofit, incorporated association of cemetery lot owners, chartered in the year 1894, can establish aperpetual care fund under the provisions ofArticle 912a, V.C.S., and related questions. Your letter states that anonprofit, incorporated association of cemetery lot owners desiresto establish aperpetual care fund under Article 912a, V. C. S. The charter ofthis corporation was granted by the Secretary ofState in the year 1894, prior to the enactment ofArticle 912a, and said charter does not provide for aperpetual care fund.

The questions in your letter which we feel we have authority to answer are paraphrased as follows: Can such association establish aperpetual care fund under the provisions ofArticle 912a from donations ofaportion only of the lot owners for perpetual care oftheir lots? Ifthe answer to the first question is “yes”, would the fund be subject to the supervision ofthe Banking Department? Ifthe answer to the first question is “yes”, can amajority of the members cause the donations to be mandatory on all members, thus creating aperpetual care fund for the entire cemetery?

Section 5ofArticle 912a is entitled “Authority to Corporations”, and sets out the powers and rules by which cemetery corporations may be formed. This section also contains aclause which reads inpart as follows:

‘1.
. .and provided further that the provisions ofthis Act shall not apply to . . . any association of cemetery lot owners not operated for profit.
. . now existing or hereafter organized.
. .I’Hon. J. M. Falkner, Page 2 (WW-1515)

Itis our opinion that this clause was enacted to exempt only those organizations named in itfrom regulation under the Act. Itwas not intended to prohibit a nonprofit incorporated association of cemetery lot owners from voluntarily adopting the provisions ofthe Act. Therefore, in answer to your first question, the incorporated association can elect to amend its charter, bring itself within the provisions ofArticle 912a, and establish aperpetual care fund according to those, provisions.

In answer to the second question, ifthe association did elect to amend as above described, the provisions ofArticle 912a would then require examination and supervision ofthe association by the Banking Department. Inparticular, see Sections 2, 3, 4, 30, 31, 32 and 33 of Article 912a.

In answer to the third question, we quote in part from Section 15 ofArticle 912a, entitled “Establishment ofperpetual care”:

‘1.
. .Ifthe cemetery originally sold cemetery lots without provision for perpetual care, it shall have the right to accept deposits from such lot owners for the purpose of establishing perpetual care endowment onthose lots, provided said deposits meet the requirements hereof, such deposits to be placed in trust in conformity with the requirements ofthis Article. I’ Itis our opinion that this part ofSection 15provides for the establishment of individual voluntary perpetual care funds inthe type of association in question, andby implication prohibits a majority of the members who may want such afund from making it mandatory ona minority who do not. The power given in Section 6ofArticle 912a to nonprofit cemetery corporations organized by cemetery lot owners allowing such corporations to tax the property for the purpose ofits general improvement and upkeep does not, in our opinion, give such corporation the power to tax for the establishment of aperpetual care fund.Hon. J. M. Falkner, Page 3 (WW-1515)

SUMMARY A nonprofit, incorporated association of cemetery lot owners, in existence prior to the passage ofArticle 912a, V. C.S., can elect to amend its charter and adopt the provisions ofArticle 912a, and establish aperpetual care fund according to the provisions thereof. This fund would be subject to examination and supervision by the Banking Department . Donations to such afund could not, however, be made mandatory from those members who do not desire to establish such afund for their individual lots. Very truly yours, WILL WILSON Attorney General of Texas

JGZ:lmc APPROVED: OPINION COMMITTEE: W. V. Geppert, Chairman Pat Bailey Dudley McCalla Norman Suarez Tom Peterson REVIEWED FOR THE ATTORNEY GENERAL BY: Leonard Pasamore