Court Opinion

ID: 4131568
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:17:11.857072+00
Date Added: 2024-06-11T14:34:14.415164
License: Public Domain

The Attorney         General of Texas
                                                  July 9, 1982
MARK WHITE
Attorney General

                               Mr. Charles D. Travis                  opinion No. NW-493
Supreme Coun Building
P. 0. BOX 12546
                               Executive Director
Austin. TX. 713711-254~3       Texas Parks and Wildlife Department    Re: Authority of Texas Parks
512,475.2501                   4200 Smith School Road                 and Wildlife Department to
Telex 9101874-1367             Austin, Texas   78744                  reinvest trust funds
Telecopier   512!475-0266

                               Dear Mr. Travis:
1607 Main St., Suite 1400
Dallas. TX. 75201-4709              Your letter concerns the proper administration of certain funds
2 14,742.8944                  contained within the Varner-Hogg State Park Trust Fund administered by
                               the department as trustee for the benefit of the Varner-Hogg State
4824 Alberta Ave.. Suite 160
                               Park in Brazoria County. This trust was established in 1956 by a deed
El Paso, TX. 799052793         which conveyed to the department certain real property and personalty
915/53x3484                    in the form of stock. You inform us that a portion of the stock was
                               in the Liggett Corporation and that that stock has been cancelled as a
                               result of a merger agreement, leaving the shareholders only the right
1220 Dallas Ave.. Suite 202
Howdo”, TX. 770026996
                               to receive a cash conversion value. Since the conversion to cash
7131650-0666                   would no longer be income-producing, the department wishes to consider
                               the possibility of investing the cash in some income-producing asset.
806 Broadway. Suite 312
                                    Your question in essence is twofold: (1) would such investment
Lubbock, TX. 79401.3479
SOSi74?-5238
                               be consistent with the trust deed and (2) does the department have the
                               authority to make such an investment?

4309 N. Tenth. Suite B              The relevant portion of the subject trust deed reads as follows:
McAllen, TX. 78501-1695
5121682-4547
                                           And, for and in consideration of the agreements
                                        and conditions hereinafter set out, I, the said
200 Main Plaza, Suite 400               IIM   Hogg I  have   transferred, assigned     and
San Antonio. TX. 78205.2797             delivered, and by these presents do transfer,
512/225-4191
                                        assign and deliver, unto the said State Parks
                                        Board of the State of Texas, stock certificates
An Equal Opportunity/                   evidencing three hundred thirty (330) shares of
Affirmative Action Employer             Kennecott Copper Corporation conrmonstock, and one
                                        hundred (100) shares of Liggett & Myers Tobacco
                                        Company common stock, upon condition that all of
                                        the cash dividends from said stock shall be used
                                        only   for   the    operation,   maintenance .and
                                        improvement of, the premises hereinabove granted,
                                        and no other, and that the title to said stock
                                        shall vest and remain in said State Parks Board

                                                         P.   1755
‘   .

        Mr. Charles D. Travis - Page 2   (Mw-493)

                  for so long a time as said premises shall be used
                  for State Park purposes, as herein provided.

                    TO HAVE ABD TO HOLD the above described
                 premises and shares of stock, together with all
                 and singular, the rights and appurtenances thereto
                 in anywise belonging unto the said State Parks
                 Board of the State of Texas so long as said
                 premises are continuously held and used by said
                 Grantee, and its successors, as a State Park under
                 the covenants, terms and provisions hereof, and no
                 longer; and if the same be not used for said
                 purposes, or at any time cease to be used for such
                 purposes, or at any time be used for any other
                 purposes save and except those which are herein
                 expressly described and mentioned, then and
                 thereupon this conveyance and transfer shall be
                 null and void and said premises and shares of
                 stock, together with any additional or substitute
                 shares which may be hereafter acquired by way of
                 merger, consolidation, stock dividends, split-ups,
                 and/or spin-offs, by the issuing corporations or
                 their successors, shall immediately thereafter
                 revert to Grantor herein, her heirs or assigns,
                 and it shall be lawful, without suit, but only
                 upon the giving of reasonable noticesto the State
                 Perks Board of the State of Texas, or its
                 successors, for Grantor herein, her heirs or
                 assigns, to re-enter and repossess said premises
                 and repossess said shares of stock, and thereafter
                 peaceably to hold and enjoy said premises and
                 shares of stock as if these presents had not been
                 made; and no act or omission on the part of
                 Grantor, her heirs or assigns, save the failure to
                 give such notice, shall be or constitute a waiver
                 of the operation or enforcement of such condition;
                 and upon such occurrence the State Parks Board of
                 the State of Texas hereby expressly binds and
                 obligates itself to re-transfer. re-assign, and
                 deliver unto Grantor, her heirs or assigns, any
                 and all certificates evidencing said shares.

             The cancellation of the Liggett stock and its conversion to cash
        clearly was not one of the possibilities contemplated by the grantor
        when the trust deed was executed and therefore we have no express
        instructions from the grantor as to how such a contingency should be
        handled. We are left with having to make a determination of whether
        or not the investment of the cash conversion would be contrary to the
        intent of the grantor. The grantor clearly intended that the trust be

                                         p. 1756
.   -
        Mr. Charles D. Travis - Page 3    (NW-493)

        composed of income-producing assets, for that is what she in fact
        conveyed. Furthermore, the instrument is silent with regard to how
        the trustee should handle assets that were not income-producing. The
        grantor clearly intended to establish a trust that would be adequate
        to maintain the park grounds indefinitely. Given a choice between
        leaving a sum of cash in the fund which is not income-producing or
        converting cash into an income-producing asset, the latter choice
        appears to be more consistent with the intent of the grantor.

             In answer to your second question, we note initially that a state
        agency only has those powers which are expressly conferred upon it by
        law or necessarily implied therefrom. 2 Tex. Jur. III Administrative
        Law 511. The Parks and Wildlife Code itself does not grant to the
        department the general authority to invest monies under its control,
        but it does contain authority for the department to accept gifts for
        the benefit of the state park system, Parks and Wildlife Code section
        13.004, and therefore has authority to act as trustee of those gifts.
        Attorney General Opinion WW-122 (1957).       The situation we are
        presented with here is not one which involves money appropriated by
        the legislature or in any' way derived through taxation nor does it
        involve money under the department's general management and control.
        Rather, the department acts as a trustee and as such accrues the same
        powers and responsibilities over the trust as any other trustee under
        the laws of the state of Texas.

             There is an implied duty to invest non-income producing assets
        held in trust where there is a direction by the grantor to pay 'over
        the interest or income to a beneficiary, Moore v. Sanders, 106 S.W.2d
337, (Tex. Civ. App. - San Antonio 1937, no writ), and it is the
        trustee's duty to use reasonable diligence in so doing, McMullen v.
        Sims, 37 S.W.2d 141 (Tex. Comm'n App. 1931, holding approved). While
        no case in point can be found in Texas, it is a generally well-
        established principal under the common law that trustees have a duty,
        in the exercise of sound judgment and discretion, to convert
        unproductive property into an income-producing fund as soon as can
        reasonably be done, Odgen v. Allen, 114 N.E. 862 (1917). We find no
        hindrance to the application of these principals to the situation you
        have presented.

             We therefore conclude that (1) the Texas Parks and Wildlife
        Department has the authority under the law of trusts to invest funds
        of the trust, (2) the trust instrument contains no language which
        would limit that authority and (3) such investment most fully complies
        with the intent of the grantor.

                                         p. 1757
                                                                                 ”   .

. .   .
          Mr. Charles D. Travis - Page 4 (MN-495)

                                         SUMMARY

                      The Texas Parks and Wildlife Department has the
                   authority as trustee of the Varner-Hogg State Park
                   Trust Fund to invest its cash assets.

                                                   -MARK       WHITE
                                                     Attorney General of Texas

          JOHN W. FAINTER, JR.
          First Assistant Attorney General

          R1CHARD.E. GRAY III
          Executive Assistant Attorney General

          Prepared by Eva Loutsenhiser
          Assistant Attorney General

          APPROVED:
          OPINION COMMITTEE

          Susan L. Garrison, Chairman
          Rick Gilpin
          Patricia Hinojosa
          Eva Loutzenhiser
          Jim Moellinger

                                          p. 1758