Court Opinion

ID: 4134791
Source: CourtListenerOpinion
Date Created: 2017-02-18 01:54:52.870225+00
Date Added: 2024-06-11T14:35:15.921871
License: Public Domain

Honorable Bruce Allen        Opinion Wo. c-670
County Attorney
Ellis County
Waxahachie, Texas            Re:   Whether the trustees of
                                   the Perpetual Care Fund
                                   of the Hillcrest Burial
                                   Park, Inc. or the corpo-
                                   ration may Invest said
                                   trust fund In corporate
                                   stock;
                                   Whether the Dedicatory
                                   Agreement of the Hillcrest
                                   Burial Park, Inc. and the
                                   Trust Agreement between
                                   Hillcrest Burial Park,
                                   Inc. and the trustees of
                                   the Perpetual Care Fund
                                   may be amended so a8 to
                                   authorize the trustees
                                   to invest trust funds In
Dear Mr. Allen:                    corporate stocks.
     By your recent letter you request an opinion of this
office with regard to the above-mentioned questions.
     The Trust Agreement between Hillcrest Burial Park,
Inc. and the trustees of the Perpetual Care Fund (wherein
the trustees are known as the "second parties") provides, in
part, as follows:
          "That the said Second Parties shall invest,
     re-invest and keep this trust fund invested in
     bonds of the United States, or of the State of
     Texas, or any County, City or other political
     subdivision of the State of Texas, or in first
     mortgage or In first lien improved real estate,
     or in bonds legal for investment for savings
     banks or trust companies in this State."

                        -3223-
Honorable Bruce Allen, page 2 (c-670 )

     It is evident that the Trust Agreement would not per-
mit the trustees to Invest trust funds In corporate stocks.
     Statutory law relating to investment of perpetual
care funds, Article 912a-17, Vernon's Civil Statutes, pro-
vides, in part, as follows:
          "Perpetual care funds shall not be used
     for any other purpose than to provide through
     the income only therefrom the perpetual care
     stipulated In the resolution, bylaws, or other
     action or instrument by which the fund was
     created or established, and It shall be the
     duty of the duly appointed trustee to invest,
     reinvest and keep such funds invested in such
     securities or assets as are or shall hereafter
     comply with the provisions of the Texas Trust
     Act in so far as the same may govern the invzst-
     ment of trust funds by the trustees thereof.
     Article 7425b-46, Vernon's Civil Statutes ( The Texas
Trust Act) provides, in part, as follows:
          "A. In acquiring, investing, reinvesting, ex-
     changing, retaining, selling, supervising and managing
     property for the benefit of another, the trustee
     shall exercise the judgment and care under the circum-
     stances then prevailing, which men of ordinary pru-
     dence, discretion, and intelligence exercise in the
     management of their own affairs, not in regard to
     speculation but in regard to the permanent disposi-
     tion of their funds, considering the probable ln-
     come therefrom as well as the probable safety of
     their capital. Within the limitations of the fore-
     going standard, the trustee is authorized to acquire
     and retain every kind of property, real, personal,
     or mixed, and every kind of investment, specifically
     including but not by way of limitation, bonds, deben-
     tures and other corporate obligations, and stocks,
     preferred or common, which men of ordinary prudence,
     discretion, and intelligence acquire or retain for
     their own account; and within the limitations of the
     foregoing standard, a fiduciary may retain property
     properly acquired, without.limitation as to time and
     without regard to Its suitability for original pur-
     chase.

                          -3224-
Honorable Bruce Allen, page 3 (C-670   )

     "B. Nothing contained In this Section of this Act
     shall be construed as authorizing any departure
     from, or variation of, the express terms, provisions
     or limitations set forth In any ,.. agreement ,..
     or other instrument creating or defining the trustee's
     duties, authority and powers..."
     Where the language of the statute Is clear and unam-
biguous, it will be enforced according to its words.
Central Education Agency v. Independent School District,152 Tex.
56., 25t, S.W.2d 357 (19531.

     Therefore, It Is the opinion of this office that the
trustees of the Hillcrest Burial Park, Inc. Perpetual Care
Fund may not Invest the trust funds in corporate stocks,
unless and until the Trust agreement is amended as hereln-
after stated.
     With regard to the second question you have asked, we
must first consider 'Section37 of the Dedicatory Agreement
signed by the President and Secretary of said Corporation
and filed with the Ellis County Clerk on December 30, 1942,
which provides in part as follows:
          "The accumulated care fund has been, and
     that in the future, as collected, will be placed
     in the hands of named trustees of said Perpetual
     Care l?undfor the benefit of said Association,
     which fund thus created shall be held forever
     intact and shall be invested, re-Invested and
     kept invested in bonds of the United States or
     of the State of Texas or of any county, city, or
     other political subdivision of the State of Texas
     or of first mortgage or on improved, first lien,
     real estate, or in bonds legal for investment for
     savings banks or trust companies in this State."
     Section 46 of the Dedicatory Agreement provides as
follows:
          "With the exceptions of all the provisions,
     conditions, etc., herein pertaining to the Per-
     petual Care Fund, these provisions, rules and
     regulations, etc., may at any time in the future
     be amended or appealed or added to by resolution
     of the Board of Directors of the Corporation, when

                           -3225-
Honorable Bruce Allen, page 4 (C- 670)

     recorded in the Deed Records of Ellis County, Texas,
     together with a certified copy of a resolution
     approving such repeal, amendment, or addenda passed
     at a regular or special meeting of the Association
     and certified to under its seal and signed by Its
     President and Secretary."
     However, Article 912a-15, Vernon's Civil Statutes,
provides, in part, as follows:
          "Notwithstanding any other provision of the
     laws of the State of Texas or any provision in a
     trust agreement executed for the purpose of pro-
     viding perpetual care for a cemetery, such trust
     agreement may by agreeTent. entered into between
     the cemetery-association and trustee or trustees
     acting under such trust agreement, be amended so
     as to include any provision which Is not lnconsist-
     ent with any provision In this act." (Rnphasis
     added).
      The pertinent provisions of the Trust Agreement have
been set out heretofore. There is no provision in the Trust
Agreement prohibiting the amendment of such instrument. Thus,
the trust agreement, when considered apart from the Dedicatory
Agreement, could be amended by the joint action of the cemetery
association and the trustees. Further, even if the trust
agreement  had a provision prohibiting amendment, It could
be amended due to the provisions of Article 912a-15. Thus,
the question is whether the Corporation, by use of an
extrinsic document, i.e., the Dedicatory Agreement, can
circumvent the provisions of Article 912a-15. We think
this must be answered in the negative.
      The particular covenant contained in the Dedicatory
Agreement with which we are concerned would have been an
enforceable obligation prior to the 1963 addition of the
quoted section of Article 912a-15, Vernon's Civil Statutes.
However, by the 1963 amendment, the Legislature clearly
expressed its intent that said trust agreement can be amended.
Therefore, the Dedicatory Agreement must be considered re-
vised to the extent necessary to effectuate such procedure.
Also, the nonperformance of this covenant will be excused
as it was caused by a i,awenacted subsequent to the making
of the contract. Binz v. National Supply Co., 105 S.W. 543
(Tex. Civ. App. 1907 error dlsm.).

                        -3226-
Honorable Rruce Allen, page 5 (C- 670)

     Therefore, without considering whether the Dedicatory
Agreement of the Hillcrest Burial Park, Inc., may be amended,
it is the opinion of this office that the trust agreement
between Hillcrest Burial Park, Inc., and the trustees of the
perpetual care fund may be amended so as to permit the
trustees to Invest the trust funds In the securities and
assets described by Article 7425b-46 Vernon's Civil Statutes,
(commonly called the Texas Trust Act) and therefore in
corporate stocks as permitted therein.
                       SUMMARY
    1. The provisions of Article 912a-17, V.C.S.,
    establish the Texas Trust Act as a standard
    for the investment of perpetual care funds by the
    trustees thereof, and where the Trust Agreement
    under which the trustees are operating only author-
    izes the investment of a portion of the Investments
    permitted under the Texas Trust Act, the trustees
    are bound to follow the latter, unless and until
    the Trust Agreement is amended to allow all the
    investments permitted by the Texas Trust Act.
     2. Article 912a-15, V.C.S., provldes that a
     trust agreement for the investment of perpetual
     care funds, notwithstanding any provision to the
     contrary contained therein, may be amended so as
     to include any provision not inconsistent with said
     Act; therefore, an extrinsic contract may not be
     used to circumvent the express language of the
     statute, and such trust agreement may be amended
     so as to authorize the Investment of perpetual
     care funds In all Investments permitted by the
     Texas Trust Act.
                              Yours very truly,
                              WAQCCNRR CARR
                              Attorney ffeneral

                              Assistant Attorney Ceneral
CMB:vg

                         -3227-
Honorable Bruce Allen, page 6 (C- 670)

APPROVED:
OPINION COMMITTEE
W. V. Geppert, Chairman
James Strock
John Banks
Pat Bailey
Ralph Rash
APPROVEDF'OR THE ATTORNEYGENiRAL
By: T. B. Wright

                           -3228-