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