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-