Falkner v. Memorial Gardens Ass'n
| Decision Date | 23 January 1957 |
| Docket Number | No. 10441,10441 |
| Citation | 298 S.W.2d 934 |
| Parties | J. M. FALKNER, Banking Commissioner of Texas, et al., Appellants, v. MEMORIAL GARDENS ASSOCIATION, Inc., et al., Appellees. |
| Court | Texas Court of Appeals |
John Ben Shepperd, Atty. Gen., J. Fred Jones, Asst. Atty. Gen., Sam O. Kimberlin, Jr., Austin, for Dept. of Banking.
Thomas D. Blackwell, County Atty. of Travis County, pro se, and Looney, Clark & Moorhead, Austin, for Thomas D. Blackwell.
Hoffmann & Hoffmann, Richard R. Grummon, Springfield, Ill., J. Hubert Lee, Austin, for appellee.
Appellees filed this suit against the Banking Commissioner of Texas, his Deputy and Supervisor in the Banking Department and the County Attorney of Travis County. They alleged that Art. 548b, Vernon's Ann.Civ.St., later referred to as Senate Bill 52, or as the Act, is unconstitutional and prayed for a temporary and permanent injunction restraining defendants from enforcing the same against them.
The defendants answered and alleged: that Senate Bill 52 is constitutional; that appellees have not complied with its provisions; that they are operating in violation of Art. 14.37 of the Texas Insurance Code, V.A.T.S., and prayed that all relief be denied appellees, that it be adjudged that they are operating without authority of law and for further relief.
The Attorney General of Texas filed a plea of intervention and prayed that he be allowed to file an information in the nature of quo warranto. Art. 6253, Vernon's Ann.Civ.St. This leave was granted and a petition in quo warranto and cross action was filed.
The Attorney General alleged that appellees are violating Senate Bill 52, that they are doing the business of providing burial and funeral benefits payable partly or wholly in merchandise and services in excess of $150 in violation of Art. 14.37, Texas Insurance Code, and prayed for a temporary injunction restraining appellees from
'* * * conducting any business, by whatsoever name called, providing burial or funeral benefits, payable partly or wholly in merchandise or services, and from doing the business of selling prearranged or prepaid funeral services or funeral merchandise (including caskets, grave vaults and all other articles of merchandise or services incidental to a funeral service) in this State under a sale contract providing for prepaid burial or funeral benefits or merchandise to be delivered at an undetermined future date dependent upon the death of the contracting party.'
A hearing was had on the applications for temporary injunction (appellees' and the Attorney General's) and both were denied.
This appeal is from the judgment denying the temporary injunction prayed for by the Attorney General.
Appellees are three Texas Corporations: Memorial Gardens Association, Inc., with its principal office in Travis County; Chapel Hill Memorial Gardens, Inc., with its principal office in Bexar County, and White Chapel Memorial Gardens, Inc. with its principal office in Tarrant County. They each own memorial cemeteries maintained under perpetual care. Title 26, Art. 912a-1 et seq., Vernon's Ann.Civ.St. (These cemeteries and their care are not involved here.) They also sell, under written contracts, interment spaces or cemetery lots, vaults, companionate memorials, individual grave markers, family memorials and interment services. The individual grave markers 'shall bear the name, year of birth and death of the individual and installation shall be in the' memorial garden named in the contract. The interment services provided for in the contracts are: the opening and closing of the grave and also 'the use of chapel tent, lowering device, greens, chairs and other equipment as is usually provided by the Company for this purpose.' The sales may be for cash or on installments and the contracts provide for delivery at any time upon the request of the purchaser, his heirs or assigns after full payment of the contract price. The contracts also contain an escalator clause which provides:
'If at the time of delivery of the merchandise described herein the cost thereof to the Company is less than at the date of this Agreement the Company will refund to the Purchaser such difference in cost, Provided, However, that should the cost of said merchandise at the time of delivery be greater than the cost at the date of this Agreement, the Purchaser agrees to pay, as part of the purchase price, an additional sum exactly sufficient to cover said difference in cost.'
The contracts are binding on the purchaser, his heirs, estate and his assigns for the payment of the contract price subject to forfeiture at the option of the Company for failure to pay installments with the return of previous payments to the purchaser.
Appellant here presents three points. These are to the effect that the trial court erred in denying the temporary injunction prayed for by the Attorney General because appellees are subject to but have not complied with: (1) Art. 548b, a valid statute; (2) Art. 14.37, Texas Insurance Code, and (3) the Texas Insurance Code in that they have failed to secure a certificate of authority to do an insurance business.
Appellees admit they have not complied with Senate Bill 52 and say that: (1) they are not subject to its provisions; (2) it is unconstitutional, and (3) it was not validly enacted. They further say that they are not subject to the Insurance Code and that the trial court did not abuse his discretion in denying the temporary injunction prayed for.
The title of Senate Bill 52 is:
'An Act relating to the sale of prearranged or prepaid funeral services or funeral merchandise to be delivered at an undetermined future date dependent upon the death of the contracting party, and the handling of money collected under such contracts; placing the administration of the Act under the State Banking Department; providing that nothing in this Act shall alter or affect any provisions of the Insurance Code of the State of Texas; prescribing certain offenses and fixing the penalty therefor; making an appropriation; and declaring an emergency.'
The Act contains twelve sections and an emergency clause. The following sections are pertinent here:
Section 1 provides:
'Any * * * corporation * * * desiring to sell prearranged or prepaid funeral services or funeral merchandise (including caskets, grave vaults, and all other articles of merchandise indicental to a funeral service) in this State under a sales contract providing for prepaid burial or funeral benefits or merchandise to be delivered at an undetermined future date dependent upon the death of the contracting party (hereinafter called 'prepaid funeral benefits') shall obtain a permit from the State Banking Department authorizing the transaction of this type of business before entering into any such contract. After thirty days from the effective date of this Act, it shall be unlawful to sell prepaid funeral benefits unless the seller holds a valid current permit at the time the contract is made. The seller shall not be entitled to enforce a contract made in violation of this Act, but the purchaser or his heirs or legal representative shall be entitled to recover all amounts paid to the seller under any contract made in violation hereof. * * *
'Sec. 2. This law shall be administered by the State Banking Department. The State Banking Department is authorized to prescribe reasonable rules and regulations concerning the keeping and inspection of records, the filing of contracts and reports, and all other matters incidental to the orderly administration of this law; and he shall approve forms for sales contracts for prepaid funeral benefits. All such contracts must be in writing and no contract form shall be used without prior approval of the State Banking Department.
'Sec. 3. Each organization desiring to sell prepaid funeral benefits shall file an application for a permit with the State Banking Department and shall pay a filing fee of Twenty-five Dollars ($25.00). The Secretary of State shall issue a permit upon receipt of the application and payment of the filing fee. Permits shall expire on March 1st of each year, and may be renewed for a period of one year upon payment of a fee of Ten Dollars ($10.00).
'Sec. 4. The State Banking Department may cancel a permit or refuse to renew a permit for failure to comply with any provision of this Act or any valid rule or regulation which he has prescribed, after reasonable notice to the permittee and after a hearing if the permittee requests a hearing.
'No organization shall be entitled to a new permit for a period of one year after cancellation or refusal by the State Banking Department to renew its permit, but shall thereafter by entitled to a new permit upon satisfactory proof of compliance with this law.
'Any person aggrieved by the action of the State Banking Department may appeal therefrom to a District Court in Travis County, Texas.
'Sec. 5. After the effective date of this Act, all funds collected under contracts for prepaid funeral benefits, including funds collected under contracts made before the effective date of this Act, shall be placed in a state or national bank, or building and loan association in this State and so deposited not less than thirty (30) days after collection, to be held in a trust fund in this State for the use, benefit and protection of purchasers of such contracts.
Any withdrawals from such trust fund shall be accompanied by a certified copy of the death certificate, together with proper affidavits as may be required by the State Banking Department, before such funds shall be released in fulfillment of the contract. In no event shall more funds be withdrawn from the trust account than are originally placed into the fund under any one contract, other than through the payment of accrued interest thereon.
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State v. Memorial Gardens Development Corp.
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