Foshee v. Republic Nat. Bank of Dallas

• Decision Date: 25 February 1981
• Docket Number: No. B-9619,B-9619
• Citation: 617 S.W.2d 675
• Parties: Clinton FOSHEE et al., Petitioners, v. REPUBLIC NATIONAL BANK OF DALLAS, Trustee et al., Respondents.
• Court: Texas Supreme Court

Page 675

617 S.W.2d 675

Clinton FOSHEE et al., Petitioners, v. REPUBLIC NATIONAL BANK OF DALLAS, Trustee et al., Respondents.

No. B-9619.

Supreme Court of Texas.

Feb. 25, 1981.

Rehearing Denied March 25, 1981.

Carter, Jones, Magee, Rudberg, Moss & Mayes, Robert H. Bezucha, Dallas, for petitioners.

Turner, Rodgers, Sailers, Jordan & Calloway, Bruce W. Bowman, Jr., and Mark White, Atty. Gen., Amie Rodnick, Asst. Atty. Gen., Austin, for respondents.

WALLACE, Justice.

This is an appeal from a judgment of the court of civil appeals which affirmed a summary judgment for respondents. Petitioners Clinton and Mary Foshee (Foshee) are the Independent Executors of the Will of Bernice Schlosberg. Respondent, Republic National Bank of Dallas, (Republic) is Trustee of the Hillcrest Mausoleum Special Gifts Trust Fund and also the Trustee of the Hillcrest Mausoleum Perpetual Care Fund. The Attorney General is a respondent because a charitable trust is alleged to be involved. ¹

The issue before us is whether a portion of Mrs. Schlosberg's Will which bequeathed $40,000 to the Hillcrest Mausoleum Special Gifts Fund violated the rule against perpetuities.

At the time of her death Mrs. Schlosberg owned a room containing five crypts at Hillcrest Mausoleum. She left a Will which provided in part:

I give, devise and bequeath the sum of Forty Thousand Dollars ($40,000.00) in cash to Republic National Bank of Dallas, Texas, in trust, as Trustee of that certain Trust created on May 19, 1948, by and between Hillcrest Mausoleum, Inc. and Republic National Bank of Dallas, known as "Hillcrest Mausoleum special Gifts Trust Fund," such sum to become a part of said Trust Fund and to be administered in perpetuity as a part thereof and under the terms and provisions of said Trust indenture. I direct that the entire income, or the maximum amount of such income that is permitted under the laws of the State of Texas, from this gift, be expended for keeping, beautifying, and for the purchase of flowers for the burial space of my mother Sallie Alwida Schlosberg, my brother Sylvan S. Schlosberg and myself in the room which I own in Hillcrest Mausoleum. I further direct that flowers be purchased from this income and placed in, on or around said room weekly or at least semi-monthly depending upon the amount of income available for such purpose. The remainder of such income, if any, after expending the maximum amount allowed by the laws of this state for the purpose aforesaid shall be devoted to and spent for the general upkeep and beautification of the entire Mausoleum.

Republic made demand on Foshee as executor of the Will to make payments to it of the $40,000. Foshee refused, contending that the bequest was in violation of the rule against perpetuities and void. Republic filed suit and both parties moved for summary judgment. Foshee's motion was denied and Republic's was granted. The court of civil appeals affirmed. 600 S.W.2d 358. We reverse and render in part and remand in part.

Article I, section 26 of the Texas Constitution provides that "(p)erpetuities and monopolies are contrary to the genius of a free government, and shall never be allowed ...."

It is settled law in this State that the rule against perpetuities renders invalid any will which attempts to create any estate or future interest which by any possibility may not become vested within a life or lives in being at the time of the testator's death and twenty-one years thereafter, and when necessary the period of gestation. Kettler v. Atkinson, 383 S.W.2d 557, 560 (Tex.1964), quoting Henderson v. Moore, 144 Tex. 398, 190 S.W.2d 800, 801 (1946). It is likewise settled law that the rule against perpetuities also applies to trusts, and a perpetual trust of indefinite duration is void. Moore v. Sellers, 201 S.W.2d 248, 251 (Tex.Civ.App. San Antonio 1947, writ ref'd); Carr v. Jones, 403 S.W.2d 181, 182 (Tex.Civ.App. Houston 1966, writ ref'd n.r.e.); Atkinson v. Kettler, 372 S.W.2d 704, 711 (Tex.Civ.App. Dallas 1963), aff'd, 383 S.W.2d 557 (Tex.1964). If, however, the trust is established for charitable purposes, the constitutional inhibition against perpetuities does not apply. Boyd v. Frost National Bank, 145 Tex. 206, 196 S.W.2d 497, 505 (1946); Atkinson v. Kettler, 372 S.W.2d 704, 713 (Tex.Civ.App. Dallas 1963), aff'd, 383 S.W.2d 557 (1964); Rissman v. Lanning, 276 S.W.2d 356, 358 (Tex.Civ.App. Austin 1955, no writ). Generally, a perpetual trust for the upkeep of a private burial plot is not considered to be for charitable purposes. See McIlvain v. Hockaday, 36 Tex.Civ.App. 1, 81 S.W. 54 (1904, writ ref'd); Annot., 47 A.L.R.2d 596 (1956); G. Bogert, The Law of Trusts and Trustees § 377 (1977); Reinstatement (Second) of Trusts § 374 Comment h (1959). In the absence of a statute declaring such trusts to be charitable in nature, such trusts are generally held to be void and unenforceable. See Bogert, supra.

The court of civil appeals held that Article 912a, Sections 15 and 18 are pari materia and should be taken and construed together to carry out the legislative intent. Further, that when so construed those sections reveal an intention by the Legislature to define the special care fund referred to in Section 18 as a charity.

Section 15, entitled "Establishment and Maintenance of Perpetual Care," authorizes the establishment and maintenance of a perpetual care fund. It provides that the income only can be used for the general perpetual care of the cemetery; that the principal of such fund for perpetual care shall never be voluntarily reduced, but shall remain inviolable and shall forever be maintained separate and distinct by the trustee or trustees from all other funds; and that all contributions to the fund shall be deemed for charitable and eleemosynary purposes.

Section 18, entitled "Special Care," permits in paragraph one, the trustee of a perpetual care cemetery to also take property given in trust and apply the principal, or proceeds, or income for the special care or ornamenting of any burial plot, lot, section or building. This section further provides that no more than 75% of the proceeds or income from such funds shall be devoted to keeping up or beautifying private blocks, lots or structures and 25% of such proceeds or income shall be devoted to the general upkeep and beautifying of the cemetery. This paragraph contains no language suggesting that the special care fund with which it deals should not be considered a perpetuity.

The second paragraph of Section 18 permits a non-perpetual care cemetery to maintain a special care fund. It requires that at least 25% of the proceeds or income from the fund be used for general cemetery upkeep and that the fund shall not be regarded or held to be a perpetuity.

The court of civil appeals reasoned that since Republic was Trustee for both the Hillcrest Mausoleum Perpetual Care Fund and the Hillcrest Mausoleum Special Gifts Trust Fund; and since both the Will and special care indenture showed that the parties were endeavoring to comply with the Cemetery Act; and since both Sections 15 and 18 deal with perpetual care funds and should be considered in pari materia ; therefore, the special care funds became perpetual care funds when they reached Republic, the common trustee.

We reject this reasoning. It disregards the clear distinction between Sections 15 and 18 of the Act. Section 15 deals exclusively with perpetual care funds and Section 18, paragraph one, the paragraph we are concerned with, deals only with special care funds. The only reference in paragraph one of Section 18 to perpetual care is in identification of the common trustee. The principal of the perpetual care fund may not be voluntarily reduced while the principal of the special care fund may be used. The income of the perpetual care fund can be used only for general perpetual care of the cemetery while the primary reason for creating the special care fund is beautification and upkeep of private blocks, lots and structures. Also, the Legislature saw fit to specifically provide that the perpetual care fund of a perpetual care cemetery and the special gift fund of a non-perpetual care cemetery were not to be deemed as perpetuities, yet the Legislature gave no indication that it considered the special care fund of a perpetual care cemetery as charitable or eleemosynary.

Section 18 of the Cemetery Act specifically permits the trustee of a special gift trust fund of a perpetual care cemetery to expend the principal of the fund. This is further indication that this section is not an attempt to enlarge the common law definition of "charity" to include such fund, as is contended by Republic and found by the court of civil appeals. In view of this holding we do not reach the question of whether the Legislature has such authority.

The Will of Mrs. Schlosberg and the trust indenture of the Hillcrest Mausoleum Special Gifts Fund could have been drawn to comply with the Cemetery Act and not violated the Constitution, but they were not so drawn and are thus in violation of the rule against perpetuities.

Republic contends that should we find the bequest of Mrs. Schlosberg to be void then we should invoke the doctrine of cy-pres and rewrite the bequest so that the money will go for charitable purposes and thus carry out the intent of Mrs. Schlosberg. The prerequisites necessary to invoke the doctrine of cy-pres are (1) a general charitable intent on the part of the testator or donor, and (2) a specific charitable purpose which has failed. Women's Christian Temperance Union of El Paso v. Cooley, 25 S.W.2d 171 (Tex.Civ.App. El Paso 1930, writ ref'd); Scott v. Sterrett, 234 S.W.2d 917 (Tex.Civ.App. Dallas 1950, writ ref'd n.r.e.). The express intent of Mrs. Schlosberg was to beautify the private burial plots of herself, her mother and her brother. This is not a charitable purpose, so no specific charitable purpose was ever contemplated. The doctrine of cy-pres is not...