Perry Funeral Home, Inc. - Page 4

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          thereunder.  A handwritten notation that the contract was                   
          irrevocable was added to certain of the forms, allegedly for                
          reasons related to Medicaid eligibility.  Regardless of such                
          language, however, it was petitioner’s practice to indicate to              
          purchasers that they had the right to cancel at any time and                
          would receive their money back.2                                            
               The experience of petitioner has been that only a very small           
          percentage of preneed contracts are in fact canceled.  The record           
          indicates that during the period from approximately 1997 through            
          the time of trial in 2003, six contracts were canceled.3  The               
          amounts paid thereon were refunded, and on certain occasions the            
          refunds also included an interest component based on “kind of a             
          guess” about prevailing rates.                                              
               During the years in issue, petitioner maintained a business            
          checking account and the following investments:  A Putnam                   
          Investments mutual fund account, a Merrill Lynch ready asset                
          account, Fleet Financial shares, Massachusetts Savings                      

               2  The contractual notations were ineffective given their              
          sham nature and the explicit directives of Massachusetts law                
          discussed below.  See Comdisco, Inc. v. United States, 756 F.2d             
          569, 576 (7th Cir. 1985) (“in general, a contract entered in                
          violation of statutory or regulatory law is unenforceable”).                
               3 The parties stipulated:  “Of the pre-need funeral                    
          arrangements in existence on January 1, 1996, six have been                 
          cancelled.  Attached hereto and marked as Exhibits 19-J through             
          24-J are copies of petitioner’s business records related to these           
          pre-need arrangements.”  However, the referenced exhibits bear              
          contract dates spanning the years 1991 to 1999 and cancellation             
          dates spanning years 1997 to 2003.                                          

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Last modified: May 25, 2011